We’ve pointed out that too many people don’t want to face up to the fact that conflict between the inevitable force of the coronavirus and the seeming immovable object of our social and economic systems, the coronavirus is in charge. That won’t change until we have a vaccine, which will either take quite a while or will never be attained, or we have treatments that reduce the severity of the disease.
This is a pretty depressing state of affairs, and most people are not wired to confront depressing truths. Even yours truly, who has a dour nature and is also in a lot of ways not badly impacted by the lockdowns (once you factor out how it’s increased the difficulty of dealing with the care of a 92 year old), is feeling pretty down. It seems to be mourning for the loss of the way things used to be.
But it appears instead that many Americans are resorting to magical thinking, that if we just end the lockdowns, things will go back to status quo ante save some nursing home residents croaking early. That’s just not happening. The results of a survey of 23,000 people in 50 states and the District:
93% of Americans do not think the economy should reopen immediately. https://t.co/kBvS6R1jxG
— Barry Ritholtz (@ritholtz) May 4, 2020
Members of both parties think a wait of at least another month in relaxing restrictions is in order.
The lack of a meaningful decline in infection and death rates has registered on the the great unwashed American public. Bloomberg reported that cases rose 2% over the past day, and tried to put a cheery spin that that was lower than the average daily increase of 2.6% over the previous week. But plateauing or only growing slowly from a pretty high level isn’t an happy story. Lambert featured this chart yesterday:
Well that’s a fascinating way to present it… pic.twitter.com/zwIFMyzGoN
— Scientists for EU (@Scientists4EU) May 3, 2020
And Americans are getting more evidence that the virus won’t be leaving us any time soon. And there’s every reason to expect infection rates to rise. The Hill:
New internal projections from the Trump administration suggest U.S. deaths will grow on a daily basis to 3,000 by the beginning of June, weeks after states have begun reopening their economies.
The startling figures from models produced by the Centers for Disease Control and Prevention (CDC) come as more and more states take steps to remove social distancing measures meant to slow the spread of COVID-19….
But lifting the measures could lead to more cases and will raise fears about a second wave from the virus.
The Administration tried denying the report, but who are they kidding? For those paying attention, StatNews had already provided sobering intermediate-term scenarios:
As epidemiologists attempt to scope out what Covid-19 has in store for the U.S. this summer and beyond, they see several potential futures, differing by how often and how severely the no-longer-new coronavirus continues to wallop humankind. But while these scenarios diverge on key details — how much transmission will decrease over the summer, for instance, and how many people have already been infected (and possibly acquired immunity) — they almost unanimously foresee a world that, even when the current outbreak temporarily abates, looks and feels nothing like the world of just three months ago.
It is a world where, even in Western countries, wearing a face mask is no more unusual than carrying a cellphone. A world where even at small social gatherings a friend’s occasional cough feels threatening, where workplaces have the feel of hot zones, and where taking public transit is not as much environmentally correct as personally dangerous….
In one future, a monster wave hit in early 2020 (the current outbreak of millions of cases and a projected hundreds of thousands of deaths globally by August 1), but is followed by alternating mini-waves of much smaller outbreaks every few months with only a few (but never zero) cases in between….
In the second scenario, the current monster wave is followed later this year by one twice as fierce and even longer-lasting, as the outbreak rebounds after a summer when a significant drop in the number of cases and deaths led officials and individuals to let down their guard…After this doubly disastrous second wave, the sea is almost calm, marred only by an occasional wave of cases that number barely one-fifth of what the fall and spring of 2020 saw.
In the third possible future, the current wave creates a new normal, with Covid-19 outbreaks of nearly equal size and, in most cases, duration through the end of 2022. At that point, the best-case scenario is that an effective vaccine has arrived; if not, then the world experiences Covid-19 until at least half of the population has been infected, with or without becoming ill.
What all three scenarios agree on is this: There is virtually no chance Covid-19 will end when the world bids good riddance to a calamitous 2020. The reason is the same as why the disease has taken such a toll its first time through: No one had immunity to the new coronavirus.
And if that isn’t grim enough, you’ll see that these takes assume that getting the coronavirus confers reasonably good immunity, and getting to over 50% of the population having gotten sick will dampen the spread. That conveniently overlooks the notion that the uncontrolled R0 is over 5, which implies that much higher infection levels are needed for new cases to fizzle out.
