Worst of 'COVID Crash' economic damage is behind us, Lancaster County experts say

The harshest economic havoc in the United States caused by the COVID-19 outbreak is behind us but a slow recovery is ahead of us, two local financial experts said Thursday.

Dave Hanson, CEO of Fulton Financial Advisors, and Keith Aleardi, its chief investment officer, made their remarks during a talk titled “The COVID Crash.” The talk was hosted by the Lancaster Chamber.

“We hit bottom in economic conditions right around Easter time,” said Aleardi.

“Since that time, we’ve seen some marginal improvement. As we start to open up, we had a relatively good retail sales number (up 17.7% nationwide in May from April), we’re starting to see bookings improve, we’re starting to see people get out.”

Aleardi pointed out that the 5% drop in gross domestic product in this year’s first quarter is expected to be followed by a plunge in the second quarter of 10% to 50% -- the range of forecasts from a dozen experts.

“We have felt extreme pain in the second quarter, but I do believe that that is the worst quarter we’ll experience here as we start to see things open,” he said.

Hanson described the economic trends as presenting “some reasons for optimism, but a lot of questions remain.”

“The economy’s waking up,” said Aleardi. “We should see some improvement in the second half of 2020. We should expect and hope for more fiscal stimulus. I don’t agree with larger debts but I think it’s needed here.

“The recovery is purely dependent on the trajectory of the virus and what industry you’re in. A little longer term, we’re going to have to deal with (higher federal) debt, inflation, lower rates, the decline in the dollar. (They will be) the cost of the pandemic.”

Hanson thought that the coronavirus-induced recession is masking one of Lancaster County’s perpetual economic issues – a labor shortage – though it also may have uncovered a possible partial solution.

“The labor shortage is not gone,” said Hanson. “It’s on temporary hold. The demographics that led us to having a labor shortage 90 days ago we don’t believe are over. We think sometime – whether it be in the next 4 months or one year or two years -- we’ll be back to having a lot of conversations about how do we attract labor.”

Despite the highest unemployment rate since the Great Depression, employers in some economic sectors -- especially retail, leisure and hospitality, and manufacturing – are struggling to attract workers now, Hanson observed. That’s because the extra $600 a week in unemployment benefits being paid to workers idled by COVID-19 makes their unemployment benefits exceed their wages, he noted.

(The $600 weekly bonus ends July 31.)

Long-term, if schools don’t reopen their classrooms and child-care centers face limited capacity due to social distancing requirements, the labor pool again will be restricted, said Hanson.

But at the same time, the pandemic has taught some employers that many types of jobs can be filled remotely, meaning that employers could potentially seek workers from virtually anywhere in the country, he said.

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Crédito: TIM MEKEEL | Staff Writer