Looking Ahead: Easing Out of Crisis and Recession, Part 1

Stephen DeAngelis

April 20, 2020

Everyone is looking forward to the end of the pandemic and the recession it has spawned. We all want to return to the new normalcy — whatever that may look like. The novel coronavirus spread so rapidly around the globe and shut down the economy so quickly commentators talked about the situation being analogous to turning off a switch. Sam Baker (@sam_baker), health care editor at Axios, writes, “It feels like some big, terrible switch got flipped when the coronavirus upended our lives — so it’s natural to want to simply flip it back. But that is not how the return to normalcy will go.”[1] Recovery is going to take a lot of planning and a lot of patience. There will be incredible financial and political pressures exerted to get the economy back on track. We need to ensure we take the right steps for the right motives during the recovery process. As Baker notes, “Even as the number of illnesses and deaths in the U.S. start to fall, and we start to think about leaving the house again, the way forward will likely be slow and uneven. This may feel like it all happened suddenly, but it won’t end that way.”

 

Political pressure will be intense

 

The fact the pandemic hit the United States in a presidential election year is unfortunate historical timing. It means politicians will be dividing their focus between recovering from the pandemic and electioneering. Inevitably, the line between the two activities will blur. This will be especially true for the President. Bruce Mehlman (@bpmehlman), founder of Mehlman Castagnetti Rosen & Thomas, points out, of the six presidents serving in office during a recession, only Calvin Coolidge got re-elected.[2] Whether or not their policies fostered recession, presidents are often blamed. No serious critic can blame President Trump for the unexpected onset of the novel coronavirus outbreak, but his actions following the outbreak will certainly be political fodder during the election. Nevertheless, he must rise above the criticism and lead the country wisely out of the current crisis. The pandemic has created conditions for a deep recession, the likes of which the United States hasn’t seen since the Great Depression.

 

Franklin Delano Roosevelt was the President voters charged with leading the country through the Great Depression. At the Democratic Party’s 1936 convention, he stated, “Liberty requires opportunity to make a living — a living decent according to the standard of the time, a living which gives man not only enough to live by, but something to live for.” Times are different. The causes of today’s recession are different; however, the need for leadership remains the same. The President is rightfully concerned about getting the nation back on track and is actively looking for ways to do just that. His decision-making needs to take into account expert advice from health professionals, business leaders, and economists. Right now, almost all of them are calling for caution. Being cautious, however, does not mean doing nothing. Planning for the recovery is absolutely essential. Mehlman asserts, in the near-term, politicians need to focus on stabilizing the situation. In the mid-term, they need to focus on recovery. In the long-term, they need to focus on reform so the country is better prepared for the next pandemic. He writes there will be a “great re-opening debate coming soon.”

 

Matt Zapotosky (@mattzap) and his Washington Post colleagues, observe, “The White House cannot unilaterally reopen the country. Though the Centers for Disease Control and Prevention has issued federal guidance advising people to avoid social gatherings, work from home and use pickup and delivery options for food, it is state officials who have put the force of law behind those suggestions.”[3] Conservative political columnist Marc A. Thiessen (@marcthiessen) believes the President is being both prudent and proactive by setting goals to get the economy back on track. He writes, “By setting a deadline, albeit one that was flexible, Trump effectively challenged medical experts to show us the path out of the wilderness.”[4] When that path out of the wilderness is identified, Mehlman asserts political and business leaders need to have a good answer to the question: “How did you help during the great pandemic?” He also believes they need to do the following:

 

  • Leverage the opportunity to build a better organization.
  • Have credible solutions to the new challenge (unemployment).
  • Prepare to engage reformers on the systemic failures exposed by the pandemic.
  • Think globally, act locally.

