As the world raced to contain COVID-19, it effectively launched a necessary but costly experiment: Move all possible economic activity online to flatten the pandemic’s curve and save lives. But digitally recreating the economy-as-usual has its limits and the “Great Lockdown” comes with devastating economic costs.
States are now rushing to reopen to mitigate the damage, but that could come with enormous consequences for public health. The U.S. is missing clear-eyed, data-driven policies for lifting the lockdown that respect American principles. We are not learning from the experiences of South Korea, Singapore and, most notably, China, where technology has been essential to identifying infection hotspots and contact tracing and determining mobility of citizens.
Domestically, Google and Apple have launched a collaborative initiative to start on contact tracing in the U.S., with requisite privacy protections; but without policy guidance and stewardship, these private initiatives, while laudable, will produce errors as people go to work based on partial data. Government leadership is needed to coordinate a public-private partnership using such tools — and mandate, if necessary. Tech companies and policymakers must coalesce to win public trust in technology.
In addition to contract tracing, the digital experience needs fixing. Even as companies slowly return to business as usual, we’ll continue to see record numbers of people working remotely for the foreseeable future. During the peak of the surge, web traffic in San Francisco alone increased over 48 percent since the beginning of 2020. And while the internet has mostly held up, 88 out of the most populous cities critical to American productivity experienced a network slowdown by the end of March. San Jose, New York, Austin, Charlotte, Washington D.C. and Houston experienced an unacceptable 24-44 percent decline in internet speed. In aggregate, this will have significant economic costs. City governments should work with large employers to coordinate and prioritize peak-time use, much in the way municipal authorities plan for snow removal, re-routing of vehicles and synchronizing traffic lights to streamline commutes.
In some states, schools will remain closed through the end of the school year, meaning students will continue to rely on accessing WiFi from home. Poorer neighborhoods, populated by those without the luxury of knowledge-based white-collar jobs and where internet activity is the weakest, will continue to struggle. Governments can start remedying this by extending an idea from a Federal Communications commissioner and prioritizing hotspots for loans to enhance last-mile access to all disadvantaged communities, their schools and other providers.
In addition, with broadband access among the most expensive in the world, subsidies are needed to compensate for this ugly American reality. While cable and telecom companies have agreed to defer fee payments and even raise data caps temporarily, these periods have to be lengthened and the fees reduced indefinitely until there is clarity on lifting of restrictions.
And while government stimulus checks have started to hit bank accounts, those who need the most help from the $2 trillion stimulus package will get it last as the most disadvantaged are on the wrong side of the digital divide. Individuals and families without a significant digital footprint – e.g. electronic banking, electronic tax payment, digital financial services – will be at the back of the queue. What is needed is a government audit to evaluate gig and contract workers’ digital capabilities and tailor payments accordingly. Ninety-six percent of Americans have cellphones and 81 percent have smartphones; so that’s a place to start.
Finally, remember that the U.S. economy is still tied to others. Many services essential for American employees, from payroll to health benefits, are handled by workers in other countries. A third of India’s IT workers are forced to go into their offices despite India’s country-wide lockdown to keep these benefits running. As the federal government eases domestic lockdown, U.S. policymakers can enact new rules to also ease requirements built into offshoring contracts, which require back office workers to physically go into dedicated offshore development centers. But they must be creative in preserving confidentiality and addressing other concerns.
It is an abomination that we lost time in the U.S., and thousands of lives, thanks to ignorance and arrogance. This needs to change now, but we can’t rush into reopening states haphazardly. While we flatten the pandemic’s curve, we must act to minimize the flattening of the economy. Technology is no silver bullet, but it’s the only tether holding that economy together – so let’s focus here. Yes, there is a smarter way to get into and out of a lockdown.
Bhaskar Chakravorti is dean of global business at The Fletcher School of Law and Diplomacy at Tufts University. He is founding executive director of Fletcher’s Institute for Business in the Global Context, where he has led the Digital Planet research initiative for a decade.
Province's decision to reopen economy still lacks some clarity: CFIB – HalifaxToday.ca
The Atlantic Vice President of the Canadian Federation of Independent Business says he’s pleased with the province’s decision to reopen the economy, but adds it still lacks some clarity.
On Wednesday, Premier Stephen McNeil announced the province’s next steps to reopening the economy, saying businesses that were required to shut down due to the COVID-19 pandemic will be able to restart operations on June 5.
Jordi Morgan told NEWS 95.7 he’s happy to hear this, but adds there are still some questions that need to be answered.
“It remains to be seen how well this happens because we’re still not entirely clear on what all the requirements are for these individual businesses,” said Morgan.
Morgan is also pleased with the province’s new small business reopening and support grant, a $25 million fund that will help businesses welcome back customers safely.
“Very happy to see that because there are a number of businesses that are going to require some bridging to reopen, invest in personal protective equipment and other things that are necessary in order to operate the business,” said Morgan.
