April 8, 2020 — A reporter asks: Can this situation be compared to the Great Depression? Or any other historical parallel that you can refer to?
My answer: The coronavirus recession this year is set to be worse than the Great Recession of 2007-09, is unprecedented in its suddenness, and is likely to show the deepest economic trough since the Great Depression of the 1930s. The most natural precedent is the global influenza pandemic of 1918-20, which has been estimated to have caused negative growth of 6% in the typical country, in a recent paper by Robert Barro, Jose Ursua, and Joanna Weng.
My best guess is that the subsequent recovery time from the 2020 recession will not be as long as the Great Depression and perhaps not even as long-lasting as the recovery from the Great Recession of 2007-09. My instinct is that once the number of infections peaks and falls to low numbers, workers will eagerly go back to work, consumers will release pent-up demand, and firms will re-stock inventories. I know that some others disagree. I could easily turn to be wrong about the speed of recovery, especially if the contagion returns after people start going back to work. But that is my guess.
[“Recession or depression? Two Harvard economists anticipate what the rebound of the economic crisis will be like,” interview (in Spanish) for La Nación, Argentina, April 8, 2020.]