There are reasons to think this recovery could be different. For one thing, the economy was fundamentally healthy when the recession began. There was no housing bubble; household debt was low; banks weren’t sitting on a tower of dubious loans that could collapse at any moment. That means there is no reason, at least in theory, that the economy can’t pick up more or less where it left off.
Policymakers have also responded much more aggressively to this crisis than to past ones. The Fed moved quickly to prevent the pandemic from setting off a financial crisis. Congress spent trillions of dollars to make sure unemployed workers could keep their homes and feed their families, and to help small businesses.
Those efforts were far from a total success. The unemployment system buckled under the crush of applicants, and millions had to wait weeks or months to get benefits, if they got them at all. Government aid was inadequate, or came too late, to save thousands of businesses. State and local governments have slashed jobs. Hunger rates have risen.
But government aid appears to have been largely effective at preventing deep structural damage that could prevent a strong rebound. There has been no wave of foreclosures or corporate bankruptcies. Rates of entrepreneurship have soared, signaling that Americans are optimistic and have access to the capital necessary to act on that optimism.
Even if there is a strong rebound, however, economists warn that not everyone will benefit.
Kara Gray and her husband, Christopher DeSure, spent years building their small Ohio construction company into a successful business. Then the pandemic shut them down, and, having a daughter at home with a compromised immune system, they haven’t felt comfortable returning to in-person work.
With the housing market strong, Ms. Gray is confident they will be able to get back to work once the pandemic is over. But she worries they won’t be able to take full advantage of the boom. She and her husband were forced to spend the money they had set aside to buy a house, and have fallen behind on bills and run up credit card debt. That could make it hard for them to qualify for a mortgage or for a business loan to expand their company.
“It’s going to affect me and my husband longer term,” she said. “It’s not just ‘Can I pay my bills this month?’ It’s that once this is over, I’m going to have to start all over.”