business backgrounder | economy
The first Covid-19 era state revenue forecast in June estimated a $ 9 billion revenue loss through the 2021-2023 budget cycle . In September , the estimated loss was halved .
The head of the state Economic and Revenue Forecast Council , economist Steve Lerch , puts the “ good news ” in perspective . Revenues remain some $ 4 billion below February ’ s pre-pandemic estimate .
“ It ’ s better , but it ’ s still bad ,” Lerch says . “ The June forecast was too pessimistic … but that ’ s different than saying there isn ’ t a revenue shortfall . There certainly is compared to what we thought the world would look like without a pandemic .”
Like other analysts , Lerch emphasizes the high level of uncertainty in any pandemic-era prediction .
“ There ’ s just a lot of things we don ’ t know ,” he says .
an uneven recovery
After a surge in unemployment in March and April , by September job losses in the state were half what they were at spring peak . ( UI fraud complicates some of the analysis .) As restrictions ease carefully , employers are hiring , employees are eager to return to work , and innovative public-private partnerships and policy initiatives are emerging to spur the economic recovery .
Just as the damage inflicted by the pandemic has been uneven , so too has been the halting recovery . Despite the rhetorical flourish of “ we ’ re all in this together ,” it ’ s clear that we ’ re not in it in the same way .
People whose jobs involve face-to-face ( mask-to-mask ?) interactions have been particularly vulnerable to job losses . Data reported on the Commerce Department ’ s Economic Recovery Dashboard tell the story . From January through August , employment in leisure and hospitality fell more than 25 %, a loss of nearly 100,000 jobs , ( see chart below ) by far the steepest employment drop of any sector . Many small retailers , restaurants , taverns and clubs are unlikely to reopen .
Meanwhile , other sectors have survived , even thrived . Those who can work at home , do . For many professionals and executives , the pandemic has had few negative financial consequences . Firms facilitating shopping from home , logistics businesses , bioscience industries , video conferencing platforms , and the like have done so well that there ’ s credible speculation that the post-pandemic normal will be unlike what went before . Main Street retail , commercial office space , shopping malls and airlines face challenges unforeseen months ago .
This bifurcation defines a “ K-shaped ” recovery . U . S . Chamber of Commerce President Suzanne Clarke calls it one “ that will be vigorous for some sectors while others remain in freefall .”
“ But that ’ s often the case in recessions and recoveries ,” writes American Enterprise Institute scholar Michael R . Strain .
Washington Employment by Industry , Jan . through Aug . 2020 fall / winter 2020 25