Experts believe that if COVID-19 lock-in measures are more aggressive, the economy will be stronger

In the early days of the coronavirus in the United States, Many economists think Although it may cause widespread short-term economic pain, an active blockade will be the best long-term solution to the pandemic. After six months, we want to know: Does this logic hold?What political events may still change the direction of development of the country Continuous recovery From the current economic recession?

in This week’s installment our Economic survey,versus Global Market Initiative At the University of Chicago Booth School of Business, FiveThirtyEight surveyed 32 quantitative macroeconomists’ views on the current and future of the economy. And since we couldn’t resist the quarterback on Monday morning, we also asked if the lockdown earlier this year was too aggressive or not aggressive enough.

Among the surveyed respondents, 74% of economists said that if the lock-in measures were more radical at the beginning of the crisis, the current economic situation in the United States would be better. In that camp, the most frequently mentioned reason is that early control of the virus will enable a smoother and more comprehensive restoration of economic activities in the future. “A more aggressive lock-in will make [gotten] As we enter the autumn and winter seasons, the country is in a better position (in terms of health),” Andrew PartonProfessor of Economics and Finance at Duke University.

Parton said: “This will also make it clearer to the entire country that we need to take the virus seriously and work together to control it.” He said in the words of Dr. Ashish Jha, Dean of the Brown University School of Public Health. The latest article in the New York Times: “There is no peeing area in the pool”, which means you can’t just restrict certain areas while others see looser restrictions-and greater spread of the virus.

Those who support stricter lockdown measures point to examples of how Japan and many European countries (such as Germany, Norway, and Denmark) can reduce the virus to a very low level as early as possible to achieve faster recovery. Others pointed out that if the virus is controlled early, children may be able to return to school more quickly for face-to-face learning. Main consideration Recover from the pandemic and maximize the country’s economic strength.

In 26% of people think that the lock should be less The radical theme is that through targeted methods to protect high-risk groups and stop potential super-proliferation events, while allowing more overall activities, could have done better. Others believe that the blockade does not even have much effect, or that most of the reduced activity is due to personal self-regulation rather than government intervention.

“I think the positive impact of more business activities on employment may exceed the higher infection rates in most places,” Deborah Lucas, Professor of Finance at MIT Sloan School of Management. “I also think that discontinuation is not very effective.”

“I think [a more aggressive lockdown] There is hardly any difference, because a large part of the population imposes movement restrictions on themselves for preventive purposes,” Christiane Baumeister, Professor of Economics, University of Notre Dame. Baumeister said that she chose a less radical option in the investigation because self-regulation “is actually beyond the control of the authorities.”

Same thing, but this time, it looks like forward —We ask economists to imagine that a new shutdown has to be carried out due to the surge in COVID-19 cases. If they still want to minimize economic losses, which activities will they close first? Our group is made up of economic experts rather than epidemiologists, but the caveat is that they prioritize indoor dining (and to a lesser extent the gymnasium) first, while outdoor dining and entertainment are at the bottom:

Which equipment should be shut down to minimize economic losses?

Economists believe that if there is a surge in COVID-19 cases, activities and venues should be closed first to reduce economic losses

Event Location First place* Average priority
Indoor dining 13 2.3
stadium 5 3.5
Face-to-face political campaign 6 4.4
Art and cultural institutions (museums, theaters) 2 pcs 4.5
the University 1 piece 5.0
Retail store 0 6.0
Interstate travel 2 pcs 7.1
K-12 school 1 piece 7.1
nursery 0 8.0
Outdoor dining 0 8.2
outdoor leisure 0 9.9

*Do not. Among the 30 respondents who completed this question, it was listed as the top priority.

Source: 55/IGM COVID-19 Economic Survey

Interestingly, most economists did not give special priority to closing schools. Everyone in the university and K-12 school received a priority vote (among the 30 respondents who answered the question), and none of them cracked the first four activities to be closed. Downtime priority in day care centers is even lower. This does not mean that our group believes that reopening schools must be safer, but it does emphasize the group’s belief that schools and childcare in general have played a role in promoting economic development, and closing schools may have an adverse effect on the economy .

