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Pedestrians are reflected in a window showing barstools put up on a table of a bar closed because of the COVID-19 pandemic Tuesday, April 21, 2020, in Nashville, Tenn. Some of Tennessee's biggest cities are not making promises about starting to reopen their economies by Gov. Bill Lee's goal of May 1, saying they are going to let data, not dates, dictate their roll-outs. (AP Photo/Mark Humphrey)

As states prepare to reopen their economies, much of the focus lies on the risk of a COVID-19 resurgence. But a University of Tennessee economist warns that consumer confidence is another important factor that leaders should consider.

"If people don't feel comfortable leaving their houses, and we don't actually get any economic activity out of the reopening process, then we're intensifying the economic crisis," said Marianne Wanamaker, an associate professor of economics at the University of Tennessee and a research associate at the National Bureau of Economic Research.

Wanamaker said the importance of consumer confidence reinforces the need for a community testing strategy that's not just focused on finding sick people.

"One of the things that economists have been saying all along is that the purpose of test and trace is not just to point out where the problems are, but also to point out where they are not, and to reassure consumers that it is safe to leave your house," she said.

Since Hamilton County wasn't an initial COVID-19 hotspot, much of the state's testing materials were directed to other cities, such as Nashville and Memphis. The county only recently began widespread community testing and testing people without symptoms.

Without robust testing data, local officials have relied primarily on hospital capacity data to indicate the severity of Chattanooga's COVID-19 outbreak.

Wanamaker said the problem with hospital occupancy data is that it's a delayed measure, since by the time people show up in the hospital they may have had COVID-19 for 10 to 14 days.

"The benefit of the testing process is that it lets you catch it several days early and take action, and what we've seen is that in this crisis, everyday matters," she said.

Michael Cembalest, a top J.P. Morgan economist who has been studying the COVID-19 pandemic, said in a new report this week that although the United States shows "substantial improvement" in controlling COVID-19 compared to a month ago, few states passed his "litmus tests" for reopening their economies.

"There have been a wide range of proposals for reopening the U.S. economy. The most common features involve litmus tests on reduced spread of COVID and the ability to care for sick patients without any rationing of healthcare equipment, beds or physician care," Cembalest wrote.

The White House announced general guidelines on what constitutes reduced infection, but exactly how that might be defined by individual states remains to be seen.

Wanamaker said the "percent positive rate" is becoming a popular metric, because it's more sensitive to the number of people tested. For example, communities that are only testing people who are sick will have a higher positive rate.

Cembalest's report found that both Georgia and Alabama "passed" one litmus test because they showed more than a 2% decline in the percentage of positive cases over the last two weeks. However, Wanamaker cautioned that a decline in the percentage of positive cases in Georgia — which went from 26.2% positive to 22.6% positive — could be a sign that the epidemic isn't well controlled. By comparison, Tennessee fell from 7.8% to 6.8%, and Alabama went from 14.2% to 10.8% in the past two weeks.

"There's an argument to be made about using the change in that rate as a signal of the decline, but I also think even if it's declining, if it's still high, you probably don't want to take that as a 'pass'," she said.

As part of its own litmus tests, Wanamaker said Nashville is emphasizing comprehensive testing and tracing programs, and maintaining a two-week stockpile of PPE for medical professionals.

"If at any point they get below a two week stockpile, then they'd have to go backwards," she said, which also has implications for businesses reopening.

"Businesses themselves are going to start to demand products that are useful in hospitals, such as surgical masks and thermometers and etc," Wanamaker said. "So now you've got the private sector and the health care sector competing for the same supplies, when we know that PPE supplies are still an issue. The same is true for cleaning supplies.

"All of these shortages that appeared in the first part of the shutdown are going to become much worse when you try to reopen businesses."

Contact Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.

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