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DENVER -- For more than a month, Coloradans have been told to stay home in order to keep the state's health care system from becoming overloaded with coronavirus patients.
First cities, then the entire state, issued a stay-at-home order to combat the spread of the novel coronavirus.
The virus itself has sickened hundreds of thousands and, in the U.S., resulted in more than 46,000 death, according to the CDC.
An otherwise healthy economy has also felt the brunt of COVID-19, with the stock market going into a temporary tailspin and millions of Americans being forced to file for unemployment.
The economic toll the novel coronavirus is causing some to call for businesses to be allowed to reopen.
So, is there a tipping point where the economic consequences of a stay-at-home order outweigh the health benefits of the stay-at-home order? Denver7 went 360 to get multiple perspectives on the issue.
A delicate balance
Across the country, public officials are trying to strike a balance between protecting public health and preserving the economy.
President Trump hoped to have the economy reopened by Easter; however, that day came and went and the deadline to reopen was pushed back.
Cities and states are having to make similar adjustments on their projections based in the number of new COVID-19 cases coming out.
On the east coast, New York and several other states decided to extend their stay-at-home orders through mid-May.
In Colorado, Governor Jared Polis has set a goal of lifting the stay-at -home order by April 26. But while that may be the case for the state, Denver Mayor Michael Hancock said Thursday evening the city needs more time to scale up testing and contact tracing, as well as provide specific guidance of what reopening looks like for businesses as well as residents. Denver is now eyeing lifting its stay-at-home order on May 8, a week later than previously planned.
“We are looking at the data every day to get the economy open it as soon as possible in a way that won’t overwhelm our health care system’s capacity,” Gov. Polis said in an April 13 news conference.
Two days later, on April 15, the Governor laid out a series of steps that will need to happen in order for the state to lift the stay-at-home order, including increasing testing capabilities and creating additional protections for at-risk populations.
Colorado’s unemployment rate rose to 4.5% in March as the COVID-19 outbreak forced thousands of people out of their jobs. That rate is the highest seen in Colorado since August 2015, according to the Colorado Department of Labor and Employment.
The agency said it is working as quickly as it can to try to accommodate all of the people filing for unemployment, but the number of people attempting to apply has overwhelmed the system at times.
Reopening the economy would help ease some of these financial hardships, but the bottom line for the governor is that even when the stay-at-home order is lifted, there will be a new normal and social distancing will still be part of life.
“As we reopen our state, things are going to work differently than they did before,” Gov. Polis said. “We want to dispel any notion that we can go back to the way things were in January or February of 2020.”
In hospitals across the country, patients are the priority. Doctors, nurses and medical staff are working long hours and coming up with creative ways to solve some of the shortages they are facing with personal protective equipment (PPE) and ventilators.
“Things are very urgent. I don't want to, in any way, let people think that we are out of the woods,” said Dr. Richard Zane, UCHealth chief innovation officer and emergency services executive director.
Dr. Zane said the number of patients coming in with COVID-19 symptoms has started to level off, but he stressed the importance of social distancing to prevent the spread of the virus for the foreseeable future.
“Social distancing is the single most important thing that you can do for the state of Colorado, for your family, for Coloradans, for your neighbors. It is the most important thing,” he said.
Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said the economy won’t ultimately dictate when things can start to reopen and how.
“Ultimately, the virus is going to determine when we can reopen safely, not only in general, but in particular locations,” Dr. Fauci said in an interview with the Associated Press. “I think how you reopen — if you want to use that word — the economy in those communities is going to depend a lot on the ability to contain what we know will happen.”
Dr. Fauci said as soon as things start to reopen, there will be more confirmed cases of the novel coronavirus and so states need to have a way to contain the spread and the capacity to handle incoming patients before anything should realistically reopen.
“The thing we absolutely have to have in place, we better have in place, is the capability of very efficiently identifying, isolating, contact tracing, getting people out of circulation if they get infected,” Dr. Fauci said. “To me we have to have something in place that is efficient and that we can rely on and we’re not there yet.”
For doctors, the lives and safety of patients are their first priority regardless of the toll COVID-19 is taking on the economy because you can’t put a price on a life.
Time to reopen
There is a growing opposition to stay-at-home orders in states across the country. Dozens of people gathered outside the Colorado State Capitol on April 19 to demand for the government to reopen the state so that they could get back to work.
Victoria Reynolds is the chairman of the Libertarian Party of Colorado and helped organize the rally. She believes Governor Polis has overstepped his legal authority by requiring people to stay at home.
“It is not only unconstitutional, it’s draconian for Governor Polis to take it upon himself deciding who is essential and who is not,” Reynolds said. “This order, I think, is wrong completely.”
Reynolds stressed that she believes the threat of the virus is very real; however she also believes people should be able to make up their own minds for whether they want to go back to work.
“I think that people who are grown up enough and mature enough to be allowed to vote should also be grown-up enough and mature enough to make those decisions for ourselves and for our families,” she said.
With so many people out of work and applying for unemployment, Reynolds, who is an economist by training, believes the state has already reached the tipping point where the economic consequences of the stay-at-home order outweigh its health benefits.
Like tens of thousands of others in the state, she is also out of work at the moment and said she doesn’t want another stimulus check to help make ends meet.
“We don’t need a handout from the federal government, we don’t need a handout from anybody. Filing unemployment is just not the solution. What we need is to be allowed to work,” she said.
