Pacific Premier Bank hosted an economic conference about the post-COVID economy, presented by Dr. Christopher Thornberg, Founding Partner of Beacon Economics and Director of the UC Riverside School of Business Center for Economic Forecasting and Development. Dr. Thornberg discussed the pandemic recession and what to look out for as the U.S. economy recovers.

As the world’s COVID-19 cases near 100 million, with 2 million deaths (20% of which are here in the United States), economists are still debating over the economy’s projected speed of recovery, which Dr. Thornberg believes is dependent on the speed to control the virus and the long-run damage it has done thus far. Vaccine rollouts are in process across the world while possible new strains are being monitored.

Compared to the Great Recession that ended in 2009, our pre-pandemic economy was in better shape: It was growing steadily, debt levels were moderate, etc. The COVID-19 pandemic recession brought about a supply shock (for example, hand sanitizer and toilet paper shortages early on) that was driven by both consumer fear and government mandates. Businesses and individuals faced loss of revenue/incomes. The impact of this recession, according to Dr. Thornberg, was better offset by government stimulus (including PPP loans, direct money transfers, unemployment insurance, etc.). 

Throughout the pandemic, there have been shifts in both personal and business behaviors. Retail has mostly shifted online vs. in-person. There’s now more flexibility for employees to engage in remote work. Industrial transport has become more local rather than global. Some other good news is that there hasn’t been a permanent change in consumer behavior.

Dr. Thornberg’s baseline predictions for the post-COVID economy include:

• Macroeconomics: A “V” outcome where the speed of recovery is dictated by the pace at which vaccines are rolled out.
• Unemployment will fall below 5% before the end of the year (currently at 6.7%).
• There will be moderate upticks in debt distress.
• The biggest lags will continue to be in the retail, restaurant, and tourism industries.

According to Dr. Thornberg, the long run still matters as the economy continues to recover from the pandemic recession. Some challenges to pay attention to include:

• New variants of the virus vs. vaccine rollouts
• Interest rates and inflation
• Political turmoil
• Miserabilism (defined as a philosophy of pessimism)

Access Dr. Thornberg’s complete presentation here.

Access a recording of the presentation here.

The views, thoughts and opinions expressed during this presentation are those of Dr. Christopher Thornberg and Beacon Economics, LLC. They do not purport to reflect the views, thoughts or opinions of Pacific Premier Bank. Pacific Premier Bank makes no representations as to the accuracy, completeness, correctness, suitability, or validity of any information presented and will not be liable for any errors or omissions in this information. Further, the information presented is for general informational purposes only.