A new study shows we’re already in a coronavirus recession — and it has hit S. Florida hard
A new study by the StratoDem Analytics data firm in Cambridge, Mass., suggests economists’ fear was spot-on. The coronavirus isn’t putting us at risk of a recession. The COVID-19 recession is already here — especially in tourism-centric South Florida.
“There is no question whatsoever that America slipped into a recession in March 2020,” said James Chung, a partner at StratoDem Analytics. “The big question is how deep it’s going to get and where it’s going to hurt the most.”
Using forecasts from large financial institutions including Goldman Sachs, JP Morgan and Morgan Stanley, the study finds the national gross domestic product (GDP) during Q2 of 2020 (April 1-June 30) will average -18.1 percent. GDP is a common way of measuring a region’s economic output.
“Ever since GDP has been calculated in the U.S., we’ve never seen a sharper quarterly downturn,” Chung said. “All other recessions were small compared to this downturn.”
Miami-Dade and Broward counties, with their heavy reliance on tourism, will be hit even harder. According to the study, Miami-Dade is forecast to suffer a -21.5 percent drop in GDP, or a $9 billion loss. Broward will see a -22.7 percent drop, equaling a $6.1 billion loss.
The Miami-Dade figure breaks out into $8,000 less spending per household in Q2, mostly due to job losses. In Broward, it means $7,700 per household.
Chung said the coronavirus outbreak simply accelerated the national bursting of asset bubbles such as real estate and commercial debt.
A bright spot
One bright spot in the study: Most of the investment banks are anticipating an economic recovery in Q3 and Q4 of 2020. But that recovery would require significant federal funds and an economic stimulus package, Chung said.
In the meantime, Chung estimates “more than 100,000 jobs” will be lost in Miami-Dade alone, including many restaurant and hotel workers, although it’s impossible to say whether those losses will be temporary or permanent.
On Saturday, Mayor Gimenez prohibited most hotels from accepting new reservations except in specific circumstances. On Monday, Britain-based Oxford Economics released a study commissioned by the American Hotel & Lodging Association estimating that 305,146 Florida hotel-retailed workers likely will lose jobs.
But the study also found there will be many new jobs created, especially in the fields of delivery, logistics and healthcare response.
“This is rewiring everything, and we’re trying to figure out how to adapt to the realities of the COVID-19 economy,” Chung said. “We’re not trying to panic people. We’re sharing this data with the public because we want people to understand this is serious and it’s going to require government and the community working in tandem to put the pieces back together.”
This story was originally published March 23, 2020 at 5:29 PM.
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