“We do have a conflict between the economy and health,” Walden said. “If you allow more businesses to reopen, you are going to add to the economic activity of the state, which would help increase income and jobs. But you have to balance that with concerns about the spread and the deaths.” Michael Walden
N.C. State University Economist
by Julie Havlak, Carolina Journal News Service
RALEIGH — Gov. Roy Cooper will keep North Carolina in his modified Phase Two of reopening for another five weeks.
That could worsen the state’s economic problems. One of the state’s top economists say North Carolina’s economy might take two to three years to recover.
Cooper paused the state’s reopening at a Wednesday, Aug. 5, news briefing. Bars and gyms will remain closed. Restaurants, salons, barbershops, and tattoo parlors can operate at 50% capacity. Mass gatherings are capped at 10 people indoors and 25 outdoors. Restaurants and breweries are banned from selling alcohol after 11 p.m. Face coverings are required in public spaces where social distancing isn’t possible.
Some 40% of businesses targeted with restrictions for health risks won’t survive, says Michael Walden, N.C. State University economist and member of the governor’s N.C. Economic Recovery Group.
“We do have a conflict between the economy and health,” Walden said. “If you allow more businesses to reopen, you are going to add to the economic activity of the state, which would help increase income and jobs. But you have to balance that with concerns about the spread and the deaths.”
Walden predicts North Carolina’s economy won’t recover until 2023, when it will still face a slightly higher unemployment rate. He believes 15% to 25% of all U.S. businesses won’t make it through the pandemic and the shutdowns.
Cooper said he was concerned about increasing COVID-19 cases. North Carolina had 22,145 active, confirmed COVID-19 cases, 1,167 hospitalizations, and 2,050 deaths. Patients 75 or older accounted for 57% of deaths from COVID-19, while adults ages 65 to 74 made up 22% of deaths, according to state data on Wednesday, Aug. 5.
“Stable is good, but decreasing is better,” Cooper said, comparing his approach to a dimmer switch. “We did not reopen too much, too quickly, which health experts say can lead to a devastating increase in cases, sickness, and death, and can lead to having to go backwards.”
Since March, 1.2 million people have filed for unemployment and received $6.75 billion in state and federal benefits. North Carolina’s seasonally adjusted unemployment rate was 7.6% in June, down from 12.8% in May, but still twice the rate before the pandemic hit.
North Carolina was one of seven states that kept gyms closed, as of Aug. 5. Thirteen other states also closed bars, while others have levied restrictions on capacity or indoor dining, according to the New York Times tracker.
Cooper gave schools three possible reopening plans, but many have opted to begin the school year virtually.
Low-skilled workers will lose their jobs to an acceleration in automation, as companies seek to guard against future infections and shutdowns, Walden says.
“This virus is dramatically changing the economy,” Walden said. “Now, there’ll be other businesses that will start up. … But this will cause a lot of folks to lose their jobs, across the income range, but especially low-income people. We’re looking at a massive national retraining necessity for workers.”
Republicans have criticized Cooper for shuttering businesses, and passed multiple bills to reopen bars, gyms, bowling alleys, and amusement parks. Cooper vetoed them.
Cooper has faced a series of lawsuits from churches, hair salons, gym owners, strip clubs, trampoline parks, a racetrack, and bowling alleys, a rural town, and the N.C. Bar and Tavern Association. He is also being sued by Republican Lt. Gov. Dan Forest, who argues that Cooper overstepped his authority when he shut down businesses without consulting the Council of State.
Cooper wouldn’t commit to reopening in September. Responding to a reporter’s question, Cooper suggested he may not allow further reopening until a vaccine is approved — which may not arrive before 2021.
“I hope that we will, because there are ways to control the spread of the virus,” Cooper said. “If people will do the things that we continue to tell them to do — wear masks, social distancing, washing frequently — we can drive down these numbers. … We would hope that we could move along with our phases, even before a vaccine is in effect.”