There are reasons to believe that this recovery might be different. For one thing, the economy was essentially healthy at the start of the recession. There was no real estate bubble. The family debts were low; The banks were not on a tower of dubious loans that could collapse at any moment. This means that there is no reason, at least in theory, that the economy could not recover more or less from where it left off.
Policy makers have reacted to this crisis much more forcefully than the previous one. The Fed moved quickly to prevent the pandemic from sparking a financial crisis. Congress has spent trillions of dollars making sure unemployed workers can keep their homes and support their families, and helping small businesses.
These efforts were not entirely successful. The unemployment system collapsed when applicants were knocked down and millions had to wait weeks or months for benefits, if any. Government aid was insufficient or it was too late to save thousands of businesses. State and local governments have cut jobs. The hunger rates rose.
However, government assistance appears to have been largely effective in preventing the profound structural damage that could prevent a strong recovery. There has been no wave of foreclosures or corporate bankruptcies. Entrepreneurship rates have increased, indicating that Americans are optimistic and have access to the capital it takes to capitalize on that optimism.
Even if there is a strong rebound, economists warn that not everyone will benefit.
Cara Gray and her husband Christopher Dessor spent years building a small construction company in Ohio into a successful business. Then the epidemic wiped them out, and since they had a daughter at home with a weak immune system, they felt uncomfortable going back to personal work.
With the real estate market strong, Ms. Gray is confident that she will be able to return to work once the pandemic ends. However, she fears they will not be able to take full advantage of the boom. She and her husband were forced to spend the money they set aside to buy a home, default on bills, and pile up credit card debt. This can make it difficult for them to qualify for a mortgage or business loan to grow their business.
“It will affect me and my husband in the long run,” she said. It’s not just about whether I can pay my bills this month. “Once this is over, I’ll start over.”
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