
The coronavirus pandemic is a new kind of crisis
The coronavirus pandemic is a disaster with no modern parallels, with no escape and no safe harbor. This may be the most sustained period of widespread public pain since World War II.
The big picture: Even the worst catastrophes we’ve experienced — from natural disasters to terrorist attacks — have happened in one place, at one time. But global reach of the coronavirus, and the societal and economic shutdowns it’s triggering, will touch everyone, everywhere, for a long time.
The coronavirus is already forcing major changes to our daily lives, and that will continue.
- You could hear new urgency yesterday from President Trump, as he ditched the hopeful talk about a quick resolution and warned that the virus is truly serious.
- The crisis was once expected to last weeks or two months. Now even trump fears a long, sad summer: “[T]hey think August. Could be July. Could be longer than that.”
- Six counties in the Bay Area have issued “shelter in place” warnings, the strongest U.S. clampdown yet as a host of cities and states force bars, gyms and other public places to close.
- Without school, travel, public gatherings or even the chance to eat dinner at a restaurant, we’re already seeing the rhythms of daily life upended.
As America came to grips with the extent of these social distancing measures, it’s natural to reach for historical comparisons. And those examples can offer the comfort that the U.S. has made it through dark times before. But we will be facing a new and different set of challenges this time.
- We’re used to seeing terrible events befall a city, or a region — not the whole country all at once, let alone the whole world.
- When that happens, we usually send supplies, material support and aid to the affected area — but there will be few such resources to spare during this outbreak.
- Unlike a terrorist attack, this won’t strike in just one place. Unlike a hurricane, there’s no high ground to evacuate to.
It may be more instructive to go all the way back to World War II, which saw the strict rationing of consumer goods, full-scale mobilization of civilian industry, even “dimouts” of New York’s skyline.
- The American public, of course, rose to the occasion during World War II. The question is whether we can do the same during now, at a time when the muscle memory of sacrifice has atrophied.
“This is the defining global health crisis of our time. The days, weeks and months ahead will be a test of our resolve, a test of our trust in science and a test of solidarity.”
— Dr. Tedros Adhamon, WHO Director-General
What’s next: A recession is likely — some say it has already started — and because a severe outbreak could force people to stay away from shops, gyms, restaurants, bars and travel for a long time, the economic hit could be enormous — affecting every sector of the economy for a long time.
- The rapidly spreading virus will strain America’s health care system. Even a moderate outbreak could easily require most hospital beds and more ventilators than the country has available — and, again, there’s no good way to borrow excess supply from another country, because they’re all going through the same trauma, or will soon enough.
The bottom line: There is no escaping the public pain to come. We’re just beginning an endurance test that has no clear end.
–Looming global Great Recession
Economists have removed their rose-colored glasses in recent weeks and are beginning to price in scenarios for the world that are as bad or much worse than the global financial crisis, Axios Markets editor Dion Rabouin writes.
The big picture: The U.S., the world’s biggest economy, is likely to have a recession this year and the #2 economy, China, has already undergone a significant slowdown.
- That alone would have been enough to weigh on global growth. But because major economies like Italy, Germany, the U.K., France and Japan also are facing major outbreaks of their own, there is growing fear of the entire world’s GDP growth turning negative for multiple quarters this year.
- As of Monday night, 15 countries had at least 1,000 confirmed cases of coronavirus, and 12 of those were among the world’s 25 largest economies.
Worse, many of the countries expected to be hardest hit by the outbreak are in some of the weakest economic positions, especially those in the eurozone.
The bottom line: A major struggle for policymakers is that much of the outbreak’s economic impact is not yet measurable. That makes preparing for and assessing the potential for damage a new challenge.
-The looming global great recession
Economists have removed their rose-colored glasses in recent weeks and are beginning to price in scenarios for the world that are as bad or much worse than the 2007–2009 global financial crisis.
State of play: “If you think about the situation going into the financial crisis, I would say all things being equal there was clearly a better ability to react economically … in Europe and in Japan and also in the U.S.,” Thomas Holzheu, Americas chief economist at reinsurance giant Swiss Re, tells Axios.
- “Since we see that the global economy is not in a very resilient situation in terms of the ability to organize and muster a very strong policy response, we expect that the recovery will not happen very quickly.”
The big picture: The U.S., the world’s biggest economy, is likely to have a recession this year and the No. 2 economy, China, has already undergone a significant slowdown.
- That alone would have been enough to weigh on global growth, but because major economies like Italy, Germany, the U.K., France and Japan also are facing major outbreaks of their own, there is growing fear of the entire world’s GDP growth turning negative for multiple quarters this year.
- As of Monday night, 15 countries had at least 1,000 confirmed cases of COVID-19, and 12 of those were among the world’s 25 largest economies.
Worse, many of the countries expected to be hardest hit by the outbreak are in some of the weakest economic positions, especially those in the eurozone.
- EU regulations have handicapped the ability of local politicians to easily increase spending and the European Central Bank already is employing unprecedented levels of stimulus.
- Many countries were struggling with low growth even before the virus — Swiss Re did not include a single eurozone G7 country in its list of top 10 most resilient economies.
The big picture: A major struggle for policymakers is that much of the outbreak’s economic impact is not yet measurable. That makes preparing for and assessing the potential for damage a new challenge.
- “This is a true external shock that happens very quickly and very strongly and is totally synchronized,” Holzheu says. “We know that there are impacts happening right now and we don’t necessarily see it in a lot of the metrics yet. But still we need to make assumptions about possible implications.”
Πηγή: axios.com