Support for Arkansas week provided by the Arkansas Democrat Gazette.

The Arkansas times and Kuer FM 89.

Hello again everyone, thanks very much for joining us for another special cyber addition of Arkansas week for the next half hour, we're going to be talking about.

Economics in Arkansas in a time of an epidemic.

Will focus to the greatest extent we can on the Arkansas economy, but as we are about to be reminded.

It's a small world joining us stuck his Randy Zook, the chief executive officer of the Arkansas State Chamber of Commerce.

Doctor John Anderson is the head economist had agricultural economist at the University of Arkansas's Division of Agriculture and doctor Marvin Jabba.

Rageh is with the Walton College of business, where he is head of the Center for economic and Business Research.

Gentlemen, thank you all very much for being with us.

Randy's hook let me begin with you as we take this broadcast on Thursday morning.

The new jobless figures K applications came out anyway.

4.4 million additional Americans filed for unemployment benefits.

We won't know they Arkansas numbers for another several days, but Suffice it to say, it's going to be substantial.

Where are we?

Well, we're in, uh, the worst part of the worst economic set back and declined.

And since the Great Depression in the 30s.

So we've got a lot of tough, tough sledding in front of us and Arkansas.

Those unemployment numbers, I'm Mervyn.

I'm sure we'll have some update on this in just a minute, but with the added number this week were crowding a couple 100,000 people who are now out of work and have applied for unemployment compensation.

That's still about, you know that's crowding 10% of our workforce.

So we're facing some tough times, Ann.

That's the downside.

The bad side.

The good side is that apparently the governor is beginning to open things up, and we've got at least a chance coming up in the next few months to get back to some more normal state.

Talk to Marvin.

Let's go to you.

Yeah, I mean, I think the number of unemployment claims in Arkansas and around the country is unprecedented, but we've also not had a situation like this at least since the pandemic in 1918.

So in every recession, people are let go from their jobs.

But it happens gradually over a period of time.

This is very different in the sense that one day in March we were opened in normal and the next day in March we were all, you know, several types of businesses were all closed at once.

So the.

Number and the spike in unemployment claims, I guess, is not I mean, it is a concern, but it's not particularly concerning to me because we're doing it for a specific reason, and that's to fight the spread of the disease and what we need to do is make sure that those businesses are viable and remain in operations that when we're past the spread of infection of this disease, we can have those people will be re employed by their workplaces.

So I think the unemployment claims is.

Spectacular, but it's sort of a separate situation than any recession we've ever had.

And it's different because it's not caused by economic reasons.

We know why it happened.

We shut.

The business is down, and if we keep the business is operational.

Wilder shut down.

We can have all those jobs back, but there's work to be done to make sure those businesses remain operational.

Don't get it will come back to that in just a moment.

Let me go to doctor Anderson here and give us the Food and fiber outlook.

It's kind of forbidding right now.

Is it not doctor Anderson.

Well, I think it's a similar to a lot of other aspects of the economy.

It's a It's very challenging situation right now.

I would say we probably haven't focused as much in agriculture on on things like unemployment numbers because most of our most of our activities have been deemed essential as being connected to the food supply.

What we have seen a lot more of an what's been a real challenge for us has been.

The transition changes in the demand for our products that have been fairly dramatic basically overnight restaurant trade all but disappeared and everyone went to grocery stores for all of their food needs that's that's a massive disruption in our world the other big changes that a lot of our supply chains have had challenges keeping workers a lot of news recently about processing plants and sickness in processing plants so.

Major demand changes and big disruptions to supply chains that really what are what are sector has mostly been trying to deal with.

Well doctor Anderson is that you see any signs is that's going to stabilize or to smooth out I mean one day you can find toilet paper the next day you can find dried beans or rice.

There's been a lot of the head, and I think it's a challenging situation for us because we're not used to going to the grocery store and seeing shelves that aren't fully stocked.

And we've seen a lot of that, and I think it's important to emphasize that we're not primarily dealing with shortages.

Real true shortages of product.

We're dealing with the disruption of of a massive, sudden shock to our supply chain.

So whereas 40 to 50% of of spending on food was being done in restaurants prior to this event now.

95% or so is being done in grocery stores, and it's been very difficult to redirect product.

Into that specific supply chain, so it's not that we're not producing food or were not producing toilet paper.

Obviously there have been some disruptions, but the big issue is that we've needed to change the distribution channels and it takes time to do that.

I do not go ahead, I apologize, let me stay with doctor Anderson.

Just second here that the availability of product though, would appear to be certainly in terms of animal protein over the last 40 hours, 48 hours.

Anyway, we have heard more than a dozen now, I think.

Pork and beef processing plants, but primarily poor.

