Economic News in Perspective
https://www.bea.gov/news/2020/gross-domestic-product-third-quarter-2020-advance-estimate
We have been on quite a roller coaster ride; the economy was down at an incredible rate due to the Covid 19 shut downs then up at a phenomenal rate due to the infusion of a very large government stimulus and re-opening of many businesses. For the year, our economy is down, but that’s hardly a surprise. We need to focus ahead on the recovery.
The recovery has been sharply K-shaped. https://www.cnet.com/personal-finance/americas-v-shaped-vs-k-shaped-economic-recovery-what-does-it-all-mean/ Basically if you work in restaurants, leisure, travel or hospitality, your business is hurting very badly. Whereas if you work in tech or software, your business is doing extremely well. Just think about it as Amazon and Zoom vs. the neighborhood restaurant, bar or movie theater. Many small businesses and their employees are facing hard times, but for example the local cleaning service may be doing much better than the local gym. Low and moderate income Americans have been hard hit while many of those in the top tiers are benefiting greatly; however nurses for example are doing well, but are at high risk, while those working in restaurants or the travel industry are faring badly.
Unemployment rates by state are showing wide variances. If you are living in a state with dominant farming or oil industry fracking, your unemployment rates are quite good. https://www.bls.gov/web/laus/laumstrk.htm
Nebraska
Unemployment rate: 3.5%
State Rank: 1
South Dakota
Unemployment rate: 4.1%
State rank: 2
Vermont
Unemployment rates: 4.2%
State Rank: 3
North Dakota
Unemployment rate: 4.4%
State rank: 4
On the other hand if you are involved in tourism, entertainment, travel or international trade, your state’s unemployment rate is likely to be very high:
Rhode Island
Unemployment rate: 10.5%
State rank: 48
California
Unemployment rate: 11.0%
State rank: 49
Nevada
Unemployment rate: 12.6%
State rank: 50
Hawaii
Unemployment rate: 15.1%
State rank: 51
So figuring out a new economic stimulus package is both politically and economically challenging. State and local governments are differentially impacted depending on what types of businesses are dominant in their state. Unemployment insurance needs are vastly different between South Dakota and Rhode Island.
The states with low unemployment are rural and for the most part represented by Republicans. Many of the high unemployment states have large, urban populations and are represented for the most part by Democrats. They have different economic world views and very different needs for their citizens and voters.
We should all be supporting an economic stimulus package because the national recovery is slowing, rather than accelerating, and we don’t want to see a double dip recession as Covid’s spread worsens. See monthly GDP growth at https://ycharts.com/indicators/us_monthly_gdp But stimulus needs to be more carefully targeted in ways that the earlier stimulus packages weren’t, and didn’t need to be since they were occurring in the context of a wholesale shut down. We don’t want to see a repeat of the small business PPP fiascoes where the big corporate owned, financially and politically well connected firms gobbled up the lion’s share of the proceeds. Size of the stimulus is important, but equally and even more important is careful targeting to the sectors of the economy, states and populations that are being the most badly hurt. Many gig workers have been particularly badly hit, and they do not qualify for state UI and their federal pandemic uninsurance assistance is scheduled to expire. We need our children to be able to go back to school safely for themselves, their parents and their teachers. We have to protect essential workers and seniors living in institutional care settings. We have to find ways to make colleges and universities safe from explosive spreading and super spreader events. Republican votes in the Senate are likely to be scarce and hard to come by once the election is over.
Prepared by: Lucien Wulsin
Dated: 11/2/20