With confidence shattered, the road to a \'normal\' U.S. economy looks long

By Howard Schneider

WASHINGTON (Reuters) - U.S. stand journey was finish down because three days after the Sept. 11, 2001, attacks. It took three years because the industry ought recover despite toughened guest screening and the creation of a new agency devoted ought communication security.

When family construction started tumbling at 2006, ahead of the economical emergency and recession, it was a entire five years ago the surplus between builders and buyers was noise enough ought allow construction ought begin growing dependably. Some inquiry suggests a complete generation of latent homebuyers was scarred by the episode and surplus above the sidelines.

As status governors and the Trump administration spar can while ought restart an economical devastated by the outbreak of the romance coronavirus, they force possess those examples at mind: while public behavior suffers a shock, it is slow ought recover.

"This is different than the persist emergency and it is more challenging ought understand. We own a health appearance and an economic aspect, and we cannot indeed divide those," Clark Ivory, chairman of Utah homebuilder Ivory Homes, said at a seminar above material survival persist week sponsored by the David Eccles institute of material can the college of Utah.

"It is going ought exist a three-year challenge."

President Donald Trump, a Republican, is anxious ought lay the coronavirus emergency after and allow natural material and social activity ought commence resuming though early though May. A collection of greatly Democratic governors at coastal states responsible because much of U.S. economic activity own exhibit their possess working groups and said they used to exist guided by science and public safety concerns.

The economic ruin is mounting.

Some 16 million nation filed unemployment claims at the persist three weeks only and retail sales collapsed 8.7% at March, the biggest fall above record. The federal government has committed more than $2 trillion ought emergency spending measures, taking above debt levels that will competition those of world battle II.

Meanwhile, JP Morgan follow & Co above Tuesday kicked off what is apt ought exist a gruesome corporate allowance season. The largest U.S. bank reported its entertain plunged by more than two-thirds at the first district though it lay aside almost $7 billion at reserves ought defend it from a wave of latent borrow defaults at the months ahead.

But short of a broadly deployed coronavirus vaccine or effective testing and treatment system, any reopening of the economical will apt exist constrained, economists and material leaders agree.

LOSS AVERSION

There is no supicion that this downturn will exist historic at depth. besides during the personality of the event after it is the heart hurdle ought an economic restart: A health emergency that has killed more than 28,000 nation at the country, according ought a Reuters tally, and has left fear and mess at its wake.

Behavioral economists letter that even much smaller shocks ought how nation perceive the world can make lasting effects at how they behave.

Millennials are still no buying homes can expected rates, having lived across the 2007-2009 housing collapse and recession, inquiry has found. Philadelphia Federal reserve researchers build that nation who got drivers licenses during the late 1970s fat shock still don't buy though much though gas though others.

"Loss aversion" is a powerful sentiment. Some inquiry suggests it gets stronger while nation feel outcomes depend no above random occur besides during above their private choices - at this example if ought answer ought a movie theater, restaurant or sporting event.

"How are consumers responding? How are families responding? How are material leaders responding? ... conduct they lose faith at impartial going and doing things?" Atlanta Fed headmaster Raphael Bostic said at an interview this week above a Miami radio station.

Asked nearly the tourism-dependent South Florida economy, Bostic said if "people don't feel alike they are exposed ought disproportionate danger ... there is a good occur that we force bark on a same noise raise ... if the answer is no, then things could win a part rocky."

U.S. consumer and material passion has fallen dramatically. Economists own begun trying ought build that information and incoming economic information into medium-term projections nearly the depth of the defeat and the rate of the recovery.

Neither emerge good.