WASHINGTON — While the reopening of businesses shut down by the coronavirus pandemic is a significant step forward, it is too soon to say how quickly or smoothly the nation’s economy will recover, according to National Retail Federation (NRF) chief economist Jack Kleinhenz.
“Is it possible the worst of the coronavirus pandemic is behind us? Maybe, but we are not out of the woods yet, and uncertainty abounds,” Kleinhenz said earlier this month. “Predicting what will happen is even more challenging than usual. While history often helps guide us, previous downturns offer little guidance on what is likely to unfold over the next six to 12 months. There is no user’s manual in which government, businesses or consumers can find precise solutions for what we are going through.”
Record drops in employment, gross domestic product, retail sales and other indicators have resulted in “such unparalleled numbers that it is not comparable to anything in economic history, and it has yet to catch up with the reality of what we are experiencing,” Kleinhenz commented in the June issue of NRF’s “Monthly Economic Review.”
Federal Reserve officials indicated this month that they expect a slow economic recovery from the pandemic-induced recession. The central bank officials estimated unemployment will be at 9.3% at year’s end. Fed chief Jerome Powell said the labor market might have “hit bottom” after recording a 14.7% unemployment rate in April, but he said it was too soon to be certain.
“This is the biggest economic shock, in the U.S. and the world, really, in living memory,” Powell said in a news conference. “We went from the lowest level of unemployment in 50 years to the highest level in close to 90 years, and we did it in two months.”
Kleinhenz also noted that the U.S. economy “changed course almost overnight” from the longest expansion on record to an “historic economic slump” due to shelter-in-place advisories intended to slow the spread of the virus.
With monthly and quarterly government data unable to keep up with the rapid changes seen during the pandemic, Kleinhenz welcomed three new weekly studies being produced by the U.S. Census Bureau — the Household Pulse Survey, the Small Business Pulse Survey and a weekly version of the Business Formation Statistics report. While the first two show households have seen reductions in income and most businesses do not expect to resume full operations for six months, the third found new businesses are still being formed despite the pandemic, with 9,000 applications for companies planning to hire workers filed in a single week in mid-May alone.
NRF cited a report from the Conference Board and Burning Glass Technologies that looked at online help-wanted ads and saw signs that the downturn may be easing and “seeds for recovery are being planted.”