SUMMARY

  • Themes of 2020

Editor’s Note: This week, we look back on broad themes that took shape during an unpredictable and unforgettable year.

The Limits of Lockdowns

In the early days of COVID-19, only a few facts were known about the virus: It is potentially lethal, often asymptomatic, and spreads through airborne transmission. Absent a medical remedy, policymakers looked for solutions to keep people separated. Thus, lockdowns were born.

The effectiveness of lockdown policies will be a point of debate for a long time to come. On the one hand, they did help to reduce the spread of COVID-19: Countries and regions with strict lockdown policies during the spring all saw lower numbers of cases in the summer. But lockdowns were no cure. Most regions that tamed COVID-19 initially have entered a renewed wave. The lockdowns bought some time and preserved health care capacity, but they were not a durable solution.

Lockdowns carry substantial economic costs. The World Bank estimates an overall loss of 5.2% of worldwide gross domestic product in 2020, triple the severity of the global financial crisis in 2009. While 2021 is shaping up to be a year of recovery, total global output will remain below 2019 levels. An assessment of the full cost of COVID-19 requires valuing intangibles like physical and mental health; we will consider it sufficient to say that everyone has felt some cost of the pandemic.

Weekly Economic Commentary - Chart 1 - 12/18/20

We cope by seeking normalcy, and some populations bristled at the restrictions placed on their lives. Indeed, as the initial round of lockdowns met its goal, many people concluded that the crisis had passed: as cases fell, people felt more confident leaving the home, and were not always careful in doing so. This return to activity drove record-setting economic growth in the third quarter but also fed the renewed wave of COVID-19 cases.

Protests against pandemic-related restrictions have grown worldwide. Some business owners and their customers have openly defied local shutdown ordinances. Educators are working hard to open schools as broadly and safely as possible, for the benefit of students and parents alike. The challenge is to balance the need to limit transmission and safeguard hospital capacity with the desire to limit economic and social damage.

Just this week, London and Germany started fresh cycles of stay-at-home orders; these won’t be the last. Avoiding contact is still an effective remedy, but it is bitter medicine we will be eager to stop taking in the year ahead.