The ability of the Wilmington-area economy to recover from the COVID-19 public health crisis is contingent on the continuation of the vaccination rollout and consumer confidence in timing with the upcoming tourist season.
That’s according to Adam Jones, a regional economist with the University of North Carolina Wilmington, who spoke Wednesday during the 29th Annual Economic Forecast presented by RSM and the Wilmington Chamber of Commerce. The presentation this year was held virtually because of the pandemic.
"It's still cold," Jones said of the local economy, "but we're kind of at dawn, and we're just starting to see the light peek over the horizon. So we've got a period of cold left to go before we get back to really being warm again."
The economy suffered in the second quarter last year when it came to a close due to the virus but has started to bounce back "relatively quickly," he said. Businesses and the economy have been more resilient through the pandemic than previously predicted, he said.
In June, expectations were that the economy at the end of 2020 would be 6.5% smaller than at the end of 2019, he said. While the final numbers have yet to be released, it looks like the economy at the end of 2020 was about 2% smaller than the end of the previous year.
"My takeaway from that is that our entrepreneurs have been incredibly resilient and creative about thinking of how do they move forward and learn to live with this virus," Jones said. "Throw in there a record-level stimulus, and we've got -- while not a good outcome -- at least one that's not as bad as we initially feared it might be."
The impacts of the pandemic, however, are very diverse, having a greater impact on some industries than others.
The construction, retail and trade sectors and the leisure and hospitality sector are some that suffered at the start of the public health crisis. The construction, retail and trade sectors, however, have recovered more quickly than the leisure and hospitality sector, which still suffers.
Hospitality shrunk by nearly 50% nationwide, Jones said. And nationally and locally, employment in leisure and hospitality remain down about 25% compared to pre-pandemic levels.
"It's these differences across industries that are going to drive differences across regions," Jones said. "So Southeastern North Carolina, being heavy in leisure and hospitality, means that we've still got a ways to go."
This is an area of the local economy that has really been lagging and will take time to recover. Part of it is because of policies, but the other aspect is people are not quite as comfortable going out yet, Jones said.
On the bright side, households have banked a lot of extra money, consumer purchases have somewhat normalized and forecasts show pent-up demand and mobility could increase with the rollout of COVID-19 vaccines, he said.
Jones said it's predicted that vaccines will be "largely rolled out" into the U.S. in late spring or early summer, based on a vaccine forecast. That's just in time for peak tourism season in the area, which even through the pandemic last year, favored largely from drive-in tourism.
Jones expects that drive-in tourism to continue in the 2021 season.
"We're not out of this health crisis yet. There's still some time to go," Jones said.
"This pent-up demand for services, fun and experiences are coupled with consumers sitting in a strong cash position where cash is burning a hole in their pocket, [which] means that drive-in markets for tourism like ours, are going to do very well," he said. "So we're optimistic that we could have one of the busiest summers we've had."