Truly New and Newly True : Economic Update – August 18

The following is a reprint of the regional economic update email from Zach Silk of Civic Ventures, sent regularly each week and posted with permission.  You can find more content by the team at Civic Ventures at their blog, Civic Skunkworks.

If you’ve been regularly reading these updates, you know we here at Civic Ventures have been relentless in our calls for immediate, impactful, and inclusive policies that meet the scale of this problem.

Thinking big, and acting accordingly, is the only way out of this economic downturn. With that in mind, we wanted to direct your attention to the Roosevelt Institute’s True New Deal for the COVID-19 Era, a suite of nine proposals that would help us recover from coronavirus and also close the yawning inequality gap that left us so vulnerable to this economic crisis in the first place.

Here’s an excerpt from their report:

A True New Deal for the COVID-19 Era outlines nine essential policy proposals that would  address our current crisis, rebalance power in our economy, and build the institutions necessary to seed lasting, equitable  change:

  • canceling student, housing, and medical debts—and implementing structural change to address the accumulation of debt;
  • creating a federal jobs guarantee;
  • federalizing and expanding unemployment insurance;
  • building a modern Reconstruction Finance Corporation;
  • guaranteeing universal childcare;
  • mandating sectoral bargaining;
  • ensuring corporate accountability through federal chartering;
  • reinvigorating antitrust law for real trust-busting; and
  • rebalancing political power through institutional reform.

Not every policy on this list is awesome, desirable or practical, but that’s not the point. You’ve got to admire the Roosevelt Institute putting these bold ideas out there and challenging others to do the same. It’s easy to stick your head in the sand or wait on an unlikely cavalry, but it’s much harder to stand up and announce what you believe in. Good on the Roosevelt Institute for doing just that. If we are going to get out of this mess, we have to start debating how best to do it. This is a good start.

Here’s what we are watching this week:

  • The latest numbers on the scope of the economic crisis
  • The local reaction to the economic crisis
  • The public response as measured by public opinion research

I’ll continue to share what we are thinking, reading, and talking about in short, occasional updates like this.

The Latest on the Impacts of Covid-19

  • Washington unemployment insurance claims for the week of August 2-8:

    • 22,140 Washington workers filed new unemployment insurance claims.
    • 10,841 workers filed new Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation claims, which are set to end this month without Congressional reapproval.
    • 2,338,445 initial claims have been filed since the start of the pandemic from 1,295,080 unique individuals.

  • New federal unemployment claims last week dropped below 1 million for the first time since March. 963,000 Amerians applied for new jobless benefits last week. This is still larger than any week in the entire Great Recession and the largest one week of claims in almost 40 years.

  • According to an analysis by EPI, there is an eye-popping 29.7 Million workers on unemployment — roughly 1 of every 5 workers in the country.

  • Another unemployment wave is coming, and it is entirely preventable. Multiple studies – including from JPMorgan Chase – have shown that the $600 a week extra benefit was the single most important intervention propping up the economy. Why? Because people are the economy and the more money they have the better the economy does. It’s not rocket science; boosting consumer spending at a time of intense economic uncertainty is good for the economy. Sadly, Republicans in Washington, DC just don’t get it. They failed to extend benefits and now we’re looking at a double-dip crisis.

  • Heather Long reports in the Washington Post on new data that shows “The recession is largely over for the rich. The working class remain in deep pain.” The data confirms what many have suspected: it’s not a V-shaped recovery; it’s a K-shaped recovery. The people at the top have recovered quickly climbing the arm of the K while everyone else is still on the downslope sliding down the leg of the K.

  • The Roosevelt Institute has released a new report that should be a must-read for policymakers and thought leaders – “A True New Deal for the COVID-19 Era.” If you don’t have time to read the report, at least check out the bullets at the top. It’s a lot of stuff we’ve been talking about in these memos.

  • America isn’t the only nation that’s fumbling the economic response to the coronavirus pandemic. Great Britain’s economy contracted by 59.9% in the second quarter of 2020, which is far, far worse than the US’s second-quarter GDP of 32.9%

  • Another day, another complete failure from the executive branch to manage the coronavirus pandemic. This time, a story in the New York Times outlines “How Trump’s Push to Reopen Schools Backfired.” It’s a little breathtaking to read Trump’s energetic drive to do exactly the wrong thing—reopening schools—at exactly the wrong time—in the middle of a spike in coronavirus infection numbers.

  • At a time when landlords can’t evict tenants for failure to pay rent, some landlords are being taken to court by hedge funds and private equity firms are taking landlords to court for failure to pay, reports Matthew Goldstein at the New York Times. “These cases have been initiated by a type of lender that is driven largely by narrow financial interests, but real estate lawyers and lenders expect foreclosure proceedings to become more widespread the longer commercial tenants fail to keep up with the monthly rent checks. Given that a full economic recovery from the pandemic is probably years in the making, things could get much uglier in the commercial real estate market before they improve.”

