1. This week's 6.6M new jobless claims represents ~4% of the estimated ~160-165M US Workforce.
2. This is incremental to the 3.3M new jobless claims filed week ending 3/21, totaling ~10M total jobless claims in the past 2 weeks.
3. The US unemployment rate was ~3.5% as of EOM February [1], so cumulatively that means we've hit ~10% unemployment as of EOW 3/28 (~10M incremental jobless claims = ~6%). That number is likely low and continuing to increase, as new jobless claims do not account for gig workers and many state unemployment sites have been inundated by these claims resulting in site crashes and people unable to file claims. In addition, layoffs have almost certainly continued between 3/28 and today.
4. The consensus estimate for this week's jobless claims was ~3.76M jobless claims, and the 6.6M actual claims blow the consensus estimate out of the water. That said, some analysts such as Goldman Sachs had estimated ~5.5M joblesss claims. Goldman Sachs estimates that unemployment will peak at ~15%. [2]
I'm also hearing this morning that we've hit the 10% mark. I also heard the same economist say "The economy is collapsing, and it's a global collapse". I don't even need coffee to be alert the rest of the day...
Not really, sadly. I just heard him on an internal conference call we have twice a week, so don't really have a link to provide but don't think he's published his views in writing just yet. I expect a lot of similar predictions to come out now that the unemployment claims number is out (as of ~1 hour ago)
For general views of very smart people on the economy and markets, I recommend Bloomberg Surveillance every morning on the Bloomberg app, radio and on your favorite podcast app
This kind of info usually circulates in the corporate world for a week before it hits the wider media zeitgeist. My company has been holding weekly analyst briefings on what to expect.
Right now, the sources I have say to expect to be WFH and "socially distanced" until July or August at the earliest. Restaurants will probably start slowly opening back up around then, but conferences or sporting events are going to be cancelled through at least the end of the year. A single sporting event or conference can lead to thousands of new infections, so none of that stuff is coming back for a long time.
Past that, we were told to expect 3 waves of economic pain: one right now when everyone loses their job, another big layoff cycle in 3 months once companies that can WFH start to adjust for structural changes, and a third wave near the end of the year after people start to seriously curtail consumption in response to the first two waves and global demand falls off a cliff.
This information has been getting priced into the market for a few weeks, so none of it is new. But these numbers are just starting to hit the wider media and your average American is starting to panic because we're looking at a decade or more of hurt before this is all over.
Great info (and scary), thank you. Is this based on assumptions that have a decent potential to not hold true, like e.g. lack of vaccines and adequate testing? Or does this assume those will happen in the next (say) ~year? And would you know if there are predictions on whether e.g. housing prices might fall?
I'm more pessimistic in the short term than this (particularly for the US, which still doesn't have a national lockdown), but more optimistic in the long term.
Despite our best efforts, this thing is burning through entire populations, and will do so quickly (within a couple of months globally, except some places in asia who escaped the first wave but are now seeing more). Every active person leaving home is going to be exposed in short order, thus infecting their household, and even in lockdowns people need to eat. Almost every country waited too long to lock down, and large countries still haven't effectively done so.
The downside of that is a horrific global death toll (1 million confirmed cases this month, maybe 10 million infected? megadeath next month?). The upside is that we will at some point reach herd immunity and/or develop and manufacture a vaccine and economies will restart.
Looking at Italy I find it hard to believe that almost every household has not been exposed by now - all it takes is one infected during the lockdown and the entire household gets it. Their new cases are declining and their deaths are flat already.
There will be substantial economic damage but I think the recovery may be quite fast as there will be a clear cause which has been addressed (probably by a rushed vaccine currently in trials - there are lots globally). I don't believe a lockdown of more than 2 months is acceptable to most, even with a 1% risk of death, and such lockdowns require the consent of the population to function.
"Every active person leaving home is going to be exposed in short order"
This virus is not transmitted via magic. Even basic precautions lower the transmission rate considerable. Most places are now taking precautions that are far beyond basic.
Most places are seeing increasing rates of infection, even in spite of extreme measures. I'm not suggesting it's magic, just that it's more infectious than a common cold, which is pretty hard to avoid in winter where I live at least.
