Coronavirus Is Killing Our Economy Because It Was Already Sick
HIGH EARNING HOUSEHOLDS AREN’T SPENDING:
“New research from the economists Michael Stepner, Raj Chetty, Nathaniel Hendren, and John Friedman suggests that — thanks to government aid — low-income Americans’ personal spending is almost back to its prerecession level. But among high-earning households, consumption remains severely depressed.
This is ostensibly because the consumption of the affluent is more heavily geared toward the purchase of discretionary, in-person services such as fine dining and live entertainment. Since rich people do not need these things — and a pandemic has drastically reduced their appeal — they’re liable to cut their spending, even if their jobs and incomes have been unaffected by the current downturn.”
THE HIGHEST EARNING QUARTER OF HOUSEHOLDS HAVE GUTTED CONSUMPTION BY 50%:
“Economists at the Harvard-based research group Opportunity Insights estimate that the highest-earning quarter of Americans has been responsible for about half of the decline in consumption during this recession.”
IF WE DON’T EMBRACE MASKS, DISTANCING AND TARGETED MEASURES (limited closures in outbreak areas or banning of high risk public activities like bars)…COVID19 WON’T “FADE AWAY.”
AND WE CAN EXPECT CONSUMPTION TO REMAIN AT RECORD LOWS, ENSURING THAT OUR CURRENT RECESSION BECOMES A FULL BLOWN DEPRESSION.