Experts believe that if the COVID-19 lockdown is more radical, the economy will be stronger


As early as the coronavirus outbreak in the United States, Many economists think Active blockades will be the best long-term solution for managing the pandemic, although they will cause short-term economic pain. After six months, we want to know: Does this logic hold up?What other political events might change the course of this country Sustained recovery From the current recession?

in This week’s installment our Economic survey, versus Global Market Initiative At the University of Chicago Booth School of Business, FiveThirtyEight surveyed 32 quantitative macroeconomists on the current and future of the economy. Since we couldn’t resist the quarterback on Monday morning, we also asked if the blockade earlier this year was too aggressive or not aggressive enough.

Among the surveyed respondents, 74% of economists said that if the lockdown measures were more radical at the beginning of the crisis, the current economic situation in the United States would be better. In this camp, the most frequently cited reason is that early control of the virus will enable a more stable and more comprehensive recovery of economic activities in the future. “A more aggressive blockade will have [gotten] As we enter the fall and winter, the country is in a better position (in terms of health),” said Andrew Barton, Professor of Economics and Finance at Duke University.

Barton said: “This will also send a clearer signal to the entire country that we need to take this virus seriously and work together to bring it under control.” In an article, he quoted Dr. Ashish Jha, Dean of the Brown University School of Public Health. A sentence. A recent article in the New York Times: “There is no urinating area in the pool”, which means that you can’t just block certain areas, while other areas have more relaxed restrictions and the spread of the virus is wider.

Proponents of stricter lockdowns used Japan and several European countries (such as Germany, Norway, and Denmark) as examples to illustrate how to reduce the virus to a very low level as soon as possible to speed up recovery. Others pointed out that if the virus was controlled sooner, children could have returned to school for face-to-face learning faster – Main consideration Maximize its economic power as the country rebounds from the pandemic.

Among the 26% who think they should be blocked less Radical, the theme is that more can be done through targeted methods, protecting high-risk groups and preventing potential super-spreading incidents, while allowing more activities. Others believe that the blockade is even irrelevant, or that most of the reduction in activity is due to personal self-regulation rather than government intervention.

“I think the positive impact of more business activities on employment may exceed the higher infection rates in most places,” Deborah Lucas, Professor of Finance at MIT Sloan School of Management. “I also think that work stoppages are not very effective.”

“I think [a more aggressive lockdown] There is hardly any difference, because a large part of the population imposes movement restrictions on themselves out of preventive motives,” Christian Baumeister, Professor of Economics at the University of Notre Dame. Baumeister said that she chose the less radical option in the investigation because self-discipline “is actually beyond the control of the authorities.”

In the same way-but this time, look for forward — Let’s let economists imagine that due to the surge in COVID-19 cases, new shutdowns must occur. If they still want to minimize economic losses, which activities will they close first? It’s important to note that our team is composed of economic experts (not epidemiologists) who clearly listed indoor dining (and to a lesser extent, gym) as the first place to close, while outdoor dining and entertainment Is ranked last:

What should be closed to minimize economic losses?

Economists said that if COVID-19 cases surge, which activities and venues should be closed first to reduce economic losses

Event Location First place vote* Average priority
Indoor dining 13 2.3
Gym 5 3.5
Face-to-face political campaign 6 4.4
Art and cultural institutions (museums, theaters) 2 4.5
the University 1 5.0
Retail store 0 6.0
Interstate travel 2 7.1
K-12 school 1 7.1
Day care 0 8.0
Outdoor dining 0 8.2
outdoor leisure 0 9.9

*Do not. Of respondents listed it as their top priority and completed the question out of 30 people.

Source: FivethIRTYEIGHT/IGM COVID-19 Economic Survey

Interestingly, most economists did not give special priority to closing schools. The university and K-12 school each received a first-priority vote (among the 30 respondents who answered the question), and neither cracked the top four activities that were closed first. The priority of day-care center closure is even lower. This does not mean that our group believes that reopening schools must be safer, but it does emphasize the extent to which the group believes schools-and nurseries as a whole-contribute to economic development, and that closing them may have harmful economic effects .

