By: Natalie Gochnour
Originally published in the Deseret News.
The onslaught of information about the coronavirus can do as much harm as good, particularly when it comes to the economy. In what some have called an “infodemic” Utahns like me are asking questions:
- How do I keep myself and the people I love safe?
- What sources of information should I trust?
- Is our response proportionate to the risk?
- Are we overreacting and hurting our economy in the process?
- How do we synchronize the public health imperative with sound economic reasoning?
I can’t answer these questions with precision, but it’s clear the virus will impact some of us, while an economic slowdown will impact all of us. It’s important we take calm and rationale actions to minimize the economic impact even as we follow public health guidelines.
With this in mind, I’ve crafted six economic rules to help Utah during a pandemic. The rules are the economic equivalent of hand-washing and not touching your face.
1. Follow the guidance of trusted sources: In a public health emergency the sources of choice are the Centers for Disease Control and Prevention and the Utah Department of Health. It is NOT the tsunami of information, misinformation and rumors circulating on social media. Consider it a blessing of your citizenship that the CDC and Utah Department of Health are on your side. Listen to them and sync your economic actions with the public health guidance they provide.
2. Stay engaged with the economy: Look for ways the economy can work for you even with uncertainty. With 30-year mortgage rates at 3%, it may be a great time to refinance. With stocks plummeting, it may be a good time to buy. With international and domestic travel limited, consider a “staycation.” With global trade stifled, buy local. Be purposeful and look for opportunities that benefit you and the local economy. Don’t hunker down.
3. Keep the long term in sharp focus: The short term will pass. Utah has endured two recessions over the past 20 years. In 2001-02 we withstood the triple hit of the dot.com collapse, 9/11, and a post-Olympic slowdown. For the first time in 37 years, Utah lost jobs on a year-over basis in 2002. But the downturn was short and recovery robust.
In 2009-10, we survived the longest, deepest and broadest recession since the Great Depression. This time jobs in the Utah economy contracted for two consecutive years, but then the economy entered its longest expansion in state history.
There is a lesson here: Markets correct, recessions end and prosperity returns.
4. Prepare so you don’t have to panic: This is the motto of Utah’s business community under the leadership of the Salt Lake Chamber. It works for individuals as well. Look for ways to diversify income sources and manage costs. Save for a rainy day. Reduce debt. Have a plan.
5. Be confident in Utah’s core strengths: I can’t think of a better place than Utah during a public health emergency. University of Utah Health, Intermountain Healthcare and others provide superb care. Utah’s fiscal house is strong with approximately $900 million set aside for a “rainy day.” Utah’s interfaith community operates one of the largest and most effective private welfare systems in the world. These and other core strengths lesson the impacts and boost our confidence.
6. Give of your means: Downturns impact people disproportionately. Some work in stable industries, others do not. Some have the means to save and invest, others do not. Some have food security, others do not. Some have the resources to stock up needed supplies, others do not. Downturns are a time to “lift where you stand” and help others by looking after your neighbors, donating to charities and serving those in need.
If we follow public health guidelines and these common-sense economic rules, we will give Utah the best opportunity to outperform other states during this challenging economic time.
Natalie Gochnour is an associate dean in the David Eccles School of Business at the University of Utah and director of the Kem C. Gardner Policy Institute.