In the words of the great philosopher President Donald Trump, the cure cannot be worse than the virus itself. The question you need to ask yourself is this, “Have we already gotten to that point?”. This morning it was announced that another 6.6 million Americans filed for first-time unemployment benefits, many of them due to the shutdown of society. The shutdown caused by the novel coronavirus response going on nationally is causing small businesses around the country to either lose a vast amount of their revenues or shut down altogether. Consumer confidence in this economy has been shaken to its core. Some economic experts are predicting as high as 30% unemployment due to the coronavirus response. Our economy is on the brink, and not just of a recession. We are already there. It is on the brink of a depression the likes of which we haven’t seen since before World War II.
Even the most pessimistic projections of the number of Americans who will be infected with the novel coronavirus (not the number that will pass away and not even the number who will be severely impacted, just the number that will be impacted) is 30% of the population. However, 100% of the population of this country will be affected by the economy. Some of the more Pollyanna experts on TV will tell you that our economy will come roaring back after all of this is done. Don’t listen to them, because they are selling you a handful of magic beans that will only lead to a giant beanstalk. Our country will be extremely lucky if we only permanently lose 20% of the jobs that people are currently losing right now. That means that if not another American loses their job because of this virus, around 2 million Americans will not be getting their jobs back after this is over. You can bet there’s going to be more Americans that will be filing for first time unemployment claims as this response goes along. As a matter of fact, don’t be surprised if next week the number is over 10 million new claims of unemployment. Doing the exponential growth math, 10 million Americans could be facing the possibility of permanently losing the jobs that they had before the epidemic started. That’s 10 million American families who won’t be able to pay their mortgages and will have to rely on the government for basic necessities of life like food, health care, and basic income to survive. That will have ripple effects throughout the economy as well, which could spread into other sectors of the economy like construction, the service sector, transportation, travel, and the financial sectors. This could potentially trigger another financial crisis the likes we haven’t seen since 2008.
In our interconnected economy and world, every action has a reaction, and sometimes that reaction isn’t positive. While right now is a good time to buy stocks if you have the disposable income and the savings to do so, it is also a very scary time for a lot of Americans. We know that financial stress leads to the triggering of mental distress in people who struggle with those issues. We also know that financial distress is one of the biggest stressors on relationships and marriages in this country. We also know that many people on the bottom rungs of society who are just trying to make an honest living and scrape by are very tempted to turn to a life of crime (including theft and drugs to name a few) when economic times get hard.
For the sake of all things that are good in our society and our economy, it is time to start opening our society and economy once again. We are right on the brink of the cure, or the response to this virus being way worse than anything this virus could have done to our country. We have to strike a balance between safety, freedom, and economy. 98 to 99% of us will still be here after this virus is long gone. And we will have to pick up the pieces of our shattered existence and try to put some semblance of normal life back together again. Just as we have found out with this virus response, the government can only do so much.