 Hi, everyone. This is Carol Hinkel, president of Triple E. I want to welcome everyone today to this, our fourth lecture. This topic is very timely. I think it's going to be very, very interesting. I'm excited. So I'd now like to introduce Beth Wood, our program chair, who will give us a little background about our speaker. Beth? Good afternoon, everyone. It's a great pleasure to welcome back to Triple E, Peter Hans Matthews. Dr. Matthews earned his bachelor's degree at McGill, his master's at Queen's University in Kingston, Ontario, and his PhD at Yale. He joined in 1995, the faculty of Middlebury College, where he is currently the Charles A. Dana Professor of Economics. He also serves as a distinguishing visiting professor at also University in Helsinki, Finland. Please join me in welcoming back to Triple E. Dr. Peter Hans Matthews. Hi, everyone. I'm absolutely delighted to be back. I'm hoping that everyone can see the slides over my left shoulder, right shoulder, one of those shoulders. As Beth said, this is a return visit for me. I think the last time I was here, I was talking to all of you about Canadian politics. So this makes a big change. But as I said, I hope that if any of you have any questions in this kind of really different format that you either ask me at the end, or if we don't have time at the end, please feel absolutely free to reach out to me. My email address is on the cover slide here. And I have a web page and I'm pretty easy to find. So all right, so let's get started. I want to start with an observation. And the observation is this. We live in an age of fake news. And even when the news isn't fake, it can be customized or tailored to fit exactly the preferences of people who are like us. And so we have this kind of real splintering effect. And the irony is, is that in the midst of all of this, we have never lived in an age in which there is as much high quality publicly available data as there is right now. There are enormous opportunities for people to become engaged citizens and in fact in much of the world engagement with that kind of data is considered a form of civic engagement. And all of the data and all of the data I'm going to show to you today is publicly available. It comes from and most of it almost all of it comes from three sources and and all of it is, all of it is material or data that any of you could engage with on your own. I'm going to walk you through a bunch of pictures today, but in some ways you could do this on your own and you could engage one another about this on your own. There's no reason that we can't enjoy fact based conversations with one another. I'll just mention where the three sets of data come from just so that you have a sense. So, the first is from this really remarkable project called the opportunity insight project insights project at Harvard that by an economist named Raj Chetty. So the project has many dimensions but of late one of the things that they've been doing is they've been in a sense creating an alternative to publicly available government data that is real time that's to say they figured a way to collect data on things like employment or small business activity in real time by partnering with private groups like a credit card processing agencies or job finders and one of the things that they're able to do is they're able to give us a glimps at what's happening to the economy as we speak. So if you want to know what happened to unemployment, not last month, but in some ways last week, the Chetty group is doing remarkable work. The other setup, most of the other pictures I'm going to show you come from something called our world in data, which you just Google our world and that you see it. This is probably the best resource available to any of us in terms of thinking about COVID related data. They also provide useful guidelines. So I encourage you to look at that. The last comes from a very old source but in some ways an underused one, our own Federal Reserve Bank has a something called Fred, which is the kind of the Federal Reserve's economic database. And that's available if you just say Fred Federal Reserve Bank of San Luis. So I just want to say that almost everything I'll show you as a picture almost all of it is publicly available. And almost all of it I think would be interesting to you even without me. So in some ways I'm here to facilitate a conversation that I hope will last a much longer time. All right, so let's start with the first picture. So what are we looking at here. So we're looking at employment. Since the very announcement of the first COVID case in the United States on January 20 of this year. And so the way to interpret this picture is to say on the on horizontally as we move from left to right, but you're looking at our various time with very different dates marked out national emergency declared the cares act enacted the first stimulus payments made up and down what you see is how much total employment in the United States has changed relative to what it was on January 20. So on January 20 at zero, you see just after that it goes up a little bit, and then you see what we all observed namely the crash of employment post the declaration of the national emergency and post the kind of a spread of the virus. I want to say and we'll see a little bit later that this is not just a decline it's a decline of absolutely historic proportions. At one point the evidence suggested that employment in the United States have declined as much as 20% or more. What you also see however is the beginnings of a recovery. There are a couple of things to note about this though that we're going to talk about a little bit more, which is that the recovery. While it's happening has in some sense, petered out a little bit and that's consistent with some of the data we saw even today. We saw were some additions to total jobs, but that that was happening at an increasingly slow rate. And so where are we now relative to where we were at the start, we see up here were about 6 or 7% lower employment. Does that sound like a lot. It is when you think that the total, the total labor force in the United States is about 150 million people. That's many millions of people who are not employed now, who might have been otherwise. So that's the first picture I wanted to show you. The next one is the same picture with a somewhat longer view. And it's a reminder that in fact it's not enough to recover to where we were in in January of this year because if you as you take a look at this picture the blue part of this picture is precisely where the previous picture starts. And one of the things you see is that in in a dynamic economy like the United States, the American economy with employment growing steadily over time because the labor force of populations growing steadily over time, we would expect