EL CENTRO – The Imperial County Board of Supervisors received a dire financial forecast for the upcoming fiscal year 2021-2022 at its regular meeting on Tuesday, June 9. Michael Bracken, Managing Partner and Chief Economist of the Development Management Group, advised the council regarding the local economy and how COVID -19 will impact the coming fiscal year.
Over the next few months, he will provide updates regarding general economic conditions and provide independent third-party information and recommendations to County CEO Tony Rouhotas. According to Bracken, the purpose of the information is to provide the county with up-to-date, real-time data to aid in policy development and budgeting.
Bracken said the national unemployment rate for 2020 in February, before COVID restrictions, was 3.5%. In April, the national unemployment rate for 2020 was 14.7%. In April, there were 5.29 million initial jobless claims nationwide, with 17.03 million continuing jobless claims.
Bracken then narrowed down the scope to explain the unemployment problems in Imperial County. In February, the Imperial County unemployment rate was 17%. In April, the unemployment rate in Imperial County rose to 28%, meaning that just over one in four residents is unemployed.
According to Bracken, between March and April, Imperial County suffered about 11,600 job losses, of which more than 8,000 in recent months were related to agriculture. He said a typical year would result in a loss of about 1,200 farming-related jobs at the end of the winter harvest season.
Most of the job losses, however, occurred in health care, hospitality and transportation, according to Bracken.
âWhile many would think healthcare would be a safe area during the pandemic, the truth is the opposite. Outside of those working in emergency rooms, critical care and respiratory care, job losses nationwide have been significant. This is because general medicine, dental care and staff used for what is considered non-vital or essential surgeries have been laid off or put on leave, âBracken said.
Bracken said the hotels support the Imperial County economy through business travel associated with the Department of Homeland Security, the California State Penitentiary System, renewable energy, agricultural support and the NAF El Centro. . With industry declining by more than 70% nationally, Imperial County’s economy has also been hit by the lack of travel.
Bracken also discussed sales tax and consumer spending. However, due to quarterly sales and use tax reports with a three month delay, the numbers are not up to date. He said that 70% of the overall economy is tied to consumer spending, which makes it vital for understanding economic recovery.
In his overall economic synopsis, Bracken said jobless claims have grown faster than ever in America, retail sales have fallen dramatically, but grocery stores and drugstores have brought some stabilization.
âThe pandemic has created an immediate and substantial shock to the global economy at all levelsâ¦ As a nation, we have probably bottomed out. Economic activity should start to rebound slowly and with that, the re-hiring of those who have lost their jobs. Frankly, Imperial County is still at the height of the storm in terms of new cases and medical treatment. When the new cases start to drop and the number of recoveries increases, the economic activity of the consumer level will start to increase, âBracken said.
âAs you are currently working to adopt a budget for the 2020-2021 fiscal year, I urge you to make conservative forecasts, as sales and use tax and property tax revenues are likely to be significantly affected, âBracken advised the board. âConsumer spending is still declining and people can struggle to pay current and future property taxes until there is greater economic stability. âHistoric federal and state funding is still in a time of uncertainty as both grapple with a combination of stimulus packages, declining tax revenues and the need to provide a balanced budget,â said Bracken.