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A Discussion of Economic Realities By Rebecca Scott | RJS Writing Service | May 10, 2021 Virtual Forum with Dr. Chris Thornberg, PhD, Founding Partner, Beacon Economics. Sponsored by: Travel Medford, May Forum D uring the May Forum, Chris Thornberg, PhD
“Back then, the entire economy was weakened. This time, it was a supply shock,” Thornberg said. “People didn’t stop going to restaurants because they had no money; they stopped because they couldn’t go due to a health emergency. When people are denied the ability to spend money where they want, they will spend it elsewhere.” Most poignantly, Thornberg said that during the Great Recession the government stimulus was too little too late. This time, it was too much too soon. Thornberg also described the current economic situation as a “winner/loser” recovery. Even though everyone was hit hard in the beginning of the pandemic, he noted that some industries have seen a lot of growth. “People may not have been able to take their family to Disneyland, so they bought a camper instead.” But for Thornberg, a labor shortage is the biggest issue facing the country. With low population and birth rates, he explained it will be difficult to fill future job openings when we aren’t replenishing the labor force with more workers. Thornberg also believed that federal policy overreactions will leave the country in a precarious position in the future. stimulate the economy,” Thornberg said. “A stimulus check is not free money. We are enriching ourselves on the backs of our children. It’s like walking into your child’s room and dropping a $20,000 IOU in their crib.” However, on a local level, Thornberg sees positive growth. He noted that unemployment rates in Medford are below 6%, and the city has one of the strongest economies in the state right now. Before ending his presentation, Thornberg wanted everyone to remember that the long term still matters. “There are still wildcards out there, but overall, there has been a lot of growth and room for more potential growth,” Thornberg said. n “It’s preposterous how much we’ve done, putting almost $5 trillion in the economy. For every dollar of lost income, the government put back $3. Unfortunately, giving people money when they can’t spend money does not
and Founding Partner of Beacon Economics, gave a realistic and insightful overview of what has happened to the economy because of the COVID-19 pandemic, and where it may go from here. Thornberg focused his talk on four areas: how the economic recovery was faster than expected; how the recovery will be even
Chris Thornberg, PhD and Founding Partner of Beacon Economics
more rapid due to fiscal and monetary policies; that there will not be a “new normal” in economics; and that the current housing market is sustainable. When discussing the government’s unprecedented monetary
policies that were a response to the pandemic, Thornberg was concerned with the potential aftermath. “It could cause dangerous instability in the financial markets, higher interest rates, public debt, or inflation.” Thornberg also addressed how people’s predictions about the post-
pandemic economic recovery were not even close to what happened. He said many people talked about a U-shaped recovery — similar to what we encountered in the last recession. “Realistically, a V-shaped recovery is the only outcome,” said Thornberg, adding that he anticipated a quick recovery. He then compared the Great Recession to what is happening today. In regards to housing, Thornberg said the subprime lending bubble led us into the Great Recession. This time, we entered the pandemic with a cool housing market and solid fundamentals. Additionally, Thornberg explained one of the largest differences between the Great Recession and the pandemic had to do with spending money.
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The Business Review | May 2021
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