------------The problem that world leaders, such as President Donald Trump, face is that the very policies that flatten the infection curve to save lives — social distancing, closing restaurants, bars, and schools, and isolating suspected cases — are beginning to crash the economy
The loss of economic supply and demand from social distancing is only temporary, in theory. But the cascading effects of the economic “infection” could spread far, leaving many businesses unable to reopen their doors once the pandemic fades. That would turn what might have been an intense but short recession into a long-lasting depression.
The objective is not and cannot be to eliminate the recession altogether,” says Gourinchas. “The recession will be there, it will be massive, but hopefully short-lived. Instead, the priority is to short-circuit all the negative feedback loops and channels of contagion that otherwise amplify this negative shock. Unchecked, the recession threatens to destroy the complex network of economic linkages that allows the economy to operate and would take time to repair.”