Even as our federal, state, county and local leaders continue to act aggressively to slow the spread of the novel coronavirus, we are beginning to experience the leading edge of a significant economic impact that may last for some time. This is a transformational moment for our community and we must take a sobering assessment of what we need to pull through.
To that end, the Chamber and our association health plan, the Business Health Trust, commissioned Chris Mefford and his team at Community Attributes to analyze the current regional economic impact of the outbreak. Their initial analysis is a snapshot in time and as we have seen, the situation is evolving rapidly. Key observations include:
- The immediate focus of all businesses in Washington state should be to help slow the spread of the virus. Economic recovery projections depend on predictability coupled with virus control – the sooner we can get past the peak, the better.
- Regardless of the timetable, the Puget Sound economy is already experiencing an economic shock that will take many months to recover from.
- In the very near-term COVID-19 will severely impact nearly 40% of all the jobs in King, Pierce, and Snohomish counties. This includes either wage reductions or temporary layoffs. Most of these jobs will return once this public health emergency has passes, but not all the businesses will survive.
- We are seeing lower earning households and hourly wage earners hurt disproportionately, with $38,000 being a key inflection point.
- Every industry is seeing some impact and while a few industries may see temporary increased demand – such as household supplies and food providers – and some industries can pivot to teleworking or other new routines, everyone will experience some level of economic impact through the balance of 2020.
- To the extent possible, policymakers need to urgently pursue proposals that can mitigate further deterioration and stimulate a return to growth.
We recently sent letters to our Congressional delegation and to state leaders and now we ask that you join us in reaching out to ask for their immediate assistance.
Chris also shared strategies that could help break the negative economic cycle:
- Loosen lending and monetary policy
Monetary policy includes the primary tools of the federal government, but lending support to borrowers must be broadly implemented.
- Rent and debt service relief
Landlords, their financiers, and the federal government must collaborate to give renters and borrowers (commercial and residential) significant flexibility for three or more months after the virus is under control (which is an undetermined date at this point.) This must go beyond support for small businesses and include medium sized and some larger businesses as well. Offices with employees numbering into the several hundreds will face choices of paying rent or retaining employees.
- Direct payments and support (all sectors)
Major employers with capital reserves have stepped into the role traditionally for government to provide direct assistance to small businesses affect in their area. Government provides grants and immediate relief. Employees and households will need direct support.
- Government spending
Capital investments must proceed. Infrastructure investments support communities directly and they create jobs that support local and regional economies.
- Fiscal policy shifts
Washington and its cities depend primarily on sales and use and similar taxes, excise taxes, and property taxes. Cities and the state will find budgeting very difficult in the months ahead to cover the costs of spending critical for relief right now. New funding sources and new approaches to revenue management will be required.
This is hard. This is painful. And this is the time to rally together. We are 2-3 weeks ahead of many other areas across the country. Our collective response to the crisis will be the model for other communities. Let’s continue doing everything we can to help the businesses and workers who are particularly vulnerable to the outbreak and its economic impact, and let’s stick together.