Our respective roles with the IU Kelley School of Business and the Regenstrief Institute have given us the opportunity to be part of many community conversations about the economic recovery trajectory. Is it a “V” – steep decline, followed by steep incline? A “W” – the decline happens two times? A “Swoosh” – a decline followed by a slow but steady increase? Or even worst case, an “L” – a drop that takes a long time to change? And I am sure there are letters we have not even considered.
We like to think of economic growth or recovery in terms of lines, blocks, or charts—and mostly “up and to the right.” The most hoped for is the straight line trajectory suggested by the “V” - after a steep decline, we have nice straight line growth back to full employment. For a number of reasons, such a recovery is very unlikely.
A line up to the right
For planning purposes, many states including Indiana, have adopted a phased-in approach. In this model, parts of the economy open in stages with the least worrisome activities coming early (e.g., outdoor dining and going to parks), while the most challenging activities and events (e.g. like sporting events and concerts) come later and under more controlled circumstances. This presents a nice orderly sequence for a baseline recovery model. And this model can be adapted, depending on metrics like the reoccurrence of COVID cases and hospitalization rates.
A phased-in approach
Unfortunately, neither model truly reflects the most likely reality of our economic recovery. It is much more random and unpredictable. It is also dependent on a number of factors that could positively or negatively impact the trajectory in significant ways. Instead, the most appropriate metaphor for the recovery might the childhood game we enjoyed decades ago—Chutes and Ladders. It’s is a game where players advance from the bottom of the board to the top by rolling dice and moving their game pieces. Along the way, spaces you land on might offer an opportunity for significant, rapid advancement, “a ladder” or a similarly significant setback if you fall into a “chute.”
Chutes and Ladders game
So what are the potential chutes and ladders for our economic recovery in this pandemic? Here are some “chutes” that could lead to setbacks:
Social distance relaxed too soon. If too many people come into contact with each other too quickly, the disease will become rampant again.
A resurgence. Whether due to relaxed social distancing or the unpredictable nature of the beast, COVID is likely to resurge as soon as this summer, or in the fall/winter as the weather changes.
Significant COVID mutation. Thus far, mutations of COVID have been fairly stable. It is not unusual, though, for viruses to have more significant mutations that change symptoms, mortality rates, and treatment protocols.
Vaccine challenges. Developing and administering a vaccine at scale has many challenges. And while it is a different animal, we have lived with and died from AIDS for 35 years or so, and still do not have a vaccine.
A new pandemic. Perhaps the most discouraging chute would be a new pandemic within the next couple of years that is equally destabilizing, but is materially different from COVID-19.
On the other side, we do have hope in the form of “ladders.” These include:
Appropriate social distancing and protective measures. Arguably, the effects of COVID could have been much worse if we did not act to slow its spread. Continued use of social distancing, masks, gloves, and safe practices will enhance our likelihood of recovery.
Testing. Testing, both for antigens (do you have COVID) and antibodies (did you have it), will be instrumental in preventing future recurrence and developing treatments and vaccines.
Summer weather. There is some evidence that warmer weather and summer will provide at least a small ladder in preventing spread and recurrence.
Treatments. As with AIDS, combinations of treatments or “cocktails” are already in development that will decrease deaths and negative effects, and improve recovery times for those infected.
A vaccine. Hopefully, within a year to 18 months, we will have an effective vaccine that can be administered globally to prevent (or at least limit) the negative effects of COVID moving into the future.
There are a lot of good things happening and in development by individual firms, not-for-profits, and others that give us encouragement. Tools like Regenstrief’s COVID dashboard help inform the state and provide all of us with a better “early warning” signal for COVID recovery. The next few weeks and months will be telling. Let’s all hope for more ladders than chutes!