Of course the health and wellness of all Americans is the priority in most peoples minds right now, however, the economic impacts of COVID-19 cannot be ignored.
Just how soon can we expect the economy to rebound once the worst of the COVID-19 outbreak is over?
Some economists are saying it could be quicker than you think.
They say that an economy that was in good shape before the steep and sudden free-fall triggered by the outbreak, just as quickly can be jolted back to life, reclaiming nearly all its former luster.
In fact, that’s largely what the massive $2.2 trillion stimulus package signed into law by President Trump last week, is intended to do — hold the nation’s $21 trillion economy together with a kind of duct tape for a few months by providing spending money to laid-off workers and teetering businesses.
However, the majority of economists say that the comeback is likely to be a far longer process. Growth could pick up strongly this summer but still fall well short of its former pace, with the recession’s after-effects lingering well into next year as consumers remain skittish about venturing out to restaurants and other gathering spots.
Some of the damage could even be long-lasting, leaving a smaller economy than would have been the case without the pandemic.
Ultimately, the strength of the recovery hinges on the course the virus takes. It has shut down 30% to 40% of America’s economy, with nonessential businesses such as restaurants, stores and movie theaters shuttered by law or by choice and the travel and hotel industries at a near standstill.
In the week ending March 21, a record 3.3 million Americans filed initial unemployment insurance claims, reflecting a staggering number of layoffs. Some economists are forecasting a similarly dire total for last week.
Under a likely scenario, top health officials believe the outbreak could peak in May or June, allowing businesses across the country to gradually reopen by summer.
But a later peak, or a virus that returns in the fall, could worsen the economic damage.
In the best-case scenario, Senior Economist Jacob Oubina of RBC Capital Market says there’s no reason an economy placed in a coma for a couple of months to contain the spread of the virus can’t be walking around and looking like its old self once the threat has eased.
“The bounce-back can be very strong,” he says.
And keep this in mind — the economy was on solid footing before the outbreak, Oubina says. During the financial crisis and Great Recession of 2007-09, millions of Americans had lost their homes and many were burdened by historically high debt. Banks pushed to near bankruptcy by their risky real estate loans were hesitant to lend despite government aid.
“We have none of that right now,” Oubina says.