Coronavirus of the US economy: the US is far from reopening the economy, experts say

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WASHINGTON – How long can we continue?
It is still very early in the US effort to stifle a deadly pandemic by shutting down much of the economy. But there is a growing question – workers, the White House, boards of directors and small businesses on the brink – which hangs over what is essentially a war effort against a virus that has already killed more than 9,000 Americans.

There is not yet a correct answer, in part because we do not even have the data to formulate one.

Essentially, according to economists, there will only be a fully functioning economy again if people are convinced that they can go about their business without the 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, an economist at the University of Michigan who worked on the Council of Economic Advisors at the White House under President Barack Obama. “It is also very likely that we will have to find a way to reopen the economy, with the virus remaining a threat. “

Public health experts are starting to forecast when coronavirus infection rates will peak. Economists calculate when the cost of continuing to close restaurants, shopping malls and other businesses – a decision that has already pushed some 10 million Americans out of work, with millions more en route – will exceed savings from additional efforts to slow the virus down once the infection curve has flattened.

Government officials set competing targets. President Donald Trump has postponed his scheduled economic reopening date to the end of April. “We have to go back to work,” he said at a briefing on Saturday. “We have to reopen our country. We don’t want to do this for months and months and months. We are going to reopen our country. This country wasn’t made for that. “

Some governors have set much more conservative goals, such as Ralph Northam of Virginia, who canceled the rest of the school year and imposed a home shelter until June 10. Other states, such as Florida, have recently agreed to cease operations, but have set more aggressive goals – April 30, in the case of the Sunshine State – to restart it.

These targets are at best moderately informed assumptions based on models that contain variables – including the number of people infected with the virus and the effectiveness of removal measures. Models cannot yet provide us with a precise answer to the big question looming over the lives and livelihoods of Americans.

To determine when to resume business, said R. Glenn Hubbard, a former senior economist under President George W. Bush, “we need more information.”

Interviews with more than a dozen economists, many of whom are veterans of the former presidential administrations, reveal a broad consensus on the basic elements that the economy needs – but not yet – to begin the slow process of normalization in the American economy.

This includes widespread agreement that the United States desperately needs more testing for the virus in order to give policymakers the first piece of evidence they need to determine how quickly the virus spreads and when it can be safe for people to return to work.

Without more testing, “there is no way to set a time limit to open the economy,” said Simon Mongey, an economist at the University of Chicago, who is among the authors of a new study that found that rapid deployment of randomized virus screening could reduce health and economic damage.

“It will depend on the ability to identify people with coronavirus, understand how easily these people can spread the disease to others, and then appropriately isolate those who are contagious,” said Mongey.

Policymakers will also need better data on the strain on hospitals and overall regional health systems if the infection rate increases and spreads. Ideally, they would control the rate enough to establish what is known as contact tracking in order to track – and avoid – the spread of the virus across the country.

Once these detection levels are established, some workers may start to return to work – for example, in areas where the risk of infection is low. Some experts have spoken of quickly bringing back workers who contracted the virus but recovered with little effect. Screening is the best way to identify these workers, who may have had the virus with few or no symptoms and may not have realized they had been infected.

Until the infection rate goes down, policymakers will need to provide more support to workers who have lost their jobs or hours and to businesses that are on the brink of failure. This could mean billions of dollars more for small business loans, unemployment benefits and direct payments to individuals, and it could force the government to be creative in deploying money to avoid bottlenecks. strangulation.

Lisa Cook, an economist at Michigan State University who worked at the Obama White House, said lawmakers should consider spending $ 1,500 a month on individuals via mobile apps like Zelle to reach more people, especially low-income, non-white Americans who disproportionately lack traditional banking. accounts. Mobile payments, Cook said, would also “make it easier and faster to make subsequent payments to family members and friends in need.”

Government efforts could prove crucial to maintain public support for what amounts to prolonged economic drought. Adam Ozimek, chief economist at Upwork, said that additional funds for small businesses will be crucial throughout the crisis – both to avoid a crushing of business failures and to prevent 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 shut down voluntarily and let them fail,” said Ozimek. “They won’t do it, the public won’t support it, and frankly, I don’t think the local authorities would stop them. “

Policymakers will also need to provide better support and protection for Americans who put their own health at risk to keep essential parts of the economy going, such as doctors, nurses, grocery clerks and delivery drivers. of packages.

Heather Boushey, President of the Washington Center for Equitable Growth, an inequality focus group, said these workers must have paid sick leave, adequate medical coverage, access to affordable coronavirus testing and care. for their children while they worked to stay. healthy and protect consumers from further spread of the virus.

“It’s the economy at this point – these workers,” said Boushey. “And their health and safety are imperative for my safety. “

Policymakers will need patience: restarting the activity too quickly could risk a second peak of infections which could cause more damage than the first, as it would shake people’s confidence in their ability to commit to quantities even limited shopping, dining or other commerce.

“It’s important not to get up too early,” said Emil Verner, economist at the Massachusetts Institute of Technology, co-author of a new study that found that cities that have taken more aggressive measures to stem the pandemic from 1918 flu in the United States emerged. with stronger economies than cities that have done less. “Because if we get up too early, the pandemic can start again. And that in itself is very bad for the economy. “

Finally, policymakers will need to put themselves on par with the Americans – and themselves – and recognize the possibility that the closure and its effects may extend far beyond the end of the month.

Aggressive enforcement measures could lead to a gradual resumption of activities which would start in some places as early as May, according to several experts. But the status quo may not return until a vaccine is developed, which could take more than a year.

“We certainly must be ready for a significant level of deliberate suppression of economic activity for the rest of the year,” said Jason Furman of Harvard University, who was one of the best economists under Obama.

The Congressional Budget Office wrote on Thursday that it expects at least a quarter of current crackdowns to last until the end of the year and that unemployment could still be 9% at the end of the year. end of 2021. Lawmakers must be ready to continue filling the void with the support of business and workers, said Karl Smith, vice president of federal policy at the Washington Tax Foundation.

“The possibility of unofficial quarantine for weeks or months after the lifting of the official quarantine is real,” said Smith. “After that, I guess the economy is in big trouble. “



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