White House economic advisor Kevin Hassett is making a bold proclamation these days. He’s saying he not only expects things to get back to normal soon, but he also expects the economy to get back up to speed faster than normal.
That’s earning him the usual mocking and sneering from the media, but there are good reasons to believe he’s right.
Initially we were hoping for a so-called V-shaped recovery, in which things would bounce back upon the reopening as quickly as they tumbled. Lately economists have been downplaying the possibility of that happening.
But I think Hassett’s on to something in his belief that the current predictions are too pessimistic.
It’s true that the states’ responses to the coronavirus have done some serious damage to our nation’s economic infrastructure, but I think people are failing to appreciate just how much economic power there is – ready to be unleashed – in this economy.
I see four specific reasons to think Hassett is right that the economy will get back up to speed more quickly than economists are predicting:
1. Many states are doing a gradual reopening.
They’re doing a follow-the-guidelines reopening.
You might think this argues for a slower recovery, but I think this will give states the time they need to rebuild their economic infrastructures.
That will inspire more confidence in the broader strategy, and I think that will make people feel more confident about spending their money.
2. Social distancing guidelines.
Many businesses are taking these guidelines seriously, even though it initially cuts down their capacity.
But by taking these guidelines seriously, you also assure your customer base that they are safe when they come and do business with you. If one of the threats to a quick rebound is that people will still be scared to go places, the application of these guidelines should help to ease that fear.
3. Workers want to work.
With 33 million people out of work, that means we have a whole lot of people who want to get back to it.
The economy is measured in productivity, and we have a workforce that’s been denied the opportunity to be productive for more than two months. I expect them to return to work with determination and plenty of pent-up energy to deploy.
4. Consumers want to get out.
They’ve been home for a long time. They want to get out and establish some sort of normality relative to their daily activities. That will make them ready to patronize businesses and spend their money.
This is not to mention the fact that they’ve been delaying purchases and waiting on services they needed. I heard recently of a bike shop that just reopened, and was so overrun with repair requests it had to stop taking appointments until it could catch up. You will see a lot of that.
It will take some very hard work to get our economy quickly back up to speed. But you know what? People are going to be happy to do it. They’ve been out of work for a long time and they’re relishing the opportunity to jump back in and make things right.
I am optimistic about what’s going to happen as we move more fully toward a reopening.
You should be too. In fact, we need you to be. Optimism is one of the most powerful assets we can put to work in turning this thing around.
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