Re-opening economy 'will have a much smaller-than-expected impact,' experts argue
In a working paper for the National Bureau of Economic Research (NBER), Christopher M. Meissner and Peter Zhixian Lin, economists from the department of economics at UC Davis, found that lifting stay-at-home orders may not make much of a difference in terms of economic effects.
“If the disease is still out there and people perceive it to be dangerous to go out, they will not go out,” the co-authors told Yahoo Finance in an email. “Also, the rest of the world is in recession, too, and the ‘re-opening’ will have a much smaller than expected impact.”
A man comes out of Saks Fifth Avenue on Greenwich Avenue in Greenwich, Connecticut on May 20, 2020 as Phase 1 of Reopening Connecticut begins today. (Photo by TIMOTHY A. CLARY/AFP via Getty Images) More Every U.S. state is amid some form of reopening their economies. In states like Georgia and Texas, shelter-in-place orders have expired and the respective governors have reopened businesses as a means for stopping further havoc on the state’s economies.
The NBER paper had three main findings: the stay-at-home orders were likely effective in slowing the spread of the virus, but not in decreasing the rate of cumulative mortality; these orders may have impacted other jurisdictions; and that “there’s little evidence that [these orders] are associated with larger declines in local economic activity than in places without” them.
There are over 1.5 million coronavirus cases in the U.S. (Graphic: David Foster/Yahoo Finance) More ‘The negative economic shocks were national and not local’ When the coronavirus pandemic first began making waves through the U.S., all but eight states shut down and implemented stay-at-home orders.
This led to an unprecedented number of layoffs and furloughs across the country. Many politicians, including President Trump, pushed for states to begin reopening their economies in order to boost employment numbers and rejuvenate economic activity.
But according to the NBER research, jobless claims rose at the same rate in states with stay-at-home policies as in states without them.
New York, formerly the epicenter of the pandemic, is experiencing a downward trend. More “Based on this, there is no evidence that stay-at-home policies led to stronger rises in jobless claims,” Meissner and Zhixian Lin wrote.
The authors noted that their results parallel data from the Spanish influenza back in 1918 to 1919 — U.S. cities that applied more of these measures “did not suffer greater economic misfortune” than other cities without the policies.