This Insights article was contributed by Dr. Adam Jones, Cameron's Regional Economist.
“What goes up, must come down,” “For every action there is an equal and opposite reaction,” choose your cliché, and you’ll have an idea of where we are economically. The Covid pandemic’s economic effects varied during the shutdown and are, consequently, varied during the recovery. For example, leisure and hospitality employment dropped by over 50% in the early stages of the pandemic and, consequently, approximately half the jobs created since the April 2020 bottom have been in leisure and hospitality. If you are sympathetic to the idea of “reversion to the mean” then Southeastern NC has a busy few months in front of us.
When the pandemic hit, purchases at the national level of everyday goods (non-durable goods) spiked in March 2020 and then fell off a cliff before recovering in June of 2020 and growing steadily since. Large ticket items (durable goods) such as washing machines, televisions, etc. decreased in March 2020, recovered in June and have continued to grow with monthly purchases up over 30% compared to pre-pandemic levels. Consumers are buying “stuff” but still desire experiences. Service consumption has largely recovered but is still below pre-pandemic levels as concerts and other experiences are just coming back online. We’re starved for fun!
If pent-up demand for experiences is kindling, then stimulus checks are fuel on the fire. With widespread vaccination drives and relaxation of restrictions, travel is exploding. TSA checkpoint data (nationwide) is closing in on pre-pandemic levels and room-occupancy taxes in New Hanover County are well above pre-pandemic levels. We, economically and socially, are working through a backlog of experiences and are likely to do so for some time yet before normalizing our behavior. (Just think of all the weddings and cruises that were postponed.)
And while Southeastern NC is recovering, it’s been anything but smooth. With differences in public health, vaccination rates, and other disruptions, global supply chains have not yet recovered; just poke your head into any hobby store and the empty shelves are apparent, don’t even think about trying to buy a discounted suitcase. Further complicating the supply chain problems is a difficulty forecasting demand going forward, for most of us this is the first pandemic in the data so historical examples are hard to come by. Even getting your mind around growth and inflation figures is difficult; for example, average wages rose at the start of the pandemic, how is that possible? Average wage data doesn’t include 0’s for those who lost their jobs and, when the lower wage jobs vanished with the Governor’s restrictions, the average for the professional jobs that could be done remotely drove the apparent increase. But remember, “what goes up, must come down” and as the leisure and hospitality jobs come back online, the average wage will come down, even if individual wages are going up. And if that idea sounds bizarre then we should leave the widening of a trade deficit during the recession for another day, welcome to the Covid economic recovery, it was a bumpy ride down and it wont be smooth coming back up.
Robert T. Burrus, Jr., Ph.D., is the dean of the Cameron School of Business at the University of North Carolina Wilmington, named in June 2015. Burrus joined the UNCW faculty in 1998. Prior to his current position, Burrus was interim dean, associate dean of undergraduate studies and the chair of the department of economics and finance. Burrus earned a Ph.D. and a master’s degree in economics from the University of Virginia and a bachelor’s degree in mathematical economics from Wake Forest University. The Cameron School of Business has approximately 90 full-time faculty members and 30 administrative and staff members. The AACSB-accredited business school currently enrolls approximately 2,600 undergraduate students in three degree programs and 750 graduate students in four degree programs. The school also houses the prestigious Cameron Executive Network, a group of more than 200 retired and practicing executives that provide one-on-one mentoring for Cameron students. To learn more about the Cameron School of Business, please visit http://csb.uncw.edu/. Questions and comments can be sent to [email protected].
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