State Education Officials Receive Economic Update from UM’s BBER
Montana’s Superintendent of Public Instruction Elsie Arntzen held a ZOOM seminar on Tuesday for education officials throughout the state presented by Dr. Patrick Barkey, Director of the University of Montana’s Bureau of Business and Economic Research.
The seminar focused on the effect of the COVID pandemic on Montana’s economy.
Barkey said the economic shutdown brought the burgeoning American economy to a screeching halt.
“What happened is consumers stopped spending money,” began Barkey. “If you look at the US economy, and you looked at why the economy went into reverse first in the first quarter, but then very strongly in the second quarter, and you just take a look at consumer spending, it had up till 2020 been a source of dynamism for the US economy. They grew every single quarter, until we got to 2020 and then it shrank and it shrank drastically.”
Barkey drilled down to get more details about the economic collapse.
“So what happened, of course, is that consumer spending cratered,” he said. “It was mostly for services. It was a peculiar report. It was a quarter in which the economy suffered as I showed you one of the worst quarterly performances ever, and yet it was a quarter which in that same three months, consumers who stopped spending actually had strong increases in their income, mostly because of what happened through the federal government transfers and UI (unemployment insurance) payments.”
Barkey said the economy is turning around almost as quickly as it collapsed.
“Currently, forecasters think that the economy is going to grow by 17% in the third quarter, of course, that's just a forecast and we're still in the third quarter, but it went down 33% and now up 17%,” he said. “This is an economy like nothing we've ever seen. But what this tells us is that when the economy switches back on, its growth can be just as impressive. Almost as impressive as when it turned off.”
Looking ahead, Barkey said consumers are more optimistic as the economy turns around.
“We have compared to just a couple months ago, there's more optimism about 2020,” he said. “We've seen consumers come back and we've seen some hiring; not enough to overcome the big declines, but still pretty good performance, relative to how far we fell. So in 2020 people are a little more optimistic about it.”
Barkey concluded by stating that the optimism is largely short term due to the mistaken notion that there might be a quick end to the pandemic.