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good afternoon everybody that's here thank you for being here on Walt Rogers deputy director of TEF Iowa TEF Iowa seeks policy solutions that help benefit all Iowans this afternoon we are releasing the economic impact of Cova tonight on the Iowa economy a first cut and in this series of reports we examine the financial implications of the virus authored by dr. Ernie Goss and mr. Scott strain the first report is based on a brief snapshot of the data currently available from the early days of the virus your niala the picture will become even more clear after April data is released later on this month but we can already see that Kovach 19 is impacting our state's economy in an incredible way both in terms of wages and jobs lost to Iowans and a future government budgets so it's important that we take a deep dive into the economic realities of this pandemic for instance in the first cut we will reveal the projections of a total cost to the Iowa economy so far as well as projections about lost tax revenue TEF I was proud to have these two noted economist dr. Ernie Goss and mr. Scott's Scott strain here with us today join us we're glad to have them join us in the discussion of findings of this first cut before I turn it over to dr. gloss and mr. strain if you have a question just simply submit it in the Q&A section and we'll get to them as quickly as we possibly can dr. Goss and mr. strain will give a quick brief summary of the report and then we'll take questions dr. Krauss good to have you here you got to get me out you unmuted a my my music you're good now okay sorry okay I'm uh there yes you are okay thanks well thanks thanks for all of you thanks for joining in Scott and I would like to thank you while Rogers and certainly John Hendrickson and Dan for all the assistance from TEF uh they bear no responsibility for anything that I may say wrong which I I by the way if I appear a bit disheveled us because I am the background you see there is the picture of a photo that a friend of mine took from an Iowa farm so that's I'm right there with thanks thanks to all of you and first off we're talking about a summary of our estimated economic impact of Cova Co at 19 on Iowa and we call it a first cut now and I'm gonna turn it over to Scott to talk about the impacts I'll just forget for about an intro why a first cut well you know we we talked about is it a v-shaped recovery in other words a sharp downturn and sharp upturn probably not I went for a ve to you a sharp downturn and move along the bottom end up turn to now I'm in a swoosh a Nike swoosh a sharp down and the gravel upturned even despite all the federal money that's going in so but why first cut well yes BLS data employment data is only for the first about the second or the second week 15th of March so you can't pick it up there's really no data available but it picks it up except the first time claims for unemployment insurance which we used as a basis for our estimate so we we had the first time claims by the way first time claims and be forewarned that they represent only about 15 40 to 50 percent of the overall unemployed in other words not all workers qualify for unemployment insurance some weight and delay getting insurance and unemployment insurance they finally some just don't don't filed some move out of the work for us so it's it's about forty to fifty percent so in general and Scott can be more specific you take the ensured unemployment right you almost double it for Iowa that's during a recession but first time claims went from twenty two thousand on March 21st March 21st that was after they beat Alaska's Employment Survey for the state of Iowa then we had a bet on the 28th we had 54,000 first time claims Neil went to one hundred and twenty seven thousand on April of fourth now these are these are first time claims and the insured unemployment went from one point three at one point three percent rate I was one of the lowest in the nation then we went to three point one percent on March the 28th then we went to seven point four on April the fourth now I actually and I was now to about eight point three percent insured unemployment rate and insured unemployment rate is a number of workers drawing benefits and unemployment benefits divided by the covered the covered unemployment number of unemployed a number of him number of employed that are covered now the UH the unemployment rate which includes the insured and also the uninsured that's divided by the labor force so it's the insured plus the uninsured uninsured divided by the labor force for that employment rate now we'll have a second cut about probably around may the 22nd now why may the 22nd or will be sometime after that that's when the first will forget the first BLS Bureau of Labor Statistics report which will tell us the unemployment rate for Iowa for the month of April and now again that's a little bit old and it is a survey and it is a preliminary preliminary number and that's on May the 22nd and that'll come out for Iowa and then we're we've put a caveat in the conclusion that this does not account for the federal reserve's massive massive stimulus and the US government US Treasuries massive massive stimulus which ultimately we will pick it up is just we're not picking it up right now and I'll turn it over to Scott right now to to go over are the findings of my report Thank You Ernie what we found during the period from March 21st April 11th is that Iowa lost approximately two hundred forty-three thousand jobs lost wages a little over half a billion dollars self-employment income of about seventy three seventy four million dollars and then the total impact to the state and this includes the impact at all stages of production one point six billion dollars so that's a total sales number go ahead and go to the next slide we've given a breakdown of some of the state and local tax impact also what we're expecting is a big impact big hit of course to sales sales tax receipts at both state and local level this of course is a result of the shutting down of retail established with food and beverage establishments as well as just overall decline in economic activity we would anticipate also income tax over this period of time to result in about a twenty six million dollar decline for the state of Iowa in total we're looking at again during