You may have Tyson in Arkansas here.

Uh, I have been affected.

Shut down across the country?

Yeah, that's that's a major concern and I think from from this point moving forward for the next couple of weeks that is going to be our primary concern in agriculture is how do we continue to to keep the protein supply chain full when we have plans either completely shut down, which has happened in some instances in some major plants, or we're having to cut shifts to do things like increased sanitation procedures in the plants.

So far we've been able to manage on most of the shutdowns.

Companies have been able to to move around.

For example, a Tyson close to plant in Columbus Junction, IA that's processing hogs.

They were able to basically redirect all of that production at that time to other plants in the neighboring area, but as these shutdowns and shift losses become more prevalent, it will become difficult to do that.

I think that's really what we need to be keeping an eye on moving forward now, because that is probably the biggest challenge that we're going to see in the AG sector from.

Disadvantages is keeping that protein supply chain cool back.

I'm back to Doctor Jaber, ajc and also to Randy zip both over.

You mentioned that there is well governor Hutchinson has announced that he at least contemplates within days reopening parts of the Arkansas economy.

A dependent of course on on test results, how?

How fat we are realizing.

Recognizing that both or neither of you, or none of you are medical doctors.

But from an economic standpoint, from a business and commercial standpoint.

Is that?

Gradual approach likely to bear fruit quickly.

Randy will start with you Randy's up.

Here, Steve, I think it will bear fruit but not at work.

This is not gonna be flipping a light switch on and off.

This is this is gonna take time but like the hospitals in the hospitals are going to have to.

Re establish their their whole work system, their workflows, people going to have to be called back who many have been laid off or furloughed because of lack of demand.

Or elective process procedures.

Clinics are going to have to get back up and operating supplies will have to be bought so it's not going to be quick and the main thing that's gonna have to happen is people's confidence in there.

Their ability to go there to go to these hospitals or clinics or wherever for doctors, offices or Dennis.

They're gonna have to feel comfortable about doing it, and that's going to be a challenge that every organization, whether it's a hospital or a grocery store or a retail store, is going to have to rebuild the confidence of 1st their employees, and then of their customers.

That I can indeed go in there and get whatever I need to do or do my work, my shift or whatever.

And get home without catching the infection or have a really good chance of not.

Not being infected, so it's going to be a gradual, but I think fairly rapid but not overnight by any means.

But Doctor Marvin the in fact I've been reading, as I suspect all of us.

Have some Gallup polls some polls from other organizations and this virus seems to have redefined consumer confidence anyway.

This economy is not going to move until people feel safe by and I think what we don't want to do is prematurely open or open in such a way that is haphazard.

So we have people going into restaurants or other places that are in crowded situations and we have re spread of infection happening all over again, where we'd have to do massive shutdowns like we've had.

In the past several weeks, So what we want to do is if we're opening restaurants or other places of public accommodation, they're going to make sure that they have sufficient cleaning products that people are wearing masks while they're out in public, which the adoption of that hasn't taken hold completely here in Arkansas and around the country.

And to make sure that their whatever place of public accommodation it is, there's plenty of physical distance between people so that they can go about their business without breathing each others.

Error and so I think even if we open our restaurants, they're going to be making such a small amount of business compared to where they were in February in early March.

So you know they're going to continue to need help.

The current build proposed by Congress works for eight weeks.

I don't think we're going to be back to normal business in eight weeks, so I think if we want businesses to open me to give them a little more certainty on the financial side from the federal government.

Uh, to say OK, well it's gonna be longer than 8 weeks.

We understand your businesses won't be back to normal in eight weeks, so this financial help will last a little bit longer than that period of time.

Or else you know, I think there's not much incentive for restaurants and bars etc to open because they're not going to be able to get as many customers as they used to have.

And we don't want them to or not at that place where we can have bars and restaurants like they were in February.

It also opens all three.

I got the retail numbers yesterday and last month retail was off perilously close to 9%.

Assuming that this is a slow recovery, that there is a recovery of, however, speed.

However, do whatever duration whatever death extent.

Are we seeing retail as we have known it in its closing days?

Mervin will start with you.

So I think the merchants just simply.

It just seems obvious they're not going to be able to come back alright.

I mean, I think so.

Any crisis I think pushes over the edge, the types of businesses that were already struggling before the crisis.

So a lot of these types of retail and old models of retail that were struggling to compete with e-commerce and compete with just how other retailers were performing a lot of them, will probably close.

And it's going to be the crisis that push them over the edge.

But it's important to remember that they were.

Probably going to close the next time there was a recession or whatever economic hangover there was.

So it isn't the crisis per say that pushed those retail establishments over the edge.

I think a lot of them were already struggling, so on the other hand, I think people think that this is going to change consumer behavior a whole lot.

