And again at Bloomberg Clive Crook warns that the economic contraction that just about everybody is expecting is not likely to be the V-shaped recession that had been hoped for:
It was clear from the start that the coronavirus slump was a strange kind of recession. Some economists even thought “recession†was the wrong word. The setback would be brief and severe, many believed, a deliberately induced shock to the supply side of the economy. But within a few months and before much lasting damage was done, governments could lift the restrictions and switch their economies on again. Output would quickly surge back. The path through the emergency would be V-shaped — not U-shaped, much less L-shaped.
This is no longer plausible. Some countries have begun easing restrictions and letting some of their businesses start up again. Others are getting ready to. But they’re moving cautiously. They’ve found that even very strict controls have only slowed new infections, not stopped them. If they ease too much, there might be new waves, maybe worse than the first, and they’ll have to put lockdowns back in place. Governments are being advised that some restrictions might be needed indefinitely, until a vaccine is available and widely deployed.
As I’ve pointed out before, especially but not exclusively in the case of small companies, the “stay at home” directives have been deathblows. For them there will be no recovery and a large business recovery isn’t much like a small business recovery. They won’t hire new workers to take up the slack.
The greatest likelihood is that any recovery will be long and painful. If you’re in your 50s or older, your plans for your old age may be permanently disrupted. Nothing you were depending on will be worth as much as you were expecting.
There is potential for economic growth, mostly in primary production and re-onshoring some supply chains. The biggest help that will be needed for that are regulatory relief and assistance in meeting the environmental standards we’ll want to keep in place.
We’ll need to re-engineer SSRI, too. More people will be more dependent on it than had been expected. Don’t be surprised if this year’s Trustee’s Report is delayed and, when it finally arrives, has some unhappy surprises.
And what about the COVID-19 profiteers? I’m thinking particularly of large retailers with robust online presences whose sales have actually increased? And whose workers have been kept on the job despite the risks as “essential”? Or companies much of whose profitable business has been in web services? But I repeat myself.
In states like Illinois, California, and New York, “essential” means merely “politically connected” (to Democrats). This means any government agency and large, unionized corporations. Medium and small businesses without political connections are “unessential,” by definition.
A lot of the shutdowns and non-shutdowns have been stupid in the extreme. The worst was Cuomo and De Blasio’s decision to keep open the NYC subway. That undoubtedly was a major contributor the the NYC disaster.
Fortunately, Trump has intervened to stop the food processing plant shutdowns. If that had happened, there would have been wide-spread food shortages this fall. As it happens, southern NH is experiencing food shortages now. That is largely because the Salem, NH, are is a major shopping center not only for southern NH but also northeast MA, including even Boston.
PS. Thanks for the edit function. I don’t know how many times I’ve left nonsense on this site. (Yeah, yeah, I know.)
It may not be obvious but I read every comment left on this site. And I’ve wanted to add a comment edit capability for years.
My assessment is that governors and mayors have tried to navigate a path between doing something in response to COVID-19 while avoiding too much pushback. Shutting down the subways would have gotten too much opposition so it was not deemed politically possible.
Agree with above Dave. To that I would add that since we have not gone through this in modern times no one really knows with 100% certainty exactly what we need to do. You follow the best advice you can find and then adjust for local conditions. By and large I think that most of the governors have done OK. I would have preferred that NY close earlier. I am a bit concerned that GA is opening while death counts are still increasing, but I am not getting rabid about it. There is no playbook for re-opening.
Locally, we are now fully committed to re-opening. It will take a couple of weeks to move everything back and get it working properly. A lot of rescheduling. So far, it looks like our number one problem is going to having enough number of tests. There is some literature which supports the idea that if pts have Covid their outcomes are worse if they have a procedure. So we plan to test everyone having procedures and if they are positive delay their procedure. The literature is not so clear for medical admissions so still not sure if we test all of those. Covid has such a wide spectrum of symptoms at presentation that I think we will end up testing everyone, if we can get enough tests available.
Steve
We won’t. We wouldn’t have enough tests available if we dedicated our whole society to it. It would mean testing all 7 billion humans repeatedly possibly forever or else completely sealing our borders and we won’t do either.
