With businesses closed and unemployment claims spiking, the global pandemic of COVID-19 is crippling the economy in Portland and around the world.
But how bad will the impact be? And when will the economy recover?
As the city economist, Josh Harwood helps Portland forecast economic trends and plan for the future. He checked in with communications specialist Julian Massenburg to provide observations and predictions about the new coronavirus.
Q: As Portland’s city economist, what is your role during the COVID-19 crisis and its aftermath?
A: Mostly, I’m working with my colleagues at the county and State to get our collective arms around what this means economically. First and foremost, this is a public health crisis. The faster we get past that part of the crisis, the better off we will be economically — even if in the near term we need to take a bigger hit.
Coronavirus economic help
Mayor Ted Wheeler announced a suite of actions to support the economy, including an economic impact task force and small business grants led by Prosper Portland.
Learn more about these actionsQ: How much do we know about the economic impacts of this pandemic?
A: Not a lot yet. It is still very early and most of the world is still at different stages of dealing with the crisis. We do know that the restaurant and hotel market is feeling this very acutely and will see dramatic layoffs. The hope is that they are largely temporary and the economy get back to “normal” as soon as possible.
Q: Do you have a sense of how this crisis will compare to other economic downturns in our history?
A: From all that I can gather, I would imagine that this contraction will be sharper — and hopefully shorter — than most experiences we have had. Every economic cycle and recession is different, and this one is especially so. Basically, most everything stopped this week, but the faucet can be turned back on pretty quickly if we can get to the other side of the pandemic.
Q: Will the impact on Portland’s economy be similar to other large cities, or do we have any special challenges or advantages here?
A: Typically, Oregon and Portland do better than average in expansions and worse than average in recessions. I would expect this to be no different given our exposure to Asia. This is because, relative to other cities we manufacture more things here and are, thus, more dependent on global markets.
Q: What, if anything, can individuals do to limit the damage to our local economy?
A: Individuals need to do whatever they can to stall the spread of the infection. I know our kids haven’t seen their grandparents in a week and likely won’t for at least a few more, even though they live within a few miles of us. Again, the key is to end the panic as soon as possible, regardless of the immediate ramifications.
Q: The City oversees numerous funds with varied revenue streams. Which funds are most at risk of experiencing revenue loss due to economic downturn?
A: Well, the first and most obvious impact will be to lodging taxes. I suspect at this point that hotels will see upwards of a 75 percent decline in occupancy. Other negative impacts are largely dependent on the duration of the crisis, but will likely focus on business license taxes for the general fund, gas taxes for the Bureau of Transportation, and enterprise funds in parks for things like golf and Portland International Raceway. Ironically, we can expect a small uptick in liquor and cannabis taxes as a result of the current state of affairs — though not nearly enough to make up for the losses is other revenue streams.
Q: How can the City minimize the financial impact of this pandemic?
A: Sadly, I’m not sure that the City can do a lot to stem the tide of a crisis of this scale. I’m not saying that we shouldn’t do anything, just that we need to understand our scope of influence and that we should be diligent about understanding where we can impact things. One of the most important things we can do is lobby Congress to get a stimulus package passed that puts money in people’s hands.