As Wisconsin began to take tentative steps to reopen its economy in mid-May 2020, The UW Now Livestream turned its attention to examine macroeconomics and economic policy during the COVID-19 pandemic. Wisconsin Foundation and Alumni Association president and CEO Mike Knetter — an economist and former dean of the Wisconsin School of Business — spoke with professors Noah Williams and Ananth Seshadri, as well as Brad Tank, chief investment officer of Neuberger Berman, and the four discussed the effect that the outbreak is having on the national and Wisconsin economies.
“COVID represents an extremely large shock to supply and demand,” said Seshadri, the Todd E. and Elizabeth H. Warnock Distinguished Chair of the Department of Economics. The effects of the pandemic cross many aspects of national life, and as a result, unemployment is rising to levels similar to the Great Depression.
“We’re seeing job loss on the scale and the speed that we’ve never seen before,” said Williams, the Juli Plant Grainger Professor of Economics at the UW and director of the Center for Research on the Wisconsin Economy. He noted that the recent national employment report probably undercounts the number of Americans who are out of work. The report estimated an unemployment rate of 14.7 percent, while he believes the real rate may be well above 20 percent.
Not all of the signs are negative, however. Tank noted that the efforts of the Federal Reserve helped forestall a market meltdown. “The good news is, post financial crisis, [the Federal Reserve] had a playbook,” he said “They used that playbook in a matter of weeks, and then they went beyond it… We’ve seen a meaningful bounce in financial markets, very much across the board.”
Each of the three made a brief presentation, and then they answered questions from the viewers who watched the event live on YouTube.
All of the speakers said they expect that the U.S. and Wisconsin economies will have a recovery, though it will probably come much more slowly than the crash. Seshadri said that he thought the recovery curve might look like the Nike swoosh logo: a steep drop followed by a long, gradual rise.
Williams also noted that some industries will have a much more difficult time coming back, and in particular he referenced leisure and travel, where unemployment is nearly 50 percent.
“When the crisis started, what was the first thing I did?” he said. “Cancel travel plans.”
The UW Now Livestream is a response to the COVID-19 pandemic. Though originally planned as a series of events in cities across the United States, it is instead offered via YouTube and will continue through the spring. The next event will be May 19.