If the governor doesn’t decide to allow the state to reopen soon, Reynolds believes there could be lawsuits from businesses and citizens who need to get back to work.
While the pandemic itself is causing the deaths of hundreds of thousands of people, Andrew Schnackenberg, an assistant professor of management for the Daniels College of Business at the University of Denver, said recessions pose their own set of dangers.
“The folks who were unemployed during the Great Recession, about 10,000 suicides were linked to the financial distress and anxiety and depression that occurred during that time,” Schnackenberg said.
During the Great Recession, roughly 8.8 million Americans were unemployed. Within the first three weeks of the COVID-19 pandemic, the number of those who are unemployed was almost double that number.
Schnackenberg recently conducted a survey of about 400 people about the economic stresses of the novel coronavirus as well as the balance between protecting public health and preserving the economy.
He found that people who were 50 and older were more likely to focus on the importance of protecting public health over the economic consequences.
People who are 35 and younger who were surveyed were split on the importance of public health versus the economy.
Interestingly, the survey found that the people who have contracted the novel coronavirus themselves or who have a loved one who contracted the virus, were more likely to emphasize the importance of preserving the economy.
“They were more worried about the economy, far more worried about the economy, than folks who have not contracted COVID-19 or didn’t know anybody in their immediate or extended family who had contracted COVID-19,” Schnackenberg said. “So, what does that say? The only reasonable explanation that I can come up with is that many folks are actually experiencing this virus relatively mildly.”
The majority of the people surveyed believed that the U.S. could only withstand somewhere between three and six months of business closings before the American economy would be in serious harm.
“It kind of suggests that at some point we will have to come back to what you would call a new economic normal while we are still facing the threat of COVID-19,” he said.
What would a recovery look like?
There are three types of recovery economists describe like letters of the alphabet. The first is a V-shaped recovery, which is a quick downturn followed by a quick recovery.
When the pandemic first hit, groups like Goldman Sachs predicted that the COVID-19 pandemic would follow this pattern.
“People have started describing this as a V, I think that’s a misnomer,” said Richard Wobbekind, a senior economist for the Leeds School of Business at the University of Colorado at Boulder.
Wobbekind believes the recovery will look more like a U-shape, which is a quick downturn followed by a bit slower of a recovery.
An L-shaped recovery would be the worst-case scenario, where there is a sharp downturn followed by a long, drawn out recovery.
While the depth of the decline is unprecedented, before the pandemic, the economy was doing very well, with underemployment at its lowest levels ever and the markets experiencing strong closings.
The overall health of the economy before the pandemic is a large part of the reason Wobbekind believes things will be able to bounce back relatively quickly.
“Really this recession is disease-induced, but it is also government-induced because the government decided to shut the economy down,” Wobbekind said.
Another part of the reason he believes the economy has the potential to recover more quickly is because of the lessons the country learned from the Great Recession.
“We learned in 2008 and 2009 — don’t sit on your thumbs, get in there. The federal reserve is literally liquefied the global financial markets (sic),” he said. “The safety net is much better now.”
While he doesn’t agree with every decision the federal and state governments are making, overall, he said he has been impressed with the actions both levels of the government are taking to mitigate the damage to the economy.
He described the debt forgiveness loan for businesses as a stroke of genius by the government, but believed more needs to be done to help small businesses weather the pandemic.
Despite all of this, however, Wobbekind believes that there will still be a higher unemployment rate at the end of the year than before the pandemic hit. He’s projecting that it will be in the range of 6 to 7%.
Even with everything the governments are doing, Wobbekind said there is a time when the economy will have to reopen even while dealing with the novel coronavirus.
“I don’t think we can afford to keep the economy close down forever,” he said. “It’s callous, and as economists we talk about these things all the time, asking what’s the value of a life, but you get to a point where, you have to say putting the economy into an unbelievable tailspin for a long period of time is just too detrimental.”
What that point looks like, however, will be up to government officials to decide.
History of pandemic economics
While pandemics inevitably have an effect on economies, a recent study of the economic toll of the 1918 Spanish flu by a group of researchers found that cities that took aggressive actions to combat it did not suffer economically more than those that did.
Instead, the study concluded that the cities that took aggressive actions were able to lower mortality rates more effectively while also mitigating adverse economic consequences.
During the 1918 Spanish flu, there was no centralized federal response to the pandemic, so it was up to cities to take public health measures into their own hands. The study’s co-authors were able to compare the actions different cities took with the economic recovery they experienced the following year to come up with their conclusions.
In an interview with NPR, co-author Emil Verner explained that for cities that did not act aggressively during the pandemic but allowed things to return to normal more quickly, people were still hesitant to go out and spend money like they normally would. Businesses were also less willing to hire new employees.
On the other hand, cities that acted more aggressively were more likely to rebuild the confidence of citizens and businesses so when they chose to go back to normal, there was more consumer confidence that things were safe.
The researchers concluded that cities that took more aggressive public health precautions not only saved lives but also experienced a stronger economic comeback in 1919.
Health vs. the economy
There is no question that the COVID-19 pandemic is posing serious challenges to public health and to the economy.
Hundreds of thousands of people across the U.S. have gotten sick from the novel coronavirus and tens of thousands of people have died. Millions more are being affected by the financial toll the pandemic will take.
Ultimately though, it will be up to government officials to decide where the tipping point is, and where the economic consequences of the stay-at -home orders outweigh the need to protect public health and how to reopen businesses safely.