The clotting/stroke issue is extremely troubling since it appears to strike a much younger age group. Since that still seems to constitute a subset of those with the disease we really need to dedicate resources to identifying any factors contributing to those symptoms.
There is a difference between testing all hospital admittances and testing everyone in the population at large.
Nosocomial transmission is a special risk factor for so called “super spreader†events that should be addressed.
On Governors — I am of the mind many emphasized the actions that were most visible vs the ones that could be most effective.
Unless a state is below the world average — I do not see how a response could be viewed as a relative success. 11 states meet that bar today.
We’re living in times in which there’s really no comparable to use as a historical template. Instead, we are faced with an array of variables in which any prophecy is primarily based on speculation.
Just trying to understand this virus is dumb founding: how virulent or docile is it; it’s relationship to our immune system, and how it reacts to T cells; will it mutate, come back in a 2nd wave; what is the probability of reinfection; and why do people’s reaction to it wildly vary – ranging from asymptomatic to massive blood clotting and organ shut downs. In the midst of wading through all of these unknowns are Herculean efforts to find quick ways to mitigate the course of this virus, while numerous attempts are being made to concoct a reliable vaccine. Then add in our unprecedented nation-wide shelter in place edicts, slamming the brakes on so many people’s livelihoods, attached with an uncertainty as to it’s end point, further emphasized by the magnitude of people’s fear towards social mingling, now or how much of it will remain in the future. How then can one possibly predict, with any plausibility, what the return to some form of “economical normalcy†will look like – whether it’s a V, U, or, L? Oh yeah, then there’s that little event, called a general presidential election, awaiting us, which only seems to be elevating political jousting, gamesmanship, and mean spirited R & D exchanges, rather than what is needed – cohesive cooperation – during today’s trying times.
The homeless have shouldered the burden of closing the subways. They call police but police prudently won’t touch them.
The tests they have now they believe are about 66% accurate and change day to day. If you display cough and low fever but test negative, you are “presumed positiveâ€.
We’re still flying blind in a viral snowstorm as far as I can tell.
Wow! I’ve never seen this form of timed editing before! Fascinating……
By the way; how things look will depend on the sector.
Things like barbershops; lawn care; child care will see a V type recovery. Restaurants, sports, will see a U type recovery. Commercial real estate could suffer an L depression. And things like teleconferencing, telemedicine, online learning will enjoy hyper-growth.
Yeah, online gaming, gambling, ESPN Classic reruns.
I worry in a larger sense about younger service sector workers who were already not doing well at all, soon to be behind on all their bills. They can’t catch up unless their parents die of the virus and leave them something.
Remdesivir:
“In Gilead’s study, 62% of patients treated early were discharged from the hospital, compared with 49% of patients who were treated late, the company said in a press release.”
This is what a thin reed of hope the stock market climbs 500 points on today.
Think the Nike swoosh. Deep, then a slow slog up. Too much damage done for a V. And if you believe in L’s then put an application in with Anthony “Dr Henny Penny” Fauci, the little bureaucratic prick.
On Fauci — if Trump wins reelection, Fauci is the person who saved his Presidency.
Listen to Fauci’s remarks, https://www.youtube.com/watch?v=yvBiU3rD6uc — he really brings the context of what at first glance is modest results. Remember, it was 6 years to the first anti-virals for HIV and another 10 for the combo therapy. This first drug took 4 months.
Well, CO, according to a recent prediction of yours, why even bother speculating about Trump’s reelection, as the “democrats are going to win in a landslide.â€
As for Fauci’s role in how this pandemic plays out – some might consider him an “asset,†while others see him as a stone-in-one’s-shoe, in efforts made to ease into any economic recovery, and thus hardly saving Trump’s presidency.
I think it’s going to be a lot more complicated than that. Most small outfits operate on extremely tight margins. If they have regular expenses (like rent or dues), they’re going to go bankrupt. They’ll never dig their way out.
