New threat to the economy: Americans are saving like it’s the 1980s
– CNN Business, May 13, 2020, Matt Egan
Batten Down The Hatches
“Americans are slashing their spending, hoarding cash and shrinking their credit card debt as they fear their jobs could disappear during the coronavirus pandemic.
US credit card debt suddenly reversed course in March and fell by the largest percentage in more than 30 years. At the same time, savings rates climbed to levels unseen since Ronald Reagan was in the White House.
The dramatic shifts in consumer behavior reflect the unprecedented turmoil in the US economy caused by the pandemic. Although caution is a logical response to that uncertainty, hunkering down also poses a risk to the recovery in an economy dominated by consumer spending. A so-called V-shaped recovery can’t happen if consumers are sitting on the sidelines.
More than 33 million Americans have filed for initial unemployment claims since mid-March, and economists warn the jobs market won’t return to pre-crisis levels for years.”
Read Full Article Here
Through the WI Lens
Americans are building cash reserves to help them through the storm. That’s the key message this piece conveys, as it reports how a raft of measures that indicate how confident people are feeling about the economy and their personal financial situation went dramatically into reverse in the space of a few weeks. A survey by the New York Federal Reserve showed that almost 21 per cent of those canvassed expect to lose their job in the next 12 months, with record lows reported for expected earnings, income and spending growth. And the response from consumers was a 31% drop in ‘revolving credit outstanding’ – the amount that is not paid off on credit cards each month, the largest one-month decline since January 1989, while the savings rate jumped from 8% in February to 13.1% in March – the highest since November 1981. The take-out from this? Wellbeing cannot exist at a more elevated level without our basic needs being met – the bottom two layers of Maslow’s Pyramid. Business and society at large need to understand that financial security has risen dramatically in the priorities of consumers and has paradoxically assumed the status of an unattainable luxury for many. Even before Covid one in four people with mental health issues had financial wellbeing issues and we can expect to see that rise. Above all, the cost of lockdown in human terms – mental and physical health and a lower quality of life for those blighted by the economic consequences – is going to become increasingly apparent in the months and years to come.
“The industry has every asset needed to be a guiding light in the shift toward personal health priority. Will that become a prevention legacy, a ‘phoenix rising’ from the Covid-19 ashes?”
“Looking at the bigger picture, putting the measures in this order represents a lost opportunity that the pandemic could have offered for a cultural pivot pivot towards getting people more focused on their health, a powerful statement of intent.”
“Employment is necessary to fulfil our most basic human needs such as food and shelter. Any significant increase in long-term unemployment will spell a retrograde step for human wellbeing like no other.”
“All roads lead to a wellbeing anchor, whether that be economic/financial, physical, mental or emotional: all contribute to a progressive and inclusive cosmopolitan world. The answer should not be a choice of one or the other but of a joined up and compassionate solution for society, business and individuals.”
“The paradox is that we continue to do this in spite of recognising that striving to become ever-more productive is an intrinsically unhealthy behaviour, leading to stress and too often, a sense of failure.”
“The same broad-sweeping structural racism that enables police brutality against black Americans is also responsible for higher mortality among black Americans with Covid-19,” Maimuna Majumder, a Harvard epidemiologist working on the Covid-19 response, tells Vox.
The take-out from this? Wellbeing cannot exist at a more elevated level without our basic needs being met.
This is not the testimony of any ordinary victim of Covid-19, but that of virologist Peter Piot, Director of the London School of Hygiene & Tropical Medicine, and one of the scientists who discovered Ebola back in 1976.
Prime Minister Jacinda Ardern’s star has risen …this article examines the style in which she’s done it.
Before Times and After Times. Is that how we’ll come to see the Covid-19 pandemic in the fullness of time?