Can The U.S. Economy Withstand the Coronavirus by Itself?

An economist responds to readers’ questions about the effect of the coronavirus on the global economy.


Mr. Goldin is an economist.

Outside the New York Stock Exchange on Friday.
Credit…Mark Abramson for The New York Times

How do world leaders limit the spread of the coronavirus while keeping the global economy from tanking?

“National policies alone, adopted government by government, will not be enough to forestall a global catastrophe,” Ian Goldin writes in the Op-Ed article “Just How Bad Could a Coronavirus Recession Get?

We gave readers the opportunity to ask Mr. Goldin their own questions about the effects of the virus on the economy. An edited selection of their queries and his responses follows. — Rachel L. Harris and Lisa Tarchak, senior editorial assistants

Pamela Porter, Bakersfield, Calif.: With the pandemic at hand worldwide, should we, as Americans, focus (without guilt or obligation) on saving ourselves first? Should we isolate our country, our money/funds in order to gain control of and thwart the spread of the virus within our own states, all the while collaborating with other countries on a vaccine that would protect people from the virus and a cure for people who already have it?

I.G.: Local and international responses are needed, and the United States has the power and expertise to handle both at the same time. During the 2008 financial crisis the United States demonstrated that it could act decisively at home (almost a trillion dollars were allocated, mainly to saving the banks) and abroad (President George W. Bush called his counterparts around the world to arrange a joint reaction that would calm markets and prevent an even more damaging economic collapse). Both responses were as essential then as they are now, not only for pandemics but also for other big risks, such as climate change, antibiotic resistance and cyber and terror attacks.

America cannot save itself in isolation. Focusing inward at the expense of outward engagement alienates others and undermines the political good will necessary to find joint solutions to our common problems. The local and global need to go hand in hand.

Slater Welte, Houston: I have been curious about inflation. With bottlenecks and strained delivery systems, you would expect some inflation, but it doesn’t appear to be heading that way. Is this perhaps an indication of persistent disinflation, even future deflation?

I.G.: This has been something I have been wondering about too. I think inflation will remain subdued as demand is falling more rapidly than supply in many areas, and the collapse in oil and some other commodity prices — together with the collapse in travel demand — will reduce transport and energy costs.

Since inflation is a composite indicator of many prices, the few items that are going up because of supply bottlenecks and rising demand (including medical supplies and food, because of stockpiling) are not sufficiently significant to push up the overall inflation numbers, which will remain subdued. We could be heading for deflation, but if the government gives working people a tax cut and provides transfers to those losing their gig and other incomes, as it should do, that would sustain demand.

Justin Le, Mountain View, Calif.: How will this affect Generations Y and Z? Millennials are scarred by years of economic downturn, job insecurity and financial instability. We’re just now recovering from losing money and opportunity as a result of the Great Recession. My fear is that this coming recession will cause permanent damage to our finances and spending power. And that Generation Z will suffer, as younger millennials did, with high student-loan balances while they enter a hostile and competitive job market.

I.G.: You are right to be concerned about this. The elderly are becoming a larger share of the population and the vote. The median age in the country is rising about two years every decade, because of increasing life expectancy and falling fertility. Given the rising costs of retirement and health care, this causes growing strains on family, state and other budgets. There will be less money to transfer to children, and as life expectancy increases, children will be older and older before they inherit anything from their parents, if indeed they are lucky enough to have parents who have sufficient wealth and savings. Economic crises exacerbate these tendencies, as do pandemics.

Lincoln Shlensky, Victoria, British Columbia: Is this epidemic a product of our times in some unique way, or is it just that the botched response to it is characteristic of the new political landscape you mention in your piece?

I.G.: The pandemic is a product of our times in the speed and intensity of its rapid spread. The super spreaders of the good aspects of globalization, such as major airports, which facilitate business and leisure travel, are also the super spreaders of the bads, like disease. The rapid growth of cities and rising incomes in many places is also relatively recent, so more people live in concentrated centers close to major hubs.

There have been pandemics before, and the Spanish flu of 1918 is estimated to have infected around a third of the world’s population and led to the death of more than 50 million people. This time is different in terms of how quickly and how far the pandemic can spread quickly. This is a feature of the growing complexity and interdependence of the world, but it also reflects the failure of politics to understand how the systems have developed and how to respond. The failure of politicians to understand and act on this, even after the financial crisis of 2008 and the growing evidence of climate change and other risks, is what worries me most, as I discuss in my books “The Butterfly Defect,” which looks at systemic risk, and “Age of Discovery,” which compares current challenges with previous ones.

Thomas Marini, Aptos, Calif.: I was mesmerized by a Times animated graphic of airline flights over a map of China. As the effects of the virus on air travel kicked in, the red swarm of flights dwindled into a scattering of individual red airplanes. It occurred to me that the coronavirus pandemic could inadvertently have a large impact on carbon emissions. Does the coronavirus, with its collateral damage to the world economy and corresponding reduction in worldwide carbon emissions, give us a model for the kind of tremendous dislocation and change that will be necessary to save us from climate catastrophe?

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