  • The coronavirus pandemic is rivaling the 1918 flu epidemic in terms of global fatalities, experts say.

  • Many have been frustrated by the way that public health guidelines and recommendations have changed over the course of the pandemic—you see a lot of mask skeptics, for instance, arguing that at one time we were told not to wear masks. But the fact is that we’re watching public health experts learn about coronavirus in real time, and changing their message accordingly. With that in mind, I wanted to pass on the latest CDC information on masks, which says those supposedly “high-tech” vents in masks do absolutely nothing to stop community spread of coronavirus. If you have those ventilated masks as a part of your daily rotation, please consider making a change.

  • We can’t recover our economy until we beat COVID, Boston Fed President Eric Rosengren warns, and the longer we flounder in our public health response the worse this economic crisis will get. In fact, we can see in the data now that states that lifted COVID restrictions too soon actually hurt their economies.

  • FP Analytics released a new COVID-19 Global Response index, rating countries on their response to suppressing the pandemic and the spread of the virus within their own countries. The U.S. ranked 31st out of 36 countries. New Zealand topped the list.

Local Reaction to the Crisis

  • In an oped for The Seattle Times, United Way of King County CEO Gordon McHenry writes the $600 weekly federal unemployment benefits were a last line of defense for countless low-income workers and families who have lost their jobs, and are now on the precipice of losing their homes. People need help – in fact, it’s the only way to stabilize our economy – and cutting aid or reducing benefits at the federal or state level will only make this crisis worse.

  • Seattle announced on Wednesday that the entirety of the housing levy fund—some 60 million dollars—will be put toward housing the homeless due to COVID-19. Sydney Brownstone at the Seattle Times notes that this is “the most the city has ever spent in a single year on permanent supportive housing.”

  • At Crosscut,  Jane C. Hu profiles a northern Washington town on the border of Canada in which routine border crossings used to be a part of daily life. “since officials restricted cross-border travel in March, Point Roberts’ roughly 1,000 full-time residents find themselves unexpectedly isolated, estranged from their usual lifestyle. Now, the invisible line dividing the two countries stands in the way of what was once an easy drive, and after four months of the pandemic, people on the Point miss the things they used to take for granted.”

  • The ripple effects of Boeing’s woes intensify. The Seattle Times reports: Almost 600 to be laid off as Kent aerospace supplier shuts plant.

  • Here is the Seattle Times infographic on COVID-19:

Real-time Analysis of the Economic Crisis

We are providing regular commentary on our content channels including analysis of the trickle-down policies that fueled the disastrous federal pandemic response, explorations of the system-wide economic fragility that the downturn has exposed, and explanations of policies that will build a stronger and more inclusive economy.

  • On Facebook Live, Jessyn and I will discuss the latest news, including the absurd claim that reducing safety and health standards creates jobs.

  • At Business Insider, Paul Constant explains why America’s childcare crisis disproportionately affects low-income families, and why a real economy should consider childcare an investment, rather than a loss.

  • In a bonus episode of our podcast Pitchfork Economics out today, Paul Constant interviews Kitty Richards about her new report from the Roosevelt Institute explaining why states that respond to recessions with austerity measures take longer to recover than states which invest in their people.

Public Opinion

We also wanted to share with you some recent polling.

  • From Navigator Research: two-thirds of Americans still support restoring the $600 a week unemployment benefits.

  • Also from Navigator, a majority of Americans – including 47 percent of Republicans – are more worried about the U.S. rolling out an untested COVID vaccine too early than they are about developing a well-tested vaccine too slowly.

Closing Thoughts

This week Mitch McConnell adjourned the US Senate until September 8th, without any relief deal in place. Even though this week’s jobless claims dipped below 1 million, we are still facing the largest number of unemployment claims than have been filed in any week in recorded American history before the pandemic. That is to say, it’s shockingly huge — some might even call it yuge. We can’t afford to get used to numbers like this.

And now that the $600-per-week additional unemployment payments have been allowed to expire, the tens of millions of unemployed Americans will be earning pennies on the dollar compared to what they were earning before. They’ll have to cut spending drastically. They won’t be able to afford next month’s rent or mortgage payments. They will be forced to sit out of the economy, making things worse for all of us. That means fewer customers for neighborhood businesses, and more job losses to come.

Without a meaningful economic intervention that meets the scale of the problem—something akin to the policies I discussed in the introduction to this email—this recession could easily turn into a depression.

Be kind. Be brave. Wash your hands. And wear a mask.

Zach Silk
Civic Ventures
PS: stay cool. It’s hot out there.

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