Slow coronavirus spread, fix economy

Austan Goolsbee helped steer the auto recovery under then-President Barack Obama after the financial market collapse in 2008. But the longtime economic adviser said the auto industry's drop in demand from the current economic downturn and public health crisis is more severe than anything he has ever seen.

"Hopefully this is just an external, temporary negative shock to demand — not a normal business cycle," Goolsbee, an economics professor at the University of Chicago's Booth School of Business, told Automotive News. "If so, there should be a fair amount of pent-up demand for cars as we come out the back side of it in a way that there wasn't after the credit-fueled excesses of the mid-2000s."

Goolsbee, chairman of the White House Council of Economic Advisers in 2009-10, said industry rescues depend on economic recovery. During the Great Recession, if the wider economy had not restored demand for buying vehicles, all the auto-industry bailout money "would have been lost," he said.

With the COVID-19 crisis and the $2.2 trillion economic stimulus package, he said it is important to have a framework for who gets money and what they are expected to do with it. But first, the virus' spread must be contained for any industry rescues to work and for the economy to be restored, he said.

"If we could get control on the spread in the next couple of months, we could start coming back out and I think economic growth would be fairly strong," Goolsbee said. "If we don't ramp up testing and don't prevent it from spreading widely, we will be back to square-zero lockdown again and the economy will crater for a long time."