How the U.S. is Planing to Reopen the Economy?

U.S. Economy

The effect of COVID-19 has very deep impact on the global economy. It has caused every aspect of human lives and businesses and disrupted the global supply chain. In order to curb the risks of the pandemic, several countries have imposed lockdown that sent the economies to shutdown. Now people are talking about reopening the economies. Many economists in the U.S. predicted a V-shaped journey for the economy, which means a sharp drop, then a quick bounce back. 

As President Donald Trump and many Republican members want to reopen the economy, experts see an ominous risk. According to professor of capital formation and growth at the Harvard Kennedy School, Jeffrey Frankel, the push to reopen the economy is making a W-shaped recovery very much more likely. “Any widespread reopening should wait for a sustained drop in death rates and the broad availability of tests. No one is completely safe until an effective treatment or vaccine can be produced and widely distributed, a scenario that’s likely many months away,” he said.

However, economists, policymakers and many others in the US are finding the right ways to reopen the economy, with putting preventative measures in place to dodge resurgence in new COVID-19 cases. In doing so, President Trump divulged a three-phase plan to reopen the country’s economy, saying that his administration is issuing new federal guidelines that will allow governors to take a phased approach to reopen their individual states.

The guidelines, for the first phase, recommends that states see a downward trajectory for 14 days in the number of confirmed coronavirus cases before they move to lift stay-at-home orders and other restrictions. The second phase involves asking for all vulnerable individuals to shelter in place, encourage telework, closure of common areas and physical distancing. And the third phase is essentially returning to the new normal with better hygiene practices, and respect for spaces between individuals.

According to New York state government sources who told Reuters, New York Governor Andrew Cuomo has hired high-powered consultants to develop a science-based plan for the safe economic reopening of the region that can thwart expected pressure from President Donald Trump to move more rapidly.

Led by New York, governors from seven East Coast states formed an alliance to develop a joint reopening plan. Three governors from the West Coast formed a similar plan, and the 10 states, mostly led by Democrats, together make up 38 percent of the US economy. In Andrew’s efforts to reopening plan, McKinsey & Company is producing models on testing, infections and other key data points that will add force to decisions on how and when to reopen the region’s economy. Deloitte is also reportedly involved in developing the regional plan.

Lifting Economy Cautiously, Experts Warn

As countries around the world are relaxing lockdowns, a top world health official warned that countries are essentially driving blind in reopening their economies without setting up strong contact tracing to beat back flare-ups of the coronavirus. 

The warning came after COVID-19 led restrictions expected from France and Belgium, while the Netherlands sent children back to school, and many U.S. states pressed ahead by lifting business restrictions. 

The WHO’s chief, Dr. Michael Ryan said that robust contact tracing measures adopted by Germany and South Korea provide hope that those countries can detect and stop virus clusters before they get out of control. He further emphasized that other nations exiting lockdowns have not effectively employed contact tracing investigators who contact people who test positive, track down their contacts and get them into quarantine before they can spread the virus. The coronavirus can spread before people feel sick, making it important to act quickly. 

Moreover, in the US, Chair of the Federal Reserve Jerome Powell has urged caution in reopening the economy, warning against taking too much risk of second and third waves of the virus.

The COVID-19 pandemic, along with disrupting economies, has also caused millions of jobs across the world. According to the International Labour Organization (ILO), 25 million jobs were threatened by the new coronavirus. And the latest dire assessment reflects the full or partial lockdown measures affecting almost 2.7 billion workers, four in five of the world’s workforce. In the US alone had a 14.7 percent unemployment rate in April, the US Bureau of Labor Statistics announced. In addition, researchers also estimate 42 percent of pandemic-induced layoffs in the face of a permanent job loss.