Ten Points About Post-Lockdown Economics

Ten Points About Post-Lockdown Economics

Jeffrey Tucker via The Brownstone Institute,

The sudden economic lockdown of March 2020, the world over, was one of the more shocking moments in history. The very core of the economic problem from the beginning of recorded time was getting more of what people needed to them in a way that was sustainable given the inherent scarcities of the state of nature. 

Regardless of the system, creating wealth was the stated goal, and humanity gradually discovered that trade, investment, marketing, and access to more via travel and creativity was the way forward.

 All in an instant, all those considerations were put on the back burner to combat what was supposed to be a deadly disease. What’s more, the belief was that ending economic activity, at least that deemed to be nonessential, was the path toward solving the health crisis. 

For how long? It was initially advertised to be two weeks. But as time went on and the lockdown period was extended longer and longer, it became clear that the whole point was to wait for a vaccine. This was based on the evidence-free supposition that the whole population was under threat and that the shot would fix the problem. 

The world economy crashed – entirely by intention and by force – as never before seen in modern times. As Trump said at the time, even as he greenlighted the lockdowns, no one had ever heard of anything like this. That’s because it is crazy and deeply dangerous. There is no such thing as turning a global economy off and then on again as if it had a breaker switch to pull and push again when the time came. 

Of the attempt, here are ten general observations about the results. 

1. The labor markets have never recovered. Both labor participation and employment/population ratios remain below what they were in 2019. Maybe this is the result of retirement. Maybe it is disability. Maybe it is just demoralization. Regardless, we never got back to normal. All the talk of the great job machine since 2021 is nothing but people finding work again after having been displaced during lockdowns or new people coming into the market. 

The job market has not been “hot” by any standard. Monthly data reports institutional surveys, which double count, but rarely household surveys which show continuing weakness. The divergence between the two has never been higher. We are nowhere near a pre-lockdown trend. 

2. Stimulus was wiped out by inflation. When the checks started arriving directly in bank accounts, people were doing absolutely nothing at home, and business was getting revenue from government even when their doors were closed, it seemed like some Nirvana had dawned. Riches were flowing from heaven. That lasted about 18 months. Once inflation came along, the purchasing power of those dollars was zapped away. Money creation had been on a level never before seen in modern times; some $6 trillion was created out of thin air to buy stunning amounts of debt. It was all taxed away in the most ancient scheme of tricking the public. 

3. Retail sales and wholesale factory orders are not up. Among all the usual data releases, only the GDP numbers are routinely adjusted for inflation. For most reports, you have to do that independently. Retail sales and factory orders are reported in nominal terms, which works fine in normal times but in inflationary times, this habit produces absurdities. It ends up clocking more spending on the same goods and services simply because everything is more expensive. 

EJ Antoni has been all over this point. Even adjusting usually severely underreported inflation shows that neither retail nor wholesale has genuinely risen. Again, these adjustments are based on conventional CPI data so the actual reality is much worse. 

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