What happens to consumer spending next in the stop-and-go COVID-19 economy?
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Left Coast Seafood, a restaurant in Venice, Florida, had a decent summer, considering the pandemic. The restaurant reopened for sit-down service in May.
“The customers were a little bit apprehensive in the beginning, but as people became more comfortable, business picked up,” co-owner Mariel Arbuckle Terone said.
Then, at the end of September, Florida lifted all restrictions on restaurants. They could open at 100% capacity.
“And as soon as that announcement was made, our phone started ringing off the hook,” Terone said.
Customers wanted to know: What was the restaurant going to do?
“People told us, ‘We’re not going to places that are going to be open at 100% that aren’t still social distancing,'” she said.
Left Coast decided for everyone’s safety to stay at half capacity, keep its tables spaced out and continue to require masks for staff.
Those phone calls the restaurant got are yet another sign that the virus is driving the economy. States or local governments can lift lockdowns, but a lot of people will still be afraid to go to bars, restaurants and movie theaters because they don’t want to get sick.
Remember that old Bill Clinton campaign slogan?
“Rather than, ‘It’s the economy, stupid,’ it’s, ‘It’s COVID-19, stupid,'” said Lisa D. Cook, who teaches economics at Michigan State University.
And Cook said that as long as COVID-19 is spreading unchecked, we will see a familiar economic pattern — the stop and start.
“Schools opening and then closing, businesses opening and then closing, football games being scheduled and then being called off,” she said. “It’s running everything.”
Getting the virus under control, at least until there’s an effective, widely available vaccine, does not necessarily require strict, widespread lockdowns. The ideal approach for the economy would be more of a middle ground, said Seth Carpenter, chief U.S. economist for UBS.
“So, testing, tracing, very narrowly targeted restrictions, mask mandates — those sorts of things allow most, albeit not all, the economic activity to continue while also still trying to restrict the spread of the virus,” Carpenter said.
Besides the virus, the other thing that’ll determine how much consumers spend going forward is fiscal stimulus. But we don’t know yet whether this Congress or the next will pass another stimulus bill — or what it would look like. Our country and our government are deeply divided, and that makes compromise hard.
COVID-19 Economy FAQs
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
Give me a snapshot of the labor market in the U.S.
U.S. job openings in February increased more than expected, according to the Labor Department. Also, the economy added over 900,000 jobs in March. For all of the good jobs news recently, there are still nearly 10 million people who are out of work, and more than 4 million of them have been unemployed for six months or longer. “So we still have a very long way to go until we get a full recovery,” said Elise Gould with the Economic Policy Institute. She said the industries that have the furthest to go are the ones you’d expect: “leisure and hospitality, accommodations, food services, restaurants” and the public sector, especially in education.
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
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