On election night, Democratic campaign consultants may have been wondering, “Where did all these voters come from?” But unless the next Congress sets a legislative course over the next few months, Speaker of the House Nancy Pelosi may soon be wondering, “Where did all the voters go?”
The incoming Biden administration will need to navigate an extremely rough economic path ahead. Congress has struggled to reach an agreement for another round of stimulus to provide emergency relief for families and businesses. Now they must act before the “dark winter” ahead further deteriorates the economic recovery.
Dr. Selma Hepp is the chief economist at Cotality.
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President and CEO Jill Castilla led a 180-degree turnaround at Citizens Bank of Edmond through her approach to Fintech and social media. She changed the story of the Bank from one of near collapse and failure to one of great success and innovation. Jill has told the story of the turnaround at conferences nationwide and to 5,000+ people in various industries. Jill broke virtual radio silence through the power of social media by leading the bank from having no audience to more than 30,000 followers who engage with the Bank through Twitter, Facebook, YouTube and Instagram. Jill was named “Most Admired CEOs in Oklahoma"; “Most Innovative CEOs in Banking”; "Community Banker of the Year"; and "Most Powerful Women in Banking" in 2015. She ranks #1 on ICBA’s list of Twitter influencers. Citizens’ community appreciation event implemented by Jill, “Heard on Hurd,” had more than 100,000 attendees in 2015 and generated more than $2.4 million in economic activity. Jill previously served in the U.S. Army and Oklahoma Army National Guard as a construction and civil engineer. Prior to joining Citizens Bank, she was at the Federal Reserve Bank of Kansas City and with a community bank in Minnesota. Her academic background includes a Master’s degree in Economics from the University of Oklahoma and she is a graduate of the University of Wisconsin-Madison’s Graduate School of Banking. Jill is a distinguished alumna of Hawaii Pacific University.
Gross domestic product, the broadest measure of goods and services produced across the economy, decreased at an annual rate of 32.9 percent in the second quarter of 2020, followed by a surged of 33.1 percent in the third quarter, in part due to earlier rounds of fiscal stimulus when businesses were offered Economic Injury Disaster Loans and forgivable Paycheck Protection Program loans, and individuals received direct payments and extended unemployment benefits.
Economic experts believe the current surge is not enough to stop continued losses incurred by various segments of economy.
“While the strong bounce back in activity from the initial devastation of COVID-19 was heartening, the recovery thus far has been highly uneven, and the path ahead is highly uncertain,” said Federal Reserve Governor Lael Brainard in a speech last month at the Society of Professional Economists annual online conference.
This highly uneven and uncertain bounce indicates the prospect of a K-shaped recovery, where some sectors continue to recover, while others see a steady decline.
The new stimulus package must focus on the sectors facing difficulties ahead to avoid colossal damage and massive layoffs.
According to the U.S. Chamber of Commerce, approximately 4 million small businesses — 13 percent of America’s 31 million smallest employers — have now exhausted their PPP loans, and many face permanent closure without further assistance.
According to the National Restaurant Association, the restaurant industry will lose $240 billion. U.S airlines may be forced to furlough 75,000 pilots, flight attendants, mechanics and other workers by the end of 2020 if Congress doesn’t act.
States and municipalities are now on verge of extreme shortfalls due to declines in tax revenues and rises in additional costs. Local governments that fund and operate public school systems will need more funding. “The average school district will face $1.8 million, or $485 per student, in additional costs for disinfectants, personal protective equipment and other preparations to bring students into classrooms this year,” according to the Association of School Business Officials.
The Federal Reserve’s Survey of Consumer Finances indicates that cash-strained households will continue to suffer as a result of continued unemployment and reduced working hours. The CARES Act did support these households either through direct payments or enhanced unemployment benefits this year, but the financial security of these households will depend on whether unemployment benefits will be extended or supplemented next year.
Therefore, it is imperative for Congress to ensure that the recovery reaches those who have been disproportionately affected. A targeted fiscal support can turn a K-shaped recovery into a broad-based, inclusive recovery to eliminate shortfalls in employment and provide a better outcome overall.