 

Finding the path out of the wilderness

 

Finding the path out of the wilderness will take the combined expertise of the country’s best minds. Washington Post columnist Michael Gerson (@MJGerson) asserts, “The main failures we have seen in the coronavirus response have not been caused by excessive confidence in experts. Our problems have been rooted in the failure of political leaders to treat the warnings of experts with sufficient seriousness, and to act on those warnings with sufficient urgency.”[5] To be fair, few people are ever prepared to act on warnings about worst-case scenarios since they are considered black swan events. Politicians weren’t the only individuals who ignored expert advice. Much of America partied and went about business as usual during the early days of the crisis. Philipp Carlsson-Szlezak, Boston Consulting Group’s Chief Economist, and Martin Reeves (@MartinKReeves), chairman of the BCG Henderson Institute, write, “Economic contagion is now spreading as fast as the disease itself. This didn’t look plausible even a few weeks ago.”[6] They add, “As the virus began to spread, politicians, policy makers, and markets, informed by the pattern of historical outbreaks, looked on while the early (and thus more effective and less costly) window for social distancing closed. Now, much further along the disease trajectory, the economic costs are much higher, and predicting the path ahead has become nearly impossible, as multiple dimensions of the crisis are unprecedented and unknowable. In this uncharted territory, naming a global recession adds little clarity beyond setting the expectation of negative growth. Pressing questions include the path of the shock and recovery, whether economies will be able to return to their pre-shock output levels and growth rates, and whether there will be any structural legacy from the coronavirus crisis.”[6]

 

The primary reason most experts are calling for patience rather than haste is because new flare-ups of novel coronavirus infections are possible. Carlsson-Szlezak and Reeves explain, “Another wave of infections remains a real possibility, meaning that even countries that acted relatively quickly are still at risk every time they nudge their economies back to work. Indeed, we have seen some resurgence of the virus in Singapore and Hong Kong. In that sense, only history will tell if their early and aggressive responses paid off.” Maria Caspani (@MariaCaspani85) reports state government and public health leaders warned, “Americans must resist the impulse to ease social-separation measures at the first glimpse of progress now being seen in the coronavirus battle. … Anthony Fauci, the nation’s top infectious disease expert, said it was important that people continue to stay home. ‘We’ve got to continue to redouble our efforts at the mitigation of physical separation in order to keep those numbers down and hopefully even get them lower than what you’ve heard recently,’ Fauci, director of the National Institute of Allergy and Infectious Diseases, said on CBS ‘This Morning’.”[7]

 

At the same time, Gabriel Leung (@gmleunghku), an epidemiologist and dean of medicine at the University of Hong Kong, notes, “Lockdown can’t last forever.”[8] He explains, “Lockdowns, quarantines and extreme forms of physical distancing work: They are curbing the spread of Covid-19. But they cannot last indefinitely, at least not without causing enormous damage to economies and compromising peoples’ good will and emotional well-being. … A formal framework is needed, with an explicit rationale grounded in science, for determining when and how and based on what factors to relax restrictions — and how to reapply some or all of them should another epidemic wave hit again.” He recommends a strategy of lockdown relaxation and, where and when necessary, reinstituting restrictions when flareups occur. He concludes, “Trying to see our way through the pandemic with this ‘suppress and lift’ approach is much like driving a car on a long and tortuous road. One needs to hit the brakes and release them, again and again, to keep moving forward without crashing, all with an eye toward safely reaching one’s final destination.”

 

Concluding thoughts

 

In part two of this article, I will discuss some of the recommendations experts have made about the way forward. There is no single strategy to follow; however, ideas are emerging about how to move ahead in a sensible and sustainable way.

 

Footnotes
[1] Sam Baker, “We can’t just flip the switch on the coronavirus,” Axios, 10 April 2020.
[2] Bruce Mehlman, “Politics & Policy in the Age of Pandemic,” Mehlman Castagnetti Rosen & Thomas, Second Quarter 2020.
[3] Matt Zapotosky, Josh Dawsey, Jose A. Del Real, and William Wan, “Trump administration pushing to reopen much of the U.S. next month,” The Washington Post, 9 April 2020.
[4] Marc A. Thiessen, “We finally have the sustainable coronavirus strategy Trump has been demanding,” The Washington Post,
[5] Michael Gerson, “The dangerous conservative campaign against expertise,” The Washington Post, 9 April 2020.
[6] Philipp Carlsson-Szlezak and Martin Reeves, “Understanding the Economic Shock of Coronavirus,” Harvard Business Review, 27 March 2020.
[7] Maria Caspani, “‘You can’t relax’: Vigilance urged as New York sees signs of coronavirus progress,” Reuters, 9 April 2020.
[8] Gabriel Leung, “Lockdown Can’t Last Forever. Here’s How to Lift It.The New York Times, 6 April 2020.