This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2020/05/29/business/economy/economy-recovery-forecast-coronavirus.html

The article has changed 19 times. There is an RSS feed of changes available.

Version 17 Version 18
Forget Swooshes and V’s. The Economy’s Future Is a Question Mark. Forget Swooshes and V’s. The Economy’s Future Is a Question Mark.
(7 days later)
WASHINGTON — There is widespread agreement that the United States economy will soon begin to recover from coronavirus lockdowns. The big debate is whether that rebound will resemble a V, a W, an L or a Nike swoosh.WASHINGTON — There is widespread agreement that the United States economy will soon begin to recover from coronavirus lockdowns. The big debate is whether that rebound will resemble a V, a W, an L or a Nike swoosh.
Increasingly, economists and analysts are penciling in another glyph: a question mark.Increasingly, economists and analysts are penciling in another glyph: a question mark.
Forecasters often label their expectations for a post-recession rebound with letters — a V suggests a rapid recovery, a W a double dip and so on — but that’s hard to do this time around. As all 50 states begin to open up and consumers trickle out of their homes, the path ahead is wildly uncertain, making prognostication dicey.Forecasters often label their expectations for a post-recession rebound with letters — a V suggests a rapid recovery, a W a double dip and so on — but that’s hard to do this time around. As all 50 states begin to open up and consumers trickle out of their homes, the path ahead is wildly uncertain, making prognostication dicey.
Second-wave virus outbreaks, changes in consumer behavior or a wave of unexpected business closures could reshape the future. That has left economists unsure how quick or smooth a rebound the U.S. economy will undergo, prompting many to offer a range of possibilities instead of declarative forecasts.Second-wave virus outbreaks, changes in consumer behavior or a wave of unexpected business closures could reshape the future. That has left economists unsure how quick or smooth a rebound the U.S. economy will undergo, prompting many to offer a range of possibilities instead of declarative forecasts.
It isn’t just Wall Street forecasters eschewing the alphabet in favor of a range of what-ifs. From the Federal Reserve to the White House, analysts have suggested that posing confident prognostications is probably more misleading than helpful. John C. Williams, president of the Federal Reserve Bank of New York, said during an appearance last week that it was important for policymakers to prepare for every eventuality, rather than focus on one type of recovery.It isn’t just Wall Street forecasters eschewing the alphabet in favor of a range of what-ifs. From the Federal Reserve to the White House, analysts have suggested that posing confident prognostications is probably more misleading than helpful. John C. Williams, president of the Federal Reserve Bank of New York, said during an appearance last week that it was important for policymakers to prepare for every eventuality, rather than focus on one type of recovery.
“We’ve had discussions all my career about V-shaped recoveries, L-shaped, U-shaped,” Mr. Williams said. “One thing I’ve learned is, don’t get into that letter game.”“We’ve had discussions all my career about V-shaped recoveries, L-shaped, U-shaped,” Mr. Williams said. “One thing I’ve learned is, don’t get into that letter game.”
Larry Kudlow, director of the White House National Economic Council, said at an event sponsored by The Washington Post that he shared President Trump’s expectation for a rapid bounceback, but suggested that there were wide ranges around those estimates.Larry Kudlow, director of the White House National Economic Council, said at an event sponsored by The Washington Post that he shared President Trump’s expectation for a rapid bounceback, but suggested that there were wide ranges around those estimates.
“It’s really hard to model a virus, or a pandemic, the likes of which we haven’t seen in 100 years,” Mr. Kudlow said.“It’s really hard to model a virus, or a pandemic, the likes of which we haven’t seen in 100 years,” Mr. Kudlow said.
“You can have your own V’s — there’s V’s, there are lesser V’s,” Mr. Kudlow said. “There are combos of U’s and V’s.”“You can have your own V’s — there’s V’s, there are lesser V’s,” Mr. Kudlow said. “There are combos of U’s and V’s.”
Cognizant of that uncertainty, the White House confirmed it would not even issue an update to its economic forecasts this summer, breaking decades of tradition.Cognizant of that uncertainty, the White House confirmed it would not even issue an update to its economic forecasts this summer, breaking decades of tradition.
Here are the possible shapes that economists are discussing and the caveats that have forecasters writing their predictions in pencil.Here are the possible shapes that economists are discussing and the caveats that have forecasters writing their predictions in pencil.
Since economists know that economic activity slowed sharply during the first half of 2020, the best possible outcome is a swift recovery, making for a V shape in which the economy is back to its 2019 output level within a few quarters.Since economists know that economic activity slowed sharply during the first half of 2020, the best possible outcome is a swift recovery, making for a V shape in which the economy is back to its 2019 output level within a few quarters.