I agree that could be worded better (I'll leave it up since you've replied), but I meant it's hard to avoid if you're going shopping every few days - people are not good at infection control and many are pretty much asymptomatic for a long period. Lockdowns are controlling the rate of spread, not stopping it, despite best efforts, and will I suspect be released after a few months for that reason - because it has infected > 50% anyway and those people are allowed out after testing.
Unfortunately, it's really, really hard to say anything concrete about the transmission rate. Testing is different everywhere, and usually far too limited, and we know there are a lot of asymptomatic cases. But, if we accept some big caveats, it certainly looks like the transmission rates in locked down regions are dramatically reduced. People are still going to the store, ordering food delivery, going for walks and jogs, etc. A big chunk of people are actually still going to work everyday for essential services. But nonetheless, transmission appears to be way down, even in Italy, which had one of the worst starts of any country.
Yes sure, probably we won't know much concrete till well after this is past.
I'm encouraged by the progress in Italy, but don't see how you can avoid having most of the population catch this in the long term without a vaccine. It appears to be very hard to control even with really draconian quarantines which only have an impact after weeks and cannot realistically hold for more than a a few months, esp in poorer countries. I'm not saying don't quarantine, it's essential to avoid really horrific deaths, just that it may not stop the majority getting it in within a year or so.
If it mutates of course that's another problem but this disease is so virulent and the economic damage of effective countermeasures is so disastrous that I cannot believe the world will not prioritise mass vaccinations when that arrives and eliminate it whatever the cost.
>such lockdowns require the consent of the population to function.
NO, they require they compliance of a population when faced with the military and martial law -- Which was already intimated directly as not being needed "just yet" by Trump.
Massive rumors of troop deployments and getting ready - videos of trains with tons of equipment being moved around the country.
Videos of the suposed "testing centers" setup at various places were the military setup huge tents - and they are completely empty, as well as fema delivering refridgerated trailers to these places...
They are planning on mass death coming very soon.
Media claiming that the hospitals are a "war zone" and guys went to these hospitals and they were empty.
Remember that 100 years ago, and then again 80 years ago, large percentages of men in Europe were removed from their own countries and sent somewhere else; ships transporting food and supplies were actively sunk, houses and factories were bombed to smithereens. In spite of the massive economic damage that caused, civilization did not descend into anarchy, and very few people who weren't prisoners starved to death.
COVID-19 isn't going to destroy any of our infrastructure, and if we mobilize properly, isn't going to kill nearly as many people. If our [great-]grandparents made it through WWII, there's no reason we can't make it through this.
>very few people who weren't prisoners starved to death [during WWII].
If it's relevant, 3 million people in India died due to widespread starvation during World War 2 caused by British colonial and war-time policies. Additionally all their cloth production was used by the British war effort, so many Indians went without clothes during that period. https://en.wikipedia.org/wiki/Bengal_famine_of_1943#Cloth_fa...
Right, I remember listening to an episode of Revisionist History about that [1]. Outrageous and shameful.
I'd have to listen to the episode again, but I think the most outrageous and shameful thing about it is that it wasn't actually necessary. The way Gladwell portrays it, they died mostly due to the personal spite of one person.
> Remember that 100 years ago, and then again 80 years ago, large percentages of men in Europe were removed from their own countries and sent somewhere else; ships transporting food and supplies were actively sunk, houses and factories were bombed to smithereens. In spite of the massive economic damage that caused, civilization did not descend into anarchy, and very few people who weren't prisoners starved to death.
> COVID-19 isn't going to destroy any of our infrastructure, and if we mobilize properly, isn't going to kill nearly as many people. If our [great-]grandparents made it through WWII, there's no reason we can't make it through this.
In The U.S., WWII was funded by the savings of that generation, which is really amazing considering they had been in the longest, deepest economic depression in the nation's history prior to the start of the war.
After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country.
Going into what we are doing right now, Americans don't have any savings plus many private and nearly all public institutions have a lot of debt.
There is no indication that the government will permit such a freely flowing economy even after whatever it is we are doing has ended, so I don't find direct comparisons relevant.
> After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country
the reason the US was ably to basically jump start it's economy after ww2 was mainly because all of its competitors got either got their industries and cities literally leveled, or their nation/people nearly utterly destroyed.