employment to grow pretty steadily. And that's indeed what we see so when we say that we haven't recovered relative to where we were in January 20 in January. So everyone can hear me. So we left off at this picture. By the way, that was that was not me hitting a random button that was the internet. That happens from time to time so I hope. I hope we're okay. All right, so taking a look at where we were last time you see that we're sort of behind where we were in terms of thinking about long run growth and that's a problem. And it's a problem because as you take a look at this. We see that employment growth has been increasing we saw that in this morning's announcement, but it's been increasing at a decreasing rate that is to say, we're recovering but the rate of which we're recovering seems to be slowing down and that's disconcerting. That's disconcerting because for one thing it doesn't it's not obvious when in some ways we're going to make up all of this lost ground but more important. It's just that there are a lot of us still in distress. We see that in terms of unemployment numbers and we see that in terms of the situation of very specific groups. And so, one of the other things that this picture points out though someone reminded me this morning is, this is a picture that gives the lie to a story that went around a lot even in Vermont which was that we needed to be careful about things like $600 unemployment insurance benefits or premium, because those were considered a disincentive to work. One of the really interesting things about this picture is that it shows that we were adding new jobs adding new employment at precisely the time when that $600 was in place. And then when it disappeared to rate it slowed down. I'm not saying those cause an effect there, but if you're going to make an argument that in fact there are huge disincentive effects built into the previous pandemic unemployment insurance plan. The data isn't really hugely supportive. This is the picture I really wanted to start with though today and really bring your attention to and you could you could look at this on the opportunity insights website very quickly. So the blue line is the line we just saw this is total employment in the United States overall the red line is total employment for high wage workers in the United States. I'm not going to say highly skilled and I'm not going to say highly educated because those are all quite the same thing but I'll call them high wage workers. The green line is the same figure but for low wage workers. And what's disturbing about this picture is, while it is certainly true that from a from a health perspective and from an economic perspective, we're all in this together. There's a sense in which those burdens are just not anything like equally shared. If you look at the experience of high wage workers. It's not a huge exaggeration to say that for high wage workers, the recession is basically over for low wage workers, low wage work employment is still 20% below where it was some time ago. In a sense, the recession has been catastrophic for low wage workers, and you might think well that that's always the case but in fact I'm going to show you that this is much more extremely the case than than than it has been in previous years. What we really have now is what some people I know many people have heard about V shape and uship and all shape recoveries. Some people are not talking about a case shape recovery. Where well to do workers have basically on the road to recovery and and and low wage workers are simply still in desperate in desperate straits. I just wanted to show you that this looks exactly the same in in Vermont so this is exactly the same data as we just looked at but in Vermont in Vermont you see the same I mean it's still the case in Vermont that high wage workers are not quite as well off as they were in low wage workers are desperately much less well off right employment is still a 25 or 30 almost 26% lower than it was at the in January, January 2020 so that case case shape recession we were talking about is really pronounced in the state of Vermont. And even those employment numbers are a little bit misleading so this is a number you don't often see reported but I thought I'd share with you. So a lot of people in the United States, especially at the lower end of the income distribution hold up what is now called a portfolio of jobs. Once upon a time, many full many many heads of household in the United States held full time single jobs. That's less and less the case, what we now often see are lots of folks cobbling together multiple jobs. There's nothing intrinsically wrong with that except that from a point of view of thinking about measuring and thinking about economic performance. When somebody loses one of the two jobs that they use in order to support a family they're still counted as employed. And when that person comes back to work to that to a second job for example that doesn't get recorded either in the usual sense. And what I'm showing you here from the Federal Reserve is a look at the number of Americans who are portfolio job holders who hold multiple jobs. And one of the things you see is that that's not recovered yet, right, that one of the things that happened in the, in the onset of the, on the onset of the COVID epidemic was a collapse, not just an employment, but in the number of jobs that people who hold multiple jobs. And that hasn't recovered. So one of the things we're looking at when we look at that case shape recovery is we're looking at a lot of folks who not only lost jobs, but a lot of poor folk who basically lost a second or third job. And that is consequences for the way you think about policy to. There's just this kind of evidence I was suggesting before that in some ways you look at four previous recessions and the one thing that's true previous recessions is yes, low wage workers tend to do a little bit less well often every recession, but this one is different. This one is absolutely different. This is the sense in which, as I said before, we're not all in this together. And frankly, brutalized by by by the epidemic, which is why then some of the federal budget policies are so important to the kind of current conversation. Let me show you one other. One of the places you see this is the fall is is in the data on COVID in race. So let's think about this a little bit. Low wage workers have been especially hardly hit during the current recession. That means it means that low wage workers, the low wage workers who keep their jobs are often working in so called essential sectors. The low wage workers who lose their jobs often return to to residences and to cities and to neighborhoods that are densely populated. They often find themselves with reduced access to medical care. And so not surprisingly, one