Many Americans received a $1,200 stimulus check followed by an additional $600 check. But that’s hardly enough to weather the financial storm wrought by the coronavirus pandemic, a Stanford University economist who studies financial networks told Insider. 

Instead, the US needs a “New New Deal,” or a set of expansive government programs and reforms to help cash-strapped, jobless Americans and struggling businesses, said Matthew Jackson, Stanford economics professor and author of “The Human Network.” 

There are currently more than 17.8 million Americans receiving unemployment benefits, which works out to more than 1 out of every 10 working age adults. 

“I think to really get the economy running again, we’ll need either some sort of New New Deal or we’ll just have to wait a decade or more [for the economy to recover]” Jackson said. 

The US government has already extended trillions of dollars worth of relief through direct payments, emergency loans, and strengthened unemployment insurance under the CARES Act.  

But that’s hardly enough, the economist argued. 

“The size of those checks, you know, they’re on the order of part of a month’s rent or a month’s rent, they’re not the kinds of things that are going to last people through long-term unemployment,” he said.

Americans may need more cash assistance, he said. 

The economist is referring to Franklin D. Roosevelt’s series of programs and reforms instituted in the late 1920s and 1930s after The Great Depression. These programs included the creation of the Civilian Conservation Corps, which employed young men between 18 and 25 years of age in parks and conservation work, the Civil Works Administration, which gave unemployed people work ranging from highway repairs to teaching, and the creation of Social Security, or financial support for Americans who are elderly or disabled. 

Jackson noted that the coronavirus pandemic is different from The Great Depression. In fact, he said, it’s worse.

The Great Depression had numerous sector slowdowns, like finance and farming, but it did not have any sectors so dramatically closed like we do today with the restaurant, tourism, airline, and sporting events industries, he said. And while The Great Depression started with the stock market crash of 1929 and eventually led to a slowdown in demand from consumers, today, the economy is starting out with a substantial loss in production, amounting to a partial shutdown of the economy, which is worse. 

“A shutdown of the economy is really unprecedented in modern times. All the time and labor that could have been producing things, that’s gone. And that’s a real loss to the economy,” he said. Gross domestic product for countries across the globe will dip, he added. 

The crisis will likely require much more government intervention, Jackson said. 

“We’ll have to figure out how to first provide a safety net for people so that they get to a place where they can return to work and spend money,” he said. 

Businesses will need more capital in the form of forgivable loans so they can keep paying their employees while they’re out of work, the economist said. 

“When people are out of work, they don’t spend, and when they don’t buy things, then businesses won’t be rehiring people,” he said. 

Jackson said policymakers need to continue to “get creative” with solutions, or consumers could begin defaulting on their loans, mortgages, and other payments. He warned of a global financial crisis similar to the 2007 subprime mortgage crisis if government intervention is minimal.  

“That’s the other shoe that’s going to drop at some point in the future, when businesses, consumers, and even countries start defaulting,” he said. “Sovereign countries won’t be able to pay their bills.”