Why a V-shaped Economic Recovery Is Folly

“In these Uncertain Times” is the phrase that sets my 18-year-old daughter off in fits of eye-rolling. They aren’t fits of rage — as, let’s be honest, when you’re 18 and a college Freshman, your rage is aimed at other things — but genuine reenactments of the Michael Jordan “Stop it” meme.

Everyone has gotten into the “In these Uncertain Times” act. Jan from Toyota — appearing in ads festooned as Jan from Toyota, but, of course, from what might be her home office — tells us that Toyota is there for us. Because auto makers and car dealers are the first thing we think of when we enter a global pandemic.

Jan from Toyota is joined In These Uncertain Times by a newly branded “The More You Know” series from the networks of NBCUniversal. Hey, we don’t know what we’re getting into either, but you should know that we’re here for you. In these Uncertain Times.

In any event, the eye-rolling is warranted. It’s not a specific “stop the spread” or “flatten the curve” catchphrase; those ask for a little bit of explanation about why they are important platitudes. How, exactly, do we “stop the spread?” What, exactly, is this “curve” that we must, together, “flatten?”

We want our mantras to be non-specific and our buzz phrases to be amorphous. “In these Uncertain Times” works. Because nobody knows what the hell will happen next. Thus the eye-rolling.

An Uncertain Recovery

If you’re new to this site, we mostly cover cryptocurrencies like Bitcoin and how and if they’re weaving their way into modern life. But, as we’ve discussed in the past…well…In these Uncertain Times, Bitcoin doesn’t have a decades-old history to point to. There are no parallels to the Great Ethereum Bounce of 1976, or the Binance Bottom of 2003.

Which brings us to the overall topic of this article — whether or not anyone knows what in Sam Hill will happen to the economy when and if there’s a magic switch that gets flipped and everyone goes back to work.

May I Interest You in Another Unemployment Chart?

Those six data points above need no explanation. To say they suck is putting it mildly; the wind came out of the economic sails on March 11, and we are not going back any time soon.

The “V-shaped recovery” crowd doesn’t necessarily think there will be an immediate switch-flipping exercise, but they do think that the “Trough of Suck” will be rather short-lived. (More on the Trough of Suck below.)

An overly simplified version of what the V-shaped folks think will happen is here:

The assumptions within a V-shaped recovery are too numerous — like dropping a quarter from space and trying to hit a shot glass in a field in Texas — but here’s a quick synopsis of how that could work:

• A “back-to-work” order arrives from the Federal government and is adopted over the course of a few weeks by at least a vast majority of the states.
• COVID-19 cases have reached their peak, and we have flattened the curve.
• Restaurants open back up with a social distancing guideline of some sort.
• You can get your hair cut and your nails done and get a facial — provided that the provider of these services has been cleared by a doctor to provide these services, and provided that a mask is worn.
• Your kids go back to some semblance of in-person school.
• You can host a dinner party at your home with more than just your immediate family.
• No one in your immediate family is sick.
• You have contact tracing in place so that you can prove that this morning’s trip to the pharmacy did not expose you to the virus.
• You have an employer that is willing to bring you back to work, hasn’t laid you off, hasn’t gone out of business, and has received a Paycheck Protection Program loan from the SBA.

Actual Recovery Looks Much Different

If you take a look at the blue line up there, it’s sorta kinda meandering downward, and then comes up a little bit — THE NEW NORMAL — and then we all figure out how to manage. Which is much more likely.

Trough of Disillusionment Vs. Trough of Suck

Gartner has a concept called “Trough of Disillusionment.” I’ll let you Google that — type in “Hype Cycle” and learn more about how analysts think about the launch of tech products — but I’ve decided to apply that thinking to something I’m calling the “Trough of Suck.”

In short, the V-shaped crowd may say “it’s going to suck for a little while” and then they think that the switch magically flips and we’re back to where we were before.

There’s also a “U-shaped Recovery” crowd, and they think there will be a bit of an extended period of pain and then gradually things come back.

But neither of these buts “The New Normal” up against the stark realities of that unemployment chart above and gets a real, actual, “Trough of Suck.”

What we’ve done over the past six weeks is unprecedented — and, dare we dip our toes into the “do you want to save your Grandma or do you want to go back to work?” argument, we’re about to enter into a Trough of Suck phase that will last for YEARS.

Take a look at this jobless claims article from Yahoo: we’ve sent 22 million people into the unemployment lines. How many of those will be able to go straight back to work?

What’s Next?

Allow me, your fearless prognosticator, to hazard a few guesses about what’s next as it pertains to you and your own microeconomy.

1. Since it’s NOT an either-or, people HAVE to go to work.

Though this danse macabre will continue, the list of essential services will expand. Because it has to — yesterday’s Michigand Yeet Fest was evidence that the Governor has overstepped her bounds by at least an order of magnitude and the seeds of discontent were long-since sown.

2. But some of you — some of us — will be stuck.

I was deemed non-essential ages ago and Lord knows I’m going to be doing a metric crapton of soul-searching about what I get to do next. (I can write about Bitcoin until the cows come home; eventually, I may have to learn how to milk said cows. Writers are non-essential — this runs counter to what the talking heads will tell you about how important the arts are In These Uncertain Times — but if I write content and that content doesn’t actually move the needle they’ve been talking about for years (in no small part because you can’t move any needles if those needles are tied to dollars an no one has either needles OR dollars), I’m going to have to find actual gainful employ.)

3. Plan for a long haul — without any idea how long that haul will be.

We’re not just trying to put the toothpaste back in the tube; we’ve asked everyone to brush and spit out and don’t swallow the toothpaste AND we’re trying to put that back in the tube.

Price of Bitcoin? Price of gold? Price of eggs, value of dollars in RMB, cost of goods sold…your guess is as good as mine as to what will happen to ANY of those things.

It’s Not a Binary Question

I’ve dumped a lot at you in this article; thanks for reading so far. If I’ve got an ask, it’s that we stop looking at this as a binary question.

The President was actually right when he talked about the human cost of shutting down the economy. Lives will be lost to the virus — but will more lives be lost to those “deaths of dispair” that people really don’t want to talk about?

The President likes to give the impression that he has a magic on/off switch for the economy; Congress likes to think that its Herculean efforts to get the CARES Act signed into law supplied the direct current for that on/off switch.

The reality — with the “will the recovery be ‘V-shaped'” and the “when can I go back to work?” and the “is it safe enough to be out in public?” crowds — is that these arguments are much more nuanced. The give-and-take that’s playing out in public is not as simple as “go back to work and Grandma dies.”

Stop playing that game. Please.

And pray for a shorter duration of the Trough of Suck.