“our economic survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago Booth School of Business, FiveThirtyEight polled 32 quantitative macroeconomists about the present and future of the economy. And because we couldn’t resist some Monday-morning quarterbacking, we also asked whether the lockdowns earlier in the year were too aggressive or not aggressive enough.
Out of those surveyed, 74 percent of economists said the U.S. would be in a better economic position now if lockdowns had been more aggressive at the beginning of the crisis. Among that camp, the most commonly cited reason was that early control over the virus would have allowed a smoother and more comprehensive return to economic activity later on.”
…
“Proponents of tighter lockdowns pointed to Japan and various European countries (such as Germany, Norway and Denmark) as examples of how reducing the virus to extremely low levels early on allowed for a quicker recovery. Others noted that children could have returned to school for in-person learning faster with earlier control over the virus — a major consideration in maximizing the country’s economic power as it bounces back from the pandemic.
Among the 26 percent who thought lockdowns should have been less aggressive, the main theme was that more good could have been done with a targeted approach that protected at-risk populations and stopped potential superspreading events, while allowing more activity overall. Others thought the lockdowns didn’t even matter much, or that most of the reduced activity was due to individual self-regulation rather than government intervention.”
…
“In the same vein — but this time, looking forward — we asked the economists to imagine a new shutdown had to occur as the result of a spike in COVID-19 cases. Which activities would they shut down first if they also wanted to minimize economic damage? With the caveat that our panel consists of economic experts — not epidemiologists — they clearly prioritized indoor dining (and to a lesser extent, gyms) to be the first shut down, while outdoor dining and recreation were at the bottom of the list “
“The whole “airborne” debate can get very complicated and technical, but the basic issue is simple: Indoor dining is very unsafe. And the outdoor dining that’s been used as a substitute is running out of steam as weather gets cooler across much of the country. For health reasons, we need fewer customers at these businesses. For economic reasons, we need them to survive. The fix is a huge bailout.”
“Already, the current downturn is turning out to be less traumatic for wealthy and well-established people than it is marginalized groups and the poor.
The stock market is soaring, even though millions of people are out of a job. The Federal Reserve has really stepped up in terms of monetary policy to inject liquidity into the economy and keep markets afloat, while Congress hasn’t really kept up its end of the bargain. It passed the Coronavirus Aid, Relief, and Economic Securities Act, or the CARES Act, in March, but much of the support from it has dried up, and it’s not clear what, if anything, Capitol Hill plans to do next on the economy.
“The rich experience these recessions much differently than the rest of us,” Bharat Ramamurti, managing director of the Roosevelt Institute’s corporate power program, told me. “The pain is much more time-limited, it’s not as deep, and as a result, they recover much more quickly, and then they’re in a position to take advantage of the fact that other actors in the economy are still struggling and can use that to further consolidate their control and their power.””
…
“After returning from recess in September, Senate Republicans put forth a “skinny” stimulus to counter a much more ambitious package proposed by Democrats in the House in May. But even the GOP’s bill failed in the Senate — as Vox’s Li Zhou explained, in part because it was more of a messaging bill than a sincere effort at helping the American public. The economy isn’t as bad as some of the doomsday predictions, so some lawmakers seem to have decided more assistance isn’t necessary.”
“in the American system, essentially every law and regulatory undertaking is subject to litigation and second-guessing by the courts. That means Supreme Court appointments have vast and wide-ranging authority over economic issues — authority that is often ignored by politicians and the media, but not by people with money at stake.
The US Chamber of Commerce, for example, did not enthusiastically back Brett Kavanaugh’s nomination because they liked his thinking on abortion, but because they like his hostility toward regulatory agencies. And while progressives often appreciated that Kavanaugh’s predecessor Anthony Kennedy sided with liberals like Ruth Bader Ginsburg on some abortion and LGBTQ rights cases, it’s telling that Kennedy himself — like Sandra Day O’Connor before him — strategically timed his retirement to be replaced by a Republican president and a GOP Senate.”
…
“though the bulk of the law was spared by John Robert’s judiciousness, he did cost millions of people health insurance by inventing a new doctrine (that Congress could not threaten to take away previously provided matching funds to create an incentive for states to accept new matching funds) to block aspects of Medicaid expansion.