of the consequences of the economic effect here is for there to be a differential health effect. What you're looking at here are early days death rates for different populations in New York City. And the top diagram is the is the unadjusted by age. So notice, you know, you would expect, for example, that because one population may be on average older than the other that COVID death rates would be higher and that's roughly right here. So what you want to see when you look at this picture is that the white population is somewhat older is the oldest of the four groups in New York. And so it's COVID death rate actually is was surprisingly low. Given its age distribution, whereas the death rates of blacks and African Americans was on average, three times higher than it was for white workers in New York City. That's one of the consequences of that case shape recession I was talking about a second ago. A recession that hits poor workers disproportionately hard is a recession that almost by definition hits black workers and Hispanic workers. And so we want to think a little bit about that. You know, I think in the interest of time I'm going to this is kind of unemployment insurance claims. There's not a lot here that's going to surprise anyone. Maybe I'm just going to skip over this a little bit. Let's talk about this though. So what I'm looking at here is not employment, but using the same opportunity insights website this percentage change in consumer spending. So if you're thinking about, you know, economic health you really want to spend time thinking about consumer spending right consumer spending is 70 or 75% of total spending. It's going to be essential to any recovery and it's going to be a probably a driver of the economy for the next year or two. And so you see a couple of things here pretty dramatically one of the things you see here is that consumption spending is still lower than it was pre covered. It's about four or 5% lower than it was. You also see a couple of other things though you see very dramatically the effect of the stimulus payments. There's a lot of talk about whether or not the stimulus was effective or not. If you look at the dotted line right about here right, sort of April 18 or so. You see a sharp spike in consumption, but in fact the largest growth in consumption spending since then that wasn't when anything was passed it wasn't when anything was announced it was in fact when the first checks went out. There's a very real sense in which a federal government policy fiscal policy has been completely successful in propping up consumption spending at a time when employment was collapsing. And that's really important to know. On the other hand consumption spending has not recovered and I'm going to show you something that I think is going to surprise you a little bit. I'm going to show you consumption spending by the same groups we were looking at when we were looking at employment. And here's what's interesting. Here's what's surprising. The green line you're looking at is consumption spending by the same low income workers who were more likely to lose their jobs and one of the things you see is that until now at least policy has been relatively good about propping up the consumption or household spending of relatively low income workers. What's really interesting about the current recession and again it's a little bit unusual is that the collapse in consumption spending has all been by high income workers. So, in effect, what we have is the following we have a recession in which relatively high income workers are hanging on to their jobs, but they're not spending as much as they used to their, but they're not spending as much as they used to on the high income workers. A lot of things our previous picture suggests that were typically provided by low income workers. So it may or may not come as a huge shock to you, but all of the kinds of in person services that were typically provided by low income workers to high income workers in the United States, that market has disappeared. But interestingly, the collapse in demand for goods and services in the United States is not coming from low income workers. The high income workers who typically have not experienced a collapse in their income are often working from home, but they're simply not spending. And that raises a really interesting policy question and you can see this by the way in this in the behavior of the three groups, immediately after the stimulus payments right low income workers were clearly in some sense saved by the stimulus payments, there could be a huge spike in consumption spending, whereas the red line, it bumps up but not nearly by as much. One of the really curious things about this is the strange patterns it produces in spatial patterns geographic patterns in consumption behavior and income behavior in the United States so for example, it's the case generally that a no group of poor workers in the United States has fared worse than those workers who lived who live adjacent to relatively affluent neighborhoods. So if you look in New York, for example, if you live, if you're a poor worker who lives relatively close to the Upper West Side you on balance done much worse than a poor worker who lives for example in Brooklyn with the box. And so we see this interesting collapse in spending and it's a collapse in spending that's largely driven by high income workers, that's going to be really important to understanding why some kinds of policies don't work. Right, and by the opening up for example policies may not may not be super successful. I want you to keep that in mind as we keep going. This is just in some sense to kind of capture the intuition so this is consumer spending on different kinds of goods and yes as we just as we just suggested spending on restaurants and hotels spending on entertainment spending on food spending all sorts of other things has basically collapsed other sorts of spending have basically picked up. I thought I'd share these to you to because there's another way in which this recession has not been the burdens of this recession and not been equally shared. So we said before that total spending is done is still down about five or 6% relative to to what it was pre covered, but the collapse in small business revenue is much larger than that. Small business is born a disproportionate share of the burdens here. And to the extent that things like payroll protection acts were not very successful at reaching out to small business that policy has to be considered something This is Vermont. In fact, Vermont, the collapse of small business revenue has been even larger, almost 30% relative to pre COVID peak. You might ask how interesting question might be is this because every small business out there simply as fewer customers or is it because effectively