Tom Traynor is a leader in Dayton’s business education scene. Traynor, dean of the Raj Soin College of Business at Wright State University, has been with Wright State since 1988 and was named a professor of economics in 2003. He chaired the university’s department of economics from 1998 to 2001, and again from 2010 to 2016.
He spoke with the DBJ on The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a more than $2 trillion economic relief package.
What has been the impact of the CARES Act on the national and local economy? How big a boost has it really provided?
The CARES Act and the other federal Covid-19 relief bills, despite their problems, have done much to prevent the economic downturn from being significantly worse than it has been.
Federal spending typically varies between $300 billion and $430 billion per month, but rose to over $979 billion in April because of spending under the CARES Act and the other federal Covid-19 related relief bills
Federal spending in May and the coming months will also be very high. While the funding has not always gone to the most needed places and there have been delays, it helped many. The net impact has offset much of the income lost by businesses and workers, preventing many business insolvencies and helping many households continue to purchase goods and services, particularly essential goods and services.
How quickly could we see a rebound to the national and Dayton-area economy?
This is the main question about the economy that is on everyone’s mind, but this recession is so different than past recessions since business cycles have been tracked accurately, making predictions very difficult. There are also many unknowns that will impact the economy. All I can offer are some observations:
- Some industries are likely to recover pretty quickly and others very slowly, but it is too soon to know the degrees to which each will recover.
- Concerns for health (both oneself and others), concerns about current and future spending ability, and policies set by governments and businesses will all play a role in determining how quickly or slowly the economy will recover.
- The future path of Covid-19 will also obviously be a key factor in the pace of the recovery.
- This recession was not caused by an economic weakness, so related underlying corrections are not needed, which will help the economy recover once the pandemic subsides.
- The federal fiscal policy response is the final factor that will determine how the recovery proceeds. If the pandemic continues or subsides-then-returns beyond the lifespan of the current spending bills, the strength of the recovery will be impacted by the fiscal policy response.
- The response by the Federal Reserve Bank has been appropriate so far.
How will the CARES Act impact the recovery?
The primary impacts of the CARES Act will be:
- Preventing the development of more significant lasting economic damage (preventing more bankruptcies than will already occur)
- The starting point of the recovery will be a significantly stronger (less weak) economy.
- A key point is that should the CARES Act end before the economy is ready to recover on its own, these benefits will not be fully realized.
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