U.S. stocks are hovering near a record high, a stunning comeback since March that underscores the new phase the economy has entered: The wealthy have mostly recovered. The bottom half remain far from it.
This dichotomy is evident in many facets of the economy, especially in employment. Jobs are fully back for the highest wage earners, but fewer than half the jobs lost this spring have returned for those making less than $20 an hour, according to a new labor data analysis by John Friedman, an economics professor at Brown University and co-director of Opportunity Insights.
Though recessions almost always hit lower-wage workers the hardest, the pandemic is causing especially large gaps between rich and poor, and between white and minority households. It is also widening the gap between big and small businesses. Some of the largest companies, such as Nike and Best Buy, are enjoying their highest stock prices ever while many smaller businesses fight for survival.
Some economists have started to call this a “K-shaped” recovery because of the diverging prospects for the rich and poor, and they say policy failures in Washington are exacerbating the problems.
Betting against the U.S. dollar was already the top second-half trade for currency and rates investors and its popularity is only growing as the greenback tumbles, according to a Bank of America Corp. survey.
A weaker dollar was the favorite trade for 36% of the fund managers surveyed this month by Bank of America, putting it well ahead of other ideas and up from 30% in July. So far that stance appears to be paying off, and a continuing slide in the currency appears to only be adding to the ranks of dollar bears.
Over the last week, just under 1 million people filed for ordinary unemployment benefits, plus another half-million under the special pandemic unemployment program for people who don’t ordinarily qualify, a substantial decline from some of the numbers seen since the beginning of the pandemic. At this rate, by mid-September or so, new unemployment claims will be merely as bad as they were during the worst of the Great Recession.
Those unemployment benefits, however, because this country has systematically stripped and sabotaged its safety net, are extremely meager and often nearly impossible to actually get. Hundreds of thousands of private citizens who have lost their jobs are flocking to Reddit for help and advice, as state unemployment bureaucracies are so janky and swamped they often can’t deal with the flood of applications.
In the past week, the r/unemployment subreddit has taken a dark turn with the expiration of the CARES Act’s super-unemployment and the failure of Republicans to even come to an agreement about what they want in the next round of pandemic relief. It’s become a de facto support group for people whose lives are collapsing around them for simple lack of income or jobs, and talk of suicide is common.
One wonders: Is America about to see bread protests, or even riots?