DeSoto County, like the rest of the country, is clearly in a recession, marked by historic unemployment rates and uncertainty throughout the economy. New data about consumers, businesses and employees in the county suggests that this downturn could result in a recovery counted in years, not months.
Still, optimism about controlling COVID-19 and businesses reopening has caused this recession — which is similar to the Great Recession in 2008 by many metrics — to seem different to some in the community.
DeSoto County has shown improvement in its unemployment rate since the start of the pandemic, but the recession, taken as a whole, has displaced as many workers as any event in the last 30 years. In the past two years, the county’s unemployment rate has hovered between 3.5% and 5%.
The county has fared better than the state of Mississippi in terms of unemployment, and both the state and county — though they have seen one of the worst unemployment fallouts in decades — have shown marked improvements since May.
Consumer confidence, though down significantly from recent years, is still stronger in the area than some experts expected. Spending has dropped significantly, but some types of businesses have seen stabilization. Unemployment is at a decade high for the county, but some are hopeful that the economic troubles will leave the community as quickly as they descended on it.
Not good, but better than expected
The fact that the greater Memphis area, including DeSoto County, is in a recession is clear — the term is used multiple times in a new study from researchers at the University of Memphis about consumer confidence in the area.
Still, some of the researchers were surprised that the results of the consumer confidence survey were not worse.
The study showed a downturn in consumer confidence in almost every category across the greater Memphis area, including DeSoto County. One in four people surveyed believe they are worse off financially than they were four years ago, compared to one in 10 of those surveyed in 2019. One in five said they are worse off than they were five years ago, compared to one in 10 of those from the 2019 survey.
Nearly half of people surveyed said that they were about the same financially as they were last year, and 75% said they did not lose their job because of COVID-19.
John Gnuschke, the professor of economics and senior researcher at the University of Memphis who led the study, said that the financial outlook has improved over recent months for many people as unemployment rates decrease and the economy gradually reopens.
“Some people obviously are going back to work; the economy's reopened; unemployment rates are falling; things are looking better than they looked two to three months ago.” Gnuschke said. “But are they great? No, they're not great.”
The survey of consumers was conducted in the first two weeks of July, and Gnuschke said that he believes that caused the results to show more confidence because a little bit of rebound was being felt in the economy by that point in the year — at least in terms of perception.
“Whether (consumer optimism) is warranted or not, I think, remains unclear,” he said.
This study showed less confidence than similar studies he conducted in partnership with Paragon Bank over recent years, and Gnuschke said that the shift was pronounced.
See the faces behind the numbers — how two businesses have been affected by the pandemic and recession.
Worse than the Great Recession?
Gnuschke said the recession caused by the coronavirus pandemic would be comparable — if not worse — to the Great Recession in 2008.
“This is perhaps worse, in terms of the great in comparison with a great recession because of the speed at which it happened. The economy fell apart in a month,” he said. “That’s virtually unheard of.”
People didn’t have time or know how to prepare for the economic impacts of COVID-19 like they did in 2008, Gnuschke said.
Another big difference from this recession and the Great Recession is the housing market. The housing market is at an all-time high now in the county, as previously reported by The Times-Tribune. The housing market in the Great Recession was a cause for, not an exception to, the economic downturn.
“It took us 10 years to recover from the Great Recession in terms of job opportunities,” he said. “What I'm suggesting here is that this recession, this downturn, will take us an extended period of time before we see complete recovery.”
Though Gnuschke estimates only about one quarter of people in the area are severely affected by the economic impacts from the pandemic, he said the recovery would be a years-long process for DeSoto County.
“Times are better than they were a few months ago,” he said. “There are more jobs, there's more income, more opportunities. But we're nowhere near where we need to be.”
Though the trends have been positive for the county’s economy for nearly a decade, the sudden fall in progress means there may be even more ground to make up in the long term.
“Everybody can tell a story about ‘things are better,’ and they are,” Gnuschke said. “But we've got a long way to go, and that's the story.”
The fate of businesses after a shutdown
Consumer confidence isn’t the only dramatic change that has brought on a new recession. Business closures, whether temporary or permanent, meant the flow of money throughout the economy was stopped in large part in a very short period of time.
