A Respite from the Recession? Not Likely
7/17/20
The extraordinary economic circumstances brought on by the Coronavirus pandemic are dramatically displayed in the above chart showing seasonally adjusted retail sales over the last two decades. Following the unprecedented 14.7% decline in March, retail sales rebounded strongly over the next two months — up 18.2% in April and another 7.5% in May.
Recall that many states and municipalities had instituted lockdowns during March that were later relaxed in April. Equally responsible for the bounce back — if not more so — was the extraordinary amount of fiscal support in excess of $2 trillion that was injected into the economy.
It’s tempting to look at this chart and conclude that the worst is over and that we’re in the process of clawing our way back to normal, but that’s wishful thinking. Without a continuation of federal support at comparable levels to those in effect in April and May, we should expect to see the recession’s severity becoming more pronounced. Add to that the likelihood that increasing numbers of states will be forced to reinstitute at least some public health restrictions that will further constrain economic activity.
Of course, Congress seems likely to pass another stimulus injection, but coming in anywhere near the levels authorized by the earlier CARES Act would surprise me. To be clear, anything Congress passes will mitigate the pain, but the needs of those who have been hit hardest by this pandemic are increasing by the day, and the backlogs of prospective evictions and bankruptcies seem unlikely to be addressed by any prospective legislation. These effects aren’t likely to be reversed in the next couple of months.
The political posturing with respect to the design of any coming stimulus is kind of perverse. In light of the abysmal failure of the Trump response to the public health crisis, you’d think that his only hope for re-election (barring the attempt to restrict voter turnout), would be for the economy to start to exhibit some semblance of a robust recovery in advance of the election. If anyone should be pushing for a massive aid package, it should be Republicans. On the other hand, it’s the Democrats who are looking to enact a more generous package — at the risk of sustaining the economy and making it more difficult for Biden to play the savior.
My aside, above (i.e., barring the attempt to restrict voter turnout) is worthy of further exploration: I’m in disbelief. While plenty of crazies continue to see the pandemic as a hoax and deny the efficacy of social distancing as a way to impede the transmission of Covid 19, I address my comments to the more sane among us.
In light of where we are with this virus, it’s unfathomable to me that any right-thinking person wouldn’t appreciate the need to strengthen and protect the integrity of mail-in balloting as a legitimate and appropriate response to the public health threat that we’re facing. Instead, the Trump administration takes the opportunity to demonize a process that has been used in varying degrees in 46 out of our 50 states. These states have a wealth of experience that we should be calling upon to assure a free and fair election. Instead, Trump chooses to de-legitimize this process, altogether. It’s a transparent effort to suppress the vote. Those who don’t see it that way, don’t want to see it for what it is; and they deserve to be called out as a threat to our democracy.
