As the federal government and many states talk about “re-opening”, whether economic activity picks up or not during this pandemic is not determined by the government, but the American people themselves will determine if and when the economy will “re-open”. What does that mean?
It means even if the government was somehow able to legally force every store, restaurant, bar, theater, etc. to be fully open tomorrow, it would not place economic activity anywhere near where it was prior to COVID-19.
As until people are comfortable and both are safe (and “feel” safe) going out to those places, economic economy will still stay depressed. So even if every place and business magically reopened tomorrow and the economy was “open” (per government definition), it would not make a difference when it comes getting the country anywhere back to near where it was when it comes to underlying economic activity.
Poll after poll shows people will not fully participate in economy
While of course the various polls differ, they tend to show similar data. Only about 25% of people are comfortable in going to restaurants as COVID-19 spreads through the population. Only about 20% of people are comfortable going to a shopping mall. ~10% feel comfortable in going to a gym or movie. And the list goes on and on…while as noted there are tons of polls, they all tend to show the same thing – the majority of Americans are very uncomfortable.
Always keep in mind about 80,000 people died in less than 2.5 months from COVID-19 (3 times more than a typical flu season). One to two thousand more are still dying daily. And tens if not hundreds of thousands more have been in the hospital. The result of said polls probably reflects that human tragedy.
Once again, if all those businesses “re-opened”, it would not make a huge difference or place economic activity anywhere near to what it was prior to Coronavirus. As most people will not go out and spend money. They will not go until they feel safe and secure in doing so. And right now, as poll after poll shows, most Americans do not feel safe. Making people feel safe all comes down to the basics…wear masks, sanitation, personal hygiene, etc.
As noted, only about 10-40% of people are comfortable in doing various activities. While like almost everything in life, I am sure the ‘pendulum” has swung way to the extreme in those stats that show the number of people that do not feel safe, lets say the pendulum starts to swing back the other way as is bound to happen. Who knows where it will end up?
But lets say it ends up as 75% of people eventually feel safe and end up slowly venturing back out during COVID-19. That would still leave 25% unsafe and not fully involved in the economy. Even that would be still be devastating to the economy. If 25% of Americans end up not fully participating in economic activity and are cautious, this means sales of those businesses impacted would decline high single to double digit rates…and when a restaurant or store has same store sales that decline even mid digits they can’t survive.
Considering that ~15% of the US population is over the age of 65 (who are most at risk of COVID-19) and tens of millions of others (even those under age 65) have medical issues, I do not think it is unreasonable to expect a big percentage of those at risk individuals will not feel safe until people and businesses do the “basics”. Even that may not be enough either. So those individuals will not venture out as much and add to economic activity. They will not participate in “Re-opening” the economy even if stores are open.
People will decide when economic activity picks up
I think we are going about it all wrong. No one (government or anyone) can “mandate”, “will” or “hope” the economy to “re-open” and activity to pick up as Coronavirus kills tens of thousands per month. No matter what the federal or your local state government says, they can’t “force” economic activity to pick up and the economy to re-open during the Coronavirus pandemic. Only if each American, business, and leader does the simple, selfless things, that is when the economy will be on the path to re-opening.
People will decide if/when the economy will reopen, and it won’t happen until people are and feel safe. Until we see more people being selfless/making a tiny “sacrifice” and doing basic things like wear masks or distance, and until we see more leadership from our so called “leaders”, or even more leadership from CEOs and companies like Frontier Airlines (which is taking passenger temperatures checking for COVID-19, mandating masks, etc.), the economy will never be fully “open” as a material percentage of people will not come and participate in the economy like they did before.
But of course the risk here is that the longer this goes on and people are not safe and people can’t “open” the economy, the more risk. As the longer it goes on the more permanent the economic activity will be, and the longer this goes on people will not have the financial means to re-open it….and who know what happens in that case.
And yes, as we wrote about in February, we hope drug companies can save us! And over these last few months polls show more people look favorable on the pharmaceutical industry and have stopped “hating” them…looks like some of that critical thinking that is sorely lacking may have set in around the drug industry? If so, hopefully that critical thinking will set in regards to the economy as well in that each and every American on an individual basis, each business, government “leaders” etc. needs to both create a safe environment and also go out of their way to make people feel safe. Otherwise I guess we just need to all hope COVID-19 vaccinations coming very soon and/or herd immunity saves the economy!