IWU Professor: Recession Is 'Inevitable,' COVID-19 Recovery Could Limit Its Impact

WGLT | By Eric Stock

Published March 30, 2020 at 4:53 PM CDT

Congress voted during coronavirus outbreak — In this image from video, members of the House practice social distancing as they sit on the floor and in the public gallery during debate on the stimulus package.

An economics professor at Illinois Wesleyan University said a recession is inevitable, but flattening the curve on the coronavirus would limit the economic damage.
Mike Seeborg said the best we can hope for is a short-term recession.

Illinois Wesleyan University economics professor Mike Seeborg says a recession is inevitable due to COVID-19 restrictions, but he said a swift response to the pandemic could limit its economic impact.

“If the pandemic goes on for a long enough time, then it’s going to be harder to bounce back from a steep recession,” Seeborg said.

Seeborg added the $2 trillion stimulus package Congress passed last week provides a "shock" to the U.S. economy, but only buys one or two months before the economy has to start running again.

“The economy really got slammed and is in sort of an induced coma and pretty soon we need life support,” he said. “This relief legislation will bring some life support to the economy.”

If that doesn't happen, Seeborg says Congress will have to pass another financial rescue bill.

While the $1,200 payments to most American adults will provide temporary help to lower-income workers and will flow money back into the economy within weeks, those who are still able to work also play a key role in the economic recovery by how much of the stimulus money they can spend, according to Seeborg.

“Immediate spending would be good at this time, I think, to stimulate local economies and small businesses,” Seeborg said.

Seeborg added the economic shutdown has disproportionately hurt minority populations as they work in higher percentages in the industries that will suffer the most, including retail, construction and hospitality.

“A lot of minority workers are hard hit by any recession. This one seems to be particularly hard on those people because of the sectors that are hurt the most," Seeborg said.

Seeborg added workers who lack college degrees are also disproportionately impacted by any financial downturn.

We’re living in unprecedented times when information changes by the minute. WGLT will continue to be here for you, keeping you up-to-date with the live, local and trusted news you need. Help ensure WGLT can continue with its in-depth and comprehensive COVID-19 coverage as the situation evolves by making a contribution.