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Post by Born2BBruin on Jun 23, 2020 7:10:44 GMT -8
Great article from NPR on why reopening isn't going to save the economy. Key points: - Typically, recessions are driven by a drop in spending on durable goods, like refrigerators, automobiles and computers. This recession is different. It's driven primarily by a decline in spending at restaurants, hotels, bars and other service establishments that require in-person contact. We kinda already knew that. But what the team's data show is that this decline in spending is mostly in rich ZIP codes, whose businesses saw a 70% drop-off in their revenue. That compares with a 30% drop in revenue for businesses in poorer ZIP codes.
- This 70% fall in revenue at businesses in rich ZIP codes led those businesses to lay off nearly 70% of their employees. These employees are mostly low-wage workers. Businesses in poorer ZIP codes laid off about 30% of their employees.
- The government rescue effort has mostly failed. The $500 billion Paycheck Protection Program, which has given forgivable loans to businesses with fewer than 500 employees, doesn't appear to have done much to save jobs. When the researchers compare the employment trends of businesses with fewer than 500 employees with those with more, the smaller businesses eligible for PPP don't see a relative boost after the program went into effect. It looks like the program didn't do its job of saving jobs. Meanwhile, the stimulus checks, while increasing spending, did not have much stimulative effect because the spending mostly flowed to big companies like Amazon and Walmart. The money didn't flow to the rich ZIP code, in-person service businesses most affected by the downturn.
- State re-openings don't seem to boost the economy either. Minnesota allowed reopening weeks before Wisconsin, but if you look at spending patterns in both states, Minnesota did not see any boost compared with Wisconsin after it reopened.
Link: Why Reopening Isn't Enough To Save The Economy |
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Post by mhbruin on Jun 23, 2020 7:48:37 GMT -8
My spending is down significantly, mostly because we rarely leave the house. No entertainment. No eating out. No gasoline. No clothes. No housewares.
Travel? No way!
I am increasing my savings and paying down my mortgage. We are also donating more.
I don't see our spending increasing until well into 2021.
I this this is true for a lot of people who still have the money to spend. And millions do not have the money.
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Post by copyboy on Jun 23, 2020 8:22:44 GMT -8
My financial evolution (devolution?) parallels MH's. Our income is unchanged, but our spending is down 40 percent, despite having shelled out quite a bit more than we historically have on the kinds of household and outdoor items that make hunkering down for a long boring stay more palatable. Amazing what happens when you completely eliminate spending on travel and outside-the-home entertainment (bars, restaurants, concerts). That stuff adds up.
On point 4 above, it's clear that people are playing it cautiously, regardless of whether the state they live in is "open" or not. The thought that the vast majority of people would rush out to resume their pre-COVID lives just because someone said they could is another one of those "miracles" that didn't happen.
Shocking.
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Post by TAMPATIDE on Jun 23, 2020 8:42:23 GMT -8
After about a month of confinement it dawned on me that I wasn't hitting the ATM every week for spending money. Biggest savings was the cutback from eating out 6-7 times a week to zero. However, I did decide to relocate and I just closed on my new home last week. About an hour north of Tampa.
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Post by Born2BBruin on Jun 23, 2020 8:51:57 GMT -8
I did decide to relocate and I just closed on my new home last week. About an hour north of Tampa. Wow! That is big news. Congratulations! On the coast or inland? Spring Hill maybe? |
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Post by mhbruin on Jun 23, 2020 12:05:37 GMT -8
Here's what a panel of economists think is going to happen: From 538 |
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Post by TAMPATIDE on Jun 23, 2020 12:14:53 GMT -8
Yes B2B, I am moving to the Spring Hill area to an over 55 gated golf oriented community of about 3400 homes. The name of the place is Timber Pines. Made the decision based on the appearance of the area and the opportunity to play golf 2-4 times a week. Also have a good friend, former Marine buddy, who lives there and the 2 wives are friends. The homes are around 30 years old and quite cheap compared to where I live now so I can net out a pretty good chunk of change when I sell my current house. The whole community is well maintained and the 3 golf courses (1 regulation, 2 executive) are immaculate. It's only about a 50 minute drive for our kids and grands. I'll get into the new place around the first of August.
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