WASHINGTON - Three weeks ago Erin Smith and her husband Patrick closed up their barbecue joint inside the Greenway Plaza office complex - which they jokingly describe as the “best food court barbecue” in Texas - after a stay-at-home order by Harris County emptied the plaza of office workers from companies such as Occidental Petroleum and Quantlab Financial.

So began another series of economic losses. The Smiths furloughed almost their entire staff and stopped paying rent to the commercial real estate firm that manages Greenway Plaza after negotiating a three-month pause on their lease.

They canceled most of their more than $36,000 a month in food orders for staples like brisket and collard greens, a loss not only for the wholesale food suppliers that keep Houston’s food industry running but also the farmers that grow their produce and raise their cattle.

“There’s a million other people that make restaurants happen, and the supply chain is bleeding out right now,” said Smith, the co-owner of Feges BBQ. “There’s produce vendors, pig farmers, the list goes on. These are people with products they need to get rid of, and they can't.”

As the stay at home orders persist, the economic damage is expected to expand far beyond restaurants and hotels to most U.S. industries, raising fears among economists of a Great Depression-scale downturn across the country and could stretch for a decade. That prospect, in turn, is prompting some executives and public officials to start asking the question, “When does the economic risk posed by social distancing measures start to outweigh the number of lives saved?”

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Former Wells Fargo CEO Dick Kovacevich drew vitriol online two weeks ago by raising the idea of starting to reopen the economy this month by bringing back workers under 55, who are believed to be at less risk of dying from the coronavirus.

“We'll gradually bring those people back and see what happens. Some of them will get sick, some may even die, I don't know," Kovacevich told Bloomberg News. "Do you want to suffer more economically or take some risk that you'll get flu-like symptoms and a flu-like experience? Do you want to take an economic risk or a health risk? You get to choose."

Many economists have criticized the view, arguing that bringing people back to work too soon could set off a potentially larger wave of infection and death that would inevitably set off a public panic and do even greater damage to the economy. But risk-based analyses aimed at balancing public health concerns against economic ones are already beginning in Washington.

Greater than ‘Great Recession’

In three short weeks, more than 16 million Americans have lost jobs, nearly doubling employment losses during the 18-month Great Recession. Both former Federal Reserve Chair Janet Yellen and her predecessor, Ben Bernanke, warned last week the U.S. economy could contract 30 percent over the next three months, a decline not seen in nearly a century.

The Trump administration is predicting a quick recovery, but with no clear end to the pandemic on the horizon — a vaccine is likely to take more than a year to develop — any effort to predict the end of the economic losses is guesswork at this point, economists say.

“Only the Great Depression would even be remotely close (to the losses this quarter) and I think this swamps that,” said John Diamond, an economist and fellow at Rice University's Baker Institute for Public Policy. “There’s been a shutdown of a pretty good part of the economy, and as that goes on that’s going to impact other parts of the economy. It’s a domino effect, and as we go from 2 to 3 months to 3 to 4 months and every month thereafter, it will get worse.”

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For now, most politicians are deferring to doctors and public health experts, saying the shut-in orders must persist until the virus is brought under control through improved testing and treatment protocols. But when that will happen remains an open question, with states still struggling to find enough testing kits for people with symptoms, let alone the general population.

“We’re so far from getting to that level of detail,” Rep. Joaquin Castro, D-San Antonio, said of the country’s public health response. “My concern is this thing is going to drag out longer than it needs to.”

With President Donald Trump calling for normal life to resume as quickly as possible, there is a clear impatience among some politicians, many of whom face re-election this year.

Rep. Dan Crenshaw, R-Houston, said he worried some officials were being too cautious, pointing to the city of Dallas’s decision to extend its stay at home order through May 20. He said the government needed to start reopening the economy sooner rather than later.

“We need to balance this, and I worry we’re not,” he said. “When I was in the Navy Seals, if we were on patrol and we got shot at, we’d take a tactical retreat. Then we’d regroup and go back into the mission; we wouldn’t keep retreating.”

Tough sell

But so far, that line of thinking is a tough sell, even among many Republicans, who are focused on providing support for laid off workers and companies through a more than $2 trillion stimulus package.

Rep. Kevin Brady, R-The Woodlands, said politicians from both parties were starting to talk about how and when to reopen the economy, but cautioned that officials’ “number one priority has to be keep us safe.”

“We’re seeing perhaps some flattening of the curve in some regions” he said, “but we need to keep maximum pressure on right now.”

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A paper published earlier this month by the nonprofit National Bureau of Economic Research examined pandemics back to the bubonic plague outbreak of the 1300s - known as the Black Death. It found that pandemics are typically followed by “sustained periods—over multiple decades” of reduced economic activity and investment, as the labor pool not only shrinks, but those who survive tend to favor saving over spending and investing.

“If the trends play out similarly in the wake of COVID-19—adjusted to the scale of this pandemic—the global economic trajectory will be very different than was expected only a few weeks ago,” economists, including Oscar Jorda, senior policy advisor Federal Reserve Bank of San Francisco, wrote.

Until the coronavirus pandemic hit, financial analysts were generally projecting the global economy would keep growing as it has for the last decade. Public officials hope to avoid a repeat of past pandemics by an unprecedented injection of money into the U.S. economy, through expanded unemployment benefits, industry bailouts and forgivable business loans, as well as the purchase of more than $2 trillion in risky debt through the Federal Reserve.

The belief is the government can prop up the economy during this unprecedented loss of economic activity, keeping businesses intact and connected to their employees, so the economy can restart more easily and quickly when the stay-at-home orders roll back.

Expanded unemployment benefits are in effect through the end of July. But after that, if not sooner, Congress would need to pass another stimulus if it is to keep workers and businesses whole, raising the prospect of the federal government taking on trillions more dollars of debt when the national debt exceeds $23 trillion — more than the annual output of the U.S. economy.

Rachel Greszler, a research fellow at the Heritage Institute, a conservative think tank, said while low interest rates allow the United States to borrow at low costs, she questioned how long the U.S. government could keep borrowing at this pace.

“Who is paying for this? We are, our children are. It’s not free money,” she said. “That’s not to say it wasn’t the right time. You spend in crises, but it would have been a lot easier if we weren’t sitting on 23 trillion in debt.”

New normal

Even with the stimulus, some businesses may never recover.

Movie theaters, already in decline, will face a market that has spent months exclusively relying on Netflix and other streaming services for entertainment. And after watching employees work from home for months on end, will companies want to return them to offices with their high overhead and potential for infection, raising questions for industries from real estate to energy?

“We can’t have unreasonable expectations. After 9/11 the travel and tourism industry took the better part of five years to adjust and recover,” said Brad Gold, a business professor at the University of Texas. “As economic activity returns, the money may not be spent the same way. The end result is some businesses and entire products may cease to exist.”

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Erin Smith and her husband are already adapting their barbecue business to life under coronavirus. While the delivery business, a lifeline for many restaurants, hasn’t worked out for them, they are bringing in income through catering gigs and selling pre-cooked, vacuum sealed briskets in a Spring Branch parking lot on weekends.

They’ve applied for a small business loan through the stimulus package but are worried the money will run out before they can get one. Without the loan, Smith figures that within two months, they won’t have enough money left to reopen.

“It’s hopefully temporary,” she said of closing her restaurant. “I guess we’ll know when we get through this.”

james.osborne@chron.com

Twitter.com/@osborneja