Larry Summers Interview

A lot of wisdom here.

Comparing Two Recessions

Job losses during the Great Recession of 2008-2009 were largely permanent job losses. Job losses during the Great Shutdown of 2020 are largely temporary layoffs. The future course of the economy will, of course, depend on the microbiology. But the economy seems well situated for a rapid recovery if testing, treatment, and vaccine development allows it. (Click on image to enlarge.)

An important caveat: The labor force participation rate has experienced a large drop. Perhaps there are many permanent job losers who are classified as not in the labor force because they cannot search during the pandemic.

COVID-19 & the Economy: A Q&A Session

Last week, I gave a webinar on COVID-19 & the Economy. If you missed it, you can get a copy by clicking here.,

Also, my publisher is creating a teaching resource for instructors, Covid-19 and the Economy Webinar: Student Guidance Questions (with Instructor notes). If you would like to receive a copy when it is available, please contact Alexis Cortez at Cengage.

The New Yorker profiles Frank Ramsey

Here.

Velde on the 1918 Pandemic

Bottom line: It led to "a recession of 'exceptional brevity and moderate amplitude.'"

A Reading List

...from my friend, former student, and frequent co-author Ricardo Reis.

AEA Podcast

Here is a podcast interview I did recently for the AEA based on my recent JEL article.

Interview with Jim Heckman

A good read.

A Great Overview

...of the policy implications of Covid-19 modeling by Chris Avery et al.

COVID-19 & the Economy: A Q&A Session

On Wednesday April 29 at 1 pm eastern, the author of my favorite textbooks will be discussing the economic impact of the current pandemic. If you are interested, you can find more information about the event here.

Dorothy Theresa Sawchak Mankiw

Above is a picture of my mother as a young woman. I would like to tell you about her.

My mother was born on July 18, 1927, the second child of Nicholas and Catherine Sawchak.

Nicholas and Catherine were immigrants from Ukraine. They came to the United States as teenagers, arriving separately, neither with more than a fourth-grade education. Catherine was from a farming area in western Ukraine. She left because her family wanted her to marry an older man rather than her younger boyfriend, who had been conscripted into the army. Her first job here was as a maid. Nicholas was from Kiev, where he had been trained to be a furrier. In the United States, he worked as a potter, making sinks and toilettes. When Nicholas and Catherine came to the United States, they thought they might return home to Ukraine eventually. But World War I and the Russian Revolution intervened, causing a change of plans. Catherine’s boyfriend died in the war. Nicholas and Catherine met each other, married, and settled in a small row house in Trenton, New Jersey, where they lived the rest of their lives.

Catherine and Nicholas had two children, my uncle Walter and my mother Dorothy. When my mother was born, her parents chose to name her “Dorothy Theresa Sawchak.” But because Catherine spoke with a heavy accent, the clerk preparing the birth certificate did not understand her. So officially, my mother’s middle name was “Tessie” rather than “Theresa.” She never bothered to change it.

Nicholas and Catherine were hardworking and frugal. They saved enough to send Walter to college and medical school. He served as a physician in the army during the Korean war. Once I asked him if he worked at a MASH unit, like in the TV show. He said no, he worked closer to the front. He patched up the wounded soldiers the best he could and then sent them to a MASH unit to recover and receive more treatment. After the war, he became a pathologist in a Trenton-area hospital. He married and had two daughters, my cousins.

My mother attended Trenton High School (the same high school, I learned years later, attended by the economist Robert Solow at about the same time). She danced ballet. She water-skied on the Delaware River. She loved to read and go to the movies.

In part because of limited resources and in part because of the gender bias of the time, my mother was not given the chance to go to college. Years later, her parents would say that not giving her that opportunity was one of their great regrets. Instead, my mother learned to be a hairdresser. She was also pressured to marry the son of some family friends.

The marriage did not work. With my mother pregnant, her new husband started “running around,” my mother’s euphemism for infidelity. They divorced, and she kicked him out of her life. But the marriage did leave her with one blessing—my sister Peg.

My mother continued life as a single mother. Some years later, she met my father, also named Nicholas, through social functions run by local Ukrainian churches. They both loved to dance. He wanted to marry her, but having been burned once, she was reluctant at first. Only when she realized that he had become her best friend did she finally accept.

In 1958, nine months after I was born, Mom, Dad, Peg, and I left Trenton for a newly built split-level house in Cranford, New Jersey. My father was working for Western Electric, an arm of AT&T, first as a draftsman and then as an electrical engineer. He worked there until his retirement. One of his specialties was battery design. When I was growing up, I thought it sounded incredibly boring. Now I realize how important it is.

My mother then stopped working as a hairdresser to become a full-time mom. But she kept all the hairdresser equipment from her shop—chair, mirrors, scissors, razors, and so on—in our basement. She would cut the hair of her friends on a part-time basis. When I was a small boy, she cut my hair as well.

I attended the Brookside School, the public grade school which was a short walk from our house. When I was in the second or third grade, my mother was called in to see the teacher. The class had been given some standardized aptitude test. “Greg did well,” the teacher said. “We were very surprised.”

At that moment, my mother decided the school was not working out for me. I was talkative and inquisitive at home but shy and lackluster at school. I needed a change.

She started looking around for the best school she could find for me. She decided it was The Pingry School, an independent day school about a dozen miles from our house. She had me apply, and I was accepted.

The question then became, how to pay for it? Pingry was expensive, and we did not have a lot of extra money. My mother decided that she needed to return to work.

