The Shrinking US Economy: COVID-19 Recession In Progress

Much has been made about the health impacts of the COVID-19 pandemic. Now its economic effects are coming into focus.

The US economy will shrink by 13% in the next quarter, according to forecasters at Deutsche Bank. Given that so much of our economy is about consumerism, this is a bleak prediction, especially for those who rely on paychecks.

Forget about the stock market. The stock market is NOT the economy. It’s gone up and down since the coronavirus emerged as a threat. Mostly these swings are about the very wealthy cashing out or in to preserve or expand their assets. 

A better measurement is employment. Take home wages are another. And the news there is simply horrible this month.

One in four people with annual earnings less than $50,000 told pollsters that they’d been laid off or had their work hours cut in recent weeks. Overall, 18% of adults in all income brackets were looking at hard times. 

The NPR, PBS NewsHour and Marist survey was taken last weekend encompassing 835 working adults in the contiguous United States.

It’s no longer a question of whether or not there will be a recession. The depth of the economic dive and how long it will last is now central to the discussion.

From Politico:

• “A coronavirus recession is inevitable,” said Josh Bivens, director of research at the left-leaning Economic Policy Institute, in a blog post. He estimated that at least 3 million jobs will be lost by summer. Meanwhile, the U.S. Travel Association was projecting 4.6 million jobs lost this year in the travel industry alone, pushing the unemployment rate up to 6.3 percent.

• The layoffs swept businesses large and small. On Tuesday Marriott said it expects to lay off tens of thousands of workers worldwide. MGM Resorts International on Monday closed 150 restaurants and bars, with more closings to come; Caesars Entertainment Corp. said it also has begun layoffs. In D.C., Compass Coffee, a local Starbucks competitor, laid off most of its 189 employees, and the Dubliner, a popular Irish bar on Capitol Hill, laid off all of them, leaving the place empty on St. Patrick's Day.

On Tuesday, Treasury Secretary Steven Mnuchin warned Republican senators that the unemployment rate could hit 20% if they failed to act on a proposed coronavirus rescue package and there was lasting economic damage, according to Reuters.

The meeting was held to persuade senators to pass a $1 trillion stimulus package, sending cash to Americans quickly and shoring up airlines and other companies.

The official unemployment rate during the Great Recession peaked at 10%; it was at 24% during the Great Depression. Reporting systems have changed over the decades, and I don’t think either of these numbers reflect the trauma inflicted on American families.

On Tuesday, another reality about the current epidemic became obvious. California governor Gavin Newsom let it drop that schools likely are to remain closed for the foreseeable future.

The coronavirus crisis is likely to last 18 months, according to a document produced for the executive branch.

From the New York Times:

• The 100-page plan, dated Friday, the same day President Trump declared a national emergency, laid out a grim prognosis for the spread of the virus and outlined a response that would activate agencies across the government and potentially employ special presidential powers to mobilize the private sector.

You know the one thing that's NOT being talked about with all the federal rescue policies?

How it will be paid for.

***
While Trump's bashing China, they're cashing in thanks to his policies, according to Foreign Affairs.

https://twitter.com/HillaryClinton/status/1240283608121839617?s=20

***
Not since the Russian press tried to justify Stalin's allegiance with Hitler has there been such a massive flip flop.

https://twitter.com/KFILE/status/1240131226268323842?s=20

Hey folks! Be sure to like/follow Words & Deeds on Facebook. If you’d like to have each post emailed to you check out the simple subscription form on the right side of the front page.

Email me at WritetoDougPorter@Gmail.com

Lead graphic c/o the Philadelphia Museum of Art via elPadawan/Flickr