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Regarding the Summers "overheating" comment, I agree that a large part of this recession is a pandemic-driven, sectoral contraction. But as work by @IvanWerning, M.Woodford, @alpsimsek_econ, and others showed this year, it is hard to get a pure supply-shock recession. (1/n)
The spillovers from the large supply shock can bleed into AD shortfalls as well. How much so I don't know. But what I can say and point to is changes in consensus forecasts for the dollar size of the economy as evidence that the recession is more than a sectoral one...(2/n)
If this were a pure sectoral recession with no lasting damage, we wouldn't expect the dollar size of the economy to be materially altered. However, the change in the Blue Chip consensus forecast over the past year shows a sustained $1.5+ trillion reduction thru 2030...(3/n)
In percentage terms, the dollar size of the economy will be permanently about 5% less over the next decade. (4/n)
Now maybe these forecasts will be revised up next year when the alleged 2021 boom arrives. But they are currently supported by evidence from TIPS breakevens which show no sign of 'make-up' inflation over the next five years. (5/n)
Returning to the "overheating" comment, I can't see it happening in an economy on track to be 5% lower in dollar size than forecasted in 2019. I agree, though, relief targeted at those in need makes more sense. So while checks aren't great, they're not inflationary either(end)