COVID-19: Y2K or Walking Dead?
A hungover partier wakes up amid the flotsam of the previous night’s New Year’s Eve bash, dons his Nikes and heads into the streets for a jog. It’s Saturday morning, Jan. 1, 2000.
He’s in the zone, totally oblivious to the chaos erupting around him, ranging from armed troops marching the streets to cash-spitting ATMs to cars crashing amid malfunctioning stoplights. Riots and explosions break out. A spiraling intercontinental ballistic missile careens overhead and an errant escaped giraffe wanders the hellscape. The jogger greets another runner hello.
Launched in December 1999, the innovative ad by film director Spike Jonze dared to poke fun at fears that the dreaded Y2K computer bug would bring the modern world screeching to a halt.
Here in the cold light of 2020, the notion that people would be terrified that a couple missing year digits in computer code might spawn a global meltdown seems more than a little far-fetched and overblown. After all, despite all the angst, very few glitches were recorded. The electric grid didn’t go down, the financial system didn’t collapse and our digital toaster ovens didn’t gain sentience and rise up against us.
But that’s because computer programmers anticipated the problem, brought it to the public’s attention and companies fixed it.
Similarly, 20 years later, as we find ourselves in the midst of a world pandemic the likes of which has not been seen since 1918, we’re left to ponder what the future will bring. Will social distancing succeed, letting the coronavirus crisis recede into fuzzy memory, like the 1976 Legionnaires’ disease outbreak? Or will we be plunged into an apocalyptic, civilization-redefining event?
As with most things, the truth almost definitely lies somewhere between the extremes.
What is certain now is that the novel coronavirus pandemic has also ushered in a catastrophic financial downturn that will likely cause a recession. (And if one listens to the histrionics of 24-hour news pundits, it could even spark another Great Depression.)
Back in my February column, which now seems so very long ago, I surveyed a handful of economic experts from around Virginia, all of whom issued a more or less unified vision of a sunny, recession-free future — unless, they cautioned, a highly unlikely and unpredictable event took place, like a war or a terrorist attack.
Or a global pandemic.
Wall Street’s unprecedented 11-year bull market ended on March 11. A day later, the already-volatile Dow plummeted, recording the largest drop since 1987’s “Black Monday” market crash. It happened again just a few days later.
Understandably, economists have revised their financial forecasts.
“It’s my opinion we are in a recession now as we speak,” The Mercatus Center at George Mason University’s Bruce Yandle told me in mid-March. That outlook was shared by Bank of America U.S. economist Michelle Meyer, who told clients on March 20 that the U.S. has gone into recession, “joining the rest of the world … and it is a deep plunge.”
Yandle believes that the U.S. economy will rebound by the end of 2020, with real GDP growth hitting about 1% for the year. But, he allows, that’s “based on optimism that may not be well-founded.”
Professor Raman Kumar at Virginia Tech’s Pamplin School of Business doesn’t think we’re there yet but now places the odds of the economy going into recession this year at above 50%.
“Whatever is being done to flatten the curve of the spread of the virus … closing down restaurants, bars, travel restrictions — all of those are the right thing to do,” he says, “but they’ll make the economy worse in the short term.”
If we can contain the virus within two or three months, Kumar thinks it’s possible for the U.S. economy to recover by the end of the year.
In a scenario in which the virus doesn’t improve until August, “we would expect the nation to go into a two-quarter recession, but we still expect a sharp rebound after that short recession,” says Christine Chmura, CEO and chief economist for Richmond-based Chmura Economics & Analytics.
“One thing we need to keep in mind,” Chmura adds, “is that the current crisis will end one day and it’s likely to be this year. … In the next few months, we’ll have a view of this [pandemic] winding down, which will be good news for everyone.”
Follow the links below to read the rest of the stories in this Virginia Business special report about the impact of the coronavirus crisis: