In the U.S. and across the world, there has been incremental progress in the fight against the coronavirus. Most importantly, the curve has been flattened. There has been an increase in personal protective equipment (PPE), a surge in hospital capacity and ventilators, and more testing.
In many states and parts of the world, leaders are feeling confident enough to go from "shutdown" to "reopening". Only time will tell if there's going to be a resurgence of the virus if these stringent measures are relaxed. Additionally, success is dependent on whether public authorities have taken the necessary steps to "test and trace" the virus to prevent its spread if it does flare up again.
What It Doesn't Mean
It's important to clarify that reopening doesn't mean the economy is going back to normal. Even in states that were late to shutdown, individuals and businesses were ahead of the curve in changing their behavior. Surveys show that many people would be unwilling to do activities like going to a restaurant, shopping, watching a movie, attending a large gathering, or take public transportation which would be considered routine a few months ago.
Additionally, places that are opening up are putting in measures to ensure social distancing and protect employees and customers. At restaurants, this may mean servers wear masks, and seating capacity is cut in half. Many businesses that run on thin margins may not be able to survive in this reality. And it may make more sense to not open rather than try to exist in a world of depressed revenue especially if costs are higher.
Other Countries vs the U.S.
Asian countries that experienced the coronavirus outbreak earlier than the U.S. have also started to reopen. Their experience shows that some measures have returned to 80-90% of pre-coronavirus levels such as auto traffic, industrial production, and employment. However, other things like traveling, dining in restaurants, and shopping for non-essential items remain significantly depressed.
Additionally, these countries seem to have much more sophisticated protocols in place to prevent outbreaks like taking temperature before entering buildings, building out a test-and-trace system, quarantining of infected patients, and separate clinics for coronavirus patients to prevent spread. Additionally, they were 'reopening', when the curve had not flattened but shrunk.
For example in China as of April 30, there was an average of ten new cases per day. In South Korea, there were 32 new cases in the first five days of May. Currently, the U.S. has just over 140,000 new cases in the first five days of May.
Conclusion
Policymakers have to balance public health, the economy, and political instincts in making decisions. There's no easy or right answer when substantial trade-offs are involved. In this matter, 'reopening' the economy won't mean much if people don't feel safe and are fearful of getting infected or passing on the virus to others. The data clearly shows that traffic to restaurants, gyms, theaters, and salons precipitously dropped even before states instituted shutdowns.
Just like the Federal Reserve took aggressive and extraordinary measures to prevent a crisis of confidence developing in credit markets, leaders at the federal and state level need to take similar measures to create confidence that outbreaks can be reduced and controlled. Only then will the economy actually reopen and return to normal.
