In this article John Denslinger argues the best solution to a sustained recovery is a marketplace where all economic activity is seen as essential.
Essential versus non-essential must be one of the more disparaging labels applied to America’s workforce and commerce in this new era of lockdowns. While I fully understand the good intentions safeguarding the health and well-being of the general population, the contrast should cease there. My take is that everyone is essential. Every opportunity to make a living is essential. Every business, big or small, is essential. Can anyone really argue each is indispensable to recovery, to growth, and to the absolute vitality of our industry?
The early decision in 2020 to lockdown a thriving economy created a staggering unemployment problem where more than 40 million people filed unemployment claims through May. Many were furloughed or temporarily laid off expecting a return to work soon. Others, not as fortunate, were immediately terminated and it’s likely more will discover their jobs eliminated in the months ahead. The sheer magnitude can be summed in a recent WSJ article headline: Decade of job gains erased in April. No sector of the economy escaped this devastating ambush. If not for a massive work-from-home phenomenon, the unemployed casualty level would have been much worse.
Fortunately, the electronics industry was deemed essential early in the pandemic lockdown. Therefore, our employees, businesses and supply chains probably fared better than many of our customers and probably their customers as well. That is the point: customers are critical to our recovery. They are the ones creating demand. It takes a healthy customer base across all sectors of the economy to spur the type of growth needed for everyone to prosper, but according to Deutsche Bank only 30 to 40 per cent of lost output and employment in the US will be recovered by year end 2020. That means, near term, the road to recovery will be challenging.
So why make such a big deal about essential vs non-essential? In a word, demand. It is demand from essential activity that drives this wonderfully intricate, American economic engine. To the contrary, non-essential activity does not. In a recent Thomas Insights report, 64 per cent of the manufacturers surveyed said the shutdown of non-essential business negatively impacted overall demand. It further detailed the sectors most affecting the decline as transportation, automotive, construction and agriculture. Make no mistake, that is a lot of ground to make up in some rather large segments.
Naturally, we hold out hope for a quick V-shaped recovery, but a gradual (hockey-stick) rebound is more logical. Steepening the slope of the curve hinges on how quickly we apply ‘essential’ to all aspects of America’s economic activity. Bottom line, we need every person working and every business operating to stimulate maximum demand for goods and services.
Granted, government stimulus programs helped immensely steadying the ship and providing a lifeline to employers and employees alike. Still, the best solution to a sustained recovery is free enterprise, resumption of domestic and international commerce, and marketplace equilibrium where all economic activity is once again seen as essential.