Simply lifting coronavirus lockdowns will not power the economy straight back to boom times if private businesses, staff, and consumers do not feel safe, according to one of President Trump’s most senior economic advisers.
Tomas Philipson, acting chairman of the White House Council of Economic Advisers, said unemployment was reaching Depression-era levels and that forecasts were converging on a second-quarter economic contraction of about 30%.
How quickly things can recover will depend on multiple factors, he told the Washington Examiner in an interview.
“I don’t think it’s just a matter of the states making the decisions. It’s also the private sector mitigation that’s taking place regardless of those things,” he said.
“People have been scared, and the question is, how quickly are they going to come back from that?”
Trump has made it clear that he is keen to lift restrictions as soon as possible. And on Friday, he repeated his claim that reopening the economy would quickly return the country to rapid growth thanks to “tremendous pent up demand.”
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Our Country wants to move safely forward. There is a tremendous pent up demand. We will open big!
— Donald J. Trump (@realDonaldTrump) April 24, 2020
He has signed a string of bills designed to put the economy into hibernation, keeping paychecks flowing to workers, extending unemployment benefits, and funding loans to small businesses in the hope that economic activity will reawaken as the virus threat recedes.
Philipson said: “By being economically inactive, we want you, basically, to have a bridge to when we become economically active.”
However, evidence showed that many businesses took measures into their own hands, sending people home before states took action, he added.
“So if you look at restaurants, hotels, etc., they took a dive before the governments started issuing stay-at-home orders on the state level, before we issued our federal guidelines on social distancing,” he said.
“That is telling you that people were aware of this and responding accordingly.
“The question then becomes, which we don’t know yet and which the future will have to show us, once we lift these mandates, are people then going to respond quickly, or are they going to walk back slowly?”
States are beginning to reopen after the White House coronavirus task force published a three-phase process last week. Places such as Georgia, which is allowing nonessential businesses, including hair salons and gyms, to open on Friday despite not meeting the requirements of the White House plan, may provide some of the answers.
Some other states will follow next week, while worst-hit areas are drawing up plans for how to move more gradually.
A senior administration official said the key was to get “people more comfortable” with the idea of returning to normal.
That would involve delivering the message that states have the resources they need to test and contain outbreaks while also informing the public about who is most vulnerable and needs continued protection.
But he admitted that officials had done “not as great a job” as they might have done.
