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2nd quarter outlook for 2020 economy in state takes a definite upswing, URC says

By JACK WEATHERLY

Mississippi’s economy is responding positively to the loosening of coronavirus pandemic restrictions

The outlook issued recently by the University Research Center (URC) of the Mississippi Institutions of Higher Learning calls for the gross domestic product (GDP) to contract 4.1 percent in 2020.

The GDP is the total monetary value of goods and services produced.

But how is shrinkage a good thing?

That’s because that negative outlook is far better than the one the URC issued three months earlier, which called for a contraction of 5.8 percent for the year.

The self-induced recession was brought about by a two-month “lockdown” across the country in which many companies closed altogether and others to a lesser degree.

Mississippi’s stay-at-home order issued by Gov. Tate Reeves was issued April 3 and ended on May 11. By June 1, all businesses could open, some with restrictions, especially restaurants and retail.

The latest URC outlook calls for the U.S. economy to shrink by 6.1 percent, .7 of a percentage point less than was predicted in the previous quarter.

Still, in the topsy-turvy pandemic world, “if realized, this decrease would be the largest annual contraction in the U.S. real GDP since 1946,” the outlook stated.

That was when the national economy was shifting from making “guns” at the end of World War II to making “butter” for domestic consumption.

Now the economy is trying to shift from coronavirus pandemic to normalcy, even though recent spikes in the virus has given policymakers puzzlement as to how to balance the two efforts.

The harshest outlook in Mississippi for 2020 is in the leisure and hospitality industry, which is projected to shrink 10.5 percent.

Already, key figures support that outlook.

Hotel occupancy rates in the first two months of the pandemic ranged from single digit percentages to the low 20s, according to two state lodging associations.

But the state’s average occupancy rate for the four-week period ending July 11 was 57.2 percent, still down 13 percent from the corresponding period in 2019, according to an association report.

The national average occupancy rate for the period ending July 11  was 45.3 percent, down 38 percent from a year earlier.

The smallest decline in Mississippi for 2020, 1 percent, is expected in wholesale and retail trade, the latter of which was the hardest hit by state and local government edicts.

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About Jack Weatherly