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Putin had grand plans for the spring, including a constitutional change that would let him remain in power into his 80s. Then the coronavirus hit. Now, Russia has more cases than any country except the US.

Consumption and hiring started to tick up in gross terms, not in net terms, Furman said, describing the phenomenon as a partial rebound. The bounce back can be very very fast, because people go back to their original job, they get called back from furlough, you put the lights back on in your business. Given how many people were furloughed and how many businesses were closed you can get a big jump out of that. It will look like a V.

Furmans argument is not that different from the one made by White House economic advisers and Trump, who have predicted an explosive third quarter, and senior adviser Jared Kushner, who said in late April that "the hope is that by July the country's really rocking again." White House officials were thrilled to hear that some of their views have been endorsed by prominent Democrats.

I totally agree, Larry Kudlow, head of the White House National Economic Council, replied in a text message when asked about Furmans analysis. Q3 may be the single best GDP quarter since regular data. 2nd half super big growth, transitioning to 4% or more in 2021. He called Furman, whom he said he knows well, usually a straight shooter. Hats off to him.

I have been saying that on TV as well, said Kevin Hassett, a top Trump economic adviser, who pointed to a Congressional Budget Office analysis predicting a 21.5 percent annualized growth rate in the third quarter. If CBO is correct we will see the strongest quarter in history after the weakest in Q2.

Peter Navarro, a Trump trade and manufacturing adviser who's a Harvard-educated economist, called the high unemployment America is currently facing "manufactured unemployment, which is to say that Americans are out of work not because of any underlying economic weaknesses but to save American lives. It is this observation that gives us the best chance and hope for a relatively rapid recovery as the economy reopens."

(Asked about his new fans in the White House, Furman responded, They get the rebound part, but they dont get the partial part.)

A rebound wont mean that Trump has solved many underlying problems. Since the crisis started, many employers have gone bankrupt. Others have used the pandemic to downsize. Consumption and travel will likely remain lower. Millions of people in industries like hospitality and tourism will need to find new jobs in new industries.

The scenario would be a major long-term problem for any president. But before that reality sets in, Trump could be poised to benefit from the dramatic numbers produced during the partial rebound phase that is likely to coincide with the four months before November.

That realization has many Democrats spooked.

In absolute terms, the economy will look historically terrible come November, said Kenneth Baer, a Democratic strategist who worked in a senior role at the Office of Management and Budget under Obama. But relative to the depths of April, it will be on an upswing 12 percent unemployment, for example, is better than 20, but historically terrible. On Election Day, we Democrats need voters to ask themselves, Are you better off than you were four years ago? Republicans need voters to ask themselves, Are you better off than you were four months ago?

One progressive Democratic operative pointed out that recent polling, taken during the nadir of the crisis, shows Joe Biden is struggling to best Trump on who is more trusted to handle the economy. Trump beats Biden on the economy even right now! he said. This is going to be extremely difficult no matter what. Its existential that we figure it out. In any of these economic scenarios Democrats are going to have to win the argument that our public health and economy are much worse off because of Donald Trumps failure of leadership.

The former Obama White House official said, Even today when we are at over 20 million unemployed Trump gets high marks on the economy, so I cant imagine what it looks like when things go in the other direction. I dont think this is a challenge for the Biden campaign. This is the challenge for the Biden campaign. If they cant figure this out they should all just go home.

The Biden campaign seems to recognize the challenge. The way that Biden talks about the economy is not just tied to the Covid crisis, its also about the things that Donald Trump has done to undermine working people since the day he took office, said Kate Bedingfield, Bidens deputy campaign manager. But secondly, its also highly likely that under any economic circumstances in the fall, Trump is likely going to be the first modern president to preside over net job loss.

Between now and Election Day, there will be five monthly jobs reports, which are released on the first Friday of every month. The June report, covering May, is likely to show another increase in unemployment. But after that, Furman predicts, if reopening continues apace, the next four reports could be blockbusters. You could easily have 1 to 2 million jobs created a month in those four reports before November, he said.

He added, And then toward the end of October, we will get GDP growth for the third quarter, at an annualized rate, and it could be double-digit positive economic growth. So these will be the best jobs and growth numbers ever.

Furman noted that there is one major obvious caveat: If theres a second wave of the virus and a really serious set of lockdowns, I wouldnt expect to see this. But I think the most likely case is the one I just laid out.

When Obama ran for reelection in 2012, during the recovery from the Great Recession, he was able to point out that the unemployment rate was dropping about 1 point every year. But in a V-shaped recovery it would be much faster. The Trump argument will be hes producing the fastest job growth and fastest economic growth in history. If he has any ability to do nuance he would say, We are not there yet, reelect me to finish the job, Furman said. The Biden argument will be the unemployment rate is still 12 percent and even with those millions of jobs we are still down 15 million jobs and the only way for this to be fixed is new economic policies.

Austan Goolsbee, a predecessor to Furman as chairman of the Council of Economic Advisers in the Obama White House, said the recovery would be more like a reverse check mark, rather than a V, and that Biden and Democrats would need to point out that the explosive numbers predicted for the late summer and fall will not erase all of the damage.

I view it as Trump left the door open and five rats came into the kitchen and youre going to brag, Look I got two of the rats out? Goolsbee said. Theres a high risk you look completely out of touch if you still have double-digit unemployment rates.

Sen. Chris Coons (D-Del.), who is close to Biden, said he's been studying numerous economic forecasts and isnt convinced a V-shaped rebound is certain. It seems pretty unlikely to me that were going to have a really robust recovery in the next few months, he said. Of course, we all hope there will be. Frankly, no matter what the recovery looks like, I expect President Trump to either take credit for things he had nothing to do with or to avoid blame for things he helped cause.

Furman is an economist, but he had some strategic advice for the Biden campaign. Dont make predictions that could be falsified. There are enough terrible things to say you dont need to make exaggerated predictions, he said. The argument that we are in another Great Depression will look like it was overstated. Trump can say, Two million deaths didnt happen, Great Depression didnt happen, we are making a lot of progress.

Read the rest here:
The general election scenario that Democrats are dreading - POLITICO