How a global pandemic made us richer four years later – Orange County Register

By Anna Helhoski | NerdWallet

Four years ago, in February 2020, the economy plunged into a recession as the pandemic began to take hold. What followed was one of the fastest economic comebacks in modern history.

Today, the economy is booming, marked by high growth, persistently low unemployment, rising wages, high consumer spending and slowing price increases.

Still, the virus killed over 1.17 million people in the U.S. alone. The emergency is over, but COVID remains with us.

But it’s undeniable that the massive stimulus in response to the pandemic emergency is what prompted that quick economic rebound, says Scott Fulford, senior economist at the Consumer Financial Protection Bureau (CFPB). NerdWallet spoke with Fulford on how he explored this cause and effect in his book “The Pandemic Paradox.”

The following interview has been edited and condensed for length and clarity. Fulford speaks on behalf of himself and not as a representative of the CFPB.

Before and after

NerdWallet: In broad strokes, what is the pandemic paradox?

Scott Fulford: Let’s step back to March 2020. That was a really scary time for lots of people for lots of reasons. There was a new virus going around and we really didn’t understand how severe it was. Then, as people started staying home and a shutdown occurred, something like 22 million people lost their jobs. It really looked like there was this financial apocalypse that’s about to come.

The paradox is that by June 2020 and then for the next two years, people were actually better off financially than they had been before the pandemic on just about every measure you could look at. To be clear, on average there were some people who were worse off, but most people were just generally better off.

That’s a huge surprise for anyone coming out of the 2008 financial crisis and the Great Recession. The idea that something that deep could cause people’s finances to improve was a big surprise.

NerdWallet: Let’s go back to February 2020: What was defining the economy right before it fell off that cliff?

Scott Fulford: The country actually had been growing and employment had been increasing for nearly 10 years. Throughout 2019 and early 2020, people were looking around and thinking, “This is a really good economy.”

Employment rates had only just gotten to the point where they had been in 2007 — especially for Black workers. In many ways, it took us a full decade to get back to where we were since before the Great Recession. So it was a good economy in some ways, but it was also an economy that had a lot of risk. There was a lot of financial insecurity in February 2020. The pandemic paradox was so surprising to me because I saw all of the fragility among many households.

The pandemic, in some ways, shows us what we can do if we change the way we think about the economy and change policy. That doesn’t mean policy changes solve all problems. But what did get better was because there were a lot of dollars spent and because people were radically changing their lifestyle.

I want to acknowledge that that doesn’t mean that the pandemic was a good thing — a lot of people died.

NerdWallet: What comes to mind to me when you talk about fragility is housing affordability, particularly rental housing. You said in your book that the pandemic could have also exacerbated existing structural problems for renters. How so?

Scott Fulford: One of the things that the pandemic did illustrate was the importance of thinking about housing and housing affordability. To break that down a little bit: For the average household, housing amounts to like 30% to 40% of its budget. What that means is that, for most people, the largest thing that they spend on is housing. For many lower-income households, it’s a lot more than that. So all the other decisions we make are kind of downstream of the cost of housing.

Housing has just gotten more and more expensive, and a lot of that is because we used to be able to build a lot where people wanted to live, and that’s become more and more difficult. In urban areas, the only less expensive housing is further and further away from city centers, which means you’re sort of prioritizing access to good jobs versus the ability to afford housing.

Recovery and inequality

NerdWallet: What are some of the ways that the most vulnerable groups were immediately impacted by the pandemic, and what were some of the longer-term impacts? For example, you said in your book that the racial wealth gap didn’t expand during the pandemic, but it also didn’t really shrink either.

Scott Fulford: The initial one is that lots of people lost their jobs and it really did look like particularly Black and Hispanic unemployment was spiking much more. The good news is that there was a great recovery in Black and Hispanic unemployment; it went back down approximately as rapidly. So it ended up being not a really unequal recovery. That doesn’t mean it couldn’t have been more equal, but less unequal than before is still a really good thing, right?