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How Will We Reopen the Economy After the Coronavirus Crisis? – The New Yorker



In the coming months, policymakers will be forced to strike a difficult balance between protecting people’s health and protecting their livelihoods.Photograph by Hannah Yoon / Bloomberg / Getty

The daily coronavirus briefings of Andy Beshear, the governor of Kentucky, used to be sedate affairs. That changed on April 15th, when protesters began gathering regularly outside the window of his briefing room, in the Capitol building, in Frankfort, and attempting to interrupt the proceedings. “Open up Kentucky!” they chanted. “We want to work!” There were horns, whistles, and signs, including one that said “Quarantine is when you restrict the movement of sick people! Tyranny is when you restrict the movement of healthy people!” An activist stood on the Capitol steps and shouted, “We’re free citizens, and we can’t be told we can’t support our families. We can’t be told that we can’t work. How unethical is it of our leadership to say, ‘No, you can’t work’? It’s garbage! If you want to open your business, go open your damn business!”

Beshear, a Democrat, won the governorship by a little more than five thousand votes last November. On the first day of the protests, he paused his briefing and addressed the people outside the window, trying to appeal to rationality. “Folks, that would kill people. That would absolutely kill people,” he said. “My job isn’t to make the popular decision but to make the right decision, and the decision that saves people’s lives.” As of April 23rd, Kentucky has 3,481 confirmed cases and a hundred and ninety-one deaths from COVID-19, which puts it relatively low on the list of affected states. But Beshear’s dilemma is the same as the one facing leaders across the country. Many Americans, understandably, want to return to work. But reopening the economy would likely accelerate the spread of the virus, straining the health system, causing more deaths, and causing further economic damage. In the coming months, policymakers will be forced to navigate the complicated relationship between protecting people’s health and protecting their livelihoods.

There is no clear path for reopening the economy, and various groups have been issuing their own, competing plans. Last Friday, the governor of Minnesota announced that outdoor activities such as hunting and fishing could resume soon and that golf courses and driving ranges could reopen right away. In Texas, retail stores will be permitted to open back up for curbside shopping. But the governor of Maryland announced that restrictions there would not be lifted until there was greater access to testing, improved hospital space and equipment, and an effective contact-tracing system. In California, Governor Gavin Newsom suggested that people visiting restaurants in his state might have to have their temperatures taken before being allowed inside. On April 13th, President Trump suggested that he might force states to reopen their economies but more recently said that he would leave the question up to governors. The White House also released its own set of guidelines for how to move forward, called “Opening Up America Again.” “I think it’ll be really chaotic,” Dean Baker, the co-founder of the Center for Economic and Policy Research, told me.

Most experts, regardless of political orientation, agree on a few principles about the recovery. The first is that the longer the economy stays in its current state of shutdown, the longer it will take to get it going again, and the more protracted the economic depression that will follow. “The longer we’re shut down, the more businesses we’re going to lose, and those businesses are what’s going to create the labor demand that will soak up our unemployed workers,” Michael Strain, an economist with the American Enterprise Institute, told me. Baker added, “Some workers won’t be able to come back. There will be incredibly complicated accounting messes; all these bills haven’t been paid for two or three months. Just getting a place up and running again takes time.” The second is that the rescue programs that Congress passed in March could mitigate the damage, but only if implemented effectively, and they still won’t go far enough. (The first stage of the program, intended to help small businesses, has already run out of funds.) The third is that widespread and accessible virus testing and effective infection tracing will be needed before most people will feel confident returning to their pre-pandemic ways of life. (The guidelines released by the White House mention testing but do not address how it would become more widely available.)

Most likely, the economy will come back online through what Strain described as a “staged reopening,” with different sectors switching on at different times. “What would that look like inside a city?” Strain said. “Continuing to prevent really large crowds, maybe opening up the smaller businesses first, having fewer people inside a store at one time. Then maybe you open up the restaurants, but people are spread out.” Larger establishments, such as department stores, would follow, with the time line ideally being driven by what can be determined about the virus’s spread through aggressive testing. It is hoped that the highest-capacity venues, such as stadiums and concert halls, could reopen in the summer. Many governors have pledged to work in regional groups to insure that the transition is as smooth as possible (such plans are already under way: New York, New Jersey, Connecticut, Pennsylvania, Rhode Island, and Delaware recently joined together to coördinate reopening plans.) Strain also noted that even a staged reopening will work only if local leaders can be nimble in response to contagion levels. “If we’re able to do this well, what you should see is pumping the gas pedal and then hitting the brakes,” he said. Schools may reopen in September, for example, and then, if the virus spreads too quickly, close again for two weeks in October. Social-distancing rules in restaurants may have to be continually adjusted. “I think we’re likely to see the virus respond to the level of economic activity, and, if the response is more than we would like, we’re going to need to slow things down again,” he said. “But I don’t know if our system of government is up to that.”

