Those hoping for an economic rebirth to happen in 2020, after the pandemic emergency ends, need to rethink their dream. It is not going to happen. Many are likely arguing that Wallstreet is booming so the economic outlook must be good. Looking closely at Wallstreet it soon becomes apparent that in between the headlines of all is good with Wallstreet, the reality that it is about the short gain and not long-term economic prosperity. Looking deeper, the rising national debt is being ignored, for now, by Wallstreet, thus the stock market’s trends does not represent the long economic outlook. Regardless, the economy is dead in 2020.
It became crystal clear to me yesterday as I walked downtown Orlando on my way to lunch. Some restaurants, not many are open for takeout and for dining in, but it remains apparent that downtown Orlando is economically dead because banks and government offices are either scaled down or closed. Bars and nightclubs are also closed during lunch and limited in the evenings.
The restaurants I frequent are the regional or local restaurants. But there a few national chains.
As I walked down the street, I noticed that Subway had shutdown. I walk by it almost every day and it seemed like one of the busiest eating establishments in downtown Orlando, before the pandemic and up until it closed. However, I noticed something was happening on Friday when I saw a few people in there but it didn’t appear there was any food being served. I didn’t pay much attention to that because I assumed, they were either running late opening up or something, like a water leak, had prevented them opening that day.
But yesterday it was clear they had shut down.
We are now almost to the end of July. The economy has been effectively shut down since about March, almost four months now. Florida, along with some other states have tried to reopen the economy up again. But not only has the reopening stalled, but it appears to be retreating due to the resurgence of virus infections.
The year ends in six months, but there is an election in November.
For Donald Trump and the Republicans, it is imperative to get the economy back on track. Without a rising economy they will suffer at the ballot boxes. But even that need is not enough to jump start the economy again. Here is why.
The closing of the Subway in Orlando explains it well. Subway has been struggling for years now. After closing over a thousand outlets across America in 2019, it was starting to show small signs of recovery. Most important is that early this year, the new leadership of the franchise was pushing online ordering before the pandemic and shutdowns entered anyone’s vocabulary.
According to news reports, over 90% of Subway franchisees applied for Covid-relief PPP (Paycheck Protection Program) loans to help them stay open. It is unclear if the shuttered Subway received a PPP loan.
Florida tried to reopen the economy and now has retreated.
Therein lies what the downtown Orlando Subway tells us.
Whether the Subway closed because of Covid-19 or another reason is immaterial to what is happening across America today. Congress is again looking at issuing more stimulus monies. The $600 unemployment subsidy is scheduled to end this month. Rent and mortgage moratoriums may end soon, although government officials may forestall the impending housing crisis be extending the moratoriums. However, no matter how long the moratoriums are extended, the rising delinquent rents and mortgage payments trickle down throughout the economy. Closing businesses, reduced wages being reported and high unemployment means that any economy renaissance this year is not happening.
Even if Congress were to issue grants across the board, that do not require repayments, (unlikely), the economic damage is already too severe.
The shuttered Subway shows us what the American business climate is going to look like for the next six months, at least, proving that America’s economy will not recover before the end of the year.