Beacon economist Chris Thornberg lays out argument for a sharp recovery following coronavirus pandemic
By Paul Myers
VISALIA – Beacon economist Chris Thornberg made his third stop in three years in Visalia to talk about the economic outlook for Tulare County. This time, he tailored his message to the economic impact of the novel coronavirus pandemic. And where some economists forecast a deep recession, Thornberg said the recession will be short and outlooks will be righted by quarter three and four.
“When this thing came in February we didn’t know it was coming. We were being completely ignorant…we weren’t cognizant and not paying attention to what the professionals were telling us,” Thornberg said at the April 24 Sequoia Regional Economic Summit. “Things are starting to turn a corner. That’s the important thing.”
Thornberg made the argument for a sharp “V” curve when it comes to the impact the coronavirus will have on the economy. He noted that most of the economy is still humming along while other nonessential business that like recreation are impacted the most. But the main reason why Thornberg doesn’t believe a recession will be so severe, is because of the reasons it occurred.
“This is being driven by choices and by public health mandates. We understand millions have been let go but if some genius tomorrow came up with a cure, within two to three days many people would be back to work,” Thornberg said.
Prior to the coronavirus, and subsequent public health decisions, the Unite States economy was experiencing its longest period of growth ever. More importantly it was moving forward in a fundamentally sound way.
“Things are pretty good out there. People are enjoying a higher standard of living… This is not a fragile consumer sector,” Thornberg said.
However, he pointed out that people have been led to believe that the economy is on the brink of collapse, which Thornberg said doesn’t make sense. Nonetheless, that narrative is pushed all over the mega media landscape.
“Why would you say that? Because that’s how you get in the headlines,” Thornberg said.
Key to Thornberg’s argument about a sharp “V” impact, is sustainability. Because the economy was fundamentally strong prior to the coronavirus, without an obvious reason to slow the economy down, there should not be a reason why a recession would be sustained. Instead, Thornberg said that an economic recovery will likely come from the pent-up demand. So a sustained recession does not seem likely.
“This is an economy that can weather a tough storm. And this is a tough storm…This is not like a housing market that is going to have a 15% foreclosure rate,” Thornberg said.
Effect on Tulare County
While other parts of the state are dealing with massive unemployment claims, Tulare County is benefitting from a mostly essential workforce in both agriculture and government. Workforce Investment Board, executive director, Adam Peck said that Tulare County actually has a lower rate of unemployment claims than the rest of the state.
“The week ending March 28 we had 7,000 new claims filed in Tulare County. That’s an all time high, but that’s not going to be the peak of unemployment…so we are in unprecedented territory,” Peck said. “Prior to that spike on March 28 we represented 1.3% of new claims…during this spike period it has reduced to 0.6% or 0.7% of new claims. Relative to the rest of the state it’s lower.”
According to Thornberg, even heading into the pandemic Tulare County’s local economy was still on the upswing. The economy here grew by 2%, farm growth was up 4%, construction was 6.7%, whole sale trade was up 7%, education and health industries were up 8.4%, leisure and hospitality was up 4.3% and other services were up 2.9%.
“It was a really good year coming into this,” Thornberg said.
What has held Tulare County back the most is population. But even that was beginning to change. Because of housing gains in Bakersfield and Fresno, residents moving into the Valley for the first time or people coming back are spilling over into Tulare County.
“Finally people are starting to move back in…that means the labor force can start growing,” Thornberg said.