RIVERSIDE (CNS) – The economic downturn triggered by the government-mandated public health lockdowns stemming from coronavirus is receding, and the regional, state and national economies are poised for growth, according to a report released Tuesday, Oct. 13 by the UC Riverside School of Business’ Center for Economic Forecasting.
“The United States hit its low point in the current downturn back in April,” CEF Director Christopher Thornberg said. “As odd as it may sound, technically, this recession is over, making it the deepest, but shortest in U.S. history.”
Unlike previous years, the 11th annual Inland Empire Economic Forecast was delivered virtually, with Thornberg and his colleagues highlighting the dynamics involved in the sharp and abrupt economic contraction, as well as what factors are now influencing the gradual turnaround.
According to the forecast, during the second quarter of the year, which ended in June, the economy as a whole was in a tailspin, with unemployment at historically high levels.
However, the third quarter has already seen positive momentum. Riverside County’s unemployment rate topped out at roughly 16% in May — a record — and since then, it has dropped closer to 11%, according to the California Employment Development Department.
The forecast did not account for the number of businesses that have permanently closed because of the lockdown-driven economic trough, but it did examine the underlying strengths of the national, state and local economies, including the fact that consumer savings have actually increased by $1.2 trillion — four times what was held in the last quarter of 2019.
“The Inland Empire’s labor market continues to steadily recover … adding 74,700 jobs since April’s lows,” according to the report. “Still, on an annual basis, year-over-year employment has fallen by 132,900 jobs. The region is outpacing the state in terms of job recovery, but trailing the nation.”
The sectors that have been impacted the most by the lockdowns are leisure and hospitality, retail trade, manufacturing and educational services.
“As health-mandated restrictions in the state continue, cities in California that rely heavily on tourism, visitors and the transient occupancy tax will experience real hardship due to revenue losses,” according to the report.
The authors noted that the Coronavirus Aid, Relief & Economic Security Act stimulus, as well as direct federal business and consumer assistance, totaling about $3 trillion, has helped offset losses, though they acknowledged that the spending has been “excessive,” leading to potentially unsustainable borrowing.
Thornberg and his colleagues expressed the notion that “governments need to worry less about regulating businesses and more about regulating people,” in the context of controlling viral spread and moving forward with economic reopening. Riverside County Supervisor Jeff Hewitt, among others, have maintained that governments have been too heavy-handed at all levels, suppressing personal freedom and productivity.
The complete forecast can be read here: