Here’s when forecasters see Washington’s economy returning to pre-pandemic activity
State forecasters are not expecting Washington’s economy to be back to its pre-pandemic activity until the fourth quarter of 2021.
Even after we’re past the COVID-19 outbreak, activity including business travel and office space demand may take even longer to bounce back, said Steve Lerch, chief economist and executive director at the Washington State Economic and Revenue Forecast Council.
Lerch was joined by Washington State Rep. Sharon Shewmake, who is also a Western Washington University economics professor, in an online economic forecast presentation for Western Insights.
While both speakers are optimistic about a recovery as a vaccine becomes widely available next year, they also expressed concern about businesses surviving until then, particularly small retail businesses and restaurants.
We definitely need some federal stimulus, said Shewmake, who recently met with business organizations including the Downtown Bellingham Partnership to hear about the challenges businesses are dealing with.
If the federal government doesn’t come up with one that’s effective, she believes state legislators in Olympia will work on ways to help the economy. One idea would be to approve funding for more transportation projects that need to be completed.
“We know that $20,000 grants are not enough,” Shewmake said, referring to the new grant program rolled out by the state’s Department of Commerce.
That sentiment about financial help for small businesses is apparent across the U.S.: The U.S. Census released its results from a survey this week showing that more than one in four small business owners said they’ll need financial assistance within the next six months.
Lerch said small businesses will be vulnerable this spring, and not just because of the pandemic restrictions limiting customer capacity. Many consumers won’t be going to brick-and-mortar stores until they are convinced it is safe, so spending will remain down in that component of the economy.
One area that came as a surprise to Lerch from a forecasting standpoint is residential real estate. Demand has been strong as inventory remains low; he thought that big purchases would have been paused during this uncertain time but that didn’t happen.
Going forward, he expects business travel to remain low after the pandemic because companies have adjusted well to online meetings, which is much less expensive than sending people to meet face-to-face. It will be interesting to see what happens with office space: Lerch said the surveys he’s seen suggest that people want to return to the office in some form. Businesses are finding advantages to having people work from home, so there could be more hybrid situations where workers do a little of both.
Shewmake said the pandemic also highlighted other problems with the economy that will need to be addressed during the recovery, including racial equity, climate change, childcare and healthcare.
