Yes, there is economic life after a viral pandemic, but don’t expect a full recovery for several years.
“Tourism was down 52% in the state in 2020. It will take three to four years to come back to pre-COVID levels,” said Richard Wobbekind, senior economist with the Business Research Division of the Leeds School of Business at the University of Colorado Boulder.
Wobbekind told more than 200 attendees of the Southwest Colorado Economic Outlook 2021 forum held this year on Zoom that Colorado shed 90,000 restaurant jobs in 2020 and a survey showed 70% of restaurant owners in Colorado are considering closing in the next six months.
He estimated only 6% to 9% of the those restaurant jobs are likely to come back in 2021.
Tim Quinlan, senior economist with Wells Fargo Securities, said of economic life entering 2021: “We’re getting back on our feet, but we’re not nearly in as good a place as where we would have been if this pandemic had not happened.”
While the rest of the country experienced a 6% decline in total jobs in 2020, Colorado came in a bit better, recording a 4% decline, Quinlan said.
“Colorado, relatively, came out better from the pandemic than the rest of the country, but it’s still god awful if you were in the food service or accommodation industry,” he said.
The country and Colorado, Quinlan said, are still in for several difficult months, but with three vaccines approved with 90% efficacy, warm weather on the horizon and likely more stimulus coming from the federal government, the Wells Fargo economist expected an economic rebound to take root during the second quarter of 2021.
Laura Lewis Marchino, executive director of Region 9 Economic Development District of Southwest Colorado, said livable wages continue to be an economic thorn in the region’s side.
The average household wage in La Plata County in 2019 was $47,944. The Massachusetts Institute of Technology Livable Wage Calculator estimates the livable wage in the county for two adults with a preschooler and one school-age child to be $54,496.
In Montezuma County, those numbers were: an average wage of $37,223, with a livable wage for the same size household at $52,187.
Teacher salaries in comparison to housing illuminate the problem.
A teacher would need to earn $75,994 annually to own the median-priced home in La Plata County in the 2019-20 school year, but the average teacher salary in Durango School District 9-R was $48,428.
In Montezuma County, a teacher would have to earn $44,021 to own a median-priced home in the 2019-20 school year. Instead, teachers in the Montezuma-Cortez School District earned an average of $39,448.
“When we did this comparison last year, two school districts in our five-county region could offer an average teacher’s salary that could afford the county’s median-priced house. This year none of them could. Obviously, we’re going in the wrong direction,” Lewis Marchino said.
Quinlan said various types of housing subsidies have been attempted across the country but have proved difficult to sustain.
The simplest answer – lower development standards and build more houses – seems to work best in driving down housing costs.
“If you allow more permits at the permitting authority, prices will follow,” he said.
Quinlan said if you asked him where taxes will be four years from now, his prediction would be up slightly.
The Joe Biden presidential campaign has promised to increase the corporate tax rate and the highest personal income tax bracket rates, but he said the Democrats narrow control of the Senate should prevent the most expensive of Democrats’ ideas, such as the Green New Deal and free college for all, from passing.
In the end, deficit spending to escape the worst of COVID-19-induced economic hits will likely cause future problems, but both Wobbekind and Quinlan said it is impossible to predict when the nation’s debt bomb would go off.
The current national debt is just shy of $27.7 trillion dollars, about $83,785 for every American.
Quinlan noted deficit spending is now the common practice across the world, used in the European Union, China and Japan.
“When does it come home to roost? When we look worse than all the others,” he said.
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