But there are massive risks involved with quickly reversing the social distancing policies. Not only would a premature re-opening of the economy defy the advice of health experts, but economists warn it would backfire.
Instead of a one-time blow, the economy could face repeated shutdowns over a prolonged period.
“If the president decides to go 180 on us and open by Easter, that will create chaos and confusion. That is the prescription for a depression,” Mark Zandi, chief economist at Moody’s Analytics, told CNN Business.
The goal of the health restrictions is to slow the outbreak, buying precious time to prevent the nation’s hospitals and doctors from becoming completely overwhelmed.
“If people are panicked because hospitals are overflowing and loved ones are dying, the hit to the economy will be even worse than if we remain in lockdown,” said Zandi, who advised Republican presidential nominee John McCain in 2008. “It’s a massive gamble — and one without science on his side.”
Bernanke warns against rushing back to work
Ben Bernanke, the former Federal Reserve chairman credited with rescuing the American economy from the 2008 crisis, issued a similar warning Wednesday.
Bernanke, who studied the Great Depression, said the current situation is “more like a major snowstorm or natural disaster than a Great Depression-style downturn.”
But in this case, it’s a snowstorm being intentionally brought on by governments desperately trying to prevent the spread of the virus.
“The federal government is slowing the economy down to try to terminate the virus. It’s a conscious policy choice,” Brusuelas said.
Morgan Stanley: Unemployment could spike to 12%
Conscious or not, the pain is severe for both Wall Street and Main Street.
And economists are bracing for an historic collapse in GDP. Goldman Sachs estimates the economy will contract at a 24% annualized rate in the second quarter. Morgan Stanley sees a record-breaking drop of 30.1%.
Washington wasted little time mounting a powerful response.
Blankfein supports phased return to work
But the stimulus won’t erase the economic fallout. Moody’s still expects second-quarter GDP to plunge by 17.6%, compared with 28.3% without stimulus.
Former Goldman Sachs CEO Lloyd Blankfein said that efforts to flatten the virus curve are “sensible,” but have a real cost, too.
“Crushing the economy, jobs and morale is also a health issue – and beyond,” Blankfein tweeted on Tuesday. “Within a very few weeks let those with a lower risk to the disease return to work.”
Zandi urged US officials to study what happened in Asia, where China, South Korea and Singapore imposed very restrictive lockdowns.
“They’re on the other side of this. While they are still battling the virus, their economies are coming back to life,” Zandi said.
Better off with one-time hit
With the presidential election barely five months away, Trump is clearly getting anxious to lift the health restrictions and revive the economy.
Of course, Trump would not be able to singlehandedly bring the economy back to life.
Various mayors and governors would likely keep their shutdowns in place, especially in hard-hit areas such as New York, New Jersey and San Francisco.
And countless CEOs would chart their own course, keeping their offices and factories dark to protect workers and morale.
Still, lifting federal restrictions would re-open parts of the economy, despite pleas from health officials not to do so.
“One can’t help but think this is just a naked expression of the president’s own narrow electoral interests,” RSM’s Brusuelas said.
But Brusuelas urged Trump to put the national interests ahead of his own political ambitions.
“If you reopen the economy prior to the termination of the virus, you’re creating a better probability of second and third waves that shut the economy again,” he said. “The US is better off taking a one-time hit.”