03-04-2020, 12:21 AM
Quote:That means discretionary activities — such as traveling, dining out or attending entertainment, sporting, religious and political events — would grind to a halt. Business travel and entertaining would dry up. Schools and day-care centers would close. Public transportation ridership would plunge.The coronavirus is taking aim at the heart of the American economy: Consumer spending - MarketWatch
About 10% to 15% of U.S. gross domestic product consists of consumption of services that could be curtailed, Goldman economists wrote in a note to clients Sunday. Another 16% of GDP consists of non-food goods consumption that could be at risk if consumers don’t want to go out shopping. If no one goes out, then millions of people could lose their jobs. Thousands of businesses would be threatened with bankruptcy. More than 16 million people work in the leisure and hospitality industries. About 5 million work in education and child care. About 1.2 million work in transportation industries that could be affected.
The Congressional Budget Office has estimated that spending on food services, arts and accommodations would temporarily decline by about 80% during a major pandemic. Spending on public transportation would drop by 67%.
If layoffs followed the same arithmetic, nonfarm payrolls would drop by about 16 million — a mind-blowing number that’s about twice the number who lost work in the 2008-2009 Great Recession. It would be the largest percentage decline in jobs since the Great Depression of the 1930s. Layoffs of that magnitude sound absurd, but it shows you just how many people are vulnerable to a pullback in consumer spending.