IS WATERTOWN WHISTLING PAST AN ECONOMIC GRAVEYARD?

 

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