this period of time the impact of state and local tax coffers of about one hundred twelve million dollars what I wanted you know because yeah yeah we can get some questions but that that I mean one of the questions I'll probably get I'm probably answering in advance is what about casinos what about the as all of yours no that's about twenty two percent the tax rate that is and interestingly I just an aside one of my very talented students was we were working on looking at the impact our the tax collections estate revenues from sports betting and as everybody out there knows know Iowa embrace sports betting that's the right term embrace but in August and so we were looking at that and I will send his project my project has been shut down for a while so anyway I'll turn it back to you all sorry for that interruption thanks problem I just like to let the press know again if they're out there just throw a question of the Q&A we'll get answered as fast as we can let me start with this one what are the critical macro economic measures to keep an eye on is there any anecdotal evidence that you are paying attention to oh absolutely I would I would do a an advertisement for cratons to monthly surveys we do a survey of manufacturers in ten state uh nine states and we do a survey of bank CEOs in rural areas of ten states both surveys include Iowa and those number one of them comes out the banker survey comes out the third Thursday of the month the manufacturing survey comes out the first business day so keep an eye on that those both are at record low levels so we're it's that's a macro trend I'd also like to say that and this is one I keep in my back pocket all the time look at the yield on the 10-year Treasury that is a prime indicator of the risk and what's going on in the myths out there instantaneously go to finance eurocom it's not about his ranges now between six tenths of one percent and seven tenths of one percent in other words record record lows now what accounts for that what accounts for it is the risk investors global investors see out there when they see risk they move out of they move into these safe havens safe haven of gold and the gold is not as good of a measure as that's house yet and also but the 10-year Treasury Treasuries across or with the 10 years the best measure of that of course unfortunately for we economists well I guess since that we the ones that do it it's being influenced by the Federal Reserve and being driven down artificially low by the Federal Reserve when that goes up they're keeping a watch out the equity market that would be a stock market I'm a little keen I'm a little concerned there I think it's a little overpriced right now I think there's too much optimism that there's going to be a sharp recovery now some of that is being driven by the Facebook they what's called the bank starts on a Facebook Amazon Google and so on but oh you need thing you want throw in the sky well I am keeping my eyes on the debt market we just had a new issue of debt out there across the maturity spectrum I think the issuance was about 14 or 15 percent larger than what the market anticipated and yields the 7 10 and 30-year bonds reacted accordingly with yields going up there was also a Treasury announcement this morning that a new 20-year bond is going to be offered those are things I would look at and especially any type of any type of debt that's backed by a revenue stream tied to real estate is what I'm keeping my eye on certainly retail reads you're right all right we got some more questions coming in I'll shoot Iowa offset any loss after rainy day funds are used grow the economy that's a tough I'll turn that one over to Scott get back to work grow the economy yeah I'm a little concerned I mean I'm obviously not a medical person I my extent of my medical expertise is putting on a band-aid but nonetheless we're if everything seen now I'm complaining here but everything is driven by the medical community and and preventing the probability of any deaths the likelihood but unfortunately as you know in Iowa and this sort of the country particularly a lot of folks aren't going to medica seeking medical care so some precautionary medical care is not being undertaken so in fact we're we may be saving lives from Co in nineteen but we're losing lives from those individuals that aren't getting a mess getting exams for breast cancer getting exams for prostate cancer all the colonoscopy those things are not being undertaken our hospitals particularly in this part of the country that's Iowa Nebraska South Dakota and North Dakota in Kansas you're talking about rural rural hospitals that are taking it on the chin right you know they were already in some real economic not not where you want to be economically speaking and go the lessons well I was going to say the paradox of this is when we look at the downdraft by industry is a huge job losses in offices of physicians other health care practitioners dentists and that's all preventive health care that dr. Goss was talking about that isn't being done yeah and I'd like to say also there is the temptation to raise taxes or move and see where you can raise taxes this is no time to be raising taxes and unfortunately property taxes in Iowa already too high for the economic conditions projected on AG agriculture it was is not doing well and in its and obviously current crop prices current livestock prices are putting separate from koban 19 are also intertwined the AG sectors not well and that goes to my next question I actually had a couple that specifically were asking about Iowa's rural economy what are some of the specific things happening to Iowa's economy because of the AG sector right now you know well we and Scott just jump in anytime too Scott but what we've conducted our at the survey in in the the last survey of bank CEOs from rural areas of Iowa and nine other states the index moved arranged between 0 and 150 s growth neutral 100 is out of sight zero obviously is not good we were at 12 12 it was a record low and the bankers that are telling us that AG and obviously I guess we don't need mangers to tell you this and you don't need an economist status the AG is in trouble with livestock prices not where they need to be grain prices in this extent is we're talking about two industries that are important to Iowa manufacturing an AG both connected to