Economic recovery from the Covid-19 crisis will need a balancing act
The task is to navigate the difficult trade-offs and even more difficult politics as sensibly as possible
For a long time, as health spending accounted for an ever-larger share of US GDP, I would joke that health economists were becoming macroeconomists, and that macroeconomists needed to become health economists. Sadly, the joke is now reality. The US and the global economy are in the deepest contraction since the Great Depression, owing to lockdowns to mitigate the spread of Covid-19 and prevent hospitals from being overwhelmed. Citizens are confined to their homes, and only "essential" services - food, utilities, health care, police and the like - are operating.
According to the International Monetary Fund's most recent forecast, the US economy will shrink by almost 6% this year (compared with a contraction of about 7% in the eurozone and 5% in Japan). Private forecasters, meanwhile, foresee an annualised second-quarter decline in the US of as much as 40%, with a return to growth in the third quarter.
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