What makes Ginsburg’s departure from the bench alarming in this regard is that post-Lopez, essentially all new progressive legislation has been a crapshoot. There’s inevitably a lawsuit to strike down anything, but on any given issue, a Roberts or (more rarely) Gorsuch or Kavanaugh might defect. With a sixth conservative justice, it would be that much easier to stop any new law that you like, since you only need to get five of them. There are many conservative legal theorists — including Thomas on the bench and Georgetown professor Randy Barnett in the scholarly world — who believe that essentially all modern economic regulation is unconstitutional. There are plenty of smart conservative lawyers to write up a brief arguing that any new law should be struck down. As for using old laws to address new problems, well, there’s a fix for that, too.”
…
“Conservative jurists, in other words, are preparing to sharply limit regulators’ ability to promulgate new rules, arguing that each new change in policy should be achieved through the passage of a new law.
That sounds nice, but it’s completely out of touch with how the American political system actually functions.”
…
“the business community and the Supreme Court bar and the conservative legal movement are all well aware that there is a huge economic and regulatory element. Their strategy is to put in place a judicial roadblock to democratic governance of the economy.”
“Erin Suggs applied for unemployment in March as soon as the California salon she works at shut down. She figured her case would be pretty straightforward — she works on commission, meaning she’s counted as a regular employee, not self-employed.
But it took the 50-year-old mother of two more than two months to get her benefits, during which time she estimates she and her husband called California’s Employment Development Department, which administers the state’s unemployment system, upward of 3,000 times. It turned out that in filling out the forms, she checked one box wrong. “It just put me in pending hell for 10 weeks,” she says. “There was no way of fixing it.”
Her experience is hardly unique. In California alone, more than 6 million people, or one-third of the state’s workers, have filed for unemployment benefits, and hundreds of thousands of them have been stuck in a weeks- or even months-long backlog. Meanwhile, nearly 1 million people across the United States continue to file new unemployment claims each week, and some 29 million people are receiving some sort of unemployment assistance. And for many of them, navigating the system has been a nightmare.
The coronavirus has brought home the many shortcomings of the American unemployment insurance system and revealed it to be fundamentally — and often intentionally — broken, chipped away over time to ensure that the jobless don’t use it too much, lest anyone get used to it. Unemployment insurance operates under a hybrid state-federal setup that has resulted in an awkward push-and-pull between the federal government, state governments, and employers. No one quite wants to take full responsibility of it, but everyone wants a say.”
…
” A reimagined unemployment system would treat the jobless like customers, not criminals, while helping them stay afloat as they find their next gig. It would be easier to navigate, pay people more consistently, regardless of where they live, and take into account the wage stagnation of decades past. It would be easier to ramp up in times of crisis and better serve the modern workforce — groups such as gig workers, short-term employees, and people looking for jobs.”
…
“unemployment insurance has never worked super smoothly in the US. The first state in the country to put an unemployment insurance program in place was Wisconsin in 1932, and the federal program became law under the Social Security Act of 1935. It was set up as a mixed federal-state endeavor for reasons that wouldn’t surprise the average political observer today: There was disagreement over what level of government should be in charge of running the program, and proponents of unemployment insurance were nervous it might be undone by the Supreme Court, which had struck down multiple pieces of legislation. The hope was that this model would give it a better chance with the court, and even if the federal component were struck down, the state components could live on.
“It was designed to have this very broken and fractured structure,” Konczal said.”
…
” In the US, unemployment insurance is meant to work by replacing about half of a worker’s wages (up to a certain cap) for about 26 weeks. It is intended for those who involuntarily lost their jobs, meaning they were laid off or fired, and not people who quit. Those who quit their jobs can wind up collecting benefits, namely if they can explain that they did so for good cause, such as experiencing sexual harassment, but it often winds up being a battle adjudicated by the state.
The program is financed through state and federal payroll taxes that are supposed to fund administrative systems and the benefits themselves.
Many states have kept those taxes pretty low, resulting in a system that is chronically underfunded. And during periods of stress, the impact of that underfunding really shows.”
