PRO: U.S. economy has overcome recession
By David Ranson
Though the president and first lady weren’t able to dodge the covid-19 bullet, the U.S. economy, we now know, has adapted remarkably well to the pandemic and social distancing. As a result, the worst of the covid-19 recession is over.
Real GDP dropped like a stone in the second quarter (April-June) of 2020, at a record annual rate of 31.7%. The great majority of forecasters did not anticipate that we could recover from such a blow anytime soon — even taking into account unprecedented government largesse.
Their predictions of sustained weakness are being overtaken by events.
Weeks ago the largest component of gross domestic product, consumer spending, already had bounced back to pre-pandemic levels, recovering twice as fast as employment or industrial production. Within just two months, May and June, retail sales had completed a full round trip. In July and August they rose further.
The speed and vigor of the U.S. rebound can be interpreted in two contrasting ways.
One is that federal intervention has been much more effective than expected. There will be no shortage of politicians waiting to take credit for that.
The other is that, collectively, virtually all of the so-called experts underestimated the economy’s intrinsic resilience.
It’s not clear whether government “stimulus” funds add to or subtract from the economy’s resilience.
Relief to those among the newly unemployed who are too pressed to fend for themselves may actually help them become more resilient.
On the flip side, moderate deprivation may be a greater spur to self-reliance, encouraging the unemployed to seek work rather than temporary income from government. Either way, the resilience of the U.S. economy is overpowering the covid-19 recession, which soon could be history.
David Ranson is a research fellow at the Independent Institute and director of research at HCWE & Co.
Con: This is a recession; Republicans need to stop blocking relief
By KAREN DOLAN
Even before the pandemic, nearly 140 million people in this country were poor or low-income. Now, they’re suffering even more acutely than before. I’ve spent the last several months interviewing some of these people as they struggle to make ends meet.
Nearly six months after reopening, the U.S. jobless rate remains stunningly high, and the latest jobs report was worse than expected.
According to a new survey from the Robert Woods Johnson Foundation and NPR, nearly half of all U.S. households report experiencing serious financial instability as a direct result of the current recession. Food insecurity has doubled in the United States, while fully one in three children in renter households is either food-insecure, housing-insecure, or both.
But that doesn’t mean that everyone’s suffering. My colleagues at the Institute for Policy Studies calculate that America’s billionaires have collectively seen their wealth increase by nearly $850 billion, or 29%, since the pandemic started. For the wealthiest among them — Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett and Elon Musk — the increase is closer to 60%.
We are living through what economists call a “K-shaped recovery.” That is, the recovery line for the wealthy is on its way up while the line for everyone else continues to crash downward. In 2017, President Donald Trump and the GOP passed a trillion-dollar tax cut for the wealthy, exploding the deficit and putting a strain on social programs for those already struggling to get by. Most billionaires now pay lower tax rates than working-class Americans, and over half of the stock market is now owned by the top 1% of earners.
Throw in a recession where the lowest-paid workers were the most likely to see their livelihoods vanish and you get an astonishing acceleration of inequality.
Extended and enhanced unemployment benefits lapsed, a federal eviction moratorium ended, and there’s been no more direct cash aid even as the pandemic has ground on. The Democratic-controlled House of Representatives passed another desperately needed relief bill back in May, but the White House and GOP-controlled Senate have taken no action on it.
For all but the wealthiest Americans, this recession is far from over. If we as a country prioritize evidence-based virus safety measures, we won’t just wear a mask and practice social distancing. We’ll pass a robust relief package that helps those who need it most, so we can weather the storm and end the recession for all of us.
Karen Dolan directs the Criminalization of Race and Poverty Project at the Institute for Policy Studies.