The Trump Recession Is The Most Unequal In U.S. History (Updated)

In case you missed it, the National Bureau of Economic Research, which determines recessions, said the U.S. economy peaked in February BEFORE the economic effects of the coronavirus pandemic began in March, bringing an end to the 128-month economic expansion, the longest in post-World War II history. “The worst U.S. downturn since the Great Depression is now officially a recession.” The U.S. entered a recession in February, according to the official economic arbiter:

The committee noted that “a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough.”

U.S. GDP fell 5% in the first quarter and is likely to post the worst decline in history for the second quarter.

See: 31.4% spring slide for a US economy likely to shrink in 2020:

The gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago, the Commerce Department reported Wednesday.

Economists believe the economy will expand at an annual rate of 30% in the third quarter as businesses have re-opened and millions of people have gone back to work.

The government will not release its July-September GDP report until Oct. 29, just five days before the presidential election.

In 2020, economists expect GDP to fall by around 4% , which would mark the first annual decline in GDP since a drop of 2.5% in 2009 during the recession triggered by the 2008 financial crisis.

The recession brings to an end the longest expansion in U.S. history, which the NBER, a private, nonprofit research organization, dated as lasting 128 months, or nearly 11 years. That growth seemed poised to continue until the declaration of the coronavirus as a pandemic, a move that triggered 95% of the U.S. economy being put into shutdown and sent the unemployment rate, which had been at a 50-year low, soaring to 14.7%, its worst in post-World War II history.

This data-rich CNBC report explains, Coronavirus recession ends for the rich but is far from over for lower-income communities (excerpts):

The economic crisis unleashed by the coronavirus pandemic may be over for some groups of Americans — primarily the wealthy and White — even as it lingers in other corners of the country.

No group was spared from the recession’s initial shock, which pushed unemployment to heights unseen since the Great Depression.

But the wealthy, White and higher-educated were the least likely to lose their jobs. And those among them who did have largely recovered.

Meanwhile, the stock market and real estate — assets disproportionately held by these cohorts — have boomed, further boosting their wealth. Financial stimulus also helped them boost savings more readily than others.

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“The story of the recession for low- and high-income individuals is very different,” he said. “From an economic perspective, high-income families are by and large doing fine.”

The dynamic has led some economists to dub this a “K-shaped” recovery due to its divergent nature.

Emily Stewart at Vox further explains The K-shaped economic recovery.

This data-rich Washington Post analysis explains The covid-19 recession is the most unequal in modern U.S. history (excerpts):

The economic collapse sparked by the pandemic is triggering the most unequal recession in modern U.S. history, delivering a mild setback for those at or near the top and a depression-like blow for those at the bottom, according to a Washington Post analysis of job losses across the income spectrum.

Recessions often hit poorer households harder, but this one is doing so at a scale that is the worst in generations, the analysis shows.

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No other recession in modern history has so pummeled society’s most vulnerable. The Great Recession of 2008 and 2009 caused similar job losses across the income spectrum, as Wall Street bankers and other white-collar workers were handed pink slips alongside factory and restaurant workers. The 2001 recession was more unequal than the Great Recession: After the 9/11 terrorist attacks, travel and tourism jobs vanished and low-wage employment fell 7 percent below the previous year’s level, while high earners remained largely unscathed. Yet, even that inequality is a blip compared with what the coronavirus inflicted on low-wage workers this year.

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At the height of the coronavirus crisis, low-wage jobs were lost at about eight times the rate of high-wage ones, The Post found. The devastation was deepest among the lowest-paid, but middle-class jobs were not spared. A clear trend emerged: The less workers earned at their job, the more likely they were to lose it as businesses across the country closed.

By the end of the summer, the downturn was largely over for the wealthy — white-collar jobs had mostly rebounded, along with home values and stock prices. The shift to remote work strongly favored more-educated workers, with as many as 6 in 10 college-educated employees working from home at the outset of the crisis, compared with about 1 in 7 who have only high school diplomas.