…
“Years of disinvestment in technology and administration led to problems like those now affecting Suggs and millions of unemployed workers across the country. You make one mistake, or your case has one little quirk, and you’re sucked into a bureaucratic black box disaster with no clear end in sight. And then, once the economy gets better, everyone moves on and forgets, and the political impetus to fix these problems fades.”
“The economy is certainly improving: The August report shows that the labor force participation rate increased a bit and millions more furloughed workers returned to their jobs.
But there are a bunch of clues in this month’s report that the growth we’re seeing now isn’t as robust as it looks, and that it probably isn’t sustainable without a dramatic change in public health conditions:
A significant chunk of the jobs gained in August were added thanks to a once-in-a-decade phenomenon that has nothing to do with the current recession — a slew of temporary hiring for the U.S. Census.
Private-sector job growth is slowing overall, and the industries that were hit hardest by the pandemic — like leisure and hospitality — appear to be stalling out well below their pre-pandemic peak.
Getting people back to work will likely be harder and harder in the coming months, because a growing share of unemployed people have lost their jobs permanently.
The recovery is arriving faster for some groups than others — which means that workers of color, in particular, are still suffering much higher levels of unemployment than white workers.”
“Six months ago, public health experts were arguing that if the United States set up robust surveillance testing, contact tracing, case isolation, and rigorous mask usage, a version of economic normalcy could return without incurring grave risks to human life. Looking across the globe, this seems to be correct — many countries have achieved much better outcomes in terms of less loss of life without incurring any clear economic cost relative to the United States.
At the same time, the view (once widespread among economists) that failing to control the outbreak would necessarily have dire economic consequences looks like it may have been overstated. While the US public health situation looks terrible in an international context, the economy is going okay.”
…
“Had the country spent May and June pursuing a strategy to suppress the virus, we might have been able to reopen most things in July and August and enjoyed a strong economic rebound without too much danger to public health. That didn’t happen. But despite the lost opportunity to contain the virus, the economy did rebound sharply once restrictions began to lift. The CARES Act not only met urgent humanitarian needs during the period of maximum business closures, it also led the economy to behave like a bouncy ball: Even as economic activity collapsed, household finances did not, so when it became easier to go out and spend money, people did — and rapid economic growth ensued.”
…
“we’ve gotten back only half the jobs lost earlier in the pandemic, and the 8.4 percent unemployment rate is still awfully high.
But the current job growth really is fast.”
…
“One boring technical problem is that people who are on temporary furlough from their jobs are supposed to report themselves as unemployed if a Bureau of Labor Statistics surveyor calls. But many people in this situation, not being experts on labor market statistics, are evidently not doing this. So the real unemployment rate is higher than the official one.
A more serious conceptual issue is that ideally, it would be useful to distinguish between people who are unemployed because they work at a movie theater in a city that won’t let movie theaters open and people who’ve actually lost their jobs on a permanent basis.”
…
” the improvement in the labor market situation has largely been the result of furloughed workers going back on the job. But while temporary furloughs continue to be a factor in the economy, Furman writes, “Even if individuals on temporary layoff returned to work very quickly, the United States would still have a recessionary level of unemployment for some time to come.””
…
” if you’re still unemployed, you’re out of luck. And if you’re a low-wage worker, you’re probably gaining nothing from the stock market, you’re taking a big risk with your health every time you report to the job, and the elevated pool of unemployed workers means you have little leverage to bargain for better pay and working conditions.”
…
“Even worse, as Ford School economist Justin Wolfers points out, the inflation rate has shifted in unusual ways that are unfavorable to low-income people: “People are buying more of the essentials, like groceries, forcing their prices up. And they’re buying fewer airline tickets and less gasoline and clothing, pushing those prices down.”
For white-collar workers with comfortable incomes, the rising price of food is offset by reduced spending on travel and dining out, and in many cases, office workers are no longer burning gas by commuting. But for lower-income workers who always dedicated a larger share of their income to groceries, this is just bad news.”
…
“The other factor impacting Americans unevenly is the closure of schools in many jurisdictions. For older kids, online learning is a drag. For younger kids, it’s a huge drag on parents’ attention — especially for mothers — or a new source of expense as more affluent parents hire nannies to assist with visual learning. And for younger kids whose parents have to work outside the house and can’t afford child care, it’s an educational disaster.”
