Economics News

May’s Economic Commentary by Dr. Simon Medcalfe

No sector of the local economy escaped the punishing effect of the coronavirus pandemic. Employment numbers for April show declines in employment in all areas of the economy. However, some sectors were hit harder than others.

Total employment in the Augusta MSA fell by over 25,000 jobs (10.4%) in April from a near record high in March. Almost half of those job losses were in leisure and hospitality, the hardest hit sector in terms of numbers of job losses and percentage loss (see table). This sector includes restaurants and other entertainment businesses which were particularly hard hit by the shelter in place order. Other service firms (which includes businesses such as repair and maintenance, personal and laundry services and religious organizations) were also hard hit.

IndustryChange in employment from MarchPercentage change from March
All employment-25,400-10.4%
Leisure and hospitality-11,263-40.5%
Education and health services-3,783-10.5%
Financial activities-243-3.7%
Government-544-1.2%
Manufacturing-444-1.9%
Mining, logging, and construction-289-1.4%
Professional and business services-2,535-7.9%
Retail-1,606-7.4%
Transportation and utilities-231-2.9%
Other services-2,142-24.9%

Health care services such as doctors and dentist offices and other allied health care providers closed their doors. Non-emergency medical procedures were postponed leading to a 10 percent decline in employment in that sector. Retail was also saw a large decline with stores either closing altogether of moving to a smaller curbside pick-up model requiring fewer workers.

The sectors that have weathered the pandemic the best so far in the local area are government, manufacturing and construction, all seeing falls in employment of less than two percent.

What does the recovery look like as we open up? V, U, W, or L? It is probably not going to be a V shaped recovery. I don’t see the local economy gaining 25,000 jobs in May with many businesses still closed and others operating at 50% capacity.

Some economists and epidemiologists are warning of a double dip (W) recovery if we open too early, or we get a second wave of Covid-19. Others, suggest a new normal (L) with little recovery. I think it will be more of a gradual recovery as we gradually open up. More like a Nike swoosh!