It is difficult to comprehend the duration of the COVID-19 pandemic using traditional measures. Businesses and communities have contended with its effects for nearly a year and experienced unprecidented impacts. Much of what we discuss in our daily lives is now influenced by questions of public health and economic recovery.
We now have a much better sense of the full magnitude of the pandemic's effects over the balance of 2020. The U.S. economy increased by an estimated 4.4% in the 4th quarter, but remains 3.5% smaller than the beginning of the year. The rate of growth and recovery has slowed significantly over the past three months both as the winter season set in and businesses returned to many of the challenges experienced in the early days of the pandemic.Similarly, economists now have a better sense of the structural hole that the economy needs to effectively be grown out of.
The holiday shopping season brought some relief to small business owners as communities urged shoppers to shop local. And a new round of federal stimulus funding announced last month will continue to provide needed assistance. Still, the nation is entering a critical phase as vaccines are deployed and the economy continues to recover.
The indicators presented below demonstrate the somewhat confusing state of the Northeast Wisconsin regional economy as well as some hints as to where signs of recovery may be found.
Annualized Employment Growth: January 2016 - December 2020
- Industry employment contracted by 14.5% annually in April before rebounding over recent months. Employment remains more than 4% below December 2019 rates.
- Regional trends have followed state and national trends as most industries have been impacted by the pandemic.
- Recent employment growth has stagnated somewhat over the past two months as firms have largely recalled employees previously temporarily dislocated.
Monthly Unemployment Rate: January 2010 - December 2020
- Unemployment rates have decreased precipitously over the past five months after spiking at 13.8% in April 2020. The current rate of 4.6% is a point and a half above 2019.
- The regional unemployment trend has followed state and national patterns throughout the course of the pandemic, though recent increases are generally owed to seasonal effects.
- Recent unemployment rates had started to tick downwards toward recent seasonal norms. This is both a function of increased economic activity and the continued impact of labor force constraints.
- Near-term forecasts suggest that the unemployment situation will remain relatively stable but will not fully recover until 2023.
Total Unfilled Job Vacancies: January 2016 - October 2020
- Unfilled vacancies had plateaued before the pandemic, with needs shifting towards essential industries.
- The index recovered quickly in the 3rd quarter as firms resumed hiring in essential positions.
- Hiring is expected to increase significantly in Q2 as vaccine distribution increases and those that had left the labor market out of public health concerns return.
Weekly Economic Index
- Index collects all economic indicators produced weekly.
- Recent observations show the inflection and depth of crisis impacts, with the economy contracting at more than 10% per week through May 2020 before beginning a sustained recovery.
- Broad recovery remains uncertain pending additional stimulative measures and the possibility of renewed business disruptions.
New Housing Starts: December 2020 YTD Annualized Change
- New housing starts and total valuation increased significantly regionally and statewide over the year spurred by low interest rates and significant available credit.
- The disruption of COVID-19 has delayed most construction activity, suggesting that this trend will continue into 2021 as scheduled jobs are completed.
- Materials constraints in the industry have loosened but project backlogs continue to inflate prices, thereby delaying new work.
Written by Jeff Sachse
Jeff is a passionate advocate for the innovation economy. He provides strategic insight to businesses and organizations throughout North America, staying in front of future trends in order to assist communities to anticipate pending challenges. Jeff is a skilled analyst, strategist, presenter and educator who believes that the currency of information comes in sharing with others. He is the founder of Rawley Point Economic Advising, Two Rivers, WI.
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