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Walker Webcast: Mark Zandi Draws Parallels Between 2008 and 2020
Mark Zandi was an early proponent of the view that the market for securitized single-family mortgages was a trouble spot for the U.S. economy. At the time he flagged this sector—2005—housing prices were at a peak and were confidently assumed to be bullet-proof. Therefore, his warning went largely unheeded.
When the Great Recession came to a head three years later, the market for securitized single-family mortgages was widely viewed as one of the main contributing factors and Zandi’s prescience was recognized. These days, the chief economist at Moody’s Analytics is a go-to authority whose insights are frequently sought out by lawmakers and journalists alike. He provided some of these insights Wednesday on the latest in the weekly series of webcasts hosted by Walker & Dunlop CEO Willy Walker.
There are parallels between 2008 and 2020. Then as now, we’re in an election against the backdrop of a downturn, this one brought on largely by the COVID-19 pandemic. And just as in 2008, monetary policy is playing a prominent role in bringing the economy back to full speed.
A key point of difference, though, is the speed with which the Federal Reserve is able to move this time, Zandi said Wednesday. One reason for that is experience. In 2008, “they were inventing things out of whole cloth” to address the recession, such as the Troubled Assets Relief Program and quantitative easing, rather than dipping into an already-stocked toolbox as the present-day Fed is able to do.
Getting out of the current economic ditch will be “tough,” Zandi said, but is likely not to take as long as recovery from the Great Recession. That being said, he ascribed some of the current economic malady to the White House’s policies, which he called “pretty bad.” Even before the pandemic came to the U.S., said Zandi, “they were driving us into a ditch.”
With regard to next month’s election, Zandi’s baseline model entails Joe Biden winning the presidency but Congress remaining divided, an outcome that would maintain the economic status quo. Should the Democrats sweep the national elections and Biden is able to enact the agenda he has outlined, the short-term result will likely be declines in the Dow but these will be followed by longer-term economic gains, said Zandi.
Replays of the Oct. 7 webcast are available by clicking here.
For comments, questions or concerns, please contact Paul Bubny
- ◦Economy
