Many of us are getting our fill of what seems to be the constant barrage of frightening and devastating news during this coronavirus pandemic. Our capacity to filter all this negative information and incorporate it in our daily lives is limited. Few of us feel like we can do much about it if we aren’t on the front lines in hospitals or delivering groceries. Many of us are coping by establishing some semblance of routine in our family structure and remote working lives. Advice on living your best “self-isolation” life abounds. We’re led to believe that our neighbours are taking online dance classes, learning how to code, speak a foreign language, or dance the night away at Club Quarantine.
But the reality is that most of us are struggling with the uncertainty. To feel more useful in the present we can turn our attention to the future. We must ask ourselves– what will Greater Victoria look like when the worst of this is behind us? That is, what will the new ‘normal’ look like? What percentage of our economy will resume? How can we prevent multiple waves of bankruptcies? And which sectors are the most vulnerable? Will BC’s containment strategy enable a promising economic rebound, like in China and South Korea? Or, without massive widespread disease surveillance and centralized executive powers, will we, and other western democracies, oscillate back and forth between tighter and looser lockdown measures until a vaccine is available?
We simply don’t know.
There’s no longer any debate about whether or not we are facing a recession. But what will this recession have left us when we look back on it years from now? The Great Recession of 2007-2009 left us with a spectacular drop in exports, racked up huge government debt, slumped demand, and a long road back to full employment. The question now is whether we are looking at a “V-shaped” recession (with a quicker rebound) or a “U-shaped” recession (with a longer period of downturn), and how narrow or wide will this “U-shape” be. Unlike the last recession, triggered by the subprime mortgage crisis, the best leading market indicators are news about the virus itself.
Societies are facing an inconceivable trade-off. The longer life-saving physical distancing measures are in place, the more protracted the recession. The shorter the lockdown, the more “springiness” our economy will retain, allowing consumption habits to rebound quickly and enjoy what economists call “pent-up demand”. This means that once the physical distancing restrictions are at least partially lifted we might catch up on deferred spending such as getting haircuts, booking vacations, meeting friends for dinner, and catching up on the latest cinema releases, live music shows and theatre productions.
So which is it going to be – a “V”, a skinny “U” or a fat one? And what will this mean for Greater Victoria where the economy is reliant on some the hardest hit sectors, like tourism, retail, accommodation, food service and transportation? As a non-profit alliance of over 60 leading public and private sector members, SIPP will be monitoring this situation closely and a soon-to-be-announced Regional Prosperity Recovery Taskforce will help create a strategy focused on the 3R’s – relief, recovery and resilience.
Lucky for us we still have the public administrative sector to soften the impact during these difficult times but, the longer the downturn, the more casualties and the longer the road back to recovery. Simply put, until we can assess the effectiveness of our containment strategy, we cannot know what damage has been done to the economy and the timing of our economic recovery. A simple way to think about the uncertainty around the timing of our recovery is by focusing on our own consumer habits. When will you be ready to go to a stadium again for sports entertainment? Book a flight for a holiday? Eat in a busy restaurant with friends?
Yes, there is a lot of uncertainty right now. But we can prepare our region by beginning to ask the right questions and putting ourselves in a position for a swift reawakening of our sleeping economy. In the meantime, let’s rally behind local businesses as they are in the trenches. The stakes are high. A third of Canadian small businesses fear that they will permanently close their doors without more government assistance and loan forgiveness. While we will eventually get through this, we must remember that if we don’t help keep small and medium businesses afloat in the coming months, many of us won’t have jobs to return to in the aftermath. It’s by coming together now, that we will see this through.
Please visit this page on our website regularly to provide real-time feedback on the future path forward for our regional economy.