COVID-19 slump expected to continue for most of 2020

MOSES LAKE — The nation’s economy is expected to shrink for most of this year, with growth only expected to return in the last three months of 2020, according to a presentation from the state’s chief economist.

Speaking during a weekly webinar hosted by the Grant County Economic Development Council, or EDC, Steve Lerch, chief economist for the Washington State Economic and Revenue Forecast Council said the economy is expected to contract around 25 percent in the second quarter of 2020 alone because of the business closures prompted by the COVID-19 outbreak.

“You have to go back to 1918 to see something like this,” he said.

The EDC co-hosts the weekly webinars with the Moses Lake Chamber of Commerce every Thursday to keep business owners and employees informed of the latest changes in federal emergency loan programs, the state unemployment insurance application process and other ways businesses can save money or possibly get assistance.

Lerch said that as many as 800,000 people are employed in “non-essential” businesses like restaurants, hotels, retail, construction, entertainment and recreation, and a good many of them have lost or are at risk of losing their jobs.

“That’s a very big chunk of the state’s economy,” he said.

According to data published weekly by the Employment Security Department, or ESD, which manages the state’s unemployment insurance program, nearly 1.5 million Washington residents were receiving unemployment benefits in the week ending April 25, more than double the figure for the preceding week.

ESD reports that 359,000 of that week’s first-time claims were related to the COVID-19 pandemic.

“These are incredibly bad numbers,” Lerch said of the state and national unemployment figures.

Lerch said that consumer confidence and small business optimism fell off a cliff in the last few weeks, as measured in surveys by The Conference Board and by the National Federation of Independent Business, with retail sales and home sales especially hard hit.

In fact, Lerch expects builders to “dial back” on new home construction as a result.

Hardest hit has been travel, which has seen spending fall by nearly 90 percent in Washington, along with steep declines in clothing sales.

“Even if you want to go out and spend money, there are not a lot of places to do that,” he said.

But there are some places, he noted, adding that home and hardware retailers have seen sales increase by nearly 45 percent by mid-April, as have grocery stores, general retailers like Walmart, and retailers specializing in hobbies and toys.

However, Lerch noted that a lot of the council’s forecasts are based on survey data, which often understate the extent or depth of a problem. Complete data, such as total unemployment claims versus initial surveys of companies laying people off, takes weeks to gather and collate.

“In an initial sample, we don’t necessarily get an accurate picture,” he said. Survey data “may make things look better than they actually are.”

“We don’t have all the data we wish we had,” Lerch added.

The council produces quarterly non-partisan forecasts used by state legislators to craft the state’s budget. The last forecast, based on pre-COVID-19 data and seeing the nation’s economy grow 1.9 percent in 2020, was published on Feb. 19, and did not reflect the looming pandemic.

“The forecast was way too optimistic given what has transpired since,” he said.

Charles H. Featherstone can be reached at [email protected].