HUNTSVILLE, Ala. (WAFF) - It is no surprise the economy took a major hit due to the Coronavirus pandemic. But two economists with the University of Alabama are feeling optimistic, saying Alabama’s economy could be on a normal path to recovery the first half of next year.
A study by the University of Alabama shows the state economy is starting to recover from the COVID-19 pandemic.
“Once all this passes you know, the economy should be fine,” said economist Ahman Ijaz. “Yea the economy should be okay in the fourth quarter.”
Ijaz said the economy will contract 3.4% but it should be on a normal track to recovery by the first half of 2021. “By the second quarter of next year, everything should be back to normal.”
Ijaz said the numbers are better than anticipated.
Alabama’s economy dipped by 29.6 % in the second quarter of the year compared to only 3.2% the first quarter. Ijaz said he was expecting an almost 35% drop.
“But still, the Alabama economy did a lot better than the US economy did in the second quarter.”
The analysis shows a glimpse of how the pandemic brought almost all economic activity to a halt in the spring. Almost 12 million people, or more than half of the state’s non-farm workforce, are back on the job and rebounding from the hit.
“Most of the sections of the economy have come back from the drop in the second quarter. So, we are still looking at a good sharp increase in jobs for the year,”
He said the future will depend on how lawmakers and individual households respond to the virus. Ijaz warns the economy could still face significant declines because of travel-related businesses, food services, hospitality, and manufacturing.
“There are still a lot of places not open because people are still afraid to have person to person contact. Most of the restaurants are not operating at full capacity. Some people can only take 50% of capacity. You know those people don’t have to hire all those people back so even if they are partially open, that slows down the economy.”