The future course of Covid-19 remains highly uncertain. Yet, we observe that leaders in government and business often continue to plan for a single future course they would prefer to be true. They tend to think in weeks, months, and quarters, not the years over which the pandemic and growing economic crisis will play out.
Such thinking is exemplified by the V-shaped recovery many had hoped for. This is what Larry Summers memorably referred to as “Nantucket in the winter” coming back online in a presumed summer season. It is abundantly clear that even in China, which is months ahead of the world in recovery efforts, there will be no V-shaped recovery for major economies. Public health officials continue to warn that until we find highly effective therapeutics or a vaccine, the grim epidemiological math of this highly transmissible coronavirus will hold our societies at significant public health risk.
This, of course, is news no one wants to hear. It means the discomfort we have experienced to date will continue as we learn to adapt. But uncertainty and challenge are no excuse for individuals, organizations, countries, and the international community to freeze in their tracks.
Failing to think more comprehensively about the range of possible trajectories Covid-19 could take magnifies the downsides while failing to identify possible opportunities. Risk exposure is magnified for those who do not grapple with worst-case scenarios alongside hopeful thinking. It is no coincidence that the United States, Russia, and Brazil have the most cases of Covid-19 in the world while their ruling parties continue to downplay the severity of the disease and speak, think, and act in short timeframes.
Two months ago, we set out with our CSIS colleagues to try to grapple with the inherent uncertainty of the moment through the development of a set of scenarios that captured the best possible scientific understanding of the possible future course of the virus (SARS-CoV-2) and the disease it causes in humans (Covid-19) and the economic, geopolitical, and societal implications of those potential futures. Our colleagues J. Stephen Morrison and Anna Carroll created a compelling set of three scenarios capturing the public health outlook for the disease. Relying on the brainpower of other colleagues across our organization we further examined the global trade, supply chain, geopolitical, and other implications across three possible cases.
We dismissed the V-shaped recovery out of hand and adopted as a best-case scenario a U-shaped recovery. Next, we considered a W-shaped roller coaster recovery that would see another large Covid-19 wave by fall 2020 and subsequent shutdown due to premature reopening in the late spring and summer. And finally, we considered what we could only call the disaster of continued public health mismanagement of the virus and the potential of no therapeutics or vaccine that would have us dealing with unending spread of the virus over a period of years with an L-shaped outlook for the world economy.
Our core finding is that the virus will dictate recovery at every turn. Public health is driving economics, and it should be driving politics and international politics, too. This is a moment where a falling tide lowers all ships. There is no workaround to a challenge as massive as a novel virus, no shortcut to the medical, scientific, and industrial efforts necessary to address it.
We assess, based on available evidence, that we are on course for the roller coaster scenario. The lack of national-level leadership and greater international coordination means the virus will continue to regain momentum and spike in ways we fail to detect in a timely way due to lack of testing in the United States and many countries worldwide. This will almost certainly look like one of the three scenarios of the coming waves of Covid-19 authored by scholars at the University of Minnesota, based on historic lessons from pandemic influenza. This risks a range of second-order consequences from the humanitarian to the economic, and even to political instability in certain areas of the world. This future course for Covid-19 is likely to accelerate elements of de-globalization that will exacerbate the severity and duration of the economic downturn by leaving in place or increasing travel and export restrictions. This in turn could drive even more nationalist politics in countries around the world and increase the risks of international conflict.
The roller coaster future puts at risk the prospect for any durable recovery in the next two years. It widens the global divide between those with means and those without—both within countries and between developed and developing parts of the world. Most importantly, it is a scenario where short-term uncertainties and impacts transition to solidify more permanent changes in behavior that become the defining features of a new, more socially distant normal. It means that extraordinary fiscal measures never move past emergency intervention into restorative stimulus. This is what Chairman of the Federal Reserve Jerome Powell recently warned about when he said, “The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy.” The lessons from the Global Financial Crisis are that massive economic downturn creates uneven recovery with outsize gains for some and outsize losses for others. We need to think about what kind of economy we want to invest in and build, especially as the likelihood increases that the government will ultimately increase its role or even take a direct stake in industries and sections of the economy.
As stark as it seems, the roller coaster scenario offers some opportunity for redemption and recovery if we choose to learn the lessons of the last several months. First, failure to manage virus outbreaks through social distancing, widespread testing, tracking and tracing, and aggressive pursuit of therapeutics and an eventual vaccine will negate anything positive we do on the economic front. If we in the United States and elsewhere in the world implement national approaches to Covid-19 efforts now, we as a globally connected people can be better prepared for future potential widespread outbreaks. Second, and deeply related, failure to work productively with countries around the world will not only stoke the natural tensions and divisions that arise during a pandemic but will serve as an anchor weighing down any social or economic recovery efforts. It is too much to hope that a global pandemic could stem the tide of eroding multilateralism, but it is sheer lunacy to think that the fastest way to any positive new normal is through extensive decoupling of economies and supply chains all in the name of greater resilience.
Last, despite shortcomings in the federal response, the United States has not completely faltered thanks to the strength of our financial institutions, state and local leadership, innovative public enterprise, and the broad and relatively silent majority of citizens in the United States who have taken measures to keep themselves and their communities safe. Now is the time for pragmatism from leaders in government, the private sector, and civil society. They should plan and act for the long term to honor the many sacrifices being made in the short term and to rebuild a society that is strengthened, not weakened, by this traumatic experience.
The authors wish to give special thanks to Nikos Tsafos, for his intellectual contributions over the course of weeks in puzzling through scenario outcomes, and Ian Barlow, for his assistance for translating the complex scenarios into the succinct graphic included here.
Sarah Ladislaw is senior vice president and director and senior fellow of the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Samuel Brannen leads the Risk and Foresight Group and is a senior fellow in the International Security Program at CSIS.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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