what we're seeing is a shuddering of lots of small businesses where the remaining small business basically pick up whatever, whatever demand is left over. In the language of economics, that's the difference between an extensive and intensive margin and the next picture I'm going to show you is the number of small businesses, which gets at the question of why we're seeing the collapse in revenue. And this is what you see the number of small businesses open has created by almost a quarter. So we see a collapse in small business revenue that's collapsing small business revenue is largely driven by the shuddering of small businesses, not by some kind of equal sharing across the board. And that's another sense in which the economics of coven are have to have to talk about unequal distribution of burden or unequal distribution of pain here. I'm only going to show you this picture because I've been you know I've been in a terrible economist right I've been nothing with grim today. And this is, this is a picture about how people are spending their time post COVID. The green line is time spent in the workplace and not surprising that's down. The red line isn't labeled I'm not sure why but I'll tell you what it is and actually think about guessing what it is. It turns out that one of the really interesting, happy byproducts of all of this is a kind of renewed appreciation for the, for the natural environment. People have. Well, Vermont is probably didn't need to fall in love once again with, with, with nature, but lots of people have. And that actually tracks in another study I'm doing in terms of attitudes about the environment. Often in a recession, lots of other kind of causes pro social causes are crowded out and that turns out to be not true for the environment and during the kind of epidemic. And that may be one consequence of this. All right, so when we talk about policy right so what can we do for for policy I'm going to show you two states here and I don't want to spend too much time on this because I want to make a couple of other more nuanced points but there's a lot of talk about how opening or earlier late is going to benefit economic growth and save the economy and save those jobs that we're talking about. So here I'm showing you a picture for two states. So this is Minnesota in Wisconsin, who as you can see before either of them closed had very very similar changes in consumer spending shouldn't be surprised. This is part of a broader Midwest economy, same larger macroeconomic forces that play same sources of kind of economic expansion or growth, same vulnerability to kind of swings of agricultural markets. And you see just before both of them close that in, you know, demand starts to collapse and that's exactly the picture that we saw before. Both of them have collapsed that that that consumer spending now is much lower than it was although the decreases sort of becoming smaller over time but here's that what I want you to notice. The timing of the opening was largely irrelevant to the subsequent path of the economy. And if you take a look at this picture, Minnesota opens well before Wisconsin. But if you were to look at the the the behavior over time of consumption spending in Minnesota Wisconsin, they look almost identical. In fact, it's in some ways you could argue that if there was any effect, the effect was health. The keeping it closed longer probably saved lives, but there were no economic consequences. And if you go back to the previous picture I showed you, you start to understand why. Remember that most of the collapse and consumer spending is driven by relatively affluent households, relatively affluent households were not going to start spending again on the sorts of things they were spending before, simply because that state opens up. I mean just to think about this in kind of completely personal terms right. It doesn't matter whether or not burning the airport is open at this point. There's no universe in which I'm getting on a plane. And it doesn't matter whether the destination state is particularly open at this point, this new universe in which I'm getting on a plane. And so to the extent that the pandemic remains in place. Most economists think it's impossible that we're going to see a fully economic recovery. So this notion of a trade off and I'm going to come back to over and over again. It's a really important lesson. And if we have one big lesson today of a trade off between okay, you know, can we have a little bit more economic growth at the expense of a few more deaths or vice versa is I think a false trade off. At the very least, it's not anywhere in the data. So I'm going to show you another couple of versions of pictures like this, but this is a really important picture to keep in the back of back of your mind and this comes from from Raj Chetty's work at Opportunity Insights. You see the same thing here so if you think the Minnesota and Wisconsin are exceptions. This is a very good this is a picture that does it for every state synchronizes days of open opening and closing, and the behavior of early closing states looks the same from it from an economic standpoint. Delay enclosure or not delay enclosure made little difference from a health standpoint it made an enormous difference. But from an economic standpoint it didn't make a lot of difference. So this is a complicated picture taking a minute or two to explain it but I love this pictures this doesn't come from opportunities as this comes from a really wonderful paper by an economic historian that's kind of a profession you may not have heard of Emile Werner at MIT. So I mean as one of those people who was fascinated by the possible connections between covert and the Spanish flu of 1918. And like all good economic historians he's collecting this unbelievably unusual new data and what he has his data on a lot of American cities between 1914 and 1919. Okay, and so on this picture what you're looking at is on the horizontally as you move from left to right, you're looking at mortality during the Spanish flu, the Spanish epidemic in 1918. Up and down on the vertical axis you're looking at employment from before the pen from from before the Spanish flu epidemic to after. So notice. If you thought there was a trade off, you wouldn't expect to see this kind of a relations because what do we see, we see generally that these two things move in the opposite direction when one goes up the other goes down. We translate that into into kind of economics language. Other things being equal higher mortality is associated with lower employment growth. So at some level that's not hugely surprising except when I tell you that the difference between the green states, so the green cities and the red cities in that diagram is precisely the difference today between states with mass