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Governor’s Council Tangles with Recession
Opinions differ on what the recovery looks like and how to boost it.

In an open session of the Governor's Council of Economic Advisors, the Council addressed questions put to it by Governor.

Joe Cortright, chair of the Council, described what he called a "K-shaped" recession in which employment in non-service and non-retail positions rebounded faster than service and retail sectors. In a similar point, he said that economists were seeing a decline in services consumption, not a decline in capital spending on large ticket durable goods during the outbreak. He credits the social safety net for keeping the recession from being far worse, and predicted an eventual recovery.

Another council economist took issue, saying, "It's not when the economy recovers, it's when the restrictions are lifted, then the economy will recover It's not like we're waiting for people to have more money to go out for dinner."

One opinion of the path to recovery, didn't offer much hope to small businesses

They're going to come back more when we finally get a credible vaccine that's going to allow people to come back and allow you to raise those restrictions out. The restaurants haven't been wiped out. The stoves are still there the plates are there, the knives the forks, the chairs and they can re-open and these people can fill back into those jobs. It's not like those places have been wiped out completely, What we may see is we may see ownership changes at restaurants and the previous owners aren't able to handle the debts and so on that have occurred and other people will step in to take their place. We'll have a redistribution, in a a sense, of ownership.

This view was countered by another economist who countered,

These restaurants and bars and the leisure and hospitality business -- especially those that are independently owned -- and small business are the ones that are hit hardest and we can see from the data that 25% of small businesses have closed in Oregon. And it doesn't feel that it's going to be a temporary problem -- that all of these are going to bounce back. A lot of our tourism business is based on having all this talent in the restaurants and leisure providing businesses, and there needs to be some kind of mechanism, not just to provide them with some money to maybe tide them over and not shut down, but how do we help them generate additional revenue that keeps them going and not close down permanently after everything comes back online.



Governor Brown asked the council, "A federal study took a look at rental arrears in Oregon and calculated that we are looking at $250-300 million I don't know if we'd borrow it or whatever, but does that make sense for the short term for the state to step up and pay that." After a long silence, and one speculation that federal help might step in, one economist offered, "I don't know that it's possible for the state to make that investment -- that it just might be too big. I would probably let the bankruptcy courts deal with it and let the banks deal with it. There's going to be costs that just can't be dealt with effectively by this state."

The council considered the impact of more stimulus -- an expensive remedy. Cortright spoke on the possible impact. "The reason it isn't working as well as we would like is we made consumers whole in the second quarter, basically. Income in the US was higher in the second quarter even though we had this big pandemic. So people have lots of money in their hands. People were unwilling -- or unable -- and it's a combination of the two to spend it in the industries where people were laid off. So, we have lots of money and we could all go to the restaurants and we could all buy food if we could go to the restaurants. So throwing more stimulus right now in a era in where we can't actually go to those businesses, doesn't re-hire those people."

--Staff Reports

Post Date: 2020-11-25 16:29:25Last Update: 2020-11-25 19:10:35

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