Democrats react to jobless rate: 'Main driver of economic decline is fear' not the shutdown orders

Austan Goolsbee, the former chairman of the Council of Economic Advisers under President Obama, and Democratic National Committee Chairman Tom Perez on Friday defended Democratic governors who kept shutdown orders in place over the coronavirus while many GOP governors began re-opening their economies in May.

The Democrats spoke on a conference call just after the Labor Department announced a lower-than-expected May unemployment rate of 13.3%.

Goolsbee and Perez were asked about the impact that extending the stay-at-home orders in certain states has had on the nation’s unemployment rate. 

“Minneapolis and St. Paul, they had diametrically different responses to the Spanish flu pandemic," Perez said. "Minneapolis shut down. They were very cautious. When you fix the public health, you fix the economy faster. St. Paul said live and let live. They did not do that and the researchers studied which economy fared better, and the answer decisively was Minneapolis.”

Goolsbee argued that the shutdown orders had a "very small, incremental effect on the unemployment rate for the economies.”

“The shutdowns of the economy began many days before those shutdown orders were in place and in places where they're doing the shutdown orders, you're only seeing a modest comeback of economic activity, far smaller than what the drop was,” he said.

“The main driver of economic decline is fear and is people pulling themselves out of the economy because we did not manage the spread of the virus,” he also said.

Perez, a Labor secretary in the Obama administration, criticized President Trump’s response to the coronavirus and called the latest jobs numbers only “a flicker of good news.”

“The original sin of this president in this pandemic was his failures in December, January and February to take this seriously,” he said. “If he had heeded advice he could have lessened the impact of this pandemic.”