ordinances. The green cities in the picture are cities that had a strong non what are called non pharmaceutical interventions, NPIs. And what I want you to know and the red states were not so think about the green cities as cities that had you know aggressive mass coordinates aggressive social distancing ordinances, which they did and the red as the red cities this not notice you see two things here first of all you see the green ones are all to the left of the reds, which tells you what it tells you that not surprisingly those ordinances work they reduce mortality. It also tells you by and large that those green cities experience faster growth after the fact. The green cities to the left. They're also typically above that line which tells you that they experienced more employment growth than you would normally expect it in that relationship. So the Spanish flu is telling us anything. And I'm as ambivalent about those comparisons as anyone, but if the Spanish flu is telling us anything. That those sorts of non pharmaceutical interventions in pre vaccine interventions may in fact contribute to longer economic growth not deterrents. That's a really important lesson. We see the same thing through internationally so so what you're looking at here this comes from our world and data this is a lovely picture for our world and data. So again, you know, all of this requires just a kind of a little bit of thinking about okay what's being pictured. So again from left to right here I'm seeing GDP growth relative to the previous year some so from second quarter 2019 to second quarter 2020. So the further right we are the better off the economies, the economy the country is doing right now knows all the numbers are negative is everyone contracted but still the further to the right you are the closer you are to basically having had no effect. As before the up and down we're looking at a confirmed deaths per million. And notice, I often do this with students and I maybe should have done this with you before I showed you the picture. If you believe that there was a trade off a trade off between getting the economy started and accepting a little bit of COVID deaths. What would you have expected to see. Close your eyes. I think I can convince you that what you would have expected to see is a kind of the points all crowded in the Northeast and stuff. What is to say, a kind of rising line here right that would be better growth but more death. But what you see when you see this picture is exactly the opposite. And really what we see is that countries that typically have experienced more successful economic growth during this difficult year are the ones that had lower deaths per million. And you see where the US US is, I mean, the US is really even well it has experienced more deaths relative to other kinds of experience similar growth, but it doesn't change away from the kind of core story that we're looking at here. I'll show you one version of this partly because I spent a lot of time in Finland, so this is the same picture looking at Europe, and some people are saying well apart from Sweden and talking about the odd Swedish case. What's going on here there's something Scandinavian going on here right Finland Norway and Denmark are all countries that have experienced both relatively low death rates, but also relatively mild economic interactions. I know a little bit about what policies in those countries look like it during that question and answer period. I mean it's something I know a little bit about too. So, if we're going to, if we're going to support us ourselves with policies one of the questions I often hear people talk about is, yeah, but you know that we've run huge deficits. We have a central bank that's intervening like crazy, aren't you going to have to pay some terrible price for this down the road. Now we're going to pay a terrible price down the road folks will say well take a look at a picture like this. So this, this says, this picture shows you over time, what the share of debt, public debt national debt to GDP to income is so right now for the US national debt is about 100% of total income is equal to total income. And you think okay that's a lot, but I noted I'd urge you to look at a couple of things that at this picture before you jump to any two very dramatic conclusions. First of all, we haven't added to it nearly as much as people might think. And secondly, I'm going to share the next picture. It's still not as high as this has been historically. It's expected to be about 108% of GDP in 2021 and say next year once we've absorbed the worst of this. That's about where it wasn't in the Second World War. And I say that precisely because the period of time after the Second World War is precisely regarded as the golden age of economic growth. And they think that debt burdens are going to just crush us all and make it impossible to grow. But if you think that this is one of the nice things about interacting with data, you would have to explain how it was that for a very long period of time for roughly 40 years after the Second World War, we grew fairly steadily, much faster than we're growing these days, despite so called debt overhang. There may be a story there, but the story that somehow we have debt that we've never experienced before, and that's going to crush us as an economy, just it doesn't make historical sense. I'll show you one or two other pictures in the middle. So the other version of this you see as well. How are we selling all this debt? And some part of it is, and this is often the part that seems to alarm big chunks of the public and others, is that our own central bank is buying it, effectively, indirectly. And why is that a problem? Well, how do central banks pay for this? Well, effectively, they print money, right? That's the one thing that central banks can do. So some people have wondered whether or not the central bank, the Federal Reserve in this country, is effectively monetizing, creating a huge increase in money that's going to come back and haunt us all someday when they buy up all of this debt. And in fact, if you're worried about increases in the supply of money, this is a picture that scares the hell out of you. This is the total. So from the Federal Reserve standpoint, an asset is something that they bought. So when they buy government bonds, for example, or they engage in quantitative easing, it shows up here. And you see even more than the financial crisis of 2008, the Federal Reserve has very aggressively participated in financial markets and asset markets, and it's holding a lot of government debt on its books. And it's effectively paid for that by printing money. And if there's, you know, one of the interesting things about doing a lot of these kinds of lectures is if there's a single kind of hardcore economic truth that people