Former Fed Economist: This Recession Is ‘Unlike Anything We’ve Seen In The Past’

There’s little about the current downturn that resembles past recessions—both in what it looks like and how it will end, says Thomas J. Cunningham, chief economist for the Metro Atlanta Chamber, during CRN’s Best of Breed 2020 conference.


The recessionary conditions caused by the COVID-19 pandemic are altogether a “different situation” from anything the world has seen before, with industries such as technology seeing growth while other segments are floundering, a former Federal Reserve Bank economist told attendees at CRN’s Best of Breed 2020 conference.

“In terms of what set up this recession, it was a very, very different situation than we’ve seen in the past. And consequently, you need to be very careful about interpreting what’s going on going forward,” said Thomas J. Cunningham, senior vice president and chief economist for the Metro Atlanta Chamber, who previously spent three decades at the Federal Reserve Bank of Atlanta.

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Cunningham—who was vice president and senior economist upon retiring from the Fed in 2015—offered the remarks during a virtual session at Best of Breed 2020 Wednesday, being held by CRN parent The Channel Company.

One key difference is that the recession was not caused by cutbacks in consumption but by a public health crisis that unnaturally forced segments of the economy to slow down or halt altogether, Cunningham said.

Policy makers also don’t have the usual responses available to them because they largely must wait until the public health crisis is controlled, he said.

“The course of the recession is going to be very different as we plod through [the crisis]—waiting for some signs that the pandemic is actually under control,” Cunningham said.

There is also a “bifurcation” in the economy that past recessions haven’t seen: Some segments are decimated, such as hospitality, even as segments such as IT see tailwinds from the shift to tech-reliant remote work, he said.

In terms of economic recovery, it’s “pretty unlikely to resemble any recovery that we’ve seen in the past,” Cunningham said.

When it comes to the tech industry, there has actually been a significant amount of innovation—including in the way businesses are adopting technology, he noted. There has been more technology deployed at organizations that were previously “on the margin of adopting technical infrastructure,” Cunningham said.

The investment in technology “has been pulled forward quite considerably,” he said.

Solution providers in the IT channel have been on the front lines of bringing critical technologies to businesses and schools during the 2020 pandemic, such as Kitchener, Ontario-based Five Nines IT Solutions—where founder and CEO Douglas Grosfield said the past months have been extremely busy.

“We’ve done a fair amount of new customer acquisition as a result,” Grosfield said. “Business is up significantly. Some of the growth is by virtue of the efforts we’ve been undertaking over the last couple years to grow. But a good chunk of growth is also directly attributed to the realities everybody’s been facing over the last few months.”

On the other hand, the boom in technological adoption has also created new risks for businesses—particularly around cybersecurity, he said.

“Vendors are rushing products to market to take advantage of immediate demand. But the reality is, that doesn’t always translate into security,” Grosfield said. “The conversations we’re having with customers are around making sure you involve your trusted adviser, your tech partners, before you adopt new technology. Because it may not be what it’s portrayed to be and may be exposing your company to greater risk.”

Another segment of the economy that is seeing impacts—and will increasingly see them going forward—is real estate, Cunningham said.

Remote work will likely remain higher into the future in no small part because the concept had already been picking up steam even before the pandemic, he said.

“The idea that you didn’t have to be in an office to do office work was becoming more and more popular,” Cunningham said.

Post-pandemic, “will we go back to the level of intensity in office usage that we’d seen before? That seems fairly unlikely,” he said. “The office space to GDP ratio is going to decline as people work more remotely, and in locations that better serve their productivity. “

Still, “that doesn’t mean that offices are dead,” Cunningham said. “The accidental creativity that comes along with casual interaction is critical in many creative segments. But it doesn’t mean it needs to be 9 to 5, five days a week. That kind of usage of office space is unlikely to persist.”

Ultimately, it’s worth re-emphasizing that “this recession is something unlike anything that we have seen in the past,” Cunningham said. “Some segments of the economy are recovering. At the same time, we’ve got some slowness that’s going to be a problem for sectors in the economy for some time to come. And that bifurcation is a challenge that we’re going to be facing for a very long time—at least until we get a real handle on the global public health pandemic that put us into the situation in the first place.”