The Shape of Economic Recovery
The main question, of late, on economists’ minds is will recovery be V-shaped, Z-shaped, L-shaped, a W, or a swoosh. What does that mean in everyday terms? In other words, what will that look like and how will that manifest for everyday people?
Two commonalities in the different theories include:
- There is a lot of uncertainty; and
- The rebound is not likely to be fast.
For lessons, experts turn to certain past experiences for clues like the great recession of 2008 and the recovery from the SARS virus of 2003. In terms of the latter, there are several notable differences that likely preclude the recovery from COVID-19 working similarly. And in terms of the former, there are some parallels we should expect.
Not All Pandemics Are Created Equal
Let’s first consider the differences from that previous viral epidemic. Economic recovery from SARS in 2003 happened in less than one year. The notable differences from COVID-19, however, included that SARS was much easier to contain for a variety of reasons, not the least of which was it spread when a person had symptoms. COVID-19, on the other hand, can spread when a person has very mild or even no symptoms at all. The nature of the 2003 SARS virus made contact tracing and socially isolating much more manageable. For this reason, SARS impacted 8000 people and, while there were cases in Canada and elsewhere, the viral infection was largely contained to Asia. COVID-19 has already infected more than 16 million people across the globe and is rising every day.
Factors Predicting Economic Recovery
Full recovery, in all areas (health, social, and economic), as many health experts indicate, will not happen in earnest (not to mention what we at COVID-RECOVERY.org hope for in terms of revitalization) until a viable vaccine becomes available. This, too, is true for a variety of reasons. Even as the economy is reopening, businesses are making very real and specific adjustments. Restaurants, for example, are setting up outdoors, spreading tables apart, and won’t be serving at full capacity for quite some time. Sporting events are planning to compete in empty arenas. Air travel will continue to be limited because countries aren’t allowing entry, social distancing is difficult on airplanes, and people are concerned about going to other locations for business or pleasure.
What happens with the economy, the recovery curve that ensues, and our personal and professional finances depends on the following interconnected factors:
- How much we spend
- Government policies, budgets, and relief packages
- Business closures, viability, productivity, and innovation
- Employment rates; human resources and capital
Health & Economic Recovery Are Intertwined
Initiatives to achieve Economic Recovery rest on caring for people and protecting our public health. The following steps not only save lives in the time of COVID-19 but also allow the economy to recover more readily:
- Assure enough personal protective equipment (PPE), adequate numbers of healthcare workers, and appropriate number of hospital and ICU beds in each region as well as mechanical ventilators. This was true when COVID-19 first hit; and this is true to mitigate potential resurgence of the virus as life returns to “normal.”
- Provide systems for testing and contact tracing
- Speed up development and production of safe and effective vaccination, along with materials and processes to disseminate and administer vaccines when they become available
- Continue seeking appropriate treatment
Government measures directly impact economic recovery:
- Paycheck Protection Program (PPP) or forgivable loans to small businesses
- Household rebates
- Expanded unemployment insurance
- Support of local and state governments to facilitate balancing budgets, in the wake of lost revenues and added spending due to COVID-19, and avoid cutting public services.