People are going to use online grocery delivery and pickup and things like that, but because of how many people switch to those e-commerce services overnight.

Uh, even something like Amazon Prime Prime no longer delivers in two days on most items, so that are not, you know, food or some other kinds of items, so most of the people switching over to these things, people trying to get into Walmart, grocery, or all these trying struggling to find slots, struggling to find the inventory of things that they need.

So a lot of people that are switching for the first time in two e-commerce avenues or finding not particularly great experience.

and I think at the end of all of this, people really want to go out there.

People, even people that shop online more often, will be interested in just going out to go out 'cause they've been cooped up at home for awhile.

So I don't know that it changes consumer behavior a whole lot in the long run, but I think in the short term it does.

Yeah, Randy's up you are you in danger of losing?

Where is doctor oz?

Just said I mean, a lot of retailers up against e-commerce.

The click of a mouse versus a trip down to the mall.

You Are you some of them are already on the edge and it seems likely this will push some of them over.

There's no question about that.

I think that's absolutely right.

That is Mervin described it.

Crises or recessions tend to accelerate, change and accelerate the destruction of some businesses and accelerate the growth and expansion of other businesses so.

The retailer of you know, two years from today is going to be a much more nimble, much more creative, much more flexible business than the retailers we see today in many cases, because they're just going to have to become more attuned to customer demand and more responsive to customer demand, and it gets back to that confidence.

Thing is, Mervin said, people want to get out, but I think people are going to be cautious for a good while.

We've got a good year ahead of us until a solid.

Proven vaccine is available to make it possible for us to go without any fear or concern anywhere, so that's a long time for us to be wary and to be mask and and cautious about the things we're doing.

So as I said earlier, it's just not going to be a light switch.

Flipping things back on by the middle of June are July or August.

Even you know the hospitals, the schools, all of these institutions have got to.

Figure out game plans and every business has got to have its own unique game plan to move ahead and survive.

Let me go back to doctor Anderson here on the on.

The Food and fiber topic, but cause you are dealing more farmers.

Ranchers in Arkansas, has other states are dealing with more than just a virus.

You've got market up evil and you're also finding many of fighting weather as well.

Doctrines, that's absolutely right.

I mean we.

We focused a lot on COVID-19 over the last month or so, but this is this is really a busy time in the production, agriculture calendar and right now out of our row crop and specially crop producers are probably struggling more with.

Weather than they are with cold 19 where we have another wet spring very similar to last spring, which was a really tough year for our row crop producers.

We are running behind in terms of our planning progress from where we would like to be.

We do have some of our specialty crop operations or into harvest of the early season stuff.

Labor issues are probably more of a challenge this year, partly because of code 19 and weather again is affecting them.

By the forestry sector is a big sector for the state of Arkansas and in a lot of cases loggers aren't able to get into the Woods because it's too wet and we've also seen some COVID-19 disruptions there of some.

Some of those processing facilities as well so you don't agriculture.

It is kind of a multifaceted problem that we're dealing with a lot related to code 19, some not really related to code 19, but probably exacerbated by the the disruptions of that disease.

But we are large industry in a very Brazilian industry and I think our our system is adapting remarkably well given the challenges that we have, particularly at this very busy time.

For most of our.

Our operators, well one small state, but we export in the billions both aggan manufacturing.

And of course, this this is a pandemic pandemic, by definition it's global.

What's our market?

Outlook Doctor Anderson?

You know the market outlook.

One of the things in the in the in the last conversation that was kind of on my mind.

You talk about the Los of retail sales.

Looking ahead, my real concern is how long, globally we will see basically depressed demand because of a couple of factors.

One obviously a lot of people have lost jobs and have depleted savings.

And that will tend to make people more cautious, just the overall higher risk environment, and I think Randy's right.

I mean, we're going to be months, if not more than a year down the road before we get the certainty or the assurance that a vaccine will provide.

I think in a high risk environment, people are going to be more prone to a higher level of precautionary spending.

And so I think all of that boils down to probably fairly subdued demand for a lot of our products, not just in the United States.

But globally and up, I think it remains to be seen how significant that effect is and how long that effect lasts.

But aside from some of the more structural changes that you handed out earlier, I think that there will just be kind of a general reduction in demand as consumers really kind of withdrawal and move into more to savings mode than they've been in the last several.

I'm sorry I saw a comment from one observer thinking yesterday or today's paper.

This will not be as was.

Mentioned earlier won't be a light switch.

Randy Zook.

I think you won't be a light switch.

It'll be more like a dimmer.

A rheostat.

But that's a good way to.

That's a good way to analogize it.

It really is.

Well, doctor Anderson looked at the at the egg.

