There’s growing consensus among economists and epidemiologists that the recovery period from the deadly coronavirus is going to be long – and bumpy.

Hopes of a quick bounce back for the economy – dubbed a “V”-shaped recovery because of how it may look on a line chart – have faded. Even as parts of the nation reopen, many Americans will be afraid to venture out, and it looks increasingly likely that restaurants, stadiums and yoga classes are going to be operating at partial capacity, at best, for a while.

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, put it this way when asked about when baseball stadiums will be filled again: “I cannot see a return this year to what we consider normal.”

What isn’t getting as much attention is the possibility of a “W”-shaped recovery, a scenario in which the economy starts looking better before a second downturn later this year or next. The W could be triggered by reopening the economy too quickly and seeing a second spike in deaths from COVID-19, the disease caused by the novel coronavirus. Businesses would have to close again, and people would be even more afraid to venture out until a vaccine is found.

Something else could cause a W pattern: a wave of bankruptcies and defaults later this year. As companies go belly-up, a domino effect ensues: Workers are not rehired, suppliers are not paid, and fear rises about who will be next to fall.

“Pretending the world will return to normal in three months or six months is just wrong,” said Diane Swonk, chief economist at Grant Thornton. “The economy went into an ice age overnight. We’re in a deep freeze. As the economy thaws, we’ll see the damage done as well. Flooding will occur.”

Early warning signs are here. Major retailers such as Macy’s and Neiman Marcus face significant financial head winds, and analysts anticipate more pain in the retail sector. Oil prices plunging below $20 a barrel is another blow to America’s fragile energy sector that will reverberate for months. Rystad Energy predicts that more than 500 U.S. companies will go bankrupt by the end of 2021.

Big law firms such as Hogan Lovells are urging their lawyers to brush up on bankruptcy and restructuring law “in anticipation of a wave of bankruptcy filings in the coming months,” and the major banks spent a lot of time on their earnings calls last week, predicting a surge in credit card, auto loan and business loan defaults. Firms and consumers are teetering on the financial edge.

Constance Hunter, chief economist at KPMG, expects job losses of “at least 25 million” this spring, a sky-high level not seen since the Depression era. The equally frightening number that’s received too little attention is that the median forecast for the unemployment rate by the end of the year is 10 percent – meaning more than 15 million Americans would still be out of work in December.

As people lose jobs, they stop paying their rent or mortgage, which can lead to eviction and a bad credit rating that drags them down for years. They lose health insurance and possibly their car. Often, they lose hope. This is the scenario the nation needs to avoid, economists say, and policymakers could be doing a much better job to trying to prevent this.

The nation already is experiencing modern-day bread lines as Americans flock to food banks after just a few weeks of the massive unemployment spike. On Friday, Dustin Sider, pastor of Fairland Church in the small town of Cleona, Pennsylvania, posted a message on Facebook, offering 2,700 eggs free to anyone who needed them. A farmer had donated the eggs to the church. Sider figured it would take a few days to get rid of them. Instead, they were gone in 28 minutes.

“I pretty much stood in the parking lot until 5 p.m. and kept telling people, ‘Sorry, we’re all out.’ The cars just kept on coming,” said Sider. “Many said they were laid off.”

Even among people who still have jobs, 25 percent fear that they will be laid off or furloughed in the coming year, according to a Gallup poll released Wednesday. Pay cuts also are becoming common, with over 14 percent of people still employed getting lower pay or fewer hours in March, according to Gusto, a payroll processing company. All of this puts consumers on edge, making them hesitant to spend – even beyond fears about the coronavirus.

“The full restoration of consumer confidence will be more difficult and will take longer to complete than following any other recession since the Great Depression,” wrote Richard Curtin, head of the University of Michigan Survey of Consumers.

The $1,200 relief payments from the U.S. Treasury will help, but that money is likely to go to rent, food and medicine. The unemployment benefits Congress approved will run out at the end of July – right about when many landlords expect people to pay full rent again plus any rent they missed this spring.

The White House has heavily touted the Paycheck Protection Program, which gives businesses loans that do not have to be repaid if 70 percent of the money is used to pay employees. Companies who take part have to rehire people by June 30, a date when a lot of employees could return to work, but businesses such as restaurants probably will not be able to pay their full staffs if they can fill half their tables. Some businesses may have to lay people off again in September as Paycheck Protection Program loans dry up and customers are not back in full force.

Early evidence from China shows how cautious consumers have become.

“The SARS epidemic in 2003 and the Spanish Flu in 1918 had three peaks before subsiding. Relapses are not uncommon,” said Sung Won Sohn of SS Economics. “China claims that production is approaching about 80 percent of the capacity, but subways are less than half full. In Macao, the casinos have reopened, but the business is still down 80 percent from the previous high.”

All of this points to 2020 as the year of heavily curtailed spending as consumers are out of work or fearful of losing a job and businesses take extreme caution. Goldman Sachs expected business investment to decline by 27 percent.

“I really worry a lot about a W-shaped recovery,” said Ernie Tedeschi, a former Treasury Department economist. “People who do have jobs are going to save more than normal. That’s perfectly rationale, but it delays the recovery.”


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