The U.S. economy will take at least through 2021 to recover from the current shutdown, the Congressional Budget Office (CBO) said.
Massive unemployment and a lack of investment capital will be the main drags on the recovery, it noted.
It projects GDP will be 11.2 percent less in the current quarter than in the first quarter of this year, but it has revised its growth forecast for the fourth quarter of 2021 from 2.8 percent to 4.6 percent, indicating a clear reversal of today’s economic contraction by then.
The state of Georgia may be a measure of the CBO forecast’s accuracy.
Georgia was among the last states to shut down its economy and reopened on 30 April, one of the earliest states to do so.
Its number of unemployment claims is still rising, however, especially in the retail sector.
This indicates some consumers are not yet ready to re-inhabit public spaces; and that enough consumers are out of work, or fear losing their jobs, they are not ready to resume their old spending habits.
There is “certainly nothing to signal there’s any return to economic stability or recovery happening right now,” said Alex Camardelle, a policy analyst with the nonprofit Georgia Budget and Policy Institute.
TREND FORECAST: We disagree with the CBO forecast. Equity markets were slumping terribly last August until the Federal Reserve starting pumping $7 trillion into the repo markets so trading houses could borrow cheaply to bet big.
Further, economic growth in the U.S. was estimated to come in around 2 percent for 2020, at best, while, as noted, major economies were going into recession.
The damage created by the global shutdowns is unprecedented in world history. Forecasting future economic growth on outdated models, as have the CBO and others, will prove inaccurate.
Hotel Industry Details “Roadmap to Recovery”
With most of its 2.3 million jobs in limbo, the U.S. hotel industry has called on Congress to take the below steps to ensure it can recover from the national economic shutdown:
- Continue the Paycheck Protection Program (PPP), make the loans larger and more flexible in their permitted uses, and extend the employee retention credit;
- Provide tax credits for the purchase of personal protective equipment for staff;
- Offer a temporary “travel tax credit” and restore the business tax deduction for entertainment.
This “Road Map to Recovery” was released by the American Hotel & Lodging Association on 20 May.
“The hospitality industry is in a fight for survival,” said association president Chip Rogers, adding that a typical hotel averaging 100 occupied rooms per night supports about 250 local jobs and generates $18.4 million in guest spending at area shops and restaurants. Hotels also generate $186 billion in local, state, and federal taxes each year, according to association figures.
Industry analysts expect that hotel occupancy rates will not return to pre-pandemic levels until at least 2022.
“Atlantic” is Latest to Fire News Staff
The Atlantic, a 162-year-old Boston-based monthly, has become the latest news publication to lay off staff.
It has shut down its video operation, ending 11 jobs, and will cut 57 other positions, the magazine announced. The cuts total 17 percent of its workforce.
The magazine also has cut executive pay and frozen all other salaries.
The Atlantic’s purge caps a flurry of layoffs in the news industry. Within the week prior, The Economist cut 90 positions, the Conde Nast magazine empire lopped off 100, and the scrappy Vice video and online outlet trimmed 155.
Since March, about 37,000 news reporters have lost their jobs across the country, according to data collected by the New York Times.
The Atlantic’s austerity measures come even as the magazine reports 500,000 subscribers to its print and online editions, including 90,000 new since the pandemic began.
The magazine also is staunchly supported by the nonprofit Emerson Collective, founded and funded by the billionaire widow of Apple founder Steve Jobs. She named her social change organization after Ralph Waldo Emerson, the American philosopher who co-founded The Atlantic in 1857 with jurist Oliver Wendell Holmes.
TREND FORECAST: As we have long forecast and as the facts show, the global economic shutdown has forced advertisers to curtail their ad buys, dramatically shrinking print and broadcast revenue streams.
While advertising revenues will increase as businesses open, considering the “New ABnormal” that will curtail economic growth, they will not rise high enough to salvage sinking media outlets.
Thus, as with other market sectors, the “Bigs” will get bigger. And, in doing so, the dramatic decline in news sources and reporters will diminish both the scope of coverage and quality.
Layoffs Hit Lobbyists and Trade Groups
Since the pandemic arrived, several Washington lobbying firms have cut workers’ pay. The International Franchise Association has laid off a third of its staff and stopped publishing its magazine. The National Rifle Association has cut its staff by 60 people. The U.S. Travel Association cut all employees’ pay after canceling its Las Vegas trade show.
Trade groups rely heavily on conferences and events for revenue. The cancellation of public gatherings will cost at least 35 percent of them a quarter of their revenue this year, according to a survey by the Public Affairs Council.
The National Association of Realtors softened that blow by converting its annual Washington conference to a virtual event, attracting three times as many attendees as typically show up in person. The group says the event will be virtual from now on.
The U.S. Chamber of Commerce, which recently gave its top executives millions of dollars in bonuses and considered creating a pricey Superbowl ad, reportedly now is seeking ways to cut its budget by 20 percent.
One well-connected PR firm has applied for a PPP loan, and another is considering doing so after laying off six staffers.
In the original Paycheck Protection Program, lobbying firms were barred from receiving the loans. But Congress changed the rules after lobbying firms persuaded them to do so.