In this webinar, founding Director of the Center for Research On the Wisconsin Economy (CROWE) and Juli Plant Grainger Professor of Economics at UW-Madison, Noah Williams, provides a macroeconomic outlook on the impact of COVID-19. A native of Menomonie, Wisconsin, Professor Williams was previously on the faculty at Princeton University. His research focuses on macroeconomics, particularly monetary policy, social insurance programs, and financial markets. He has published widely, and co-authored several papers with Nobel Prize recipients Lars Peter Hansen and Thomas Sargent.
To watch the full webinar, click HERE.
Below are a few key points Professor Williams touched on during this webinar:
- Ever since the COVID-19 pandemic hit Wisconsin in mid-March, the University of Wisconsin-Madison’s Center for Research On the Wisconsin Economy (CROWE), has tracked the scope and magnitude of the unprecedented changes in the economy in real-time using new economic indicators. These indicators include filings for unemployment, as well as tracking economic activity via foot traffic using SafeGraph.
- Filings for unemployment – Mass unemployment is one of the primary changes brought on by the Professor Williams noted that a spike in filings for unemployment occurred in mid-March, followed by a peak around mid-April. Around the pre-COVID era, Wisconsin’s unemployment rate was roughly 3%. However, within a couple of weeks, more than double that amount had filed for unemployment insurance. Despite the national consensus projection that employment would continue to plummet, employment bounced back with 2.5 million jobs being added and the unemployment rate falling. To provide a broader picture of the impact of unemployment, Wisconsin’s labor force is roughly made up of three million people, which equates to roughly 300,000 jobs having been lost.
- Economic activity via foot traffic – Professor Williams noted that overall foot traffic had fallen by 60% by mid-April. However, as of early June, a significant amount of economic activity has been regained with an increase to 20%.
- Without a doubt, both the COVID-19 pandemic and economic recession have exacerbated some of the pre-existing inequalities in For instance, many of the lower income individuals and industries that have been hit the hardest include the African American population, which make up roughly less than 7% of Wisconsin’s overall population.
- African Americans make up over 20% of COVID cases and account for 24% of deaths related to the Not to mention, nationwide, the African American unemployment rate has increased by more than the overall unemployment rate. Even when the overall unemployment rate fell in May, the African American unemployment rate kicked up.
- The federal government has attempted to provide some economic stimulus packages, which have served as more of a lifeline to bolster economic spending rather than a stimulus package. According to Professor Williams, the following three programs have had the biggest economic impact:
- Direct stimulus checks – Professor Williams noted that the roughly $1,200 checks have helped prop up consumer spending in the period in which a lot of economic activity has been halted. This is evident in the increases in consumer spending and income increases, which were much higher than anticipated over the last month.
- Increased federal unemployment benefits – The federal government topped-up state unemployment benefits with a $600/ week payment, which has been a big help in a period of mass unemployment. Previously in Wisconsin, the replacement rate (how much you get in unemployment benefits as a share of what you earned while you were working) was roughly 40%. With these federal top-ups, average replacement rates have been closer to 90% and in many cases people are earning more in unemployment than they had while working, which has both positive and negative repercussions.
- The Paycheck Protection Program (PPP) – Aimed at small businesses, Professor Williams believes this program is one of the main reasons unemployment made a comeback nationwide last month. Whereas many analysts had been projecting further substantial decline, Williams noted an increase in payroll employment.