They just can’t afford to lose a month or two’s business while their expenses continue to mount up. Additionally, their customers can’t necessarily continue to pay them.
There will be thousands, maybe tens of thousands, of small apparel companies that go belly up. They depended on supply chains that extended into China. They haven’t received product in weeks or months and their customers aren’t operating.
They maximized visibility while minimizing pushback. They avoided angering the public employees’ unions but were fine with imposing sanctions on everybody else.
I guess you could gratuitously divide different shapes of recovery by business types. However, one common denominator will be the size of each business, and how old and seasoned their business is. Smaller businesses are run on more day-to-day revenue. Once that comes to a sudden halt there is usually less of a cushion to survive on. This is especially true if someone is trying to operate a relatively new enterprise, which they are just getting off the ground.
Also, adhering to scientific evidence, fueled by speculative computer modeling, in solely gaging when businesses are allowed to function again, seems to be a sure fire way to crush livelihoods, creating tons of bankruptcies in the wake of these rigid mandates. However, why then do the governors of NY and Illinois seem so shocked when it‘s suggested their states might have to declare bankruptcy, in lieu of mounting budget deficits – despite many of those shortfalls being due to corruption and/or prior mismanagement of their revenues? What this is implying is it’s ok to sacrifice the little guy, while, at the same time saying it’s imperative to intervene, sparing the big spending states from going under, which perhaps would provoke some self-reevaluations about their impossible short-sighted fiscal practices.
The comment about the landslide was partially in jest — but my honest opinion is Trump and the GOP are distinct underdogs right now.
That the chances is actually > 0 is probably Fauci’s credit.
The New York Times reported Fauci convinced Azar to order the FDA to expand testing by bypassing the CDC in late February.
If Fauci was not there and the FDA sat on their hands for another week, the causalities would have been 2x-4x what we have seen. And reopening would not be possible until June / July.
I don’t think you can. There’s an old rhyme:
Great fleas have little fleas upon their backs to bite ’em,
And little fleas have lesser fleas, and so ad infinitum.
That’s how the economy works. However they might chafe at it big companies are dependent on little ones and vice versa. If little companies don’t recover, neither will big ones.
Fauci should be shot. Its too bad the unemployed and bankrupt can’t sue him. Dave pointed out recently that Presidents need to temper their remarks. So should Fauci. He is narrow and irresponsible. He is no asset; he’s Debbie Downer. And who is he beholden to??????? Can you say BigPharma………
Separate and apart, I think it is a no brainer that different sectors will have different experiences. I have not taken the time to enumerate our various companies and their realities. Vastly different. Nor have I done anything but note that various lenders, IB’rs etc have told us their war stories. Hundreds of companies all totaled. A million stories in the naked city. But in aggregate, think swoosh.
As an aside, I just bought a Trek FX3…………………because Trek and the bicycle shops cant keep up. I found one in Savannah, and bought it on the spot. Everyone is out of stock. I found gold. Those folks are experiencing a boom. Your favorite family restaurant…..not so much.
Talk is of opening restaurants at 1/4 seating capacity. They will lose more money, utilities and rent are the same.
They need mealtime peak volume to make it.
Drew, You are a brave man to make such a candid statement about Fauci. Most people, especially among the intellectual crowd, think he is a science guru, not to be questioned, only touted in the infectious disease realm. However, I’m always leery of such idolization. In fact “to error is human,” is a more down to earth evaluation of most “experts” in any field, including Fauci and Birx.
Also, from my way of thinking, Fauci was not exactly spot on in his participation and predictions dealing with the HIV epidemic. His dutiful loyalty to computer modeling, joined by the simple fact he is not a hands-on professional, having been absent for decades in the patient care arena, lends an even bigger margin of error to what he says about anything. So, IMO, operating from only theoretical assumptions has it’s limitations in accurately assessing real time events as they relate to real people. This has been proven in how radically “off” most of the COVID-19 models were, including the currently used IHME model, which has undergone numerous data revisions, while the shelter in place mandates, for so many areas, either remain in place or demand ever stricter guidelines to be adhered to by the populace..
