Robert Shiller: "COVID-19 is Different from the Great Depression... Fear Could Drive Us into a Panic"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Robert Shiller, a Nobel laureate in economics and a professor at Yale University, diagnosed that the fear of the novel coronavirus infection (COVID-19) could drive the economy into an excessive state of panic.

On the 12th (local time), Professor Shiller appeared on the US CNBC program 'Trading Nation' and said, "This is not the same as the Great Depression of the 1930s," adding, "The Great Depression lasted for 10 years, and until it ended, the unemployment rate in the US never fell below 12%." He said, "This time it is a pandemic. It is not an issue that will last for 10 years. It will end in one or two years."

Professor Shiller, who has studied how the psychology of economic agents affects financial decisions, said, "A shortage of supplies generally becomes terrible news that drives us to the edge," adding, "This could mean that people will not go to restaurants or sports events for years. The issue of disease may not disappear for years from now."

He particularly saw that this phenomenon could impact the employment market. Professor Shiller warned, "People are afraid of the talk that the unemployment rate will soon rise to a very high figure like 20%," adding, "This psychological structure can become a self-fulfilling prophecy." He added, "The job market is more difficult than the stock market. The unemployment rate tends to rise quickly and then fall slowly," and "It will take years for employment levels to fully recover."

Professor Shiller expressed no doubt that the recession caused by COVID-19 will be quite severe and predicted that it will take considerable time for the economy to recover to the pre-COVID-19 peak, including the employment market.

This content was produced with the assistance of AI translation services.