A Tale of Two Recessions

Abelardo Morel’s photograph “A Tale of Two Cities” confounds the reader by juxtaposing words written from left to right with words written from right to left. While the more positive messages from Dickens’ novel are written in the sinistrodextral such as “it was the season of hope”, the dextrosinistral messages contain more negative messages such as “a dirty procession of monks.” Just as Morel’s image fazes the reader by blending feelings of optimism and pessimism, the current economic data, with divergent paths across sectors, regions, and industries confounds economists and policy makers alike.

The stock market has been booming and after the election of Joe Biden,: the Dow Jones closed over 30,000 for the first time ever on Monday November 24. The Nasdaq composite is for the first time ever above 12,000 points. Unfortunately, the optimism from Wall Street does not translate to the greater economy. In fact, more than 400,000 small business have closed since the pandemic started and many more will struggle to survive during the next few months until a vaccine is widely available.

It may very well be that the current rate of COVID-19 transmission may spell doom for many entrepreneurs. This pandemic has been particularly harsh for women-owned and minority-owned businesses, and the Payroll Protection Program struggled to support these entrepreneurs. Yet, larger firms, especially those with expansive on-line operations, have been consolidating market power. A recent survey indicates that almost three fourths of all Americans expect to do their shopping online to avoid crowds.

The unequal recovery is reflected in labor markets as well. Data from the Opportunity Insights team show that high earners experienced a v-shaped recession, but the lowest earners’ job losses was are still large and for them the recession is lingering much longer. Data from the Bureau of Labor Statistics show that industries like construction, finance and manufacturing have mostly recovered, and are currently at more than ninety-five percent or more of their employment level from a year ago. In contrast, leisure and hospitality has lost over three million jobs, almost twenty-percent of their employment from a year ago.

It seems odd that the words of a novel written in 1859 are so salient to today’s economy, yet we must keep in mind that just as one-hundred-and-sixty years ago, our current economy rewards different workers differently. More than ever, this recession has taught us that the most vulnerable will struggle more and for much longer during the pandemic. The inability of the federal government and congress to approve a second rescue package is just accentuating these differences. Let us hope that this inaction does not result in the “ssenkrad fo nosaes” for many of us.

Publish on The Press Enterprise 12/05/2020

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