By John Schneidawind, vice president, public affairs, ARTBA
The economic downturn caused by the COVID-19 pandemic has devastated world economies in ways unlike previous slowdowns, former Federal Reserve economist David Wilcox said in his Oct. 19 keynote address to ARTBA’s national convention. The impacts on the transportation construction industry are still developing.
Wilcox, who spent 17 years as a top economist and senior advisor to three successive Federal Reserve Board chairs, praised policy makers and legislators for their quick fiscal policy response last spring just as the pandemic forced a shut-down of the U.S. and world economies. But with COVID infections rising, the initial stimulus legislation expiring, and succeeding legislative aid less likely because of congressional gridlock, the coming weeks and months are “quite tenuous,” Wilcox said.
“We simply don’t know what the short-term will provide,” said the nonresident scholar at the Peterson Institute for International Economics. “We are at an interesting and sensitive moment. The policy process has ground to a halt, while the Fed expended most of its ammunition right away.”
Wilcox noted two main concerns:
the distribution of COVID-induced job losses is different from previous slowdowns, hitting lower-income groups much harder than the rest of society, “a separation experience that is quite dangerous” ; and
state and local government limits to deficit-finance their way out of recession.
The effects of the pandemic on the overall construction sector are mixed, Wilcox said. Home building has recovered but heavy construction job losses are sizable. The shift to virtual meetings and working at home is creating “stranded assets” in commercial real estate “that are not well-suited to a post-Covid environment.” While it’s “premature to figure out what the ‘new normal’ will be in office settings, that fact alone will dictate changes, including for ARTBA members,” he concluded.