July 3, 2022

Finance & Economy

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The economy’s remarkable recovery – Rochester BeaconRochester Beacon

Maintaining perspective since the world closed down in March 2020 has been difficult. This is partly due to the vastly different ways COVID-19 has affected individuals’ daily lives. My wife and I have personally experienced few hardships and many blessings. Yet a friend just told of four deaths among family members and close friends, each of which touched him deeply.

So, it has been with economies. New York City was the first big casualty as cases, hospitalizations and deaths soared in the spring. We feared a shortage of ventilators and hospital beds. In response, Gov. Andrew Cuomo issued a national plea and Samaritan’s Purse set up an emergency hospital in Central Park. China seemed to have conquered the virus; many nations, particularly in Southeast Asia—e.g. Cambodia, New Zealand, Australia and Vietnam—reported no cases at all. 

The crisis soon showed up in the GDP figures. With only three weeks of COVID in the first quarter, lockdowns in New York City and Las Vegas drove New York and Nevada to the bottom of the GDP rankings (fourth quarter of 2019 to first quarter of 2020), both losing 8.2 percent on the influence of those few weeks.

The rest of the nation soon followed. New York lost an additional 36 percent from Q1 to Q2 2020 and Nevada 42 percent. But we had lots of company. 

By the end of 2020—just 10 months ago—the economy had lost 9.4 million jobs, a far greater loss than the U.S. experienced in every recession in recent memory. The unemployment rate soared to near 15 percent nationally and 16 percent in New York.

But look what happened next: Only a month later, the unemployment rate began a steep decline that continues today. Even New York’s jobless rate has dropped 9 percentage points to 7 percent.

The employment picture is the mirror image. National employment sits at 97 percent of the pre-pandemic level with Rochester at 95 percent and New York at 91 percent. Some industries remain well under their pre-pandemic levels, however. Leisure and hospitality employment is only at 90 percent. 

While profits have soared in many industries, others—retailers and restaurants, particularly—face a critical labor shortage. The shortage has helped spur a long-overdue increase in wages, however. Again, winners and losers abound. Something approaching equilibrium is months or years away.

The employment record of individual metros has also been quite variable. Looking first at the entire 2010-2020 period, Buffalo, Rochester and Syracuse badly underperformed the rest of the nation. While top-ranked Provo, Utah, grew its employment base by 52 percent, the three Upstate New York metros’ growth was in the single digits.

 

Relative performance among New York metros has not much improved in 2021. From the annual average 2020 through August 2021, New York City employment growth ranks near the bottom, along with other tourism-dependent economies like New Orleans and Honolulu, with Las Vegas not in much better shape. While only Syracuse remains in the bottom 10, Buffalo and Rochester are not far behind.

Though significant pain and suffering were imposed on many during this recession, I and others expected that the economic decline would last far longer. By passing the CARES Act on March 27, 2020, Congress and the Trump administration made this recovery possible. Our nation’s leaders met the crisis.

The CARES Act firehose was badly needed. By heading off a disastrous recession, Congress and the White House have granted themselves sufficient breathing room to forge more thoughtful and lasting policies. The fissures between and among the political parties did not go away during the pandemic, however, and consensus on the proper response to the status quo remains elusive. Our leaders’ report card will be issued soon.

Kent Gardner is Rochester Beacon opinion editor.

The economy’s remarkable recovery