There are reasons to believe that this recovery might be different. For one, the economy was fundamentally healthy at the start of the recession. There was no real estate bubble; household debt was low; Banks were not sitting on a tower of dubious loans that could collapse at any moment. In other words, there is no reason, at least in theory, that the economy can no longer continue where it left off.
Policy makers have also reacted much more aggressively to this crisis than to previous ones. The Fed acted quickly to prevent the pandemic from sparking a financial crisis. Congress spent trillions of dollars making sure unemployed workers could keep their homes and support their families, and helping small businesses.
These efforts were anything but a complete success. The unemployment system collapsed under the pressure of applicants and millions had to wait weeks or months to get benefits, if they got them at all. Government aid was insufficient or too late to save thousands of businesses. State and local governments have cut jobs. Hunger rates have increased.
However, government aid appears to have been largely effective in preventing profound structural damage that could prevent a strong recovery. There has been no wave of foreclosures or corporate bankruptcies. Entrepreneurship rates have increased, indicating that Americans are optimistic and have access to the capital needed to respond to that optimism.
Even if there is a strong upswing, economists warn that not everyone will benefit.
Kara Gray and her husband Christopher DeSure spent years growing their small Ohio construction company into a successful business. Then the pandemic turned them off, and since they have a daughter at home with a compromised immune system, they have not felt comfortable going back to work personally.
With the real estate market strong, Ms. Gray is confident that she will be able to return to work once the pandemic is over. But she fears they won’t be able to take full advantage of the boom. Forced to spend the money they set aside to buy a home, she and her husband have relapsed on bills and accumulated credit card debt. This could make it difficult for them to qualify for a mortgage or business loan to grow their business.
“It will affect me and my husband in the longer term,” she said. “It’s not just, ‘Can I pay my bills this month?’ As soon as that is over, I have to start over. “