Face masks could really save the economy, says Goldman Sachs


Monday evening, the investment bank published a an in-depth analysis which makes the economic and medical case for a national mask mandate.

By studying the link between coronavirus infections and mask warrants in US states and abroad, Wall Street Bank has estimated that a national warrant could reduce the daily growth rate of confirmed cases by one point percentage to just 0.6%.

This, in turn, could avoid the need for formidable locks that would eliminate 5% of US GDP, according to the report. “We find that face masks are associated with much better results on coronaviruses,” wrote Jan Hatzius, chief economist at Goldman Sachs, in the report.

In April, the federal government issued a “recommendation” to wear masks in public. However, unlike countries like Germany, India, Italy, the United Kingdom and Mexico, there are no national requirements in the United States..

President Donald Trump, who claims the masks are a “double-edged sword”, refuses to publicly wear one himself.

There is a great disparity between the use of masks in the United States, although Dr. Anthony Fauci, the country’s leading infectious disease specialist, says masks are “extremely important”.

For example, Goldman Sachs said that only 40% of Arizona residents still report wearing a mask in public, compared to almost 80% in Massachusetts.

A national warrant would increase use “significantly”, particularly in states like Florida and Texas, where masks are worn primarily on a voluntary basis, according to the Goldman Sachs report. Overall, a warrant could increase the percentage of people wearing masks by 15 percentage points nationally.

“Our analysis suggests that the economic benefit of a face mask mandate and increased use of face masks could be substantial,” wrote Hatzius.

Trump suggests masks are counterproductive

The results contrast sharply with Trump’s skepticism about the masks.

“Masks are a double-edged sword,” said the president of the Wall Street Journal in a recent interview. “People touch them. And they catch them and I see it all the time. They come in, they take the mask. Now they are holding it in their fingers now. And they put it on the desk and then they touch their eye and they touch their nose. ”

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In contrast, Joe Biden, the presumed Democratic presidential candidate, expressed support for a federal mandate for the masks.

“These masks make a huge difference,” Biden told the CBS KDKA branch last week. “I would do my best to make people have to wear masks in public. ”

Even parliamentary minority leader Kevin McCarthy, a Trump ally, told Fox News on Tuesday that he supported wearing a mask as a way to “keep this economy open.”

“Wearing the mask is the best opportunity for us to keep this economy open, to continue working, to keep us safe and to help us progress towards this vaccine where we are in a much stronger position than any other country before, “said McCarthy.

V-shaped recovery is a “fantasy”

The debate comes as health experts and investors become increasingly nervous about the recent spike in coronavirus infections in the Sun Belt states, particularly Arizona, Texas and Florida.

“In a March rerun, the virus now appears to be getting out of control in about a third of the United States,” Ethan Harris, a global economist at Bank of America, wrote on Tuesday.

Morgan Stanley biotechnology analyst Matthew Harrison warned in a report Tuesday that if Texas and Florida “don’t break their exponential growth in the next 10 days, we would expect the epidemic get out of control without more aggressive measures ”.

All of this casts additional doubt on the already limited prospects for a V-shaped recovery in the US economy after the pandemic.

“With half of the country opening slowly and the other half closing slowly, the economy could flatten overall,” wrote Harris of Bank of America.

Constance Hunter, chief economist at KPMG, told CNN Business that she was concerned that the pandemic would leave “lasting scars” on the job market and that entire companies “would not return”.

“There is no way we can have a V-shaped recovery. It’s a fantasy,” said Hunter.

The second wave is looming

The good news is that medical experts remain optimistic about the prospects for a vaccine.

Ninety-eight percent of executives and investors in the life sciences industry expect a vaccine to be developed, according to a poll released last week by Stifel Financial.

However, more than three-quarters say that a vaccine will not be widely available until the end of next year or beyond. And more than half (52%) say there will be a second wave serious enough to cause government-imposed closures and restrictions.

Any shutdown would shutdown for the economy. Goldman Sachs estimates that the combination of government restrictions and social distancing wiped out 17% of U.S. GDP between January and April.

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“A mandate for a national mask could potentially replace renewed blockages that would otherwise steal almost 5% of GDP,” said Goldman Sachs in the report on Monday.

However, politics have prevented such a mandate. “So will the United States adopt a national facial mask mandate?” This is uncertain, in part because masks have become such a politically and culturally charged issue, “wrote Hatzius.

Hunter, KPMG economist, said she was “dismayed, confused and sad” that masks have become such a controversial political issue as they could allow life to return to normal sooner by depriving the virus of hosts.

“The virus has taken away our freedom and people say, ‘I want to regain my freedom,'” said Hunter. “But the mask is the wrong target for his negative feelings. The mask can actually give us our freedom. “


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