The epidemic, if it repeats

　　1. Twists and turns. The mutation of the new coronavirus seems to be normalized, and it has the potential to coexist with humans for a long time. Domestic prevention and control has been upgraded again, and the epidemic has repeated so repeatedly. Does it mean that its short-term impact on the macro economy has once again intensified? Or, it indicates that it will have a longer-term uncertainty impact on micro-subjects?
　　2. If the epidemic counters, the economy is bound to suffer. However, judging from the repeated history of the past few rounds of the epidemic, its impact on economic growth has shown a diminishing margin, and its impact on the financial market is gradually weakening. The reason may be related to the increased awareness of the virus from all walks of life and its proficient response.
　　3. The more complicated and long-term consequence of repeated epidemics is to cause instability in the expectations of micro-subjects. On the one hand, it is difficult for residents to reduce their preventive savings and consumption to return to normal after repeated repetitions; on the other hand, the service industry is often forced to be interrupted, making relevant investment unsustainable, which is a drag on overall investment.
　　4. Looking to the future, rapid blockade makes the spread of this round of epidemics likely to be controlled in the near future. After a short-term shock, the economy will still return to a logical operating track determined by more “non-epidemic” variables. However, strict precautions may be the norm under repeated epidemics, indicating that the return of the economy to normal will be a prolonged process.
　　The mutation of the new coronavirus seems to be normalized, and it has the potential to coexist with humans for a long time. With twists and turns, domestic prevention and control has been upgraded again. Does the recurrence of the epidemic mean that its short-term impact on the macro economy has intensified again? Or, it indicates that it will have a longer-term uncertainty impact on micro-subjects?
1. The epidemic is repeated: short-term shocks have intensified again?

　　The economy is bound to suffer under the counterattack of the epidemic. However, judging from the repeated course of the past few rounds of the epidemic, the degree of its impact on the economy has shown a marginal diminishing trend. The reason may be related to the increased awareness of the virus from all walks of life and more effective response. The new demand (such as the “home economy”) and new supply (such as the “online office”) generated by the epidemic also provide new development momentum for the economy.
　　The impact of the recurrence of the epidemic on the financial market is gradually weakening. After the first round of the epidemic at the beginning of last year, strong risk aversion caused stock prices to plummet and bond interest rates fell sharply. However, after the recurrence of the epidemic, the volatility of the stock and bond markets has significantly weakened, and stock prices and interest rates have sometimes even increased, reflecting that the recurrence of the epidemic may not necessarily be the core contradiction that drives the market.
　　The more complicated and long-term consequence of repeated epidemics is to bring expected instability to micro-subjects. After repeated repetitions, the uncertainty of residents’ employment and income has increased, and the precautionary savings motive has risen accordingly. In addition to household income factors, the willingness to save still constrains the rate of recovery of consumption. After each wave of epidemic disturbances subsides, although consumption has rebounded, the rate has gradually weakened.
　　Under the expectation that the epidemic will “continue” and the service industry will bear the brunt of the “interruption”, the willingness of service industry companies to expand capital expenditure is bound to be impacted. Unlike industry, the impact of the recurrence of the epidemic on investment in the service industry may not be less and less. After each wave of the epidemic has weakened, the magnitude of the rebound in service industry investment has become weaker and weaker.
2. Basic conclusion

　　First, the epidemic will fight back, and the economy will inevitably suffer. However, judging from the repeated history of the past few rounds of the epidemic, its impact on economic growth has shown a diminishing degree, and its impact on the financial market is gradually weakening. The reason may be related to the increased awareness of the virus from all walks of life and its proficient response.
　　Second, the more complicated and long-term consequence of repeated epidemics is to cause instability in the expectations of microscopic entities. On the one hand, it is difficult for residents to reduce their preventive savings and consumption to return to normal after repeated repetitions; on the other hand, the service industry is often forced to be interrupted, making relevant investment unsustainable, which is a drag on overall investment.
　　The third is to look forward to the future, and the rapid interruption will make the spread of this round of epidemics likely to be controlled in the near future. After a short-term shock, the economy will still return to a logical operating track determined by more “non-epidemic” variables. However, strict precautions may be the norm under repeated epidemics, indicating that the return of the economy to normal will be a prolonged process.