Even the UK, which was a victor of world war 2 had an economy which was basically dead in the water until the late 70's.
The US got incredibly "lucky" during world war 2 in the sense that it didn't fight the conflict on its own continent.
Also, the marshall plan was a smart policy in an economic sense because it allowed the war economy to transistion back into civilian goods thanks to having a massive (subsidized) export market.
> > After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country
> the reason the US was ably to basically jump start it's economy after ww2 was mainly because all of its competitors got either got their industries and cities literally leveled, or their nation/people nearly utterly destroyed.
> Even the UK, which was a victor of world war 2 had an economy which was basically dead in the water until the late 70's.
> The US got incredibly "lucky" during world war 2 in the sense that it didn't fight the conflict on its own continent.
> Also, the marshall plan was a smart policy in an economic sense because it allowed the war economy to transistion back into civilian goods thanks to having a massive (subsidized) export market.
Nations are not competitors. They are trade partners.
> Nations are not competitors. They are trade partners.
Of course nations are competitors. International trade is an unregulated market, every nation competes economically with each other and tries to extract maximally favorable deal for themselves; when negotiations get heated, they get backed up by military strength, and the only reason we don't go to war often is a combination of sanity and MADness.
> > Nations are not competitors. They are trade partners.
> Of course nations are competitors. International trade is an unregulated market, every nation competes economically with each other and tries to extract maximally favorable deal for themselves; when negotiations get heated, they get backed up by military strength, and the only reason we don't go to war often is a combination of sanity and MADness.
What does this have to do with post-WWII economic recovery in the U.S.?
Do you have any sources that compare government and private savings at the two time points? I am surprised by your claim that savings were higher at the height of the great depression
> Do you have any sources that compare government and private savings at the two time points? I am surprised by your claim that savings were higher at the height of the great depression
Not immediately, but the U.S. was on a gold standard at the time and funded the war through war bonds (and establishment of income taxes) which were largely purchased domestically.
The gold standard bit is important because the government was not able to simply print money to fund the war.
It sounds like you're arguing against the idea of debt altogether. Debt is a great, great thing that's allowed us to accomplish way more as a society than we ever could before. Way faster too.
Yes, there is irresponsible lending that winds up in temporary value being created that we later find out was fake, and yes it's scary when the government is that lender. Maybe ironically, gold now works as a store of value that hedges against government money going bad.
But debt it still a great system that will continue to work well after COVID-19.
> It sounds like you're arguing against the idea of debt altogether. Debt is a great, great thing that's allowed us to accomplish way more as a society than we ever could before. Way faster too.
> Yes, there is irresponsible lending that winds up in temporary value being created that we later find out was fake, and yes it's scary when the government is that lender. Maybe ironically, gold now works as a store of value that hedges against government money going bad.
> But debt it still a great system that will continue to work well after COVID-19.
There is no argument for or against debt. You are inserting something not there.
It is notable, however, that to create debt there must be a creditor.
You know those signs we memed the hell out of last decade? They're so cliched that they don't mean anything anymore, but think of those.
Keep calm and carry on
You should relax. We're not the first humans to see some hardship. Everything isn't going to fall apart because the economy has a downturn. Society isn't going to collapse because of this. It didn't happen in the 1600s, nor the 1700s, nor the 1800s, nor the 1900s. It's not going to happen in the 2000s.
Two global wars, the use of nuclear weapons, and a 50 year cold war with the ever present threat of nuclear apocalypse didn't cause society to break down last century, a flu won't cause it to fall apart this century either.
While all of that is true, it can be very painful for most people. These types of events almost invariably lead to social unrest which compounds the problem. Ambitious and unscrupulous leaders in government and businesses will use this to undermine many of the norms we take for granted.
What is clear is that people are underestimating this crisis, no one wants to think we are in a WWII level moment, and so we don’t activate the appropriate level of response. But it is and will be a world altering period.
Once consistent pattern is that countries seem to feel like you do, it’s just a flu, then doctors see patients gasping for breath and literally drowning as their lungs fill up with fluid, and the true dread sets in. My friend is a doctor in NYC. She said this feels like war, and the nature of death experienced by people is horrific. If people were bleeding from their eyeballs like a movie maybe that would capture people’s attention but on the front lines people are terrified because this is an awful awful way to die.
