BANGOR – COVID-19’s impact on the economy is expected to be steep. Economists are using the Great Recession as a measuring stick to try to forecast the future.
The coronavirus has proven to be unpredictable, but analysts say the economic impact it’s causing is predictable, and it’s trending down.
“Maine’s expected to lose about 87,000 jobs by June,” said Sarah Austin, a policy analyst for the Maine Center for Economic Policy.
During the Great Recession, Maine lost about 19,000 jobs between December of 2007 to June of 2009.
Meanwhile, during the COVID-19 pandemic, economists predict The Pine Tree State to lost almost five times that amount in only a four- to five-month span.
“That takes our unemployment rate from 2.8 percent, which was really low, we had a really good economy for the last year or so, and brings it to a 15.7 percent unemployment rate, which is just unprecedented,” Austin said.
Austin said the numbers will continue to change as COVID-19 evolves. She stressed a recession was inevitable, even if the government scaled back social distancing and stay at home measures.
“The most important thing the governor really needs to be focusing on is just limiting the spread of the virus and saving lives at this moment and part of that is going to be a slowdown in the economy,” said Austin.
In-state, Austin says the hospitality industry will be hurt the most. She also added there are lessons to be learned from the Great Recession to help ease the one we’re about to enter.
“One of the policy mistakes in the Great Recession was that there was a big fiscal stimulus bill that passed at the federal level that kept things going for about a year, and then they stopped doing any more fiscal stimulus after that, even though the economy wasn’t quite back to where it ought have been,” said Austin.
The federal government just passed a $2.2 trillion stimulus package last week, a good step, but Austin says it can’t be the only one.
“Government has the ability to keep spending at times when people’s spending has to get cut back, and the best thing the federal government can do is continue spending until we’re fully back to where we were,” she said.