What goes around comes around. In January when coronavirus was spreading rapidly, the President of the United States Donald Trump lavished praises on China and its President Xi Jinping even going to the extent of saying that America and its people owed a debt of gratitude for the fashion in which Beijing was going about to contain the crisis.
All this changed in March when Trump started making the point that if only China had confined the virus to one area or had leveled with the world what was taking place, it would have been a totally different story. But as Trump was dishing out a newfound argument to China and its leadership, America and the rest of the world knew that Trump and his right-wing coterie inside and outside the White House were in total denial. Using the White House as the pulpit, Trump rubbished the notion that the virus was a crisis and went on to accuse Democrats and the media of falsely propagating an idea just to bring him down in an election year.
But three weeks into March and with America posting the highest global infection rate of about 250,000 along with death figures hovering around 6,000, Trump was finally caught with his pants down.
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Even now the President puts up a brave front on the pandemic that has impacted the world, but the spirited person that he is, it has comes while spewing venom against his detractors or dishing out plain nonsense about the deadly virus, but has given way to a sober mood as if the White House has been hit by a tsunami.
Finally, some sense seems to be dawning on Trump and his close advisers, partly because of the accumulating body bags across 50 states and an eerie feeling that the economic ramifications are somehow frightening.
"America is engaged in a historic battle to safeguard the lives of our citizens." pic.twitter.com/DgiyktSc9O
— The White House (@WhiteHouse) April 3, 2020
What is unfolding economically in the United States is giving the feeling to many economists that the 2009 recession or for that matter even the Great Depression may look like a Sunday school picnic.
The Trump administration, chiefly the man sitting in the Oval Office, did exactly what it accused the Chinese of doing, which is failing to come to terms with reality in the face of mounting evidence.
Governors of states, especially Democratic, were laughed out of court, ridiculed, name-called and insulted on tweets for asking the Federal Government basic essentials such as hospital facilities, testing kits, ventilators, and masks to fight the coronavirus threat. And then Republican and Democratic lawmakers in the House of Representatives and Senate along with the White House went into long drawn-out negotiations over a so-called stimulus package that finally culminated in a USD 2.2 trillion agreement that may seem as too little coming too late.
And the worst part of it all is that lawmakers have gone into recess until late April when their presence is most urgently required on Capitol Hill.
The first wake up call to Trump came two weeks ago when it was reported that close to three million Americans had filed for unemployment benefits, but the shocker came two days ago when it was announced that close to 6.6 million people had filed for unemployment benefits over a two week period, bringing the total to about 10 million without a job in a three-week period.
The stunning statistics came at a time when Vice-President Mike Pence on a tour of a Walmart facility in Virginia praised American workers for putting food on the table — the irony of the statement could not have come at a worse time. Foodstuffs are available but people do not have the money to buy and pay for them!
If unofficial statistics are anything to go by, American unemployment which was just 5.8% in February is said to be now around 17%; and the rates for African Americans has gone from about 6% to 19%; and for Hispanics, it is around 17% from about 4.5%. And teen unemployment is said to have hit 25%.
More than 6.6 million Americans applied for unemployment benefits last week, double the record of 3.3 million reported for the previous week. The layoffs have led many economists to envision as many as 20 million lost jobs by the end of April.https://t.co/Zylsl5A6gm
— The Associated Press (@AP) April 2, 2020
There is not a sector that has been left untouched by the coronavirus — retail, industry, airline, travel, hotel, oil and gas, to mention a few. It is said that the USD 17 billion tourism industry in Hawaii is in the doldrums with close to 82,000 workers in the sector of 1.5 million filing for unemployment in March.
What has also been pointed out is the uneven unemployment crisis that is raging in America. With tourism taking a hit along with fall in the production of oil and natural gas due to tumbling prices, a state like Louisiana is looking at peak unemployment of about 45% from the current 5.8%. One prediction is that by July 20, million jobs could be lost pushing the unemployment rate to 15.6%; and another worst-case scenario paints that the unemployment rate could peak at 32% given the frenzy in which the coronavirus is spreading globally.
Economists and writers have not failed to point out that during the Great Depression, unemployment peaked at 25%. “I am honestly running out of adjectives here, though ‘apocalyptic’ comes to mind. The speed and scale of this economic catastrophe are almost hallucinatory,” Jeff Spross had written.
With close to 181 countries being affected by the coronavirus pandemic — some are putting it at 203 countries and territories — the International Monetary Fund has clearly made the point that global growth for 2020 will be negative with an expected recovery only in 2021.
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The international organisation has also made the obvious point that while it is ready to assist any country given its financial reserves of USD one trillion, emerging markets and low-income countries are impacted severely — one first example being that investors have already removed some USD 83 billion from emerging markets from the time this coronavirus started.
The United States may be a USD 22 trillion-plus economy and maybe in a position to withstand the economic shock of the coronavirus but the general feeling is that America is in for the long haul. The Bank of America has made the point that in 2008 (at the start of the banking crisis and recession) the economy experienced a cumulative recessionary decline in GDP of 4%; but the 2020 recession will be twice as severe in terms of total GDP decline, perhaps as much of a decline as 10%.
President Trump is not the kind of person to admit errors in judgment — after all, he is a genius and a very stable one at that, by his own reckoning. Just at a time when he was waxing in glory about the great economic turnaround he had done for America in terms of economic growth and bringing down unemployment levels, he is now faced with a crisis that need not have precipitated to the extent it has, had he listened to wiser counsel.
Even with a truncated Democratic primary season, a clear nominee yet to emerge and the Democratic National Committee having postponed their convention from July to August, the odds suddenly look stacked against the incumbent Republican who not too long ago looked set for four more years in the White House.
(The writer was a former senior journalist in Washington D.C. covering North America and the United Nations.)