For the past year, economists and policy experts had been warning of a coming economic downturn. But the screeching halt the economy has experienced in the midst of the COVID-19 pandemic isn’t that, says Mike Konczal, who studies financial reform and unemployment at the Roosevelt Institute, a left-leaning think tank. “It is so difficult to describe how this is not the next recession that would have eventually happened,” Konczal tells me.
Recessions, Konczal explains, tend to unfold slowly; during the 2008 crisis, unemployment rose steadily, with roughly a million people losing their jobs in one month during the worst of it. But under current conditions, Konczal predicts we’ll see 3 or 4 million newly unemployed people this month alone. The second and third quarter of this year, he believes, will look like a depression. “This is such an absolute stop and such a shock across so many businesses—there really isn’t a good parallel,” he says.
Konczal says that the federal government needs to do everything it can to keep small and medium businesses from getting “wiped out”—particularly those in the service sector that won’t reap the benefits of pent-up demand when life goes back to normal. On Wednesday morning, Senate leadership and the White House announced a deal on a $2 trillion relief package that addresses some of this: It includes $350 billion in loan forgiveness grants to small businesses and $10 billion in emergency grants to provide up to $10,000 per company in immediate relief.