How do we get the economy back to normal? “Extremely cautiously,” says Economist editor in chief
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President Donald Trump and the federal government have set the framework for how the U.S. might get back to work as a nation after a season of sheltering in place.
How have countries around the world handled such a task? Zanny Minton Beddoes, editor in chief of The Economist, has the global perspective.
“Everybody is thinking about it,” she told “Marketplace Morning Report” host David Brancaccio. “But most of the world is still incredibly susceptible to a second wave of the virus. Most people haven’t been exposed to this virus.”
The following is an edited transcript of their conversation.
Zanny Minton Beddoes: I think the economy has been put, effectively, into a medically induced coma, and so how do you bring the economy out of it? And you do it as you do with patients, extremely cautiously. The reason we’re thinking about this already is because we’re seeing the alarming cost of the lockdown, economic cost of the lockdown, which is huge, but it’s also going to get a lot bigger very fast. And I was very struck this week with the International Monetary Fund’s forecasts, where they already say that we, this year, are going to see the biggest downturn since the Great Depression, 3% shrinking of global GDP. But that is predicated on economies opening up. If, however, the lockdown continues into the third quarter of this year, they expect the size of that downtime to double to 6%.
David Brancaccio: Can we learn from strategies in other countries? Germany’s already thinking very specifically about ways to get workers back.
Minton Beddoes: We can. I mean, everybody is thinking about it. But most of the world is still incredibly susceptible to a second wave of the virus. Most people haven’t been exposed to this virus. And, I suspect, governments will be reaching different positions on three different parameters, and that’s going to affect it. And the first, and I think by far the most important, is the ability to test, because the only way that you’re going to know whether you’ve got a resurgence in the rate of infections is by having huge amounts of testing. But the second is really, really effective ways of contact tracing, so that once you test and you find someone who has been exposed to the virus, you can actually then trace all the people that they have been in touch with. And then the third sort of set of parameters is, what do you actually ease first? You know, do you open schools first? Do you allow shops to open?
Brancaccio: I suppose another question is what we reopen to. It’s not just going to be the old way of doing things.
Minton Beddoes: That’s exactly right. And it’s not going to get back to normal until we have a vaccine or an effective treatment that is very widespread. And that’s going to be a year, or 18 months, or longer. It’s a normal, I think, of wearing masks in public. It’s a normal where restaurants, if they are open, have tables set much further apart. It’s a normal where factories are reconfigured so that people on assembly lines are far apart from each other. And if you look at what’s going on in the Chinese economy, although it has come back dramatically from where it was, it’s operating, perhaps, at 90% capacity, which is still a dramatic downturn relative to where the Chinese economy was. And so I think we’re not going to go back to anything like what we had, you know, even six weeks ago in the short term.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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