July 30, the U.S. Commerce department released sobering news about our national economy: from April to June 2020, we saw the biggest quarterly contraction in GDP on record. GDP fell 9.5 percent in this quarter, wiping out 5 years of growth.
Today, we have new data to share about the economic impacts of COVID-19 on the Seattle metropolitan region through June 2020. A new regional economic impact analysis done by Community Attributes for the Chamber finds our region has experienced:
- $13.4 billion in lost gross business revenue, comparing the first six months of 2020 with the same period in 2019.
- $8.1 billion in lost wages and earnings in the second quarter of 2020.
- 828,900 new unemployment claims filed in 2020, with 801,800 new claims between March 1 and July 11. The unemployment rate in the region is currently 9.3% for the Seattle MSA (June), down from 14.5% in May.
- $900 million in lost taxable retail sales.
These numbers paint a clearer picture of the magnitude of the economic shock our region is experiencing, and the importance of working together on relief and recovery.
As we look ahead, here are five key concerns:
- The economic outlook is highly dependent on control of the virus
Until people can safely and confidently resume a wide range of in-person activities, such as on-site school, on-site work, business travel, dining, and in-store shopping, our regional economy will operate at a rate substantially lower than pre-COVID-19 levels of productivity.
- The “tail” of the recovery is uncertain
As of June 2020, the unemployment rate for the Seattle MSA was 9.3%. Even during the depths of the Global Financial Crisis, the Seattle MSA’s unemployment rate peaked just shy of 10%.
It is possible that employment could recover to pre-COVID levels by 2022. However, previous recessions have lasted much longer. After August 2008, it took 60 months for regional employment to reach pre-recession levels.
- The uneven economic impacts may exacerbate existing inequities
The virus has disproportionately impacted people of color, workers with less education, and low-income workers: In the Seattle Metro area, more than 41% of individuals filing for unemployment between March 1 and July 11 were a person of color or Hispanic. Additionally, approximately 32% of new filers had no more than a high school diploma, compared with 26% of the regional adult population overall with a high school diploma or less.
Low income workers have been more severely impacted by COVID-19. According to the Federal Reserve, 39% of people working in February with a household income below $40,000 reported a job loss in March.
- Various policy levers could help or hurt recovery
Many of our region’s industries are experiencing major disruptions that may extend for months or even years, affecting business revenues and employment. These changes are and will continue to significantly impact tax collections that support state and municipal spending.
The decisions that policymakers pursue to backfill lost revenue and/or to reduce services may create secondary impacts for residents and businesses that could either promote or stall economic recovery. These decisions will also take place as businesses face rising costs in other areas such as unemployment insurance.
- The virus may accelerate lasting economic changes
Some of these changes were already underway, such as the growth of online consumption platforms, in-home entertainment and streaming platforms, technology advancements that support remote work, and restructuring of global supply chains diversifying away from China.
The virus may also bring previously unanticipated changes, including reduction in business travel, increased household savings rate, adjustments to household consumption which may lead to decreased demand for outside leisure, recreation, and entertainment.
Clearly, public health, the economy, and racial justice are inextricably linked – and an inclusive and equitable recovery depends on all three. These are difficult times, as the report illustrates, and the Chamber is dedicated to being your advocate so that our region’s leaders fully understand and can address the challenges that lie ahead.