Federal Reserve economists have released a paper warning that the global pandemic's economic damage could cause long-term changes in what we believe and how we behave, which could hamper growth even after the virus is under control. Specifically, the economists warned of a "scarring effect," that is, "a persistent change in beliefs about the probability of an extreme negative shock" to the economy. For example, in 2008 many seniors who'd lived through the Great Depression reacted by taking their savings out of banks, fearful that their money would disappear as it had then.

Using complex economic modeling, the paper concludes that behavioral scarring from the pandemic could "induce a long-run drop in GDP of about 5 percent" over a time period marked in generations (the charts on page 22 literally go to the year 2100). The report noted that the pandemic so far has led to a 6 to 9 percent GDP loss projection, but "the cost of belief scarring is five to six times as large," and "the cost of obsolete capital is about four times as large as the damage done during the pandemic."

"Our point is not that these are the right forecast of the coming year's events. The point is that whatever you think will happen over the next year, the costs of this pandemic are much larger than your short-term calculations suggest."