While the economy has taken a beating throughout the pandemic, it’s recovering more quickly than many anticipated and should continue to improve following a sluggish first quarter, according to economists who spoke at economic outlook events for the Oshkosh and Fox Cities chambers of commerce.
Economist Elliot Eisenberg of Graphs and Laughs LLC spoke at the Fox Cities Chamber’s February virtual event and says the economy has outperformed his expectations and made huge strides. “Our economy has done pretty well. It’s going to continue to get better. This is a pretty good story all in all,” he says.
GDP is down 2.5 percent, which Eisenberg calls “really very good.” Stimulus, which came later than he would have liked to see, has helped immensely and more is on the way.
The economy has changed throughout the pandemic, Eisenberg says, with people spending money on goods instead of experiences. “Anything to do with stuff — manufacturing of stuff, storing of stuff, moving of stuff … and distribution of stuff — is doing phenomenally well,” he says.
At the same time, while household consumption was doing well through October, the economy began to “run out of gas” with worsening surges of the virus, Eisenberg says. Thus, momentum going into the first quarter was sluggish and it won’t have a strong performance. However, he expects to see sequentially better performance in the remaining quarters of 2021.
Brian Beaulieu, CEO and chief economist of ITR Economics, who spoke at the virtual Oshkosh Chamber of Commerce Economic Breakfast in mid-February, made a similar assessment, saying the economy is slowly coming out of the pandemic recession, but it won’t reach its pre-COVID-19 levels until sometime in 2022.
ITR Economics also projects that once the economy returns to its pre-COVID levels, it will continue to grow through 2026. “We’re still the world’s No. 1 economy,” Beaulieu says. “We’re going to come back strong. We really have no recession concerns until 2026 or ’27.”
Eisenberg says positive signs are emerging with case rates and hospitalizations declining and vaccinations becoming more widespread. Still, “we’re in a race against time with mutations,” he says, and it’s not enough just to vaccinate in the United States. We must vaccinate people worldwide to stop the mutations.
As for the regional economy, places like Wisconsin that are heavy in manufacturing are suffering less than service-based economy. “Manufacturing is on fire. Manufacturers are making tons of stuff, and truckers are moving the manufacturing and retailers are selling the manufacturing,” he says.
Firms are investing heavily in equipment and adding solutions to help stop the spread of the virus. This all costs money, helping the economy recover more quickly, Eisenberg says, adding that businesses, governments and households largely are adapting to the realities of the virus.
Beaulieu says with low interest rates, it’s the ideal time for businesses to look at acquisitions. “It’s a great time to be a capitalist. Buy another business, invest in innovation, new products or new services,” he says.
Small businesses, which account for roughly half of all American jobs, continue to struggle and it’s important to help them because they employ many and smaller firms eventually become bigger ones, Eisenberg says.
As for the unemployment rate, it’s fallen dramatically from its peak last spring. The rate was hovering around 4.2 percent as of December for most of the region. Firms are struggling to manage hiring and firing right now, Eisenberg says, and the recession has hit less-educated and less-experienced workers the hardest.
Access to labor remains a challenge across the region. In his 2021 economic outlook for Manitowoc County, regional economist and strategist Jeffrey Sachse says the communities within the county will “have to contend with the pressures of continued growth. Labor competition will build as the labor force continues its sluggish growth. Development pressures will continue as communities compete against each other and in competitive regional markets for new projects.”
The Oshkosh Chamber’s annual economic report points out Oshkosh capital investment in commercial and industrial property was more than $64.7 million in 2020 and more than $50 million of new development projects are planned for 2021.
“The year 2021 will be one of recovery,” the report says. “Depending on where you sit, the recovery may be strong. Some businesses and industries have thrived … but it is a different story for those businesses that have been adversely affected by the pandemic. Entire business sectors have been decimated.”
The Fox Cities Chamber’s report showed positives including favorable costs of doing business, strong access to suppliers, robust worker productivity and high satisfaction among people living in the area. It will be important to continue to attract new people to the region from other areas, Eisenberg says.
“The challenge is getting workers because your unemployment rates are low,” he says. “It may be hard to find workers, but it’s a great place to live.”