When the United States entered the Great Recession over a decade ago, there were structural economic problems that don’t exist today during the coronavirus pandemic, writes Commerce Secretary Wilbur Ross. Alex Brandon Associated Press file photo
By Wilbur Ross
There is no doubt the coronavirus pandemic has dramatically impacted our day-to-day lives. Americans are making adjustments to everything from their morning routines to how they’re managing their money. Families have yearned for good economic news for several months now, and last week we saw the beginning of an economic revival they’ve so desperately needed.
By multiple predictions, May and June are likely to be the nadir of the recession, followed by a sharp recovery toward the early fall. The ADP National Employment Report for May shows the number of newly-unemployed dropped to below 3 million, versus a consensus forecast of 7 million. The U.S. Department of Labor announced last week that the economy added more than 2.5 million jobs in May, versus what was expected to be a 7.5 million jobs loss.
While economists estimated large declines in payrolls and increases in unemployment, the data shows just the opposite: Payrolls rose and the jobless rate fell from 14.7% to 13.3%.
Consumer spending makes up about 70% of our economy and Americans already received what the White House calculates as $400 billion in federal support provided by the government’s coronavirus relief package. As stores and restaurants begin to reopen, a large majority of that money will be invested back into local economies across the country. The U.S. Commerce Department’s Census Bureau on Tuesday released data showing a 17.7% surge in retail sales for the month of May, much higher than the 8% that many economists had forecast.
The reason for this is simple: the resilience of the American consumer.
As average weekly unemployment benefits for those who lost work because of the pandemic are now supplemented by $600 per week from the federal government, in addition to the $1,200 one-time payment to Americans in low- and middle-income brackets, President Donald Trump has continued to ensure that Americans have every opportunity to recover from the economic downturn. Fundamentally different from what Americans experienced in 2009, when they were leaving the labor market with no hope of reemployment, 77% of unemployed Americans now expect they will be reemployed quickly, and consumer confidence continues to grow.
Measures signed into law by the president have infused $4 trillion into the American economy, twice the amount post-2009. This money is going straight back into the economy and ultimately into the pocketbooks of everyday Americans, where it belongs — marking a second fundamental difference from what we experienced in 2009, where relief went to plug structural flaws in mismanaged state capitols and Wall Street.
But we can’t gloss over a third, very critical difference between the economic revitalization we’re soon to see and the recession we experienced just over 10 years ago: the contrast of a strong American economy versus the severe structural problems in the economy of the late 2000s. Wages remained stagnant for middle-class America for more than a decade. Gross domestic product had been recklessly inflated by excessive mortgages and other forms of credit. Banks were already failing, and therefore incapable of transmitting increased liquidity into the real economy. Consumer confidence was incredibly low. By contrast, our biggest problem before the coronavirus pandemic was that under the leadership of the president, there were more available jobs — 6.5 million to be exact — than there were people to fill them.
The malaise that led to a catastrophic 2009 had been accumulating for years, and it is not surprising that it took a leader like Donald Trump to help overcome it. The coronavirus, in contrast, is a one-time health crisis that caused a temporary collapse to the economy. Now that America is reopening, it should not take long for us to see the economic recovery unfold. Confidence is growing in both the economy and our president.
As the economy gets back to where it was, with record low unemployment for African Americans, Hispanics, women and the disabled, and with more rapid increases in non-supervisory pay, Americans deserve to be hopeful and eager to get back to their pre-pandemic routines. While we focus on improving the economic growth of our nation, all Americans from coast to coast will be able to enjoy the economic benefits of which the United States of America is capable.
Wilbur Ross is secretary of the U.S. Department of Commerce.