David Wright, 62, stood at the door of his Replay Arcade last week, trying to look at the bright side of things. The sole owner, he’s a tenant at the Mall of Georgia, which shut for a month but re-opened on May 4.
“Traffic is about 10% of normal, but that’s 10% better than zero,” he chuckled in a phone interview from his business just outside Atlanta.
Even with the rosy assumption that the Covid-19 virus will be contained in the coming weeks, the U.S. economy is in for a slow and painful struggle back from this devastating public health crisis.
Consumers drive 70% of U.S. gross domestic product and they’ve been dealt multiple blows. For some it’s a direct hit to their bank account. For others it’s a shot to their psyches as earners, spenders and social animals.
“We can’t just flip the switch,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth. “Just because you can go to the store and buy things again, doesn’t mean you will.”
Spending Ability
There will doubtlessly be cheerleading from elected officials and business leaders as restrictions are slowly lifted. Already there’s talk of pent-up demand as consumers dream about getting out of the house for more than groceries and prescriptions.
That may be true in some areas, like health care services, where important but non-urgent physician visits and medical procedures were postponed. More broadly, the reality is likely to be disappointing.
For starters, more than 33 million Americans have lost their jobs in the seven weeks since wide swaths of the U.S. economy shuttered to stem the outbreak. Many may end up being out of work for the long-term, outlasting unemployment benefits that will typically end after 39 weeks, and far past the federal government’s $600 weekly supplement that’s set to expire on July 31.
“There’s willingness to spend and there’s ability to spend,” said Jack Kleinhenz, chief economist for the National Federation of Retailers. “For many people, their ability to spend has been negated.”
Younger Generation
Severe economic shocks can even scar those who hang on to their jobs but are rattled watching friends, neighbors or relatives lose their work. Economists said it’s also worth noting this is the second recession in the space of 12 years that Americans have been told is the worst since the Great Depression.