In recent months, analyses of the economy have focused not only on metrics and data, but on identifying the proper letter of the alphabet. Will the economy look like an "L," dropping sharply and staying low? Will the recovery look more like a "W," falling, then rising, then dropping again before returning to normal? Perhaps we should expect more of a "U," which would offer more gradual gains?
Donald Trump has clearly settled on his preferred letter, telling supporters at a campaign rally in North Carolina last night, "Our economy is doing phenomenally well. Not only is it a 'V,' it's a 'super V.'" In other words, the president believes the economy fell sharply as a result of the pandemic, and it's now bouncing back with equal speed.
This is, of course, highly dubious, especially as job gains appeared to lose momentum over the summer.
Joe Biden, meanwhile, has been warning of a "K-shaped recovery," in which there are effectively two tracks: one for the wealthy who are making gains, another for everyone else, pointed in the opposite direction.
The latest evidence suggests Biden is right and Trump is wrong. Politico reported this week:
The path toward economic recovery in the U.S. has become sharply divided, with wealthier Americans earning and saving at record levels while the poorest struggle to pay their bills and put food on the table. The result is a splintered economic picture characterized by high highs -- the stock market has hit record levels -- and incongruous low lows: Nearly 30 million Americans are receiving unemployment benefits, and the jobless rate stands at 8.4 percent. And that dichotomy, economists fear, could obscure the need for an additional economic stimulus that most say is sorely needed.
CNBC had a related report the other day, which quoted Joseph Brusuelas, chief economist at RSM, a prominent tax and accounting firm. "The K-shaped recovery is just a reiteration of what we called the bifurcation of the economy during the Great Financial Crisis. It really is about the growing inequality since the early 1980s across the country and the economy," he said. "When we talk K, the upper path of the K is clearly financial markets, the lower path is the real economy, and the two are separated."
The New York Times' Paul Krugman added in his latest column that "the economy is still bypassing those who need a recovery most."
Of course, the point of the analysis is not to choose the appropriate letter of the alphabet. Rather, what matters is what policymakers -- and those who hope to become policymakers -- intend to do in the face of these economic conditions.
It's problem that Trump sees -- or at least claims to see -- a "super V" recovery, but it's a bigger problem that his assessment has led to passivity when it comes to doing real work on the economy. On Labor Day, of all days, the president said he wouldn't even negotiate with congressional Democrats on a possible economic aid package.
What's more, a day earlier, Stephen Moore, a far-right voice on economic policy with close White House ties, suggested the economy is already healthy thanks to "the four biggest months of job creation in the history of the United States."
In other words, despite high unemployment and widespread economic distress, many on Team Trump are prepared to do very little to improve the status quo -- and that's even more alarming than the White House's misguided choice in letters used to represent the state of the "recovery."