DeSoto County saw significant decreases in spending on average in many categories compared to last year, according to an analysis by Womply, a commerce platform business that also analyzes market metrics, According to the analysis, which included dozens of county businesses across many categories, auto services saw a 16% decline, health and beauty saw a 36% decline, restaurants saw a 37% decline and retail saw a 21% decline.
Some businesses have not had a decline in spending from last year: food and beverage shops saw a 10% increase in spending, and fast food businesses saw a 19% increase. Still, some of those businesses missed the expectations of their year-over-year growth.
The closure rate of businesses across the county, also from the Womply analysis, showed an increase from 2019 data.
Food and beverage businesses saw 13% more closures, health and beauty businesses saw 45% more closures, fast food businesses saw 6% more closures, restaurants saw 25% more closures and retail businesses saw 14% more closures.
The data in DeSoto County largely matched the trends of that in the greater Memphis area, which included the analysis of hundreds of businesses.
Gnuschke said that small businesses naturally have a lot of turnover, but added that the pandemic and recession combined would mean many more closures.
“We can expect a lot of small businesses just not to survive,” he said.
Robert Shaw, CEO of Paragon Bank, said that there was a lot of uncertainty among the small businesses with which he has been working, but added that not all businesses are struggling to the same extent.
“I think it’s uneven. I think there are some businesses that are hurting worse than others,” he said.
Still, Shaw said that people have been reacting to the downturn.
“We see people doing some extra savings and preparing as if it might get worse,” he said.
Optimism among leaders
As the recession sets in, some leaders around the county are optimistic about the future — some with more hesitancy than others.
Vickie DuPree, the executive director of the Olive Branch Chamber of Commerce, said she believed businesses in the area would fare better than others around the country.
“I think they’re optimistic, especially because we are in an area that hasn’t seen a drastic downturn,” she said. “Our area’s pretty diversified in our businesses and I think they’re just learning to adjust.”
She said that there have not been many businesses closing for good that she has seen, but that some operations are scaling back or changing practices to adapt to the pandemic.
“Not everything is back to normal, but I think maybe everyone is getting used to the rules,” she said.
Scott Phillips, mayor of Olive Branch, agreed.
“Overall, we fared well,” he said. “Obviously, the stimulus package did help, and it did open up some spending.”
Phillips added that he expected to see some change as those funds dry up.
Jim Flanagan, president and CEO of the DeSoto County Economic Council, said that growth from previous years has continued into recent months and shows promise for the future of the county.
Flanagan said that in terms of industrial additions and expansions, jobs created and capital investments, 2020 numbers for the county have already exceeded 2019, which was a record year at the time.
“In our efforts to recruit and to retain industry in DeSoto County, it appears that we’re exceeding our record year last year already, by the end of September,” Flanagan said. “In the midst of a pandemic, we have been very fortunate to continue to attract key investors to DeSoto County.”
Flanagan added that the growth in some areas up to this point of 2020 had been encouraging. Mayor of Southaven Darren Musselwhite has also noted encouraging signs of the economy.
Though he could not be reached at time of publication, Musselwhite has publicly spoken about the strength of the economy, even denying that the economy faltered at all.
“A thriving housing market is a key indicator of a thriving economy. A thriving stock market is another,” he said in a Facebook comment in August. “June and July set records for sales tax revenue in Southaven. There is no faltering economy. Our economy is thriving.”
The sales tax revenue remitted from the state of Mississippi to the city of Southaven was down compared to earlier years in June and July, according to data from the Southaven government. Data aggregated by Mississippi State University indicate that sales tax collected by Southaven in June was down compared to earlier years but up in July. In August, sales tax increased again compared to earlier years — both in collection amounts and in the amount Mississippi remitted to Southaven.
Musselwhite did not return multiple interview requests for this article.
Even as time passes and new data comes to light, uncertainty remains a strong element in the minds of consumers, employees, business owners and investors.
“It’s hard, if not impossible, to predict the future in normal times,” Ryan Hanson, a geographer who guided the data gathering for the consumer sentiment survey, said.
It is still difficult to say when the coronavirus will be contained indefinitely, when a vaccine will be available, who will be elected, if or when more government stimulus money is released or when the recession may end. Both medical and economics experts agree that the impacts of the pandemic will likely continue for years, perhaps even a decade or more.”
“What I’m looking for is better times,” Gnuschke said. “It can’t get much worse.”