Oregon’s economic future unclear

Amidst a global pandemic, Oregonians are self-quarantining and many nonessential businesses were ordered to shut down. Since Oregon Gov. Kate Brown announced her stay-at-home order on Mar. 23, new models from the Oregon Health Authority have shown that these restrictions have helped Oregon flatten the curve and prevent as many as 70,000 cases in the state.

However, some businesses that were forced to shut down are now struggling to stay afloat. Companies have been forced to fire or furlough thousands of workers due to losses from COVID-19. Citizens have been left to deal with the aftermath, often without adequate government support, as the $1,200 stimulus checks some people received have been spent.

Across the country, roughly 1 in 4 Americans have filed for unemployment, bringing the 9 week tally to 40 million claims. 

In 2008, the U.S. lost 2.6 million jobs.

It will take several more weeks before claims drop below one million,” wrote Ian Sheperdson, Chief Economist at Pantheon Macroeconomics. “Note that in the single worst week after the crash of 2008, claims rose 665K.”

Powell’s Books, a popular independent bookstore that employed over 530 people, had to lay off the vast majority of its employees. McMenamins, a hotel and pub chain based in Oregon, laid off almost 3,000 employees. Both franchises shut down all their locations in response to the coronavirus outbreak.

While citizens are left reeling from the impact, the Oregon Employment Department is still struggling to process 38,000 initial general unemployment claims, and tens of thousands are waiting for their benefits. 

Oregon’s economy has been forced to a standstill. Oregon’s rural counties have been especially hard hit, where, according to Willamette Week, most still haven’t recovered from the loss of jobs due to the Great Recession

This left political leaders weighing a difficult choice: do they move to reopen and risk thousands of lives, or continue with lockdowns and risk large deficits in their budget that will lead to a recession that lasts for months, if not years?

 

 

In these unprecedented times, the future of the local and global economy is unclear. On May 20, Oregon’s Office of Economic Analysis (OEA) released a revenue forecast which stated that although economic growth in the second half of 2020 will be strong, the economic downturn from Covid-19 has been major and recovery will take years.

“Instead of having what I call a ‘V’ recovery, which is a very swift drop to the bottom and coming back very quickly, it looks like more of a ‘U’,” said business teacher Henry Hooper. “The bottom trough of the ‘U’ is going to be longer than most people had anticipated.”

This has been the most severe recession in Oregon’s history to date (with data going back to 1939), but the OEA predicted that the duration of this recovery period will be shorter than that of the 2008 recession, ending mid-decade.

In contrast to the 2008 recession, there were no major macroeconomic issues or imbalances prior to this virus. The initial severity of this recession was due to decreased economic activity, and according to the OEA, “the federal policy response, however imperfect, has been swifter and more targeted in recent cycles.” 

“If you look at 2008, so much of that was in several pockets,” said Hooper. “One, it was really the banks, and their lending practices. Then you had the investment bankers in terms of how they sliced and diced up the debt. So really, it was the financial institutions and the [credit] rating agencies… [2008] is different in terms of how it really was isolated to a known number of bad actors.”

However, many are hesitant to believe that Covid-19 will continue to subside. They argue that the reopening is too sudden, and that it will cause another wave of the virus. Indeed, we are already beginning to see this trend in the first few states that began to reopen. There remains the additional threat to the economy if the reopening causes another lockdown. 

“The hard thing is that any virus, the ones that they’ve studied, all have multiple peaks. We’ve apparently hit a peak, and then it’s gonna come down, but it’s gonna come up again,” said Hooper. “It’s really the management of that inevitability. If it’s going to happen, how do you make it so that it’s not as painful the second, third, fourth time?”

Social studies teacher Patrick Magee-Jenks argues that it is impossible to predict how it will take for the economy to recover. “Different public health officials and economists have models and projections, but all models are wrong… This is unprecedented. There’s no way to be like ‘We know what’s going to happen.’”

Protests and demonstrations

In early May, when a Salem salon reopened, defying Gov. Brown’s orders, 40 protesters showed up in support of the business owner, waiving signs that read “All jobs are essential to someone,” and “My body, my choice.” A few days prior, a few hundred people flocked to the Oregon State Capitol to protest the shutdown. Their signs read “Reopen Oregon,” “Open schools” and “No More Masks.” Other demonstrators waved U.S. flags or “Don’t Tread on Me” flags, while some waved banners reading “Trump 2020.” Many of them, echoing calls of political leaders, argued that the threat to the economy was greater than the threat to public health.

“I think that’s really stupid,” said Magee-Jenks. “That comes from a position of privilege and internalization of the oppression that happens through capitalism. It’s not laborers who are clamoring to get back to work. It’s people who want to be taken care of, people who want to either be able to extract other people’s labor for their material benefit, or they want their houses to be cleaned. Most of the people protesting the shutdown still have jobs. It’s not like they want to go back to work, it’s that they want other people to do jobs for them.”

Hooper believes that the risk to public health should not be taken lightly and that people should be aware of the ramifications that comes with reopening.  “Everytime we say that there is a rise in the curve, there are thousands of people who are giving their lives for that. I just wonder what the costs and the values and the returns are on that… We cannot underestimate the value of our elders, the value of whose health that might otherwise be compromised. They’re not expendable. We’re looking at the statistics and saying ‘Well, it’s just the old people that are dying, and that’s okay.’ It’s not okay.”

“Our priorities are still very individualistic,” said Magee-Jenks. “That needs to change if we’re going to rebound out of this in a meaningful way.”

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