One proposed plan, published by several of Strain’s colleagues at the American Enterprise Institute, outlines the possible phases of a staged reopening. The first is the one we are currently in, when the focus is on slowing the spread of COVID-19 by shutting down public spaces and ordering residents to shelter at home; Phase II occurs on a state-by-state basis, “when they are able to safely diagnose, treat, and isolate COVID-19 cases and their contacts.” During this phase, Scott Gottlieb, an A.E.I. fellow, and his co-authors write, “schools and businesses can reopen, and much of normal life can begin to resume.” Physical-distancing measures may still be in place; vulnerable individuals may still want to limit their contact with others; and much more stringent public-hygiene measures should be adopted in public places. The third phase suggests that physical distancing and other restrictions can be removed when widespread disease tracing, treatment, and vaccines become available. (Vaccine tests are under way, but nothing is expected for at least a year.) After that, the report suggests, we should focus on preparing for the next pandemic. The authors write, “After we successfully defeat COVID-19, we must ensure that America is never again unprepared to face a new infectious disease threat.”

Even after restrictions begin to lift, the economic crisis will probably be unlike anything the U.S. has seen in several decades. On April 14th, the International Monetary Fund published a report predicting that the current period will be the beginning of the “worst recession since the Great Depression, and far worse than the Global Financial Crisis.” Heidi Shierholz, a senior economist at the Economic Policy Institute, said that, while the U.S. government had taken some steps toward alleviating the damage, it hasn’t done nearly enough. She compared the response of American leaders to that of leaders in Denmark, who swiftly implemented a program to replace workers’ lost wages so that they could remain connected to their employers and could be summoned back again easily once it was deemed safe; the U.S. version, an emergency loan fund called the Paycheck Protection Program, has, so far, been riddled with implementation problems and has left many businesses that are in serious need without access to funds. “They’re getting what they need to survive the lockdown,” Shierholz said, referring to workers in Denmark. “So workers aren’t facing the trauma of job loss, which research shows can be very long-lasting, and can have effects on kids.” She went on, “We didn’t do what Denmark did. We chose not to. So we are going to be in a worse position, and we are not going to have as quick of a recovery.”

Pavlina Tcherneva, an economics professor at Bard College and the author of “The Case for a Job Guarantee,” told me that she believes the government should step in with forceful interventions, including more aggressive aid to individual families and a job guarantee through public-service projects. “The shortest distance between two points is a straight line, right?” she said. “The federal government should pay. If the problem is we need jobs, the government should create them. Hire the unemployed. It’s a very straightforward solution.” She believes that the crisis is an opportunity to reflect on economic policies that are currently failing us—such as the absence of universal health care, and tax structures that favor the rich—and to imagine a new world on the other side of the crisis. For inspiration, she suggested looking back to 1933, when Franklin D. Roosevelt took office amid the Great Depression and quickly expanded the role of the government in the economy, including by creating jobs for unemployed workers. “In two short years, Roosevelt did extraordinary things,” she said. “Look at that world of the nineteen-thirties: we didn’t have Social Security; we didn’t have a minimum wage; we didn’t have a forty-hour work week. F.D.R. came in and said, ‘Clearly the market is not solving the unemployment problem; clearly government has to come in and provide basic protections to workers.’ In two years, we did so much.”

A Guide to the Coronavirus

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Final roundtable: Clean economy projects could create 670000 jobs per year – Corporate Knights Magazine



The COVID-19 pandemic represents an opportunity to “reposition” the Canadian economy to take full advantage of the low-carbon transition, the new chair of the Canada Infrastructure Bank said June 3.

The economic crisis resulting from the pandemic has forced corporations and governments to deviate from their standard operating procedures, opening up an opportunity for innovation and creativity, said Michael Sabia, who was recently appointed by the federal government to head up the infrastructure bank.

“We need to seize this moment to be creative about how we reposition the national economy for a world that is going to be different, and a very important part of that [effort] is repositioning our economy to be a significantly lower carbon economy,” Sabia told a virtual roundtable hosted by Corporate Knights.

Sabia said that there is plenty of potential for the Canada Infrastructure Bank (CIB) to participate in clean energy projects but that the federal Crown corporation has underperformed to date.

