Economist predicts dire recovery forecast if there’s a second COVID-19 surge

WATCH: Economist predicts dire recovery forecast if there’s a second COVID-19 surge

MEMPHIS, Tenn. — Thousands of people remain unemployed as the pandemic stretches into its sixth month in Shelby County.

Some industries are starting to bounce back, but many small businesses are struggling.

University of Memphis economists say about 100,000 jobs were lost during the first month of the pandemic alone. They said they believe things could get worse if the coronavirus ramps up during flu season.

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“We’ve had an economic disaster that hit us,” said economist Dr. John Gnuschke describing the impact of COVID-19 on Shelby County’s economy. “It’s been a tsunami and the damage is not finished.”

Dr. Gnuschke is Director of the Sparks Bureau of Business and Economic Research at the University of Memphis.

He estimates about 75,000 people lost jobs from March to July because of COVID-19 closures and shutdowns.

"It could take us years, four, five years to just get back to where we were in terms of employment at the beginning of this year,' he said.

Dr. Gnuschke said the economy is starting to recover since businesses started reopening in May but he says the virus will determine what happens for the rest of the year.

“If the coronavirus starts to die off and we literally do not have a new surge in coronavirus then, in fact, our employment numbers will begin to increase and we’ll see some pretty substantial growth in employment for the end of the year,” he said.

But if there is a second surge and another round of restrictions or even another shutdown, he said any employment gains we’ve seen over the last few months will disappear.

“It would be even more devastating for the local economy and set us back a decade or more,” he said. “So now we can’t afford a shutdown but we may not have a choice and if the coronavirus becomes really bad as some forecasters are saying then, in fact, we face that kind of decision.”

If more restrictions are necessary this fall, economists say it may specific to certain industries or types of businesses.

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