The director of the National Economic Council, Larry Kudlow, told ABC News on Sunday that “it could be four weeks, it could be eight weeks” before economic activity resumes. “I say that hopefully,” he said, “and I say that prayerfully.”
Outside economists have been pumping out analyses on the optimal length of a shutdown almost daily. One that has been shared with officials inside the White House comes from Anna Scherbina, the author of the 2019 study who is now an economist at Brandeis University and the American Enterprise Institute. It seeks to determine the optimal length of a national suppression of economic activity, which Ms. Scherbina does not define precisely in the paper. In an interview, she said it would encompass school closures, shutting down many businesses and the sort of stay-at-home orders that many, but not all, states have imposed.
“What it entails is something as drastic as you can get,” Ms. Scherbina said. In the United States right now, she added, “we don’t have it everywhere.”
Ms. Scherbina’s paper evaluates the trade-offs involved in slowing the economy to fight the spread of the virus by, as the paper puts it, “balancing its incremental benefits against the enormous costs the suppression policy imposes on the U.S. economy.”
In a best-case scenario, Ms. Scherbina concludes, a national suppression of economic activity to flatten the infection curve must last at least seven weeks. In a worst case, where the shutdown proves less effective at slowing the rate of new infections, it would be economically optimal to keep the economy shuttered for nearly eight months.
Suppression efforts inflict considerable damage on the economy, reducing activity by about $36 billion per week, the study estimates. Ms. Scherbina said the optimal durations would remain largely unchanged even if the weekly damage was twice that high.
But the efforts would save nearly two million lives when compared with a scenario in which the government did nothing to suppress the economy and the spread of the virus, Ms. Scherbina estimates, because doing nothing would impose a $13 trillion cost to the economy — equal to about two-thirds of the amount of economic activity that the United States was projected to generate this year before the virus struck.