As the Trump administration eyes the beginning of May as the first possible date they’ll reevaluate our current national shutdown, critics have rightly wondered when we’ll see real measures to reopen the economy. After all, our national quarantine will likely lead to deaths of despair from suicide and substance abuse, and if our supply chains remain unstaffed long enough, more lives will be at stake.
But there’s an economic question here as well, and despite a public unwillingness to admit it, finding the break-even point between quarantine and reopening the country includes both lives saved and the economy. Luckily, leaked memos written by President Trump’s economic adviser Peter Navarro show that economics have been a part of the administration’s calculation all along.
The cost of halting travel to China for one month, Navarro noted, would be $2.9 billion, whereas a yearlong ban as a result of the coronavirus becoming a pandemic would be $34.6 billion. All in all, Navarro estimated that no containment could cost the country up to $5.7 trillion and half a million lives.
Right now, roughly a quarter of the economy is shut down, and just in the past two weeks, a record 10 million people have reported job losses, with millions more to come. Additionally, 1 in 4 small businesses report being two months away from permanent closure, with another 1 in 10 saying they’re just one month away. There’s no question that our current quarantine has led to significant economic damage, but if we can expedite a slow restart to the economy, it may prove the most economically sound option in hindsight.
There’s not much good news these days, but two factors should provide some promise. First, domestic death toll projections have been revised downward and peak projections moved forward. All of this indicates that the worst may be over sooner than we think, at least until winter strikes, meaning that we may be able to return some healthy workers to supply chains, albeit with stringent social distancing and mask measures. Marko Kolanovic, a top quantitative strategist at J.P. Morgan, thinks that we might see a limited reopening of the economy in one to two weeks.
If this shutdown continues into the summer and low-risk workers aren’t given leeway to open up shop, containment could wind up costing us anyway. But in the short run, this strategy likely saved us a lot.
