Coronavirus Takes Unprecended Toll On American Livelihoods
STEVE INSKEEP, HOST:
More Americans have now died from the coronavirus than were killed in the Vietnam War. The death toll in the United States has risen above 58,000. The economic toll has hit so suddenly that it's hard to compare directly with anything in memory. Today, we have some numbers that illustrate the economic damage. The Commerce Department released its first quarter gross domestic product report, and an NPR poll shows how widely the economic pain is spread. Let's begin with NPR chief economics correspondent Scott Horsley, who's on the line. Scott, good morning.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: How bad is this GDP report?
HORSLEY: The Commerce Department says the U.S. economy shrank at an annual pace of nearly 5% in the first three months of the year - 4.8% to be precise. What's driving that contraction is a drop in consumer demand and, of course, it's all because of the coronavirus. For the first 2 1/2 months the quarter, the economy was actually chugging along, growing at a steady if slow pace. But when we got to the middle of March, there was a sharp and sudden downturn. That's, of course, when restaurants and retail shops around the country closed their doors. Tens of millions of Americans started staying home. Ben Herzon, who's an economist at IHS Markit, says even though that only happened in the last few weeks the quarter, it was enough to erase whatever growth had come before.
BEN HERZON: Whenever you have the entire country changing behavior at one time in a way that reduces spending, it's certainly enough to wipe out any gains that we saw earlier in the year.
HORSLEY: For the quarter, personal consumption fell at an annual pace of more than 7 1/2%. Exports were also down almost 9%. That reflects the downturn in global demand. This is, of course, a pandemic.
INSKEEP: If just a couple weeks of shut down at the end of the quarter can throw us into recession, what about the quarter we're in now starting April 1?
HORSLEY: Yeah, that's what's really scary. Economists expect to see a really deep contraction in the current quarter. When those numbers come out in July, Herzon expects they'll show the economy shrinking at an annual pace of something like 37%. Obviously, in just the last five weeks, we've seen some 26 million people joining the ranks of the unemployed. This is shaping up to be the deepest downturn in the U.S. since the 1930s.
INSKEEP: Scott, stay with us. I want to bring another voice into the conversation, NPR's Domenico Montanaro, who has in hand an NPR/PBS NewsHour/Marist poll that asked people if they personally have been affected by this downturn. And, Domenico, what are people saying?
DOMENICO MONTANARO, BYLINE: Well, it's taking a pretty harsh one. I mean, 50% of Americans say they have either been laid off or lost hours at their job because of it. That's up from just...
INSKEEP: Did you say 50%?
MONTANARO: Fifty percent - I mean, that's a huge number. And that's up from 18% just a month ago. So imagine where this would go if this continues and how long it could continue. And the pandemic is having a harsher financial impact on people of color, people without a college degree, younger people and those who are making less than $50,000 a year, Steve.
INSKEEP: This is like something we learned about the Great Depression in school, that unemployment went up to 25% but far more even than that 25% were affected. They work shorter hours, they work for lower pay, and that seems to be what's happening. But with all that said, are people eager to get the economy going again?
MONTANARO: Well, Americans are largely cautious about reopening too quickly. Eighty percent or more of people say they do not want schools, restaurants or large sporting events to start taking place as normal again until there is further testing. And there's real anxiety about that. And two-thirds of people say that they do not want us to physically go back to work without widespread testing. But a majority of Republicans say it's time to get back to work. And this is the tension. You know, people are going to probably have to start venturing out soon-ish as Scott's talking about what's happening with the economy. But what is that proper level of social distancing, and how much do we go out and how fast?
INSKEEP: So if there's that partisan divide with a majority of Republicans wanting to get right back to work and other people being more cautious, how are people viewing the president's performance?
MONTANARO: Well, the president - 44% say that they approve of the job he's doing on this pandemic, similar to the overall approval rating that he's been - that he's had since the beginning of his presidency. No rally around the flag moment, though. And most think their governors by a 2-1 margin are doing a better job than President Trump is on this. And there are a huge gender and educational divides on how Trump is handling all of this.
INSKEEP: So mixed views on reopening the economy but big majorities overall saying they want to be cautious. Nevertheless, Scott Horsley, some states are trying to move ahead with some halting steps toward reopening. What might a recovery look like?
HORSLEY: It's a good question. You know, these numbers from the Commerce Department today give us sort of a rearview mirror. But economists are trying to figure out what's ahead of us. Ben Herzon has been looking at industries like airlines and restaurants which have been really hard hit. In fact, for them, there's really no place to go but up.
HERZON: Passenger traffic is down 95% from year-ago levels. Seated diners from OpenTable is down 100%. You can't go lower than that. You know, all these indicators are really bad right now. At some point, they'll turn. We'll just have to keep an eye on when that happens.
HORSLEY: And the crystal ball is cloudy. Obviously, there is a question of what the virus will do, and then how will the American people respond to that? The best-case scenario is the economy starts to stabilize this summer, and then we begin to see a rebound later in the year. But there's no guarantee of that. If a lot of businesses don't make it till the recovery, then the turnaround will be weaker and it will take longer. And then there's also the danger of what happens if there's a big second wave of infections later in the year that would require another round of lockdowns.
INSKEEP: Domenico, always hard to forecast, especially in politics these days. But is this fall's presidential election likely to be 100% about the pandemic and the response?
MONTANARO: Well, two-thirds of people say that they have already made up their minds, Steve. But about a third say that this will have either a major or minor impact. So the coronavirus could very well be the determining factor for that swing group of people.
INSKEEP: OK. NPR's Domenico Montanaro and Scott Horsley on grim economic news this morning. Gentlemen, thanks to you both.
HORSLEY: You're welcome.
MONTANARO: You're welcome. Transcript provided by NPR, Copyright NPR.