She started looking for a job, and an extraordinary opportunity presented itself. Union County, where we lived, was opening a public vocational school, and they were looking for teachers. She applied to be the cosmetology teacher and was hired.

There was, however, a glitch. The teachers, even though teaching trades like hairdressing, needed teacher certification. That required a certain number of college courses, and my mother had not taken any. So she got a temporary reprieve from the requirement. While teaching at the vocational school during the day, she started taking college courses at night to earn her certification, all while raising two children.

My mother taught at the vocational school until her retirement. During that time, she also co-authored a couple of books, called Beauty Culture I and II, which were teacher’s guides. From the summary of the first volume: “The syllabus is divided into six sections and includes the following areas of instruction: shop, school, and the cosmetologist; sterilization practices in the beauty salon; scalp and hair applications and shampooing; hair styling; manicuring; and hairpressing and iron curling.” I suppose one might view this project as a harbinger of my career as a textbook author.

When my parents both retired, they were still the best of friends. They traveled together, exploring the world in ways that were impossible when they were younger and poorer. During my third year as an economics professor, I was visiting the LSE for about a month. I encouraged my parents to come over to London for a week or so. They had a grand time. I believe it was the first time they had ever visited Europe. When I was growing up, vacations were usually at the Jersey shore.

My father died a few years later. My mother spent the next three decades living alone. She was then living full-time at the Jersey shore in Brant Beach on Long Beach Island. The house was close to the ocean and large enough to encourage her growing family to come for extended visits. Two children, five grandchildren, four great-grandchildren. The more, the merrier. Nothing made her happier than being surrounded by family.

My mother loved to cook, especially the Ukrainian dishes she learned in her childhood. Holubtsi (stuffed cabbage) was a specialty. Another was kapusta (cabbage) soup. One time, the local newspaper offered to publish her kapusta soup recipe. They did so, but with an error. Every seasoning that was supposed to be measured in teaspoons was printed as tablespoons. The paper later ran a correction but probably to no avail. I am not sure if anyone ever tried the misprinted recipe and, if so, to what end.

During her free time in her later years, my mother read extensively, played FreeCell on her computer, and watched TV. A few years ago, when she was about 90 years old, I was visiting her, and I happened to mention the show “Breaking Bad.” She had not heard of it. She suggested we watch the first episode. And then another. And another. After I left, she binge-watched all five seasons.

As she aged, living alone became harder. When she had trouble going up and down the stairs, an elevator was added to her house. But slowly her balance faltered, and she fell several times. She started having small strokes, and then a more significant one. She moved into a nursing home. Whenever I visited, I brought her new books to read. Her love of reading never diminished.

This is, I am afraid, where the story ends. Last week, Dorothy Theresa Sawchak Mankiw tested positive for Covid-19. Yesterday, she died. I will miss her.

A Tale of Two Possible Recoveries

Click here to read my column in this Sunday's New York Times.

For the Record

Given how fast things are moving, this is a bit out of date. But here are some remarks I made at a teleconference about the current crisis on March 24, slightly updated and posted by the Washington Center for Equitable Growth.

My Recent Conversation with Chris Paxson

The Best Ever Use of Zoom

Lessons from WWII

...that are relevant for the present crisis.

Three Facts from Today's Jobs Report

• The employment-population ratio fell by 1.1 percentage points. This is the largest one-month drop since these data began in 1948.
• The number of job losers on temporary layoff showed a large spike upward (by more than 1 million people).
• The number of permanent job losers showed only a small increase (by less than 200,000 people). 

None of this reflects the dramatic changes during the past two weeks. We will have to wait until next month's report to see that in the employment data. But these three facts offer a glimmer of hope that the inevitable deep recession resulting from the pandemic might be followed by a quick recovery.

Viral Exposure

This NY Times piece seems to make an important point that has not received much attention:

From a policy perspective, we need to consider that not all exposures to the coronavirus may be the same. Stepping into an office building that once had someone with the coronavirus in it is not as dangerous as sitting next to that infected person for an hourlong train commute.... 

Low-dose infections can even engender immunity, protecting against high-dose exposures in the future. Before the invention of vaccines, doctors often intentionally infected healthy individuals with fluid from smallpox pustules. The resulting low-dose infections were unpleasant but generally survivable, and they prevented worse incidents of disease when those individuals were later exposed to smallpox in uncontrolled amounts. 

Despite the evidence for the importance of viral dose, many of the epidemiological models being used to inform policy during this pandemic ignore it. This is a mistake.

Daily Data on Hours Worked

I received the following email yesterday:

Thank you for blogging on the papers concerning the economic impact of coronavirus. I've been a fan of yours for many years, since using your textbook as an undergraduate. I'm reaching out to share some data that might be of interest to you. I am a software engineer at Homebase, the leading scheduling and time tracking solution for small businesses across the US, so we see daily clock-in and clock-out data. We are able to see how many workers are working fewer hours or no hours versus before coronavirus and track the economic impact of this on workers and businesses across the country in real-time.

You can see their data at this link. It shows that hours worked by hourly employees is down by more than 50 percent. FYI, hourly workers make up about 60 percent of the labor force, most of the rest being salaried workers. It is not clear to me how representative the Homebase data are, but they may turn out to be a good resource for tracking the economy in real time.

Pandemic Readings from Economists

1. Jim Stock
2. Michael Greenstone and Vishan Nigam
3. Sergio Correia, Stephan Luck, and Emil Verner 
4. Robert Barro, Jose Ursua, and Joanna Weng
5. Andy Atkeson