Rx for an Ailing Economy
Newsweek asked 12 top economic thinkers what the next president should do to restore America to financial health.
THE NEXT PRESIDENT WILL BE TASKED WITH RESTORING AMERICA’S FINANCIAL HEALTH. WHAT’S THE MOST CRITICAL MOVE HE SHOULD MAKE? NEWSWEEK ASKED 12 TOP ECONOMIC THINKERS FOR THEIR BEST ADVICE
With two weeks to go before the election, the nation’s financial health is top of mind for Americans. According to a recent Gallup poll, nearly nine out of 10 registered voters say the economy is the most important factor in their decision about who to vote for—ahead of response to the pandemic, crime, race relations and a dozen other key issues. Additionally, nearly half of those polled said that President Donald Trump’s recent COVID-19 diagnosis had made them even more worried about the economy than they already were.
No matter what happens between now and Inauguration Day, January 20— even in the unlikely event of a coronavirus vaccine or a second round of stimulus checks— the next president will be looking at an economy that is in rough shape and faces a long recovery.
The current national unemployment rate, after all, is still at a lofty 7.9 percent. While that's well below the nightmare days of late spring when it rose as high as 14.7 percent—a level second only to the rates seen during the Great Depression—it's still in another ballpark from last January, when it stood at 3.6 percent, near its 50-year low.
That pain is not being distributed equally. The Federal Reserve Bank of St. Louis estimates that the unemployment rate for Black Americans is 12.1 percent and 10.3 percent for Latinos, compared to 7 percent for whites; meawhile, the unemployment rate for men topped out at 13.5 percent in April while hitting 16.2 percent for women the same month. Then too, according to the Labor Department, about five million people are about to join the ranks of the “long-term unemployed,” meaning they've been out of work for at least six months, a point at which they are increasingly likely to stop looking for a job altogether.
Total job losses so far: about 30 million and the Labor Department estimates about 4 million of those are permanent. For some individual sectors of the economy, many of them composed largely of small business, the lasting damage has been brutal. Business review site Yelp, for example, recently estimated that 19,590—or 61 percent— of the 32,109 restaurants that have closed this year are gone for good.
So, with all those depressing numbers in mind and the need for action critical, what should the next president do to fix the ailing economy? Newsweek asked 12 leading economic thinkers to imagine a phone call on January 21 from the nation's commander-in-chief asking them, “What's your best advice for me right now on the economy?”
Below are their answers to that question, edited for space and clarity. We heard a range of specific recommendations, but almost all of them included the federal government pumping a ton of money into the U.S. economy, in the form of both immediate direct aid to individuals and businesses as well long-term investment in things like infrastructure and education. The word we heard repeatedly was “spend.” Or as one economist put it: “What's the answer? Money. And lots of it.”