Economic damage from the coronavirus is hitting the lowest level of wage earners hardest

Economic damage from the coronavirus is hitting the lowest level of wage earners hardest
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  • Lower earners are going to feel the biggest hit from the economic shutdown, according to Federal Reserve research.
  • Those who work in the hard-hit retail sector and are dependent on others being able to shop and dine and travel are most at risk.
  • Market expert Jim Paulsen says meaningful resumption of activity will be seen as a positive and those who are at the bottom end of the scale will get at least a boost.
  • New coronavirus data suggests that the virus is more widespread, but less lethal than thought.

Plunges in employment, manufacturing and other widely followed data points only tell part of the story behind the coronavirus-induced economic damage. What they don’t readily reflect is where the worst of it will fall, and that’s likely to be on the people who can handle it least.

Lower-income groups, who depend on the service industry for jobs, are taking the biggest impact from the shutdown of an economy that is driven by services like hotels, bars and restaurants. They work in the hard-hit retail sector and are dependent on others being able to shop and dine and travel, activities which all have been sharply curtailed during the current shutdown.

While government programs have been focused on keeping people afloat who have been displaced by the efforts to curtail the coronavirus spread, the pain is likely to be long lasting.

“The largest body blows are to the travel industry, the retail industry, parts of the health care industry that are on the front lines battling the virus. Those are generally low-paying jobs, so the folks in the bottom part of the income wealth distribution are going to get creamed by this,” said Mark Zandi, chief economist at Moody’s Analytics. “There’s no doubt about it.”

Source: CNBC

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