COVID-19 and Georgia: Fiscal Research Center Report Estimates the Pandemic’s Economic Impact
Wednesday, July 1st, 2020
In the space of a month, from mid-March to mid-April, the COVID-19 pandemic had already taken a tragic human toll and created unprecedented economic decline. The United States saw businesses close their doors as shelter-in-place orders continued across the country.
More than 22 million Americans, about 13.5 percent of the labor force, filed for unemployment insurance during that period, with some industries hit harder than others. By June 6, this number had risen to more than 14 percent.
Beyond the individual and commercial implications, the slowing of economic activity has proven a tough challenge for governments as sales tax revenues plummeted.
A report released on April 14 by the Andrew Young School of Policy Studies’ Fiscal Research Center provides an early estimate of the economic impact of this dramatic drop in business operations on sales tax revenues across several hard-hit industries in Georgia.
Authors Peter Bluestone and Robert Buschman used the IMPLAN economic model to assess the potential revenue effects based on three scenarios of varying business-volume reductions, while acknowledging the challenges of predicting the depth and duration of the pandemic.
Focusing on directly affected industries in the travel and hospitality sectors, such as airlines, hotels, recreational businesses and restaurants, the authors found the cutbacks in these sectors would likely reduce state gross domestic product (GDP) by 2.4 percent to 4.1 percent for the full year and lower state and local government sales tax revenue by $729 million to $1.27 billion.
Since it was published, the study has been reported on by media that include:
Georgia governments could see $1 billion hit in sales tax revenue from coronavirus (Atlanta Journal Constitution)
Coronavirus cutting deep into Georgia state, local revenues (Marietta Daily Journal)
Strong state revenue report could be last for foreseeable future (Calhoun Times)
COVID-19 may cast shade on sunny local government budgets (SaportaReport)
The Fiscal Research Center is now updating the study and working on related research that examines the impact of potential recovery scenarios on different regions of the state.
Download a copy of the April 14 report at https://cslf.gsu.edu/2020/04/14/fiscal-research-center-estimates-covid-19-impact/