Local economy will experience shallow recession as result of COVID-19, says GVSU expert 

There is now enough data and information on the impact of COVID-19 (coronavirus)to understand and better define where the local economy is headed, said Paul Isely, associate dean and professor of economics in the Seidman College of Business.

Gov. Gretchen Whitmer ordered restaurants, bars and other businesses to close dine-in services beginning March 16.

Isely said the entertainment and food services industries make up about 3 percent of the West Michigan economy.

"We're looking at a 50-70 percent reduction for the course of a month in their income," said Isely. "Those industries will be strongly affected so we're looking to see what the government does to support people."

Isely said changes in consumption patterns (restaurants, entertainment, transportation), along with supply chain problems, will take about 2 percentage points off of the growth of the local economy for the year, which translates to $1.2 billion to $2 billion.

"That sounds like a lot, but the West Michigan economy is over $60 billion, so it's going to cause problems, but not problems on a massive scale," he said.

Isely said he is careful using the word recession. He emphasized the recession will be light and short in duration.

"Most economists are looking for a pretty quick tail on this," he explained. "It's going to hit some industries very deeply for a short period of time, but we’re looking at a pretty fast rebound. Economists are projecting a pretty good second half of the year as we come out of this phase."

The drop in the stock market has caused some fear, Isely said, but added the economy is not the stock market.

"Understand the stock market is going to be very, very volatile in the near term as traders try to figure out how long this is going to last," said Isely. "But, we've already seen the Federal Reserve step in very strongly and very decisively. Now we’re just waiting to see what sort of stimulus the U.S. government will kick in to try and support those industries that are most adversely affected."