RENO, Nev. — There’s a scene in the 1996 comedy film “Black Sheep” in which Chris Farley’s character tumbles down a mountainside — hilariously somersaulting and screaming — for a solid minute.
For financial analyst Sanjay Varshney, that 60-second fall captures how the many businesses and people have felt during the past four months due to the swift state shutdowns and subsequent economic downturn caused by the coronavirus pandemic.
Varshney showed the clip during his presentation as the featured speaker of Western Industrial Nevada’s July 31 virtual event, “Predicting the Unpredictable: Our Region’s Economic Forecast, During and Post-COVID.”
“That video pretty much captures most of our sentiment,” said Varshney, who in July started his own wealth management firm, Goldenstone Wealth Management, after more than five years as a senior vice president for Nevada and California at Wells Fargo Private Bank – Wealth Management Group. “We were patient for the first couple of weeks. People said, ‘15 days, stay at home, after that, things will be great and go back to normal and schools will reopen.’ Fifteen days became 30; 30 became 60; 60 became 90.”
We’ve all seen the numbers. The stock market plunged 38% between its record-high in February to its March low; unemployment claims soared to 15 million in two weeks and 45 million over three months; the economy sank 32.8% in Q2. Not to mention, the rising number of coronavirus cases and COVID-reported deaths since March.
“We didn’t slide into a recession — we crashed into a recession,” said Varshnay, noting that this spring saw the second-fastest bear market in the history of the U.S. “Rarely does an economy crash into a recession. Usually there’s enough warning signs, enough data, enough stuff you can see on the radar that gives you enough time to plan ahead.”
With consumer spending accounting for roughly 70% of America’s GDP, Varshney, who’s also an author and chief economist with the Sacramento Business Review, said it made the economic landscape especially shaky when the crisis shut down the country.
“When the consumer loses confidence and doesn’t spend money, the economy takes a hit,” he said. “We were vulnerable because the consumer was told to stay indoors; we were told you cannot go anywhere.”
As a result, small businesses have been hit hardest by the COVID recession.
Consequently, he said it has forced businesses into adapting and innovating in order to survive, he said. Notably, in Nevada, small businesses make up more than 500,000 people, or 42%, of the private workforce, according to the Statistics of U.S. Businesses.
“The reality we are facing is you need to find new ways to do business,” said Varshney, a professor of finance at California State University, Sacramento. “My best advice is to innovate and figure out how the consumer is going to buy in the future.”
BIGGEST LITTLE RECOVERY?
Months into the pandemic, many states and regions nationwide are in stages of recovery, some slower than others, with social-distancing and masked workers and consumers becoming the norm.
Varshney said he’s “more bullish” on Reno-Sparks being a post-COVID “winner” compared to other pockets of the U.S.
He pointed to the fact the region has become much more diversified over the past decade — fueled by the tech and manufacturing industries — and no longer puts most of its economic chips on gaming and hospitality like Las Vegas.
“Reno should probably move more away from gaming,” he said. “You can clearly see in this pandemic, we have learned a lesson that if you are very hospitality-driven, those cities have taken it on the chin. And the cities that were extremely well diversified, they are doing OK.”
Another lesson the pandemic taught America, Varshney said, is that its supply chain is “horrible.”
“I think the realization is the supply chain needs to come back to the U.S.,” he said. “I hope there’s a silver lining that our politicians will wake up and our economic leaders will wake up and stop depending on China the way they have been depending on China.”
To that end, Varshney said manufacturing is the best opportunity for the U.S., especially in regions like Northern Nevada.
“If I was in Reno right now in the economic leadership, I would say, ‘let’s see if we can do a better job with manufacturing,’” said Varshey, adding that he’d also be pushing for more technology.
With Nevada’s business-friendly tax structure, cheaper land and Reno’s proximity to the Bay Area, Varshney expects the Biggest Little City to continuing growing.
Currently, he said the Reno-Sparks economy has a labor force of 241,000 and a GDP of about $30 billion. Nevada’s overall GDP is roughly $180 billion, he noted.
“The question is … is Reno prepared for the growth?” Varshney asked. “Do you have enough water supply? Do you have enough schools? Do you have enough infrastructures for housing? Do you have enough electric grids?
“All of those challenges, I think, made the conversation in Reno a little bit more complicated than just a pure celebration of the fact that Reno is going to succeed no matter what.”
