When the coronavirus pandemic ends, the economy of the United States will likely still be the biggest in the world. However, many feel that President Trump’s “rocket ship” economic growth prediction is implausible, with the nation’s economists suggesting economic recovery will be a long and bumpy process.
While life will continue, we cannot deny the fact that nothing will be the same. The new normal will likely involve some aspects of our current social distancing lifestyle, whether it be masks and protective gear, new sanitation protocols, or simply a switch to a more permanent remote working model. While undergoing such massive changes, America needs big novel ideas to get the economy rolling.
Band-aid fixes for massive wounds
The stay at home orders and resultant unemployment problems have seen the federal government offering band-aid solutions to get us through while the long-term outlook is assessed. Washington has already distributed $2.2 trillion in relief for households and businesses, but it’s not enough. Congress is set to release an additional $500 billion to assist out-of-work Americans.
Some of the hardest-hit industries, like airlines, hotels, and restaurants, have been overwhelmed with losses, forcing them to lay off more employees and cut investments.
The stock market has also lost significant value. According to chief economist Ian Shepherdson of Pantheon Macroeconomics “No matter how much fiscal stimulus Congress pumps in – and more is coming – business earnings across wide swathes of the economy will be crushed for an extended period.”
Adjusting the American mindset
The mindset of Americans is one of the biggest challenges to thoroughgoing rehabilitation. Surveys reveal that they are more concerned about additional coronavirus deaths than they are about economic collapse. As long as they are worried and not open to change, the country will continue to weaken.
“Lingering concerns about the virus may mean that individuals are reluctant to gather in public places like theatres and restaurants long after the official lockdown is lifted. There is some evidence that this is happening in China,” said Neil Shearin, chief economist at Capital Economics.
The potential for a second economic nosedive
Another huge barrier to recovery is the health of micro-enterprises that employ almost half of the American population. If a huge number of small businesses break down, the rate of unemployment will keep increasing, and it will take an extended period for the economy to revitalize.
As economists and business leaders have predicted, the worst thing that could happen is a second wave of viral outbreaks later this year as this would compel the economy to close again.
“A second shutdown of the economy, local or national, would be extremely expensive to both firms and consumers,” said Richard Curtin, director of the University of Michigan’s survey of consumer sentiment.
The shape of recovery
Even the world’s smartest economists cannot exactly predict the shape our economic recovery will take. With a first-quarter slip, expectations at this moment for the second quarter are worse than America has seen in the past. The GDP may dip by 20% or more and the unemployment rate may elevate from 15% to 30%.
According to Marin Gjaja, a partner with Boston Consulting Group, which is helping businesses with their reopening strategies, “The point estimate of GDP right now is not really that valuable. The degree of variability is really unique. We’re going to have to figure out a way to navigate through that.”