The Economist The 90% economy

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From: The Economist this week - Thursday Apr 30, 2020 05:54 pm
Even after lockdowns are eased, economies will not return to full strength immediately. The longer they take to do so, the greater the consequences will be
   
April 30th 2020 Read in browser
   
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  Our cover this week looks at what to expect from life after lockdowns: what we are calling a 90% economy. Since China began to ease up in February, its factories have become busier and its streets are no longer empty. But it is missing large chunks of everyday activity. Rides on the metro and on domestic flights are down by a third. Spending on such things as restaurants has fallen by 40%. Across the post-lockdown rich world, life will be tough—at least until a vaccine or a treatment is found. People are weighed down by financial hardship, businesses are short of money and the unemployed could face a lost decade. The longer the world has to endure the 90% economy, the less likely it is to snap back after the pandemic. The popular demand for change could radicalise politics faster than it did after the financial crisis in 2007-09.  
 
  Zanny Minton Beddoes, Editor-In-Chief  
     
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Spain announced a complicated four-phase, eight-week return to a “new normality”, which will vary in speed between provinces. If all goes well, Spaniards will be able to return to beaches and bars by the end of June, and in some places before then. France also outlined its own “deconfinement” strategy. Most businesses will be allowed to reopen from May 11th, except for cafés, restaurants and large public spaces such as museums; public transport will largely resume too. The French prime minister said this was necessary to avoid economic collapse. France also suffered some alarming instances of rioting.
 The American economy shrank by 4.8% at an annualised rate in the first quarter, the worst decline since the fourth quarter of 2008. It will get worse: pandemic restrictions began in the tail end of the quarter. The news did little to stop the recent bullishness in stockmarkets: the S&P 500 is up by more than 30% since mid-March.
 
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