Tuesday, 27 Oct 2020

The Pandemic Depression Is Over. The Pandemic Recession Has Just Begun.

Signs of a slower, grinding recovery sure look familiar.

By Neil Irwin

There is a straightforward narrative of the economy in 2020: The world shut down in the spring because of the coronavirus pandemic, causing an economic collapse without modern precedent. A sharp recovery began in May as businesses reopened.

That is accurate as far as it goes. But the snapback effect over the summer has masked something more worrying: We’ve entered a longer, slower grind that puts the economy at risk for the indefinite future.

In the details of government employment data — covering hundreds of industries — can be seen a jobs crisis that penetrates deeply into the economy. Sectors that in theory shouldn’t be much affected by the pandemic at all are showing patterns akin to a severe recession.

Business news headlines are reflecting a drumbeat of layoffs normally seen in recessions. In the last few weeks alone, the oil giant Shell said it was cutting 9,000 positions, with Disney eliminating 28,000 and the defense giant Raytheon 15,000.

After shedding jobs in the spring, these sectors have brought workers back slowly, or not at all, through the summer. Some have continued cutting positions. Employment at corporate headquarters — “management of companies and enterprises,” in the official terminology — fell by 92,000 in March and April, with another 4,000 jobs lost since.

The 3.9 percent contraction in these jobs, typically white-collar professional positions, is considerably worse than the 2.4 percent drop during the 2008 recession.

A similar pattern is evident across dozens of industries, employing tens of millions of workers. These sectors did not endure a prolonged pandemic-induced shutdown or collapse in business. But they have shed jobs over the last half-year at rates consistent with a serious downturn.

The list is varied and includes real estate, automobile dealerships, advertising and heavy construction. It even includes truck transportation, a sector that functions as the economy’s circulatory system, given its crucial role enabling all sorts of commerce.

Over all, even if you exclude the sectors directly affected by the pandemic — air transportation; arts and entertainment; hotels; restaurants; and both private and public education — the number of jobs in America was 4.6 percent lower in September than in February. That is not far from the 5.3 percent contraction in total employment that took place during the entire 18 months of what is now known as the Great Recession, and around three times worse than the job losses in the 2001 recession.

Pandemic Job Losses Are Worse Than in Past Recessions

Even excluding directly affected sectors like hotels and restaurants.

Directly affected sectors include air transport; leisure and hospitality; and education

Source: Bureau of Labor Statistics

The New York Times

Executives in these industries and analysts who study them describe two related phenomena. One is the mechanical effect of shutdowns in large swaths of the economy. But as is often the case in recessions, the pandemic has prompted many companies to accelerate shifts that were already underway.

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