What does the road to economic recovery look like?
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There are many headwinds holding the economy back right now. But, in the long run, this economy is on track to turn around. Vaccines are here, and nine or so months from now, our lives should be getting back to something like the way they were before the pandemic.
But nine months is a long time; the pandemic started a little over nine months ago.
So here’s a guide to some of the signposts the economy will pass as it makes its way back.
Even with layoffs mounting and COVID out of control, consumers turned more optimistic heading into the new year.
Chris Jackson, a vice president with Ipsos Public Affairs, said the firm’s latest consumer polling — done just before last week’s insurrection in Washington — found “the stimulus really starting to reach people’s pockets.”
“And then, the coronavirus vaccine getting out there, and sort of this idea that there is potentially an end to this long, long nightmare,” he said.
But it could be hard to sustain that optimism in the short term, said economist Robert Frick at Navy Federal Credit Union.
“If retail spending doesn’t climb back, if companies aren’t really investing because so many people have COVID, we can’t ignore how tough the next few months are going to be,” Frick said.
He predicts that six months from now, by midsummer, enough people will have been vaccinated that spending will pick up again. More people will be making restaurant reservations, going out to shop and buying airline tickets.
But, “a lot of people are assuming it’s going to be like a light switch,” Frick said. “Given the troubles with vaccine rollout and the number of people who don’t want to get vaccinated, there’s a light at the end of the tunnel, which is herd immunity. That’s going to take probably not until some time next year.”
Harvard economist Jason Furman said the economy is gonna have a lot of fuel to burn.
“People will have money. They actually had higher incomes after taxes and transfers in 2020 than normal, [and] they had lower spending,” Furman said. “So there will be about $2 trillion of dry powder — of excess saving — to spend.”
Furman said there will be two big problems, though: A lot of long-term unemployed people will be out of savings altogether, and a lot of businesses will have closed their doors for good.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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