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No, the Recession Isn’t Over—and It’s About to Get Much Worse for Some

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No, the Recession Isn’t Over—and It’s About to Get Much Worse for Some

As Tuesday’s chaotic Presidential debate shifted to a discussion about the U.S. economy, President Donald Trump and former Vice President Joe Biden seemed, yet again, to be operating in different stratospheres. As Trump boasted—without corroborating evidence—that “our country is coming back incredibly well” from the economic shutdown precipitated by the coronavirus pandemic, Biden countered that…

No, the Recession Isn’t Over—and It’s About to Get Much Worse for Some

As Tuesday’s chaotic Presidential debate shifted to a discussion about the U.S. economy, President Donald Trump and former Vice President Joe Biden seemed, yet again, to be operating in different stratospheres. As Trump boasted—without corroborating evidence—that “our country is coming back incredibly well” from the economic shutdown precipitated by the coronavirus pandemic, Biden countered that the recovery hasn’t been so simple.

Though some measures indicate revival, he argued, the growth has primarily been concentrated in the stock market, where gains are made by people who have funds to invest. “Millionaires and billionaires like him in the middle of the COVID crisis have done very well,” Biden said. “But you folks at home, you folks living in Scranton and Claymont and all the small towns and working class towns in America, how well are you doing?”

This exchange was largely drowned out by other arguments in the turbulent conversation. But Biden’s rhetoric hit on a theme that economists have been warning about for months: that America’s economic recovery from the coronavirus pandemic has been “K-shaped,” or mainly benefitting the affluent. American billionaires saw their wealth skyrocket by $282 billion between mid-March and mid-April, according to an analysis by the Institute for Policy Studies. Interest rates are down, allowing people who own their homes to refinance their mortgages. Those with jobs that provide 401Ks have seen their account balances rise to near pre-pandemic levels. Even pandemic-fueled price changes have tended to reduce the prices of goods and services that mostly benefit people who have money to burn; new cars, travel, and food delivery services have gotten cheaper.

Then there’s what’s happening to millions of less fortunate Americans. During the same March to April time period that saw billionaires’ gains spike, more than 22 million Americans lost their jobs. Those numbers have recovered somewhat, but the unemployment rate was still 8.4% in August—more than double the 3.5% before the pandemic hit. Eight million more people are unemployed today than were jobless in February. The same price shifts that made luxuries like food delivery cheaper have caused the inexpensive grocery store items that poor households rely on to become pricier.

The pain shows little sign of abating for this unlucky group; in many ways, it’s just getting worse. This week alone, Disney laid off 28,000 workers, and hundreds of thousands of airline workers could face a similar fate if Washington does not renew a federal assistance program that has been keeping the embattled industry afloat. Congress is still struggling to come to an agreement on the next coronavirus relief deal, even as several of the key programs serving as an economic lifeline have expired. One of the food assistance programs that was quickly rolled out to help children hit by the coronavirus-induced economic crisis is slated to end in several states this week. Evictions, which have been temporarily paused for most people who have been financially affected by the virus, will kick off again in the dead of winter.

This inequitable economic recovery can partially be blamed on Congressional inaction. Rare bipartisan camaraderie behind emergency relief efforts ended soon after Congress overwhelmingly passed a $2.2 trillion relief package in March. House Democrats subsequently passed a $3 trillion package in May, which would have extended many of these programs, but Senate Majority Leader Mitch McConnell refused to vote on it, dismissing it as a “liberal wish list.”

The White House began negotiating with Democrats in July, but have been unable to reach an agreement on another round of relief since. As frustration has mounted within the Democratic caucus and the pandemic continued to rage across the country, Democratic leadership unveiled a pared down proposal and House Speaker Nancy Pelosi continues to confer with Treasury Secretary Steven Mnuchin. But there is no guarantee an agreement that pleases all parties involved will come to fruition this time, either. Mnuchin said Wednesday evening that the total cost was still too high. House Democrats had expected to vote on the bill Wednesday evening, but postponed a vote until Thursday to allow more room for further discussion, according to a Democratic aide. And any bill will need support from at least thirteen Republican Senators and the White House’s approval to actually become law.

