August 15, 2020

California, After Riding a Boom, Braces for Hard Times

A few weeks ago, those plans seemed sound. Back then, on the sunny Friday afternoon when outdoor dining in Alameda County was allowed to resume, the Golden Squirrel’s patio tables, about eight feet apart, were full of patrons enjoying their first trip out for a drink since shelter-in-place orders took effect. That weekend the surrounding College Avenue retail strip was busy with masked, distanced, Purell-doused dining that to many felt borderline decadent after months of being cooped up.

Now business is slowing again, as California is averaging about 8,000 new cases a day, about triple the level a month ago. Mr. Snow’s plans to bring back workers over the holiday weekend didn’t come to pass, and he has put further hiring on hold.

“People are scared,” he said in an interview. “The math for having more people doesn’t work out anymore.”

Exactly how and how quickly the state should have reopened, and who is to blame for the backslide, are unlikely to ever be resolved. What the result means for the economy is more time in the dark, more need among the poorest citizens and more drain on the taxes required to support them.

The U.C.L.A. Anderson Forecast, which has been prognosticating California’s economic trajectory since 1952, expects that the state and national economies won’t fully recover until “well past 2022.” In the state as in the nation, the worst declines will be in the leisure and hospitality industries, while higher-wage areas like technology will be better off, a dynamic that will make financial inequality worse.

Even if the country avoids a second wave of infections in the fall, and a vaccine is made and distributed relatively quickly, that won’t keep many businesses from failing. Others will shift from investing in new equipment and employees to paying debt and shoring reserves. State and local budgets could take years to recover their pre-coronavirus levels of spending, even with federal help.

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