business news in context, analysis with attitude

by Kevin Coupe

Excellent piece this morning in the New York Times about the debate taking place among economists about what it will take to return to a place in which the economy is full-functioning - which is hard to quantify or qualify since the data doesn't exist within which to formulate an answer.

However, the Times writes, 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 virus … 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."

After all, as the Wall Street Journal reports, "At least one-fourth of the U.S. economy has suddenly gone idle amid the coronavirus pandemic … Forty-one states have ordered at least some businesses to close to reduce the spread of the coronavirus, according to Moody’s. Restaurants, universities, gyms, movie theaters, public parks, boutiques and millions of other “nonessential” businesses have shut off the lights as a result. The upshot: U.S. daily output has fallen roughly 29%, compared with the first week of March, just before the spate of closures, the analysis shows."

But there are a lot of moving parts and a lot of unknowns - perhaps the most important of which is how effective and how aggressive these suppression measures prove to be.

Some excerpts from the Times story:

•  "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."

•  The story notes that there is "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 contract the virus but recover with little 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."

•  "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."

(If you're interested, you can read the entire Times story here.)

This latter, Eye-Opening point in some ways strikes me as the most important one - that the nation runs the risk of even worse and more sustained economic damage if an attempt is made to impose a sense of normality before the country is ready, as opposed to allowing normality to return in some sort of organic way.

Meanwhile, there is another perspective in what it will take to get back to some semblance of normal, from the Wall Street Journal:

"Sports will be back. At some point in the possibly distant future, athletes will head back to work in arenas, ballparks and stadiums, and leagues will promise a return to normalcy. There will finally be something to watch on television again.

"But there are some people who might not be ready so quickly: the fans.

"What happens next in sports may be beyond the control of leagues and the television networks that pay them billions of dollars. The people with the power are the ones who packed the stands. And sports will only be normal once the public decides it’s socially and psychologically acceptable to be around thousands of strangers again … It’s no longer a given that play will resume this year. 'Until you’re widely vaccinated,' Bill Gates said last week of mass gatherings, 'those may not come back at all'."

Scary and uncertain times ahead, to be sure.