FMA economist: Turning the coronavirus corner in four to five weeks

Economist Chris Kuehl says the economy could be closer to back in business in four to five weeks if most U.S. citizens adhere to some committed level of social distancing to steer clear of the coronavirus. Getty Images

It’s not as soon as many metal fabricators would like, but Dr. Chris Kuehl, FMA's economic analyst and founder of Armada Corporate Intelligence, suggested in a webcast on March 27 that the economy could be closer to back in business in four to five weeks if most U.S. citizens adhere to some committed level of social distancing to steer clear of the coronavirus. That’s when he believes the U.S. will be turning the corner and coronavirus cases and deaths will start to trend downward. President Donald Trump’s extension of social distancing measures to April 30 creates a framework that life can return somewhat to normal sometime in May.

What’s the reason for the optimism? Kuehl said other countries, such as China, Singapore, and South Korea, seem to have peaked in terms of spread of the coronavirus. China was slow to react, but then cracked down hard in terms of keeping people in their homes in Wuhan province and responded in force in treating the ill. Kuehl told the audience for his webinar “The Economy in the Time of COVID-19” that he has faith in the statistics coming out of China because of the number of foreign health experts there from organizations such as the World Health Organization and the Centers for Disease Control in the U.S. South Korea was very aggressive in testing and isolating those with the virus early on. Singapore was hit in 2003 with the SARS breakout and so was prepared with social distancing edicts and aggressive testing.

Kuehl added that in China’s Wuhan province, people are traveling, emergency hospitals built just for the pandemic response are now closed, and even restaurants are open. “We could see something similar happen in other areas,” he said.

The U.S. also has the advantage of warmer temperatures heading its way, which should stifle the spread of the virus, according to Kuehl. Given the federal stimulus working its way into the economy during this time, the economy could be poised for a nice bounce as early as the third quarter. International economic agencies were predicting global GDP of close to 3% in 2021, and Kuehl said that is entirely possible if current trends of social distancing and increased testing continue.

“I think we’ll see a real good bump this summer, but I’m not sure if it will be early or late,” he said.

That’ll be more reminiscent of a V-shaped downturn, where the economy bounces back quickly after recession, which is traditionally defined as two quarters of negative economic growth. The recovery that followed the Great Recession of 2008-2009 was considered U-shaped because economic growth after the downturn was hardly robust for several years after the official end of negative economic growth. Kuehl said that the U.S. economy is still a consumer-driven one, and that is unlikely to change when people are free to hit the streets again and get back to work.

“We are a very determined consumer. We like to buy things,” he added.

Of course, the flip side is that people could start to ignore the shelter-in-place orders and foster the continued transmittal of the coronavirus. By that time, the medical infrastructure is overwhelmed and panic ensues, resulting in more layoffs and bankruptcies. The government can’t offer up any more financial stimulus. The global recession deepens, and it gets harder to see any type of recovery in the near term.

Don’t fear, though, Kuehl said that there was only about a 10% chance of this “zombie apocalypse” happening.

Listen to Chris Kuehl’s webinar