published on April 29, 2020 - 2:02 PM
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Numbers to express the impact coronavirus and shelter-in-place orders have dealt to businesses are still pretty nascent, but early data and intuition suggests hospitality, leisure and health care have been the hardest hit. Job losses due to self-quarantining and diminishing consumer confidence may bring the Central Valley unemployment numbers back to numbers politicians have been fighting to bring down since the Great Recession.

Nationally, hospitality and leisure have experienced losses upward of 85%, according to Mark Vitner, senior economist for Wells Fargo, who focuses on U.S. and regional economies.

“In a deep recession, construction and manufacturing might be off 10-15%,” said Vitner. “But nothing is off 85%.” And he said he was being “kind” in that estimate, he added.

Unlike the “slow burn” during the Great Recession, hotels and restaurants were forced to shutter suddenly. In 2018, leisure and hospitality made up 5.6% of GDP in Fresno County. Preliminary data show workers at restaurants, hotels and bars add 35,000 jobs to the 364,000 non-farm jobs in Fresno County.

Hotels are running at occupancies between 6-12% and have laid off workers. Numerous restaurants have reported laying off upwards of 90% of their workforce, keeping only a chef, a cook and sometimes a food runner.

Since the outbreak, 17 major conventions/events have been cancelled, with a total of 31,591 attendees, according to Layla Forstedt, president and CEO of Visit Fresno County. Those scrubbed conventions would have brought in $4.67 million in economic impact to restaurants, bars and other retail.

Nationally, retail sales in March fell 8.7% — an “unprecedented decline,” according to the Associated Press.

In the worst drop of the Great Recession — November 2008 — that number only dropped 3.9%.

In Fresno County, retail trade makes up 6.3% of GDP.

Regional numbers for jobless claims come out Friday, before this story went to print, but Vitner could see job losses reaching 37,000 — if Fresno’s share of unemployment in the past rings true when official March unemployment numbers come out. That could mean unemployment rates back to over 10%, sending the area back to unemployment numbers seen in the Great recession.

“All these numbers look really high when you look at them because we never really saw anything like this,” said Vitner. “I’ve been doing this since 1984. We’ve never had numbers like this.”

The CARES Act passed by Congress and signed by President Trump allocated $349 billion for small business through the Payroll Protection Program, executed by SBA-approved lenders.

“While it is difficult to pinpoint the immediate and prolonged economic impacts endured by COVID19, the destructive effect that this pandemic will have on our economy is already being felt,” said Will Oliver, vice president of business services for the Fresno Economic Development Corporation. “For those businesses having to close their doors, it is apparent that the outflows of federal relief dollars cannot come soon enough and are anemic at best.”

On April 14, 70% of that money had been claimed, with the remainder running out in the next few days, according to Axios.com.

A survey sent to Central Valley businesses by The Business Journal found that of the 27 businesses that replied and said they had applied for funds, one said they received funds. The survey was sent out April 9.

In other parts of the economy, commercial building in the Central Valley has plummeted. According to the Construction Monitor, commercial permit valuations totaled $5.55 million between April 2 to April 8. In the same week last year, the value of all commercial permits in Fresno, Tulare, Kings and Madera counties totaled $29.59 million.

Forty-three permits were filed to build single-family homes that week, compared to 87 in 2019. In all, construction in the Central San Joaquin Valley totaled $36.96 million, compared to $60.72 million in 2019.

Since this article was originally published in the April 17 edition of the Business Journal, the Construction Monitor updated its permit numbers. Total permit valuations between April 2 to April 8 dropped 35% from the same week in 2019.

In residential real estate, there have been 538 closed sales in Fresno County, according to Danyelle Conner, Realtor with London Properties. In the same time last year, 675 homes closed. Most of these sales were from escrows that began before shelter-in-place orders, but home sales are still happening. Conner says she sold a home last week to a buyer who had only seen the home through Facetime and online.

Some bright spots are shining through, however. Initiative Foods, a baby food manufacturer in Sanger, opened a second shift and is also processing on Saturdays to keep up with demand, according to Oliver.

The T-Mobile Customer Experience Center in Kingsburg is still moving forward, which will reportedly bring 1,000 jobs, according to Oliver. T-Mobile and Sprint finalized their merger in March, a move the new call center was hinged on.

Global trade will fall to levels not seen since 1945, says Vitner. This will put pressure on manufacturers who rely on global trade.

Agriculture makes up 9% of Fresno County’s GDP. And while an initial rush at grocery stores helped boost produce sales, the close of foreign markets could make it harder to unload specialty crops such as citrus.

Vitner, as well as others predict that the economy will turn back around this year, perhaps as early as July. Half of jobs lost could be brought with the remainder being made up in coming years. But some things will change. For example, before the coronavirus outbreak, people spent more money eating out than buying food at grocery stores. “We’re not going to see it flip back,” said Vitner. Gov. Newsom said he was doubtful public gatherings could reopen this year.

“Odds are it’s going to get back on track some point this year,” said Vitner. “We’re not going to replace all the jobs that were lost.”

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