- "I think that when we look back at this episode, we will conclude that March 2020 was already a recession month," economist and former Federal Reserve Vice Chairman Alan Blinder told CNBC in a Wednesday interview.
- He also said that a fear of shopping amid the coronavirus outbreak is what is driving the current economic situation.
- In an op-ed published in The Wall Street Journal on Tuesday, Blinder argued that the best stimulus for the coronavirus is testing kits.
- Read more on Business Insider.
The US might already be in a recession, according Alan Blinder, a former Federal Reserve vice chairman and now a professor at Princeton.
"I wouldn't be one bit surprised if when we look back at the data, it is decided ... that the recession started in March," Blinder said in a Wednesday interview with CNBC.
Economists won't know for sure for a while, he added, as "it takes months to get the data that would be relevant to a call like that."
An official recession call from National Bureau of Economic Research takes time - even though the US economy fell into a recession in December 2007, NBER didn't declare the start of the cycle until nearly a year after the fact. The NBER defines a recession as "a significant decline in economic activity, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."
Blinder said that a "fear of shopping" is what's driving current economic panic amid the coronavirus outbreak where schools have been shut down, conferences have been canceled, and many companies are telling employees to work from home.
"You can understand why people don't want to go to movies, restaurants, shopping malls," and travel, Blinder said. "Spending on all of those categories has probably plummeted and much faster than our data system catches it."
Blinder criticized some of the government's communication efforts around the outbreak and argued that the best stimulus for the coronavirus is testing kits in an op-ed published in The Wall Street Journal on Tuesday. Until the public knows the full extent of the coronavirus outbreak, which on Wednesday was declared a global pandemic by the World Health Organization, they will not go out and spend money, Blinder said.
Given that consumer spending is a cornerstone of the US economy, a small decline would be more than enough to trigger a recession, Blinder wrote in the Tuesday piece.
The economist also told CNBC that the best short-term stimulus measures are ones that can be done quickly, including government-subsidized sick leave.
"I think that when we look back at this episode, we will conclude that March 2020 was already a recession month," he said.