‘We don’t know how nasty it’s going to get’: Sonoma State economist suggests boosting consumer confidence to buoy economy | TheUnion.com

‘We don’t know how nasty it’s going to get’: Sonoma State economist suggests boosting consumer confidence to buoy economy

Jobs lost in Nevada County, comparing March 2019 to March 2020 numbers. The unemployment reports for April are going to look a lot worse, according to Sonoma State University professor of economics Robert Eyler.
Submitted photo

As goes consumer spending, so, too, does the economy.

That’s at least the thought process of many economists who note that when people are not spending — shopping infrequently, buying less items, perusing fewer restaurants, not getting a haircut — the economy begins to halt, and a recession is more likely to loom.

This sentiment was echoed by Robert Eyler, a professor of economics at Sonoma State University. Eyler in a Tuesday morning Zoom call with 25 Nevada County attendees discussed how ramifications from the pandemic have altered the national, state and local economies, and what efforts can be made to ameliorate the damage. The call, coordinated by the Alliance for Workforce Development, Inc., included local business owners and government officials.

Nationally, statewide and locally the economy is experiencing recession-like numbers due to everyone staying at home to prevent deaths from, and further outbreaks of, COVID-19 cases. The national unemployment rate now sits at 14.7%, with 20.5 million jobs lost in March.

In comparing March numbers in Nevada County from 2019 to 2020, Eyler said the biggest downturns occurred in the manufacturing, education, health services and government sectors, with 260 total jobs lost over that time period.

But Eyler assured the audience that the data, especially for April, is going to get worse, and that local city governments are going to be severely hurt as dollars from a previously expected tourism season do not manifest.

“The second quarter is going to be very nasty,” he said. “So we have to prepare for some very weird numbers.”


While it’s a difficult period to navigate, Eyler offered a few rays of hope if physical distancing remains in effect, and if the cannabis and construction industries can continue operating.

“We don’t know how nasty it’s going to get,” said Eyler, noting that the pain will likely drag for some time. “What we’re trying to do is reduce the depth and shrink the duration.”

In order to ameliorate the economic damage, Eyler suggested keeping consumer confidence high and keeping jobs and incomes stable.

Nevada City resident and visiting professor at Vienna University of Economics and Business Gary Zimmerman agreed.

“The unemployed and those worrying about unemployment are not big spenders,” he said in an email. “If they are not confident that the pandemic is over, they are not as likely to be shopping and spending, traveling, going out to restaurants and events.”

Zimmerman suggested the federal government do something similar to European countries like Germany, where the country has paid firms to keep workers on company payrolls, possibly allowing for a smoother recovery.

While the current situation, where the federal government is distributing more money via unemployment insurance, is not necessarily bad, Eyler noted that it’s still difficult for low wage workers in Nevada County.

“(Unemployment insurance) does not solve hunger or rent,” he said.

Eyler also suggested that, in an economy more dependent on the internet, more people may flock to Nevada County for better living conditions, while they work remotely, once the pandemic subsides.

Zimmerman supported this sentiment, but highlighted the importance of making broadband accessible, especially in more rural areas of Nevada County.

“Whether workers move to rural areas also may depend on the internet infrastructure and potential business support and its adequacy in rural areas,” he said.

To contact Staff Writer Sam Corey, email scorey@theunion.com or call 530-477-4219.

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