Deep pain remains nearly seven months into the crisis. Employment for low-wage workers was still down more than 20 percent in August from the summer before and around 10 percent for middle-wage workers.

On Thursday, “Unemployment data released by the Department of Labor did little to assuage fears about the recovery’s fragility: 837,000 initial claims for unemployment insurance were processed last week” (the 28th consecutive week in which the number of Americans filing for initial unemployment benefits was worse than at any time during the Great Recession peak of 665,000 in March 2009, and the previous all-time mark of 695,000 in October 1982). Layoffs still piling up as jobless claims remain stubbornly high:

Another 650,000 people had new claims processed for Pandemic Unemployment Assistance last week, the program for self-employed and gig workers, up slightly from 630,000 the week before.

The total number of people claiming unemployment insurance ticked up slightly, to 26.5 million for the week ending Sept. 12.

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A grim portrait of the U.S. economy is emerging more than six months into the pandemic, as a cascade of new layoffs announced this week puts pressure on an already strained labor market and further raises the specter of an economic U-turn with the recovery only partially underway.

The parade of bad news has picked up in recent days, with several large companies announcing wide layoffs.

Disney announced it would lay off 28,000 from its theme park division, insurance company Allstate said it would cut 3,800 positions, and the airline industry, already battered by months with levels of consumer demand, saw more than 30,000 additional furloughs at American and United Airlines.

With just weeks to go before the election, a range of industries are now under severe pressure as the effects of the pandemic continue to filter deep in the global economy. Continental, the German tire company, announced plans to cut as many as 30,000 jobs worldwide, and Marathon Petroleum has also begun a new round of layoffs. Royal Dutch Shell announced cuts of as many as 9,000 jobs.

And more layoffs are encroaching into white–collar jobs that are not directly affected by the pandemic or shutdown.

Axios reports that Doomsday has arrived for tens of thousands of workers:

Federal coronavirus aid for airlines expires on Thursday with no renewal in sight, meaning massive layoffs for the industry aren’t far behind.

The big picture: Airline workers aren’t alone on the unemployment line. Oil companies, tire manufacturers, book publishers and insurers are among those that have announced tens of thousands of layoffs. Federal aid through the CARES Act earlier this year delayed most layoffs — until now.

• • • American Airlines on Wednesday was the first to announce that it will begin furloughing 19,000 employees on Thursday.
    • United Airlines’ CEO warned in a letter last month that the company could furlough up to 16,000 if aid was not renewed.
    • Spirit Airlines says it will cut 1,000 jobs in Florida, per Bloomberg.
    • Delta says it will delay potential furloughs until Nov. 1 in order to allow themselves more time to assess their finances, per NBC News.
    • Allstate Insurance is laying off 3,800 employees, about 8% of their workers, The New York Times reports.
    • Up to 9,000 Shell Oil workers are losing their jobs, according to Business Insider.
    • Fashion designed Ralph Lauren is cutting 15% of its workforce, or more than 3,700 jobs, due to coronavirus business slowdowns and store closures, the Wall Street Journal reports.
    • Defense contractor Raytheon is trimming 15,000 workers, the company announced last month.
    • Disney on Tuesday said it will layoff 28,000 employees, mostly in its theme parks.
    • Hotels chains including Marriott, Hyatt, Hilton and Choice have issued thousands of layoffs since the start of the pandemic.
    • More than 900 previously furloughed employees at Busch Gardens in Tampa will be laid off, per an announcement last week.
    • Over 1,800 employees at the theme parks SeaWorld Orlando, Discovery Cove and Aquatica also faced layoffs late last month, per the Tampa Bay Times.

These layoffs will “trickle down” to other sectors of the economy, leading to more economic slowdown.

The House narrowly passed a $2.2 trillion Democratic coronavirus stimulus plan on Thursday night, the HEROES Act 2.0. House passes $2.2 trillion Democratic coronavirus stimulus bill:

The House approved the legislation in a 214-207 vote. Eighteen Democrats voted against the measure as lawmakers in competitive districts grow wary of the ongoing impasse over aid.

