We’re inching closer to the point where some significant portion of the United States is going to reopen again, and one question people are asking is: how is the economy going to perform after the reopening occurs?
Of course, no one can predict what’s going to happen, because we’re truly in virgin, unprecedented territory. Never before have we stopped the world’s largest economy with a series of closure orders, kept it shut down for weeks, and then tried to restart it through a series of piecemeal orders issued on a state-by-state basis. There are no meaningful historical parallels. Anyone — regardless of their claims to “expertise” — who tells you that they know with confidence what’s going to happen is lying, because no one can possibly know.
The ultimate economic response is going to be the product of millions of individual decisions made by our different economic actors, and no one knows for sure how they’re going to respond. Are consumers going to go out and spend those checks from the federal government in brick and mortar businesses, or are they going to bank them, or are they going to permanently shift their buying to on-line shopping? Are people pining for a sit-down meal in a restaurant? Is there a pent-up demand for products — like, say, shoes — where you really need to try them on that will bring people back to brick and mortar stores? Are the countless small businesses going to reopen, or has the hit to their cash flow been fatal — and if they reopen, are they going to rehire all of their former employees immediately, or take a partial, wait-and-see approach? Are restaurant owners going to reconfigure their restaurants, and advertise that they have implemented a new social distancing seating policy, and adjust their prices to reflect the new normal? Will entirely new jobs — like the roaming disinfecting wipedown specialist, the entranceway COVID-19 test administerer, and the mask patrol — be created, that will help to nudge unemployment statistics back down sooner than anticipated? Will businesses default on loans, putting pressure on bank financial statements and cash flow?
I’ve got no special insight into any of this. I would only note one thing: I think it’s pretty clear that many business people are very good at figuring out a way to make money. If you’ve been on social media recently, you’ve probably had it seep into your consciousness that a lot of places are selling different kinds of masks and other protective gear — more websites selling more masks, in fact, than you ever thought possible. It’s an example of how the participants in the modern American economy are both inventive and adaptable.
That doesn’t necessarily mean that the economy will come roaring back from a total standstill. But it does suggest that the people who were successful in business before the great shutdown are going to apply all of their creative, flexible impulses toward getting that “invisible hand” to work in their favor, and to entice homebound consumers into going out to the world at large and spending. Where some people are going to see a cause for hand-wringing, others are going to see great opportunity.
What does it mean? We’re about to find out, in the greatest economic experiment in the history of the human species.