Stores are beginning to open across the country as the calls to get Americans back to work have grown deafening in past weeks. Thirty-four states announced that they are easing social-distance restrictions or scaling back their guidelines, allowing some businesses to reopen at reduced capacity.
Critics of social-distancing guidelines say the protocols in place have paralyzed the country and caused more harm than good, with consumer spending evaporating and nearly 30 million Americans filing for unemployment.
Economist Stephen Moore told The Cats Roundtable that while the states lifting restrictions will open new flows of commerce, it may still take until after the summer before business returns to usual.
“It’s a slow process. It’s not like everyone’s going to run out to the stores, and run out back to their jobs—but they will start to,” Moore said.
Moore noted that the pace of recovery was dispersed across the country, with harder hit areas like New York or Massachusetts needing longer timelines. But he told The Cats Roundtable he believed that states opening sooner would see the benefits first..
“We do think there is a light at the end of this tunnel,” he noted, adding that experts like Larry Kudlow and Art Laffer agree that a Fall recovery is on the table.
But according to Moore, businesses like retail stores, who were already seeing hits to their revenue before the pandemic, are going to have a tough time.
“Some businesses will not survive because they just won’t have the revenue they need to keep open,” he said.
The reopening of the states comes as the Federal Reserve announced it will keep its interest rate at zero to both combat deflation and employment returns.
“Deflation can be a killer for recovery,” Moore said about the Fed’s move. He pointed to the fall of oil prices by “70 to 80 percent” since the pandemic. “You’re seeing that with commodities across the board,” he said, telling The Cats Roundtable that the Fed needs to put more dollar liquidity into the economy, while potentially suspending taxes and royalties on the oil and gas industry.
“We are not going to see a strong recovery in the U.S. economy if we have the oil and gas industry, which led us out of the last recession, flat on its back” he said.
While there are trouble signs in the economy, Moore believes that as the fear of the virus lessens and Americans adapt to a new normal, companies will see the benefits.
“Once Americans get back to work and businesses start seeing customers in their door, you’ll start to see some profits rise.”
Listen to the interview below