This is a very interesting era for the US economy – and for studying economics.
The COVID-19 pandemic halted the economy and led to large-scale government intervention, followed by an uneven recovery. Employment remains unstable and Federal Reserve and federal government actions appear to be increasing inflation. The Federal Reserve Bank of New York said Monday that long-term inflation expectations rose slightly in July. The estimate of price gains over three years of the bank’s consumer expectations survey was up from 3.6%. elevated 3.7%, the highest value since August 2013.
It is a fascinating time for anyone teaching and researching economics. UVA Today recently spoke to Lee Coppock, professor of economics at the University of Virginia and director of undergraduate studies in the Department of Economics, about today’s teaching.
Since joining the faculty in 2003, he has received several teaching awards, including the 2017 Kenneth G. Elzinga Distinguished Teaching Award from the Southern Economics Association – an honor named after his UVA colleague, a longtime teaching legend – and the 2018 UVA Alumni Distinguished Professor Awarded.
“Ken Elzinga is my mentor, both as an economics professor and as a person,” said Coppock. “One of my greatest honors was winning the teaching award named after him. It’s a national award, but named after my friend and mentor. “
Coppock and Dirk Mateer, Senior Lecturer at the University of Texas at Austin, have jointly written a widely acclaimed and widely used textbook “Principles of Economics”.
During his time at UVA, Coppock taught the fundamentals of macroeconomics to more than 17,000 students.
“I really love our UVA students,” said Coppock. “You are smart, respectful, in a good mood and versatile. I can’t think of a group of students I’d rather meet and teach. “
Just before the fall semester began, we asked Coppock what it was like to teach in times of economic instability and what he thought of the US economic prospects.
Q. As an expert in the field, have you ever lived through a period of so much economic turmoil?
A. The turmoil of this COVID-19 era has been extraordinary, but in some ways there is less uncertainty than during our last great recession from 2007-2009. The rise in unemployment and the decline in real GDP have been faster and more productive last year steeper than anything we’ve experienced before. But there was no typical surprise when we saw the data – we all knew we were going into a recession when the World Health Organization declared a pandemic on Wednesday March 11, 2020. As many of us remember, the Atlantic Ocean was the day that the Coast Conference basketball tournament was cut off and our men’s basketball season was over.
With the economy at a standstill, it was clear that we were plunging into recession that day. It was kind of creepy for economists to see all of this in a 24 hour period. The UVA was in the middle of the spring break and I knew immediately that the second half of the semester would be very different.
Q. Is it as different from historical precedents or other eras as it feels to people who are not experts?
A. Yes, this recession is different from any we’ve seen before. The slump in real gross domestic product was deeper than any recession since the Great Depression. And while we haven’t fully recovered yet, it looks like the return to normal growth and unemployment will come sooner than our last great recession.
Q. What do you find most interesting about it right now?
A. Many economists are eager to see how this recession changes future behavior. In other words, what changes in behavior required by COVID-19 will remain in place? It is clear, for example, that many more companies will now allow or even encourage remote working; Zoom meetings are here to stay. Of course, this also has an impact on the commercial real estate market, as firms reduce their demand for office space. Additionally, it will still take some time to see how this affects other industries such as construction and transportation.
Constant change can be positive – if we can produce the same output at a lower cost, that’s great. But even then, it can take time for resources to adjust, and that adjustment time can mean higher unemployment and lower production as companies and workers find new roles.
Q. Do you need to teach economics differently to keep up with the times?
A. Classes in macroeconomics last year were very different from previous years, both in terms of theoretical examples and politics. Most recessions are best characterized by changes on the demand side of the economy – people’s spending on goods and services falls. But this recession is only fully understood by focusing on the supply side – stores closed, workers stayed at home, and global supply chains have been severed.
The government’s reactions were accordingly new and different than before. Fiscal policy has focused on new programs such as the Paycheck Protection Program (forgivable loans to companies used to pay their workers) and unemployment benefits. Monetary policy also focused on specific sectors of the economy, lending to troubled industries through credit facilities. This focused approach to monetary policy has evolved over the past 15 years.
Q. Assuming you think there are important things today that differ in economic matters, what are the same things? What doesn’t change in the basics?
A. First of all, supply and demand are important. Sometimes we tend to focus on one side of the economy. This recession and the ongoing recovery are a reminder that both the production or supply side and the consumption or demand side must be resilient for the economy to recover. If companies fail to hire workers or international supply chains are disrupted, the recovery will be uneven and protracted. On the demand side, the purchasing behavior of consumers and companies must also recover.
And all of this depends on uncertainty. We were reminded of this again with this new delta variant of the virus. If suppliers and buyers are unsure about the ongoing fight against COVID, they cannot properly plan for the future and this will put a brake on any serious economic recovery.