The Story So Far : The Indicator from Planet Money Five indicators provide a gauge of how daily economic life in America has changed.
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The Story So Far

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The Story So Far

The Story So Far

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

STACEY VANEK SMITH, HOST:

Hey, everyone. Cardiff and Stacey here. And this is THE INDICATOR FROM PLANET MONEY. More than three months since the start of the coronavirus pandemic, the enormous damage it is causing to the U.S. economy is becoming clearer by the day.

CARDIFF GARCIA, HOST:

According to one early poll from Gallup, already, more than 1 out of every 4 workers across the U.S. has been either laid off or had their hours reduced. And with all the businesses being forced to close, there just is no parallel in our lifetime for the economic catastrophe that is now unfolding.

VANEK SMITH: And these huge macroeconomic consequences are now obvious. But today on the show, we want to start taking a closer look at the economy. Specifically, we want to look at a series of indicators that show more than just the scale of the economic crisis but also show the underappreciated ways that this recession has changed daily life for people and for businesses in the U.S.

GARCIA: So we are going to do just that. We have picked a bunch of indicators, and we've identified the different stories that these indicators tell us about the way life has so suddenly changed across the country - five stories in all. Here they are.

VANEK SMITH: And the first story, the first indicator, is that people in the U.S. have stopped moving. We don't mean they've stopped moving from city to city or from one house to another house. We mean that they are just not traveling at all.

GARCIA: Yeah. For example, look at what happened just yesterday. On the same Sunday in March last year, there were about 2.4 million airline passengers. Yesterday, there were 90,000. That is a decline of 96%.

VANEK SMITH: Car traffic has also totally collapsed. I don't know if you've seen the videos of cities now, but there are, like, no cars on the highways. People are still using their cars to run personal errands, but they are not commuting to work nearly as much. They're not traveling. And traffic on highways in particular has gone way down. All signs point to everyone just staying really close to home.

GARCIA: Yeah, and this is not just showing up in the data. You can also see this in the suddenly clear skies above cities like Los Angeles, which in normal times are clouded over by a layer of smog. One measure of pollution in Southern California shows that it has fallen 40% since the middle of March.

VANEK SMITH: In New York City, carbon emissions have also fallen. And the decline in traffic is having another effect. Traffic accidents were down almost 40% in New York for most of March. And it's likely that with so many people staying home, traffic accidents will fall throughout the whole country.

GARCIA: And that leads us to the second story. The country is not just driving and flying less. It is also using a lot less energy overall. One estimate from The New York Times shows that electricity used has roughly fallen by 8% since February. That is an incredibly fast and steep decline. Just for context here, in the last recession - the one from more than a decade ago - electricity use never fell that much even though the economy was declining for a whole year and a half. And that was a terrible recession. In the recession we are almost certainly in now, it has fallen by more than that in only about a single month.

VANEK SMITH: That is shocking, but it also makes sense, right? I mean, the economy is using less electricity because so many businesses and other places, like schools and restaurants and shops and museums, have entirely closed down because of social distancing. The lights have literally been shut off.

GARCIA: And there's a reason that this indicator matters so much. How much electricity the country uses tends to match how much the economy is growing or shrinking really closely, which is why this is such a great indicator to keep track of. It can tell us how much worse the economy is getting in real time, and it should also tell us when the economy has started to recover.

VANEK SMITH: Indicator No. 3, our third story about the economy - the budgets of state and local governments are really suffering. Since people are spending a lot less money now in the overall economy, these state and local governments won't collect as much money in sales taxes. Plus, they won't collect as much money in income taxes either because so many businesses are laying people off. And this is happening at a time when state and local governments really need the money to provide things like unemployment benefits and health care expenses.

GARCIA: All of which means that these governments are feeling pressure to cut costs somehow in other places, and that might include laying off some of their own workers. These layoffs have already started in places like Cincinnati and Wichita. So far, there have not been too many of these layoffs, at least compared against the layoffs happening at businesses. But they could accelerate quickly if the economy continues its freefall.

VANEK SMITH: More than 1 out of every 8 workers in the U.S. economy works for a state or local government. That is 20 million people - people like firefighters, teachers, police officers.

GARCIA: And as part of the CARES Act - the big bill that passed a few weeks ago - the federal government and the Federal Reserve, the central bank, are providing some funding to state and local governments to help them out. But a lot of economists worry that it just is not enough, that these state and local governments are going to need more money in future bills.

So those are three stories so far. People are stuck in place. The country is using a lot less electricity. And state and local governments are getting hammered in this recession. We'll have two more stories for you right after the break.

VANEK SMITH: Today's fourth story, our fourth indicator about the coronavirus recession in the U.S. - entrepreneurship. Entrepreneurship is way down. Applications to start new businesses each week are roughly 33% lower than they were a year ago, and that is not very surprising. It's hard to start a new business when the economy is in a freefall and you don't know if people are going to have money to buy whatever your business is trying to sell. It's also hard to open a business if you see other businesses closing down all around you.

GARCIA: But even though it's not surprising, this might still be an underappreciated story. New businesses are often a great source of new ideas for how to do things and how to make things. So entrepreneurship is crucial for making an economy more productive in the long run.

VANEK SMITH: Yeah. After the last recession, the Great Recession, the rate at which new businesses were formed - it never got back to quite where it was before the recession. And if that happens again, then the economy's potential to grow faster in the future will shrink. Less entrepreneurship, by the way, does not just hurt the economy when it's in a recession. It hurts the recovery later on as well.

GARCIA: And story No. 5 of the coronavirus recession - this recession is not affecting everyone equally. The recession is revealing economic inequalities that already existed throughout the country. And we'll have more detail on this in a future episode, but this trend is maybe most obvious if you look at who is dying from the disease.

VANEK SMITH: To take one example, in Chicago, black residents are only 30% of the population, but they are 68% of the city's coronavirus deaths. A similar story is happening in Milwaukee County, where African American residents are a minority of the population but a big, big majority of the deaths from coronavirus.

GARCIA: And here's just another example. If you look at which jobs can be done from home throughout the country, well, the majority of high-income workers - so take all the people who make in the top 25% of earnings throughout the country - 6 out of 10 of those workers can do their jobs from home. But if you look at the people who make in the bottom 25% of earnings, fewer than 1 out of 10 of those workers can work from home, which means these workers will either have to be let go if their place of business is closed down, or they'll have to risk getting the virus by continuing to go to work.

VANEK SMITH: And there are many more disparities like this. The point is that as terrible as this economic downturn has been for some groups of people, it has been a lot worse for others.

GARCIA: This episode of THE INDICATOR was produced by Darius Rafieyan and fact-checked by Brittany Cronin. Our editor is Paddy Hirsch, and THE INDICATOR is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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