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  • Life With, And After COVID-19

When we first became aware of the coronavirus, it seemed to be a localized infection that would interrupt some Chinese factories for a few weeks. Any impact on the global economy was widely thought to be short-lived.

When the coronavirus struck America with a vengeance in mid-March, many of us were encouraged to decamp from the office and work remotely. I didn’t bother grabbing much from my desk; it was assumed that we needed to weather a brief surge, and that we’d be back before long.

Now homebound for almost five months, I realize how persistently I underestimated the power of the pandemic. (The fact that I was not alone in this misjudgment is hardly comforting.) Our forecasts have been ripped up and rewritten more times than I care to admit—and they will likely undergo further revision as the virus runs its course.

In this issue, we wanted to step back and give thought to some of the potential longer-term impacts of COVID-19 on the economy. Some aspects of our lives will take longer than we anticipated to return to pre-pandemic norms, and some may never do so.

Ahead of us are two phases. The first, which we are feeling our way through, is the interval prior to the perfection of a vaccine. Epidemiologists are working at warp speed toward this goal, aided by digital advances in medical research. News of promising developments has cheered markets, but the process of trial still takes time, and sometimes results in error.

Weekly Economic Commentary - Chart 1 - 07/31/20

Experts anticipate a durable solution will still take some months to develop and test. From there, additional time will be required to manufacture, distribute and administer prevention. We are likely to be well into 2021 before all of these steps are completed. And the process is likely to be uneven across countries and communities within countries.

Until then, populations will remain vulnerable to renewed outbreaks. COVID-19 has shown a penchant for lying dormant and re-emerging when given the opportunity. Most of the world is not equipped to perform contact tracing, so restrictions on movement will remain the primary means of arresting spread. COVID-19’s mortality rate is substantially higher than more common viral infections (currently 3.5% for the United States, more than 300 times the rate for seasonal influenza), so we are assuming public officials will remain cautious.

“The pandemic will have a range of long-term economic consequences.”