The bill likely will not get through the Republican-held Senate and become law. Senate Majority Leader Mitch McConnell has opposed the legislation as his caucus resists spending trillions more on the federal response to the pandemic.

So no new federal economic relief is coming due to Republican opposition.

(The above layoffs are not included in Thursday’s weekly unemployment figure, and are not reflected in the September jobs data to be released by the Department of Labor on Friday, the last monthly reading on the labor market before the election).

The September jobs data released on Friday shows US hiring slows for 3rd month in sign of struggling economy:

America’s employers added 661,000 jobs in September, the third straight month of slower hiring and evidence from the final jobs report before the presidential election that the economic recovery has weakened.

With September’s hiring gain, the economy has recovered only slightly more than half the 22 million jobs that were wiped out by the viral pandemic. Nearly 10 million jobs remain lost — more than were shed during the entire 2008-2009 Great Recession. And the pattern of slower hiring will delay a full recovery of jobs: Compared with September’s more modest gain, employers added nearly 1.5 million jobs in August, 1.8 million in July and 4.8 million in June.

The unemployment rate fell last month to 7.9% from 8.4% in August, the Labor Department said Friday. Since April, the rate has tumbled from 14.7%. But last month’s drop in joblessness reflected mainly a drop in the number of people seeking work [labor market participation], rather than a surge in hiring. The government doesn’t count people as unemployed if they aren’t actively looking for a job.

“There seems to be a worrisome loss of momentum,” said Drew Matus, an economist at MetLife Investment Management. “There’s a lot of caution on the part of employers.”

[L]ast month’s gains appeared to reflect mainly temporarily laid-off workers being recalled to their old jobs, continuing a trend in place since April, rather than people joining new employers. In a worrisome sign, the number of laid-off workers who say their jobs are gone for good rose from 3.4 million to 3.8 million.

With no new federal stimulus funds for the economy and a new fall surge in the coronavirus pandemic building going into the flu season, a double-dip recession is not only a possibility, but increasingly likely.

This comes at the same time when Millions of Americans risk losing power and water as massive, unpaid utility bills pile up, and There’s a Looming Eviction Crisis, and We Have No Idea How Bad It Will Be.

This is a perfect storm, like the fall of 2008. Americans need to remove these Republicans from office if there is any hope to recover from the coronavirus pandemic and to begin rebuilding the economy.

Vote like your life depends on it, because it may very well.

UPDATE: Catherine Rampell at The Washington Post writes, The U.S. is still ‘missing’ more jobs than it did at the worst point of prior postwar recessions (excerpt):

Here’s the bad news: The nation’s payrolls are still down 10.7 million jobs, or about 7 percent, since their peak in February, when the recession began. That’s enormous. In fact, a higher net share of jobs is still “missing” today, relative to pre-recession times, than was the case even at the worst period of any prior postwar downturn.

The chart below shows percentage changes in employment since the recession began, and how recent trends compare with other postwar downturns and recoveries. The black line plots the Great Recession and its aftermath. At the very worst point for the job market in that business cycle, payrolls were down about 6.3 percent. Now, however, the magnitude of those Great Recession job losses looks slightly less “great” when compared with more recent changes in employment, plotted by the red line.

The unemployment rate in September was 7.9 percent. The unemployment rate peaked at 14.7 percent — though that official figure understated the damage due to measurement issues. Unfortunately, unemployment fell in September largely for the “wrong” reasons: because people dropped out of the labor force and stopped being formally counted as employed.

The 7.9 percent rate is also pretty close to the average peak unemployment rate of all postwar recessions.

An unemployment rate of 7.9 percent is also the highest for any president heading into a reelection contest in modern economic history. Several incumbents headed into their elections with rates above 7 percent (Jimmy Carter, Ronald Reagan, George H.W. Bush), but none with a rate this high.

Rampell offers more damning economic data in her column.