The economic pain caused by the pandemic will likely linger through the first half of 2021, but an economist at the University of San Diego is predicting a big recovery like what we saw following the 1918 Spanish Flu pandemic.
“In the same way that I think in the early part of the 1920s the roaring 20s started with the fatigue of World War I and the 1918 pandemic, people started splurging a little bit and there’s all that penned up demand of the things we used to do,” said Ryan Ratcliff, Ph.D., an Associate Professor of Economics at the University of San Diego.
San Diegans earning higher salaries and with a higher education are more likely to have kept their job during the pandemic, but they haven’t been spending as much on things like travel or salon services.
“You’ve got big spending potential among the higher income sets, and they have been less impacted. That suggests we’ll get that consumption boom once we're able to come out of the bunker,” Ratcliff said.
The recovery will likely take longer in certain industries. One-hundred-seventy-six- thousand, local workers lost their job due to COVID-19 last year, according to the San Diego Association of Governments. Eighty percent of those jobs came from the tourist, retail, and education sectors.
“When you look at households making $50,000, the job loss is very concentrated there and this is much more a recession that makes the financial crisis look like a brief hiccup,” said Ratcliff
Like the virus itself, the recession has disproportionally affected people of color. A survey of California households shows 67% of Latino households suffered job loss in 2020 compared to 49% of white families. 71% of Black households suffered job loss last year.
Despite the grim numbers there are promising signs.
“More than half of the hospitality jobs that we lost in 2020 have come back,” Ratcliff said.
A slower than expected vaccine rollout will likely mean a slow economic start to 2021, but as we get closer to herd immunity and local business keep adapting, it is becoming more likely that we can have a roaring 2022.
“The same way that our great grandparents fought World War I, went through a pandemic with the Spanish Flu and got to 1920 and said we just did a lot of great things let’s celebrate, I think that is what I expect to see in 2022,” Ratcliff said.