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For the cycle Just how did the pandemic affect broader economic patterns? BY STEPHEN ELLIOTT
OVID-19 threw a wrench in most economic outlook predictions. Pretty much overnight, hundreds of thousands of Americans were suddenly out of work, and years of economic gains since the Great Recession evaporated. Now, more and more people are getting back to work, trillions of stimulus and relief dollars have been pumped into the economy and experts are beginning to reassess where we stand and what the next five to 10 years could look like. The Post spoke about this with three of those experts: restructuring veteran Steve Curnutte of Tortola Advisors, University of Tennessee Boyd Center for Business and Economic Research Associate Director Don Bruce and investment strategist David Waddell of Waddell & Associates. On the primary question of where we stand in the typical economic cycle, the answers were varied though generally positive. First of all, Bruce says, “There’s no such thing as a typical economic cycle.” And anyway, he adds, there’s no question that the pandemic “rewrote the book on economic cycles.” In the months before COVID-19 reached the United States, Waddell feared a looming minor recession, though obviously not one of the scale and abruptness ushered in by the pandemic. Now, though, he is optimistic.
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“I wish people would dance,” he says. “I wish they’d be happy. The economy is at record highs, corporate earnings are at record highs, stock prices are at record highs and household net worth is at record highs. This is the time to be happy.” With that rosiness comes a fear for some: inflation. “Middle Tennessee was hot before the pandemic, and is likely to get hot again, even with strong headwinds,” Curnutte says. “The headwinds I worry about are inflation and the unintended consequences of tax policy changes.” Bruce and Waddell accept that there is some risk of inflation but neither is terribly concerned about the chances of it being extreme or that it will matter all that much in the long run. Bruce points to years of slow wage growth in tempering his fears of runaway inflation.
Waddell, meanwhile, looks to history, noting that the American economy has thrived in times when inflation was above the level some experts are now warning it could reach. “Inflation is something we’re not used to, but in the past, just because you had a little inflation didn’t mean the world fell apart,” he says. The trillions of government dollars invested into the economy — in the form of stimulus checks, the Paycheck Protection Program for small businesses and other forms of spending — had its desired effect, for the most part, the three experts agree. The spending put off a feared tidal wave of commercial bankruptcies and kept many businesses afloat. “There was disruption, certainly in the service industries, but it wasn’t the buffet that bankruptcy attorneys would look for in a traditional recession,” Waddell says.
