In this crisis, no American was at fault. But all Americans are at risk.
It’s worth taking a moment to understand why this crisis is not like anything we’ve seen in the past, whether in 2008 or the century prior.
You’ve often heard the term “GDP,” or gross domestic product, as a measurement for how the economy grows. Economists break down GDP into four parts:
Consumption – Purchases by individuals of goods and services;
Investment – Purchases by businesses giving them increased capacity to offer their products;
Government spending – Local, state or federal government purchases of any good or service;
Net exports – The difference between the value of exports going out of the U.S. and the value of imports coming in.
As you probably guessed, consumption, which makes up nearly 70 percent of U.S. GDP, is the problem. With shutdowns taking place across cities and towns nationwide, going out to restaurants, gathering in stadiums, heading to the mall or to the gym are all, for now, out of the economic picture. And, as every payment is somebody else’s income, this forced austerity is a big hit to small businesses, who need to pay leases and other debt obligations during this time.
It’s a tough situation – but just as consumption is the problem, consumption can also be the solution.
Read the rest of David Bossie’s The Hill Op-ed…
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