That 93% who want longer lockdowns means even those who really want to engage in some activities they miss, like getting a haircut, going to a gym, or even going out to a bar or coffeeshop, are going to feel queasy about it. It’s not going to be all that relaxing or fun. The Wall Street Journal provided some tips in Safety Advice for Reopening: How to Reduce Your Risks as Coronavirus Lockdowns Ease, such as:
So the safest move for most people is still to stay home as much as possible. But if you do go out, there are ways to reduce the risks. Here’s what the experts say….
At the Hairdresser or Barbershop
Check out those YouTube tutorials, because Dr. Poland urges people to postpone trips to the salon until there’s more evidence that community transmission of the novel coronavirus is very low. Dr. Kuritzkes concurs. “It’s going to be basically rolling the dice and hoping the person doing your hair hasn’t been recently exposed by another client or somebody in their neighborhood and is shedding virus.” He notes that some research has found that people are most contagious in the two or so days before they exhibit symptoms of Covid-19.
If you do go to the hairdresser or barber shop, Dr. Milton says because “people are going to be really close for an extended period of time,” it is important that both client and professional wear masks. Dr. Kuritzkes says that it probably is safer to have your hairdresser make a house call (if he or she is willing) and cut your hair outside in your backyard.
That means that even those who start re-engaging in “normal” activities are likely to do so selectively, yet another damper on getting back to former spending levels. And it goes without saying that trying to make businesses safer almost always has adverse financial effects. From the Financial Times:
A second wave of job losses could hit developed economies even when governments begin to lift lockdowns, as businesses reassess their ability to operate in an era of continued social distancing, economists have warned….
So far, policymakers have focused on supporting businesses to survive a short-term drop in revenues, while funding them to keep furloughed employees on their payroll. This was meant to help prevent workers from falling into long-term unemployment, while allowing companies and the wider economy to return to full capacity quickly once restrictions were lifted…
Now most economists expect the short-term hit to GDP to be larger, and the recovery more drawn-out, than governments had initially hoped.
“The recovery will be slow, the adjustment will be long and not without pain, for people and businesses,” said Andrea Garnero, a labour market economist at the OECD. “All public spaces will have to be rearranged and I am not sure we will rush to a spending spree as soon as the lockdowns are lifted.”
Mobility data from US states suggested that with or without mandated lockdowns, people would not resume normal activity until the health issues were solved, he added.
The evidence of deep, lasting damage to the economy is overwhelming. The biggest tell is that Warren Buffett, who is famously cool-headed and prides himself on buying into good franchises on the cheap during crises, not only says he has nothing to buy but actually engaged in distressed selling of airline stocks….meaning even the Sage of Omaha decided to cut losses rather than hope things might eventually come back. And while the “nothing to buy” comes in large measure from Treasury and Fed handout meaning that big companies don’t need the need to come to Berkshire Hathaway for rescues, it also means that Buffett doesn’t deem any sectors to be oversold.
You can’t handwave away over 30 million unemployment claims…and that doesn’t include idled gig economy workers. Many are losing their livelihoods and can’t fall back on wealth, subsistence farming or a “must have” skill. Railing against injustices like unwarranted foreclosures and young people drowning under student debt burdens seems quaint compared to the collapse or radical contraction of entire swathes of the economy: restaurants, entertainment, hotels, car rental, airlines, gyms and personal trainers. And that’s before you get to the knock-on effects of the not-so-badly off reining in their spending out of caution or because there’s less reason. For instance, BBC had a piece on a young professional who returned all her recent workplace wardrobe buys and procured upscale but still cheaper sweats in their place. Similarly, a one-time road warrior who spoke at and attended conferences in the US and abroad, says the confabs are still being held, on Zoom. This lawyer doesn’t seen these events coming back to anything resembling their former scale, even if coronavirus is conquered. New habits and budgets are being set and they’ll be hard to displace. Another contact, with a mid-sized manufacturing business with NASA and top automakers as its customers, says revenues have collapsed to one-fifth of former levels.
The path back to something dimly resembling normalcy is even more difficult in countries hard hit by coronavirus. Take a look at this short BBC video from Naples, ‘It would be better to die’: Italy’s lockdown cost. Stop and go lockdowns could eventually do as much economic damage as Italy’s protracted shutdown has.
