Local Economist Expects “Gigantic” Declines in the Next Few Months
UM Bureau of Business and Economic Research Director Dr. Patrick Barkey was on Talk Back on Wednesday answering questions from listeners about a report released by his office this week on the devastating economic impact of COVID-19 on the state. One listener asked if he has been contacted by various city and county governments to consult on these issues.
“In a way we are doing that,” Barkey said. “Obviously, coming out with this report is the first step toward really giving people a little message about what the impact of coronavirus has been so far and getting that in front of people. In terms of dealing with health departments and so forth, we are pretty decentralized. The county health officials have a lot of power across the state and that is probably appropriate because they have to manage things locally.”
Barkey was also asked if, in addition to the many ways government is easing financial burdens on state citizens, if that might include delaying the payment of state property taxes in May.
“They don’t have the capacity to do that,” Barkey said. “We don’t allow our local and state governments to run operating deficits. They can take on debts for bonds and projects, but we don’t allow them to run operating deficits and that is for good reason. We have had some historical experiences when they are allowed to do that, mischief and bad things happened. There is no the capacity to do that. That money is already obligated and it would be hugely disruptive if that weren’t received.”
Barkey closed by warning listeners that there will be even worse economic news in the next few months as the effects of the pandemic become more apparent.
“In terms of economic data, we are going to see some real shock and awe in the coming months,” Barkey said. “I just ask everyone to keep your body and soul together. You are going to hear about some gigantic declines in economic activity in the second quarter. We just heard about what happened in the first quarter and the second quarter could be as low as 28% annualized decline in the U.S. economy, which is something no one has ever seen in their lifetime.”
Access the report by clicking this link from UM's Bureau of Business and Economic Research.