The ‘Rocket Ship’ Economic Recovery Is Crashing – The New York Times

Child care constraints are keeping many workers, particularly Black and Hispanic women, from returning to work, according to weekly census survey data analyzed by Ernie Tedeschi, an economist at Evercore ISI.

Some economists say the slowdown was predictable — and a natural reaction to Americans attempting to rush back toward normalcy before the virus was under control.

When it comes to the recovery, “the virus is the boss, not the governor, not the mayor, not the president,” said Austan Goolsbee, a former top economist for President Barack Obama and the author of a recent study that found fear of infection — and not government lockdown policies — drove nearly all of the contraction in economic activity this spring.

Mr. Goolsbee, who is a professor at the University of Chicago’s Booth School of Business, and his colleague Chad Syverson used cellular phone records to track visits to businesses during the pandemic.

The research found that just over one-tenth of the drop was attributable to lockdowns themselves, a share that held constant as areas began to lift restrictions in May. The authors say that suggests that if infections accelerate, public officials will not be able to avoid another economic shock simply by refusing to shut down activity. Consumers will make that decision for them.

When cases of the virus first began rising earlier this year, many economists hoped that, with the right set of policies, the United States could avoid most long-term economic damage. The idea was that by providing trillions of dollars in support for households and businesses, the federal government could, in effect, keep the economy in stasis until the health crisis had passed.

There are signs that those efforts were at least partly successful. Nearly a third of the people who lost jobs during the pandemic have already returned to work, according to a poll conducted for The New York Times in early June by the online research platform SurveyMonkey. Another quarter expected to return to their old jobs within the next month.

But that still leaves close to half of all those who have lost jobs still out of work, with no immediate prospects for a return. That group is disproportionately Black and Hispanic, and concentrated in low-wage service industries, the survey found. Perhaps unsurprisingly, those respondents are far less sanguine about the direction of the economy than Americans overall.

“How can we have a recovery when millions of people are now permanently unemployed?” asked John Singh, a survey respondent in Los Angeles. “How can we have an economy when big companies have just thrown in the towel?”

Mr. Singh’s husband was furloughed from his job at a large corporation, but returned to work — from home — this week. The break was a loss of income, but not a major career disruption.

It is a different story for Mr. Singh. He runs a small public relations agency — he is the only full-time employee — and his main client is in film distribution. When theaters shut down in mid-March, his revenue dried up overnight. With theaters expected to be among the last industries to return to normal, he doesn’t expect his business to bounce back anytime soon.

The Homebase data suggest a yawning divide in the experiences of businesses that never closed for the pandemic and those that shut down as it began to spread. Employee hours and total number of employees are running just above pre-crisis levels at retailers that never closed. But many businesses have not reopened, which Homebase officials said in a report this week could be a sign that as many as 20 percent of all small businesses will permanently close amid the crisis.

“For many of our business owners, it doesn’t yet make sense to open at the level of customer demand they’re seeing,” said Ray Sandza, vice president of data and analytics at Homebase.

Data from Kronos, which provides time-management software and related services, tells a similar story. The number of shifts worked by the company’s roughly 30,000 U.S. customers have rebounded strongly since mid-April but remain down 15 percent compared to before the crisis. Now the pace of growth has slowed in Georgia and some other early-reopening states, and the number of shifts worked has fallen outright in South Carolina and Florida since the beginning of June.

“We bounced off the bottom, and it was a sharp bounce off the bottom,” said Dave Gilbertson, vice president of strategy and operations at Kronos. “Now is going to be what really proves out the full pace of the recovery, and it’s going to take longer.”

Several factors could complicate that next phase. For one, many day care centers remain closed or limited, restricting some parents’ ability to return to work. “I don’t see how parents get back to work in a meaningful way if their kids can’t be in day care or back in school,” said Melissa S. Kearney, a University of Maryland economist who directs the Aspen Institute’s Economic Strategy Group. “Figuring out how to make that happen needs to be at the top of the list.”

Ms. Kearney warned in a report with several co-authors in June that the recovery could stall if Congress fails to maintain the support for people and businesses that has helped buoy consumer spending. Senators are poised to leave Washington this week, returning in mid-July, with negotiations on a new economic aid bill still in their early stages.

Nathaniel Popper contributed reporting.