Foss: Return to economic health won’t happen quickly

Customers at 151 Bar & Restaurant on LaFayette St. at lunchtime on Thursday June 4, 2020.
PHOTOGRAPHER:
Customers at 151 Bar & Restaurant on LaFayette St. at lunchtime on Thursday June 4, 2020.

Categories: News, Opinion, Schenectady County

Last week I did something I hadn’t done in months: I bought lunch. 

I looked in my refrigerator, found it wanting and decided to order food for pick-up from a restaurant. It was so good that two days later I ordered out again. 

My spending declined dramatically during the pandemic, but in recent weeks it’s started ticking up again, and I suspect that’s true for many people. 

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This week I was struck by how lively downtown looked – by how many people were out and about, walking, eating, heading in and out of buildings that were, until very recently, closed to the public. Allowing restaurants to move tables outside has made a huge difference, bringing life to streets that were empty and deserted during the height of the pandemic. 

If I didn’t know any better, I might look at the surge in activity and conclude that the economy was on the fast track to a full rebound from the recession caused COVID-19-related job losses and shutdowns. 

Unfortunately, the increased busyness we’re seeing around the Capital Region is a bit of a mirage. 

Businesses are reopening, and people are spending more. 

But the hole we fell into was deep, and it’s going to take a long time to climb out. 

One of the more frightening pieces of news this month came from the Congressional Budget Office, which said it could take nearly a decade for the U.S. economy to recover from the pandemic. 

At the moment, most of our political leaders seem to be banking on a quick recovery, and I’d like to think they’re right to do so. 

But an accumulation of troubling economic data makes me think they’re in denial about the grueling slog ahead of us. And while it might not last the full 10 years projected by the CBO, it will still be protracted, unpleasant and hard. 

In a blog post from last week, the Empire Center’s E.J. McMahon described the pace of the state’s recovery as “painfully slow,” and predicted that private-sector employment in New York won’t return to 2019 levels until the middle of 2021. 

Even more worrisome, there’s good reason to believe that many of the jobs lost during the pandemic are not coming back. 

A report from Bloomberg Economics suggests that millions of temporary layoffs are at risk of becoming permanent, due to something called reallocation shock, in which “firms and even entire sectors suffer lasting damage. Lost jobs don’t come back and unemployment stays elevated.” 


How many jobs have disappeared forever? 

The answer, if accurate, is downright scary. 

According to Bloomberg, 30 percent of U.S. job losses between February and May are the result of reallocation shock. Their analysis “suggests the labor market will initially recover swiftly, but then level off with millions still unemployed.” 

 

How that plays out locally remains to be seen, but I would expect the hospitality, retail and leisure industries to be especially hard hit. 

Yes, people are doing more. 

But many of us will continue to take precautions, traveling, eating out and engaging in big social gatherings only sparingly. Some of us might even find that we like preparing our own lunches, and cut back on how much we buy from local eateries. That’s what I plan to do – and I bet others will, too. 

Another looming problem is the economic strain that millions of Americans are dealing with. 

Food drives and the moratorium on evictions have helped obscure this reality, but it will soon become hard to ignore. 

One recent survey, by Apartment List, found that 30 percent of Americans missed their rent payments in June; the mortgage technology and data provider Black Knight reports that nearly 9 percent of mortgages were in forbearance as of June 2, meaning borrowers can skip or make reduced payments.  

At some point, all of these bills will come due. 

Absent more aid to those struggling to adapt to a dramatically altered economic landscape, we will see an explosion in evictions and a jump in foreclosures. 

It’s nice to see people enjoying a meal out, shopping or getting a haircut. 

The activity will give the Capital Region a boost – one it badly needs. 

But our economy has been badly weakened, and we’ll likely be dealing with the fallout for years to come. 

Reach Sara Foss at [email protected] Opinions expressed here are her own and not necessarily the newspaper’s.

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