Even before the health and economic crises, it was common for Americans to be living paycheck to paycheck. The explosion in unemployment has put already disadvantaged individuals in a dire position.
Last week, reporters documented more than 700 cars waiting at a food bank in Miami, Florida, the line stretching on for two miles.
Surely, we can all agree this is not what a recovery looks like. On the contrary, a lot of the data is getting worse.
Delinquencies in commercial mortgage-backed securities last month experienced the largest one-month jump in 16 years of data. The delinquency rate hit 3.59 percent last month, with $10.8 billion in new delinquencies. This marks a significant increase from the 1.46 percent recorded in May. The total delinquent pool now comes in at around $17.2 billion. We are sitting on a cliff looking over into the biggest commercial mortgage meltdown in the history of the country.
So many restaurants and retailers are failing to keep up with their rent payments, and in turn, owners of commercial property are unable to make their own payments on mortgages.
The chain reaction will worsen through the rest of the year and well into 2021. Things are going to get messy.
Of course, messy could already describe the US economy as a whole. You only have to look as far as the stock market to see even more ominous signals for worsening of the economic collapse.
Legendary American financial analyst and commentator A. Gary Shilling recently said that the current climate feels a lot like 1929, right before the world plunged into the Great Depression. He and other experts agree that the resilience of stocks can be credited to investor confidence in two things. First, that the pandemic will be brought under control around the world and second, that the massive amounts of aid the federal government is handing out to individuals and businesses alike will save the troubled United States economy.
As we have already seen, neither of these points can be counted on. For one, the US is experiencing a surge of new cases, particularly across the South and West of the country, as a result of botched reopenings. For the other, many of those stimulus measures will soon expire, with unemployment benefits that deliver $600 a week to jobless Americans running out at the end of July.
Moratoriums on evictions, forgiveness for late rent payments, and other policies implemented to ease the worst effects of the health crisis also expire on a similar timeline. This means that many Americans will soon be struggling to afford even basic necessities, and a large number run the risk of losing their homes. Furthermore, the end of aid will not hit the public evenly. Minorities and already disadvantaged groups will take the brunt of it, in turn leading to growing disparities in poverty rates between white versus black, Latino, and Asian citizens.
But until the aid does expire, thousands of Americans continue to falsely believe that we still have a chance at recovery, and that the stock market is a positive indicator of returning economic activity.
There has been little indication of a drop thus far, as the other day saw the Dow DJIA increase by 1.78 percent, the Nasdaq COMP jump 2.21 percent, and the S&P SPX climb 1.58 percent. This marks the fifth straight positive session for both the Nasdaq and the S&P, and the Dow also showed strong trends, with four out of its last five sessions running positive.
But Shilling predicted that the stock market could crash as much as 40 percent over the course of the next year. He called the pandemic, “the most disruptive financial and social event since World War II,” and warned that its effects would last at least as long as the aftermath of the world war. After all, consumers will not be more cautious for years to come, especially as the pandemic caught so many off guard at a time of high debts and short financial reserves.
With all of our institutions failing–big and small businesses, banks, the stock market–it is clear that the United States is on the precipice of the most devastating chapter in all of American history. The pandemic and the economic collapse are just two elements that make up the perfect storm of chaos ahead.
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