A Cruel Paradox: Beating Virus Means Causing US Recession

The coronavirus is dealing a death blow to the longest U.S. economic expansion on record, triggering layoffs and putting intense strain on the nation’s financial system.

In a cruel paradox, the very steps that are needed to contain the outbreak — quarantines, travel restrictions and business closures — are bringing everyday business to a halt and shoving the U.S. economy into recession for the first time since 2009.

“The more rapidly you want to contain the virus, then the more severe the lockdown has to be and the more severe the disruption to economic activity is,” said Gregory Daco, chief U.S. economist at Oxford Economics. “The hope is, the more severe the lockdown, the sharper the rebound will be.’’

The “Lockdown Paradox,” he calls it.

Much will depend on how swiftly and aggressively the Federal Reserve, Congress and the Trump administration deliver financial aid to tens of millions of economic victims — from hourly workers with no more income to suddenly furloughed employees to businesses with loans to pay but no customers. Solving the health crisis by shutting down the economy, though, will have to come first.

The U.S. economy has never endured anything like this. The economic shock from the 9/11 terrorist attacks, painful as it was, was shortlived. The financial crisis and the Great Recession were devastating. But they weren’t intertwined with a calamitous health crisis.