The post-virus economy

How long will it take the U.S. economy to recover from the pandemic?

President Trump.
(Image credit: MANDEL NGAN/AFP via Getty Images)

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Don't bet on a sharp and quick recovery for the economy, said Andy Kessler at The Wall Street Journal. At the beginning of the crisis, many hoped that the post-virus economy would still "take off like a rocket ship," in the words of President Trump. Economists and pundits came to call that a "V-shaped recovery" — ­meaning a sharp plunge, then a rapid return. May­be if "we'd had a two-week house ­arrest — three, at max" that could have happened. But with 26 million unemployment claims, "we've clearly fallen off a cliff." Now many economists think we are in for something more like a U, with a slower ascent, and maybe a "long time under­water." My expectation is a little different. I foresee a short bounce, as we've already seen in the stock market. But then we are in for "a flatline, with zero to 2 percent GDP growth until the damage is assessed and the debt dominoes start to clear."

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Yes, it's still early, said Conor Sen at Bloomberg, but if you look around you'll see signs of improvement. Americans are already "getting more comfortable with wearing masks" and going out more; gasoline demand rose last week for the first time since the shutdowns, as did the number of travelers passing through airport security checkpoints. The resilience of global supply networks also points to a strong recovery, said Salvatore Babones at Foreign Policy. "No one in the world has been denied the opportunity to buy a car or a phone due to production problems." When the pandemic closed Chinese suppliers in February, "pundits predicted that global auto production would grind to a halt." It didn't. Asian automakers closed some plants for a few days; Tesla "shut its California factory only after government orders, not because of any lack of parts."

What is the stock market telling us? asked Michael Santoli at CNBC. Thanks largely to help from the Federal Reserve, the S&P 500 index is up 29 percent from its low a month ago and just 16 percent off its record high, despite mass layoffs, zero earnings, and an oil shock. But if the market were really expecting "a roaring economic revival," one would expect "early cycle" groups "like autos, banks, consumer durable goods, and retail to lead the market." Instead, it's Amazon, health-care stocks, and consumer staples like Campbell's soup "holding things together" — a sign that the economy hasn't yet begun "the healing process."

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