The economic impact of the coronavirus and the measures taken to combat it are pushing the country into a recession. California faces some of the steepest consequences.
UCLA economists revised last week’s predictions to accommodate for the rapidly changing situation. For the first time in the 68-year history of their quarterly forecasts they updated a report.
It began with a revision to the first quarter’s prediction, down to 0.4 percent growth. It proceeds to correct the second quarter, foreseeing a much worse outcome. Its previous prediction of 1.3 percent growth in the second quarter reversed to a 6.5 percent contraction. Additionally, they see the third quarter contracting by 1.9 percent, down from a growth rate of 0.6 percent.
The economists from UCLA are joined by Goldman Sachs in predicting second quarter woes as a direct result of the outbreak.
But how will the recession impact specific California industries?
Recession Felt Far and Wide
For the state of California, the recession poses a uniquely harrowing prospect. For one, the state comprises over a fifth of the country’s tourism industry. Los Angeles alone accounts for over half of that. The dropoff in travel and closures of popular tourist destinations essentially pauses that entire industry.
Additionally, the massive service industry in the state is at a standstill right now. Governor Newsom’s orders directing restaurants to dramatically limit capacity all but kills business for them. Takeout and delivery orders can’t make up for the lost income.
The same goes for bars and movie theaters. With the closures comes massive unemployment. As a result, the UCLA economists predict a rise to an average of 6.6 percent through 2021.
Furthermore, the outbreak comes on the heels of the trade war with China, a double whammy for supply chains and the shipping industry that operate around California ports.
While the federal government intends to introduce a hefty stimulus package, it appears lasting economic consequences will continue to impact the state for an indeterminate length of time to come.