New Shutdown Points to a Dimming CA Economy

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

If there were a stock exchange dedicated exclusively to California’s fiscal health it would take a drubbing with the double announcement from Gov. Gavin Newsom closing down many work establishments that were opened just a month ago and large school districts in the state announcing they would remain closed and go to online learning instead of opening the schools as hoped next month. 

Gov. Newsom announced new restrictions statewide in closing indoor dining, bars, museums and other entertainments. In addition, more than half of California’s counties have to close hair salons, gyms, retail malls and even churches. 

It was just a month ago when these facilities were opened again after a three-month layoff. 

Couple the governor’s announcement with the big school districts led by Los Angeles, and parents of school children have to relive difficulties of supervising their children’s online education and trying to work at their jobs at the same time. 

State and local economies are bound to take a hit, which means government budgets will continue to suffer when there was hope of a quick comeback. 

Just a month ago, Christopher Thornberg, co-founder of Beacon Economics was saying that the June and July employment numbers would indicate if California’s May jobs report was an indicator that the economy was rebounding. Thornberg thought that the California economic outlook could revive in short order. While, it still could come back quickly once the economy opens up, it doesn’t look like that will happen soon given the governor’s new edicts. 

What this does to small businesses is particularly troubling. Some small businesses were hanging by their fingernails hoping the economic revival was on its way. How long this new shutdown will last could be the death knell for many small businesses. 

And, if the school closures are an indicator, that tells us health officials still believe the virus spread will continue to remain strong. The shutdown could last awhile.

John Kabateck, executive director of National Federation of Independent Business/California, said it was “really unfortunate that a good many small businesses looking to renew momentum for themselves and their employees are taking a step back.”  Kabateck said he had faith the governor was getting the best advice from top medical and health experts and he knows that Newsom, as a small business owner, empathizes with the difficult situation small business people now find themselves. But Kabateck said, “Without mom and pop shops on main street surviving, government will suffer because of reduced revenue.” 

The problem is compounded by the school closures that will keep workers at home, or if they are already at home, parents will be splitting their time between monitoring their children’s education while trying to get their work done. 

The effects on the economy were also on the mind of Los Angeles School Superintendent Austin Buetner who said in urging year-round Covid testing, “The dollars pale in comparison to the importance schools will play in reopening what was the fifth-largest economy in the world.” 

That economy had been showing signs of life. Yesterdays dual announcements could soon have the California economic engine sputtering again.

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