Models measuring Worcester’s economic growth showed that New England’s second largest city experienced a slowdown prior to the governor restricting dine-in service at restaurants and gatherings larger than 250.
The Worcester Economic Index (WEI), which is calculated by Assumption College, fell by 1.6% in the first quarter of 2020. The report that addresses the WEI said the drop will be inconsequential compared to future estimates of decline.
Calculations used data from surveys completed between March 8 and March 14. Gov. Charlie Baker prohibited restaurants across the state from offering on-site dining on March 15. Nine days later he issued the stay-at-home advisory.
The first confirmed case of coronavirus in Worcester also wasn’t announced until March 14.
While the surveys don’t capture the “substantial economic disruption” in the end of March and April, they reveal the initial decline caused by the coronavirus.
Data collected through the first two weeks of March, said household employment fell within the city by 6,974.
The Worcester Economic Index is a measure of overall economic activity in the Worcester economy that is derived from available employment and unemployment data.
In some ways, the coronavirus may have even made the model obsolete. It’s built on the assumption that changes in the economy are relatively smooth, Assumption College said. The shutdown of non-essential business arrived in the city abruptly.
“The widespread closure of much of the economy in response to coronavirus has been so abrupt that prior relationships between economic variables have likely changed,” the report said. “As a result, the Worcester Economic Index, as well as other economic indicators will probably need substantial revision in the coming months.”
The report continued, “The coronavirus pandemic and its sudden and dramatic effect on economic activity is so far from ordinary that its impact cannot be captured using the forecast model of the Worcester Economic Index.”
The Worcester Economic Index normally provides a future forecast for the city, but again the drastic change caused the models to provide a prediction that is of “little value.”
Not surprisingly, the forecast provided negative signals for the future, however, the report said, the model does not provide a reasonable estimate of the size of the economic downturn which the economy is currently experiencing.
“While the extent of the decline in economic activity will become more apparent during the second quarter,” the report said. “It is clear that the economy was already heading toward a recession by the end of March.”
The next issue of Worcester Economic Indicators will be released in early August 2020.