“The more rapidly you want to contain the
virus, then the more severe the lockdown has
to be and the more severe the disruption to
economic activity is,” said Gregory Daco, chief
U.S. economist at Oxford Economics. “The hope
is, the more severe the lockdown, the sharper
the rebound will be.’’
The “Lockdown Paradox,” he calls it.
Much will depend on how swiftly and
aggressively the Federal Reserve, Congress
and the Trump administration deliver financial
aid to tens of millions of economic victims —
from hourly workers with no more income to
suddenly furloughed employees to businesses
with loans to pay but no customers. Solving the
health crisis by shutting down the economy,
though, will have to come first.
The U.S. economy has never endured anything
like this. The economic shock from the 9/11
terrorist attacks, painful as it was, was short-
lived. The financial crisis and the Great Recession
were devastating. But they weren’t intertwined
with a calamitous health crisis.
In the near term, at least, Daco foresees
excruciating economic pain: He expects the
American economy to shrink at a staggering
12% annual rate in the April-June quarter.
That would be the most dismal quarter on
record dating back to 1947. After a second-half
rebound, Daco thinks the economy will post
zero growth for 2020 as a whole.
Financial markets are bracing for the worst. On
Wall Street, the Dow Jones Industrial Average
was down more than 1,300 points in late-
morning trading and has plunged more than
9,600 points or 33% since Feb. 12.