think they know, it's that printing a lot of money causes inflation. So that's why the next picture I'm going to show you is a little kooky. And I'm sorry, it's the least clear picture and it was the only one that had both of them. But the blue line here is inflation. Inflation is at an absolute historic low relative for so about rounds of the many decades anyway, despite printing all of that money, despite putting all that money out there, despite monetizing huge parts of the government's debt. We haven't seen an increase in prices. In fact, the central bank has gone out of its way to say we would like inflation to be higher. We're willing to tolerate more inflation in an effort to kind of bring the economy out of the current recession. If more money causes higher prices, more inflation. The record of the last 10 or 15 years is that it's almost impossible to explain. Inflation is for sure real issue, but we need a better story, but it both as a public and sometimes an economics. Another red line there is sometimes called a real interest rate. So when I borrow money, when you borrow money for a mortgage, you say, okay, I borrow money at three or four percent. Well, in a world in which prices are going up five or six percent and everything's going up five or six, including your wages. In some sense, you're paying back less in real terms than you're borrowing. So we call that a real interest rate. So why does that matter? It matters because right now the federal government is able to borrow at negative real interest rates. Yes, the federal government is taking on a lot of debt. In some sense to keep the economy propped up and to deal with this case shape recession. But it's able to borrow at negative rates. It's able to borrow in a way that actually requires it to pay back less in real terms than it borrowed. If one was going to take on a lot of debt, this was absolutely the time to do so. In real interest rates are negative now. They're expected to remain negative for a period of time. And so from a prudential standpoint, this is a good time to borrow. I'm going to show you one more picture and then I'm going to be done with a few minutes to spare and then we can have some good questions. So this is consumer confidence. And I'm showing you this picture because it looks like at some level consumer confidence has created. And at some level, yes, it has relative to its 19 or early 1920 peak. And that's really quite concerning. And yet consumer confidence remains higher now than it did in 2012. Then it did throughout the entire financial crash of 2007, 2008 and 2009. And so I see this picture as a kind of a reason for some optimism. I see consumers looking even in the midst of the current recession, the deepest recession since the Great Depression, and retaining some measure of confidence that things are actually going to get better. I think they're right, actually. I think they're right. I'm more optimistic than some about what we're going to look like in a year or two. And some part of that is honestly, you know, the experience of having lived by and large in Vermont and Finland. It's very hard not to be proud to be a Vermonter in the current economic climate precisely because we're dealing with this in the most grown up possible way. That is to say we're fighting the pandemic first. We're going to do as well as we can recognizing that we're setting the foundation for kind of economic growth to occur later on. And I think it's true of my experience, frankly, in Finland, where the population has accepted all sorts of measures in order to kind of track and trace more effectively in order to isolate more effectively. And it's willing to do that precisely because they understand that this kind of trade off between, you know, death versus economic growth is a false trade off. I think I'm going to end there. Whether we got this from a picture that comes from VPR. So I'm happy to turn to the Q&A unless somebody would prefer that I not. Beth or Carol can ask me not to if they don't want to. Let's see. All right. I'm going to go. I'll go backwards just because I have no reason to go backwards. So one person asked what could or should be done now financially to assist those who have suffered most in this pandemic and what should be done to prevent this trend in future crisis. So that's a great question. The good news is we've done until now pretty well. Before consumption spending by the lowest income households in the United States actually recovered, but that was largely because we were making very large transfers to those households. What's just and and I'll add another couple of things. Actually, I had one thing that doesn't often get talked about in a kind of macro setting, which is, we were pretty good at at at preventing eviction for a period of time. One of you who've read Matthew Desmond's absolutely remarkable book. In fact, it will know that eviction policy in general is a kind of it can be a source of poverty and in the United States. And there are two things to be really concerned about right now. We're seeing what we think is the beginning of a second wave. There is no emergency pandemic draw the emergency or additional unemployment insurance funds that we were making available to folks have also disappeared. And the CDC's moratorium effective moratorium on eviction seems likely to be challenged. So I would say this I would say, what we could or should do now is a version of what we've been doing so far. The $2.2 trillion bill that just passed the house goes some distance to doing that. But I will also say that absent that support the economy in terrible danger. So that's, let me so that's one question I saw next one is early in the lecture you compared high earners versus low. And you were talking about how having multiple jobs had an effect on spending. Do you have average numbers of jobs for each of these groups. Great question. And the answer is off the top of my head I cannot tell you the precise numbers, but I will tell you the following which is that multiple job holding is much more common among low income households and high income households. And some part of that is the kind of the increase in what some people refer to as kind of precarious labor right there are a lot increasingly low and middle low income households are calling livelihoods together by holding two and three jobs. And that's always been a challenge for it's one of the ways in which interpreting data has become harder right so now. Here's what's interesting when a recession hits. In the old days when a recession hit and you lost your job you showed up as being unemployed. Now when a recession hits, and you lose one of your two jobs, you no longer considered unemployed. And in fact we don't have a measure that says okay you're sort of a math employee. And so one of the things