Low-to-moderate income Americans face slow recovery
Economists estimate that the Covid-19 pandemic has had a disproportionate impact on poor households and families in the United States, with continued disruptions to small businesses, housing and even childcare services.
William Rogers, Professor and Chief Economist at the Heldrich Center, Bloustein School of Planning and Public Policy, Rutgers University, and Senior Fellow Affiliate at the National Poverty Center at the University of Michigan, shared an article on how the Covid pandemic -19 continues to affect low-to-moderate income (LMI) people and communities in 2022 and beyond.
Analysis by the Institute for Economic Equity examining the latest US Fed Community Impact Survey conducted in August 2021 highlights that a higher concentration of employment in service industries disrupted by the pandemic, such as leisure and hospitality, and a lack of savings among workers and families have led to greater suffering and slower recovery.
Additionally, American Indians or Alaska Natives, Hispanics or Latinos, and Blacks have been disproportionately affected by the Covid-19 pandemic and its economic and health effects. For example, the pandemic has had an adverse impact on their financial security versus housing stability, with organizations facing continued challenges related to high demand and maintaining staffing levels. Moreover, these challenges were exacerbated with the emergence of the Delta and Omicron variant beyond the period studied.
About 78% of respondents said conditions related to loss and stability of income were even worse than they were before the pandemic. Similarly, about 81% noted that small business disruptions, including closures, reduced demand and supply chain blockages, were worse than before the pandemic.
Bernard Yaros, economist at Moody Analytics, retweeted an article shared by Sharon Parrott, president of the Center on Budget and Policy Priorities, about what could have happened to the US economy, workers and families without strong relief measures against the Covid-19. Economists say there would have been slower economic growth and high and sustained unemployment, especially for low-wage workers.
The United States and other economies have surprisingly recovered fairly quickly from the Covid-19 pandemic, experts say. The strong performance and recovery was attributed to the largely robust vaccination programs in all countries, accompanied by efforts to fight the virus, but also to the rapid and massive global monetary and fiscal response.
Economists say the macroeconomic costs of governments’ failure to help their economies during the pandemic would have been staggering. Global real GDP would have fallen twice as much in 2020, and growth would have been half of what it actually was even as the global economy began to recover in 2021.
Moreover, no fiscal or monetary support would have led to massive levels of unemployment, with an additional 40 million unemployed in 2021 and persistently high unemployment thereafter. As a result, the global economy would have contracted further, never fully able to recover the production lost during the pandemic.
Gregory Daco, chief economist at EY-Pantheon and former chief U.S. economist at Oxford Economists, retweeted data shared by Frederik Ducrozet, global macro strategist at Pictet, on January’s final report on the Harmonized Consumer Price Index. Eurozone consumption (HICP) which looked even worse, as inflationary pressures appeared to widen further amid Covid surges.
Ducrozet tweeted that the cleanest measure might be two-year underlying inflation at an annual rate given pandemic-related distortions. As a result, the euro zone was close to its inflation target of 2% and on the verge of exceeding it.