MARY LOUISE KELLY, HOST:
It's the economy, stupid - a line widely attributed to Democratic strategist James Carville. Carville helped run Bill Clinton's winning campaign for president back in 1992. So how much might the 2020 presidential election hinge on the economy, an economy, by the way, with historic levels of unemployment, double-digit contractions in economic growth, large sectors of the economy shut down for weeks, now months, all because of the coronavirus?
Well, it is tempting to think all of that would be an albatross for President Trump, but maybe not so, says Jason Furman, a Democrat, an economist and chair of President Obama's Council of Economic Advisers. He has got a theory that the economy could be a winner for Republicans this fall, and he is here now to make the case. Jason Furman, welcome.
JASON FURMAN: Thanks for having me.
KELLY: So your argument is that, yes, complete economic carnage right now, the economy, the data is dire, but that in the coming months, we could see the best economic data in history. Really? Make the case.
FURMAN: So I'm not a political forecaster. I'll tell you what I think's going to happen in the economy and then can speculate about what it means for the economy. The economy collapsed over a one-month period from mid-March to mid-April. After that, it's gone from very, very, very bad to what on election day will probably just be very bad.
Now, the difference between very, very, very bad and very bad will be four months in a row when we might see more than a million jobs created a month, when we might see the unemployment rate falling really rapidly. And so if you just focus on the most recent data, there will be a case that one can make with a straight face that we're seeing the fastest economic recovery ever.
KELLY: So you're saying the numbers might still actually be bad come fall, but they would be moving in the right direction, if you're President Trump and thinking this might help your reelection prospects.
FURMAN: Yeah. And I don't expect that right direction to last forever because the first phase of the recovery is the fastest part. That's where you turn the lights back on in your business. That's where the furloughed workers get called back. And that can lead to a rapid decline in the unemployment rate, a rapid increase in jobs. Even at the end of that process, you'll still have an unemployment rate in the double digits.
And, you know, what I think a lot of the debate will hinge on is, you know, the unemployment rate is 12, that's terrible, or the unemployment rate has come down really far from, you know, the 20% it was at earlier in the year - isn't that great?
KELLY: Nobody knows what the fall will bring, of course, but it does seem the - an unexpected second wave of the virus would flow - would throw a serious fly in the ointment of this argument.
FURMAN: Yes, a second wave, a large second wave, would make this wrong. It is what most economic forecasters are expecting right now. But I do think, you know, the Great Depression forecasts and the like are setting the bar in the wrong place. We are very unlikely to have something like the Great Depression. We are much more likely to have a very bad recession. A very bad recession is a problem. I think we should be doing everything we can to avoid it. But for some people, you know, there may be a relief that, you know, it will appear as if the worst is behind us.
KELLY: I do - I mean, the politics and the economics are hard to untangle here because we are in an election year and inside of six months from that presidential election. How tricky a spot does this put Democrats in? In the sense that everybody, just about everybody, surely wants the economy to recover - we would all like to see it doing better - but if it does, does that play straight to President Trump's advantage come November?
FURMAN: I think the relevant question for voters in November will be who has a better plan to make the economy better in 2021, 2022, 2023 - who has a plan for infrastructure, for training, for paid leave, you know, whatever it is you think you're going to need for the recovery of the economy on a sustained basis.
KELLY: That is Jason Furman. He's an economics professor at Harvard, and he served as chair of the Council of Economic Advisers to President Obama. Jason Furman, thank you.
FURMAN: Thanks for having me. Transcript provided by NPR, Copyright NPR.
