What Might a Second Lockdown Signal for the American Economy?

The current global pandemic has caused countless national economies to suffer. Recent data released from regions such as Asia and Europe suggest that some regions are suffering fiscal contractions that have never before been seen. However, it does indeed appear that these very same areas are slowly emerging from such economic doldrums due in part to the easing of local and national restrictions. It is still a fact that the United States does not seem to be following the same route.

As cases begin to mount, many states have once again imposed restrictive measures that are limiting the movement of individuals and causing businesses to shutter their doors. Assuming that this current momentum continues, how might it affect the American economy from a medium-term point of view?Fracturing an Already Frayed SocietyOnly a handful of weeks ago, many reputable online news sources were touting that the United States had begun to economically recover from the restrictions imposed in March and April. However, this now appears to have been slightly optimistic as opposed to realistic. Cases once again began to surge in July and many states are now reporting record-breaking numbers on a daily basis.

Should such a trend continue, it is only reasonable to assume that businesses will be forced to close their doors for the time being; causing even more economic woes during the height of what would have otherwise been a thriving tourist season. We also have to question whether republican-dominated states such as Texas and Florida would be willing to adopt such restrictive measures.Unforeseen Economic WoesThe main issue here is that the current state of affairs has never occurred in the past. Unlike the cyclical nature of the stock markets, it is impossible to determine the extent of economic damage that a second lockdown would have; particularly if it needs to remain in place for weeks or even months.This has many economists rightfully worried, as they have no models to predict what might happen in terms of concerns such as GDP and unemployment. Considering the fact that the economy of the United States has already contracted at unprecedented rates, we are left to wonder what further damage may be incurred.The Ability to Improvise, Adapt and OvercomeThe good news is that this is not all gloom and doom.

One of the reasons why the United States represents an economic powerhouse results from its ability to adopt a more flexible edge when the going gets tough. A growing number of individuals are now choosing to work from home. Businesses may opt to outsource their production facilities to more logical portions of the world. The government will inevitably provide additional stimulus packages for its population if required.

So, there may indeed be a light at the end of the tunnel.While such sentiments may provide little comfort at the moment, they are nonetheless important to highlight. From a long-term point of view, the United States will remain quite strong.