When the coronavirus stay-in-place orders started, the time at home seemed like a timeout from the frenzy of office life. With considerable curiosity, I absorbed the statistics, news articles, videos and just about all the information that I could find. New concepts of the day featured: social distancing, flattening the curve, asymptomatic, and reaching the peak. The stories of human suffering, sudden onset, and family tragedy are a heartbreaking addition to the evening news.
Through all the focus on the pandemic, there are quiet, yet steady voices about the economy. However, these voices are not loud enough to counter the hysteria of the virus. What are we going to do? Is it realistic to just turn off the economy for an unspecified amount of time. Imagine not paying the mortgage.
Of course, warning signs will emerge after 30 days, and there is still plenty of time to get things back on track. At 60 days, the mortgage company demand letters and phone calls become continuous. Credit is severely downgraded and all the parties involved know that without a major change, the full impact of the foreclosure train wreck is around the corner.
Since I live on the edge of Denver, visiting small, country towns is a short drive away. I will often go on shopping trips to these places in an attempt to push my expenditures towards the entrepreneurs, who can gain considerable benefit. I will often ask how are things are going with the current situation. The first response I see is the fear in their eyes about the unknown. One gas station manager told me their cash register often rings up less than $100 in an entire day. Projecting out to 30 days, imagine trying to run a business on $3,000 per month to pay the rent, employees, vendors, and still make a living.
The federal government is making a valiant attempt to backstop business and individual bills through stimulus packages and unemployment compensation. With a combined federal debt level of $20 trillion, how much more debt can we absorb without severely damaging our economy for generations? Despite the best of intentions, millions of individuals and businesses will not become financially whole again for many years. A bankruptcy late in a career will postpone and permanently alter retirement.
There is another way forward to prevent the train wreck and climb out of financial despair. First, insist on sheltering-in-place for seniors, anyone with an existing health condition, and residents of hard hit areas, such as New York City, Detroit, and New Orleans. Next, starting with rural areas with a modest number of cases, open up the economy with social distancing guidelines in place. As the virus continues to slow, phase back in the remaining businesses with altered arrangements, such as fewer tables per location for restaurants and customer limits with other retail businesses. Telecommuting, masks, and wide scale testing can be implemented as well.
There are millions of people, such as me, who are willing to accept the risk of obtaining the virus to protect our own livelihoods as well as contribute to the resurgence of the economy. If anyone does not feel comfortable, they can opt out for now and re-enter at a later time as long as they understand the financial risks. The longer the shelter-in-place orders remain, the deaths from economic despair will begin to significantly surpass the deaths from the virus.