It was a fairly normal week at the state Department of Labor until Friday, when the lines lit up. By 6 p.m. the number of new jobless claims approached 2,000 for the 24-hour period.
A typical day? More like 500 or so, spokesman Steve Jensen said.
Boom. It’s here.
A few minutes after that tally, across the state at the upscale 85 Main restaurant in Putnam, the lines most certainly did not light up. I spoke with co-owner Brian Jessurun for 20 minutes at the dinner hour. In that time, two small groups trickled in.
“Normally on a Friday night we’re mobbed, it’s standing room only,” said Jessurun, who owns four restaurants, including two near UConn. “I think it really hasn’t resonated with people until right now.”
The mild winter has made for a great year so far. I could hear him shaking his head. “We’re about to have the rug pulled out from under us.”
That means all of us, not just restaurants and shuttered music halls such as the historic Toad’s Place in New Haven, the most obvious places to see it. The coronavirus crisis has plunged the state, the nation and the world into an economic downturn that walks, talks and inflicts pain like a global recession.
And even though a recession has a technical definition that this doesn’t meet yet, make no mistake.
“The issue is not when and whether we’ll suffer a recession, but when and how strongly we will recover,” said UConn economist Fred V. Carstensen. “Effectively, employment is plummeting as is value creation.”
On Monday, the state will apply for emergency loans for businesses, backed by the Small Business Administration at 3.75 percent interest — part of a $50 billion disaster relief tranche Congress and President Donald Trump are making available. Connecticut could see $500 million of that.
That’s a recession move, on the order of some of the Obama-era recovery programs.
How long might this downturn last? No one alive has ever seen a recession ignited by a global pandemic, at least not on the scale of this crisis.
What’s weird is that the collapse in consumer demand — a hallmark of any recession, as confidence and income fall — was ordered by public health officials. France, Spain and especially Italy are in lockdowns — far more severe than any recession when it comes to curtailing spending.
And while we have data to tell us how markets behave, we’re flying utterly blind when it comes to the root question in this one: How much infection, how much sickness, how much death will COVID-19 exact?
For Don Klepper-Smith, the start of the recession is past-tense.
“There’s every evidence that we went into recession in March of 2020. We’ll see where it goes from here,” he said. “I think this stands to be at least as bad as the last one, which was 18 months.”
If you somehow missed 2008-09, that would be the Great Recession, the worst downturn since the Great Depression in the 1930s. Surely coronavirus couldn’t precipitate a recession as bad as that, at a time when the economy, and the stock markets, were defying odds with no likelihood of a sharp downturn in 2020.
At least a year of recession, Klepper-Smith, of DataCore Partners, said in an on-the-fly hedge. He and Carstensen, a UConn finance and economics professor, have both studied the state for decades. Give us a few weeks to start seeing data, they said, but the result is already clear.
David Lehman doesn’t have the luxury of waiting for numbers. As Gov. Ned Lamont’s economic development czar, the former Goldman Sachs partner spent the last week talking with bankers, federal officials, state agency heads and business owners about relief.
Immediately, the state ordered a three-month hiatus on all the loans in the state’s Small Business Express portfolio — $113 million for 800 borrowers.
That will help those borrowers but what about everyone else? All options are under consideration including somehow using the $115 million in authorized bonding for state business assistance. Lehman also takes solace in the fact that banks have plenty of money to lend, unlike in a typical downturn when the flow of cash, known as liquidity, dries up.
Jessurun, who lives in Pomfret, is grateful for a payment hiatus in his $200,000 state loan. As important, he appreciates the attention from Lehman’s Department of Economic and Community Development. “That’s actually a very proactive branch of the state,” said Jessurun, who’s not shy about criticizing Connecticut policy.
But it’s not enough. On Friday, he trekked to his bank and maxed out his line of credit, at 4.7 percent interest. Even that isn’t enough. He planned to spend the weekend preparing to to sell his 2,700-square-foot house and move into a small cottage he also owns.
That’s the cascading nature of these things in an economy that depends on instant movement, on-time parts, relentless consumer spending. Consider: A good year of growth is up 3 percent from the year before. Down 1 percent is a recession. So if you spend $96 instead of $100, and I do, and we all do, that’s all it takes.
Call it the toilet paper syndrome. We don’t know why everyone is stocking up on the indispensable rolls, but they are, and suddenly we’re, um, wiped out because the supply chain is so sensitive.
It’s all the more complicated when we’re killing spending out of caution for a purpose bigger than prosperity. “The right thing from a public health perspective is different from what’s good for our economy,” Lehman said. “We just need to make sure that we cushion the blow.”
Jessurun and Brian Phelps, who talked with my colleague Liz Teitz about shutting down Toad’s, are on the front lines. But economic malaise, like any viral contagion, spreads widely. “Our UConn businesses are in real trouble,” Jessurun said, referring to the Dog Lane Cafe at Storrs Center and the Fenton River Grill a few miles away. “We’re not sure if it’s even survivable.”
And yet, he’s not one of the business owners sending people to the labor department for unemployment benefits — which the state has now extended to include people not looking for work in temporary furloughs. Instead, he’s doling out fewer hours so every employee draws some pay, for as long as he can.
That’s the same idea at Yorkside Pizza and Restaurant in downtown New Haven, where owner George Koutroumanis said business is off 35 percent from coronavirus — even accounting for the Yale University spring break. “They all have families, they’ve been with us for 10, 20, 30 years,” he said, looking around at a staff that outnumbered customers for a while as I ate there Saturday night.
Just as quickly, a group of 13 young women and one middle-aged man came in and commandeered the back table in close quarters, not what I’d call social distancing. The Yale crew team, with one father in tow, gathered for what that father called a “last supper” — their season, for some their college careers, cut short on a weekend when they should have been competing in Tennessee.
Their synchronized laughs, their tales of glory and trials around a tight table, spoke loudly of the unbreakable human spirit in a time of loss. Koutroumanis’ face lit up as he welcomed them to the hallowed landmark, three walls of the back room filled with Yale sports team photos, around the corner from an Apple store that closed Saturday until further notice.
“We’re going to get through this,” he said. “We’ll pray for the best and we will make it.”