When you
think back to the days of the pandemic, what comes to mind first? For many, it
would of course be the staggering death toll (over 1 million in the U.S. alone),
especially if someone you know died from the disease. For others, it might be
the vaccines, the school closings, or the isolation.
Or, it might
be the recession.
If you were
a worker between the ages of 18 and 24, the recession that most affected your
life was the COVID-19 Recession of 2020. Members of that age group, especially
those who worked in hospitality, retail, or food service were most likely to
lose their jobs. Young workers in other sectors were likely to have their
careers placed on hold.
I have lived
through seven recessions in my adult life. To some extent, I remember all of
them. But it was the recession that took place from December 2007 to June 2009
− aptly dubbed the Great Recession − that I remember most vividly.
On the eve
of that recession, the 2007 U.S. unemployment rate was 4.4%. At the peak of
that recession, in October 2009, it had skyrocketed to 10%, and over 8.7
million U.S. jobs, including mine, had vanished. With massive government
intervention, the unemployment rate gradually declined to 5% in 2015. The
employment disruption lasted eight long years.
The Great
Recession began when the housing market collapsed and the construction sector
lost over 2.3 million jobs. It took 10 years for that sector to return to
pre-recession employment levels.
The housing
stories featured in the news were not about building more units and creating
density, they were about loan defaults and foreclosures. There were reports
from across the country of homeowners so upside-down on their mortgages they
walked out their front doors and never looked back.
At its low
point, the Dow lost 50% of its value. Prominent psychologists advised the
public not to look at their 401ks. For therapists and other mental health
professionals, business was booming.
Bankruptcies
and layoffs were the dominant business news stories. More than 30,000
businesses filed for Chapter 11. Had it not been for a federal bailout, General
Motors and Chrysler would have ceased to exist.
Looking back
at the Great Recession and the COVID-19 Recession, we can see the number of
jobs that were lost, but we can’t see the number of careers that ended
prematurely with those jobs. We can see the number of business bankruptcies,
but we can’t see the number of middle-class families that descended into poverty.
Statistics
take us only so far. The human damage from any recession can never be
adequately quantified. The number of Americans who never recovered is
incalculable and remains an untold story.
With all of
my vivid memories of the Great Recession, there was a highly relevant fact that
I could not immediately recall.
Who was the
President of the United States?
It happened
under the watch of George W. Bush, but it never became known as the Bush
Recession. The causes were too numerous and complex to assign total blame to
that president. And, we could say the same of every other past recession of my
adult life. The causes were too numerous and complex to assign total blame to
any of those presidents.
Fast forward
to March 2025.
The
President of the United States has declared a trade war on our neighbors and
our allies. His weapon of choice: tariffs.
Here’s a summary
of Trump’s war so far: He tariffs them. They respond by threatening to tariff us. He
responds by tariffing them more. He delays, he threatens, he exempts, he
reinstates. He doubles down. Intentional or unintentional, it is economic chaos
and the markets and investors don’t like it. And neither do employers. And
neither do consumers.
Once again,
it might be advisable not to check your 401k. Once again, mental health
professionals should consider canceling their vacations.
President Trump,
who presided over the COVID-19 Recession, explained that a future recession
might be a necessary part of a “transition” to a much stronger U.S. economy.
He is fine
with having his weapon of choice referred to as the Trump Tariffs, in fact, he
practically insists on it. Why share the credit?
For the
first time in our lives, a President of the United States considers a recession
an acceptable component of his economic policies. But has he really thought it
through?
Is he too
comfortable with the prospect of a recession?
There are
tens of millions of voters who believe that Donald Trump is a genius − a master
strategist who is playing chess while his opponents are playing checkers. They
believe the United States has foolishly allowed other nations to take unfair
advantage of our generosity, making them richer and us poorer.
There are
tens of millions of voters who believe that Donald Trump is a malicious
sociopath who has become America’s mad king. They believe that we and the rest
of the free world have become helpless passengers in a vehicle being driven
erratically by a drunk driver.
The question
as to whether he is a chess master or a mad king should start becoming clearer
as the trade war continues to develop.
(Sorry for
my blatant metaphor-mixing. I try my best to keep it in check, but…)
Most
economists agree that if the tariff war continues, there will be pain. The question is: How much and for how
long? The answer is anyone’s guess. No economic guru has a crystal ball.
One possible
outcome of the tariff war is stagflation − an economy suffering
simultaneously from recession and inflation.
My immediate
question is: What should Watertown do to prepare for the economic fallout?
Municipalities
were hard hit during the Great Recession. Several filed for bankruptcy protection
under Chapter 9. Others were forced to cut services and slash their payrolls.
Watertown
was well-positioned under the stewardship of Town/City Manager Mike Driscoll
and we emerged from the recession intact. That was so yesterday.
How
vulnerable is today’s Watertown to a sharp economic downturn? The life-science
boom that had been filling the city’s coffers is now barely a whimper.
Developers have been cautiously playing wait-and-see while an already uncertain
market decides to declare itself.
With
tariffs, they will soon face higher costs of lumber, steel, and other building
materials that were already high and already getting higher.
Meanwhile,
residents have had to contend with the ever-rising costs of living: water and
sewer rates, energy bills, property taxes, insurance, and the current cost of
food, clothing, and other necessities.
Has
Watertown’s economy become more fragile than most of us realized, making us
less able to handle the load that tariffs will pile on the shoulders of
struggling residents?
Our city
government seems to be in a business-as-usual mode, taking for granted that the
storm clouds will pass, sparing us the pain that other municipalities will
suffer if the tariff war continues.
Maybe Watertown
will be spared. Maybe.
But, maybe
it’s time to hit the pause button and focus on emergency preparedness.
Maybe it’s
time to turn our rainy day fund into a tsunami fund.
Maybe it’s
time to tighten our belts and halt our government’s hiring spree.
Maybe it’s
time for some tough, honest conversations.
Bruce
Coltin, The Battle For Watertown