Special episode 01: Economists on the economy

Christy Kallevig: Hello, this is Christie Kallevig, host of Vital connections On Air. We have been experiencing some really difficult things in the last few months, and we know that there are more challenges ahead. At the Center for Community Vitality. We have been working to bring topics and partners together through webinars and articles [since] the end of March, to get you the information that you need.

Now, I'm going back to those educators and asking them for updates and insights on what we should be doing in our current context. I'm sharing small parts from these long conversations over the next several weeks so that we can listen, reconnect with ideas, and hopefully take the next small steps. Here's part of my first conversation with Bridget Tuck, senior economic analyst and Neil Linscheid, community economics educator, as we reflect on their first webinar back on April 14^th.

Christy Kallevig: I want to set the stage for our conversation a bit and go back to a webinar on April 14th. That just seems like forever ago, right?

Brigid Tuck: Yes!

Christy Kallevig: But during that webinar, the two of you discussed what you knew at that point in time and how economists were looking at the situation. And when I went back and revisited that, you know, the information that you were talking about at that time was that Minnesota was showing that roughly 226,000 unemployment claims had come in, that there were some projections showing like a 5.4% decline in GDP, but also you were able to point out that there were still some positive employment postings showing up in some sectors. Does that kind of sound like an accurate picture of where we were at back in April?

Brigid Tuck: Yes. I would say that that summarizes sort of where we were, we were on the cusp too. I think of beginning to really understand what industries were going to be impacted and how much of an impact we would see.

Christy Kallevig: Knowing that our information is changing so rapidly. And now we're seeing here in Minnesota, the dials being turned, what can you share with us today about our current economic picture?

Brigid Tuck: Yeah, so I think things in a way, some things have sort of stayed similar. For example, we had an interview yesterday with the state economist that was showing that we still are looking at that decline of 5.4%. That is the most current information we have. So that's still sort of stands as where we are. And we're looking at a recovery that would bring us back in terms of we would see GDP growth over the next couple of years returning, but still overall, our growth would not be as high as it would have been pre-COVID with the predictions were.

The other thing I think that, you know, on the unemployment side of things we did see unemployment claims climb quite a bit after that. So I think we were up to about 660,000 unemployment claims at this time. So we've seen a big spike there and we're beginning to get a clearer picture of exactly which industries are being, as I mentioned, hit the hardest and then starting to be able to see maybe where things will go once we reopen or get back to kind of a new level of normal.

Christy Kallevig: As we think about kind of the next phase for Minnesota, we're seeing that the dials are being turned and some businesses are being given the opportunity to open with restrictions or to start their operations back up. What things should we be looking at and watching to understand the economic situation where we live and to see how we can support our communities in this process?

Brigid Tuck: Well, I think one thing that I hope people are thinking about at the community level, and we're certainly nudging them this direction, is to start to go a little deeper to understand who's being affected. So we have data now to show us sort of what industries are being hardest hit, but we're starting to have some really good information on sort of a demographic piece as well.

So Laura Kalambokidis, our state economist, had a nice slide yesterday showing that something like 50% of other people who filed for unemployment claims are in our lower income, you know, low-income to kind of medium-income families being hardest hit by this, as well as like we looked at some data for Duluth and we were looking at workforce, especially in health care and the positions that had been furloughed in the healthcare sector in Duluth, or anywhere from 75 to 90% “female” jobs.

So seeing maybe some impacts that way. There are some real differences in terms of whether of age distribution of some of this. So sometimes in some areas it's the younger population being affected more, maybe that high school or just post-high school kind of students that are feeling the impact, and other industries that might be more of the family household head affected.

So I do hope the one thing we start to kind of dive into here is that this impact isn't being felt equally across everyone. And how do we create strategies and ways to assist the folks that are being affected? And those strategies might look different depending on who we're trying to assist.

Christy Kallevig: What do you think, Neil?

