The University of Wisconsin – Madison hosted a panel of experts to discuss the economic and financial fallout from COVID-19 as well as the massive policy response by government at all levels.

The public policy response to the COVID-19 crisis has been extensive. Governors have issued stay-at-home orders, fiscal authorities have given unprecedented support to offset forced business closures, and the Federal Reserve is entering new territory in its support of asset markets. The live discussion on May 12 focused on the near-term consequences of these policies and what might be the long-term unintended consequences.

President and CEO of the University of Wisconsin Foundation Mike Knetter moderated the discussion, which featured three expert panelists:

  • Ananth Seshadri — professor and Todd E. and Elizabeth H. Warnock Distinguished Chair of the Department of Economics
  • Brad Tank (MBA '82) — chief investment officer and managing director of Neuberger Berman Funds
  • Noah Williams — Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy

Below are highlights from the discussion, with opinions from all three experts combined and formatted as a rapid-fire Q&A:

When will the country get back to 5% unemployment?
The recovery will be a “Nike swoosh” shape. We won’t get back to “normal” until late 2021 or early 2022.

How effective has the economic stimulus been?
We haven’t seen a fiscal bump from the stimulus, but it was designed only to be replacement revenue.

How many small businesses will fail?
We expect to see and 8-9% rate over the next 12 months.

Is the stock market considering supply chain issues?
The issue now is about supply chain dependability and not the price of goods.

What is Wisconsin’s comparative advantage?
Typically, it’s been manufacturing, but that sector is in a long-term downward/stagnant trend. We expect a push to more automation.

Who as the advantage now, large or small firms?
The clear advantage is going to continue to be toward large companies with small businesses declining. Business and consumer inequality are increasing, moving away from smaller firms to larger ones, which is consistent with the last two decades. Training is the best solution.

What’s on your Congressional policy fiscal wish list?
Aid to states to replace lost revenue.

Is a new public works program a way out, like during the Great Depression?
If we see a slower recovery than expected or a second wave of the virus appears this fall, future solutions could include public works programs as an option.

What’s the impact of lower government revenue on municipalities?
Services and jobs can and will get cut at the municipal level. It makes sense for the federal government to borrow in order to support lost municipal revenue.

For more information like this and regular economic updates, visit the Center for Research on the Wisconsin Economy (CROWE).