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California's 2nd-Largest County To Seek Faster Reopening

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Officials say if they win approval, some restaurants could open within days. The county also may ask the governor for permission to jump ahead to phase three with a pilot program to reopen hair salons and barbershops.

Speaker 1: 00:00 San Diego is on the verge of launching a pilot program which would allow businesses to reopen at a faster pace than the state. The county's public health officer, dr Wilma Vuitton declared yesterday that the County has met the new state guidelines that would allow San Diego to proceed at its own pace to safely reopened restaurants and retail stores. The San Diego board of supervisors is reviewing the pilot program today. While the promise of reopening has generated a lot of enthusiasm from the business community, San Diego is still faced with major economic challenges from the pandemic shutdown. Tomorrow, a forum of business leaders from around the region will hold a virtual seminar on getting San Diego back in business. One of the featured speakers is Ryan Ratcliffe, associate professor of economics at the university of San Diego and professor Ratcliffe. Ryan, welcome to the program. Thanks for having me already. As you know, some non-essential businesses and retailers have started to reopen for curbside pickup in recent weeks. Is it too early to say whether that added economic activity is already having an impact on the region's economic recovery?

Speaker 2: 01:11 I think it can only be a good thing that a, that we're moving retail back into engaging with customers and selling again. Um, it's way too soon to have seen it in any data that I'm able to look at yet. I mean, the economic data is such that we're still waiting, uh, to find out what happened in April in San Diego County, in California, when you look at all of the major numbers that we look at. So it's gonna be several weeks before we have any good data to see it. But, uh, it can only be a good thing.

Speaker 1: 01:39 Okay. So while you're still waiting on the data, how would you characterize the current state of the local economy?

Speaker 2: 01:45 Well, I think the, uh, the best data we have so far is, uh, at the national level, oddly enough. And so I'm kind of thinking what I'm going to expect to see, uh, in a few weeks when we get the San Diego data is pretty staggering. The national level numbers are such that in the one month from March to April, uh, we had about a loss of 20 million jobs at the national level. And that's roughly two times what we had over the entire course of the great recession from its beginning in the end of 2007 to kind of when it bottomed out in terms of employment in 2009. So to say that out loud is just staggering and that's about what I expect to see. Uh, at the San Diego level, some of the preliminary, uh, measures that we have suggest unemployment in the County is North of 20%. Now one in five people. Those are numbers that we haven't really seen since the great depression. So I think the, uh, the, the lockdown, which is what we're starting to see right now has really, um, had an unprecedented, um, both in terms of how quickly it happened and how deep it is a contractionary effect on the San Diego economy.

Speaker 1: 02:54 Well, staying at the national level for just a moment of federal reserve chairman Jerome Powell, the economic recovery is unlikely to be the so-called V shape recovery or the downturn. And then quick return to normal recovery, others anticipated and it's likely to last through the end of 2021. How do you expect the economic recovery to play out here in San Diego?

Speaker 2: 03:16 I expect to see the same thing. I think there's several reasons why this isn't just going to be like you pushed pause for a month and then you push play again and we're all uh, uh, back to normal. I think there's a lot of uncertainty around reopening as we look around the nation. We see some of the things that are going on in States that have been very aggressive around reopening. Um, you know, we see sort of a stop and a start and an a stop again as, uh, you know, as, as we sort of, uh, did a better sense of can we reopen and uh, keep, uh, keep new cases of the virus and hospitalizations and so on at a, at a manageable level. Um, and the thing is we just don't know. And I think in that kind of environment of uncertainty, you're not going to see, uh, businesses in a huge rush to try to scale back up to their, uh, uh, pre virus levels immediately, right?

Speaker 2: 04:10 They're sort of, everybody's going to be in a little bit of a wait and see mode. I think for a, for a month or two at the minimum. And that's going to have, uh, that's going to keep things kind of at a slower recovery than we might like to see. And I think the other major factor that we've seen in California, and it certainly at the San Diego level too, in the last two recessions, is that crises, uh, like this have a huge effect on state and local government budgets. And those, uh, affects, tend to linger on for even a year or two after the private sector is starting to recover so that the state, local government sector is a drag on private sector recovery. And, uh, based on what we're hearing out of Sacramento, I'm expecting to see that same pattern again, you know, again, arguing for a much more, uh, you know, I've heard a hundred metaphors on this, the square root or the Nike swoosh or that sort of thing where I do think we see, um, kind of an initial, uh, you know, kind of quick comeback from the bottom but not all the way back to where we were before.

