Everywhere you look right now, shops and restaurants are reopening, and life appears to be returning to some semblance of normal.
But it only takes a glance at COVID-19 case statistics to know that life isn't truly returning to normal at this time.
This is also borne out by what may be permanent changes in our everyday lives. Masks may be a necessary accessory for years to come. The restaurant industry may need to reinvent itself to survive.
In this unprecedented situation, what can you expect the impact of reopening the economy to be?
There are no certainties right now, and it is difficult to make predictions. But let's take a look at what some experts have said to try and get a feel for where we might be headed.
1. Reopening the economy is an experiment.
The first thing to note is that we are not reopening the economy because it is safe to do so.
We are reopening the economy because of a mixture of political and economic pressures.
Trump thinks reopening will bolster the stock market, and some Americans on the far right feel their freedoms are being infringed upon if they have to stay home.
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Many Americans also are having a hard time paying the bills, and need a way to keep putting food on the table and a roof over their heads.
Mohamed El-Erian, chief economic adviser for Allianz, referred to reopening the economy as a “massive experiment.” He explained, “I think of this as, we used to live in this really sophisticated jigsaw puzzle that was put together... Now we're trying to put the puzzle back together and we don't have all the pieces.”
What can we expect from a “massive experiment?” Well, we really don’t know. But we can make a couple educated guesses.
2. There will be a temporary upsurge.
First of all, it is likely to reopening will provide a temporary boost to the economy. There are already some signs of this.
There was a jobs report released in early June which revealed a larger jump in employment than many people expected. In response to this, the markets rallied.
3. The second wave will bring about the next downturn.
Although we can expect a temporary partial recovery, unfortunately, we can also expect things to go south again.
While some states have managed to "flatten the curve," that does not mean that coronavirus no longer poses a threat.
When people go back to mingling together in public, disease vectors will once again pose an increased threat, and the virus will begin spreading rapidly once more.
Nobel-winning economist Paul Krugman said, “The closest model we have is the influenza of 1918, 1919, where it turned out that places that were too eager to return to normal life paid the price. But one thing that we know for sure is that the United States is nowhere close to that point. So the idea that we can reopen in a matter of a few weeks is crazy.”
Krugman also wrote in The New York Times, “The epidemiologists could, of course, be mistaken. But at every stage of this crisis they’ve been right, while predictions of a quick end to the pandemic by politicians and their minions have proved utterly wrong. And if the experts are right again, premature opening could lead to hundreds of thousands of deaths — and backfire even in economic terms, as a second wave of infections forces us back into lockdown.”
So, even if you are back at work or will be soon, there is a good chance that you will once again find yourself unemployed or furloughed in the near future and back under quarantine.
4. The only long-term answers are a cure for the virus or a cure for the economy.
As you can see, there is no rational reason to believe that things are "getting back to normal," or will any time in the near future.
If we want economic stability, we either need to create a vaccine which is effective against the virus, or find a way to vaccinate our economy.
One idea might be universal basic income (UBI). While UBI would not address the issues of keeping services available which are necessary for human well-being, it would provide a long-term solution for lost income during the pandemic.
George Mason University economics professor Tyler Cowen writes, “Universal basic income was a popular topic in the U.S. before Covid-19 — in a theoretical sense. Now a pandemic is providing a tragic preview of some of the conditions UBI was conceived to address … Covid-19 is illustrating that some aspects of a UBI may be more necessary and more workable than previously thought.”
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As you can see, there are more questions than answers right now when it comes to the economic impacts of coronavirus and reopening.
For many Americans, that means a great deal of financial uncertainty about the years ahead.
Managing your finances and planning for the future during such a time on your own can be challenging, confusing, and stressful.
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