By JULIE CUNNINGHAM
(Boston, MA) – The total economic impact of COVID-19 on the Commonwealth of Massachusetts remains unclear, but indications are it won’t be good.
That was the main takeaway from an April 14 House Ways and Means Committee live roundtable discussion on the COVID-19 pandemic, where some officials predicted that the economy won’t return to pre-pandemic levels until 2022.
Significant losses in tax revenues are expected, and the state’s unemployment rate may reach 14.7%, up from the current 12.7%, which is above the national average. Historically, Massachusetts has outpaced the national economy, but that could change if a second wave of the pandemic hits.
UMass Dartmouth Professor Michael Goodman says an increased demand for services is expected to accompany the revenue losses. If the current pace continues, Goodman believes the Massachusetts Unemployment Trust Fund could be exhausted in six weeks. Goodman also believes the ongoing need for quarantines could blow a large financial hole in healthcare systems across the state.
“How do you make policy for an economy that is essentially operating under suspended animation?” Goodman asked.
Economic projections for 2020 and 2021 assume a COVID-19 vaccine or treatment. Other predictive models do not take into account the extension of tax day to July 2020. However, forecasters are predicting $5 billion to $6 billion losses for 2020. These projections take into account unemployment rates, lost income for state tax revenue, and federal support that may be vital to the economic survival of Massachusetts.
Governor Baker announced in his press conference on April 13 that further guidance on school closures is forthcoming. The current a statewide lockdown of non-essential businesses will. continue until May 4th.