the global environment global economy and both in the global economy it's not just the US economy the global economy is suffering now I hate to be a bloomin and Scott may be doomed gloom and doom here but it's not looking good right now and again but that will hopefully it will have a little time to talk about the glimmer of hope at the end of this webinar the next question it kind of concerns that also is what are your thoughts about the discussions in Congress right now covering some of these state losses with another 500 billion or even another trillion of pandemic spending you don't want to Scott I mean I'm agin it I'll just put that one in other words it's a blue state and I was been a purple state of course and more more certainly not a blue blue state but it's a bailout for the overspending of California Illinois New York Connecticut and Massachusetts and other state economies by state governments state local governments of overspending our Iowa and and Nebraska and other states in this part of the country have been more restrained in the growth now say local spending has grown into unsustainable pace but that was because it was tracking AG income when AG income began to take off in 2010 11 12 13 14 and then 15 it came down then we started moving lower and property taxes were growing growing unsustainably high in that period of time so I'm opposed to that there are some needs and those needs the president has discussed that some of those directly tied to Kovach 19 not tied that other levels of spending overspending and the Scott you want to chime in on anything well I wish I was just thinking of tying this back to the shape of the recovery when you were talking about a Nike swoosh I think we could all remember going back to the last recession where we in some sectors rebounded vigorously but then we had a rumblin stumblin recovery after that and very muted growth for an extended period of time the shape of the recovery in that from the last recession was actually a square root right and that's I think we can learn a lot from that experience how do we grow the economy we don't overburden the economy with regulation we don't overburden the economy with the government's hands all over everything let the private sector get back to work that's right in essence we may we may owe a royalty payment Nike so maybe we better come the square-root you don't have to pay maybe Isaac Newton on that one well that seems to be the discussions of the next questions is what you are kind of alluding to is what should we do then what I'm hearing is number one don't raise taxes number two the government should just get out of the way basically what I'm hearing from you guys will definitely not come in with a lot of regulations that that result in unintended consequences we have a experience already where the unemployment benefits have been increased by $600 for $600 plus per week and that may create a disincentive for people to return to work oh it will in other words there lots of folks out there you know the care is act some of the parts of it that are contradictory and work against each other that would be the idea that this company has to retain the workers but can you retain the workers when they're paid more to remain unemployed or go on unemployment then they get from working that's and that was opposed by four senators that would be Lindsey Graham of South Carolina Senator Scott of South Carolina senator scott of florida and there was one other senators that means SAS I'm not sure Nebraska certainly well you wanted to keep thi press briefing in kind of a short period but when I asked one last questions that kind of closes out and basically asking you both what do you see on the horizon as far as hope what's hopeful and what's taking place in the states in the country for us well if I can start off that's that you we could not be in a better part of the best nation on the earth in other words we Iowa and this part of the country you look ahead there's a huge demand for our food and the farmers food and agriculture is very very productive so if we if we get some would get some of the truck and now I hate to see the president raising trade barriers again he's talking about raising mirrors that is no place to go the I look for no no farmer on the face of the earth can compete with the farmers in this part of the country let's move let's move aside let's get the trade get trade going again that would be a very important but long-term food food demand is growing in that pickle in Asia as much as we channa I don't any into the politics of China but they really need our food and they will pay a premium and that's good for us and Scott you want to know I think that's a that's a good point the other thing is we voluntarily shut down our economy we did not have had the type of have the type of policy misfire or the type of exogenous shock that we've had to the systems say oil or something like that in the past this is this is this is different but each day the people that get up and go back to work and as more and more people go continue to go back to work the economy is kind of going to start growing now it may take 12 months it may take 18 months may take 24 months for all those supply chains to recover but to me that I'm optimistic we did not suddenly become less productive right and that's where the answer is productivity I'd like to also say something for Iowa's alternative energy that would be when we debt we definitely have an advantage in terms of wind and wind energy production ethanol is taking it on the chin with oil prices moving down in a negative territory now back up to 20 to 30 dollars a barrel that has been very tough on ethanol and that transit that transmits back to the farmer in terms of corn prices and also in the soybean prices so ethanol we're I'm hopeful they're going forward and people say well what about those subsidies well there are really the subsidies aren't really there it was a blending requirements and I think we will remain with those blending requirements going forward that's good for the Nebraska the Iowa for the sake of Kansas in their waters buffer after got mr. strain I wanted to thank you both for your expertise for coming on board for this press briefing one let me know let the press know that the will have a full webinar and this report online at TF Iowa org TEF Iowa not audible