Friday’s Bureau of Labor Statistics report on the November labor market told us what we already knew but in more precise terms: The economy is improving but at the lowest pace in six months.
As the bureau put it, “Total nonfarm payroll employment rose by 245,000 in November, and the unemployment rate edged down to 6.7 percent … However, the pace of improvement in the labor market has moderated in recent months.”
Given what we think we know about the general availability of coronavirus vaccines, which should help to solidify the economy when they begin to arrive, we would best fasten our safety belts and keep our fingers crossed. With the virus ramping up and the economy slowing down, the next six months could bring a rough ride, even though challenging times are also sometimes the best opportunities to look for a thousand points of light. More on that later.
Broadly speaking, the problem we face is fear: People are afraid and are avoiding contact with the virus, and for good reason, of course. Consider some indicators. Online retail sales are booming, and in-person sales are suffering. Travel, even across the accelerated Thanksgiving holiday period, is down, especially where public transportation is involved. Auto sales are up, perhaps a compensation for fear of flying. And based on an important indicator from OpenTable, the percentage of U.S. restaurants taking reservations has headed south again, a trend that is apt to be accelerated by more expected state and regional shutdowns.
In looking for a proxy for fear, I turn to the cash balances we hold in our checking and savings accounts. We maintain balances to cover transactions and future needs, but another reason relates to uncertainty or fear. Rising levels of fear lead to more money held in reserve. As shown in this next chart and reported here previously congressional efforts to bring coronavirus relief in the form of direct household payments and payday protection have led to a huge increase in bank balances.
The data tell us that cash holdings are headed skyward and have remained elevated. In fact, survey evidence published by the National Bureau of Economic Research indicates that 40% of the funds transferred went to pay off debt or into savings. Fear and uncertainty led to less spending, making it hard for national politicians who think in terms of spending and debt forgiveness to break the coronavirus logjam.
So, where does this leave us as we face the next six months, not yet seeing immediate vaccine relief and with more expected shutdowns? Are we simply caught between a rock and a hard place with nowhere to turn? Are Congress, a new administration, and more attempted cash transfers our only hope? I think not.
Yes, public assistance is surely called for, and we will be reminded of this constantly by our neighbors and preferred news outlets and commentators. But I believe we should give recognition and more support to relief activities that are already underway across this good land. There is, after all, more going on outside of Washington than inside it.
With that, let’s revisit an idea I have touched on before. Those old enough to remember President George H. W. Bush’s 1989 inauguration will recall, warmly, I hope, his “thousand points of light” initiative, an effort that underlined and capitalized on grassroots community activities that together could make a huge difference in the personal fortunes of those in distress. Much like President Ronald Reagan’s call for “morning in America” and FDR’s “fear itself” speech, Bush reminded us that ordinary people working in our own communities and neighborhoods can change things for the better.
When we think of Meals on Wheels, Salvation Army shelters, United Way-supported soup kitchens, and the efforts of countless civic organizations, churches, corporations, and nonprofit groups, it quickly becomes clear that there are not just a thousand points of light. There are millions, and we should celebrate them and assist them, each in our own way. They represent the soul of America.
Yes, the coronavirus roller coaster economy seems ready for another downward swoop. But community members have marvelous ways of looking out for each other. Maybe this is the time for the new administration to remind us that we are a part of a caring human community and call on a thousand points of light.
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science. He developed the “Bootleggers and Baptists” political model.
