Economist: U.S., Indiana Facing ‘Unprecedented’ Challenges
Abbey Omodunbi is an assistant vice president and economist for The PNC Financial Services Group.
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowUnemployment insurance claims in the U.S. totaled more than 6.6 million last week. In Indiana, Department of Workforce Development Commissioner Fred Payne said the state saw 133,639 new claims, down slightly from the previous week. With claims totaling nearly 17 million over the past three weeks nationwide, PNC Bank economist Abbey Omodunbi says the number of layoffs resulting from the COVID-19 pandemic is unprecedented.
In an interview with Inside INdiana Business, Omodunbi said another concern is deflation with the prices of goods falling 1% in March.
“If prices keep reducing over time, consumers can hold off on purchases and hold off on spending,” said Omodunbi. “So if consumers aren’t spending once maybe they get their stimulus checks, if they don’t actually spend that money because they think prices are going to go down in the future, we could end up taking ourselves into a more severe recession.”
PNC says deflation currently poses the “gravest risk” to the U.S. economy, though it expects the Federal Reserve to take further steps to prevent deflation from taking hold in the U.S., if necessary.
Omodunbi says Indiana is being hit particularly hard because of the pandemic’s impact on manufacturing, an industry on which the state’s economy relies heavily.
“There’s been a standstill in economic activity nationally. There are lots of restrictions on consumer movements and also lots of businesses are pretty much shut down right now due to this pandemic. So I expect Indiana’s recovery to be slower than the national recovery.”
PNC says the April jobs report from the U.S. Bureau of Labor Statistics, which is slated to be released on May 8, will show job losses in the millions and like break the previous record for job losses, 1.959 million, set in 1945 after the end of World War II. The national unemployment rate is expected go above 10% in April.
Omodunbi says there is a silver lining, which is the Federal Reserve doing “everything they can to make this recovery as sustainable as possible.”
Omodunbi says another concern is deflation with the prices of goods falling 1% in March.