Growing possibility of W-shaped economic recovery. Economy may recover somewhat before another major crash

There are growing concerns that any economic recovery later this year could prove short-lived because of a possible deadly resurgence of the coronavirus and a late spike in bankruptcies and defaults, a wicked combination that could cause households and businesses that barely survived the spring lockdown to go under later in the year.

White House officials have touted the possibility of a V-shaped recovery as soon as this summer, pining for a swift rebound once businesses reopen on a staggered basis. But some economists believe a W-shaped recovery is increasingly likely, in part because efforts to find a vaccine are likely to take at least a year and millions of Americans and businesses are piling up debt without an easy ability to repay.

“Pretending the world will return to normal in three months or six months is just wrong,” said Diane Swonk, chief economist at Grant Thornton. “The economy went into an ice age overnight. We’re in a deep freeze. As the economy thaws, we’ll see the damage done as well. Flooding will occur.”

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Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, put it this way when asked about when baseball stadiums will be filled again: “I cannot see a return this year to what we consider normal.”

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