The CIB has a mandate to invest $35 billion in federal funding by 2027/28 but has been criticized for its slow start.

Sabia said the bank should focus less on traditional infrastructure like roads and ports and more on stimulus projects that accelerate the energy transition, including renewable power, interprovincial transmission, low-carbon transportation and digitalization efforts to ensure all Canadians have access to high-speed internet.

The Corporate Knights roundtable was part of its seven-part Building Back Better project that urged the Liberal government to ensure that any economic recovery plan have a climate-change focus.

Addressing the roundtable, Industry Minister Navdeep Bains said Canada will have to be innovative in responding to the COVID-19 pandemic and the climate crisis.

He said hundreds of Canadian businesses have responded to the need for medical equipment by changing their operations to produce new products. “That’s the same mindset we have to have when it comes to confronting the climate crisis.”

In a white paper released Wednesday, authors Ralph Torrie, Céline Bak and Toby Heaps said the federal government should allocate $106 billion over the next 10 years for a host of clean energy projects that would create the equivalent of 670,000 full-time jobs per year. More than a third of the federal government investment, $40 billion, would be frontloaded in the first two years (with half dedicated to grants to finance a green renovation wave). Over 10 years, the white paper estimates, the federal investment and complementary policies would crowd in a further $730 billion in mostly private sector investment.

All told, the investments would reduce greenhouse (GHG) emissions by 236 megatonnes annually by 2030, from 2018 levels of 729 megatonnes. That scale of GHG reductions would put the country on track to meet the Liberal government’s target of net-zero emissions by 2050, Bak told the roundtable.

Proposals have included support for a major retrofit program to improve energy efficiency in buildings, planting an additional 800 million trees a year for 10 years, and investments in coast-to-coast electric-vehicle (EV) infrastructure, as well as interprovincial transmission lines to deliver low-carbon electricity and a $40 billion Energy and EV Innovation Fund to help create Canadian champions in fast-growing low-carbon markets where Canada has strong assets, including bitumen-derived carbon fibres, green hydrogen, renewable jet fuels, batteries and EVs.

Other speakers suggested that a green stimulus plan should have goals beyond job creation and emission reductions.

Canadians are now confronting a triple whammy of the COVID-19 pandemic, the climate crisis and the vivid reminder of the systemic racism embedded in the country’s attitudes and institutions, said Catherine Abreu, executive director of Climate Action Network Canada.

Any green stimulus programs must be based on a “just recovery” Abreu said. Her group was one of 150 civil society organizations that released a document this week proposing “Six Principles for a Just Recovery” for a more equitable and sustainable future.

“This moment is forcing us into confrontation with the vulnerabilities that are built into our economic and social systems,” she said. “There are ongoing crises that lurk behind the current health and economic emergencies . . . So if we are going to tackle issues like climate change, we have to come at them fundamentally as a fight for justice.”

The federal government can pursue reconciliation with Indigenous communities by partnering with them on clean energy projects that deliver health, economic and social benefits to the people, said Terri Lynn Morrison of the Indigenous Clean Energy network.

Morrison said Indigenous people are already major developers and partners in clean energy projects across the country. “They’re ready to seize the opportunity,” she added.

Some economists have questioned whether stimulus spending on clean energy infrastructure is the optimal way to respond to an economic slump precipitated by a health crisis that has forced Canadians into social isolation. Sectors like retail, restaurants and tourism have been hit hardest with job losses, and it’s not clear they would benefit from traditional – or even non-traditional – stimulus spending.

In a blog post last month, economists Dale Beugin and Mike Moffatt argued that green stimulus spending should target areas such as infrastructure, while government should continue to rely on regulation and carbon price to drive climate policy.

Trying to meet the requirements of both recovery and emissions reductions would result in an approach that fails to do either efficiently, they argued.

“Climate considerations should be less constraint and more a radar to help identify non-traditional but job-rich investment opportunities, such as deep retrofits and flood protection for homes and workplaces,” Heaps said via email. “Climate can also be a tiebreaker where two recovery options offer similar economic benefits.”

“In addition to the large investments in green infrastructure, the ‘shecovery’ will likely require significant investments in eldercare and childcare,” he added.

During the roundtable, Ivey Foundation president Bruce Lourie noted that countries like Germany and South Korea have succeeded in providing support for key clean energy sectors. The refrain that “governments shouldn’t pick winners” is a “tired and misguided refrain for us to be using,” he said.

As an example, he cited the promising opportunities for Canada to be a global leader in the emerging market for hydrogen-powered buses and trucks.