that I want people to be mindful of us they hear the unemployment data reported today is that it's probably it's understanding the extent to which people are still without their quote unquote desired number of jobs. I'll say one other thing about today's unemployment rate data because people have asked me about that on several other forum, which is unemployment rate data is also sensitive to who's being counted. Who's being counted as being in or not in the labor force so let me give you an example. Today, the data suggests that the total number of women in the labor force went down number of women working with was actually down. Despite that, the unemployment rate for women was also counted as going down and so how can that be. And the answer is a substantial number of women who were previously counted as unemployed but searching and therefore in the labor force are now being counted as being outside the labor force no longer actively looking. And so, even though the total number of women actually working was down it increased as a fraction of the total number of women who are considered in the labor force. And so that's one of the ways in which you want to be a little bit mindful of thinking about this data. So, the next question on many of my economic grass. Well not mine I want to say that for the record, small business activity and spending of different economic classes. There appears to be a blip upward around late May to mid June. This is the reopening in the majority of states and the answer is no it's not the reopening the majority of states. It's typically either payments going out or something else. The reopening. It's really hard. And I know this is a, this is a very controversial and some is very provocative claim. I'm surprised that even among conservative economists. I know that there hasn't been more evidence that the reopening plans did but in some ways their proponents or advocates said they did. And I would also suggest that, you know, reopening plans have largely been stymied by the fact bluntly that high income households were not spending on the kinds of business service they were before opening a or no reopening. And to the extent that low income households that were dependent on that spending for jobs. That's not coming back. And this is consistent with this kind of bigger claim that I one of the big lessons I really want folks to leave with today is that there is no cure there's no economic recovery here without a solution to the pandemic without it without dealing with the health crisis first. Next question. I wonder if the reduction in spending by those working from home is due to a reduction in keeping up with the Jones's factor. Working together in an office when it hears from others what new things they have bought and you think that you may need that also that could be. Yeah, for sure. I mean one of the really interesting things to me as an economist just think a little bit about how the culture of work is going to change. I mean, once it's possible to all go back, are we all going to go back and if we all go back how is culture going to change. What is the influence of other workers. And perhaps less important now than things like spending on travel and food and entertainment and all of that other kind of stuff. In fact, there's some evidence that spending on some kinds of consumer durables have gone up so I had no idea whether this is true but an economist friend of mine in the Midwest told me that in parts of the Midwest spending on swimming pools is up. Has the ring of truth to it. And the story there would be right that that households are now spending more on quote unquote home activities. But yes, keeping up with the Jones is a real issue and I'll say that returning to the workplace is more than just kind of conspicuous consumption culture right I mean the workplace in workplace interaction is important for a lot of reasons cultural economic social, and I'm wondering exactly what we're talking about what we're going to see post COVID are we all going to come back and and in some sense return to a culture we had before and I don't know what the answer is my sense is no. So another question, but I like the Jones question. So what is the case shape recovery what does the case stand for so the kid doesn't stand for anything other than the fact that the, like all of the other descriptions of recoveries the idea is that the recovery resembles the shape of the letter and so by K effectively what we're talking about are now two paths right. So, you know, happy economy going up and happy economy going down and that's where the K comes from. And the hack that's going up are typically high income workers right who's, whose jobs have remained and who's spending is down a little bit and low income workers who basically still seem to be struggling in fact there's this really evidence that they're under enormous pressure and that pressures related to for example eviction are getting worse not better. So, I hope that answered the question about eviction. All right, what information do you have about older workers leaving the workforce because of covert who replace these workers when the economy recovers. Great question. So, yes, some part of what we're seeing when we look at unemployment data is the consequence of workers who are effectively and in the language of economists they transition from in the labor force and employed to not in the labor force. And some part of that is indeed older workers who are counted as leading the labor force when I'm no longer counted as looking who replaced those workers. I don't know this is a very interesting question. There's a lot of talk these days about the so called labor force participation rates of especially older older men and they seem to have collapsed start to collapse even before the, even before the covert epidemic. And so we don't know I mean a standard economics reason would be if in fact work becomes you know if firms really find themselves searching for work and workers are scarce because of the retirement of older workers that wages will go up and people will then be drawn back into the labor force. That's a great question and it's something we're watching actually right now. All right, and I think I'm at the question at the top of the list, which is since the Trump administration changed the agency to which covert 19 statistics is required to report sometime in early August from the CDC to a private company. What is the current quality and accuracy of the coronavirus dashboard in the US great question. And I'm going to say that the problem so I'll say that the problem is not specific to the United States. The quality of reporting data varies a lot all over the world, and with lots of countries having obviously pretty strong incentives to suppress some kinds of reports. I will, I