||| BY theORCASONIAN OPD-ED REPORTER MATTHEW GILBERT |||
On December 9, the San Juan County Economic Development Council (EDC) hosted what has become a year-end round-up of economic data from the prior year for a virtual audience of approximately 35 people. As expected, the numbers were a grim reminder of the damage wreaked by COVID while providing some insights into what 2021 may look like.
EDC Director Victoria Compton began by noting that the county’s reliance on tourism had the biggest impact on economic performance. “Our narrow industry channels hurt us,” she said. The county also has a much higher percentage of self-employed and micro-businesses than elsewhere in the state. “They had less access to safety nets and resources.” Construction and other non-seasonal industries “took a hit” but it wasn’t nearly as significant. Still, she said, “Construction hasn’t quite recovered from pre-Recession levels.” Looking ahead, “Economic diversification is the key. It will reduce our cyclicality and vulnerability.”
A COVID Winter
James McCafferty of Western Washington University’s Center for Economic and Business Research followed by sharing a snapshot of current data on COVID. Statewide, he said, “Deaths are expected to rise from 13/day to 53/day in February. This sharp climb will begin in a couple of weeks. Daily infections will double from 3,700/day currently to 7,500 by late January.” (There were 1,000 cases/day in October.) “Washington State is not yet maxing out on filling ICU beds,” he said, “which means other states will be sending their COVID patients here.” By mid-March, as winter recedes and vaccines become more available, all of these numbers will start dropping.
Another data point watched by the state (via “anonymous” cell phone tracking) is “mobility.” In April it was -53%, meaning that more than half the population was basically staying at home. It’s currently -22% and is expected to increase to -38% by March.
Regarding a vaccine, early data shows a 90% effective rate (11 are in Phase 3 research, the last step before approval), but a 70% acceptance rate is needed. “July is the likely target to know if these thresholds get met,” he said. Vaccines for children will not be available until later in the year.
Data’s Tale of Woe
McCafferty was followed by Anneliese Vance-Sherman, a labor economist with the Washington Employment Security Department. Among her many observations:
- The April unemployment rate in SJC was 17.8% (a record going back to the Great Depression).
- Unemployment claims spiked to 1,200 compared to a peak of 160 in 2008.
- Women, minorities, and those under the age of 44 were more likely to become unemployed than other demographic groups.
- There is currently no “job search requirement” to qualify for Pandemic Unemployment Assistance, which is scheduled to end on January 19, 2021 but will probably be extended.
- While tourism experienced expectedly high unemployment, health care and social service claims were higher than expected because of limits to face-to-face contact and fewer elective surgeries. Still, “every industry is being affected.”
- There was a 54% drop in hotel/restaurant spending in the Seattle metro area.
A Slow Recovery
Despite what is expected to be a challenging winter, McCafferty expects overall GDP to reach pre-pandemic levels by mid-2021. “This is a disaster-based phenomenon, not a structural issue with the economy.” He said there are already signs of a rebound, though not uniformly spread.
Nonfarm employment, for example, is already starting to show life because of innovative responses by companies such as curbside pick-ups, increased online retail and creative restructuring of service offerings from smaller businesses. Some sectors including real estate and finance never slowed down. “But employment typically lags GDP by approximately six months, which means we’re still a couple of years out from likely reaching pre-Recession employment levels.”
Unfortunately, and pertinent to the county’s near-term future, “retail and dining will be the last ones to recover.” The EDC has been unable to track how many businesses have already closed due to the pandemic, in part because there are so many entrepreneurs here.
McCafferty went on to say that, “We will still have a summer tourist season (but it could be tepid). It will depend on behavior. How comfortable are people with the status of the vaccine? People are making plans now. There will be fewer airline trips and more camping and RVs.” It may not be until the end of the high season that things begin to normalize.
Orcas Island Community Foundation’s Hilary Canty brought up the fact that, “A lot of rental houses have been sold, displacing renters who have nowhere else to go. Businesses will experience more staffing issues. We’ve seen $1.2M in philanthropic support just here on Orcas. The next four months will get darker.” She is starting to see “donor fatigue” and “we can’t rely on the feds.”
Mike Sharadin of Mike’s Cafe and Wine Bar in Friday Harbor expressed concerns about “the quality and quantity of the returning workforce. They will be young and inexperienced.” He may be forced to reduce his hours of operation. “SJC is geographically challenged both in travel and workforce,” added Vance-Sherman.
You can view both the EDC’s slide presentation and the data roundup from Vance-Sherman and McCafferty and get additional information on the EDC website.
