THE PANDEMIC PARADOX

A senior economist at the Consumer Financial Protection Bureau surveys the financial consequences of the Covid-19 pandemic.

The good news: The pandemic took less of a toll on the economy than it might have. The bad news, and thus the paradox of the title: The economic damage will last. As Fulford shows in clear and accessible prose, the world as a whole was unprepared for a devastating pandemic; Americans, in particular “were not prepared for an economic collapse of this magnitude.” That lack of preparation continues, and willfully, since Americans still don’t have much interest in saving for a rainy day. However, where they might have suffered because of that unpreparedness, monetary policy in the form of stimulus and unemployment payments saved the day. Whereas in 2008 the response of the government was timid, in this instance, Congress acted quickly to pass three major stimulus bills “more than five times larger than the response to the Great Recession.” Moreover, the relocation of much of the knowledge workforce from office to home remade the economic landscape, showing that there were new possibilities in independence and entrepreneurship. Many of the ills of the pandemic are generational, since they mostly affect young people. Millennials have had to weather two major economic upheavals in their working lives, while those who are in school today lost educational ground, so that “the average student affected by pandemic schooling is likely to earn around 4.6 percent less over her lifetime than she would without the pandemic.” This adds up to $100,000 per person and more than $5 trillion over a generation. There’s no real way to catch up, Fulford writes, and though things will get better, the damage to the supply chain and inflation are something Americans will be weathering for years to come.

If you’re wondering about the dollars-and-cents effects of the virus, this book makes a lucid guide.