The Food and fiber.

Aspects of it you're in constant touch with the manufacturing aspect, certainly of Arkansas business.

What do you see as?

The demand.

Potential here in the next several months through the end of the year now.

Well, you know, a lot of our manufacturing is pretty basic kinds of stuff.

Commodity products, like steel and a lot of our industries or manufacturers or food processors.

So as doctor Anderson said earlier, a lot of the shifts there having to undergo overnight nearly is in packaging an quantity and size rather than for restaurant or food service.

Pipelines are supply lines.

It's it's direct to the consumer, so those are significant challenges, but there certainly something that can be overcome in a fairly short period of time, but a lot of our basic manufacturers have been running full speed right through this.

First month at least or six weeks or so of this shock.

Because of the nature of the products that they produced, so a lot of our businesses are in really good shape of some of our businesses are facing unprecedented challenges, but for the most part, our manufacturing sector is going to be one of the one of the sort of the steady eddies coming through this thing because they're still in business.

People still buy stuff you stuff.

Need raw materials?

Need need the tires?

Steal food of all kinds, so that's kind of a strong point.

I think in our balanced economy in Arkansas, along with our solid AG sector, doctor Anderson mentioned this time of year.

I'm a recovering farmer and just went down to McGee to check out how things are going.

An there there running wide open.

You know they are busy.

Their biggest problem is too much rain.

So let me go back to doctor Mervyn for just a second because I think it was you who mentioned earlier in the broadcast the potential for a second wave which the epidemiologists say is a distinct possibility later in the autumn or in autumn.

Are we going to be Mervyn?

Are we going to be better positioned to economically?

Should that second wave arrive?

Well, I mean, I think our economy is going to be running at a much slower pace through this summer all the way into fall and later in the fall when we might see a second wave of infections from COVID-19.

But what I hope for is that we would had better systems to mitigate some of the economic problems.

Right now we've tried to accelerate payments to households.

Do unemployment claims, provide business loans, all of which we've tried to invent, sort of on the fly?

And have not been very effective, so we haven't really built systems to handle the scale of payment to businesses and to households.

and I think if we have learned anything and whatever processes that we put in place during this time will be helpful.

If there is, you know a bigger spread of this disease later in the year.

Fall is people expect there will be, so I don't expect the economy is going to be running at full steam before we go back into another period of infection and shutdowns about what I think is important is if the government has the ability or as developed the ability, especially state and local governments to provide A2 businesses and households more effectively than they manage this time because they have not dealt with the scale of anything like this before.

But at least in the fall would be the second time they're doing it.

Yeah, well, Randy Zook.

Certainly Washington's turn open the spigot trillions of dollars.

So far enough more going to be needed even as we speak.

He's been even as we prepare this broadcast houses, debating, and likely to vote on another one 500 half another half trillion.

Exactly, you know Trey in her tray in there, and pretty soon you're talking about some real money.

We still cannot borrow our way out of debt.

At some point we've got to begin to address this exploding federal death that's accumulating as a result of this.

Basically all out war on this on this germ so.

Is it enough?

No, not.

So far it's gonna take a lot more and we're going to be astonished at the total cost of dealing effectively with this.

As Mervyn said, as we put these, hopefully more effective ways to get money into the economy and to a broader percentage or a larger percentage of the population in an efficient and speedy way.

Because we've got so many families and people across the country who are who live right on the edge paycheck to paycheck as the old expression.

Lots of people, or you know, it's about a month away from from being in really serious shape for a lot of families.

So we've got to be sensitive to that and we have to deal effectively with people who.

Who are in that predicament?

And we've got to find ways to get him.

Give him a chance to get back to work and and to be more and more self sufficient as we go along so.

We've spent a lot we're going to spend a lot more to get through this, yeah, Doctor Anderson.

We've got less than a minute remaining.

I'll give you give you that.

I'm the seconds remaining.

Well, I want to follow up on what Randy was just talking about it.

I don't think we know how much is going to be enough because I don't think we know yet how big the losses are.

These these losses are going to continue to Mount.

I think there has been significant demand destruction for a lot of our retail products.

I think as I said earlier, I think consumers are going to continue to be very cautious, which will equate to weaker.

It meant moving forward so losses are still mounting what we're gonna have to do because we can't shut the economy down completely every six months to avoid the COVID-19 impacts we need to be now developing more resilient and more robust systems and find ways to continue to operate a continue to to create value even as we deal with this this issue.

All right gentlemen ad with that we are literally out of time.

We want to thank all three of you for sharing your insights with us.

Thank you and please come back.

And we'll see you next week.

Support for Arkansas week provided by the Arkansas Democrat Gazette.

The Arkansas times and Kuer FM 89.