The Covid-19 pandemic will continue to be the main factor in determining the health of the Dayton region’s economy in 2021, but local experts say it should be a rapid recovery when given the “all clear” to return to normalcy.
Though new cases, deaths and hospitalizations related to Covid-19 are still on the rise, the phased distribution of a vaccine and a new stimulus package should help individuals and businesses recover in both the near- and long-term. Unemployment funding to help those who have lost their jobs during the pandemic, coupled with new rounds of economic disaster and paycheck protection loans for businesses, would provide immediate assistance, while the widespread vaccinations are the key to ushering in a full economic recovery.
Reports indicate that, based on current contracts with pharmaceutical companies, about two-thirds of the U.S. population should be vaccinated by late summer. However, epidemiologists say that number isn’t enough to ensure the economy will return to normal.
The good news is more contracts are expected to be signed this year, which would lead to additional doses of the vaccine. “It’s still hard to say when we’ll get to a vaccination level that’s safe for the economy,” said Thomas Traynor, dean of the Raj Soin College of Business and economics professor at Wright State University. “I think we’re months away from that at least.”
Traynor said the early months of 2021 will look a lot like the last few months of 2020 — limited activity by the public reflected by a decrease in spending. Small business owners will likely continue to struggle as a result, even with a new round of relief funding.
“If we’re looking at late summer or even early summer before most people can get vaccinated, the first part of the year I wouldn’t expect a whole lot of change,” he said. “But it’s important to point out that things are changing fast. We could get additional vaccines with great results to be approved and pushed out into the market, but we don’t know today when that will happen.”
The key, Traynor said, is getting the “all clear” from the Centers for Disease Control and Prevention. But that will only happen when enough people are vaccinated, and the government feels confident to tell people they can return to their normal, pre-pandemic lives.
“Once the pandemic is behind us — and it’s not possible to predict what month that will be — but once that happens the overall state of the economy is such that we stand to have a fairly rapid recovery,” he said.
One factor leading to Traynor’s conclusion is household savings in aggregate is “way up,” so the financial positions of many people are “quite good,” he said. Lower-wage workers in industries like retail, restaurants and lodging will be much worse off, though any unemployment benefits or stimulus checks they receive or likely to be spent immediately, helping the economy in the shorter term.
Those who are in better financial shape mainly saved their initial stimulus check, and will likely do the same with the next one that is being rolled out. That doesn’t do much for the economy now, but Traynor said it could have an impact further down the road.
“What we saw with the $1,200 checks was people tended to stock it away to improve their financial position,” he said. “That isn’t helping (the economy) right now, but it could be a difference maker when the pandemic has passed and people start spending their money again. That will help with recovery.”
Traynor envisions a slower recovery in the first few months of the year as vaccines are rolled out in phases to certain segments of the population, but the rapid recovery he is projecting will not begin until the the fed gives the OK. Traynor believes “were many months away from that,” but it should be sometime this year.
“The best I can say is 2021 should end a lot better than 2020 did,” he said.
In the Dayton region, economic development officials are also expecting a strong recovery in 2021. The Dayton Development Coalition says its pipeline of economic development projects and new leads are “really strong” heading into the year, thanks in part to resilient industry sectors such as logistics and distribution, advanced manufacturing and technology. The region’s defense industry also remains on a growth trajectory, as evidenced by recent wins in the space intelligence and flying car domains.
“We’re really optimistic from a pipeline perspective,” said Julie Sullivan, executive vice president of regional development for the DDC.
While many existing companies pressed pause on their expansion efforts in 2020, some are expected to ramp up investment in the new year.
“The first half of 2021 will be a lot like it is now — some companies are ready to make decisions, others are waiting longer,” DDC President and CEO Jeff Hoagland said. “But the pipeline is full, and we’ve been crazy busy with the amount of leads and projects in the pipeline.”
Despite the uncertainty surrounding how the pandemic will play out in 2021, Hoagland said he’s more optimistic about the future of Dayton’s economy than ever before.
“I’ve never been more excited,” he said. “I’ve been in economic development for almost 30 years, and as crazy as it sounds with the pandemic, the future has never been brighter in Dayton, Ohio.”
View the original story at bizjournals.com