Photo courtesy of The Chamber ALX
Jeanette Chapman
The effects of the COVID-19 pandemic have dominated the economy here in Alexandria, but the region may not see a full recovery until 2022.
Jeanette Chapman, Director of the Stephen S. Fuller Institute at George Mason University, spoke about the pandemic in the DC area and gave an economic recovery forecast at The Chamber ALX’s 2020 State of Business meeting on Tuesday morning.
When coronavirus cases in the region first began to increase in March and April, many businesses shut down as people were ordered to stay at home. After a slight increase in the late summer, cases decreased and hit their lower point in the DC metro area in September and October, before spiking again in November.
“The reason that this matters is that it affects how the economy is functioning and how consumers have changed their patterns,” said Chapman.
While consumer spending and jobs have been slowly increasing, Chapman does not see a full recovery until 2022.
She predicts that uncertainty over the latest coronavirus wave, the Federal election and lagging consumer sentiment will dominate this winter.
When a vaccine is available and schools begin to reopen, there will be an acceleration in recovery. The second generation of vaccines will usher in greater recovery in 2022 with growth expected by 2024.
Image courtesy of The Stephen S. Fuller Institute, GMU
Metro Area Job Losses
The DC area’s economy has done better than many other metro regions but still experienced an unprecedented 10.7 percent loss in jobs between February and May. Not surprisingly, the majority of jobs lost were in the leisure and hospitality sector closely followed by transportation and utilities and education and health services (private sector). T
here was a slight increase in jobs in information services, manufacturing (tech) and construction. The job market has slowly recovered 35 to 40 percent of these jobs.
Chapman pinpointed three workforce trends in the DC metro area:
- Teleworking went up significantly with DC ranking number one or two among other major cities. Working from home will affect consumer services that catered to office workers.
- Productivity has decreased on a per job basis as overall most workers are not as productive at home.
- A large number of pandemic affected workers have left the labor force altogether and are not actively seeking a job. Part of this is because of a lack of jobs in certain sectors but some of these workers have taken on childcare or are concerned about health and will not return until the pandemic is under control.
Image courtesy of The Stephen S. Fuller Institute, GMU
Indicators: Restaurant Reservations and Debit Cards
She gave an example using OpenTable reservations, which sharply declined in March nationwide even before official policies were put in place. In DC, as initial restrictions were lifted, reservations steadily increased.
She compared this to patterns in Miami, which began to reopen before experiencing its first wave of cases in June and July and experienced another decline as a result of increased cases. In the DC region, she said, consumers were more cautious and that reopening policies often preceded consumer demand.
Chapman also looked at credit and debit card spending in select households in Fairfax, Arlington, Alexandria and the District, which dropped by around 50 percent at the beginning of the pandemic.
Consumer services like accommodation and food service and transportation industries were most affected, with goods like general merchandise and apparel also experiencing a decline but recovering quickly. Food and groceries experienced an initial spike before evening out to its regular numbers.
Chapman said wealthier households experienced less variation while younger households, which tend to spend more on consumer services, has seen the slowest recovery in spending. Houses and durable goods recovered much quicker than consumer services as people continued to make these large purchases throughout the pandemic.
Phillip Avant, from Truist Bank, presented on the asset market and macroeconomic update.
“This year has certainly been unique, something we’ve never seen before. There’s been an extreme amount of volatility, but if you were to ask me in March or April, would I think we would be where we are right now in these various markets, I never would have thought it,” Avant explained.
Despite an initial drop the COVID-19 market is continuing to improve with stocks and commodities almost fully recovered. He said that Federal intervention provided initial support to larger companies like Walmart and Apple but that with time it will impact small and mid-sized business. He predicts that mergers and acquisitions will go up significantly next year with the huge amount of capital available. He said that the lending market has returned after the PPP rush and that borrowing rates are low. He advised businesses looking to get a loan to bring updated financials and a forecast when talking with banks.
Photo courtesy of The Chamber ALX
Stephanie Beyer Kirby
At the conclusion of the meeting, Stephanie Beyer Kirby was named 2021 Chair of The Chamber ALX, replacing 2020 chair Dave Millard. Beyer Kirby is a trustee and governance chair of The National Children’s Museum and a board member of Inova Alexandria Hospital’s quality board. She served the Chamber as former chair of the young leader’s network and as chair-elect in 2020.