Neil Linscheid: I agree with that, Bridget, and I'll add just a couple more things. So, first businesses are going to reopen and that is wonderful. And we hope that people support them right out of the gate and you know, help them get some of that cash flow back, move in and show them that they can be successful again in this new environment. But here's a kind of a weird thing that can happen. And that's you know, when that new restaurant opens, even in regular times or that new business opens and you go there the first day and you maybe buy something little and then you don't come back for six months and then it's not there. Well, that's exactly the sort of thing we've got to avoid right now.

There have been great efforts and I would be surprised if you could find a community in Minnesota that hasn't really rallied around their small businesses and tried to find ways to do some “buy local” work, encourage people to keep those businesses alive and had gotten extremely creative about that.

And the worst thing we could do is, when there's an all clear, let up the gas on that to slow down on that thing we need to do, when things open is double that. It's going to feel counterintuitive. It's going to feel like, “Oh no, we've been working hard at this.” Now we can go back to normal, but those businesses and any organization in our community will need us to be stepping up when things are coming back more than ever.

Right now, we're on hold. Now we will need to come back and we'll need to come back strong and we'll need to be resolved to stick with it. And that's the hard part. That's the thing that I think I'll be watching. And I'll be trying to encourage everybody I talk to is to say, “you gotta keep it up. We gotta keep this going.”

We can't we can't act as if this is now passed. And so it's okay to just leave everyone to their own devices. Let's just keep pulling together here. It happens. It's kind of a phenomenon that happens with natural disasters. It's been studied for many years that you know, people come out with the chainsaws, there's this a lot of togetherness, but after the cleanup happens, there's still a lot of pain and recovery and rebuilding that needs to happen. And there's not always the volunteers or the urgency and the places that can really keep that rallying and keep that going. We'll really see more success in my opinion.

Christy Kallevig: Absolutely. And I think even just moving beyond that Minnesota common statement of, “How are you doing? I'm fine.” And I think for businesses and community members to feel comfortable to say, if they're not, and, to have those conversations and dialogues about what support they need and how we can give that to them.

Neil Linscheid: I agree. What support we need, how can we do that too? And hey, the easiest thing that any of us can do, whatever role we're in to help our business community is to be a reliable customer for our local businesses for our nonprofit and civic communities to be a reliable and dedicated volunteer and to take on some responsibility for what is happening in our community.

Christy Kallevig: So one quote that's been getting a lot of play, we'll say lately, is Winston Churchill: “Never let a good crisis go to waste.” What are stories you're hearing or things you might be seeing about innovation or creative problem solving across Minnesota as communities and businesses are looking for ways to change and adapt?

Brigid Tuck: I think one that pops to my mind right away is the livestock industry. Particularly, you know, we've seen all these different supply chain things going on, particularly with hogs in the shutdown of some of the plants and the slowdown in the process. In part, I think it's kind of opening people's eyes, maybe a little bit wider to how our food supply works. Helping people think through, “Oh, is, is this the way we want our supply chain to work in agriculture?” Are there changes that we need to make? Are there ways we need to think about this differently?

As well as just people coming together to kind of support each other you know, realizing that your neighbor's having some troubles and maybe can't sell some hogs, so maybe you ended up buying a pig or something and keeping it on your farm. So I think there's some around livestock and around agriculture. I think we're going to see some, maybe more fundamental changes in that area. Don't know, Neil, if you have any stories to share there,

Neil Linscheid: I just think it's an enormous asset that we have, that we have businesses that, you know, when given the chance are creative and we'll work through these challenges. Sometimes it's like, the story can just be, "Oh, it was making ventilators," but there's some kind of cool stories that I see every day of like a small restaurant that maybe never did take-outs that are now doing them. Hey, on a small scale, that's a big shift for you to make. Small businesses getting online and figuring out some of these things that maybe were on the back burner for a while. And now they're jumping in and those are they're good.

I'm also seeing some innovation at the community level, like conversations across silos. We could say like having people from faith community, the healthcare sector, having people from the business community, the local government and the nonprofits groups meeting together regularly to talk about what's happening to talk about who in their community need some support, what positive things they could be working on as a community and how they can kind of keep hope alive in their place.

Those are real innovations, those connections, those relationships that learning new ways to work together. We don't see them immediately, and we wish that we didn't have to have a situation like this for them, but they will have long-term dividends.

