Lockdowns clearly bled America's economy

Lockdowns clearly bled America's economy
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May’s employment report highlights the misconception that coronavirus sank the economy; rather, lockdowns did. For too long, the popular narrative has attributed all the negative impact to the virus. May demonstrated that once society and economy were unlocked, both returned despite the virus.

Heading into last Friday, expectation was for another dismal employment report. Earlier in the week, unemployment claims had exceeded estimates, putting the total of job loss filers at 44 million since mid-March. 

Leading into the release, the AP wrote: “America’s workers likely suffered another devastating blow in May, with millions more jobs lost to the viral pandemic and an unemployment rate near or even above 20 percent for the first time since the Great Depression.”

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Instead, May’s results profoundly reversed expectations; as the BLS wrote in its release: “Employment rose by 2.5 million in May.”

Unquestionably, May’s 132.9 million nonfarm payroll employment is not a good number in any absolute sense. As recently as February, it was 152.5 million, while in May 2019, it was 151.1 million. However, May’s results do constitute a dramatic change in trajectory; they should also prompt an equally dramatic change in conjecture. 

May’s surprise was one of expectation, but a bigger one occurred in the explanation of our economic hit. The prevailing description of the economy is that the virus has been the direct cause of growth decline and job loss. This version has mistakenly and inaccurately dropped the lockdowns from the causation equation. 

The AP’s May report story captures the common omission: “The job market meltdown triggered by the coronavirus has bottomed out.” What May’s report really showed was that the “meltdown” was caused by the lockdowns. By short-handing the explanation, we have been short-changing reality. 

What we really discovered is something very obvious; however, it has been largely overlooked for the last three months. In March and April, America locked down her economy and then saw employment levels fall 1.4 million and 20.7 million, respectively. When the lockdowns loosened in May, economic activity broadly returned (though there were the inevitable laggards within it) and overall employment rose 2.5 million.

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As simple as this sounds, it has been obscured for the better part of 2020. The May job report supplied the proof of what happens when the lockdowns were loosened — and the pain they inflicted while operating. Importantly, coronavirus is still with us. Yet, despite the continued presence of the virus, the economy still responded positively. That was hardly a given or inconsequential.  

If the virus caused the economic hit, as has been the shorthand claim, the economy would not have responded so well. We would have seen the supply side unwilling or unable to produce, or the demand side unwilling or unable to purchase. Neither occurred; instead, the opposite did. The economy responded to the lockdowns’ loosening, not the virus’s virulence. 

This revelation is bigger than the much-welcome 2.5 million job increase itself. None of this is to say that the presence or threat of the virus is not serious. Indeed, the very fact that it is, only invites more focus on lockdowns. May’s report must at least prompt the reexamination of the lockdowns. It certainly should end their omission from the explanatory equation altogether.  

Faced with an unknown threat, states responded with the best of intentions. They followed models, intuition and inevitably, no little herd mentality. Their approaches were largely one-size-fits-all exercises. They ignored differences in demographic and regional threats, even within their borders. In their haste, they were not focused on the cost of lockdowns or their inherently regressive nature. 

If further loosening spurs further job gains, without large and sustained virus surges — and many cities’ uncontrolled protests must now be factored into this too — it will not be the first time that a cure has been worse than the disease. For centuries, this was prevalent in the medical profession itself.   

It was once common medical procedure to bleed patients. Americans may shortly come to realize that the same was done to their economy — with the same result. That what made America sickest was not the virus, but the bleeding of its economy. 

J.T. Young served under President George W. Bush as the director of communications in the Office of Management and Budget and as deputy assistant secretary in legislative affairs for tax and budget at the Treasury Department. He served as a congressional staffer from 1987 through 2000.