It has become all too clear that the coronavirus pandemic is not just a matter of global health, but also an economic issue. Indeed, the virus is having a major impact on the American and global economies as it spreads rapidly in the United States and around the world.
The stock market has dropped dramatically since late February. On Monday we saw the Dow Jones Industrial Average suffer its third-biggest one-day percentage drop.
Major cities are effectively shutting down. California Gov. Gavin Newsom even ordered the state’s 40 million residents to stay home except for essential activities. A growing number of other governors are also telling people to only leave home when absolutely necessary.
As bars, restaurants, gyms and other places where we gather socially close, many hourly workers are losing their jobs. The travel business, including airlines and hotels, is facing furloughs and layoffs. Many small businesses are suffering.
We are all bracing for the economic impact the coronavirus may have on us.
But what is the right economic policy we should be pursuing at this time? Do we send checks of $1,000 to everyone who needs the money? Or do we incentivize the economy with tax measures that will boost the businesses most significantly affected so they can preserve their workforce?
These questions are especially pressing as a stimulus bill to fight the economic fallout from the virus makes its way through Congress.
I discuss how the American economy should be supported on this week’s episode of my podcast “Newt’s World.”
Fortunately, America went into this pandemic with a strong economy under President Trump, with low unemployment and strong, consistent growth. So we’re starting from a stronger position than other countries that are also dealing with the coronavirus. That being said, the virus will hurt the American economy.
Obviously, we have no choice in the immediate short-term but to close down, to distance ourselves from other people and to stop doing so many of our regular activities. We hope that doing so will starve the virus and begin to break up its momentum.
This campaign of shock and awe will work for two or three weeks; it won’t work for two or three months. Bluntly, we're not going to be able to keep 330 million people doing nothing for more than a couple of weeks.
Instead, we're going to have to think through how we restart the economy, how we gradually reintegrate people and reopen stores. We badly need some people to start planning how we get back to being a country of growth and prosperity.
My two guests this week – Stephen Moore, a fellow at the Heritage Foundation; and Charles Payne, host of “Making Money with Charles Payne” on Fox Business – are two such people.
I think my conversations with them are a very good starting point. We discuss in detail the benefits of suspending the payroll tax, how to keep companies from going bankrupt and laying off workers, the effects of direct payments to Americans, and many other pressing issues in these unusual economic times.
I hope you will listen to this week’s episode as we not only prepare for an economy damaged by a pandemic, but also plan for how to rebuild that economy to become as robust as it was beforehand.