NEW YORK – An overwhelming number of Americans today see the coronavirus pandemic as a months-long disruption to the economy and cutting across political lines, favor another economic aid package from the government to help them survive and remain financially stable in this hour of crisis, according to a new Pew survey released on Thursday.
The positive and bullish outlook for an economy that had record low unemployment at the beginning of the year, has deteriorated to panic levels in just over three months.
According to the survey, conducted April 7 to 12 among 4,917 US adults on the Center’s American Trends Panel, just 23% of Americans now rate economic conditions in the country as excellent or good, down sharply from 57% at the start of the year.
Most now say the economy is in either only fair (38%) or poor (38%) shape. In January, just 9% of Americans said economic conditions were poor.
Nearly nine-in-ten US adults (88%) say the $2 trillion economic aid package passed in March was the right thing to do, including identical majorities of Republicans and Democrats (89% each). More than three-quarters (77%) think it will be necessary for the president and Congress to pass legislation providing additional economic assistance, said the survey.
Majorities of Americans say the aid package enacted last month will do a great deal or a fair amount to help a range of actors, including large businesses (77%), small businesses (71%), state and local governments (67%) and unemployed people (68%).
However, only about half (49%) expect it to benefit self-employed people, while 46% think it will help their own household a great deal or fair amount. In part, this reflects the fact that lower-income adults are far more likely than more affluent people to say the aid package will benefit them, Pew surmised.
A majority (71%) says the economic problems resulting from the outbreak will last for at least six months, including 39% who say they will last a year or more. Just 29% expect these problems to last six months or less.
Yet the public does expect some improvement over time from today’s dire economic conditions. A majority (55%) expects that economic conditions in the country as a whole will be better a year from now than they are today, while 22% say they will be worse and 22% expect conditions to be about the same as they are now, according to the survey.
The survey finds that the public’s reactions to the recently passed economic aid package differ markedly from views of the economic stimulus plan enacted during the early months of Barack Obama’s presidency. At that time, views of the economy were even more negative than they are today, with 68% saying economic conditions were poor (38% say that today).
In March 2009, 56% said the $800 billion stimulus plan put forth by Obama and passed by Congress was a good idea; about a third (35%) said it was a bad idea. While the question about the economic package passed in March differs somewhat, 88% of the public says it was the right thing to do.
In contrast to the extensive bipartisan support for coronavirus aid, support for the 2009 stimulus aid package was divided along partisan lines: 79% of Democrats and Democratic-leaning independents said it was a good idea, but just 28% of Republicans and Republican leaners said the same.
After the dot-com bubble burst in the early 2000s, views of the economy slipped precipitously, but far less rapidly than they have during the coronavirus outbreak. While public views of the economy prior to the economic trouble of the early 2000s were even brighter than they were prior to the COVID-19 outbreak, it took considerably longer for perceptions to fall as far as they already have in the first three months of 2020, the survey noted.
While the decline in overall personal financial ratings has been modest, a new analysis of the coronavirus outbreak’s impact on family finances finds that 43% say someone in their household has taken a pay cut or lost a job as a result of the outbreak.
A report by Jay Shambaug, Director, The Hamilton Project, in Brookings, this week, says that using economic data-based triggers can ensure appropriate fiscal support that is aligned with economic conditions, to counter the financial turbulence created by the pandemic.
Shambaug says if the unemployment rate rises rapidly, it signals a recession, and certain policies should be employed. Doing so reduces the need for frequent Congressional action, which is especially valuable if political hurdles—e.g., the ability of Congress to meet in-person or political considerations during an election year—make new legislation difficult, he added.
Countries that are beginning to remove restrictions have experienced only a slow economic liftoff, he analyzes, and says it’s unlikely the economy will see a full rebound once social distancing policies are formally relaxed. But because there is considerable uncertainty about how the economy will perform, letting economic data on job growth and the unemployment rate guide the response is crucial.
He recommends that the unemployment insurance system is a natural automatic stabilizer, providing more help to the people and places that need it when the economy slows down and job losses mount.
There are three main advantages to letting fiscal policy responses to a downturn be guided by automatic economic triggers: quick policy activation, faster implementation facilitated by pre-planning, and sustained policy support that lasts as long as needed, said Shambaug.
According to Shambaug, there is a very good chance that six months from now the unemployment rate will be higher than it was at any point in the Great Recession, making it imperative for large and sustained support for the economy.
Following the Great Recession, fiscal policy pivoted to being contractionary far faster than it normally would given the economic circumstances, he said.
He also recommends aid to states, which the federal government this week rejected, saying that it would be better for states to declare bankruptcy.
Research suggests that states lose roughly $10 billion in revenue every quarter for each percentage point that the unemployment rate is elevated. This could amount to state revenue shortfalls in the hundreds of billions over the next year, which would lead states to fire thousands of workers and impair the economic recovery, notes Shambaug.
(Sujeet Rajan is Executive Editor, Parikh Worldwide Media. Email him: firstname.lastname@example.org Follow him on Twitter @SujeetRajan1)