A v-shaped recovery is possible over the next few months, state and national economists say.
But the V might as well stand for “very uncertain.”
A historic recovery to match the historic drop-off in economic activity is possible, said Andy Bauer, an economist with the Federal Reserve Bank of Richmond.
But, “It seems unlikely just because there’s a lot of uncertainty,” Bauer said. “How the pandemic plays out will largely shape the recovery.”
Bauer was among the panelists for “West Virginia’s Economy During Covid,” a Thursday presentation by West Virginia University’s John Chambers College of Business and Economics.
Panelists like Bauer talked about how sharply economic activity dropped off as the coronavirus prompted a dramatic slowdown of the economy.
There are positive signs of recovery now that businesses are opening back up, economists on the virtual panel agreed.
But what happens over the next few months largely depends on the spread of the virus and accompanying consumer confidence.
Over the past couple of weeks, the rate of spread has shot up in states across the South and Southwest.
West Virginia has shown signs of community spread, with the state joining others in a reproductive value that has gone above 1-to-1 spread.
That couples with speculation that there could be another wave of coronavirus activity in the fall, as days get shorter and people spend more time inside.
“I think it’s likely to be a slow recovery,” Bauer said. “A lot of it depends on how the pandemic acts in the second half of the year.”
He described the country’s economic performance in the first two months of the year as fantastic, but the shutdown because of the coronavirus was catastrophic.
For many companies, he said, revenue has fallen off 10 to 100 percent. That has improved somewhat with reopenings.
“Still, for many firms it’s difficult because revenues are off considerably from where they were at the beginning of the year,” he said.
He noted that 45 million Americans applied for unemployment insurance over the past 13 weeks. And he said an entire decade’s worth of job gains were wiped out in just two months.
John Deskins, director of WVU’s Bureau of Business & Economic Research, expressed a more optimistic view of recovery but acknowledged that much remains unknown.
Speaking on the bureau’s webinar and earlier on MetroNews’ “Talkline,” Deskins suggested a fairly rapid “V-shaped” recovery is possible.
“I’m saying I’m optimistic that it will be V-shaped,” Deskins said on “Talkline.”
Although he added, “I think it’s very unlikely that we’ll be back to the unemployment level that we were by the end of the year.”
He attributed current recession conditions to the intentional acts of slowing the economy as a result of the pandemic, calling it “recession by design.”
“We’ve never seen anything like this before. This is a recession that hasn’t been caused by economic problems,” he said on the presentation. “Previous recessions are caused by problems the economy developed. Because the source of this recession was so external it makes it difficult to predict where we’re going.
But Deskins also acknowledged it is harder to gauge factors such as consumer confidence that could be affected as people continue to react to the virus.
“It’s really hard to predict confidence,” he said.
West Virginia shed 94,000 jobs from mid-February to mid-April, Deskins noted.
“The speed of the decline is completely unprecedented,” he said.
Then from mid-April to mid-May, the state gained back 13,000 jobs.
In February, the state unemployment rate was 4.9 percent.
For April, West Virginia’s unemployment rate shot up to 15.9 percent.
And for May, the unemployment rate eased back a bit to 12.9 percent.
A big question, Deskins said, is whether all that sudden economic damage will cause long-term structural problems.
“The longer the shutdown lasts the more underlying economic damage will be created,” Deskins said. “So far, the data has not indicated a whole lot of those signs for long-term damage.”
Dr. John Deskins, Director of WVU’s Bureau of Business and Economic Research, talks with Hoppy Kercheval about West Virginia’s economic picture amid the pandemic. WATCH: https://t.co/wkudfIRZCB pic.twitter.com/yteY3g78bA
— MetroNews (@WVMetroNews) June 25, 2020
The presentation also included officials with West Virginia’s Department of Commerce, who expressed realism about the current economic conditions but expressed hope that the recovery will be steady.
“It’s hard to plan. It’s hard to make policy and execute policy in these unprecedented and historic times,” said state Commerce Secretary Ed Gaunch.
But, Gaunch said, “We are moving forward in Commerce as though this is a V-shaped recovery.”