Christy Kallevig: So in April, you encourage people to go back to their teams and look at what is driving their economy, where they live to take a look at the industries that would be most likely to be impacted. And you've kind of touched on that again today. You also encourage the use of good data as they're making decisions, but now as we sit here today, May 22nd, 2020, we're about 10 weeks in. We don't know how much longer we have to go. What is your advice today?

Brigid Tuck: I think my advice remains largely unchanged. I mean, I think Neil and I have had a couple of conversations around this, that when you are faced with a big challenge like this, it can be easy to lose focus and to start trying to just triage, you know, in maybe feeling torn in a lot of different directions. It's as good a time as any to go back to Community Development 101, and to just kind of focus yourself and remind yourself. I think, not only where are we going with this situation, but even going back to your previous plans, your strategic vision for your community. You may have to make some adjustments to it, but it's still there, and who you are intrinsically as a community hasn’t changed.

So it's a good time to maybe go back and take a deep breath and look at what your plans were and what your focus was, and then try to figure out how do these new challenges sort of fit into that. And how do we use the data that we know, like I said, to kind of focus on where do we need to put our resources most? Because I think we unquestionably know our resources are being spread thin, whether it's financial resources, whether it's our time and energy, whether it's our community time and energy. So just taking that time to sit down and refocus your plan and make sure that you're putting your resources where they really need to be. And data, I think is an important part of that.

Neil Linscheid: I think I've only had one amendment from last time, and that is really look hard at who else you can invite to that table, use this as a time to invite new people that haven't participated in your community and economic development efforts. Previously, I say that because all these things we're hearing how low-income people are disproportionately affected. People of color are disproportionately by this. And it's not always the case that people that are in those categories are a part of community and economic development efforts. And we want them to be. Now is a good time to bring them in and invite. So the power of that invitation is just critical right now.

Brigid Tuck: I would add one thing too, to follow up with that Neil. And I think that is that now is a good time to also do some education in your communities. I know Neil and I were kind of working on a little bit of a piece on, you know, so you have to cancel your festival or event, and people have these passions and I've run the Giant Phase 5K every year for the last 20 years or whatever, not quite ‘cause I had some kids in there. You know, there there's this passion and it's our community, it's our time to come together. And so when we cancel that, there are a lot of emotions that go along and maybe somewhat of a lack of understanding of all the things that go into that decision. And so same with a lot of things that are happening.

You know, you might get some questions about why are you doing your economic development this way, if you're able to do some education with your community about what is the role of economic development. What are our priorities? What are the issues? The more you can kind of get that out into the community so that other people understand where you're trying to go. I think loss will be very valuable for getting that support and community buy-in when you need it. And I think it's, it's not just festival and events that are facing that, but I'm sure economic developers as well as communities, chambers, you know, what kind of actions are you taking? And the more they can understand the pressures that they're facing, the more we can understand how we support them.

Neil Linscheid: I love that. I just want to add to that, that the broader point is everybody in a public leadership role is having to make very tough choices. And I think as a role of followership and the role of people that are residents of the community that have the luxury not to be on a school board on the city council … name your group … having to make these tough calls and knowing that no matter what people will be furious with you, whichever way you go. And second guess you and all that.

I think our role is as just people that support our leaders is to genuinely support them and to recognize that these are very difficult things. No one can open a book and pull up the checklist and say, “Oh yes, this is exactly what our choice should be about graduation, about opening our businesses …” These are really difficult, very contentious things. And we just need to all have some patience with our leaders and communicate with them with respect and with compassion.

Christy Kallevig: Thank you so much to Brigid Tuck and Neil Linscheid for joining me for this conversation. I look forward to sharing more from our chat with you in the coming weeks. Until then, please make sure to visit the University of Minnesota Extension Center for Community Vitality webpage at extension.umn.edu/community-development, where you will find more resources on economics in Minnesota and your community, as well as all of the recordings of the webinars and articles that we're releasing during this Covid time.

Please follow us on Facebook and Twitter to stay up to date with new research and resources for communities and those who lead them. And we hope that you will join us for our next episode of Vital connections On Air, and please, stay well.