When Does Economic Growth Return?

Every talking head, every politician, and virtually every citizen in the United States has the same question:  when will economic growth return?  Prior to the coronavirus shutdown, the US economy was doing well. Unemployment was at a record low.  Capital was available.  Then came the shutdowns. 

As states begin to “open up” their economies, we are treated to alphabet soup of what the recovery will look like.  “V” represents a sharp bounce back.  “U” a gradual recovery.  “L” represents a long time at depressed economic levels.  These descriptions make for good soundbites but they really don’t get to the underlying issue:  under what conditions does the economy start to grow again?

For growth to return, we need to let businesses focus on value-add activities.  I submit businesses, even those that never shutdown, are in survival, or at best, wait and see, mode.  When businesses worry about complying with unclear health and safety regulations, they are not adding value.  I talked with a friend of mine who also owns a business, “I spent a half hour today talking about whether or not we’d provide coffee in the office when office workers return.”  He laughed, only to text me a few days later, “I had the $&#&*#@ coffee pot conversation today.”  Another business owner friend texted, “I’m playing psychologist, health and safety advocate, purchasing agent of hard to find items, and FDA expert.  All in the same hour.”  Nowhere in there was anything about working with customers or thinking about the future.  

When do businesses get to focus on value-add activities?  When the fear level of the general public drops.  Right now, our political leaders have indicated the fear can only drop if there is a vaccine, more testing,  or better treatment for covid-19.  That could be a long way off.

The esteemed governor of Illinois is only allowing 2 people on a boat, even if you’re in the same family.  You can live together but “you are putting your family at risk” (his words) if you go out on a boat together.  I wish I were making this up.  https://chicago.cbslocal.com/2020/05/04/boat-owners-say-social-distancing-rules-under-revised-stay-at-home-order-dont-make-sense/

The US has always had tension between the value of individual freedoms and the collective good.  We have prospered more than any society in history because people have used their individual freedoms to improve the collective good.  Right now, the political narrative is we must sacrifice our individual freedoms for the collective good.  Unless our leaders change the narrative, we’re in for a painfully slow economy for the foreseeable future. 

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