Recovery will be faster if Texans help each other
Winter is coming, but keep spring in your heart.
A second coronavirus wave is building in Europe and New York, and there is little doubt it will flow across the nation this winter just as it did in the spring. But no matter who wins the White House, we will get a COVID-19 vaccine and the economy will recover.
In the meantime, we need to maintain discipline and show kindness toward our neighbors. If all Americans help slow the disease by wearing masks and minimizing time in public, we will position ourselves to rebuild the economy faster once we’ve gotten our jabs.
France and Spain are seeing a remarkable spike in cases. Wisconsin’s governor opened a field hospital for COVID-19 patients Wednesday. New York’s mayor and governor are shutting down ZIP codes where the virus has taken off in recent weeks.
Fatalities are slowing as doctors learn how to manage cases while we wait for a vaccine and cure. But Texans shouldn’t become complacent with the steady hum of 4,400 new cases a week. Bars and
restaurants may be open, but that does not mean we have to go to them.
One realm where I and other pundits have been gratefully wrong is the extent of the economic damage. COVID-19 did not destroy the entire economy as feared, only specific industries. Many economists forecast the coronavirus only will cripple economic growth for the year, not disembowel it.
S&P Global Ratings improved its forecast for economic growth. The financial data analysis firm, projects the economy will shrink by 4 percent this year, up from the earlier forecast of a 5 percent contraction. The remarkable turnaround from July through September, though, will be short-lived.
“The big bounce is largely mechanical and the next leg of the recovery will be more difficult. Indeed, momentum is already beginning to fade,” S&P analysts said in a research note. “Challenges are mostly fiscal include protecting those hardest hit, keeping viable firms afloat, and facilitating necessary structural changes.”
The biggest fiscal challenge is the standoff between President Donald Trump and Congress over another economic aid bill. The supplemental unemployment insurance payments helped the hardest hit workers, and the Paycheck Protection Program kept some firms afloat, but those programs are wearing off
Federal Reserve Chairman Jerome Powell argued for more fiscal stimulus on Tuesday, explaining that while the central bank can keep financial markets afloat with its limitless checkbook, Congress needs to put money directly in Americans’ pockets.
“Too little support would lead to a weak recovery creating unnecessary hardship for our households and businesses,” Powell warned.
Economic forecasting firm IHS Markit does not see the U.S. economic activity returning to prepandemic levels until late 2021, and it does not see employment returning to previous levels before 2023.
“The easy part of the labor market recovery is largely behind us now,” said Brian Coulton, chief economist at corporate rating agency Fitch. “A lot of jobs still came back in September, but the pace of improvement is clearly slowing. The sobering statistic here is that 36 percent of unemployed are now classed as permanent job losers, up from 14 percent in May.” (Fitch is owned by Heart Corp., the parent of the San Antonio Express-News.)
The economic slowdown has hit small businesses especially hard, because they cannot take advantage of the huge support programs offered by the Federal Reserve. More than 40 percent of local businesses fear they could run out of cash by the end of the year, according to a survey by Alignable, an online network for small business owners.
The economic contraction will also keep energy prices low for months, if not years to come. The oil and gas industry has slashed 107,000 jobs since March and 70 percent of those jobs will not come back at current West Texas oil prices, an analysis by consulting firm Deloitte indicates.
Powell, many economists and epidemiologists have warned time and time again that the virus is in charge of the economy until we eradicate it. Reopening businesses too soon may spur short-term activity, but the more people who get infected, the longer the pandemic will last.
Vaccine companies say they hope to have a safe vaccine by the end of the year and to begin distributing it in January. Providing shots to enough people to slow the virus will take months and will not be finished until summer.
If we can stay healthy until the green shoots of spring arrive, and help our neighbors keep hearth and home together until the vaccine arrives, we can rebuild this nation and its economy quicker than if we lose another 200,000 people and tens of thousands of businesses.
We will need each other this winter. Let’s try to pull together rather than drift apart.