What Do We Call a Deliberately Engineered Recession?

For indispensable reporting on the coronavirus crisis and more, subscribe to Mother Jones' newsletters.

Heather Long writes about the $2 trillion coronavirus rescue bill:

The good news is the majority of the money is going to laid-off workers, small business owners, hospitals and state and local governments. The bad news is it won’t be enough to stop a recession. And it’s an open question whether the nation can avoid an economic depression, the likes of which haven’t been seen since the 1930s.

I continue to be a little perplexed about this. Is it really a recession if it’s caused by the government stepping in and literally ordering businesses to reduce their output? Technically, I suppose so. GDP goes down, employment goes down, and consumption goes down. Those are all the markers of a recession.

And yet . . . help me out here. It’s not the same thing, is it? Or am I missing something? It almost seems as if there ought to be another name for a deliberately engineered economic slowdown like this one that will end just as soon as the government orders it to end. Take this, for example:

It’s apparently true that real estate investors are in panic mode right now, but it’s not so much because the value of real estate has truly plummeted; it’s only because deals are frozen due to government lockdown orders.¹ Nobody wants to buy while the coronavirus lockdown is in effect, which means that technically markets are in freefall. This is bad news for those who are unlucky and have to sell right now, but for most real estate owners it doesn’t mean anything much at all. There might be some footnotes that have to be added to their balance sheets, but they’re temporary and affect nothing. They just have to ride it out for a few months. In a real recession, you’d be afraid that your holdings have lost value forever.²

So what do we call this? A fauxcession? A coronacession? A pandemicession? Any ideas?

¹There are probably exceptions, of course. For example, the chart suggests that the value of senior housing is down the most, which makes sense. It’s all a bit ghoulish, but if the coronavirus ends up killing a lot of the elderly, then there will be less demand for senior housing and its value will decline.

On the other hand, why would anyone think that student housing is down 30 percent in any real sense of the word? When the pandemic ends, there are going to be just as many students as there were before.

²Or, to be more accurate, for an indeterminate but longish time.

THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.