COVID-19 delivers one-two punch to economy

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The COVID-19 pandemic is causing New Jersey employees to work from home, resulting in major impacts to New Jersey businesses. Government leaders are asking residents to stay inside their houses.

Luis Portes, a professor of economics at Montclair State University, explained that COVID-19 is impacting the economy of New Jersey in more than one way: The immediate human impact is people are wary about getting sick.

“It is a double shock to the economy,” Portes told NJBIZ. “We have on one hand a shock to production in which businesses do not have access to their workers. They have to sit idle in industries that are on the front lines. Then on the other hand, we have a shock to spending.”

“As of now, I hope we are at the end of the first stage where all the impact is coming through, the magnitude and geography of it,” Portes said. “Eventually we will determine the right policies for our recovery.”

Economists use unemployment claims to assess the economy.

Portes said that last week unemployment claims rose from March 7 to March 14, especially in Washington State, California, Nevada and New Jersey. The sectors that are most impacted are leisure and retail, Portes said.

Most salaried workers have the ability to work from their homes, he said. But New Jersey employers in the pharmaceutical, life science and logistics industries require a physical presence.

“We are in a new statistical model that is not predictive enough because this is not business as normal,” he said.

CitiBank said the current quarter of the year would have a gross domestic product that is 10 percent lower than the previous quarter. Goldman Sachs said it would be 20 percent lower.