would urge you in that context if you're looking for the best possible data. We start the our world and data folks and one of the things that makes their exercise really remarkable is they're trying very hard to recognize when this kind of stuff happens and then to calibrate right so for example, if reporting, if reporting rules change that in principle if we observe enough examples on both sides of that kind of change, we're able in some sense to correct for it right and so this, this effort to make data commensurate across reporting regimes and across other agencies is a really difficult one it's a big challenge for economists. But I think we're making some progress in that direction I really urge you to look at the our world and data site. For what I think of us as absolutely the best data on on on COVID death rates COVID infection rates. New infection rates and so on. The one thing I'll say is that it doesn't typically disaggregate by the state level. I'm seeing have I done all of the q amp a I see if I'm allowed to I have Beth asking a question or two in the chat. So I'll take a look at both of those. And then I'll take any more questions people have them. So, so in the chat I have how long will it take for low wage earners to recover after the vaccine or will they recover to any great degree. And what will it take for small businesses to recover in the US and Vermont. Wow, that's a great question. You know, I think the hope obviously right is that the advent of our kind of a widely accepted and why what widely used and this is a big issue. Vaccine is going to bring the economy to some back to something like where it was before. I'm not so sure, however. You know, I think that at a minimum, I guess I would say this my concern at this point is more about making sure that low wage workers make it through the next couple of months. And that's because there's frankly not nearly enough pressure on Congress to pass something that would rescue these workers, which still astonishes me right I mean once upon a time. The months before an election was typically a period of time in which, you know, Congress went out of its way, right to be generous to workers of all kinds. The notion that low wage workers have been abandoned still kind of puzzles me at some level. So I my concern at this point is less about what they're going to look like when a vaccine happens and just getting them to the point where the vaccine actually manages. If the spending of high income households recovers my sense is that those jobs will come back. I think we're going to have a different conversation after that however about things like healthcare and other things. One more question from the chat and then one more from the Q&A. The UK's economy is declined the most what lies for what lies for them with Brexit on the horizon and likely a no deal Brexit, which countries likely to come out of the pandemic the strongest economically. The UK has suffered a great deal and Brexit is not going to make things worse but not not going to make things any better. You know you look at the economies that have done relatively well and they at this point they tend to look like the Nordic economies. Some part of the Brexit problem and honestly some part of the problem today with the news that President Trump was infected is that economies don't do well under clouds of uncertainty. It's one thing to say good or bad. It's another thing to say hugely uncertain. And in that environment Brexit is as much a problem because of the uncertainty it introduces as anything else. So yeah I have a daughter who's kind of living through. I have one daughter in the UK right now and one daughter in Sweden. And so between the three of us or my wife the four of us we are literally experimenting with four completely different approaches to pandemic and the economy. But all right. I'm seeing one more in the Q&A. Is that right? Oh two more in the Q&A. Well I love a couple of these. I hope I have enough to answer one of these. All right so I'm Canadian living in the US and want to know if the US stats parallel the Canadian. So Canada looks a little better. But looks more like the US than does other European countries. For many of the same reasons right this kind of the notion of a trade off some resistance to the imposition of any kind of public health requirements or restrictions. I'll give you an example actually so in Finland right which I showed you has relatively good economic performance of low numbers of death. You know the kind of sort of high tech, vibrant high tech sector. One of those high tech companies came up with a kind of the equivalent of a kind of self-enforcing kind of tracing contact tracing mechanism. Let's just say everyone would kind of get down on this app everyone would kind of enter their status and the company would do whatever it needed to do to assure privacy. And what it would let you know is whether or not you were in the proximity of anyone with a positive diagnosis. And what's charming is that you can imagine basically that although they exist no one is proposed using the United States. The day that it was introduced in Finland, a third of the population signed up. So what are the countries that are going to do well? The countries that are going to do well are the countries that limit the health consequences of this. I mean it's that simple. I'll answer one. I think I have time for one more. I have to answer this one where has nothing to do with the talk but somebody asked it. And I'd love to answer this feature. So the question is why is economics called the dismal science? And I love this question because you know after talks like this people say you're really pretty depressing fellow. But actually I'm proud of that name. So I'm proud of that name because it was given to economics by Thomas Carlisle who was a very conservative historian, British historian of the early 19th century. And the reason he gave it to economics was, I'm not a big believer in Adam Smith, but Adam Smith would tell these stories right about the benefits of competition. One of the things he would say is that competition was able to erase prejudices. Every single person can some way stand on their own. And the notion that somehow we were all equal in some way really offended Carlisle. Carlisle thought we were a dismal science because we harbored these crazy illusions of equality. And that we weren't willing to recognize the kind of the realities of the world out there. And so in that sense I'm super proud to call myself a dismal scientist. And I'm seeing at least one other person cut on so I'm going to stop there. Is that okay for everyone? Peter, thank you so much. We do not consider you dismal, I'm sorry. That was a fascinating discussion. Really, really worthwhile. Perfect time. Thank you again. Thank you very much.