By any reckoning, the coronavirus pandemic will be at least a temporary body blow to the U.S. and global economies. The debate among forecasters is whether unemployment this summer will peak at 15%, which is much worse than after the 2008 financial crisis, or soar to new records above 30%.

The real question is what happens after the pandemic subsides. Will the recovery expected later this year be a “V-shaped” rebound that’s almost as steep and fast as the March collapse?

That’s what many forecasters predict, and it seems intuitive. But Nicholas A. Bloom, a professor of economics (by courtesy) at Stanford Graduate School of Business and a senior fellow at the Stanford Institute for Economic Policy Research, who has spent years tracking “uncertainty shocks,” isn’t so optimistic.

Not only will this downturn be worse than what followed the financial crisis of 2008, he says, it could rival the Great Depression.

“People may end up calling this the Greater Depression,” Bloom says. “I think the drop will be comparable to the Depression. The only question is about the rate of recovery.”

A five-year downturn?

The problem, Bloom says, is that the aftershocks of the COVID-19 collapse are likely to last much longer than most people expect. It could take five years, he warns, before economic output climbs back up to where it was in February 2020.

The all-time record for U.S. unemployment was 24.9% in 1933, during the depths of the Depression. In the brutal recession of 2008 and 2009, after the financial crisis, unemployment peaked at 10%. By contrast, the pandemic could at least briefly push the jobless rate to entirely new heights. Indeed, economists at the Federal Reserve Bank of St. Louis have warned that 47 million people could be thrown out of work and that the unemployment rate could hit 32% by this summer or fall.

Bloom agrees with other forecasters that the economy will start bouncing back later this year. After what could be months of sheltering in place, consumers will have huge pent-up demand and businesses will want to ramp up to meet it.

Brace for aftershocks

But Bloom says the aftershocks of the pandemic—what he calls the “second moment” shock—could greatly inhibit that rebound. The most immediate aftershock is likely to be an extended bout of uncertainty and risk avoidance. Having just experienced a jaw-dropping downturn, Bloom says, businesses are likely to remain cautious for much longer than usual about ambitious new projects. Consumers are likely to be wary, too, especially those who lost a big share of their earnings in 2020.