Just how will the US economy rebound once all of the COVID-19 restrictions get removed? That depends in large part how quickly those restrictions get rolled back, and whether or not those rollbacks generate a “second wave” that requires another round of curve-flattening shutdowns. The Wall Street Journal takes a pessimistic view of the potential for a V-shaped recovery, especially in the manufacturing sector. The problem of unemployment will create a vicious cycle of declining demand, the very phenomenon that Congress hoped to avoid.
In fact, we’re already seeing this as temporary shutdowns have started to become permanent decisions:
Factory furloughs across the U.S. are becoming permanent closings, a sign of the heavy damage the coronavirus pandemic and shutdowns are exerting on the industrial economy.
Makers of dishware in North Carolina, furniture foam in Oregon and cutting boards in Michigan are among the companies closing factories in recent weeks. Caterpillar Inc. said it is considering closing plants in Germany, boat-and-motorcycle-maker Polaris Inc. plans to close a plant in Syracuse, Ind., and tire maker Goodyear Tire & Rubber Co. plans to close a plant in Gadsden, Ala.
Those factory shutdowns will further erode an industrial workforce that has been shrinking as a share of the overall U.S. economy for decades. While manufacturing output last year surpassed a previous peak from 2007, factory employment never returned to levels reached before the financial crisis.