2,000 jobless claims filed in single day
It was a fairly normal week at the state Department of Labor until Friday, when the lines lit up. By 6 p.m. the number of new jobless claims approached 2,000 for the 24-hour period.
A typical day? More like 500 or so, spokesman Steve Jensen said.
Boom. It’s here.
A few minutes after that tally, across the state at the upscale 85 Main restaurant in Putnam, the lines most certainly did not light up. I spoke with co-owner Brian Jessurun for 20 minutes at the dinner hour. In that time, two small groups tricked in.
“Normally on a Friday night we’re mobbed, it’s standing room only,” said Jessurun, who owns four restaurants, including two near UConn. “I think it really hasn’t resonated with people until right now.”
The mild winter has made for a great year so far, he added. “But we’re about to have the rug pulled out from under us.”
That means all of us, not just restaurants and shuttered music halls such as the historic Toad’s Place in New Haven, the most obvious places to see it. The coronaviris crisis has plunged the state, the nation and the world into an economic downturn that walks, talks and inflicts pain like a global recession.
And even though a recession has a technical definition that this doesn’t meet yet, make no mistake.
“The issue is not when and whether we’ll suffer a recession, but when and how strongly we will recover,” said UConn economist Fred V. Carstensen. “Effectively, employment is plummeting as is value creation.”
On Monday, the state will apply for emergency loans for businesses, backed by the Small Business Administration at 3.75 percent interest — part of a $50 billion disaster relief tranche Congress and President Donald Trump are making available. That’s a recession move, on the order of some of the Obama-era recovery programs.
How long might it last? No one alive has ever seen a recession ignited by a global pandemic, at least not on the scale of this crisis.
What’s weird is that the collapse in consumer demand — a hallmark of any recession, as confidence and income fall — was ordered by public health officials. France, Spain and especially Italy are in lockdowns — far more severe than any recession when it comes to curtailing spending.
And while we have data to tell us how markets behave, we’re flying utterly blind when it comes to the root question in this one: How much infection, how much sickness, how much death will COVID-19 exact?
For Don Klepper-Smith, the start of the recession is past-tense.
“There’s every evidence that we went into recession in March of 2020. We’ll see where it goes from here,” he said. “I think this stands to be at least as bad as the last one, which was 18 months.”
If you somehow missed 2008-09, that would be the Great Recession, the worst downturn since the Depression in the 1930s. Surely coronavirus couldn’t precipitate a recession as bad as that, at a time when the economy, and the stock markets, were defying odds with no likelihood of a sharp downturn in 2020.
Klepper-Smith, of DataCore Partners, and Carstensen, a UConn finance and economic professor, have both observed the state for decades. Give us a few weeks to start seeing data, they said, but the result is already clear.
David Lehman doesn’t have the luxury of waiting for numbers. As Gov. Ned Lamont’s economic development czar, the former Goldman Sachs partner spent the last week talking with bankers, feeral officials and business owners about relief.
Immediately, the state ordered a three-month hiatus on all the loan in the state’s Small Business Express prtfolio — $113 million for 800 borrowers. Lehman takes some solace in the fact that banks have plenty of money to lend, unlike in a typical downturn when the flow of cash — known as liquidity — dries up.
Jessurun, who lives in Pomfret, was one of those borrowers, with a $200,000 state loan. He’s grateful fior the hiatus and, as important, the attention from Lehman’s Department of Economic and Community Development. “That’s actually a very proactive branch of the state,” said Jessurun, who’s not shy about criticizing Connecticut policy.
But it’s not enough. On Friday, he trekked to his bank and maxed out his line of credit, at 4.7 percent interest. That’s a backstop for all the business he’s suddenly losing.
It’s still not enough. He planned to spend the weekend preparing to sell his 2,700-square-foot house and move into a small cottage he also owns.
That’s the cascading nature of these things in an economy that depends on instant movement, on-time parts, relentless consumer spending. Consider: A good year of growth is up 3 percent from the year before. Down 1 percent is a recession. So if you spend $96 instead of $100, and I do, and we all, do, that’s all it takes.
Call it the toilet paper syndrome. We don’t know why everyone is stocking up on the indispensable rolls, but they are, and suddenly we’re, um, wiped out.
Coronavirus caused it but as Lehman put it, “Once something stops it’s very hard to restart it.”
Jessurun lives by that week-in-week-out need to feed the beast, as he feeds Manfield and Pomfret. “Our UConn businesses are in real trouble,” he said, referring to the Dog Lane Cafe at Storrs Center and Fenton River Gril. “We’re not sure if it’s even survivable.”
And yet, he’s not one of the business owners sending people to the labior department for unemployment benefits — which the state has now extended to include people not looking for work in temporary furloughs. Instead, he’s doling out fewer hours so every employee draws some pay — so far.
That’s the same idea at Yorkside Pizza and Restarant in downtown New Haven, where owner George Koutroumanis said business is off 35 percent from coronavirus — even accounting for the Yale University spring break. “They all have families, they’ve been with us for 10, 20, 30 years,” he said, looking around at a staff that outnumbered customers for a while as I at there Saturday night, writing this column.
Just as quickly, a group of 14 young women and one man came in and commandeered the back table — in close quarters, not what I’d call social distancing. Koutroumanis’ face lit up as he welcomed the Yale crew team for their last dinner.
“We’re going to get through this,” he said.