The economic consequences of the coronavirus

Benjamin Yount:

Some of the jobs lost to Wisconsin’s coronavirus shutdown will not come back.

The state’s economic development office, the WEDC, sent a report to lawmakers that outlines the economic impact of the coronavirus.

“Although this report can only capture a snapshot in time and further monitoring will be required to fully understand and refine recommendations, several clear themes were identified that clearly have the potential to shape Wisconsin’s recovery,” the report states.

WEDC found:

  • Tourism, retail and service businesses are still closed, are open in voluntary limited capacity or are struggling for customers. Most have seen substantial declines in their business and are unsure of their long-term prospects.
  • Agriculture and food and beverage, which have been identified as essential businesses, are seeking to anticipate the markets and manage disruptions to the supply chain.
  • Manufacturing and construction saw less immediate disruption but anticipate the long-term economic impact with slower consumer spending and overall activity as well as declining capital investment.
  • Forest products have had perhaps the starkest divide, with consumer paper goods at record highs while the decline in printed advertising has seriously impacted the catalog and magazine industry.
  • Education and health care – both huge economic engines in their own right – have also been disrupted or nearly brought to a halt by the pandemic.

“If anything, this report reflects the complexity of a crisis that hits every person, every region, every economy in our state and beyond our borders,” WEDC CEO Missy Hughes wrote in the report.

But some aspects of the report are brutally simple.

“Many jobs simply disappeared overnight, especially among service workers,” Hughes noted. “The reality today is many of the jobs previously held in the service industry will not recover.”

Hughes doesn’t have a number for how many jobs will never return, but the report does have some estimates about the number of jobs lost and the amount of money the coronavirus lock down cost businesses.

The report says businesses reported $22.2 billion in income losses, and another $37.8 billion in other economic losses. Those same businesses reported 2,648 lost positions.

Some of those business losses were offset by nearly $14 billion in federal aid. The vast majority of that federal money went to farmers and businesses in the state through programs like PPP and farm payments.

WEDC’s report notes that both income and sales tax revenue to the state dipped during the worst of the coronavirus lock down. But the report states it is too early to tell just how much state government will lose by the time 2021 rolls around.

Recall, however, that Gov. Tony Evers tried his best to shut down the state by dividing businesses, and therefore their employees, and therefore Wisconsinites, into “essential” and “nonessential” (including the businesses whose employment is nowhere near normal). Keep that in mind when you assess fault.

 

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