UW-Extension’s Center for Community & Economic Development released its latest WIndicator report this week, analyzing the impact COVID-19 has had on Wisconsin’s economy.
The report found an economic freefall directly coincided with the statewide closure in March.
“The data are clear,” it states. “When the pandemic was declared and Wisconsin schools closed, followed closely by the Governor’s Safer at Home order, the economy partially shut down resulting in significant loss of jobs and consumer spending.”
March’s safer-at-home order mandated that nonessential businesses cease operations, forcing many employers to lay off their workforce. It had an immediate impact on the state economy.
Wisconsin’s unemployment rate increased from 3.1 percent that month, to 13.6 percent in April.
For comparison, the unemployment rate was 9.3 percent at the peak of the Great Recession. During the height of the 1980s-economic crisis, the unemployment rate was 11.9 percent.
“A key date is March 16,” the report finds, “when Wisconsin public schools closed face-to-face instruction and moved to completely remote learning. After March 16th, Wisconsin employment dropped by 15.9 percent to its lowest point on April 22.”
Some industries were affected worse than others. According to the WIndicator report, COVID’s impact on businesses was largely determined by their ability to adapt to its symptoms.
While restaurants were able to change their business model, many retailers were forced to close.
“The one sector of the Wisconsin economy that is believed to be most heavily impacted is retail,” the WIndicator report finds. “Compared to the January benchmark, retail sales (as tracked by credit and debit card purchases) dropped by 38.9 percent at its lowest on April 13.”
Consumer fear only exacerbated the problem, as knowledge about COVID-19 remained limited. Lacking a clear sense of how the virus spread, people spent less time - and less money - at stores.
Only when public knowledge about COVID increased did businesses’ ability to adapt to it.
“As we have learned more about COVID-19 many retail stores have adapted and implemented and enforced policies such as facemasks,” the report states, “and limiting the number of customers in the store at one time. These retailers that have adapted have seen a stronger recovery than those that have not.”
Aiding in the recovery was a $1200 stimulus payment sent to Americans, beginning in mid-April. Yet despite that assistance, the retail industry has remained largely affected.
“There has been some recovery,” the WIndicator report finds, “particularly after the stimulus payments were sent starting on April 15th. But retail sales in Wisconsin remain 23.3 percent lower in the first week of August compared to January.”
Other industries thrived, with grocery-store sales increasing 12.3 percent from January to August.
The increase has reflected a shift in the way food is being consumed throughout the COVID pandemic, as people are preparing more meals at home versus eating out at restaurants.
However, some of the industry’s success has been linked to panic-buying among consumers.
“The ‘bubble’ in Wisconsin sales in February has been attributed to panic-buying at grocery stores and larger general merchandise stores that sell food,” the report states. “The infamous ‘toilet paper panic of 2020’ is evident in the data.”
The WIndicator report concludes that the state economy will continue to recover as the public learns more about the virus, and that consumer confidence will play a large role in that recovery.
The full report can be accessed at https://blogs.extension.wisc.edu/cced/files/2020/09/v3i4-COVID-Impacts.pdf.