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Tyler Cowen

Covid-19 Will Expose the Ghosts in the U.S. Economy

Even if they survive the lockdown, many U.S. businesses won't make it through the reopening.

More ghost diners than real ones.

More ghost diners than real ones.

Photographer: Bryan Tarnowski/Bloomberg

Each stage of the pandemic revives the question of what is coming next, usually in a more disturbing context. The next major event, I am sorry to say, is the disappearance of what I call ghost capital. According to one estimate, about half of small businesses will be out of cash within a month, and many of them will close. The American economy has been living off the inheritance of its pre-Covid-19 past, and that cannot go on forever.

Consider your local restaurants. I live in Northern Virginia, which is scattered with thousands of dining establishments of many different kinds. Many of them are currently open for takeout and delivery but not for sit-down dining. Even when they are allowed to welcome customers back inside, social distancing will mean they can’t serve nearly as many patrons as before.