Oregon Insight: Coronavirus recession is states steepest and deepest yet not nearly as bad as feared – OregonLive

Here is The Oregonians weekly look at the numbers behind the states economy.View past installments here.

Anna VonRosenstiels customers vanished last March when the pandemic hit and she wasnt sure they would ever come back. So she shut down her Southeast Portland ceramics shop, laid off her four employees and began contemplating the bleak prospect she might never reopen.

Instead of breaking down, though, VonRosenstiel opted to reboot.

I basically decided I would spend every moment of the day just reconfiguring the business, said the 42-year-old shop owner.

She began by putting free clay outside her shuttered shop on Southeast Division, Carter & Rose, just to stir interest among prospective customers. Then she spruced up her website and started posting Instagram tutorials on how to make ceramics.

Everybody was craving things to do and ways to stay connected in an uncertain time, she recalls. Her wholesale business began taking off, VonRosenstiel obtained a federal relief loan to help her reopen the store in June and start hiring again. Her husband, laid off last spring, plans to open a food cart in the space next door.

If someone asked me a year ago what a year from nows going to look like, I think I would have just burst into tears, VonRosenstiel said. Its the opposite of that. And Im very humbled and grateful.

This coming Tuesday is the first anniversary of Gov. Kate Browns stay-home order, which shuttered offices and businesses across the state. By the time the governor stepped in many businesses had already shut down and businesses were laying off workers by the tens of thousands.

The whirlwind VonRosenstiels family endured over the past 12 months is emblematic of Oregons larger struggles during the first year of the pandemic recession.

It was the steepest and deepest downturn on record. Nearly 260,000 Oregonians lost their jobs in the first month alone, nearly 1 in every 8 workers statewide. Low-wage workers on the front lines, in the service industry especially, have suffered the most.

And yet the recession has been far less brutal than economists expected at the outset. Oregons jobless rate never approached the 20% some forecast. State revenues rose despite the downturn, the vast majority of businesses weathered the storm and economists are increasingly hopeful of a sharp upturn this spring.

I think the recovery, once we start opening up, could be pretty quick, said Portland economist Eric Fruits. But it could also be uneven.

Adaptation

Think back to the state of commerce a year ago: A sudden economic catastrophe.

Panic buyers were emptying grocery shelves. McMenamins laid off almost everyone as it shuttered its theaters, hotels and brewpubs throughout the Northwest. Emily Powell warned darkly that she was doing everything within my power to keep Powells alive even as she closed down every one of its famous bookstores.

Stroll down your supermarket aisle today and theres plenty of toilet paper. Movies are playing again at the McMenamins Bagdad Theater. Powells cavernous downtown store is back open and restaurants are welcoming diners back inside all over the state.

ONE YEAR SINCE OREGONS STAY HOME ORDER

While the pandemic is in steep decline, its certainly not over. And yet many businesses have adapted.

They really swung into action to make the accommodations to keep doing business, said Fruits, who teaches at Portland State University and works with the libertarian Cascade Policy Institute.

With masks, plastic shields in the checkout line and limits on the number of customers inside a store or on an assembly line, Fruits said businesses found ways to get by. Officer workers learned how to do their jobs from home. Factories reconfigured their assembly lines.

Hopefully in the future we wont have to have these huge, economy-wide shutdowns, Fruits said. Hopefully people can know what the right thing to do is.

DISPARATE IMPACT

While the vast majority of businesses adapted to the pandemic, and some thrived, many never had the opportunity. Restaurants, bars, gyms, bowling alleys and skating rinks among others faced extended closure orders as the pandemic spiked last spring and again in the fall.

The industry lost about half its jobs, poof, in two months time, said Gail Krumenauer, economist with the Oregon Employment Department. Thats unreal.

A third of Oregons leisure and hospitality jobs still havent returned. Thats typically low-wage work, often part time.

The sector pays less than $25,000 a year on average, which means people will rarely have savings to cushion them when their incomes disappear. And workers in those fields are disproportionately women, or members of diverse ethnic or racial groups.

A year into the pandemic, Oregon counts more than 142,000 as unemployed nearly double the number a year ago. Another 100,000 have received benefits through a new program Congress created for self-employed workers.

Those expanded jobless benefits sustained many, despite long delays in payments, but nearly 1 in 5 tenants have fallen behind on their rent. Estimates suggest that renters owed $250 million or more at the end of last year.

I call it the debt hangover, said Fruits, the Portland State economist. While federal, state and local eviction moratoriums have kept people in their homes, unpaid rent keeps piling up.

I think thats going to be a huge hangover, Fruits said, and theres going to be no way to resolve that without someone getting hurt, whether its the property owners or the tenants.

Closed schools and family health issues put particular pressure on women, who represented a high proportion of self-employed workers seeking aid and who were far more likely to be unemployed during the first months of the pandemic.

That gap in the jobless rate has eroded, but one main reason is that women are dropping out of the workforce altogether so theyre no longer counted in the standard unemployment statistics. Thats a broader trend that reflects worrying signals of nascent economic malaise.

Theres still persistent, deep unemployment or underemployment, Krumenauer said. Theres a lot of people who would like to be working more hours than they are right now.

NEVER SEEN ANYTHING LIKE THIS

Oregon has paid out an unprecedented $8 billion in jobless benefits in the past year, a decades worth of aid in just 12 months. Nearly 570,000 Oregonians have received benefits since the pandemic hit, with most of the money coming from expanded benefits funded by Congress.

Administrative failures at the employment department delayed many workers benefits for weeks or months. Yet Josh Lehner, with the Oregon Office of Economic Analysis, said federal support kept a terrible situation from turning into an abysmal one.

Outside of wartime we have never seen anything like this, Lehner said. In addition to the jobless benefits, the federal government awarded $7 billion in forgivable Paycheck Protection Program loans to 66,000 businesses, with billions more on the way after Congress renewed the aid in December.

Oregonians are now finding billions of dollars more in their bank accounts through a new stimulus program approved this month. Altogether, Lehner said the federal support amounts to a fifth or more of the gross domestic product and means a lot of the last years pain wont last.

Thats a tremendous amount of money, basically over the course of the year, Lehner said. It turns out that if you help households and businesses to such a degree you get surprisingly little permanent damage, economic scarring.

Oregons job losses tracked the national downturn early in the pandemic, but then faded some last winter as the state took extreme measures to contain resurgent infections. Oregons restrictions on restaurants, bars and gyms have been stricter than in most states but its death rate has been substantially lower.

Since the pandemic hit, Oregon has lost 55 people to COVID-19 for each of its 100,000 residents. Thats a third the national figure; only four states had lower death rates.

Its impossible to know, at least at this point, how much Oregons restrictions contained the pandemic and how much other factors played a role. And Lehner said theres no easy way to weigh the economic costs of business restrictions against the number of lives saved.

Regardless, Lehner said that the pandemic appears in retreat. Infections and deaths are at their lowest rates since last summer and vaccines are giving hope that Oregon may avoid any more spikes.

Some unforeseen obstacle could still trip up the recovery, Lehner said, but with more federal cash on the way and Oregonians eager to spend what they saved, he said theres every reason to believe the worst of the recession is behind us.

The stage is set for really strong growth. Incomes are up and weve seen relatively little of that economic scarring to date, Lehner said. So we think there will be quite a strong economic recovery.

-- Mike Rogoway | mrogoway@oregonian.com | twitter: @rogoway |

Visit link:

Oregon Insight: Coronavirus recession is states steepest and deepest yet not nearly as bad as feared - OregonLive