Economist Gary Shilling Warns Quick Recovery ‘Not Realistic’: Coronavirus ‘Most Traumatic Event in the World Since World War II’

Hoping for a quick economic recovery after the coronavirus is “not realistic,” economist Gary Shilling told Bloomberg TV on Monday. He added that the worst may still be ahead.

“I think it’s going to be very slow,” Shilling told Bloomberg Daybreak host Francine Lacqua. “This is like 1929 … stocks rallied 40 percent after the initial fall, 52 percent retracement. But then, as people appreciated the depths of the depression, it fell another 86 percent, [totaling] 89 percent decline.

“I think we are in a similar pattern, and the idea of a V-recovery is not realistic. The idea of the destruction of supply chains, factory disruptions, I think the recession is going to stretch into next year and we’ll probably have a very slow recovery,” Shilling added. “It could take years to fully recover. This is the most traumatic event in the world, in my opinion, since World War II, and equally disruptive.”

Shilling, who presently has his own firm, A. Gary Shilling & Co., previously worked for Merrill Lynch, where he served as chief economist. He also said that recovering after pandemics can take “decades,” but that federal stimulus funding may aid in shortening that period.

“I do not think the consumer is going to stay in the doghouse forever, but people are very, very cautious about going out,” he said. “After pandemics … you find a very slow, drawn-out recovery. It actually favors labor, because you tend to store more labor than you have capital. But it really can take decades before you are completely recovered. I do not think it will take that long because of the massive underlying stimuli this time, but I just do not see the consumer roaring back. People are getting used to being at home, doing things they did not do before.”

Hershey Company President and CEO Michele Buck echoed Shilling’s sentiment in an earnings call last month, telling investors that the economic implications of the coronavirus were unprecedented. “While comparisons can certainly be drawn to weather-related disruptions or natural disasters or recessions, the reality is that we have never seen so many factors at play at the same time on such a global scale.”

The real unemployment rate in the U.S. stood at 22.8 percent in April, according to Bureau of Labor Statistics data. Asked in a Sunday interview whether the country’s true unemployment was closer to 25 percent, Treasury Secretary Steven Mnuchin said, “We could be.”

Watch above via Bloomberg.

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