Editorial: Take action to stem effects of K-shaped recovery
A V-shaped economic recovery would be ideal. An immediate return to the economy in February could alleviate concerns from families who have suddenly faced questions about how to pay their bills and bring back businesses from the brink of bankruptcy.
But the notion of a V-shaped recovery, nationally and locally, seems increasingly unlikely as months drag on. Instead, policymakers, from town halls to the halls of the legislature and Congress, should consider the more realistic possibility that the country is experiencing a K-shaped recovery.
The theory behind a V-shaped recovery is that a deep economic decline will be followed by a quick, sharp rebound. It imagined the possibility that shutdowns would be followed by businesses bringing employees off of furlough quickly, rehiring any people laid off and that customers would come back just as fast as they left.
But a K-shaped recovery is one in which some industries and workers are able to recover quickly while others are still struggling or seeing business continue to decline.
A memo from the U.S. Chamber of Commerce and distributed by the Rowan County Chamber last week posits the latter is happing now. Tech companies, retailers with a good online operation as well as automotive and manufacturing sectors are recovering sharply, the memo states. But food and beverage industries, some brick-and-mortar retailers, travel, tourism and those businesses still unable to reopen represent the bottom of the K — struggling to keep the doors open and the lights on.
“It is important not to lose sight of these businesses as the recovery continues. Until the pandemic is fully over and we can return to our lives as they were before the virus struck, they are likely to continue to struggle,” states the memo from Curtis Dubay, a senior economist at the U.S. Chamber. “The businesses on the sliding part of the ‘K’ may need government assistance longer than other industries, and in the immediate future need a phase four relief bill from Congress as soon as possible.”
Consider the situation in Rowan County. A news release last week from the Convention and Visitors Bureau reported tourism in Rowan County posted record growth in 2019, before COVID-19. Tourism spending increased by a relatively sharp rate 7.8% and infused $199.05 million dollars into the county’s economy. The tourism economy supported 1,530 direct jobs and generated $6.4 million in local tax revenue.
But tourism revenues bottomed in April 2020, falling 60% from the previous year, according to the Rowan County Convention and Visitors Bureau. While there’s been some recovery, things have not returned to where they were pre-pandemic. Places like the fairgrounds are usually booked every weekend with events of some type. Now, they are fewer and farther between. And the fairgrounds is just one of many businesses who would report a similar trend.
It may be worthwhile for our representatives in Congress to specifically consider another, more-focused Paycheck Protection Program. North Carolina legislators should realize they have a role in stepping up to support the state’s businesses in additional ways, too.
Most importantly, local residents should more seriously consider the benefits to the community of supporting businesses here, particularly those that are tourism-focused.