What Giant Skeletons and Puppy Shortages Told Us About the 2020 Economy
The result has often been referred to as a “K-shaped economy,” in which the well-off are on a rapid ascent while those with lesser means — and disproportionately Black, Hispanic and female workers — are suffering the pandemic’s economic consequences. As the rich get richer and more mobile in the work-from-home era, they’re buying houses.Business & EconomyUpdated Dec. 23, 2020, 8:59 a.m. ETAmerica has Zoom towns.Many middle-class millennials who lingered on the housing market’s sidelines for years reported that the pandemic had hastened their buying plans. They have been lured by the Fed’s pandemic-tied interest rate cuts, which have made mortgages cheap, and by the prospect of more space.Some millennials, freed from office buildings by remote work arrangements, seem to be aiming for cities where single-family homes are relatively affordable — what some writers have labeled “Zoom” towns. People roughly ages 21 to 40 have accounted for a huge share of home purchase loans in places like New Castle, Pa., and Frankfort, Ind., according to data from Ellie Mae, a mortgage software company. At the same time, rents in pricey cities like New York, San Francisco and Boston have been dropping.This $300 giant skeleton sold out.As people found themselves spending time at home, many decided to finally fix the back porch or renovate the garden — or to invest in weirder types of décor. The Home Depot and its competitors had a good year in general as America shifted from spending on services to spending on goods as restaurants closed and far-flung vacations became off limits. But the home repair store saw that goods-over-experiences trend play out in a big way at Halloween. The company offered a $300 giant skeleton that became a national sensation, selling out before October even started. People went on to decorate the 12-foot frame for the holidays, to social media users’ delight.Deficit spending got a celebrity endorsement.Skeletons aren’t the only domain where some Americans decided that bigger might be better. A group of economists has been arguing for years that the United States needlessly shackles its potential by trying to contain the federal deficit. They say resource constraints are the real limit on how much the American government, which prints its own currency, can spend.That idea — called modern monetary theory — attracted a lot of attention in 2020, particularly as some Democratic presidential candidates promised sweeping government spending programs. It even hit Hollywood. The actor and musician Ice Cube suggested in a tweet that America should be able to deal with problems like hunger and homelessness since it can print cash. Lest fans miss the point, he posted a follow-up photo of the economist Stephanie Kelton’s book on the theory, which came out in 2020.Celebrity endorsement aside, the theory has many critics, and it is clearly not operative in Washington yet: Deficits were central to the debate over a $900 billion relief package that President Trump signed into law on Sunday night. But the government’s debt increased rapidly during the year as Congress and the White House stepped in to blunt the effects of the pandemic, so an era of bigger spending does seem to be upon us.