Economic minute: 7 evolving COVID-19 situations
Professor of Economics Dennis Hoffman kicked off the first Economic Club of Phoenix event of the 2020-21 season with updates on the latest evolving economic situations affecting Arizona and beyond.
Since 1776, the U.S. had a recession every decade until the 2010s (well, almost). “We just barely made it, of course. We were in recession in 2009, and we're in recession in 2020,” said Professor of Economics Dennis Hoffman, who kicked off the first Economic Club of Phoenix (ECP) event of the 2020-21 season, featuring Blue Yonder CEO Girish Rishi.
Hoffman, who’s director of the L. William Seidman Research Institute, shared updates on the latest evolving economic situations affecting Arizona and beyond during the live Zoom event on Sept. 9.:
- There’s a much deeper dip in terms of loss in economic activity in the 2020 recession than the Great Recession of 2007. We didn’t reach the bottom of the economic valley in 2007 until the sixth quarter compared with reaching it in the second quarter of 2020.
- Confidence will be key going forward. Small businesses are very bearish about the economic outlook right now. Forty percent expect a recovery sometime in 2021. Another almost 20% expect one between 2022 and 2024.
- We lost more than 21 million jobs in the April report. Payroll employment increased by 1.371 million jobs in the August payroll period, just a tad below the consensus of 1.4 million. As a result, the labor market has recovered 52% of the losses incurred during the spring. This still leaves an enormous deficit of 11.6 million jobs, which will take many months to fill.
- We've always been a low-saving country — not right now. Personal savings rates are at unprecedented high levels.
- Weekly initial claims are declining, which is a good thing. But we're still substantially above the levels that we were at before the pandemic. And continued claims, of course, are even less likely to have declined. We were still at 14 million continuing claims as of mid-August.
- Arizona employment has declined 3.6%, but we’re far better off than the nation. Arizona is among the top states for job growth. Other top states for job growth include Utah, Idaho, Texas, Nebraska, and South Dakota. Hawaii is the worst off for job losses, and it's very logical since it depends on travelers and tourism and it has, of course, all come to a halt with the advent of the pandemic. Other states among the slowest for job growth include Vermont, Michigan, New York, and Massachusetts.
- The homeownership rate is skyrocketing, and this is not only in Arizona. Nationwide, 47 of the 50 U.S. states saw homeownership increases in the first and second quarters of 2020. The Arizona homeownership rate increased to 71.7% in the second quarter of 2020, the highest since the second quarter of 2007.
You can find out about other events where Hoffman and other top national and regional experts present their economic forecasts by visiting econclubphx.org.
“As to the future, everything will depend on how confident people are to climb out of their rabbit holes and go back and engage in this economy like we were doing in January and February,” said Hoffman.
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