“The problem is everyone in America is cutting back their consumption,” said Jason Furman, who led the Council of Economic Advisers during the Obama administration. “A lot of sectors are being hit, especially the services sector. A lot of income and spending is being reduced. That’s just an enormous shock to the economy.”
The economy has weathered numerous painful recessions and previous shocks, including natural disasters and terrorist attacks. But what’s different this time is the speed of decline and the comprehensive economic hit caused by an unpredictable health scare that interferes with Americans’ ability to produce and consume.
By the end of this month, the global economy probably will have shrunk by 1.2 percent — “not far short of the 1.6 percent drop in world output seen at the depth of the global final crisis” in the fourth quarter of 2008, according to Capital Economics in London. As the United States reels, Europe and Japan are also probably in recession.
“This is like a hurricane happening everywhere simultaneously for months and months on end,” Furman said.