Speaker 2: 05:11 And then a very kind of long, slow grinds to get back to whatever this new normal is going to look like.

Speaker 1: 05:17 Now governor Newsome is banking on Washington to approve federal aid for States. Two questions. Could that get us out of our slump faster? And what do you think the chances are of that happening?

Speaker 2: 05:29 Well, so I'll speak to the economics piece, which is that federal transfers to state and local governments do have a lot of bang for the buck in situations like this in terms of, uh, you know, if you're going to do fiscal stimulus at the federal level, where, where does it have the most impact on the economy? And in previous studies have suggested that these transfers to help backstop state and local governments are one of the places, uh, that you get a lot of bang for the buck from. Uh, as for the blue state red state politics of how that's all gonna play out. Um, I'm afraid that's above my pay grade. Um, but my hope is that, you know, we treat this like the 50 state national disaster that it is and this is really one of the main roles the federal government has is to help the individual States through situations like this. You know what I mean? At the end of the day, the national government is the, uh, the one with the biggest borrowing capacity and frankly they can print money and we can't. At the end of the day, the national government is going to be, I think the, uh, the backstop that has to emerge for all 50 States. Um, in this regard,

Speaker 1: 06:36 let's bring this discussion back back here to San Diego. Our local leaders, including mayor Kevin Faulkner, have asked the governor to allow San Diego to reopen businesses under phase three, which would include hair and nail salons. How crucial are those sectors under phase three to the region's overall economy?

Speaker 3: 06:56 Well, I, I think, you know, I'm gonna, I'm gonna speak a little more broadly than that. I, I sorta think, uh, you know, my, uh, analysis that I've done on this is kind of broken the San Diego economy into three slices and roughly a quarter of our GDP comes from, so, you know, gross Metro product like we talk about for the U S but for San Diego County, specifically about a quarter of that comes from sectors, uh, like finance, like college education, uh, information like what we're doing here. Um, that the transition to kind of a remote work new normal would be at the easier end. And then there's about 32% of San Diego's, uh, gross Metro product that comes from sectors, uh, you know, like retail, uh, leisure and hospitality. So everything from, uh, movie theaters to tourism to restaurants where, you know, we all know that that sector, you know, San Diego being the tourist destination that it is, is a, is a big piece of our GDP.

Speaker 3: 07:56 And that is one where it's much more difficult to just say, uh, let's go out to dinner on zoom. Right? Or let's go get a haircut on zoom. So what the transition looks like that is, you know, the combination of helping this a vital part of our economy get back on its feet, but get back on its feet in a new normal way. That is, uh, you know, the, the recognizes the, uh, potential for transmission and that we can kind of get that under control. I think that's one of the, the big questions. You know, about what, uh, what the recovery is going to look like in the next several quarters. And it's really a, uh, you know, I think the, uh, the governor and then the local leadership is trying to just balance that tension.

Speaker 1: 08:41 How different do you see this economic recovery from the one during the great recession?

Speaker 3: 08:48 Well as I said though, the first place where we are completely in uncharted waters is just how quickly this came upon us. You know, I think I said that the, uh, the impact on employment for the great recession kind of unfolded over two years. So that's kind of the usual pace of economics, if you will. You know, you can kinda see it happen over a month and then the next month and then the next month and, you know, we get, we, we kind of get a sense of those things that, uh, you know, it's not quite geological pace, but economics pace tends to unfold at a quarterly basis. And we basically had, you know, double a bad recession happened in one month, you know, that, that March to April job loss at the national level being double what we saw for great recession. So just how quickly it's come upon us as largely unprecedented.

Speaker 3: 09:35 And so what the recovery looks like, I think is also, you know, history is a, uh, you know, not a very good guide to, uh, to what we can expect. But you know, in so far as we try, you know, I think there's several things about the, this isn't simply just a push play and we all go back to normal. There's going to be, you know, a lot of transition about how we do retail, how we do restaurants, how we do manufacturing based on, you know, what the, what the, uh, what the scientists are telling us about the way to do that safely looks like. And so any transition to a new normal like that is always a little bit bumpy and it takes some time.

Speaker 1: 10:15 I've been speaking with Ryan Ratcliffe, he's associate professor of economics at the university of San Diego, and thank you so much. I appreciate it. All right, my pleasure.

Speaker 4: 10:29 [inaudible].

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.