As negotiations lurched along this summer, programs that provided critical assistance have vanished, with more expiration dates on the way. The Payroll Support Program, which has been providing airlines with financial assistance to keep workers on payroll, ends October 1. Airline executives have been warning for weeks that if no deal appears likely, hundreds of thousands of workers—which includes baggage handlers who earn a median income of $28,000 per year—will be furloughed. Two months ago, the Federal Pandemic Unemployment Compensation program stopped sending a weekly allotment of $600 to supplement state unemployment benefits. And the Paycheck Protection Program, which administered millions of potentially forgivable loans to small businesses, closed on August 8.

Lobbyists on both sides of the aisle, particularly those advocating for industries hit hardest in the pandemic, are astounded their calls for help have fallen on mostly deaf ears. “Congressional inaction is occurring when restaurants are literally at the weakest point they’ve been in six months,” says Sean Kennedy, executive Vice President at the National Restaurant Association. With the weather getting colder in much of the country, he argued, restaurants need extra reinforcements at the federal level that will enable them to stay open and adhere to safety standards, or otherwise risk permanent closure. “It’s amazing that restaurants suffering this much can’t galvanize or secure relief when every time a member of Congress goes home to their district they’re shocked to learn another restaurant [or] favorite hangout has closed their doors for good.”

Michele Evermore, a senior policy analyst at the National Employment Law project, thinks the inability to reach an agreement in Washington stems partially from the fact that the recovery has disproportionately benefited the wealthiest Americans—including those who serve in Congress and the people in their social circles. “I think people see numbers improving and they actually don’t know anybody who’s struggling,” Evermore says. “The kind of people who serve in Congress don’t tend to have a lot of broke friends.”

Time is also running out on pandemic relief benefits that have kept children in low-income families from going hungry. Pandemic-EBT is a Department of Agriculture program that launched when schools closed to support to families whose children would normally qualify for free and reduced-price school meals by loading funds onto a prepaid card otherwise used for food stamp benefits. It ends September 30, despite the fact somewhere around half of the nation’s public school students are still fully remote. (A few states have recently been authorized to continue the program on a more limited basis.) The Summer Food Service Program, also funded by the USDA, enabled kids in families of all income brackets to obtain free meals distributed by schools throughout their closures. It will lose funding in January.

Health care practitioners have already been seeing the impact of families’ scrambling to make ends meet on children’s health. “What I see every single day from the pandemic is really amazingly increased numbers of severely underweight children coming to our clinic, and parents really panicked about how they are going to find enough food,” Dr. Megan Sandel, co-director of the Grow Clinic for Children at Boston Medical Center and a lead investigator of Children’s HealthWatch, said on a recent press call.

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Housing experts also fear what is to come in January, when a Centers for Disease Control and Prevention eviction moratorium ends. At that point, renters who have so far avoided evictions because of eviction protections will owe months’ worth of back-rent, in addition to any late fees their leases stipulated. It is not yet known how many people may suddenly lose their homes during one of the coldest months of the year—but unless some form of rent relief or direct payment is passed, the figure will surely be staggering.

With all of this unraveling under his watch, Trump still claimed during Tuesday’s debate that he had built the “greatest economy in history” before the pandemic struck. If only examining the gains made by people who share Trump’s billionaire status, that might be right. But even before COVID-19 sent the economy into a tailspin, many low-income Americans probably would have disagreed. In 2018, nearly 40% of Americans couldn’t cover an unplanned $400 expense without going into debt, carrying a balance on their credit card, or borrowing the funds, according to a report from the Federal Reserve. Around the same time, three men in the U.S. collectively held more wealth than the poorest half of Americans, according to an Institute for Policy Studies report.

For some, the looming loss of housing and food protections—in addition to the lack of a second stimulus check and the standstill in Congress over extending protections for payroll relief—is only going to make things harder. Worse, says Evermore, is that few in power seem to care. “Goodwill toward people who lost work through no fault of their own has dissipated faster during this recession,” she says, “than at any time in history.”

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