He says once they get all the guidelines in place, they’ll have a better idea of how to operate and keep both the public and employees safe.
Nearly 40% of the economy may vanish in Q2 because of COVID-19, but then do something surprising – Yahoo Canada Finance
The S&P 500 has crossed the 3,000 level again and investors are clearly riding high on hope for a second half economic recovery post the worst of COVID-19.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.” data-reactid=”17″>But that doesn’t mean the market is immune to a pullback this summer primarily because the economic data will likely continue to be horrible. Remember bulls, the U.S. economy has been kicked in the face by the pandemic, and a rebound won’t happen overnight simply because states are reopening. Corporate sales and profits remain under severe strain, sending many off to explore bankruptcy or cut thousands of workers even with quarantines being lifted.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.” data-reactid=”18″>“We think that the reported unemployment rate may be around as high as 20% in May,” Barclays chief U.S. economist Michael Gapen warned on Yahoo Finance’s The First Trade. The unemployment rate in April increased by 10.3 percentage points to 14.7%.
Gapen believes the U.S. economy may contract a whopping 40% annualized in the second quarter, then surprisingly grow by 25% in the third quarter and 8% in the fourth quarter.
Part of Gapen’s cautiousness on the economy in the second quarter stems from his outlook on the consumer, which comprises two-thirds of the U.S. economy as is often cited.
“I think when we move into the third quarter, the savings rate will start coming down. All else equal, we are expecting the consumer to remain cautious. I think you will see a blend. Some return to normalcy, but it will take time,” Gapen explains. “Negative wealth is still at play. Equity markets are doing well, but the average household may not feel that. And I think that there will be caution and a preference for saving.”
To be sure, recent economic data warrants the markets taking a short-term breather.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Another 2.123 million Americans filed for unemployment benefits in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.” data-reactid=”34″>Another 2.123 million Americans filed for unemployment benefits in the week ending May 23. Over the past 10 weeks, more than 40 million Americans have filed for unemployment insurance. U.S. durable goods orders tanked 17.2% in April, U.S. Commerce Department data showed Thursday. Durable goods dropped 16.6% in March.
Pending home sales in April fell 33.8% year over year, the National Association of Realtors said Thursday. That marked the biggest decline since January 2001.
“I think the market has priced in that April is probably the worst of the economic data,” explained Sevens Report Research founder Tom Essaye. “While it looks like the worst is behind us — which is great — we need to start to see more improvement.”
<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=”37″>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=”38″>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=”50″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.
France Paves Way for Economic Restart After Taming Virus – BNNBloomberg.ca
France will lift domestic travel restrictions and allow most bars, restaurants and museums to reopen as the country slowly unfreezes its economy following weeks of stringent controls to contain the coronavirus epidemic.
While France won’t completely return to normal, it can ease restrictions starting on Tuesday as confinement measures proved more effective than expected in combating the spread of the disease.
“Freedom will finally become the rule again, and prohibition the exception,” Prime Minister Edouard Philippe said Thursday, following a cabinet meeting. “The results in terms of public health are good, even if we remain cautious.”
From the coming weekend, the state will accelerate plans to restart schools, reopen parks and scrap a rule limiting travel within France to 100 kilometers. The government favors opening internal European Union borders from June 15, while leaving a decision on travel beyond the bloc to the EU.
In areas including Paris and the surrounding region, lifting curbs will be slightly slower. Bars and restaurants will only be able to open outdoor spaces, and sports centers will not open until the next phase starting June 22.
France is following other major European economies in relaxing restrictions on the public. Germany has already undertaken a broad restart of businesses. In Spain, cafes and restaurants in Madrid and Barcelona re-opened this week, and foreign tourists should be allowed in again from July without a two-week quarantine.
Greece is also relaxing curbs on travels, re-opening restaurants and allowing foreign tourists from mid-June.
Economic pressure to relax the rules was mounting in France after it implemented one of the strictest lockdowns. For two months, locals were banned from going more than one kilometer away from their homes without a justification.
The government eased some restrictions earlier this month, following a drop in the number of severe Covid-19 infections. But the economy has continued to suffer with activity around 21% below normal levels, according to estimates from national statistics agency Insee, which expects France’s 2020 contraction to be deeper than the 8% the government forecast.
“A new front is opening today: The country will have to fight against the impact of a historic recession,” Philippe said.
The French state has already announced a plan to revitalize the car industry and will announce another plan for the aircraft sector next week.
The government has also earmarked 18 billion euros ($20 billion) for the hard-hit tourism industry, which represents around 7% of GDP. France has suggested domestic tourism would be possible during the summer with some restrictions, but that trips to foreign countries could remain on hold.
Read More: Tourism Slump Has Holiday Destinations Scrambling
The restaurant and hotel industry has warned that social-distancing measures could dent profitability in the long run, as fewer people will be able to be catered to and costs will rise.
©2020 Bloomberg L.P.
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