In terms of future policy implications, we also include a long-term version of the problem We asked the group about a month ago: What developments in the COVID-19 world or the political world will cause economists’ GDP growth forecasts to become better (or worse)? Similarly, the school is a huge economic engine.

What will make the economy in 2021 look better or worse?

The proportion of economists who predict certain scenarios will increase or decrease GDP growth from the fourth quarter of 2020 to 2021

In this case, the growth in 2021 will be…
Imagine significantly reduce almost Significantly higher
Vaccines approved on election day 0% 50% 50%
Democrats control the president + Congress 0 53 47
K-12 courses taught in person 3 50 47
Biden wins; Congress stays the same 6 94 0
Teaching K-12 courses in a virtual way 31 66 3
Trump wins; Congress stays the same 41 59 0
The election is considered illegal 47 50 3
No extra stimulation until November 59 38 3

The survey of 32 economists was conducted from September 18 to 21.

Source: FivethIRTYEIGHT/IGM COVID-19 Economic Survey

The results also focus on how economists view the election results and the overall political climate.we have already Written many times They believe that Congress’s infusion of additional funds—whether in the form of strengthening federal unemployment insurance or a series of other stimulus payments—is essential to stabilizing the economy through recovery. According to our survey results, the biggest economic risk in 2021 is that no additional stimulus measures will be passed before November 2020. Economists believe that the Democratic Party’s control of Congress will have a significant impact on the growth potential in 2021, possibly because they have been more willing to pass government spending bills. (Please note that even though Joe Biden won the presidency but the Senate did not turn to Democrats, 94% of our panel members stated that their outlook for 2021 will be basically the same as they are now.)

“I think the failure to pass fiscal stimulus measures is the biggest downside risk,” said Jonathan Wright, An economist at Johns Hopkins University, who has been consulting the FiveThirtyEight survey. “This may be caused by RBG battle. “

Of course, among the above results, the possibility of rapid vaccine development is the only highest rise, and elections are considered illegal —— Real possibility -According to the expert group, this is another worst-case scenario.

However, no matter what happens, we can expect the stock market to tide over the difficulties with minimal losses. As i wrote in june, The market did not reflect the overall economic recession, the S&P 500 index Almost recover all losses Since late February (even in Unstable start in September). In order to understand more clearly why this happens, we explained to experts the seemingly disconnected situation between the stock market and other economies, and asked them to assign an importance rating from 0 to 1 for each option, where 1 is the most important.

Why did the stock market perform so well in a recession?

The main explanation for the continued growth of the stock market, even if other economies are in recession

Explanation weight
Fed’s expansionary policy 0.35
Some companies (such as technology companies) are benefiting from the pandemic 0.18
The rich have increased their savings, and then they invest 0.12
Unreasonable, the bubble will burst eventually 0.12
It is normal that the market is not relevant to the larger economy 0.11
Investors are optimistic about post-pandemic growth 0.10
other 0.02

Respondents were asked to assign a weight from 0 to 1 for each category, and the sum of all responses must be 1.

Source: FivethIRTYEIGHT/IGM COVID-19 Economic Survey

Although some people believe Booming technology company In order to keep the market stable, economists clearly believe that the Fed bears the greatest responsibility for the stock market’s rebound. “Obviously, the panel believes that ultra-low interest rates and targeted injection of liquidity into the economy have had a significant impact on the stock market,” Alan Timmerman, An economist at the University of California, San Diego, who has also been consulting the FiveThirtyEight survey.

There is also a very small—though not non-existent—weight that believes that this is just an irrational price bubble that is about to burst.

However, it may be explained that the lowest weight option available is the real optimism of investors. As we said, The stock market is Is not economic.

Looking at the big picture, most economists believe that the United States could have done a better job of initially controlling the virus through a more aggressive blockade, which in turn would put the country in a better economic state. Legislators are also likely to have choices that have a significant impact on the overall economic trajectory in 2021—the same goes for voters.Just how much we guessed Those ones However, the decision remains to be seen.



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