After COVID-19 closures, economy is returning with a whimper, not a roar
What if you reopened the economy and nobody shopped?
It’s still way too early to measure the economic effects of several states allowing the reopening of retail stores, restaurants, salons, gyms, doctors’ offices, and other businesses that have been hit hard by stay-at-home orders because of the COVID-19 pandemic. Evidence is based on anecdotes rather than hard data, but businesses are desperate: U.S. retail sales tumbled a record 16.4% in April.
Who will spend money at those businesses is even more problematic. The U.S. unemployment rate soared to 14.7%, according to the April jobs report, and in just the first week of May, nearly 3 million people filed unemployment claims, for a total of 36.5 million unemployed Americans since mid-March.
But one thing is certain: The economy hasn’t come roaring back, as Donald Trump and Treasury Secretary Steve Mnuchin promised in late March. Instead, the Trump administration is now singing a different, less lion-like tune: In a May 10 Fox News Sunday interview, Mnuchin admitted that the economy and employment numbers are “probably going to get worse before they get better.” Federal Reserve Chair Jerome Powell warns of long-term economic damage without more financial help to taxpayers from the federal government.
Governors itching to get their states going again — to appease both Trump and a small minority of often heavily armed protestors in several states screaming about “liberty” and demanding that businesses reopen — are announcing reopening plans, often going too fast for public health physicians and scientists. A dozen states were set to launch a major reopening of businesses by May 18, and more than two-thirds have reopened in some significant way.
On May 14, the Centers for Disease Control and Prevention issued brief checklists of guidance on how to reopen public spaces safely, with details on transmission thresholds, travel recommendations, rules for large venues, and more.
Too bad the vast majority of U.S. citizens aren’t ready for reopening. Because they don’t want to die if they can avoid it.
Americans are obviously tired of living in quarantine and want to get back to a normal life, whatever that might look like in the age of COVID-19. But poll after poll, such as this one from Pew Research, shows that a large majority of people fear that states might be lifting restrictions too quickly.
The Pew data show that 68% of all Americans are wary of reopening too fast. There’s a growing partisan divide, too: In data collected from April 29 through May 5, 53% of Republicans thought restrictions were being lifted too slowly, up from 48% who thought that from April 5-12. Contrast that with 87% of Democrats who thought restrictions were being lifted too quickly, up from 81% a few weeks earlier.
Partisan divide, yes; class divide, no. A Washington Post-University of Maryland poll found that “there just aren’t meaningful divisions along class or education lines on these questions,” as a Washington Post story put it.
By 78 percent to 22 percent, Americans believe it is “necessary” for people in their communities to stay at home as much as possible.
The spread is very similar among those of incomes below $50,000 (82-18), those of incomes of $50,000 to $100,000 (77-23), and those of incomes over $100,000 (71-29).
Like many media outlets, CNN regularly updates its list of each state’s reopening status. Some were early out of the gate, such as Georgia, where Gov. Brian Kemp unbelievably said he didn’t know that asymptomatic people could spread coronavirus.
Wisconsin joined the “let freedom ring and then die” club when the state Supreme Court struck down the stay-at-home order from Democratic Gov. Tony Evers after a challenge from the GOP-led Wisconsin Legislature. The decision also comes after 72 people in Wisconsin who attended a large protest against the stay-at-home order have now tested positive for coronavirus. There’s no telling what the infection rate will be in the hordes of people who descended on the state’s bars to celebrate opening up again after the Supreme Court decision.
Everyone is tired of being cooped up, and we all want to support local businesses that are hurting. But states where stores have been open for a few weeks are seeing a sluggish recovery at best. Most Americans are still too frightened to be in enclosed spaces with lots of people. According to a story in TIME:
A new study by Fivestars, a marketing platform for small businesses, found that while sales at small businesses in Georgia, Texas, Florida and California jumped 18% the weekend of May 7-10 compared to the weekend prior, they were down 63% compared to the same weekend last year.
The TIME story gives examples of several small businesses telling the same tale: gift shops, tattoo parlors, and music stores all report a trickle rather than a rush of business.
Lanie Lewis, the owner of State Street Trading Company in West Columbia, S.C., is less sanguine. Her store is a gift shop and arts & crafts store in a rapidly growing part of town. Before the pandemic, she had ordered $8,000 worth of trinkets and small gifts to sell during what she expected to be a bustling street fair season.
