This is the strangest economy ever

First, the economy is not really “broken,” as it was in the Great Recession, when the U.S. housing market collapsed like a wobbly Jenga set as the stock market, labor market, and manufacturing industry all came clattering to the ground at once. Instead, a global pathogenic pulse, whose reverberations are being felt in every corner of the world, has suddenly interrupted an otherwise normally functioning economy. That means we can’t solve the economic crisis until we solve the public-health crisis…

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Second, this crisis combines an unprecedented shutdown of the physical economy with an unprecedented federal effort to distribute emergency cash to tens of millions of families. In April, consumer spending suffered the worst drop on record in the same month that personal income saw the biggest increase on record. Read that again. It sounds totally implausible, but here’s how it happened. As department stores, restaurants, and shops closed, consumer spending and employment in those places plummeted. But the federal government also passed the CARES Act, which distributed thousand-dollar checks to tens of millions of families and increased jobless benefits by $600 a week. As a result, the typical unemployment-insurance recipient has been earning 34 percent more than he or she did while working. With millions of Americans earning more in unemployment than they were at work, personal income soared in April by 10 percent…

Third, although retail is in the toilet, just about everything that has to do with housing is fine. New-home sales are higher than they were one year ago. Mortgage applications are higher than they were in late February. Grocery sales have boomed, and Wayfair furniture sales are up. Thumbtack, an online marketplace for independent workers such as yoga instructors and electricians, is showing a full recovery in home construction, home maintenance, and moves. With the physical economy shut down, American have been sent back to the 19th-century economy, before the boom in urban services, when families cooked, cleaned, worked, reared children, and cared for animals at home (recent pet-product sales are way up).

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