This time it is different.
In traditional recessions, usually we experience an increase in the unemployment rate and a decrease in consumer spending. Then, after the recession has run its course, both of these indicators reverse themselves, and we are well on our way back to a sense of normalcy.
However, now we find that although the rate of new claims for employment compensation is slowly moving down, the expected increase in business activity is almost absent. This is understandable, as we have only just entered Phase 3 in our recovery process.
What is missing beyond the Phase 3 restrictions is the reality that it’s the richest Americans who have cut their spending the most during this pandemic, which is limiting the economic recovery to a larger degree than in past recessions.
Unlike other recessions, this one has decimated the service sector, which depends increasingly on consumption by those at the top.
So what kind of businesses are we talking about?
Mainly small firms, contractors, and professionals who provide services to wealthy people in relatively wealthy neighborhoods — high-end restaurants, boutique and fashion shops, spas, gyms, therapists, theaters, florists, and so on.
Data from daily credit card receipts (tracked by ZIP codes) broken down by average household income show that the top 25 percent of wealth-related ZIP codes are spending dramatically less than those getting the first stimulus checks, presumably not the wealthy. The average personal savings rate has skyrocketed to an unprecedented 33 percent in April. And nearly all of this gain has come from the affluent.
Much of this money now flowing into banks would have been spent in restaurants, hotels, and other suffering service businesses.
Additionally, half of the consumption decline in April and May came from the top quartile of households, and over half the spending decline in the current recession is coming from the top 20 percent of income group.
Many empty stores were making our village look shabby enough and now, to add to the toll, additional ‘Vacancy’ and ‘For Rent’ signs are something that many of us do not want to see. The face-to-face contact required to produce many goods and services in the service sector came to an abrupt end once people decided to stay home. It’s time to come together as a community and support the commercial tax-paying businesses in the Plaza by shopping either in person or via orders delivered.
Controlling the coronavirus is not sufficient. Spending won’t recover unless people feel safe. We must all use mask-wearing as the best and least expensive economic stimulus program available to us.
Recognizing that this presents a real problem for businesses in which crowds and small spaces are unavoidable, we must be cognizant of the fact that senior citizens, and those with health conditions that make them more vulnerable, are concerned and afraid when they see large numbers of unmasked people walking around in public.
Legal mandates aside, we should always be respectful of our senior relatives, friends, and neighbors. Cooperating by wearing masks seems to be the least we, as residents and visitors to the Plaza, can do to stem the slow but menacing decay of our long-neglected downtown area.
Doing nothing is not a viable option. We may not have many good choices now, but we simply have to pick the best that we can as of today.
We have an excellent option for creating a brighter future in Great Neck Plaza by voting in a new administration at the next village election—one that will energetically and realistically address the real needs and concerns of this community.
You can make a difference on September 15th. Your voice and your vote are the only way we can affect the changes we need in Great Neck Plaza.
Village of Great Neck Plaza