President Donald Trump is predicting strong economic growth in the third quarter of this year, followed by an “incredible” fourth quarter and then an “incredible” 2021.
Well, it’s understandable that he would want to put the best spin possible on the state of the economy, which he seems to consider his passport to re-election. But since the definition of incredible is “beyond belief,” I think his prognostication is right on the money. This year has been a disaster so far, and I see no reason to believe it will improve substantially anytime soon.
Tens of millions of people have been laid off or furloughed. Huge numbers of factories, restaurants, theaters and shops have locked their doors. Sporting events have been suspended. Travel has ground almost to a halt. Schools are still closed. Malls are closed. Municipalities and states have been hit with huge bills to pay, and only Uncle Sam has the ability to bail them out.
The federal government has already thrown several trillion dollars at the crisis, but people aren’t spending, partly because they’re broke and partly because they’re just plain scared.
Because of an attack by a microbe too small to be seen, we’ve seen our economy shrink by an annualized rate of almost 5 percent in the first quarter — despite a good January — and the Congressional Budget Office thinks economic activity will plunge by 40 percent in the second quarter, April-May-June.
That’s a catastrophe, any way you slice it.
The Dow Jones Industrial Average, which seemed about to break the 30,000-points barrier for the first time ever in February, sank below 20,000 in March, ending the longest bull market in U.S. history. (For the record, the highest numbers have happened on Mr. Trump’s watch, but most of that bull market took place under President Barack Obama.)
But this isn’t about apportioning blame or credit; it’s about facts on the ground. Here’s what I fear, and dread:
Let’s assume that some combination of medical science and civic action is able to wrestle this virus to the ground. Whether that happens sometime this year or early next year, enormous damage will have been done to the economy, and it seems inevitable that the industrial and financial giants and the biggest chain stores are in the best position to weather the storm.
But what about the Mom & Pop stores? What about the small, family-owned pizza shop that employs just a few people? What about the beauty salon owned and operated by a hardworking woman helping support her family? What about the coffee shop or brewpub that just opened a few months ago and hasn’t had time yet to put down roots?
To a large extent, we’ve already seen this. The independent grocery store is just about gone. So is the independent drug store, book store, clothing store, shoe store, hardware and building supply store, auto parts store.
What I fear and dread is that on the day after Covid-19 we’ll wake up to a brave new world where most of the family-owned, local businesses — the coffee shops, delis, pizza parlors, beauty shops, bakeries and dance studios — have been killed off and what’s left are the chain operations, headquartered far away. The kind of outfits that won’t do anything unless “corporate” gives the OK.
Give me Mom & Pop any day.
Reach Glenn Richter at firstname.lastname@example.org.