“We won’t. We wouldn’t have enough tests available”
I was referring only to the subset of people being admitted to the hospital.
CO- Agree with you on Fauci. He was one of the few people telling the truth and actually looking after the best interests of Americans. Trump provided little leadership, especially at the start. Without Fauci we lose thousands more AND still have economic problems.
” I am of the mind many emphasized the actions that were most visible vs the ones that could be most effective”
What would have been more effective? Be specific. Look at Sweden. They did pretty much what you want. They have twice as many deaths as their neighbors and still have their economy sinking.
Steve
Restaurants determine their viability based on the average check times the number of tables times the number of times they can turn the tables around. Cut that in four and I doubt that 10% of restaurants could make it. That’s probably particularly true in high rent places like New York City ($75-$2,000/sqft) and San Francisco ($25-$100/Sqft).
(a). Centralized quarantine
(b). Mandatory screening of travelers from out of state
(c). Special regulations for care facilities (like sending confirmed cases to a special facility, or bans against working in multiple care facilities)
(d). Preventing mass transit from being cut due to reduced demand (because less mass transit = harder to do social distancing)
All those things would be more effective at limiting spread then say — closing state parks.
Is that specific enough?
We dont have enough facilities for C. We dont have enough staff to do that either. Would we include truckers bringing stuff in across state lines for B? I dont know if this would be effective but I think it destroys the economy pretty fast.
I think central quarantine actually has some merit, or do the South Korean version where they give you a big box of food then have inspectors check on you frequently. Dont think it is politically viable.
State parks. Ok, I know some states did that but who really thinks it was a good idea? I certainly wasn’t advocating for it.
Steve
Considering the amount of resources it costs to have a lockdown, my guess (c) is an order of magnitude cheaper.
(b) — yes, they should screen truckers too.
What about centralized quarantine is not politically viable; citizens in Singapore / South Korea / Hong Kong / Taiwan are pretty attached to their civil liberties too.
Why C has merit: In NY the Comfort and Javits Ctr had over 3000 extra beds available (along with medical personnel) to care for the elderly, those testing positive for or undergoing medical treatment for COVID-19. In Los Angeles the Mercy was docked here with available medical space for older vulnerable patients, rather than putting them back in a convalescent setting. But, both coasts did not avail themselves of these services, while both CA and N.Y. showed high infection and mortality rates of nursing home residents. In fact, Gov. Cuomo created a directive in late March, mandating COVID patients be cycled back into nursing homes. If this had been a presidential memo, with similar instructions, it would have been deemed impeachment-worthy by the Dems, for sure.
Here in CA, Gov. Newsom and Mayor Garcetti seem to relish imposing and extending emergency powers heavily regulating, businesses, closing all parks and beaches, enacting surveillance over people to dutifully wear masks and exercise proper social distancing. The same mandatory restriction are also applicable to northern CA counties where many have low infection rates with. mortality numbers in single digits. Nonetheless, all beaches, parks, parking lots, walking trails, restaurants, churches, businesses, hotels, vacation rentals are shut down, and literally in the process of killing these smaller coastal communities. I can’t help but see these CA leaders as evolving into totalitarians.
Well; given 40 governors have death tolls above the world average — it is a bipartisan failure.
Maybe we should reframe it as an opportunity. The first governor who can control an outbreak (bring it down to 1 case per million per day) is likely to be a lead contender for the Presidency in 2024 or 2028. Is anyone going to go for it??
“In fact, Gov. Cuomo created a directive in late March, mandating COVID patients be cycled back into nursing homes. If this had been a presidential memo, with similar instructions, it would have been deemed impeachment-worthy by the Dems, for sure.”
I am sure that you have talked with your nurse and doctor friends in NYC about this. I am sure you must have co-workers who went to work in the NYC ICUs. Should ask them their opinion on this. It was a tough call and may have been the wrong one, but there were none of those extra facilities opened on 3/25 when he made the order.
“Considering the amount of resources it costs to have a lockdown, my guess (c) is an order of magnitude cheaper.”
Much more than a magnitude, but it would require spending money before the pandemic. Wont see it happen.
Steve