That being said, in an adjusted lockdown phase, the emphasis will be on what we can safely do without making the pandemic worse. More outdoor activities will make sense, provided social distancing is observed, and some businesses could reopen, even if they are not essential, provided they don’t seem to pose too great a medical risk. Buying a new car or new house, for example, should be possible without violating social distancing and both vehicle sales and home sales could rise in the third quarter. More restaurants may reopen on a take-out-only basis and most factories should be able to operate, again with a heightened focus on hygiene.

For the economy, this could allow real GDP to see modest growth in the third quarter, particularly if inventories fell by less or were replenished. Payroll employment might drift down further. However, the unemployment rate could also peak and begin to come down, as a collapse in immigration and people giving up on job searches caused the labor force to fall. Corporate profits would likely remain very weak. However, inflation could well stop falling as supply-side constraints increased the cost of many of the goods and services bought by consumers. 

The School Reopening/Better Treatment Phase
September will mark a crucial turning point for the social distancing recession as states will have to decide on reopening schools, even with a still-rising total death toll. While this decision may, unfortunately, get politicized, it is a genuinely tough call. As a new school year approaches, we will have to weigh the risk of greater contagion, particularly for the old, against the long-term damage that social distancing and ineffective schooling could inflict upon the young.    

If, by then, we have more widespread testing, better treatment protocols, and more effective drugs to treat the disease, then the mortality rate should be lower. If it is, then schools will likely reopen, albeit trying to maintain as much social distancing as possible. If this occurs, some offices that have been shut could also reopen, as parents no longer have to look after house-bound children. Careful arrangements will also likely be made for early voting in the November election, along with spaced-out arrangements to vote in person, with plenty of masks, gloves and hand-sanitizer.

However, all of these steps will likely still be tentative in the absence of a vaccine, and it will likely not include any significant resurgence in restaurant meals, hotel stays, airline travel, spectator sports or even shopping at the mall. Any gains in employment, output and profits will likely be small in the fourth quarter of 2020 and early 2021 as we all await a vaccine.

The Vaccine Distribution Phase
Hopefully, by sometime in early 2021, a safe and effective vaccine will have been found and manufactured. However, distributing this vaccine will require an army of health-care workers together with supplies and facilities in which social distancing can be maintained. Even if this is organized well, it could take months to fully accomplish, with vaccine days perhaps being first reserved for front-line medical workers and then allocated randomly based on birthdays. It would also necessitate some card or app to allow people prove that they were immune either due to the vaccine or because they already had the virus.

A vaccine would be a game changer. If businesses require that all employees prove that they are COVID-19 immune and check the same thing for customers as they enter the business, they should be able slowly to get back to normal. Airports should gradually fill up again with COVID-free cards or apps being checked at security, and restaurants, hotels, sporting events and group activities should begin to reopen.

Some of these businesses will, unfortunately, open up under new management if government efforts to sustain existing firms through the recession fall short. However, it should be relatively straightforward to open these businesses and real GDP growth should begin to surge, as the population gets vaccinated, with corresponding increases in employment and profits. Inflation may also begin to rise as businesses face increased costs from medical precautions, some shortages due to remaining supply constraint and the pent-up demand of a public willing to pay above the usual price for something resembling normality. 

The Post COVID Phase
Assuming a successful vaccine that is distributed over a number of months, there should come a day when the government will declare that the pandemic is over, with 95% of the American public now vaccinated. At that point, the country will try to get back to normal with a rush. However, we will all have been changed. Masks at airports will be a more common sight than before and strangers will always think twice before shaking hands. Some online businesses will have gained a new foothold in people’s lives, while many traditional retail outlets will likely find it hard to reopen.