-->RENO, Nev. — There’s a scene in the 1996 comedy film “Black Sheep” in which Chris Farley’s character tumbles down a mountainside — hilariously somersaulting and screaming — for a solid minute.
For financial analyst Sanjay Varshney, that 60-second fall captures how the many businesses and people have felt during the past four months due to the swift state shutdowns and subsequent economic downturn caused by the coronavirus pandemic.
Varshney showed the clip during his presentation as the featured speaker of Western Industrial Nevada’s July 31 virtual event, “Predicting the Unpredictable: Our Region’s Economic Forecast, During and Post-COVID.”
“That video pretty much captures most of our sentiment,” said Varshney, who in July started his own wealth management firm, Goldenstone Wealth Management, after more than five years as a senior vice president for Nevada and California at Wells Fargo Private Bank – Wealth Management Group. “We were patient for the first couple of weeks. People said, ‘15 days, stay at home, after that, things will be great and go back to normal and schools will reopen.’ Fifteen days became 30; 30 became 60; 60 became 90.”
We’ve all seen the numbers. The stock market plunged 38% between its record-high in February to its March low; unemployment claims soared to 15 million in two weeks and 45 million over three months; the economy sank 32.8% in Q2. Not to mention, the rising number of coronavirus cases and COVID-reported deaths since March.
“We didn’t slide into a recession — we crashed into a recession,” said Varshnay, noting that this spring saw the second-fastest bear market in the history of the U.S. “Rarely does an economy crash into a recession. Usually there’s enough warning signs, enough data, enough stuff you can see on the radar that gives you enough time to plan ahead.”
With consumer spending accounting for roughly 70% of America’s GDP, Varshney, who’s also an author and chief economist with the Sacramento Business Review, said it made the economic landscape especially shaky when the crisis shut down the country.
“When the consumer loses confidence and doesn’t spend money, the economy takes a hit,” he said. “We were vulnerable because the consumer was told to stay indoors; we were told you cannot go anywhere.”
As a result, small businesses have been hit hardest by the COVID recession.
Consequently, he said it has forced businesses into adapting and innovating in order to survive, he said. Notably, in Nevada, small businesses make up more than 500,000 people, or 42%, of the private workforce, according to the Statistics of U.S. Businesses.
“The reality we are facing is you need to find new ways to do business,” said Varshney, a professor of finance at California State University, Sacramento. “My best advice is to innovate and figure out how the consumer is going to buy in the future.”
BIGGEST LITTLE RECOVERY?
Months into the pandemic, many states and regions nationwide are in stages of recovery, some slower than others, with social-distancing and masked workers and consumers becoming the norm.
Varshney said he’s “more bullish” on Reno-Sparks being a post-COVID “winner” compared to other pockets of the U.S.
He pointed to the fact the region has become much more diversified over the past decade — fueled by the tech and manufacturing industries — and no longer puts most of its economic chips on gaming and hospitality like Las Vegas.
“Reno should probably move more away from gaming,” he said. “You can clearly see in this pandemic, we have learned a lesson that if you are very hospitality-driven, those cities have taken it on the chin. And the cities that were extremely well diversified, they are doing OK.”
Another lesson the pandemic taught America, Varshney said, is that its supply chain is “horrible.”
“I think the realization is the supply chain needs to come back to the U.S.,” he said. “I hope there’s a silver lining that our politicians will wake up and our economic leaders will wake up and stop depending on China the way they have been depending on China.”
To that end, Varshney said manufacturing is the best opportunity for the U.S., especially in regions like Northern Nevada.
“If I was in Reno right now in the economic leadership, I would say, ‘let’s see if we can do a better job with manufacturing,’” said Varshey, adding that he’d also be pushing for more technology.
With Nevada’s business-friendly tax structure, cheaper land and Reno’s proximity to the Bay Area, Varshney expects the Biggest Little City to continuing growing.
Currently, he said the Reno-Sparks economy has a labor force of 241,000 and a GDP of about $30 billion. Nevada’s overall GDP is roughly $180 billion, he noted.
“The question is … is Reno prepared for the growth?” Varshney asked. “Do you have enough water supply? Do you have enough schools? Do you have enough infrastructures for housing? Do you have enough electric grids?
“All of those challenges, I think, made the conversation in Reno a little bit more complicated than just a pure celebration of the fact that Reno is going to succeed no matter what.”
