UPDATE (April 30, 2020): As confirmed cases of COVID-19 rise and the coronavirus pandemic continues to rock the economy, several of the indicators in this report have already become out of date. Initially grim indicators forecasts have grown even more dire in the intervening weeks. In the week ending April 25, 7,420 Mainers filed new unemployment claims, bringing total new claims to more than 108,500 since the pandemic began. The Economic Policy Institute’s forecast of Maine job losses by June has been revised, from the 61,000 originally cited in this report to as many as 123,000. As indicators and projections point to an even deeper recession, the need for bold policy action to protect Mainers’ health and economic security becomes more stark than ever.
The coronavirus pandemic has triggered a sharp reduction in economic activity. Available indicators forecast a new recession triggered by the spread of COVID-19, with the economic damage poised to hit harder and faster than any downturn in recent memory.
The rapid spread of coronavirus and the strain on the health care system were bound to affect the economy. Absent a cure or vaccine, the only options to limit the spread of COVID-19 have exacerbated the slowdown and triggered an unprecedented spike in unemployment.
Social distancing has brought a sharp decrease in demand for many goods and services. To limit virus transmission, many nonessential businesses have closed their doors, either voluntarily or under orders from state or local officials. Nearentire sectors of workers have been sent home to shelter in place.
While the arrival of coronavirus is the precipitating event for this recession, it has also laid bare the cracks in the economy that will make it harder for many Americans to weather the storm. Many Americans were already on shaky ground before the virus struck. Austerity budgets and wasteful tax cuts have weakened the public health infrastructure and the safety net. Insufficient worker protections and poor job quality have brought low wages and limited-to-nonexistent paid leave for large swaths of working Americans. The new recession will be more severe as a result.
But the length of the recovery and the amount of human suffering will be determined by the choices of lawmakers and administration officials at the state and federal level, and how well their policies support families and small businesses during an economic slowdown that’s necessary to slow the virus and save lives.
While federal and state policymakers have enacted some emergency measures to protect Americans’ health and livelihoods in the short term, bolder policy solutions are needed to limit the human toll of the pandemic and the coming recession. The best policy solutions also will create a more fair and resilient economy in the future.