NEW YORK (MaceNews) – The economic outlook remains uncertain, but steps by manufacturers to protect workers from Covid-19 in the workplace show how businesses can adapt and recovery can unfold, Chicago Fed President Charles Evans said Monday.
Evans, in remarks prepared for delivery in a virtual meeting with the Lansing, Michigan Chamber of Commerce, recounted how he has heard from regional manufacturers who have described their “largely successful efforts to operate safely in today’s demanding environment,” and he said these anecdotal reports support expectations for recovery in the second half.
“These responses to the public health challenge on the factory floor give me hope that when the time comes, others will be able to scale up production as well,” he said. He spoke of how an executive at one large capital equipment manufacturer, which has operated as an essential business throughout the crisis, detailed the protective measures that have allowed it to continue.
“The executive described how the firm’s workers wear face masks and safety glasses and are separated by plexiglass if they must work close to one another,” Evans said. “Areas where close personal contact is unavoidable undergo intense disinfection.”
“The firm also has a health center, where workers can be screened and tested and where contact tracing and quarantining are coordinated. I heard of similar efforts from other manufacturers, including Michigan’s automakers.”
Speaking of the overall economy, Evans repeated that his baseline expectation calls for a slow recovery in the second half of 2020 and into 2021. This assumes progress on testing and tracing allow a phasing out of social distancing so that businesses can reopen and consumers can go about their business more normally. He said that among forecasters who see a recovery in this scenario, the median expectation still sees GDP at the end of 2020 5% below its pre-crisis level with the unemployment rate at around 9 percent.
He also noted “other more pessimistic scenarios are also much discussed.”
“For example, a second wave of Covid-19 could necessitate re-shuttering activity, like in March,” he said. “Or bankruptcies could be larger and more widespread, leading to further destruction of employment and business relationships. Or some combination of these scenarios and other difficulties could occur.”
“With uncertainty so high and with so many potential difficulties at this still early stage, the likelihood of the baseline scenario may only be a bit higher than that of the more pessimistic possibilities,” he said.
“But, on a slightly more positive note, auto production lines will begin to reopen on May 18. And, at the national level, though still very low, daily and weekly indicators of consumer sentiment and spending have risen a bit recently. Some of the gains appear to reflect support to households from payments made through the CARES Act.”