At the Town Council meeting on Tuesday, May 5, economist Michael Goodman gave a presentation about financial projections for the state in the wake of the COVID-19 pandemic.
A professor of public policy at the University of Massachusetts Dartmouth, Goodman said that we are living in “an extraordinary time.” He called the current situation in the Commonwealth “a state of suspended animation” and compared the closing of the economy to a medically induced coma.
“You only do that when the alternative would be worse,” said Goodman. “We’re paying a high economic price to slow the pace of the pandemic. But if we weren’t to do it, we would have a worse outcome.”
According to the presentation, the epidemic affects the economic channels of both supply and demand. Quarantines lead to factory closures. Travel restrictions lead to cutbacks in the service professions. The closing of public places leads to a disruption in the supply chain and an increased demand for entertainment and educational services.
The U.S. economy is expected to shrink more during the second quarter of 2020 than in any other period in our nation’s history. Goodman touched on the “unprecedented rise in unemployment,” stating that one in four Massachusetts workers has applied for unemployment benefits.
“This is something we’ve never experienced before even in the Great Depression,” he said. “April, May and June of this year is looking like it may be the worst economic performance in the history of the republic.”
In terms of reopening the state, officials are taking cues from other cities and countries. However, Goodman cautioned that just because businesses start reopening does not mean that customers or employees will be returning in large numbers. Many will want to wait until there is a vaccine.
“Until people feel safe, we’re going to be struggling,” he said. “Every week or month that goes by is associated with economic pain.”
Goodman’s presentation stressed that COVID-19 has put enormous and unprecedented pressure on the state’s budget and that federal assistance is essential. The two trillion-dollar relief package that recently passed in Washington has largely gone toward stimulus checks and payroll protection, and not toward state and local governments.
“We need more help from the federal government,” said Goodman. “Without assistance, it’s going to be painful.”
As Winthrop officials struggle to assemble a viable budget for fiscal year 2021, Goodman gave some advice on how to make revenue estimates in a state of suspended animation.
His first suggestion is an emphasis on public health, taking all necessary measures to allow all ill people to be treated within the current capacity of the healthcare system and expanding system capacity.
“If healthcare facilities become overwhelmed, it forces us into a triage situation,” said Goodman. “We have to be ready to confront waves of the virus.”
Goodman also urged making human needs a top priority, stating that some residents are only just recovering from the effects of the Great Recession ten years ago.
“The further they are permitted to fall, the longer it will take them to recover,” he said.
Lastly, Goodman called for the protection of key assets and institutions, such as our world-class hospitals and universities. The ability of these pillars of our economy to withstand past recessions will be challenged in entirely new ways in this post-pandemic reality and will be depending on “strategic intervention and support.”
One caller thanked Goodman for his presentation, calling it “sobering.”