The outbreak of the novel coronavirus from Wuhan, China has totally shifted the world’s political system. Specifically, the United States, which until the outbreak of the pandemic had appeared to be doing well economically was shown to be a Potemkin Village. Just below the surface were systemic weaknesses—such as a housing crisis—that the coronavirus-related national lockdowns exacerbated.
Earlier this year, Congress passed a stimulus relief bill that merely slowed the financial bleeding for millions of Americans. With those meager benefits set to expire—and with the political leadership never missing an opportunity to miss an opportunity to help ordinary Americans—it looks as though at least 14 million Americans are set to be evicted from their homes by the end of December.
This is to say nothing of the gutting that most middle-class and small business-owning Americans have endured since the COVID-related lockdowns at the start of 2020.
Meanwhile, 12 million Americans are set to lose their unemployment benefits at a time when there is no hope for those Americans to find gainful employment. This is not because these Americans did not sufficiently pull up their bootstraps; it isn’t because these Americans are morally compromised and therefore unwilling to find gainful employment.
Instead, this is because not only were their jobs lost but their entire industries were decimated by the COVID-related lockdowns. As the disease continues propagating at record-breaking levels in the United States (due to the horrendous response from all aspects of the government), entire industries as well as opportunities for ordinary Americans are erased.
Along with their jobs, also, millions more have lost their healthcare coverage and are being left to fend for themselves.
Speaking of which, the unemployment situation in the country is better than it was in April. Although, with talk coming from President-Elect Biden of greater lockdowns occurring his first one-hundred days in office, whether the situation remains the same or worsens remains to be seen.
In April of 2020, unemployment was at a whopping eight percent. In December 2020, it was down to around 6.7 percent. The situation, though, is far too tenuous. And as people are evicted by the millions beginning at the end of December—with unemployment benefits evaporating—the idea that the economy is willing go to rebound for Americans is inaccurate.
The U6 unemployment rate, that is the rate which measures both the unemployed and, more importantly, the chronically underemployed, is at 12 percent. In April it reached 22 percent. Yet, the average for a “good” U6 number is around seven percent. I’ve often found the U6 number to be far more helpful when analyzing the health of the American economy, because it incorporates greater data and allows the observer better context of the overall economic situation.
This is to say nothing of the ongoing systemic failures the pre-COVID economy had either papered over or simply ignored. For example, there is a slow boiling student loan crisis that most young people—you know, the future of our country and economy—are facing.
The Federal Reserve Bank of New York estimates that there’s roughly $1.57 trillion in student debt. According to the New York Federal Reserve, “about two in ten adults who took out student loans were behind on their payments, 6.5 percent of total student loan were at least 90 days delinquent or in default.”
While these figures may sound low, the initial tranche of COVID relief measures passed in March of 2020 (which are expected to expire by January 31, 2021) covered up the real threat to young Americans. These student loan relief measures were initially expected to expire by December 2020, but President Trump opted to extend them to the end of January.
The burden of student loans—which have increased each year for decades—has meant that a large number of young Americans have delayed family formation. Further, the issue of onerous student loan debt (of which many more young Americans are likely to default on) has combined with chronically low wages.
The average salary for an American worker is around $48,516 per year. While the average cost-of-living for most Americans (excluding rent) was estimated to be around $49,416 for a family of four in the year 2019, according to The Economist.
So, average wages are low and debt loads on young people are high. Even in the “good” economic circumstance most young people eschewed living as their parents had done at their age. Delayed family formation has degraded community. High cost of living has also hollowed out the ability for many young people to get ahead.
Both the cost of rent and the cost of owning a home are high. While it’s true interest rates are at historic lows (even in the age of COVID), the fact is that most people’s debt comes from home ownership–and the debt load is high. Far higher, in fact, than it should be for someone to be considered in good financial standing. When the Boomers were starting families and buying their first homes, debt from home ownership was nowhere near as caustic for them as it is for their children and grandchildren today at the same point in their lives.
The average savings rate was abysmal before the pandemic for most Americans, too. Now, it is totally untenable. With so many people either unemployed or underemployed—and even fewer Americans being able to depend on assistance to get them through what could be as much as two years of COVID-related economic damage (until the much-ballyhooed vaccines are made available), the gutting of at least one-third of America financially is at hand.
A Harvard professor recently asserted that the country was in store for a redux of the “roaring twenties,” wherein sex-mania and a general elation would consume the United States following the end of the coronavirus pandemic. Though the professor believes that it won’t come about until 2024 or 2025, the academic is convinced that shinier days are ahead for most people if we can get through the pandemic and the related economic fallout.
That’s certainly a hopeful idea.
Yet, more probably, given the data and trends I outlined above, we are likely to be experiencing a repetition of the worst aspects of the Great Depression—unless Congress and the president can get their proverbial acts together and create a robust stimulus bill that will protect the most at-risk Americans from the economic fallout of the novel coronavirus (I won’t hold my breath).
During the Great Depression, Hoovervilles—giant tent cities where America’s dispossessed found themselves living in like refugees—dotted the landscape. A few well-connected and industrious individuals were able to create great wealth for themselves and families.
Sadly, the vast majority of Americans barely managed to scrape by. Entire families were destroyed.
Whereas some speculated at the start of the COVID pandemic that there would be a sudden uptick in birthrates in the United States, as people were forced to stay inside, the likelihood is that the country will endure greater divorce rates than previously experienced. As financially damaged couples separate and their families break apart, the financial stability of many Americans will be further weakened, as marriage is often a necessary antidote to poverty.
In the 1930s, the United States endured wild swings in its economic fortunes as well as its political stability. In 1932, for instance, nearly 20,000 World War One veterans marched on Washington, D.C. demanding an immediate bonus for their service in the war to help alleviate their family’s financial suffering during the Great Depression. We should expect to see similar things moving ahead, unless the political system can create real and lasting financial assistance for the millions of Americans who either have or about to lose everything because of the pandemic and the lockdowns that followed.
One could argue that the riots that erupted over the summer, ostensibly over the death of George Floyd in police custody in Minneapolis, was actually about much more than just racial grievances. It was a compounding event: the pent-up frustrations of the lockdowns, the fear from the disease, and anger at political leaders erupting in our streets.
More recently, the apparent Right-wing terrorist attack in Nashville—and my fear that more events like this will be forthcoming—is similarly the result of not only the partisan political mess the country finds itself in 2020, but also the release of pent-up frustrations on the Right over the lockdowns, economic collapse, and the fear of the disease.
Rather than bickering amongst each other over the most banal and inconsequential things, America’s two parties should band together to create a truly helpful relief package that will get the country through until at least 2022, when it is believed the COVID vaccines will be made available to the general public.
Failure to give Americans the relief they deserve after government-induced lockdowns, will create the toxic conditions for an actual revolution to erupt in our streets. 2020s America could end up looking like the last days of the Weimar Republic in Germany, when communists and Nazis duked it out on the streets for control of the country. Whoever won that battle, the vast majority of apolitical Germans would have lost. The same holds true for America today.
A revolutionary America is the last thing that any American, much less other world powers, should want to see. After all, the next American revolution would likely be more akin to the bloody messes that were the French and Russian Revolutions.
And the regimes that arose from those bloody revolutions—that of authoritarian Napoleon and totalitarian Stalin—plunged the world into gruesome conflicts. Let us hope that America’s political class has enough sense to help their fellow Americans and ameliorate the conditions that normally lead to bloody revolution.
Brandon J. Weichert is the author of “Winning Space: How America Remains a Superpower” (Republic Book Publishers). He can be followed via Twitter @WeTheBrandon.
THE WEICHERT REPORT 