I agree with you, but still would like to point out that the same line of argument (we’ve been fine before) would be as valid if society were to actually collapse. No species has ever gone extinct before... until it does!
So you're saying -- if things now return to conditions that were present during "Two global wars, the use of nuclear weapons" of last century... no cause for alarm?
1. HN is not "an informed audience", it's literally the public. And it's common for software developers to mistake themselves for domain experts on any domain but they aren't.
2. It's not an informed audience if misinformation is not challenged, it's a misinformed audience.
3. The flu is a bad parallel. The flu, while annually killing lots of people, does not overwhelm hospitals like a novel virus does. At best it makes people think this is like swine flu, while it has quickly shown to be nothing like swine flu.
Regarding 3, upper estimates for the 2009 swine flu are north of 500k deaths and the 1918 Spanish flu is 50 million.
Flus can be very deadly and the poster obviously did not intend to use the word in a diminutive way. You added that interpretation, knowing it is wrong, and then challenged it.
The whole post was playing down the effects of the current pandemic on society. The whole conclusion was that "a flu won't cause [society to break down]".
So yes, the poster was using flu in a diminutive sense. And yes, flu is deadly and a lot worse than a lot of people (who've probably never had flu) realise. But even given that, even recent novel flu strains haven't stressed and shut down the global economy like this pandemic has.
>The whole conclusion was that "a flu won't cause [society to break down]"
This does not minimize the harm a flu can do, it puts it in perspective. Nuclear bombs going off over LA, London, New York, and Beijing probably would not cause society to break down. That does not mean that does not mean that it wouldn't be terrible, deadly, and disruptive.
When planning for how to prepare and deal with this pandemic, people should not be preparing for some Mad-Max scenario where an assault rifle is their most valuable possession.
While the death toll remains smaller, at this point the global consequences of this pandemic are worse than LA, London, New York and Beijing getting glassed (assuming this hypothetical scenario was some kind of a terror attack, and not the first strike in WWIII).
To respond to "Clayton" in this thread, we did not have much of an option for reacting to the virus once it got to our land. Legally, the federal government cannot shut down the country and order lockdowns, only cities and states can do that. We could have taken the need for testing and equipment preparation more seriously, but we didn't.
In the absence of data around who is sick, who is not, and who is immune, there is no way to slow the spread of the virus during an outbreak except to keep everyone away from everyone else.
This is juxtaposition, a form of literary style. He is sarcastically downplaying the _flu_ in comparison to the world wars because the _flu_ is already significantly lesser than the holocaust or an atomic bomb landing in Japan.
You know that that meme originated from a campaign designed by the British government for motivation in the face of mass bombing anticipated in England before the onset of WWII right? I think saying that "this won't be any worse than being bombed by nazis" is not a particularly motivated slogan.
> a flu won't cause it to fall apart this century either.
If you think this is just a freak thing that is happening, som e flu what will pass, then you don't understand what is happening. What we're seeing is the way this pandemic is exposing vulnerabilities in our global capitalist system.
And finally, plenty of societies of collapse in those time periods. Of course humans and societies continue to exist, but there are more an enough examples of societies that have ceases to exist and the transition is a painful process.
It's actually way more ironic than that. It's traced back to the public stance of the British government during the spanish flu pandemic in WW1, where they decided that keeping the economy going was more important than trying to slow the spread of the flu.
"According to Dr Honigsbaum, the “carry on” advice may well have been responsible for thousands of the 250,000 Britons who ultimately died in the Spanish flu pandemic."
While many people will likely get very sick, they only stay that way for ~2-6 weeks. Further, around half of people below 50 will show minimal if any symptoms. So, while most non essential jobs are shut down we are likely to see a surplus of labor in terms of trucking etc.
My guess is plenty of essential jobs will have heavy overtime while many people are unemployed. Simply because the disruptions are going to cascade through individual factories very quickly. The economic impact is largely going to be a question of how much do we shut down to save lives?
That thinking negates the economic impact that a bunch of people dying is going to have on the economy. There are really two options here.
1) A huge impact on the economy and fewer people die.
2) A huge impact on the economy and lots of people die.
Nobody has the capability to predict the real outcome of one scenario over the other from an economic perspective.
