The Economy Is Experiencing an Epic Collapse of Demand.

A rip in the fabric of the economy won’t be healed easily, and denial of the severity of the crisis won’t solve it.

Despite it all — a nation on edge, with an untamed pandemic and convulsive protests over police brutality — for the first time in three months there is a scent of economic optimism in the air.

Employers added millions of jobs to their payrolls in May, and the jobless rate fell, a big surprise to forecasters who expected further losses. Businesses are reopening, and the rate of coronavirus deaths has edged down. The Trump administration has begun pointing to what are likely to be impressive growth numbers as the economy starts to pull out of its deep hole.

A Storm is Brewin'

All of that is good news, and far better than the alternative of a continuing collapse in economic activity. But it also creates a risk: distraction and complacency.

You can already sense in the public debate over the economy that people are starting to lose the thread — viewing the slight rebound from epic collapse as a sign that a crisis has been averted. That certainly is the kind of optimism evident in the stock market, which is now down a mere 1.1 percent for the year.

"damage done to millions of interconnections — between workers and employers, companies and their suppliers, borrowers and lenders."

But there are clear signs that the collapse of economic activity has set in motion problems that will play out over many months, or maybe many years. If not contained, they could cause human misery on a mass scale and create lasting scars for families.

The fabric of the economy has been ripped, with damage done to millions of interconnections — between workers and employers, companies and their suppliers, borrowers and lenders. Both the historical evidence from severe economic crises and the data available today point to enormous delayed effects.

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