As reported in last week’s Trends Journal, the mass shutdown of the global economy is having the most drastic effects on the poor and middle class.
In the U.S., the wealthiest country in the world, aerial photographs show miles-long lines of cars seeking much-needed food bank handouts.
Over 22 million Americans have filed for unemployment in a system incapable of dealing with the massive request load. That number of lost jobs, 22 million, interestingly enough, approximates the number of jobs created over the past nine years.
COVID-19 is making clear what astute observers of the American economy have known for over a decade: the impressive rise of the stock market along with low unemployment and an economy championed as creating the longest expansion in history was a mirage for the vast majority of U.S. workers.
While the wealthiest 1 percent were reaping record stock profits and corporate executives were cashing in million-dollar bonuses, average Americans saw zero percent growth in their wages. In fact, median household income is at 1999 levels… and it will fall much lower as a result of the economic lockdown.
Politicians were well aware – or should have been well aware – when they shut down the U.S. economy from its “purple mountain majesties” to across “fruited plains” and throughout “amber waves of grain” that four out of ten American adults didn’t have the financial ability to cover more than $400 in unanticipated expenses.
About half of all U.S. households have zero emergency savings, according to the Federal Reserve.
Governors deciding on their own what were “essential” businesses and those “non-essential,” which could be shut down, either knew or should have known that according to the Pew Research Center, “Today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.”
Mayors of large American cities had to have known that over the past few decades, millions of Americans have been forced to spend more than a third of their earnings on rent and wouldn’t be able to handle an economic shutdown.
The 22 million Americans thrown out of work by the national coronavirus shutdown, even if they get the $1,200 per person promised by Washington, will do little to salvage their financial distress.
According to a U.S. Chamber of Commerce survey, some 25 percent of all the small businesses in the U.S. are two months away or less from going out of business and not reopening after the lockdowns are lifted.
According to Lindsey Piegza, chief economist at Stifel Fixed Income, “Going forward, as we continue to keep the economy closed, more than 45 million Americans are expected to lose their job with the unemployment rate potentially peaking near 30 percent.”
A McKinsey report released this past week noted the “unfolding public-health and economic disaster” of the national lockdown, which will “disproportionately impact black Americans as well as other minorities and immigrants.”
