Plenty of questions, but the economy is ready to rebound

I once heard a quote, perhaps from the movie Patton, that went something like this:

"You tell your men they have to march 20 miles the next day, and then you push them 30, they will hate you. You tell them they will have to march 50, and you let them stop at 40, they will think you are a hero."

I thought of this quote when President Donald Trump changed his message about when we should try to "reopen" the economy. Instead of Easter, as he originally speculated, the target date has now been pushed out to sometime after the end of April. For a number of reasons, I believe it was far more prudent to build in extra time rather than push for an earlier and riskier target date. And if things work out favorably, Trump will have no trouble being touted as a hero.

I mention this because it now appears the dreaded curve for new infections of the coronavirus, at a national level, will hit its peak very soon, if it has not already done so in the past week. This means the curve for the data on deaths, which is a lagging indicator, will soon peak as well. Of course, there will be variances in the timing based on region of the country. And it represents an important step toward recovery to say we will now start to shift our focus to these regional data rather than nationwide totals.

This means our national efforts at mitigation are paying off. The curve is flattening. Another clue to this is the concerted message from the Trump administration that this past week was to be the "worst" week. The Surgeon General publicly referred to last week as our "Pearl Harbor moment." In my opinion, they will choose to use such dire messages only once, and they strategically timed them to coincide with the peaks in the curves.

Nevertheless, there will still be many instances of hardship and heartache in the coming weeks. Just because we are past the peak does not mean our travails are completely over. This is not the time to forego all of the mitigation measures. But we can take heart these measures are working, and unless we completely drop the ball, the worst is now behind us.

Right on cue, I have noticed a sharp rise in questions about the trajectory of the next recovery phase. How much have we declined? How much permanent damage have we sustained? How long will it take to get back to normal? Will we ever get back to normal?

My response starts by stating three things I know for certain. First, I am not sure of the exact timing, and I am not sure what people mean when they use the word "normal," but the U.S. economy will get back on an upward trajectory, and it will exceed the previous peak at some point in the foreseeable future.

Second, I know for sure is that, at this moment, nobody knows how long it will take, or how much we have lost. There is no model for this and no comparable historical event with which to compare. The best guess I have seen so far is that the U.S. GDP total for the second quarter of this year will post a record-shattering decline. This will be followed by a solid bounce during the second half of the year.

The current recession was not caused by a bursting bubble in the markets or some other systemic failure. It was caused by a natural disaster. We have experienced large natural disasters before, but unlike hurricanes or wildfires or earthquakes, which are more regional in scope, this was global.

The relief measures so far have been like nothing ever witnessed before, and it is likely there is more to follow. Let me state it again: Nobody knows how quickly these measures will work. Additionally, nobody knows the magnitude of the aftereffects of injecting this much relief into the system. We are all learning as we go.

I know the pace of recovery will vary widely based on region of the country, sector of the economy and even down to the level of company by company. Stronger regions and companies will recover faster than weaker ones. For the majority of sectors and companies, the recovery will be gradual. But one's definition of "gradual" will be case by case.

Finally, no other country will recover like we do — not China, not Italy, not anybody. So, it does little good to compare our data and curves and forecasts with those from other countries. We are unique among nations, and we are the best there is when it comes to dealing with a crisis. I do believe we will recover better and faster than all other countries. This is due in no small part to our ability to collect, process and report reliable data.

And while I am yet unable to offer much insight on the timing and magnitude of the current national cycle, I do have an idea about some of the achievements and milestones that will characterize the next overall recovery phase. And I am happy to report the plastics industry will make a large, irreplaceable contribution to hitting these achievements.

Most importantly, our approach to the coronavirus will transition from a population-based effort all the way down to a case-based protocol. This will require a fully supplied system for rapid testing that is adequately distributed all over the county. Such a system will enable health care providers to diagnose, track, trace and quarantine very quickly and effectively. It will also identify those who have acquired full or partial immunity. Until we are able to eradicate this disease through immunization, we must have a system capable of full containment and the ability to know who is not at risk.

Next, we must continue to increase our nation's health care capacity. This does not mean we need to build more hospitals with a greater number of ICU units and beds. It does mean we need absolute control of our health care supply chain as it pertains to medical supplies and equipment. This supply chain must be efficient if we are to optimize resources, but it must also be robust and stress-tested so it is ready when needed most. We learned this lesson about the big banks during the last recession, and the strength of the banks will prove to be one of the bright spots in the next recovery. We need a similar reformation in health care.

This will require some upfront investment, and it will be nominally more expensive to maintain. But we can no longer ignore the lesson that it will prove much cheaper over the long term if crucial supplies and equipment are locally sourced.

So here is my economic outlook for the next few quarters. I expect we will make steady progress toward achieving these health care goals in the coming months. We are not quite past the threat of further disruption from the coronavirus, and it will be a large task to rebuild our economy. But I can see the light at the end of the tunnel, and we are definitely ready to start back to work. The plastics industry has acquitted itself marvelously during this crisis, and I have no doubt this will continue.

In closing, I wish to express a few words of tribute to my late colleague and friend, Bill Bregar. Bill and I were close in age, got into this business at about the same time, and our career paths increasingly intertwined over the past 30 years. He possessed a number of talents, but he had one distinct attribute that I greatly admired: He was unpretentiously, endearingly, magnificently quirky. He would never be mistaken as one of the cool kids, but he was unmistakably cool. I will surely miss him.