“This One Is Scarier”: Obama-Era Officials Say Current Economic Crisis Is Fundamentally Different From 2008Breaking News
tags: Great Recession, coronavirus, 2008 financial crisis
While the 2008 bailout was about getting money to industries and workers to encourage spending, this year’s package is all about giving people enough money to tide them over while the economy is effectively on hold.
As people stay home and social distance to combat the spread of Covid-19, nonessential businesses have been forced to shutter, resulting in mass layoffs that could affect as many as 6 million workers solely in March. The main purpose of a stimulus package is to guarantee these workers (as well as companies, hospitals, and states) the financial support they need as the US attempts to slow the spread of the coronavirus.
The public health component makes this crisis unique — and challenging.
In 2008 and 2009, the core issue that fiscal stimulus was trying to address was a dearth of consumer spending and jobs, prompted heavily by the fallout caused by banks’ handling of mortgage-backed securities. The problem at hand is much tougher to rein in because it requires more than just economic tools; the US must first get the coronavirus under control before it can reopen the economy.
“What we’re seeing is caused by something external to the economy,” Gus Faucher, chief economist of PNC Financial Services Group, told USA Today.
Because of this, the government response has had some key differences. Right now, one of its big focuses is making sure people have the money they need to weather this crisis while businesses are closed.
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