Experts weigh in on Bay Area’s recovery
‘If we have to close the place down again, I'm not going to survive’
California could be on the path to recover from the COVID-19 recession even faster than the United States as a whole, but experts warn that rosy predictions about a surging economy depend on one key assumption: no surprises.
“The potential risk in the short term is that the abatement of the pandemic doesn’t happen as we have assumed,” said Jerry Nickelsburg, director of the UCLA Anderson Forecast, which recently released a report anticipating strong nationwide economic growth.
Vaccinations are continuing, although a pause on the one-and-done Johnson & Johnson shot stymied efforts to vaccinate vulnerable residents. Health experts have also expressed concerns about the introduction of more transmissible variants — mutations of the coronavirus first detected in New York, the West Coast and abroad have recently been identified in the Bay Area, raising the specter of another surge in cases.
Another wave and subsequent retightening of lockdown rules could be devastating for businesses that have managed to make it through the sharp economic decline caused by the pandemic.
“The year past, forget it. It’s not recovered,” said Theodoros Matheou, one of the owners of the Country Way restaurant in Fremont. “If we have to close the place down again, I’m not going to survive.”
Matheou said outdoor dining has helped bring in some revenue but by 3 p.m. it’s too cold and windy for many customers. He’s hopeful that with vaccinations, more customers will feel comfortable eating indoors again.
Nickelsburg also expects demand for bars and restaurants to pick back up. Although unemployment remains high — 8.3 percent in California in March, almost double the 4.5 percent unemployment rate back in March 2020 — Nickelsburg said unlike in previous recessions, those food service workers will soon have jobs waiting for them.
“They will come back when people are no longer afraid to and are allowed to go back to restaurants and bars and the like,” he said.
Even a move to more remote work won’t threaten the Bay Area’s economic recovery. Even if people commute into San Francisco less often, they will continue shopping and going out to eat, just a bit closer to home.
“Maybe you go out to lunch in Dublin instead
of going out to lunch in San Francisco,” he said.
Even tourism, which was among the hardesthit industries during the pandemic, offers some silver linings. International tourism likely won’t recover for a while, Nickelsburg said. But more Americans are getting ready to travel and, with other countries still struggling to control COVID-19, many more of them will likely vacation domestically in places like the Bay Area.
The UCLA Anderson Forecast estimates California’s unemployment rate will be an average of 6.8 percent this year, dropping to 4.1 percent by 2023. Recent economic data has been so positive, the organization increased its prediction for national GDP growth in 2021 to 7.1 percent, followed by 4.6 percent growth in 2022.
That economic improvement is still not here for many Californians, but Matheou, in Fremont, has seen one sign of a tightening labor market, at least for workers with restaurant experience.
“I lost workers because they got a different job,” he said. “Plus, the unemployment (insurance) is more than I pay sometimes.”