The Covid virus is wreaking devastating havoc on society and the economy. An economic comeback will depend on the rate of activity when the all-clear comes. JP Morgan estimates a collapse in GDP up to 40%. Unemployment has skyrocketed. For many people income has vanished and costs have not. The US economy is going through a severe contraction that is unprecedented. One estimate is that stay-at-home orders continue through May and a rebound starting in June.
When it’s over we will have a changed playing field. The widespread work-from-home experiment will persuade some companies to let people work remotely and reconsider their need for less office space. People get activated by fear. They will recalibrate in a post virus world and become more conservative. It’s likely they will cut back on spending and increase savings. Services which account for two-thirds of the economy may be smaller. Travel and hotel industries could be hurt. Businesses and individuals with strong balance sheets will look for opportunities to improve their positions as weaker cash-strapped rivals exit. Societies and economies have a way of resetting themselves. Maybe a trend of more inclusive growth will follow.