(The Center Square) – The COVID-19 recession is already expected to be deeper than the Great Recession that ended in 2009, but the recovery could be quicker.
While economic recovery is expected after the COVID-recession, how fast the economy picks back up depends on several factors.
University of Illinois Springfield Professor Kenneth Kriz said there are two possible economic recoveries once the state lifts the government-imposed economic shutdown that was implemented to slow the spread of COVID-19.
“A V-shaped recession would be an immediate bounce back, that’s what the National Association of Business Economists see,” Kriz said. “Some other forecasters have looked at a U-shape, which would be a slightly longer recovery period.”
He said there was a lesson to learn from twelve years ago.
“In the last recession, we had states increasing taxes and cutting expenditures during the recession itself, which definitely lengthened the recession and made the results worse,” Kriz said.
Ultimately, Kriz said the longer the COVID-19 recession lasts, the greater the toll on state and local government revenue.
UIS professor Beverly Bunch said when the stay-at-home orders are lifted, not everything will get turned back on in a day.
“Clearly the governor has asked people not to plan large events,” Bunch said. “Conferences that are being scheduled for the fall are still in limbo whether they’re going to happen or whether they’re going to go online.”
She said a lot of it will also depend on the advice being given out by public health officials.
Kriz said the psychological impact from the Spanish Flu pandemic in the 20th century could be prologue.
“People didn’t feel safe going out in public,” Kriz said. “Now obviously that was a much different virus. I don’t think we can draw a direct correlation, but it’s going to take a while.”
Kriz said if there is a quick recovery, there could be a shift of consumption through the third and fourth quarters.