When will the coronavirus be controlled enough to send people back to work? We should learn from Hong Kong, GVSU economist says
Currently, West Michigan is being affected less than other parts of the country economically due to fallout from the current COVID-19 pandemic, said Paul Isely, associate dean and professor of economics at Grand Valley.
"We will still experience a moderate recession locally because of COVID-19," said Isely. "It will be very steep at the front end, and April will hurt a lot for a lot of people."
Isely said he doesn't have all of the details of the aid package announced by the federal government, but said a lot of the aid is tied to unemployment benefits.
"The best option for some firms may be to lay off employees so that aid can flow," he said. "We're going to see a high spike in unemployment this week and next week."
Isely said the key question is: When will the virus be controlled enough to send people back to work?
"There is no good answer," said Isely. "The life cycle of the virus is not clear enough yet.
"If it takes until May to get a handle on this, then we could experience a very bad recession. If we can get this done in April, then we're still looking at a recession that is less than 2008 for the year."
Isely said because the recession is compressed into just a month or two, it will be very deep when it does happen. He also said there are lessons to be learned from what happened in Hong Kong.
"It looked like the virus was under control in Hong Kong and so people went back to work," said Isely. "But then 14 days later, the virus came back. They sent workers back too quickly. And, that tells us that we're seeing more signs that in order to get this under control, there's going to be a damper on the economy for a longer period of time."
For GVSU updates on COVID-19, visit gvsu.edu/coronavirus