Now that many businesses in Texas are slowly reopening, the idea that we are on the way to returning to something even somewhat normal might be on the minds of many people.
Maybe so, but it looks to be a long, long road to travel.
The latest economic report showed the U.S. economy shrank at a 4.8 percent annual rate during the first quarter as the coronavirus pandemic shut down much of the country.
Consider this: During that first quarter, most businesses and industries were operating, although in many cases with reduced sales and production, during January and February. March is when the door slammed shut on the economy.
But economists point to expected coronavirus flare-ups that could force reopened businesses to shut down again or keep some closed businesses from reopening at all. With so much of the economy paralyzed, the Congressional Budget Office estimates the economy this quarter will shrink 40 percent.
Island businessman Tilman Fertitta predicted Galveston Island’s economy won’t fully recover until 2022. We fear he might have hit the nail on the head.
“Things are going to be different for a long time,” Fertitta told The Daily News on Wednesday.
Adding to the coronavirus effect on the economy, the oil industry took a huge hit in the first quarter. But the industry was facing challenges even before the coronavirus swept in.
Prices were low because of a trade war between the United States and China. As lockdowns began to increase around the world because of the spread of the coronavirus, oil use plummeted and prices fell. Then Saudi Arabia, in a power struggle with Russia, began flooding the market with oil, pushing prices down even further.
Locally, Kemah’s economy has been devastated during the coronavirus outbreak. The city has the Kemah Boardwalk complex and largely is defined as a dining, shopping and entertainment destination — sales and beverage taxes make up more than 85 percent of the city’s annual budgeted tax revenues.
With the businesses in the city slowly being able to reopen at reduced capacities — to ensure that social distancing requirements are met, restaurants are only allowed to seat 25 percent of their maximum capacity — a quick turnaround of the city’s economy seems unlikely.
While a quick rebound has not been ruled out — anything can happen — the likelihood of a long recovery is the vastly greater outlook.
Get ready, at least economically, for the long haul.
• Dave Mathews