The coronavirus pandemic has infected nearly 400,000 people worldwide. With over a dozen U.S. states ordering citizens to remain indoors and shutting down establishments deemed non-essential, economists think the world’s largest economy has already been thrust into a deep recession.
The nearly $2 trillion stimulus package being hammered out in Washington is meant to help stave off the mounting economic carnage, but millions of jobs are still expected to be lost in the coming weeks.
The damage — both economic and political — has stoked a widening debate over when the U.S. can return to a semblance of normalcy. With his re-election chances likely to be defined by a recovery from the crisis, President Donald Trump on Tuesday called for the economy to be restarted by April 12.
“You’re basically turning off the country…that’s never been done before,” Trump told a Fox News town hall.
“Its been very painful for our country. It’s been very destabilizing for our country…but we have to go back to work,” the president added.
Yet public health experts and Wall Street economists are pushing back against the suggestion that the U.S. economy can restart in a matter of weeks, warning about the risks posed if infections continue to surge. There are now nearly 50,000 domestic COVID-19 cases, with New York considered an epicenter of new infections.
“The experience with China has been you shut down everything for 2-3 months, the number of [new] cases goes to zero, and then you restore economic activity gradually, and that’s the right thing to do,” economist Nouriel “Dr. Doom” Roubini told Yahoo Finance in an interview on Tuesday.
However, Roubini warned that accelerating that timetable would be a recipe for disaster — arguing that the U.S.’s caseload could easily top 500,000 within a month given the rapidly accelerating infection rate.
“This idea we’re going to restart everything soon enough in a week or so is totally nuts,” the famed economist said. “It’s the worst thing you can do, it’s going to be a nightmare and it’s going to imply that [the U.S.] ends up into a depression.”
He added: “Think about what’s going to happen to this economy if you don’t shut down everything for a month or two, whatever it takes, to stop this contagion.”
‘Messy, ugly debate’
The question of the appropriate timetable to normalize activity has been broached by an increasing number of people — including New York Gov. Andrew Cuomo, former White House Economic Advisor Gary Cohn, and ex-Goldman Sachs chief Lloyd Blankfein.
“Policymakers have taken bold public health & economic actions to address the coronavirus, but businesses need clarity,” Cohn posted on Twitter Sunday.
Extreme measures to flatten the virus “curve” is sensible-for a time-to stretch out the strain on health infrastructure. But crushing the economy, jobs and morale is also a health issue-and beyond. Within a very few weeks let those with a lower risk to the disease return to work.
— Lloyd Blankfein (@lloydblankfein) March 23, 2020
“Otherwise they will assume the worst and make decisions to survive. Determining a future & appropriate end date for the economic shutdown is about balancing the enormous suffering from COVID-19 with the enormous suffering that unemployment and economic hardship create for the mental & physical health of our citizens,” he added.
Meanwhile, in spite of the president’s wishful thinking, companies are planning as if the current environment is here to stay for the time being. Accenture (ACN) CEO Julie Sweet, whose consulting firm employs 505,000 people worldwide and offers management advice to 6,000 client organizations, told Yahoo Finance as much.
“What we're trying to do is put in the infrastructure and the connections for our people and with our clients as if it may last for a very long time,” Sweet told Yahoo Finance Editor-in-Chief Andy Serwer on Tuesday.
Given the unprecedented scale of the U.S. shutdown — and dire warnings of a steep drop-off in employment and economic growth — the debate is becoming increasingly polarized.
It’s part of what David Zervos, Jefferies’ top macro strategist, predicted would become a “really political, nasty, messy ugly debate about what to do next” – and when to do it.
“It’s about getting people back to work in a safe and productive environment,” Zervos told Yahoo Finance.
“It’s testing, its cures, its vaccines, it’s all the things we’re hoping for and as much money is going to be thrown at that should be thrown at that, I think that’s probably far more long-term valuable investment than saving a small number of jobs and companies that may be on the brink of bankruptcy or leverage,” he added.
Javier David is an editor for Yahoo Finance. Follow him on Twitter: @TeflonGeek