I recently interviewed Don Rissmiller, chief economic partner at Strategas Research Partners, an institutional brokerage and advisory firm that provides, among other things, macroeconomic research. Analysis from his firm drives home the importance of a May restart — instead of a June or July reopening.
That timing could make the difference between a recession and a depression.
In my interview with Rissmiller, we discussed the implications of waiting another month to get back to business as usual. There has already been a palpable economic hit with the closure of roughly 25% of our nation’s economic engine.
According to Rissmiller, starting the reopening in May gets us to a minus 30% GDP number for the second quarter. Waiting one more month to start the restart takes us to minus 60% GDP. That 30% spread is the difference between bending our economy and breaking it — and potentially losing millions of companies that won’t be there to rehire when the sun shines again.
For context, we all remember how bad the economy was in 2007 and 2008. During those dark years, the worst two quarters we had were minus 8% and minus 4.5%. We would be miles beyond that carnage at minus 60%. Herein lies the difference between a recession and a depression; these numbers make clear the importance of every single day we wait.
While human lives will always take priority over a financial decision, Gov. Kemp’s declaration says public health is now our personal responsibility. None of the new public health measures that we now embrace with great seriousness were possible or even on the table two months ago. Just eight weeks ago, we had no chance of becoming effective at collective public health. But now, we are infinitely better at using the most important anti-COVID-19 tool: our personal responsibility as citizens and business owners to execute the tedious and methodical, yet lifesaving measures necessary to slow COVID-19’s spread. We’ve accepted social distancing as the norm. We’re washing our hands and not touching our faces. People are staying home from work when they feel sick, to-do lists be damned.
Let’s remember the following. The initial goal of sheltering in place and mandatory social distancing was to create hospital capacity for those who became infected. It was a smart idea, and it worked. The case count in the state of Georgia has been falling, and our hospital systems have not been overwhelmed.
However, the goal of some policymakers now seems to be the complete eradication of the virus before we reopen our economy. While I would love for that to be possible, without a miracle cure, the complete (or near-complete) eradication of COVID-19 won’t happen until sometime next year when the introduction of an effective and widely available vaccine is slated.
>> RELATED: Georgia’s evolving testing machinery will be tested as state reopens
As for testing, yes, it would be a game changer to be able to have every citizen do a once- or twice-a-day at-home test to track and identify COVID-19 infections. But we’d need 700,000 to 30 million tests per day for that tracking to be effective. We are two months into this crisis and still barely hitting 150,000 tests per day in the entire country. So, even in a best-case scenario, adequate testing is still months and months away.
>> RELATED: 4 new metro testing sites to fill gaps in coronavirus response
So, what do we do? Restart now or wait?
I think this answer lies not in when we restart, but how smart we are about the restart. Whether we choose to wait until June or August or November — COVID-19 will still be present in our society.
Furthermore, experts widely agree that reported case counts in the U.S. dramatically understate the actual number of infections. According to new research from the University of Southern California and Los Angeles Department of Public Health, antibody testing shows that the actual number of infections is 55 times higher than reported — meaning that more than 4% of the entire L.A. population has already been infected. For every case we see, the data indicates that there may be 50 other cases not reported.
Bottom line: Even when we see only a handful of newly reported cases, the virus is still a long way from being snuffed out. If we wait to reopen the economy until complete eradication, the economy will lose millions of businesses and leave millions of Americans unemployed.
Social distancing puts massive pressure on many industries and is already bending the entire economy in a significant way. If we wait too long, the bend could turn into a permanent break.
>> RELATED: As business restrictions ease, Georgians on their own to fight virus
Here’s what reopening states in a smart way looks like to me:
Businesses will continue to encourage or require employees to use practices that we know stifle the spread of the virus. That means continuing to work from home for as long as possible, particularly if there is little interruption to the business.
When we do decide to go back to the office, employers will have to monitor their workforce for indicative symptoms. Symptomatic people won’t be allowed to physically return to work until a medical provider clears them.
Folks will continue to use social distancing, protective equipment, sanitation and the disinfection of common and high-traffic areas. Employers could implement temperature checks. We’ll keep testing as availability improves, isolating and contact tracing.
Business travel will look different. We must develop and implement appropriate policies, following federal, state and local regulations and guidance, and informed by industry best practices. These best practices will emerge quickly as business owners adapt to a new public health-conscious reality.
With courage, a renewed sense of personal responsibility, discipline and common sense, we can reopen Georgia’s economy safely. If we get it right, we get to lead the way for the rest of the United States. The world is watching.
<em>Wes Moss has been the host of “Money Matters” on News 95.5 and AM 750 WSB in Atlanta for more than 10 years now, and he does a live show from 9-11 a.m. Sundays. He is the chief investment strategist for Atlanta-based Capital Investment Advisors. For more information, go to wesmoss.com.</em>
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