Quarantine Economics: 5 Steps to Getting our Economy Back on Track
As small business owners around the country are dipping into their personal savings to keep their businesses in operation, you may be wondering what we can do to get our economy back on track during COVID-19 and beyond.
Fortunately, there are steps that we can take at all levels — from government down to individuals — to help us recover.
- Stay Healthy
First and foremost, it’s vital that you stay healthy. This means observing stay-at-home orders so long as health experts recommend and taking precautions when you do have to venture out for groceries or prescriptions.
Researchers Martin S. Eichenbaum, Sergio Rebelo, and Mathias Trabandt found that containment measures need to curtail economic activity considerably in order to achieve the best-case scenario.
What is the best-case scenario? Saving lives.
Based on the widely accepted economic cost of a lost life, the researchers found that the benefits of saving so many people through government mandates and stay-at-home orders outweigh the economic costs.
- Absorb the Learnings of Others
China’s number of reported local transmission cases of COVID-19 is now around zero. Unfortunately, but not unsurprisingly, its economy has taken a hit from the sweeping measures taken to stem the spread of the virus.
It is likely that the U.S. (and the global economy) will follow the same economic trajectory.
China has begun to recover and are slowly reopening businesses and consumers are slowly returning to malls and restaurants. However, economic regrowth for China may be slow since 65% of respondents to a Beijing financial firm’s survey indicated that they were planning to “restrain” their spending habits post-COVID-19.
That brings us to our next recommendation.
- Make Wise Spending Choices
The U.S. has seen unemployment insurance claims soar over the past month with more than 16 million people filing for benefits. Stimulus measures from the U.S. government and Federal Reserve will alleviate the shock to some degree, but you do not have to be an economist to know that such an increase in unemployment numbers is bad news for the economy.
As the economy continues to contract into what is sure to be a recession if not a full depression, it makes sense to want to move to protective spending habits.
If you are able to maintain your spending levels, though, we encourage you to do so. The more people continuing to inject money into the economy, the better.
- Plan for the Future
Moderate estimates put the containment of the virus and the consequent reopening of businesses happening in the summer. This means that many businesses could be close to irreparably broken despite fiscal support.
If you’re a business owner, now is the time to plan. Consider how COVID-19 will change the behavior of your customers and what they need or want. Then, figure out how your business can continue to fit into those wants and needs.
- Ramp Up Business
The majority of economists believe the U.S. economy will start to pick back up later in 2020, with some predicting a rapid recovery starting in the summer and others a short recession continuing through the fall.
As businesses begin opening, it is important not to do too much too fast. Match your production to the increasing demand that will happen as the country goes back to work.
You have heard countless times over the past couple of months that these are unprecedented times. To be sure, they are.
Despite the fact that the IMF (International Monetary Fund) is forecasting a global recession, it’s important to remember that some analysts believe we could begin to see a recovery as early as the third quarter of 2020 with government stimulus, consumer confidence, and the number of COVID-19 cases all factoring into the timeline.
Stay safe, stay healthy, and look to the future.