The economic fallout of coronavirus
At Katz's Delicatessen, on New York's Lower East Side, they've been slicing the corned beef and pastrami for 132 years.
"We've gone through everything, right?" said Jake Dell, the third-generation owner of Katz's. "We've seen depressions and hurricanes and blackouts and terrorist attacks, and we've been here through all that. We've never closed."
But now the chairs are stacked on the tables. Katz's, like most restaurants across the country, is prohibited from seating diners. So, the bagels and blintzes are only available to-go. Dell is desperately trying to keep his 200 workers busy and, more importantly, to keep paying them.
"Waiters, for example, are doing deliveries or working on crowd control," he said. "You know, I have busboys that I obviously don't need to clean tables right now, so I'm having them do prep work. Basically everyone is an all-hands-on-deck, and we take it one day at a time."
Alfredo Fernandez has put his knife to work at Katz's for 14 years.
"I'm concerned," he told CBS News business analyst Jill Schlesinger. "A lot of people gonna go without jobs. And if it happens, you know, you just gotta stick together and try to help each other out through this."
At least Katz's is still open. As the global economy enters an unprecedented shutdown, just look around: Major league sports have left the field. Factories and shopping malls are shuttered. The lights have gone dark on Broadway. And the curtain has come down for Manhattan's independent theaters, like the Magnet Theater.
"I'm sitting here in an empty theatre, and it's empty every night. We're shut down. New York City is shut down," said actor Ed Herbstman, who co-founded the Magnet, which is dedicated to improv.
He remembers the good old days, like, a week-and-a-half ago.
"We were booming," Herbstman said. "Thirty-five to 40 shows a week, back-to-back each night."
The Magnet has 50 employees but the damage goes beyond those 50. There's a web of companies and workers that supply everything from utilities to T-shirts to beer who will all feel the impact of the theater's closing.
"I'm worried about the future of this place," Herbstman said. "Well, I'm worried about the future of the city."
Schlesinger asked Joseph Stiglitz, a professor at Columbia University who won the Nobel Prize for economics in 2001, "If you look back on your life, you've lived through a lot of different shaky economic periods. Can you tell me how this period feels to you today versus what you've seen in the past?"
"Oh, to me, I think this is the most nerve-racking," Stiglitz replied. "This is totally different, where we're shutting down the economy to protect our health."
Stiglitz believes that the pre-virus economy was one where too many were left exposed, where both families and businesses alike were at risk, if conditions soured: "Before the event, many of our households were living at the edge. The average amount in the bank that some, you know, 50%, 70% of Americans have is $500-odd, $1,000.
"On the other side, businesses have been really foolish taking on debt as if no storm's ever going to hit. And we always know that there's going to be some storms. They've been really, really foolish."
He said, "We've pushed the idea of efficiency in a narrow-minded sense too far. We've run our whole economy that way.
"No extra hospital beds? Fine, as long as you don't have a crisis like the current one. We developed a system without resilience in which we left large numbers of Americans extraordinarily vulnerable."
As the health pandemic becomes an economic pandemic, the world is waiting for governments to respond. Here in the U.S., the Federal Reserve has cut interest rates to near-zero to help consumers and businesses access cheaper loans; and it's also taking actions to keep the nation's financial plumbing unclogged.
At the same time, the Trump administration and Congress are nearing an agreement to make half-a-trillion dollars available to help large corporations and small businesses. And there's another half-a-trillion dollars for households, amounting to $1,000 to $3,000, depending on the size of the family and income level.
Stiglitz says it's a start.
Schlesinger asked, "The idea of sending checks to people – not a one-time event. You are advocating something different. Can you explain?"
"Well, if we knew this was just gonna be a three-week event, a one-time check would be fine. It gets us over the hump, and we're on," said Stiglitz. "But the epidemiologists are not sure how long it's going to take. The best estimate is months. And that means a lot of people really are anxious. And knowing that if this crisis lasts for three months, there'll be another check … $1,000 for three months? Come on. So, we really need to give them the assurance that as long as this lasts, there'll be a check coming."
"Should we be concerned at all about spending this money now?" Schlesinger asked.
"The answer is no. I mean, when we went to World War II, we didn't ask, 'Could we afford it?' We had to do it. We need to do. Can we afford it? Yes, we have enormous resources."
When asked if his clients are freaking out right now, Michael Goodman, the president of Wealthstream Advisors, a financial planning and investment management firm, replied, "Well, some of our clients are definitely on edge.
"I mean, this is a pretty scary time, of course. And you would never want to discount that. There are clients, however, I'm surprised to see, that are anxious to put some money into the market."
It's been a frightening ride for investors; stocks have plunged more than 30 percent over the past five weeks, ending the longest bull market on record. But despite the market turmoil, Goodman says that even for a person nearing retirement, now is not the time to panic and get out.
Schlesinger asked, "If I'm 60 years old and I plan on retiring when I'm 70, should I make any changes in the account right now?"
Goodman replied, "If you're 60 and you're not gonna be retiring for another 10 years, in these times there's this temptation to make adjustments. As scary as this is, as much as we don't know the bottom to this market, average recovery is typically somewhere around 24 months."
Whether you're an investor or not, Goodman said now is an important moment to take stock of your financial situation.
So, what should we focus on day-to-day? "I think the thing that people should be focusing on right now is making sure that they understand what their personal obligations are over the next several months, so that they feel that they can get through that," Goodman said. "This will pass. There will be damage because of it. And we will rebuild and grow back. We've done this before."
Back at the Magnet Theater, they're trying to get through it all by experimenting (like some of their big-league colleagues) with putting performances online.
The theater dedicated to improv is improvising, as we all are.
Herbstman said, "What we do is we train people to deal with the fact that everything is uncertain. It's improvising. We're constantly saying, 'Calm down. Take a breath. Don't try to plan. Try to react.' And now, we're doing that for real in real life."
For more info:
- Katz's Delicatessen, New York City
- Magnet Theater, New York City
- Magnet's Virtual Improv Show Schedule
- Joseph Stiglitz, Columbia University
- Michael Goodman, Wealthstream Advisors
Story produced by Alan Golds. Editor: Steve Tyler.