…
“he Treasury Department stages bond auctions of various kinds from time to time to finance the federal deficit, and on August 20 it held an auction for what’s known as the 30-year Treasury Inflation-Protected Security. This is a bond that pays interest for 30 years. But rather than a flat interest rate, it promises to pay the owner the rate of inflation plus some interest — hence “inflation-protected.”
The price that emerged from the auction was negative 0.272 percentage points.
The buyers of these bonds, in other words, are guaranteeing themselves financial losses. It sounds weird, but negative interest rates have been popping up from time to time in various places for years now”
…
” it’s clear that there is some level of economic hardship out there, and it’s equally clear that addressing the hardship is extremely affordable. Reasonable people can disagree about what, exactly, would be best to spend money on — or what taxes would be best to cut — but it seems pretty clear that a big increase in the deficit is extremely affordable. So as long as we could find even slightly worthwhile uses of the money, we’d be better off.”
“the belief is that when the government takes a dollar out of your pocket, puts that dollar through the political process, and decides where to spend it (based on input from special interest groups), the economy will somehow return more money in growth than the money invested, even after Washington bureaucrats take their cut. It’s magic! Sadly, these arguments ignore recent empirical evidence that the costs of increased government spending far outweigh the benefits to the economy.
For starters, contrary to the claims of pro-government spending proponents, economists are far from having reached a consensus about the actual return on government spending. While some economists find that a dollar spent by the government generates more of a return than the dollar spent, others find that the return is less than one dollar. And yet others find that if you take into account the future taxes needed to pay for the dollar that’s spent, the multiplier is actually negative, and the economy takes a hit.”
…
“there are narrow cases when government spending can stimulate the economy, but for that to happen, the environment in which the spending takes place is important. Work by economists Ethan Ilzetzki, Enrique Mendoza, and Carlos Vegh on the impact of government fiscal stimulus shows that it “depends on key country characteristics, including the level of development, the exchange rate regime, openness to trade, and public indebtedness.” Many other economists have found the same. Unfortunately for the proponents of fiscal stimulus, the United States has the features of a country where stimulus by spending does have an impact and, in fact, can have a negative impact on growth.”
…
“even if you had a country with little debt and the right environment, implementing the spending correctly is a key to getting a multiplier that’s larger than one. As former Treasury Secretary and former Director of the National Economic Council Larry Summers has explained, stimulus spending needs to be timely, targeted, and temporary. Unfortunately, evidence from the last recession shows that it rarely is.”
“When President Donald Trump imposed 10 percent tariffs on imported aluminum in March 2018, it was (predictably) American aluminum-consuming companies that suffered the most.
Companies like Whirlpool Corp., for example. The appliance manufacturer—which had previously been a cheerleader for Trump’s tariffs on imported washing machines—saw its sales and stock prices tumble in the months after Trump’s aluminum tariffs took effect, as the import taxes added to the company’s input costs. It takes a lot of aluminum to build a washing machine, after all.”
…
“Those tariffs had been lifted in 2019 as Trump sought to negotiate the United States–Mexico–Canada Agreement (USMCA), which officially took effect last month. But with the new trade deal in place, Trump has quickly returned to his old tricks. “Canada was taking advantage of us, as usual,” he said Thursday during a largely off-the-cuff speech at the plant. The new tariffs are slated to take effect on August 16.
Ostensibly, the justification for reimposing these tariffs is the claim that imports have increased dramatically in recent months. In reality, that’s a bunch of nonsense. The Aluminium Association says the claims of a surge in aluminum imports “are grossly exaggerated.” In fact, aluminum imports from Canada are below 2017 levels—the last year before Trump’s first round of tariffs took effect.
And even if aluminum imports were increasing, that’s not something to get upset about. The United States literally does not produce enough aluminum to meet its domestic needs, so imports are essential for supporting the 97 percent of American aluminum industry jobs that are in downstream production. And when more aluminum—or anything else—is traded back and forth between the United States and Canada, both countries benefit from the transaction. That’s how trade works.
It’s not exactly clear what Trump hopes the reinstated tariffs will accomplish, but the one thing that should be obvious is that American aluminum-consuming industries will once again be punished by the president’s trade policies.”