The first thing to understand about the current crisis is that it will end. The macroeconomic foundations of the U.S. economy remain strong, and the fundamentals which led an unprecedented period of growth over the past 11 years will result in an economic rebound in 2020. Our forecasting models predict that this economic downturn will be steep but short, with things starting to improve in May under the best-case scenario and August under the worst-case scenario. Unemployment will increase to double digits, but the historically low current unemployment rate means that the vast majority of people in the labor force will remain there.
As an economic developer, your challenge is to convince companies to continue to keep their eyes on the near future, rather than the somewhat rocky present. The local startup that has grown to 75 employees remains well positioned within its growing industry and still needs a bigger office space. By the fourth quarter, consumer demand is likely to increase, so business owners should not rush to close retail locations. You need to impress upon your partners the relatively strong economic forecast for the medium and long term and that the need that brought them to you in the first place remains. Any company that can safely absorb minor losses over the next two quarters should continue forward with their plans relatively unchanged.
But how? How can you cut through the panic that is gripping the world and convince your partners to focus on their needs? The best way to assure your clients that the time will soon be ripe again for expansion is with reasoned analysis and data. Data can remind people how strong our economy was before COVID-19. Data can show the forecasted quick recovery of the economy and where it will happen. Most importantly, you can use your data and, if you can get it, your partners’ data to rationally examine their current and future situation.
To provide a data-based perspective, Chmura has developed the COVID-19 Economic Vulnerability Index which is a measurement of the negative impact that the coronavirus crisis can have on employment based upon a region's mix of industries. For example, accommodation and food services are projected to lose more jobs as a result of the coronavirus (in the neighborhood of 50%) compared to utilities and healthcare (with none or little expected job contraction).