New coronavirus infections are plunging globally. This hasn’t happened yet in this yearlong odyssey, except for brief moments. Currently, the trend is decidedly down, and uninterrupted, since mid-January. Are we nearing the end, or is this just setting us up for another wave of infections?

Nobody wants to take this question on. Why? Everyone has been so wrong in the past that pundits are gun-shy. First, we were aiming for mid-2020, then September, then year-end, and predictions were colossally wrong each time. What was supposed to be a downturn in infections invariably became a next wave, each one larger than the last. The year ended off with twin towers: a pre-holiday spike, a drop and then an almost-equal post-holiday surge. Apart from the holiday-related swoon in infections, there has been nothing in the entire series like the drop we’re now witnessing.

How could we have been so wrong about the waves? It essentially comes down to governance: reopenings touched off a rise in infections, which led to partial or full lockdowns, depending on the country and conditions. Success was usually measured in curve-flattening; reopenings then saw infection levels rise, and the whole cycle replayed yet again. At the same time, economic activity is gyrating to the same beat.

Today’s trend is encouraging, like nothing we have yet seen both for the rate and the persistence of decline. It certainly seems like something different is happening. Continue the trend, and new infections drop to absolute zero by March 24. It seems almost too good to be true.

The policy and pragmatic dilemma is this: how do we open up without touching off yet another wave of infections? And how do we shield ourselves from the new and more virulent strains coming out of the United Kingdom, South Africa and Brazil? And while we’re at it, just how long can we continue to shut down the economy? Or borrow more public funds to get us through this thing? The longer the coronavirus persists, the tougher these questions will get.

Thankfully, there’s a critical difference this time. Vaccines have been approved and mass production organized well ahead of initial projections. The current decline in infections is too soon for recently-administered vaccines to have had much effect; it’s related principally to lockdowns. But if the vaccines are effective, then there’s likely more good news to come on the infection front. Things are looking up.

How do we get the economy back up to full throttle? Key to that is restarting industries that have suffered the most. Restaurants, movie theatres, sports and arts events will need to reboot. Travel is also a biggie—how on earth are we going to get people comfortable enough to fly again? These are problems we have seen before, and here’s where market forces work well. Hesitation will be met with introductory discounting. Everyone has their price, and when the price is right, people will bite. And when others see that they’ve done it and survived, they’ll rush to get the remaining discounts. But for this dynamic to work, infections must continue to diminish.

Once we reach that point, there’ll be new challenges. Public stimulus spending will start to thin out, then start to drop. Banks will get less official forbearance, and will start to tighten up their portfolios. And ratings agencies will likely do a full-scale evaluation of public debt levels, which have mushroomed in the past year. We may get a reprieve—if the rebound is robust enough, the problems might well be pushed off to a later date.

The bottom line?

COVID-19 has hit the world in countless unprecedented ways. As such, getting beyond the pandemic isn’t likely to be cookie-cutter-simple. What’s clear from past waves is that, managed badly, recovery isn’t only abortive, but the spread of the virus is exacerbated. This time around, there’s more ammunition, as vaccine programs scale up. Getting beyond this would be a huge relief. Keeping up with the jump in growth could be our next great challenge. Let’s all hope so!


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