Joe Biden and Donald Trump speak during the first U.S. presidential debate on Sept. 29, 2020.
Kevin Dietsch/UPI | Bloomberg | Getty Images
President Donald Trump and Democratic presidential nominee Joe Biden have diverging views on the economic rebound that has played out after the coronavirus pandemic upended the country last spring.
Trump and administration officials have consistently said the recovery has been shaped like the letter V — suggesting a quick return to pre-pandemic levels after a self-induced recession caused by mandated business closures.
“This is better than a V. This is a rocket ship. This is far better than a V,” Trump said in June.
The president again touted a “V-shaped recovery” in a speech on Wednesday. White House economic advisor Larry Kudlow recently echoed those remarks, telling CNBC that a V-shaped recovery doesn’t depend on another round of federal financial relief.
Meanwhile, Trump has pointed to the stock market’s swift rise as a leading indicator that the economy is back on track.
Biden has a different view. He views the recovery more as a K — whereby its spoils have gone overwhelmingly to the rich, while others haven’t reaped those gains.
The former vice president made that case in a town hall Thursday night.
“[Trump] talks about a V-shaped recovery. It’s a K-shaped recovery. If you’re on the top, you’re going to do very well,” Biden said. “And if you’re on the bottom or if you’re in the middle or the bottom, your income is coming down. You’re not getting a raise.”
No group was spared from the recession’s initial shock, which pushed unemployment to heights unseen since the Great Depression. And employment has steadily rebounded among all groups since the crisis peak in April, according to federal data.
But data also indicate that the recovery has been uneven.
The wealthy, White and higher-educated were the least likely to lose their jobs early on. And those among them who did have largely recovered.
Meanwhile, the stock market and real estate — assets disproportionately held by these cohorts — have boomed, further boosting their wealth. Financial stimulus also helped them boost savings more readily than others.
That remarkable recovery for the rich masks deep and continuing financial pain for other groups, like people of color, lower earners, women and workers with less education. Such groups are more likely to report hardship like food insecurity and trouble paying rent.
While they, too, have bounced back a bit since the depths of the crisis in April, the pace of that progress is stalling, at the same time that financial-aid measures have ended, John Friedman, an economics professor at Brown University, previously told CNBC.
“The story of the recession for low- and high-income individuals is very different,” he said. “From an economic perspective, high-income families are by and large doing fine.”
Sectors like leisure and hospitality that took the biggest beating during the downturn disproportionately hire women and people of color and tend to pay lower wages, according to Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution, a think tank.
The unemployment rate, a traditional measure of financial hardship, among Asian and Black Americans peaked at nearly 15% and 17%, respectively, in April. Latino unemployment ballooned to almost 19% — meaning about 1 in 5 adults who wanted a job couldn’t find work.
The rate was lower for Whites, at just over 14% — which is still high by historical standards. But it has since halved to 7% in September, even as unemployment for Blacks and Latinos has stayed above 10% (12.1% and 10.3%, respectively).
Similar job trends have played out by education and income level, too.
Unemployment peaked at over 21% in April for those without a high-school diploma, roughly three times the rate of the college-educated, according to the Bureau of Labor Statistics. The former have seen their jobless rate fall to nearly 11%, even as the rate for those with bachelor’s degrees is just below 5%.
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Further, the top third of earners (those making at least $60,000 a year) had almost fully recovered their lost jobs by the end of August, according to an Opportunity Insights analysis of Labor Department data.
By comparison, employment among the lowest earners (those making less than $27,000) — who saw more than 37% of their jobs evaporate in April — was still down nearly 18% from the beginning of the year, the analysis found.
Stocks and real estate
Inequality is a marker of all U.S. recessions, Edelberg said. But this recession is unique in that financial assets were either quick to rebound or remained unscathed, keeping the wealth of the rich intact, she said.
White, college-educated and wealthy Americans overwhelmingly own stocks and real estate, according to Federal Reserve data. The richest 10% of Americans, for example, held 87% of the $22 trillion of corporate equities and mutual-fund shares at the end of the first quarter, according to the Fed. The share was even higher for Whites, when looking across racial groups.
“[The stock market] is one of the clearest reasons people are taking about a K-shaped recovery,” Edelberg said. “For a lot of well-off people who didn’t experience a job loss, they are utterly blind to the financial hardship that millions and millions of people are feeling.”
The S&P 500 stock index plunged 34% from its high in mid-February to its bottom on March 23, the quickest decline in its history.
Those losses were fully erased by Aug. 21, less than five months later.
Stocks were up more than 8% this year through noon ET on Friday. The market has been buoyed by investor optimism that the country will find a vaccine or some treatment for Covid-19, Howard Silverblatt, a senior analyst at S&P Dow Jones Indices, previously told CNBC.
By comparison, stocks took more than four years to recover after hitting their lows during the last two recessions, according to S&P Dow Jones Indices.
The typical home owner also saw an 11.4% increase in housing prices in August versus the same time last year, to $310,600, according to the National Association of Realtors.
Prices rose in every region of the country, the group said. The national median home price surpassed $300,000 for the first time ever in July, and August’s national price increase was the 102nd straight month of gains over the prior year.
Meanwhile, the same group that reaped the benefits of financial-asset ownership was most likely to save stimulus checks (up to $1,200 for individuals) enacted by the CARES Act coronavirus relief law in March, according to the Bureau of Labor Statistics. Other groups were more likely to use the aid for everyday expenses or to pay off debt.
“What you’re seeing across the country is an individual’s income and the color of their skin have a large role to play in terms of how someone is faring during this pandemic and economic crisis,” said Richard Besser, president and CEO of the Robert Wood Johnson Foundation.
Just over a third of White and Asian-American households reported experiencing serious financial problems since the start of the pandemic, compared with 55% of Native American, 60% of Black and 72% of Latino households, according to a joint survey published recently by the Foundation, NPR and the Harvard T.H. Chan School of Public Health.
A federal $600-a-week supplement to unemployment benefits that had propped up household income and spending in the early months of the pandemic lapsed at the end of July. The Trump administration provided up to six weeks of $300 payments through a separate Lost Wages Assistance program to supplement jobless benefits, but it’s been slow to reach people and isn’t available to hundreds of thousands of workers.
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