Precautionary steps to stop the spread of Coronavirus have obviously affected the world’s economy. I use the term ‘affected’ instead of ‘hurt’ because this is a policy choice between two bad options. I think it is clear we chose the least damaging option. Over the past few weeks, the center in which I work, as well as others around the nation, have attempted to model the economic, fiscal and labor market effects of this less painful option. As with any economic analysis, there is uncertainty about the depth and persistence of the path we have chosen. The source of some of this uncertainty is obvious, but much is not. As we look forward to more normal economic times, it is helpful to think about what we cannot yet know, and what this means for our projections about the economy. 

The first and most obvious source of uncertainty is just how long this first onslaught of the Coronavirus might be. Right now, the economic shutdown most states have ordered is designed to preserve lives. However, even if we manage to keep the death toll down to an astonishing 100,000 this spring, it is pretty clear the economy will not magically rebound back to the pre-COVID-19 levels. 

As long as this disease can run largely unchecked through our populations, we will experience a much different level and type of economic activity. Until we develop a vaccine, a robust treatment or broad immunity, a significant level of reduced economic activity must be expected. 

Many economists, myself included, believe a short duration shutdown would not leave lasting scars on the economy. With a well-designed relief bill, most businesses would restart, displaced workers would find new employment and government services would continue unabated. However, the notion that this will be a brief shutdown seems increasingly improbable. A longer shutdown, even one with a known end date, introduces more uncertainty to our economic conditions. 

The type of economic disruption we now experience falls unevenly upon American families. I don’t mean to suggest that this is easy for anyone. A family can face minimal financial disruption and still bear great burdens of sorrow, fear and stress. But, economically, COVID-19 largely strikes at small business owners and employees working in restaurants, retail, hotels and motels and in other leisure sectors. Workers in these sectors are generally less well-paid and well-educated than the typical American. 

Uncertainty about jobs persisting after COVID-19 will also weigh heavily on the strength of the recovery. If the disease suppresses these sectors for a year or more, we should anticipate much expanded automation of service sector jobs, and loss of many smaller businesses. Prospects for works and business owners largely depend on their ability to improve educational attainment in preparation for better jobs. The lengthier the COVID-19 shut downs, the more likely will be the permanent loss of lower wage service sector jobs.  

There is little certainty over the size of the effect of school closings on the long-term prospects of the economy. The direction is pretty clear. School closings pull more than 7.0 percent of adult workers out of the labor force. That alone would push the unemployment rate to Great Recession peak. Worse still, is the share of students not accessing education. As many as one third of American students will have missed five months of school in 2020. We know that learning losses over a short summer are large; five months of missed school can affect a lifetime for many children. Most troubling here is the likelihood that the most affected kids are those already facing challenges in schooling. 

It is a smaller share of the economy, but this fall will likely force the closure of many American colleges. Most at-risk are those small, private institutions that are already relatively expensive and have little capacity for online learning. The spread of the disease will also limit international travel, which will have outsized impacts on higher education. 

The productivity impacts of the current anti- COVID-19 measures are uncertain. We will surely find that some tasks, and maybe some entire occupations, are easily performed at home. Others require an in-person presence. A year or more of mostly work-at-home will change the way we use urban space and where families can live. 

Finally, the conduct of business is a complex and varied affair. Institutional knowledge, the skills developed from interacting with other workers and the relationships with customers and suppliers are not easily built from scratch. This makes a long closure damaging to businesses ranging from a food truck to a technology firm. 

These few uncertain effects imply a high variance in economic forecasts for the coming months and years. While a quick rebound in economic activity is certainly possible, so too are several protracted and damaging years of slow, or even negative, growth. Readers should brace themselves for many different predictions, based on only modestly different assumptions about the duration of the downturn, and its affect on families, businesses and institutions.