“The economic hit could be sharp and deep,” said Harvard University professor Jeffrey Frankel. But assuming that infections peak in 2020, “there is no reason why economic activity should stay depressed for a period of years, which I take to be the definition of a depression.”
Some analysts trying to project the economy’s path cite the 1918 influenza pandemic that claimed an estimated 50 million lives worldwide.
In a recent presentation to a virtual Brookings Institution conference, economist Robert Barro said that countries back then typically suffered a 6% reduction in GDP, about in line with that of the last recession but far smaller than in the Great Depression.
He described his findings as an upper-bound estimate of the economic impact from the coronavirus. Global health systems are better equipped to handle contagion now, but the world is more interconnected, Barro said.
“We think of a depression as a recession that is very, very deep and very, very long,” said Blinder, now a Princeton University professor. “That’s the kind of thing that could happen” should infections peak only temporarily then return in the fall.
--With assistance from Shawn Donnan, Katia Dmitrieva and Steve Matthews.
This article was provided by Bloomberg News.