GVSU economist says recession caused by COVID-19 will be a little bigger than 2008-09 recession

It will be June before there is any broad-based restart of any economic activity, said Paul Isely, associate dean and professor of economics in the Seidman College of Business at Grand Valley State University.

State health officials have said the number of COVID-19 cases in Michigan will peak in early to mid-May. Based on that, Isely said the West Michigan economy will now see a decline larger than $3 billion. 

"Right now, this recession looks like it will be a little bigger than the 2008-09 recession," he said. "About 41 percent of the $3 billion decline is the slowdown in manufacturing and 26 percent is entertainment, food services and retail."

Isely said about 10 million people across the country have applied for unemployment during the last two weeks, matching the level of unemployed people in 2009-10. More people are expected to apply in the next two weeks.

"The good news is many of those people have been able to apply for unemployment benefits and most, not all, will be helped by that aid," he said.

Isely said the crisis caused by COVID-19 will be something economists haven't seen before in modern times. 

"But, it's still looking like there's a possibility of a fast tail on this, meaning manufacturing will be able to ramp up relatively fast — in one to three months — once we get into late May or June," he said. "And that means this recession, unlike the last three recessions, has the possibility of us recuperating many of those job losses in a relatively short period of time in the course of the year."