Michigan business owners, economists optimistic about state’s recovery in 2021
The pandemic has had a severe impact on Michigan businesses and consumers, but the economy could improve quickly in 2021, especially as more and more residents are vaccinated, economists and a survey of business owners say.
While 67% of survey respondents in Michigan said the coronavirus pandemic has had a somewhat or extremely negative impact on their business, 16% said the opposite, that it
had an extremely positive or somewhat positive impact on their business, according to the Michigan Economic Outlook Survey revealed at a virtual Detroit Economic Club meeting Tuesday.
The survey looked at responses from more than 1,000 members of chambers, business associations and economic development groups around the country.
Respondents whose businesses were negatively impacted by the pandemic also had a negative view heading into 2021, while businesses who did well in the pandemic had a positive outlook of the future, the results show.
“That was striking,” said Gabe Ehrlich, director of the University of Michigan’s Research Seminar in Quantitative Economics. “One of the things that encouraged me was that the outlook was generally positive moving forward.”
The survey results highlight the unique nature of the pandemic, which has affected businesses in the leisure and hospitality and retail industries disproportionately compared with others. In other recessions, manufacturing has been hit the hardest in Michigan.
The leisure and hospitality industry employs more women, minorities and low-income workers compared with other sectors, thus disproportionately affecting these groups.
“People at the lower end of the income distribution have been hit disproportionately hard by the pandemic recession,” said Ehrlich. “Higher-income folks generally do have more ability to work from home.”
Ehrlich said jobs that require face-to-face interaction, such as those in retail and leisure and hospitality, will likely recover at a slower pace than others.
There’s been a drop in women participating in the labor force in the pandemic, State Treasurer Rachael Eubanks said, because they are more likely than men to have jobs in these industries. They’re also more likely to be responsible for parental duties.
That’s why it’s so important that Gov. Gretchen Whitmer set a goal for schools to offer some in-person learning by March 1, so that women can go back to work, she said.
Eubanks also said federal aid will continue to be important in propping up consumer spending.
“That’s going to be really important to continuing that economic progress,” she said. “Michigan had $44 billion in federal aid that came in between the Paycheck Protection Program, the stimulus payments and the enhanced unemployment benefits.”
Eubanks and Ehrlich were both optimistic about a return to normalcy with the rollout of vaccines, and the impact that will ultimately have on the economy.
“The virus and the economy are so intertwined,” said Ehrlich. “If the question is, ‘Is it worth spending the extra dollars to get people vaccinated and work quickly,’ the answer is ‘Yes.’ It’s a super high multiplier economically.”
Still, he said he’s worried about the impact the pandemic could have longer term on the need for business travel and office space, and what will happen to cities’ downtowns if demand for both continues to be diminished.
Posted By: Detroit Free Press on January 12, 2021. For more information, please click here to read the source article.
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