“Creative Destruction” or Just “Destruction?”
Under the effects of the Pandemic, consumers and businesses grapple with their own “Reset.”
This is the transcript of my podcast last Sunday, THE WOLF STREET REPORT.
We’ve got the weirdest economy ever. A disputed number of people lost their jobs early on in the Pandemic, with figures ranging from 22 million to 33 million people who lost their jobs, depending on whether we looked at the monthly jobs report or the number of people having filed for unemployment.
Since then, millions of people have been hired back by restaurants, gyms, hotels, and other enterprises that had shut down. This was followed – and that’s the phase we’re in now – by more layoffs but further up the corporate chain, with higher-paying jobs now getting axed. Initial unemployment claims of newly laid-off workers have remained horribly high, at over 800,000 a week, and have risen recently.
But wait… at the same time that this jobs fiasco is playing out, retail sales – so that’s goods bought online and in stores – after plunging in March and April have spiked to record highs.
This does not include services such as insurance, airline tickets, hotel bookings, rent, healthcare, etc. And we know that airline passenger revenue at Delta, for example, has collapsed by 83% from a year ago in the third quarter, according to Delta’s quarterly earnings report. Many hotels remain closed.
In August, spending by Americans on services was still 7.4% below a year ago. And spending on services is the largest part of consumer spending.
But they plowed record amounts of money into buying goods, such as electronics, appliances, cars, bicycles, exercise equipment, and the like. According to government data, the amount that Americans spent on durable goods in August spiked by 12% from February, just before the Pandemic.
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