In terms of future policy implications, we also include a long-term version of the problem We posed on the panel about a month ago: What developments in the COVID-19 world or the political world will cause economists’ GDP growth forecasts to become better (or worse)? Similarly, the school is a huge economic engine.

What makes the economic situation better or worse in 2021?

The proportion of economists who have predicted that certain scenarios will increase or decrease GDP growth between the fourth quarter of 2020 and 2021

In this case, the growth in 2021 will be…
Imagine Greatly reduced almost Substantially higher
Vaccines approved on election day 0% 50% 50%
Democrats control the president and Congress 0 53 47
Class K-12 taught in person 3 50 47
Biden wins; Congress stays the same 6 94 0
K-12 classes will have virtual lectures 31 66 3
Trump wins; Congress stays the same 41 59 0
The election is considered illegal 47 50 3
No more excitement until November 59 38 3

A survey of 32 economists was conducted from September 18 to 21.

Source: 55/IGM COVID-19 Economic Survey

The result has also brought into focus how economists view the election results and the overall political atmosphere.we have already Written many times They believe that injecting additional funds from Congress (whether in the form of enhanced federal unemployment insurance or a series of other stimulus payments) is essential to stabilize the economy through recovery. According to our survey results, the biggest economic risk in 2021 is the possibility that no additional stimulus package will be passed by November 2020. Economists believe that the Democratic Party’s control of Congress has had a significant impact on growth potential in 2021, possibly because they have been more willing to pass government spending bills. (Please note that even though Joe Biden won the presidency, the Senate did not let the Democrats rule, and 94% of our panel members stated that their outlook for 2021 will remain the same as they are now.)

“I think the failure to pass fiscal stimulus measures is the biggest downside risk,” he said. Jonathan Wright, An economist at Johns Hopkins University, who has been investigating with FiveThirtyEight. “This could be caused by RBG battle. “

Of course, the possibility of rapid development of a vaccine is the only highest-rising option among the above results, and elections are considered illegal situations – Real possibility The panel of experts believes that this is another worst-case scenario.

However, no matter what happens, we can expect the stock market to return to normal with minimal losses. As i wrote in june, The S&P 500 index does not fully reflect the recession Recover almost all losses Since late February (even if September begins to waver).In order to more clearly explain why this happened, we provided experts with a series of explanations about the seeming disconnection between the stock market and other economies, and asked them to assign the importance level of each option from 0 to 1. Where 1 is the most important

Why did the stock market perform so well in a recession?

Even if the rest of the economy is in recession, the main explanation for the continued growth of the stock market

Explanation weight
Fed’s expansion policy 0.35
Some companies (such as technology companies) are benefiting from the pandemic 0.18
The wealthy people’s savings increase, and then they invest 0.12
This is irrational, the bubble will burst eventually 0.12
It is normal that the market is not related to the larger economy 0.11
Investors are optimistic about post-pandemic growth 0.10
other 0.02

Respondents are required to assign a weight from 0 to 1 for each category, and the sum of all answers must be 1.

Source: 55/IGM COVID-19 Economic Survey

Although some people expressed confidence in the following views: Peng Tech’s Technology Company In order to keep the market stable, economists clearly believe that the Fed bears the greatest responsibility for the rise of the stock market. “Obviously, the panel believes that ultra-low interest rates and targeted injection of liquidity into the economy have had a significant impact on the stock market,” he said. Allan TimmermannAn economist at the University of California, San Diego, he also consulted with FiveThirtyEight during the investigation.

Although this is just an irrational bubble in price, and it may burst, it also has a small weight (although it is not non-existent).

But perhaps this suggests that the lowest-weighted option is a true optimist for investors.As we said The stock market is Is not economic.

On the whole, most economists believe that through more aggressive lock-in measures, the United States may do a better job of initially controlling the virus, which in turn will put the country in a better economic position. Parliamentarians still have choices that have the potential to have a major impact on the overall economic trend in 2021-the same goes for voters.How much did we guess Those ones However, the decision remains to be seen.

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