Parts of the US economy are buffered against the coronavirus chaos.
Start with government, accounting for a steady 17.5% of US GDP at the combined federal, state and local levels over the past 3 yrs, or $3.7-T of GDP in Y 2019.
That includes administrators, clerical workers and technology staff running the benefits programs that lots Americans now rely on, as well as firefighters, police and others who maintain basic services, including teachers leading online classrooms.
Much of that in place employment will continue, for now. But difficult choices are ahead for state and local governments as costs for their emergency healthy issue responses rise, as Key revenue sources like sales and income taxes falls. That could bring about some layoffs.
Calls for a broad package of federal help for local governments are being resisted by leading congressional Republicans.
But, this wk the Fed expanded the scope of a $500-B lending program for state, county and local governments. That will allow the Fed to buy short-term bonds from hundreds of local government entities to help them raise money needed to pay staff wages and other bills.
The federal government will borrow massively to fund $3-T in emergency programs. A large share of that is in the form of direct payments to households and expanded unemployment benefits. Jobless families will spend much of that on food, housing and perhaps medical care. Consumer spending accounts for 72% of US output.
In contrast to government, the private sector has absorbed a massive hit, as 1 of every 6 workers was laid off in a 4 wk frame.
Airlines have been grounded, the industry was so stricken it was singled out for direct government loans. Hotels and restaurants are also among the direct hit casualties of draconian social distancing rules.
Who came up with the magic 6ft number anyway?
But the headlines ignore what is going on among 2 large categories of workers; those working remotely and those whose occupations are deemed “essential.”
The latter category encompasses an enormous group of workers, including front-line medical personnel, public safety officers, people laboring to keep the food supply intact, those distributing goods around the country and utility workers keeping the lights on and the water flowing.
A Brookings Institution study using the Department of Homeland Security’s (DHS) guidance on “essential industries” estimated that up to 62-M employees may qualify, that is 40% of total employment before the health emergency.
Many of those people ‘holed up‘ in their homes are earning income.
Up to 37% of US jobs “can plausibly be performed from home,” according to a recent study by researchers at the University of Chicago Booth School of Business.
They estimate that those jobs account for an outsized 46% of US wages, and include about 80% of workers in the finance and insurance industries, and in scientific and professional fields. Many adapt, some thrive.
Have a healthy day, Keep the Faith!