U.S. nowhere close to reopening shuttered economy, experts say
How long can we keep this up?
It is still very early in the U.S. effort to snuff a lethal pandemic by shutting down much of the economy. But there is a growing question — from workers, the White House, corporate boardrooms and small businesses on the brink — that hangs over what is essentially a war effort against a virus that has already killed more than 10,000 Americans.
There is no good answer yet, in part because we don’t even have the data needed to formulate one.
Essentially, economists say, there won’t be a fully functioning economy again until people are confident that they can go about their business without a high risk of catching the coronavirus.
“Our ability to reopen the economy ultimately depends on our ability to better understand the spread and risk of the virus,” said Betsey Stevenson, a University of Michigan economist who worked on the White House Council of Economic Advisers under President Barack Obama. “It’s also quite likely that we will need to figure out how to reopen the economy with the virus remaining a threat.”
Public health experts are beginning to make predictions about when coronavirus infection rates will peak. Economists are calculating when the cost of continuing to shutter restaurants, shopping malls and other businesses — a move that has already pushed some 10 million Americans into unemployment, with millions more on the way — will outweigh the savings from further efforts to slow the virus once the infection curve has flattened out.
Government officials are setting competing targets. President Donald Trump has pushed his expected date of reopening the economy to the end of April. “We have to get back to work,” he said in a briefing Saturday. “We have to open our country again. We don’t want to be doing this for months and months and months. We’re going to open our country again. This country wasn’t meant for this.”
Some governors have set much more conservative targets, such as Ralph Northam of Virginia, who canceled the remainder of the school year and imposed a shelter-at-home order through June 10. Other states, such as Florida, only recently agreed to shut activity down but have set more aggressive targets — April 30, in the case of the
Sunshine State — to it.
Those targets are at best mildly informed guesses based on models that contain variables — including how many people have the virus and how effective suppression measures will prove to be. The models cannot yet give us anything close to a precise answer on the big question looming over Americans’ lives and livelihoods.
To determine when to restart activity, said R. Glenn Hubbard, a former top economist under President George W. Bush, “we need more information.”
Interviews with more than a dozen economists, many of whom are veterans of past presidential administrations, reveal broad consensus on the building blocks the economy needs — but does not yet have — to begin the slow process of restoring normalcy in the U.S. economy.
That includes widespread agreement that the United States desperately needs more testing for the virus in order to give policymakers the first key piece of evidence they need to determine how fast the virus is spreading and when it might be safe for people to return to work.
Policymakers will also need better data on how strained hospitals and entire regional health care systems are likely to be if the infection rate flares up and spreads.
Ideally, they would sufficiently control the rate to establish so-called contact tracing in order to track — and avoid — the spread of the virus across the country.
Once such levels of detection are established, it is possible that certain workers could begin returning to the job — for example, in areas where the chance of infection is low.
Some experts have talked about quickly bringing back workers who have contracted the virus but recovered with little
restart effect.
Testing is the best way to identify such workers, who may have had the virus with few or no symptoms and possibly not realized they were ever infected.
While they wait for the infection rate to fall, policymakers will need to provide more support to workers who have lost jobs or hours and to businesses teetering on the brink of failure. That could mean trillions more in small business loans, unemployment benefits and direct payments to individuals, and it could force the government to get creative in deploying money to avoid bottlenecks.
Adam Ozimek, chief economist at Upwork, said additional money for small business will be crucial throughout the full extent of the crisis — both to prevent a crush of business failures and to keep owners and customers from flouting the national effort to reduce infections.
“I don’t think you can force hundreds of thousands of small business owners to voluntarily shut down and let failure happen to them,” Ozimek said.
“They won’t do it, the public won’t support it, and frankly, I don’t think local authorities would stop them.”
Policymakers will also need to give better support and protection to Americans who are putting their own health at risk to keep the essential parts of the economy running, such as doctors, nurses, grocery store clerks and package delivery drivers.
Policymakers will need patience: Restarting activity too quickly could risk a second spike in infections that could deal more damage than the first because it would shake people’s faith in their ability to engage in even limited amounts of shopping, dining or other commerce.
“It’s important not to lift too early,” said Emil Verner, a Massachusetts Institute of Technology economist who is a co-author of a new study that found that cities that took more aggressive steps to curb the 1918 flu pandemic in the United States emerged with stronger economies than cities that did less.
“Because if we lift too early, the pandemic can take hold again. And that itself is very bad for the economy.”
Finally, policymakers will need to level with Americans — and themselves — and concede the possibility that the shutdown and its effects could drag well beyond the end of the month.
Aggressive suppression measures could lead to a gradual resumption of activity that begins in some places as soon as May, several experts said. But business as usual might not come back until a vaccine is developed, which could take more than a year.
“We should certainly be prepared for a meaningful level of deliberate suppression of economic activity for the rest of the year,” said Jason Furman of Harvard University, who was a top economist under Obama.
The Congressional Budget Office wrote Thursday that it expected at least one-quarter of the current suppression measures to last through year’s end and that the unemployment rate could still be 9% at the end of 2021. Lawmakers need to be ready to keep filling the void with support to businesses and workers, said Karl Smith, vice president for federal policy at the Tax Foundation in Washington.
“The possibility of an unofficial quarantine for weeks or months after the official one is lifted is real,” Smith said. “After that, my guess is that the economy is in major trouble.”