Commentary: The US reopens for business but families are reluctant to spend – an urgent warning for countries easing COVID-19 restrictions

Back in February of this year, the US economy registered a historical low unemployment rate of 3.5 per cent. In mere weeks, it went up to near 15 per cent . New jobs created this decade were wiped out in an instant.

All this matters when central banks around the world concur the evolution of consumer spending is a leading indicator of a country’s economic health because the dynamic of consumption reflects household expectations for the economic outlook. In states that never implemented any stay-in orders during the COVID-19 health crisis, like the state of South Dakota, consumer spending experienced a similar decline compared to the states that did.This sharp drop in household consumption, regardless of whether a stay-in order has been issued, suggests fear of the virus is the major factor behind the drop in economic activity, rather than the actual implementation of movement restrictions.

The sooner we are able to contain the spread of the virus, locally and globally, the faster we will see a rebound in the economy.

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