Whether a V or U-shaped recovery, the economy is already off the bottom

Linda J. Dodson

Companies are beginning to ease back into action, but big questions remain for hospitality and leisure

Just about every letter of the alphabet has seemingly been used to characterise the range of possible trajectories for our epidemically bombed-out economy. Is it to be a V-shaped contraction and recovery, a U, an L, or even an I, where the economy doesn’t recover at all but continues in freefall?

Without knowing how effective governments have been in taming the virus, the answer can for now be little more than guesswork.

Yet despite the uncharted nature of our self-induced shutdown, there are perhaps already a number of pointers that can be offered.

One is that we have already almost certainly passed the nadir of the contraction. Notwithstanding the fact that the lockdown has not yet been lifted, there are multiple signs of the economy beginning to wake up: more cars and vans on the roads, more people on the streets, more eateries open for takeaways, and more offices and factories that having taken appropriate safeguarding measures are operating again, albeit at much reduced levels.

All this would suggest economic activity is very probably somewhat better than it was, say, two or three weeks ago.

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