Hartford Business Journal

www.HartfordBusiness.com • July 13, 2020 • Hartford Business Journal 17 IS YOUR ORGANIZATION TAKING THE STEPS TO IMPLEMENT HEALTH & WELLNESS PROGRAMS? GO TO >> HARTFORDBUSINESS.COM/HBJ-EVENTS CLICK ON CONNECTICUT'S HEALTHIEST EMPLOYERS & NOMINATE! NOMINATE TODAY DEADLINE 7/14 PLATINUM SPONSOR: about Connecticut's economic outlook hosted by the Hartford Business Jour- nal and New Haven Biz. He was joined by Fred McKinney, professor of entrepreneurship and strategy at Quinnipiac University, and Daniel Cooper, senior economist and policy advisor at the Federal Reserve Bank of Boston. More pain could be ahead As Connecticut takes some modest comfort in its own success controlling COVID-19, numerous other states are seeing signs of a second wave, includ- ing Texas, Arizona and Florida. The spike in cases, which some of- ficials have blamed on the early eas- ing of economic and social restric- tions, have prompted another round of temporary shutdowns of bars, movie theaters, gyms and other businesses in those states. "There's a concern that reopening too fast has had some consequences," said Cooper, the Boston Fed economist. Connecticut residents may be behaving more cautiously, but the leap from the recent rate of under 100 new COVID-19 cases a day to something far worse is not so long, said Quinnipiac's McKinney, noting that students from other geographies will be returning to Connecticut colleges this fall. "We cannot rest in Connecticut with states around the country experiencing these spikes in cases and think they're not going to affect us," McKinney said. "We also have a risk of a second shutdown if we don't control this virus nationally." Cooper said the consensus predic- tion from professional economic fore- casters is that the national economy will fully recover sometime in 2022. "The general consensus is it's go- ing to be a fairly drawn out recov- ery," Cooper said. The pace of recovery will depend on how consumers and businesses respond, and whether the virus can be held in check. A second wave could mean a W-shaped trajectory, meaning the economy, after starting to rebound in the second half of this year, falls once more before eventually climb- ing its way out of the hole over a longer period, Cooper said. It's impossible to predict with much certainty, as the situation is so unique compared to past recessions and pandemics. Congress injecting hundreds of bil- lions of dollars in stimulus funds into the economy, or the Fed lowering in- terest rates to near zero, can all help. " … But at the end of the day, mon- etary policy can't control the virus," Cooper said. McKinney is especially worried about the impact a second wave of the virus — and potential accompa- nying economic restrictions — will have on small businesses, many of which are already suffering from suppressed customer demand. "I think [the small business] com- munity is going to be particularly hard hit and it's going to be a chal- lenge for them to get back," he said. Businesses will need more help, McKinney said, but perhaps not in the same form as the U.S. Small Business Administration's Paycheck Protec- tion Program (PPP), which primarily helped cover companies' payrolls. While PPP has been extremely popular in general — infusing $6.6 billion into more than 57,000 Con- necticut companies as of June — the SBA has struggled to dole out all of the available money autho- rized for the program, which nearly expired on June 30 with $130 billion in remaining funds before Congress extended it into August. McKinney said businesses will need more help paying their fixed expenses, like rent, loan payments and other costs that were not PPP's focus. Cooper, who stressed that he was giving his opinions and not those of the Boston Fed, said the institution's Main Street Lending Program — which provides loans that are almost entirely backed by the government — attempts to make credit more available as the COVID-19 recovery continues. "These are loans, and of course, there are drawbacks to loans, and I would agree there potentially needs to be more direct fiscal support to house- holds and businesses," Cooper said. CT's total employment and wage growth Source: IHS Global Insight 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 FY 2011-2019 FY 2004-2008 Compound annual growth in employment Compound annual growth in average annual wage 0.9 0.6 4 1.9 Growth in %

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