summary
  • The Coronavirus Breaks Containment
  • Space Available
  • The Cost of Staycations

Carl offers thoughts on the progress of the pandemic.

I belong to an international economic association that meets annually during the summer. We had been set to gather in Madrid earlier this month, but COVID-19 forced us to scuttle those plans. Fortunately, we were able to share conversation via video conference; unfortunately, we had to schedule those discussions at odd hours to accommodate members from around the world. There is nothing more stimulating than a 3 a.m. lecture on modern monetary theory.

Many of the presenters began their segments with a review of the pandemic’s progress through their regions. Some (Australia, Japan) are well past peak rates of infection; others (Brazil, India) are seeing cases increase rapidly. As we discussed in our recent essay covering the four curves of recovery, the path of the virus will have a critical impact on economic performance in the quarters ahead.

On that front, the United States is not faring well. The U.S. is almost alone among countries in having seen contagion fall from a peak, only to accelerate a second time. A handful of U.S. states have witnessed a significant increase in cases during the past several weeks. In general, the areas that reopened earlier and were more relaxed about enforcing preventative measures have seen the biggest outbreaks.

Weekly Economic Commentary - 6/26/20 - Chart 1

In response, some places have slowed their reopening schedules and reinforced requirements for masks and social distancing. The risk of renewed closures is rising. Even if communities stick to reopening plans, consumers may hesitate to go out again amid the renewed risk of infection. After gaining nicely over the past month, restaurant reservations in some of the hotter spots for COVID-19 have fallen off.

The economic consequences of the resurgence in cases could be substantial. More people will be out of work for longer, and more firms will face bankruptcy. Policy will be challenged to address a more prolonged period of business interruption.

Earlier this year, some public health officials predicted that the pandemic would burn itself out by summer. Unfortunately, it still appears too hot to handle.