Unfortunately, economists say that projection is probably a pipe dream. In a note titled “V Is for Very Unlikely,” Michael Feroli, J.P. Morgan’s chief U.S. economist, described the trajectory as one in which the economy “is turned off and then on, like a light switch.”Unfortunately, economists say that projection is probably a pipe dream. In a note titled “V Is for Very Unlikely,” Michael Feroli, J.P. Morgan’s chief U.S. economist, described the trajectory as one in which the economy “is turned off and then on, like a light switch.”
Because economic variables like unemployment and output often face a lingering drag after a one-time shock, that sort of outcome is pretty dubious, he said. Lower business capital spending and state and local budget cuts are likely to weigh on growth for some time, alongside other factors, making it hard for the economy to get right back on track.Because economic variables like unemployment and output often face a lingering drag after a one-time shock, that sort of outcome is pretty dubious, he said. Lower business capital spending and state and local budget cuts are likely to weigh on growth for some time, alongside other factors, making it hard for the economy to get right back on track.
It is also worth noting that a sharp rebound in the growth rate is distinct from a return to the previous level of economic output. For example, the economy is broadly expected to show a fast rate of growth in the third quarter, given the record contraction in the second quarter. But overall output will remain lower than it was pre-coronavirus for some time, most economists think.It is also worth noting that a sharp rebound in the growth rate is distinct from a return to the previous level of economic output. For example, the economy is broadly expected to show a fast rate of growth in the third quarter, given the record contraction in the second quarter. But overall output will remain lower than it was pre-coronavirus for some time, most economists think.
“The initial bounce may feel pretty robust,” said Michelle Meyer, head of U.S. economics at Bank of America Merrill Lynch.“The initial bounce may feel pretty robust,” said Michelle Meyer, head of U.S. economics at Bank of America Merrill Lynch.
Her team recently revised up its third-quarter growth forecast; it sees a 7 percent output gain after a 40 percent plunge in the second quarter. While stimulus checks may help spending, that is not going to make up for corporate insolvency and lost jobs. Full recovery could take until the end of 2022, Ms. Meyer said.Her team recently revised up its third-quarter growth forecast; it sees a 7 percent output gain after a 40 percent plunge in the second quarter. While stimulus checks may help spending, that is not going to make up for corporate insolvency and lost jobs. Full recovery could take until the end of 2022, Ms. Meyer said.
“There’s quite a lot of residual damage,” she said.“There’s quite a lot of residual damage,” she said.
Just as only strident optimists expect a perfect V, only outright pessimists are projecting an L, in which growth remains at or near the very low levels it almost certainly hit during the second quarter. The economy is already showing a partial rebound, suggesting that such a formation is unlikely.Just as only strident optimists expect a perfect V, only outright pessimists are projecting an L, in which growth remains at or near the very low levels it almost certainly hit during the second quarter. The economy is already showing a partial rebound, suggesting that such a formation is unlikely.
Mortgage applications have stabilized after sharp declines, consumer confidence is recovering slightly, and while initial jobless claims remain elevated, they are slowing. The car industry is hopeful that auto sales are in for a rebound in June.Mortgage applications have stabilized after sharp declines, consumer confidence is recovering slightly, and while initial jobless claims remain elevated, they are slowing. The car industry is hopeful that auto sales are in for a rebound in June.
Real-time trackers show a muted bounce, with a daily J.P. Morgan credit card series showing a slow but fairly steady uptick starting from mid-April. Google mobility data suggest that people are moving around more and visiting parks, TD Securities said in a research note. The pickup in areas that drive growth — retail, restaurants and move theaters — has been more restrained.Real-time trackers show a muted bounce, with a daily J.P. Morgan credit card series showing a slow but fairly steady uptick starting from mid-April. Google mobility data suggest that people are moving around more and visiting parks, TD Securities said in a research note. The pickup in areas that drive growth — retail, restaurants and move theaters — has been more restrained.
“None of the states show a sudden snapback,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities, noting that some places are further along the path to official reopening. While the nascent recovery seems to preclude an L, he said, the limited data so far jibe with the idea that the recovery will be more gradual than the collapse.“None of the states show a sudden snapback,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities, noting that some places are further along the path to official reopening. While the nascent recovery seems to preclude an L, he said, the limited data so far jibe with the idea that the recovery will be more gradual than the collapse.
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
That brings us to an outcome that is still on the table: a W-shaped recovery. It could be that the economy will partly bounce back before plunging again amid a second wave of infections as states reopen and people face renewed exposure to the coronavirus, or if the disease stages a comeback this autumn.That brings us to an outcome that is still on the table: a W-shaped recovery. It could be that the economy will partly bounce back before plunging again amid a second wave of infections as states reopen and people face renewed exposure to the coronavirus, or if the disease stages a comeback this autumn.
