MISSOULA, Mont. — As the National Bureau of Economic Research declared, the U.S. is officially in a recession, and it reports we have been since February.
NBC Montana reached out to Patrick Barkey, the director of the Bureau of Business and Economic Research at the University of Montana. He says this recession is unusual because of how fast it’s happening and changing.
“We’re right in the teeth of the storm. Things are happening very quickly,” Barkey said. “Two months ago, people thought there would be a quicker bounce back. And then one month ago, people got more pessimistic, because they looked at things like what was going on in health care and what was going on in airlines. And now things are changing again. And if you wait a month, it will change again. Very tough time to make a cockpit call on exactly where we are and where we’re going. But we have been through these kind of downturns before. I think this is going to be a different kind of recession and not a depression.”
Barkey thinks this recession is significantly more severe than past recessions but says he’s unsure if it will be short-lived. He says the expectation is the U.S. economy will turn back to growth as early as next month but expects it could take years to dig out of this hole, especially for certain industries.
“There are a lot of tourist events, everything from the Missoula Marathon to the Cherry Festival, you just go right down the list. A lot of these things are crossed off,” Barkey said.
When it comes to tourism, he added, “It’s going to be a very, very tough year; I think all the operators know that. Another thing, though, is what we’re looking at in the coming months and out to the end of the year is going to be a different kind of second wave. It’s not a second wave in infections, it’s a second wave in the economy. And one of the biggest challenges facing Montana right now is what’s going to happen to state and local government as revenues start to take a hit and we get beyond the level of cuts that governments can make without endangering some pretty important services.”
Barkey’s watching that closely. He also says to expect very grim numbers when our second quarter reports come out the end of July.
“It will be unbelievably negative numbers. People are talking about GDP falling at a 40% annualized rate,” Barkey said. “Negative 40%, I think that’s a pretty bad number. And that’s basically already cooked in. We actually think the economy is already turning towards growth right now as we speak, so that will be a little bit in the rearview mirror.”
He went on to say they’re mostly about the past. “That’s the nature of economic reports,” Barkey said. “But they’re in the books. They’re real, they have to be addressed. But fasten your seatbelt when those reports come, because they’re going to be stunning.”
There’s good with the bad. Barkey says the Federal Reserve is doing a lot behind the scenes to keep the wheels greased. And he points to signs of life for airlines, restaurants, hotels and lodging. It’s not a matter of waiting and watching how the rest of the pandemic plays out. And he says there have been positive surprises in this.
“It’s an unprecedented experience, what we’re going through with the economy as well as it is with what’s going on with the pandemic. And we’re getting surprises -- we’re getting some big surprises. And they’re not all negative surprises,” Barkey said. He used last week’s U.S. Jobs Report as an example. “The month of May gave a big surprise. All of a sudden the unemployment rate went down and 2.5 million jobs were added back to an economy that lost 20 million the month before. We didn’t expect that!”