Environmental economist David Sawyer said proponents of green stimulus plans should emphasize “co-benefits” that come with investment in emission-reduction projects. They can include not only more jobs but also health benefits from reduced fossil-fuel pollution and greater resiliency to withstand the severe weather impacts of the climate crisis.

Dianne Saxe, Ontario’s former environment commissioner, said Canada needs to find a way to maintain long-term climate-change policies so businesses and consumers have confidence that investments made today are not undermined tomorrow.

“The biggest challenge is how to have stable policies that survive government changes,” she told the roundtable. Canadians need to be active, she said. “Fundamentally, to get durable public policy, we need strong, loud public demand for it.”

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Eurozone in fresh emergency action to boost economy – BBC News



The European Central Bank has taken further dramatic measures try to boost the eurozone economies, amid their biggest recession since World War Two.

Just months after emergency measures, the central bank said it would increase the size of its bond buying programme by €600bn (£546bn) to €1.35tn.

The programme will run until June 2021, six months longer than planned.

The move will keep borrowing costs low for countries and firms as they face huge budget deficits and recessions.

The purchases support “funding conditions in the real economy, especially for businesses and households,” the ECB said.

The central bank also decided to hold its interest rates at record lows.

The extra bond buying “is likely to push European government bond yields even further into negative territory, and investors in search of positive returns will be forced to take more risk,” said Rachel Winter, associate investment director at investment firm Killik & Co.

The bond purchases are often referred to as Quantitative Easing (QE). When central banks buy bonds with printed money, the value of the bonds rise and borrowing costs drop.

Some market commentators wonder how much money can safely be printed without causing the value of money to decrease.

‘Fiscal box’

“Although inflation is currently very low, these levels of asset purchases are causing some concern about inflation further down the line,” said Ms Winter.

“Economic theory tells us that that inflation is linked to the supply of money in the economy, and if the money supply is being drastically increased to fund quantitative easing then long-term inflation ought to rise too. These fears of long-term inflation have stoked demand for gold recently.”

Gold is trading at about $1,717 (£1,368) an ounce, down from highs of $1,766 earlier in the month, but up compared to a price of $1,324 one year ago.

In many ways, the ECB is playing catch-up with other central banks, said Neil Williams, senior economic adviser at US-based money manager Federated Hermes.

“After lagging the US and UK, the fiscal box is now opening, he said. The planned spending works out at about €100bn a month, higher than the €80bn spent in the wake of the European sovereign debt crisis, he points out.

The UK added £200bn of bond buying in March.

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Impact of new social unrest on the US economy in two charts – Yahoo Canada Finance



<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="To those Wall Street strategists saying the social unrest currently sweeping the country isn’t enough to derail the market’s shocking rally from the March lows, we present new charts from Goldman Sachs.” data-reactid=”16″>To those Wall Street strategists saying the social unrest currently sweeping the country isn’t enough to derail the market’s shocking rally from the March lows, we present new charts from Goldman Sachs.

In the charts — which you could see below — it’s clear that social unrest as measured by real-time user comments about the economy on Twitter is beginning to weigh on consumer confidence.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Consumer sentiment (left chart) had begun to stabilize in early to mid-May with states reopening and people returning to work after months of COVID-19 lockdowns. But then came the senseless killing of George Floyd by Minnesota police in late May and rampant protests and looting, and a plunge in consumer sentiment per Twitter data analyzed by Goldman.” data-reactid=”20″>Consumer sentiment (left chart) had begun to stabilize in early to mid-May with states reopening and people returning to work after months of COVID-19 lockdowns. But then came the senseless killing of George Floyd by Minnesota police in late May and rampant protests and looting, and a plunge in consumer sentiment per Twitter data analyzed by Goldman.

Meanwhile, negative sentiment on the economy (right chart) as measured by tweets not mentioning coronavirus has spiked over the past week. Some strategists have pushed back on a chart like this one, noting it’s part of a larger issue holding the economy back.

Ultimately it’s hard to determine if weakening consumer confidence over the past two weeks has seriously derailed a U.S. economy already in a sharp recession due to COVID-19. But for those on the Street betting for a V-shaped economic recovery later this year (stat: the S&P 500 is only 7.8% below its February record highs), the data presented by Goldman hints that is far from a sure bet as social unrest is sustained, weighs on consumer psyche and spending decisions.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.” data-reactid=”25″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read the latest financial and business news from Yahoo Finance” data-reactid=”26″>Read the latest financial and business news from Yahoo Finance

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”38″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

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