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Obama’s former economic advisor says Trump is ignoring the most important rule of virus economics — and warns the usual recession playbook is futile against COVID-19

 

Austan Goolsbee, the former economic advisor to President Obama, says “the number one rule of virus economics is that you have to stop the virus before you can do anything about economics.”
Goolsbee says after controlling the virus you need to provide relief so that nobody starves or has to liquidate everything due to a temporary slowdown. He insists that regular stimulus will only be effective after taking these steps.
The economic impact will be worse in the US than in China because America’s economy is more dependent on face-to-face services, according to Goolsbee. 
Goolsbee says Trump is not doing well in terms of credibility in handling this crisis. In dealing with the Great Recession, he remembers Paul Volcker always saying credibility is the only asset you have during a crisis. 
“We’re already in recession,” Goolsbee says, “if we let a short-run downturn… morph into something more permanent, that’s when you talk about depression.”
Visit Business Insider’s homepage for more stories.

Austan Goolsbee is an economics professor at the University of Chicago Booth School of Business and former economic advisor to President Obama. On Tuesday, Goolsbee spoke to Business Insider’s Sara Silverstein about the economic fallout of the novel coronavirus outbreak. Following is a transcript of the video.

Sara Silverstein: We are streaming live from my living room for Business Insider and I’m thrilled to have Austan Goolsbee here via Skype.

Austan is the former economic advisor to President Obama and currently an economics professor at Chicago Booth.See the rest of the story at Business Insider

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