The Economy, the Virus and Us

Annie Lowery of The Atlantic says that economists have four major concerns regarding the US economy.

(1) The household fiscal cliff:  Government stimulus payments have kept the economy in fairly good shape this spring, despite massive unemployment. However, the stimulus is supposed to end a month from now. Republicans don’t favor renewing it. That will mean  “millions of families just keeping their head above water will sink”. Consumer spending will plummet.

(2) The great business die-off:  “This steep decline in consumer spending will hasten mass business failure… An estimated 100,000 small companies have shut permanently. On top of that, numerous businesses—airlines, restaurants, live-events businesses, hotels, private schools, oil and gas companies—face severe and stubborn slumps….Economists expect that 42 percent of people recently let go will not return to their former employers.

(3) The state and local budget shortfall:  Every state except Vermont is required to balance its budget, but “sales taxes, real-estate-transfer taxes, income taxes, fines and fees—they are all collapsing, leaving local governments with a budget gap expected to total $1 trillion next year. Without help from Washington, this will necessarily mean massive service cuts and job losses: namely, an estimated 5.3 million job losses.

(4) The lingering health crisis:  “The catastrophe of the American government’s management of the … pandemic …  has led to the unnecessary deaths of tens of thousands of people…. The country is reopening with the disease still spreading and maiming and killing, as several states experience a dramatic surge in caseloads. Never getting the pandemic under control means never unleashing the economy…. Ending the pandemic would have been the single best thing the federal government could have done to preserve the country’s wealth, health, and economic functioning. The Txxxx administration, in its hubris, obstinacy, and incompetence, failed to do it.”

“Congress could extend unemployment insurance, offer new help to flailing businesses, send monthly cash grants to poor families, offer fiscal relief to the states, and implement a nationwide test-and-trace program.” Or things may get a lot worse.

From Stat News:

The “respiratory” virus that causes Covid-19 made some patients nauseous. It left others unable to smell. In some, it caused acute kidney injury….The Centers for Disease Control and Prevention constantly scrambled to update its list [of symptoms] in an effort to help clinicians identify likely cases.

[But] in late January, … scientists in China identified one of the two receptors by which the coronavirus, SARS-CoV-2, enters cells. It was the same gateway, called the ACE2 receptor, that the original SARS virus used. Studies going back some two decades had mapped the body’s ACE2 receptors, showing that they’re in cells that line the insides of blood vessels — in what are called vascular endothelial cells — in cells of the kidney’s tubules, in the gastrointestinal tract, and even in the testes.

Given that, it’s not clear why the new coronavirus’ ability to wreak havoc from head to toe came as a surprise to clinicians. Since “ACE2 is also the receptor for SARS, its expression in other organs and cell types has been well-known”….

The assumption that infection would first and foremost cause respiratory symptoms was misplaced. In the week before they were diagnosed, Covid-19 patients were 27 times more likely than people who tested negative for the virus to have lost their sense of smell. They were only 2.6 times more likely to have fever or chills, 2.2 times more likely to have trouble breathing or to be coughing, and twice as likely to have muscle aches. For months, government guidelines kept people not experiencing such typical signs of a respiratory infection from getting tested.

Faced with a disease the world had never seen before, physicians are learning as they go. By following the trail of ACE2 receptors, they are more and more prepared to look for, and treat, consequences of SARS-CoV-2 infection well beyond the obvious.

What He Does and Doesn’t Have Going For Him

People who write headlines often do a crappy job. Here’s an example from The New York Times:

Even if presidents have less sway over the economy than is widely assumed, perception can be important.

The headline implies that the economy is just about perfect. It’s not. As Steven Rattner points out:

T—- promised growth of “4, 5, 6 percent”, a tax cut that would raise workers’ wages significantly [and pay for itself!] and new trade policies that would again make the United States a manufacturing powerhouse. None of those things has happened….

Sen. Chris Murphy of Connecticut explains the situation:

One of T—-‘s favorite tactics is taking credit for Obama’s economy. Democrats need to stop letting him get away with it. A quick thread debunking some of his favorite lies:

Job Creation:

Obama created 227K jobs a month in his last three years in office. In T—-‘s first three years, it’s only been 191K per month.

Job creation numbers were 20% higher under Obama during that three-year span.

Deficits:

T—- DOUBLED the budget deficit, creating over $3 trillion in new debt.

Where did all this money go? Mostly to tax cuts for corporations and rich people. But instead of boosting the economy, business investment has actually fallen since the tax law passed.

Wages

Real wages aka what you can buy for the amount of money you take home, are actually doing worse under T—-.

They increased just 0.8% since T—- took office, compared with 1.3 percent over a similar period under Obama.

Trade War

Trump’s self-inflicted trade war contributed to outright job declines last year in states like Wisconsin, Pennsylvania, Oklahoma, Indiana and New York.

Overall, the trade war with China cost America 450,000 jobs in 2019.

Obama inherited the worst financial crisis since the great depression and pulled America out of it.

T—- was handed a healthy economy and has made things harder for working families while juicing corporate profits.

Don’t let his lies try to tell you otherwise.

Paul Krugman provides needed context:

[It’s] worth talking about why the economy is growing. The answer is, it’s the deficit, stupid.

T—-‘s deficitpalooza is giving the economy as much stimulus now as it was getting in 2012, when the unemployment rate was 8%. Imagine what Obama’s economy would have looked like if [Republicans] and Very Serious People had let him run deficits that big.

And of course imagine if we were using that money to build infrastructure and help children, not give corporations more money to buy back their own stock.

[In 2009] some of us were tearing our hair out over the fact that the stimulus was obviously too small. But Obama and his inner circle insisted that it was inconceivable to [get around the filibuster by using] reconciliation to enact something bigger, because norms or something.

In the end Obama [and other Democrats] paid a heavy political price because recovery was too slow, thanks to inadequate stimulus; T—- is getting a dividend because nobody, including the bond market, actually cares about budget deficits. So many bad things have followed from Obama’s caution back then. The course of history could have been very different.

… Republicans hobbled the Obama economy in the name of fiscal responsibility, which they abandoned as soon as T—- came in. But how big a deal was that?

Absent [Republican] sabotage, we would have been down to 4% unemployment in 2014. Think how different everything would look if we’d done that.

Finally, a few words from Nancy Pelosi:

Under Obama…

  • Unemployment dropped from 10% to 5%
  • Stock market went from 6,000 to 18,000
  • Deficit was reduced by a trillion dollars
  • The US gained more than 14 million private sector jobs.

[T—-] did not inherit “a mess”, he inherited a momentum.