COVID and the economy: The Good, The Bad and The Ugly

Image by Steve Buissinne from Pixabay

By Mike Sunnucks | Rose Law Group Reporter

When it comes to the economic impacts and aftermath of the COVID-19 pandemic, the glass is very half full — or very half empty.

It just depends on the sector and market.

“Greater Phoenix is actually the best performing major market in the country,” said veteran Arizona economist Elliott Pollack. He expects more growth here as businesses and workers exit places hit hard by COVID and social unrest.

“I think you will see continued moves out of California, out of Seattle and Portland, out of Chicago and New York City, out of Atlanta and we will benefitting from that,” said Pollack during a New Virtual Power Lunch hosted by Rose Law Group on Friday.

Pollack said New York lost 1 percent of its population in a month with as it deals with social unrest, a rise in crime as well as having the most COVID-19 deaths in the U.S.

But Pollack expects as many as 30 to 35 percent of businesses to shutter in the aftermath of COVID-19 and government mandated closures. He said that will disrupt supply chains.

Pollack also worries about service workers impacted by COVID closures and what will happen to them without a new federal stimulus package. Efforts to pass a new COVID stimulus have stalled in Congress though President Donald Trump has executive order extended extra unemployment insurance and suspending payroll taxes.

“A lot of people are going to run out of money. They are just out of luck,” Pollack told the Rose Law Group virtual forum.

Joe Blackbourn, president, CEO and founder of real estate investment firm Everest Holdings, said sectors such as retail, hospitality and commercial office space are all getting hit hard by COVID.

“You can’t get out of the way of the devastation there,” said Blackbourn during the Rose Law Group forum.

“The demise of malls is happening faster now,” Blackbourn said.
But he said COVID has magnified the rise of e-commerce and that is propelling more demand for logistics and distribution space. Blackbourn said there is between 13 million and 14 million square feet in new industrial and warehouse development planned or underway in metro Phoenix.

That includes Amazon which announced a 3,500-worker expansion of its regional footprint including growth a Tempe technology hub and 3,000 new fulfillment and logistics jobs.

The regional housing market also continues to see strong buyer demand spurred by record low mortgage interest rates even during the COVID pandemic and Phoenix’s record setting summer heat.

Heather Davenport, vice president of land acquisition and development for Woodside Homes, said the homebuilder has seen record sales in metro Phoenix since reopening in mid-May after the first reopening of the Arizona economy.

Davenport said home builders are also having to respond to buyers wanting more space for home offices or online school because of COVID and some of its short and long-term impacts.  “We are integrating all those into our new products,” Davenport said.

The cannabis business (both legal and medical marijuana) is also seeing record sales during the COVID pandemic, according to Ryan Hurley, general counsel for Copperstate Farms.

The company is the largest legal marijuana grower in the country and operates dispensaries.

“Consumers are definitely spending their money on cannabis and medical cannabis,” Hurley said.

Hurley said, however, the cannabis industry has run into challenges with capital markets even with its growth.“We have record sales and we would like to grow more but getting capital in the door is a challenge,” he said.
Pollack said the economic situation remains uncertain nationally and in Arizona.

“We’re in the blind here. We don’t know when there is going to be a therapeutic. We don’t know when there is going to be a vaccine. We don’t know how many people will take the vaccine,” Pollack said.

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