Lewis opened her doors back up on April 23, but the fairs are not returning, leaving her sitting on boxes of unsold goods. While regular customers buy things to support her from time to time, the foot traffic is nonexistent, and Lewis says she’s lucky if she gets two customers a day. “I’ve had days where I’ve had nothing in the register,” she says.
One exception seems to be salons and barber shops. We’re all feeling pretty shaggy and long to get a professional haircut, so it’s no surprise that business has been booming in salons in reopened states. The TIME story quoted the owner of Salon Gloss in an Atlanta suburb.
“Our clients were just elated to be back,” Tim Timmons, the store’s owner, tells TIME. “Their hair looks terrible. It’s long and they’ve got bad roots, so they’re getting everything done.”
It’s not just the regulars who are coming in: Timmons says he had 60 new clients in his first two days of operation. While his staff is half of what it used to be, Timmons estimates he is taking in 75% percent of what he normally would, because his clients are asking for extra work: color, cuts, perms and more.
Another current economic success is community supported agriculture, or CSAs. While some of the nation’s farmers are being forced to pour milk down drains and leave crops rotting in fields because their restaurant markets have dried up, the CSA market of delivering boxes of fresh, locally grown produce to customers has seen a resurgence — and many CSAs have growing waiting lists. Customers fearful of shopping in grocery stores or even visiting a local farmers’ market are instead choosing to have produce delivered safely. From an NPR story:
CSAs have long been something of a niche market that have never really penetrated the mainstream. Yet the coronavirus just might prove to be sparking community supported agriculture’s breakout moment.
“In all the time that we’ve worked with CSAs, which is several decades, we’ve never seen a surge as quickly as we have of the last few weeks,” said Evan Wiig with the Community Alliance with Family Farmers, which supports and lobbies on behalf of CSAs across California. …
The coronavirus has exposed the vulnerabilities and fragility of the U.S. global agribusiness supply chain. The CSA model’s focus on local and fresh is ideally suited for a crisis that has people deeply worried about germs on lettuce, beets or broccoli as the crops make their way from the field to the kitchen counter.
Even with the CDC guidelines, in the absence of a national plan from the Trump administration, governors are weighing public health against economic recovery. There have been successes in opening outdoor activities such as golf, hiking, boating, and even drive-in movie theaters. After some serious missteps that led to large crowds, most officials now know that reopening beaches means issuing requirements such as no sunbathing or beach volleyball to avoid crowds and maintain social distancing. Indoor events or events with bigger crowds, such as most worship services, professional sports, music concerts, and theater performances, are still on hold for now. Restaurants will function very differently, with waiters in masks, spaced-out booths and tables, and e-menus.
But will customers come back? The industry newsletter Restaurant Business said only 41% would go out to eat within 30 days.
In comparison, 18% of consumers canvassed by The Harris Poll said they’re likely to stay in a hotel within a month of infections decelerating. Fifteen percent said they expect to board a plan within a month of that marker, and 21% indicated their expectation of going to see a movie.
About 13% of consumers expect to resume going out to eat as soon as the risk of decontamination starts to abate. Twenty-eight percent said they’d dine out within the next one to 30 days.
Another 25% said they’d wait two to three months. Six percent said they’d hold off for a year, and 1% indicated they’d never again eat within a restaurant.
Germany and South Korea provided admirable models of COVID-19 containment with widespread testing and contact tracing. Yet when the two countries took steps to reopen, they were hit with higher infection rates. In South Korea, one man who went dancing at five nightclubs in one evening spread the virus to 162 people. Germany saw a tripling of cases in one day. A second wave in the U.S. could be much, much worse.
It’s best to listen to the advice of infectious disease expert Dr. Anthony Fauci, who told a Senate panel that reopening too quickly could lead to needless suffering and death. Despite what Trump and Fox News commentators shout to discredit his warnings, Dr. Fauci, a member of the White House’s Coronavirus Task Force and longtime head of the National Institute of Allergy and Infectious Diseases, is found to have more credibility than anyone else about the pandemic.
Until the new normal emerges, perhaps we should change our national motto to “In Fauci We Trust.”
Originally posted on Daily Kos on May 15, 2020.