While economists generally say that a W remains entirely possible, they aren’t willing to make it their most-likely forecast because it hinges on two total unknowns: whether there is another spike in infections, and whether states will shut down again if that happens. Analysts who venture a guess increasingly favor a nonletter shape as their base-case: the checkmark.While economists generally say that a W remains entirely possible, they aren’t willing to make it their most-likely forecast because it hinges on two total unknowns: whether there is another spike in infections, and whether states will shut down again if that happens. Analysts who venture a guess increasingly favor a nonletter shape as their base-case: the checkmark.
The Congressional Budget Office’s baseline expectation suggests that growth will contract slightly in the first quarter and sharply in the second quarter before making a gradual rebound starting in the quarter that stretches from the start of July to the end of September. The budget office doesn’t label the shape, because the climb back will be slower than the drop. The trajectory looks like a checkmark on a graph.The Congressional Budget Office’s baseline expectation suggests that growth will contract slightly in the first quarter and sharply in the second quarter before making a gradual rebound starting in the quarter that stretches from the start of July to the end of September. The budget office doesn’t label the shape, because the climb back will be slower than the drop. The trajectory looks like a checkmark on a graph.
There are big uncertainties around that forecast. Additional waves of infection, variations in consumer behavior and the timeline for a vaccine are all wild cards that could change the path ahead. A host of risks could lead to worse outcomes, while a vaccine breakthrough or unexpected government support for the economy could improve the trajectory.There are big uncertainties around that forecast. Additional waves of infection, variations in consumer behavior and the timeline for a vaccine are all wild cards that could change the path ahead. A host of risks could lead to worse outcomes, while a vaccine breakthrough or unexpected government support for the economy could improve the trajectory.
If a quicker recovery takes hold, the rebound could look more like a “swoosh” as growth improves slowly before accelerating. But if more infections occur and a vaccine remains elusive, the economy could also face a “wave” recovery of repeating peaks and troughs as states continually reopen and then pull back.If a quicker recovery takes hold, the rebound could look more like a “swoosh” as growth improves slowly before accelerating. But if more infections occur and a vaccine remains elusive, the economy could also face a “wave” recovery of repeating peaks and troughs as states continually reopen and then pull back.
“We’re all prefacing what we say with: We’re not epidemiologists,” said Mr. O’Sullivan, explaining that the range of possible economic outcomes is unusually wide because it turns so much on what happens with public health. Because it’s a new coronavirus, and a totally unusual shock to the economy, nobody’s guess for what comes next is especially reliable.“We’re all prefacing what we say with: We’re not epidemiologists,” said Mr. O’Sullivan, explaining that the range of possible economic outcomes is unusually wide because it turns so much on what happens with public health. Because it’s a new coronavirus, and a totally unusual shock to the economy, nobody’s guess for what comes next is especially reliable.
Even the Fed’s economists, never shy to to set out a forecast, have sounded uncertain. Minutes from the central bank’s late-April meeting show that staff offered a baseline forecast in which shutdowns gradually ease and growth resumes into the second half of the year, but warned that “a more pessimistic projection was no less plausible than the baseline forecast.”Even the Fed’s economists, never shy to to set out a forecast, have sounded uncertain. Minutes from the central bank’s late-April meeting show that staff offered a baseline forecast in which shutdowns gradually ease and growth resumes into the second half of the year, but warned that “a more pessimistic projection was no less plausible than the baseline forecast.”
Fed policymakers, for their part, “discussed several alternative scenarios with regard to the behavior of economic activity in the medium term that all seemed about equally likely,” according to the minutes. Among them were predictions that the country experienced additional outbreaks and shutdowns (a W or a wave), and more optimistic situations in which social distancing measures were successfully relaxed (a check or a swoosh).Fed policymakers, for their part, “discussed several alternative scenarios with regard to the behavior of economic activity in the medium term that all seemed about equally likely,” according to the minutes. Among them were predictions that the country experienced additional outbreaks and shutdowns (a W or a wave), and more optimistic situations in which social distancing measures were successfully relaxed (a check or a swoosh).
Richard Clarida, the Fed’s vice chairman, said last week that it could take until early autumn to get more clarity on where the economy is headed.Richard Clarida, the Fed’s vice chairman, said last week that it could take until early autumn to get more clarity on where the economy is headed.
To put it bluntly, as Ian Shepherdson at Pantheon Macroeconomics did in a recent research note, “the timing of a full recovery is unknowable.”To put it bluntly, as Ian Shepherdson at Pantheon Macroeconomics did in a recent research note, “the timing of a full recovery is unknowable.”
Jim Tankersley contributed reporting.Jim Tankersley contributed reporting.