Recovery + Relief After COVID-19
The Greater Des Moines Partnership welcomed Darrell Cronk, chief investment officer for wealth and investment management for Wells Fargo (pictured below), at a recent DSM forward Task Force Meeting that took place on Tuesday, June 2, 2020. Below are insights Cronk shared about what a post-pandemic state and business community can expect and why a plan for the future is needed.
Midwest Recovery from COVID-19
Within the Midwest and the state of Iowa, estimates are that the GDP will contract 5.5%, in line with the 2008-2009 recession, and it will take until 2022 to hit where we were nationally in January 2020. Fortunately, the Midwest and South have been more insulated from the effects of the pandemic than the coasts.
There are concerns about the Phase I trade agreement with China, including that China agreed to purchase $36.5B of US farm goods for 2020 and have only bought $3.35B so far. This will have sizeable implications for the state of Iowa.
Relief Packages for DSM
A fiscal stimulus of 2.7T, plus 2.4T in monetary support has provided relief, while a Phase 5 package of stimulus is expected in late June/early July. Amounts of stimulus relief are unknown at this time, but it is expected that the Paycheck Protection Program (PPP) will be extended and there is anticipation surrounding the Friday, July 31 expiration of additional unemployment benefits of $600 per week.
Business Community Outlook
While some businesses are struggling during this time, there are others finding success. Businesses that continue to embrace social media will see opportunity. Those businesses within the teleconferencing industry, as well as technology or online sales companies and home improvement stores will continue to grow sales during this time. Companies offering stay-at-home entertainment will also remain steady.
Industries that will have more trouble bouncing back from the crisis include businesses in the following categories:
- Labor-Intensive Small Businesses
- Travel + Hospitality
- High-Density Entertainment
- Brick and Mortar Retail
- Higher Education
- High-Density Office Work
- Commercial Real Estate
Businesses will struggle because of online sales, fear of crowds and rethinking technology and the way people attend events. Within the business community, consumption patterns will shift, including the use of debt and changing savings rates. Business owners will look at traveling less, occupying less office space and more as they reassess operations.
Viral outbreaks are here to stay. The business community will need to prepare for a future with pandemics. Health care will play a prominent role in this preparation.
Iowa’s economy is insulated from many of the national trends seen during the COVID-19 pandemic, but the state and Greater Des Moines (DSM) must continue to think about ways to ready the local economy for these future outbreaks.
For more information on DSM Forward, visit DSMpartnership.com/DSMforward.
You can count on The Partnership to continue to share accurate and fact-based updates as well. See more on COVID-19 here.