On Pause

There seems to be prevailing view — in the US in particular — that the economic contraction associated with the pandemic is man-made and man-controlled rather than systemic, rather like a pause button effect, and that once the threat to life has diminished sufficiently — ideally during the summer — the button can be un-pressed and everything will more or less start off again where it left off...in a ‘robust’ state.

There’s an obvious political angle to this narrative in the US. And yet it is not to be entirely discounted as many stalled industries are likely to need to play catch-up almost immediately and may tend to kick off again at full tilt.

Yet can 17m unemployed just walk back into their old jobs? Is the US economy such an island that the wider slowdown in global trade, tourism and so on is unlikely to have much of an impact?

What of the likely longer-term absence of large-scale social interaction and its associated psychological impact? Is the new normal really going to so closely resemble the old normal?

Thinking more locally, there are certainly parts of the Guatemalan economy that from the supply side at least will come back online rather like a rebooted server. The demand side could be trickier though.

And the 4/5s of Antigua's economy that used to be funded by foreigners will not magically re-appear in even the medium term.

When the pause button is finally released we may not hear the tune we expected.