A selection of corroborating stories today:
VW warns of rising costs as car market faces deep recession Financial Times
Hertz Prepares to File Bankruptcy If Monday Deadline Is Missed Bloomberg
United Air to Cut at Least 30% of Managers, Administrative Staff Bloomberg
People want to save their jobs, their businesses, get out of the house, have a beer with their friends. But even the young aren’t immune. While their hospitalization rates are lower, some seem unable to shake the bug and remain severely ill for weeks. Doctors regard the level of serious cases among health individuals in their 20s and 30s to be troublingly high. From Business Insider:
Doctors on the front lines say they’re astonished at how many relatively young people are becoming severely ill from the novel coronavirus….Stories of young people getting sick and even dying from the novel coronavirus are becoming common….
But in a hospital on Long Island, the ICU has patients in their 20s, Dr. Dixie Harris, an ICU doctor who flew out from Utah to help with the crisis, said. It’s somewhat unusual to care for so many young people, and doctors feel extra pressure to find ways to help them recover, she said.
And the press isn’t helping. There’s way too much vaccine boosterism, for instance. There may never be one worth a tinker’s dam if getting sick confers little or only short-term immunity. And “twelve months to eighteen months” to get one even if there is one is on the wild side of optimistic given how long clinical trials typically take and the history of safety issues with early vaccines (as in there are bona fide reasons the process takes as long as it does). If you want to give the anti-vaxxers a shot in the arm, rushing a vaccine out the door is a prime way to do it.
Having said that, there’s a cheery story tonight on a new antibody reported to block SARS-Cov-2, which therefore would make for an effective vaccine if all pans out. But if I read this correctly, the researchers are at the petri dish stage.
So it’s not just the general public that reacting to news skewed toward the upside. So is Mr. Market. From Gavyn Davies in the Financial Times:
According to a very interesting analysis by Zach Pandl of Goldman Sachs, the equity markets are assuming that the storm will blow over very quickly, with GDP growth rates being higher not lower than normal in 2021. On that basis, equities do not look particularly overvalued.
However, Mr Pandl adds that this outcome would be unique among recent recessions in the country. In a normal cyclical downturn, predictions for GDP growth are reduced in successive years once a recession becomes inevitable. This is particularly true in the second year after the recession starts, suggesting no early bounceback to previous peak activity. The decline in output becomes persistent, not a springboard for recovery.
The use of the “r” word seems awfully cheery. Nouriel Roubini, despite his write-up being scattered and unduly worried about public debt, seems closer to right order of magnitude with The Coming Greater Depression of the 2020s.
Robert Reich points out that the way Trump is setting out to end the lockdowns will cause more deaths…which, as we pointed out earlier, will put a dent in consumers’ willingness to gad about and spend. From the Guardian:
Trump’s labor department has decided that furloughed employees “must accept” an employer’s offer to return to work and therefore forfeit unemployment benefits, regardless of Covid-19….
Forcing people to choose between getting Covid-19 or losing their livelihood is inhumane. It is also nonsensical. Public health still depends on as many workers as possible staying home. That’s a big reason why Congress provided the extra benefits….
Trump is pushing to give businesses that reopen a “liability shield” against legal action by workers or customers who get infected by the virus.
This week, he announced he would use the Defense Production Act to force meat-processing plants to remain open, despite high rates of Covid-19 infections and deaths among meatpackers…
The Senate majority leader, Mitch McConnell, insists that proposed legislation giving state and local governments funding they desperately need must include legal immunity for corporations that cause workers or consumers to become infected….
But how can the economy safely reopen if companies don’t have an incentive to keep people safe? Promises to provide protective gear and other safeguards are worthless absent the threat of damages if workers or customers become infected.
Normally we reserve Antidotes to Links, but this post is so gloomy that it seemed necessary to offer some relief. I must confess that I don’t relate to this sort of thing, but I anticipate many of you will (hat tip Dr. Kevin):
A feel-good story (hat tip dk) on thanking USPS carriers (Threadreader version here):
Emerson, my 11 year old, is on a bit of a wild ride with the @USPS and our local mail carrier, Doug.
And, I think there’s a deeper message to it all.
First, the backstory…
— Hugh Weber (@hughweber) May 2, 2020