Social distancing may be good for public health these days, but it isn’t good for the California economy.
As the coronavirus pandemic forces millions of residents to cancel dates and travel plans, retreat from social life to shelter in place, key cogs of the state’s economic engine are grinding to a halt. That’s an unprecedented shock for a modern economy, experts say — one that will test the resilience of California’s decadelong boom and the adequacy of its $18 billion cash reserve.
What we know so far: The coronavirus is almost certainly causing the first pandemic-induced recession of the postwar era. For millions of Californians and their families, that may mean less work, lower income and more financial stress, particularly for those least able to weather the shock: Californians living at or below the poverty line, those without savings or outside financial support and people living on the street.
What we still don’t know: how bad this will get. Never before in the state has so much business activity come to such an immediate and widespread stop at once, the experts say. Policymakers, businesses and regular Califorians are just beginning to grapple with what this all might look like.
“It’s so much larger than anything we’ve encountered before,” said Jesse Rothstein, professor of public policy at UC Berkeley. “I think this is going to be larger than the Great Recession. I hope it doesn’t last as long, but the magnitude of the shock is bigger.”
The state’s enormous, diversified economy — fifth largest in the world — isn’t reliant on any one industry. But sunny California’s tourism, hospitality and retail sectors — together providing about one in five jobs, according to state statistics — are proportionately larger here. So are transportation, warehousing and other trade-related industries. All are taking the most immediate financial hit.
And while the tech sector that has driven so much of the state’s economic growth may very well be better equipped to handle — even prosper from — the new housebound economic order, such a dramatic slowdown is likely to leave few sectors unscathed.
