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Ok friends. It's a Thursday afternoon of a holiday-shortened week, and it's 16 weeks since my household was first told not to come into the office anymore, and now seems a good time for a "where are we in this economic recovery" thread. So let's go. 1/
Back in March, huge parts of the American economy shuttered, as the coronavirus spread rapidly and gov officials moved to restrict economic activity. The idea then was, turn the economy off until it's safe to turn it back on again. https://www.nytimes.com/2020/03/22/us/politics/coronavirus-economy-shutdown.html 2/
By the end of March, Congress had passed trillions of dollars in assistance to people and businesses. Historic waves of Americans were thrown out of work. A recession was upon us.
In mid-April, we started to climb out of it. 3/
In mid-April, we started to climb out of it. 3/
Thanks in part to gov stimulus checks, consumers started spending more money. Businesses, especially restaurants and other hospitality firms, started to figure out how to sell in a lockdown environment. By early May, states were lifting economic restrictions. Hiring resumed. 4/
(Quick aside: There's important evidence from @Austan_Goolsbee & @ChadSyverson that fear of the virus was the big chill on econ activity, and shutdowns far less so. Keep that in mind.) 5/
By late May, though, a lot of real-time economic data were showing the pace of improvement in the economy was slowing. The "v" was plateauing even in reopening states, for small biz openings, some credit card spending, etc.
That's all before Wave 2 of the virus hit. 6/
That's all before Wave 2 of the virus hit. 6/
When infection rates began to rise again in late June, the real-time data showed the economy starting to backslide: https://www.nytimes.com/2020/07/01/business/economic-recovery-virus-surge.html
But the June jobs numbers were strong! Which brings us to where we are right now. 7/
But the June jobs numbers were strong! Which brings us to where we are right now. 7/
What the data suggest is we probably have a rocky few months ahead of us, filled with uncertainty. There are already a lot of businesses that have closed for good. There are some industries that will struggle to reopen so long as consumers are scared of infection. 8/
CBO is forecasting a second-half rebound, but a slower one than it saw in May.
The risks are rising of permanent damage to the economy and to workers, depending on how these next few months play out. 9/
The risks are rising of permanent damage to the economy and to workers, depending on how these next few months play out. 9/
It's all because Americans still fear the virus.
We still don't have the scale of testing that economists like @paulmromer have called for, or a big national test and trace system. 10/
We still don't have the scale of testing that economists like @paulmromer have called for, or a big national test and trace system. 10/
We don't have systems in place to handle school or child care in the fall, which is a barrier for Black and Hispanic women, in particular, to return to work, per Census analysis by @ernietedeschi.
We're not close to giving ppl confidence in safety, so we're not 'normal' yet. /11
We're not close to giving ppl confidence in safety, so we're not 'normal' yet. /11
Monetary and fiscal policy have kept things from being much worse, thus far. Lawmakers have worked together to make the crisis much less bad.
Congress faces key deadlines this month with lots of unresolved issues.
/12
Congress faces key deadlines this month with lots of unresolved issues.
/12
We didn't wait to turn the economy back on until it was safe, and so now we're trying to plow through until there's a vaccine or some other way to reassure people.
So that's where we are: Better than it could have been, but still not normal. Not close.
/fin
So that's where we are: Better than it could have been, but still not normal. Not close.
/fin
