Self-Directed Investor Society News Feature: Fed Officials: “Additional 50 Days of Restrictions IMPROVES ECONOMY”

If you are among the individuals harking back to 1918 and the Spanish Flu to make projections about how the coronavirus pandemic will play out, then you will love the latest from some Federal Reserve officials and researchers based in the Northeast. According to a new report from Sergio Correia of the Federal Reserve Board, Stephen Luck of the New York Fed, and Emil Verner of the Massachusetts Institute of Technology (MIT)'s Sloan School of Management, extending the time period for restrictions on public movement in the wake of viral exposure can improve manufacturing by 6.5 percent "after the pandemic abates .

SDI Magazine readers should note that although Fed officials participated in the research and writing of the paper, their conclusions and published results are not officially endorsed by the U.S. central bank.

"We [found] that cities that intervened earlier and more aggressively do not perform worse [economically] and, if anything, grow faster after the pandemic is over," the researchers wrote, adding later in the report, "NPIs can reduce mortality while, at the same time, being economically beneficial."

Most of the research focused on the effects of implementing restrictions sooner rather than on how long they should last once infection had taken hold. However, the relatively large size of the United States when compared to many other countries in the study and currently battling the coronavirus makes this research timely since the infection is not spread uniformly across the country.

In smaller countries, like Taiwan and Singapore, national governments report they believe they have "not only limited infection growth but also...to have mitigated the worst economic disruptions of the pandemic."

The authors of the paper also emphasized that the COVID-19 coronavirus does not appear to be as deadly for "prime-age workers" as was the Spanish Flu and that "the complex nature of modern global supply chains, the larger role of services, and improvements in communication technology are mechanisms we cannot capture in our analysis."

Do you think it is reasonable to compare Spanish Flu and COVID-19? To what degree?

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Author: Carole Ellis
Carole Ellis is the editor-in-chief of Self-Directed Investor Magazine and the Bryan Ellis Investing Letter. Email her at [email protected]
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