Coronavirus Recession: What Needs To Happen For Economic Recovery? Testing On A Massive Scale

The U.S. will need the ability to perform 5 million coronavirus tests per day by early June and 20 million by midsummer to be able to fully mobilize the economy and pull it out of the COVID-19 recession, a Harvard study indicated Monday.

“What we do together -- for one another and, even more, with one another -- to fight this terrible disease, protect human life, secure our institutions and prevent the destruction of our economy will determine whether free societies will prove resilient in the face of existential emergency,” the study authors said in their executive summary.

The survey comes as the U.S. reported more than 760,000 confirmed coronavirus infections and deaths topped 40,700 by late morning Monday. An NBC/Wall Street Journal poll indicated more than half of voters (52%) disapprove of President Trump’s handling of the pandemic while a Pew Research Center study indicated 66% are wary of restrictions being lifted too soon.

The study called for a “bottom-up innovation” to scale up a massive testing effort and contact tracing to prevent recurring shutdowns – something Dr. Anthony Fauci, head of the National Institute of Allergies and Infectious Diseases warned could happen if stay-at-home orders are lifted before the pandemic is under control.

https://youtu.be/_C-NxRVsu8c

“The level of testing and supported isolation we need depends on how effectively we can trace people’s contacts, warn those contacts about their exposure and need for a test, test them and isolate those who are COVID-positive,” the study said.

“To succeed, isolation must be supported with job protections, resource support and healthcare.”

The study called on the federal government to set up a “pandemic testing board” that would have strong but narrow powers to secure testing supplies and provide an infrastructure to carry out the testing mission.

Trump has said he expects the economy to recover from the virus swiftly, but experts told IBTimes that is unlikely.

“The only prudent way to climb out of the current recession -- and we are in a recession irrespective of the conventional definition of two consecutive quarters of negative GDP growth -- is to listen to the medical experts and socially distance long enough so that a second outbreak of the virus is avoided,” said Robert Johnson, professor of finance at Heider College of Business at Creighton University.

“As painful as social distancing is from an economic standpoint, it would be much more painful to prolong the episode. I believe those predicting a V-shaped recovery are overly optimistic. I fear that the recovery will not even be U-shaped, but that we will have a false start to a recovery, experience another economic downturn, and then slowly recover.”

Mark Hamrick, senior economic analyst for Bankrate.com said universal testing is the key to restoring confidence in the economy.

“This is necessary for businesses to be ready to re-open and welcome their workers back. It is necessary for workers to feel comfortable to return to workplaces. It is necessary for consumers to feel safe in venturing back into public and to engage in the new normal purchasing behaviors,” Hamrick said. “Consumer spending is the engine which propels the economy. Until that is restored to a large degree, job security remains at risk.”

Craig Erlam, senior market analyst at OANDA, said even once businesses begin reopening, consumers are likely to remain hesitant about going back to their usual routines as fear of another wave if illness looms.

“Many people may not have lost their income -- plenty will -- but the fear of another wave when they may not be so lucky could push people to save, rather than spend, and build up a buffer,” he said. “This recovery is going to come in phases and may have setbacks along the way.”

“Consumers won't start spending robustly until social distancing measures are relaxed enough that they can begin planning discretionary purchases again, particularly travel and dining, which they have been avoiding to date,” said Caleb Silver, editor in chief of Investopedia.” They will also want to be assured that there won’t be another resurgence of the virus that will cause another shutdown and reset economic growth.”