FILE PHOTO: Bars reopen in Austin after closing to slow the spread of coronavirus disease (COVID-19) in Austin, Texas, USA, May 22, 2020. Photo taken May 22, 2020. . / Nuri Vallbona / File Photo
By Howard Schneider
ROCK HILL, USA, Jun 26 (.) – When Texas reopened the bars for Memorial Day weekend last month, millennials and members of the zero generation took advantage of it, ignoring social distancing rules to fill the clubs and increase your card spending in the next two weeks to 2019 levels.
The brief adventure with a broad economic reopening, replicated in southern states such as Florida and South Carolina, has transformed into an outbreak of new coronavirus cases that is changing the nature of the pandemic and likely to test the strength of any economic rebound.
Reports of increasing outbreaks in places like Florida and Texas have pointed out that younger adults are now becoming infected with COVID-19, the respiratory illness caused by the coronavirus. This may reduce the death rate, as they are less likely to die from the disease, but it could also cause the country to reopen intermittently.
The situation may become bleaker as some towns backtrack on their reopening plans, stores close again, and Americans are divided between those who are willing to risk further exposure and those who still meet health guidelines. .
It’s a recipe, economists and epidemiologists warn, for a weak recovery that could turn recent good news into little more than fake headlines. A recent decline in daily deaths could also be fleeting. Hospitalizations are on the rise in Texas, and health experts warn that the spread of the virus among those at least risk for serious illness, such as young adults, will spread over time to those at greatest risk for serious complications. .
« There is an inevitable mix, » said Amesh Adalja, an academic at the Johns Hopkins University Center for Health Safety. « We are likely to see an increase in deaths. »
And that dynamic could be poisonous to any economic recovery.
« If you add tolerance to the risk of going unmasked to indoor parties, then the virus will prevail … and those who are risk averse will continue to be afraid to buy again, » said James Stock, professor of economics. from Harvard University. « So the recession is lengthening and perhaps deepening. »
Stock, along with other researchers, has proposed ways to balance the reopening of the economy with measures to control the spread of the virus. However, there is little spirit of national agreement for any type of system like that, or what if COVID-19 begins to spread more uncontrollably.
Leading economists have a hard time interpreting the recent surge in cases.
Does it demonstrate, as Evercore ISI Vice President Krishna Guha recently noted, the fragility of the American market if people are afraid to cross state lines? Or, as the chairman of the St. Louis Federal Reserve, James Bullard, suggested, are risk perceptions and risk management different among individuals, companies, and regions?
Republican-ruled states, particularly in the south, hesitated to crack down on the early pandemic and were quicker to relax restrictions. They are now seeing record growth in COVID-19 cases, and its residents have been vetoed by states, including New York, which were the hardest hit at first but have made the most progress in suppressing the virus.
West Virginia Governor Jim Justice, a Republican, has warned against traveling to Myrtle Beach, after cases in his state were linked to infections in the popular South Carolina resort, and some political supporters of the reopening have changed course.
Over the course of a week, Texas Gov. Greg Abbott, a Republican, went from encouraging people to « stay home » to issuing an edict on Friday that he closed bars, reduced restaurant capacity, and stopped other activities.
Florida authorities also announced Friday that state bars should stop serving alcohol immediately.
Speaking to the Florida Chamber of Commerce on Thursday, Atlanta Federal Reserve Chairman Raphael Bostic said that if a significant number of people return to public life without following health rules, it will put the economy « in a different trajectory. «
There have been positive surprises. US employment grew unexpectedly in May, and retail sales rebounded sharply from a historic collapse.
But that could be a false dawn if states in which activity was recovering more quickly demonstrate that they have given a new impetus to the pandemic.
JPMorgan economist Jesse Edgerton has drawn a rough correlation between increased restaurant visits in some states and the growth of infections two weeks later.
An Oxford Economics « recovery tracker » that combines 20 economic, health and social measures began to grow steadily in early April, but slowed in June. It may decrease further if cases continue to grow, said Gregory Daco, the group’s chief economist.
« After a strong first phase of recovery – in which robust growth data from depressed levels gives the false impression of an immediate return to pre-crisis economic dynamism – the economy appears to be entering a slower second phase » Daco wrote in a recent analysis.
« The basis for this recovery is an improvement in health prospects. If that measure continues to deteriorate, confidence will follow. »
(Report by Howard Schneider; Additional report by Ann Saphir; Edited in Spanish by Javier López de Lérida)