Economists See Georgia’s Reopening as ‘Bellwether’ for Nation

(Bloomberg) -- Georgia Governor Brian Kemp’s move to allow businesses to reopen almost three weeks ago, widely ridiculed by public-health officials, has so far not resulted in a surge of hospitalizations or deaths. That’s caught the attention of economists.

Some Wall Street economists say a continued decline in serious illnesses suggests Georgia’s reopening may encourage other states to ease restrictions and lead to an eventual resumption in economic activity in the U.S.

“Georgia is a bellwether mainly because the reopening has been so aggressive,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, who cited in a research note Wednesday an almost 20% drop in Georgia’s Covid-19 patients in the past week or so.

“The other aggressive states, like Florida and Texas, are still opening up more slowly,” Stanley said in an interview. “So if Georgia is successful then, in theory, no one is going too fast -- there should be a strong presumption that reopenings everywhere else should be successful.”

Kemp lifted a state order on April 24, allowing nail salons, hairdressers, bowling alleys and gyms to reopen so long as they followed state protocols. Restaurants and theaters were given the go-ahead three days later.

The move was widely criticized, with Atlanta Mayor Keisha Lance Bottoms saying she was “dumbfounded” and “extremely concerned.”

That message was echoed this week by Anthony Fauci, the nation’s top infectious-disease official, who warned before Congress that an early reopening of the economy could risk new outbreaks.

Data Encouraging

So far, this hasn’t happened in the Peach State. Kemp said this week that Georgia has seen the lowest use of ventilators and lowest hospitalizations of Covid-19 patients since it started tracking the numbers. Confirmed cases still may go up, he said, reflecting greater testing. More than 1,500 people have died, and the case total exceeds 35,000, according to the state department of public health.

“The Georgia data are encouraging,” said Mark Vitner, senior economist at Wells Fargo Securities. “Like many states, a large proportion of Georgia’s cases have been in nursing homes. Georgia has done a great job of helping secure nursing homes recently, which may account for some of the overall improvement.”

Growth in cases has slowed across the U.S., even after stripping out New York, which has been a center of the crisis, Ian Shepherdson, chief economist with Pantheon Macroeconomics, wrote in a report this week. He said there’s no evidence of a pickup in Georgia or in South Carolina or Tennessee, which also had early reopenings.

Georgia’s early good fortune may have resulted from many of the state’s restaurants and other businesses staying closed even after they were allowed to reopen, as well as residents practicing social distancing and wearing masks, said Robert Bednarczyk, an epidemiologist at the Rollins School of Public Health at Emory University in Atlanta.

“I’m cautiously optimistic,” he said. “Efforts to flatten the curve largely seem to be working pretty well in terms of addressing some of the major health-care surge that we were worried about overwhelming hospitals.”

Still, it’s premature to say Georgia has survived the worst, as a new “hot spot” of cases has emerged north of Atlanta, and there’s a risk of more significant outbreaks, Bednarczyk said.

While some businesses are experiencing stronger sales, it’s not clear how significant the economic impact is. Many restaurants remain closed other than for takeout or delivery, and office workers are mainly staying home. At the same time, traffic on local roads and highways has picked up in the past few weeks.

Removing the legal hurdles “is clearly just the first step,” Vitner said. “Large proportions of businesses, workers and consumers will not fully re-engage in economic activity until they feel it is reasonably safe to do so.”

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