If the US does everything perfectly, we'll probably lose 200k people to COVID-19. If we "reopen the economy" prematurely, the number could easily be 5x to 10x that figure.
Loss of human life has a very tangible impact on the economy, so folks should not be thinking of this as a binary decision ("do we save lives vs do we save the economy").
That’s incredibly simplified. Policy makers don’t have a simple switch to which results in some specific known outcome. Nobody wants millions of Americans to die or for another outbreak to happen in 6+ months. Unfortunately, avoiding both without shutting everything down until a vaccine is developed is tricky.
I'm pointing at the fact that it keeps getting presented like a binary decision in the media over and over again, and that's not an appropriate characterization.
If that’s what your thinking don’t say: There are really two options here.
Frankly, the US with effective leadership could have less than 1/10th your quoted 200,000 deaths, just look at South Korea. Any time someone says their are two options on a complex issue it’s a straw man argument which is what I objected to.
>Policy makers don’t have a simple switch to which results in some specific known outcome
BS: Donald Trump was specifically asked yesterday how he feels about the poor and especially illegal immigrants who will have zero access to help, both financial and medical.
He litaerally tilted his head and said "what are you gunna do?" knowing what that outcome is going to result in.
> around half of people below 50 will show minimal if any symptoms.
I have a middle finger for you for how cold hearted you sound. As though “it’s no big deal”. My wife went through this (previously healthy 34 year old) and it was terrible. The docs just said: “there’s nothing more we can do”
I'm sorry for what you're going through. Maybe reading a thread on the economic implications of this disaster -- which will inevitably discuss both the terrible parts and the silver linings -- isn't the healthiest thing for you right now?
"Forecasting is hard, especially when it's about the future"
Whether or not you need ammo probably depends on where you live... but I'd stock up on non-perishables and necessities if you can afford it.
Not sure you need vodka at all, but I think that's a matter of personal preference. I'm actually trying to be as healthy and fit as possible to fight the weirdness that is self-isolation and to be ready for the virus when it inevitably comes (if 80% of us really are going to be infected...)
Am also hearing PE funds are forecasting anything between "18 months until we're back to normal" to "it will never be the same"..
The vodka and ammo was a bit of the joke (though I think the saying goes that post-apocalypse currency is fuel, ammo and cigarettes).
I've stocked up a month ago for a minor supply chain disruption. But the more I read the news every day, the more it seems to me that it isn't going to be a minor disruption. I'm starting to worry about survival even if neither myself nor anyone around me actually catches COVID-19.
Food, non-perishables, fuel? Yes. Firearms and ammo? To each their own. We did, but we're more rural.
Our concern is a supply chain meltdown when you have millions infected and sick. I would rather be prepared and not need something, then need something and not be prepared.
> Our concern is a supply chain meltdown when you have millions infected and sick.
This is an absurdist prediction - we are looking at maximum 2 million 75+ year olds dying with some much smaller number of people of different ages. This is the group least likely to be involved in the day-to-day functioning of our supply chains.
Honestly, where are people coming up with these doomsday predictions?
Have you watched the supply chains? Spikes in demand followed by demand collapse have already wreaked havoc. From what I read from people from that business, there's total chaos.
And even if the elderly bear most of the risk, countries are shutting down completely for their sake - and that means companies stopping operations, leading to further disruptions. Also this article: US already has 10 million unemployed, and it barely started to consider doing anything about the virus.
I think this is closest to actual doomsday since the peak of Cold War.
If you were to value all human lives equally, the Cold War potential threat was far greater than this. The actual realized causality count is of course orders of magnitude lower for the Cold War.
In terms of being an existential threat to human life, this virus as we currently understand it (ignoring all the unknowns) isn't a real Doomsday. Historically it's merely a blip on the radar of awful things humanity has went through, endured, and survived leading to where we are now. People survived the bubonic plague and continued on. It was awful and they lacked much of the knowledge and understanding we now have to better curb these threats.
The vast majority of the population is going to be fine, healthy, and moving along. There may be economic restructuring after this (I don't see it as likely though). You're probably going to see a drop in quality/standard of living at large no matter what, but the majority of our infrastructure will still be there and the majority of the people who operate it will still be there. It's not like humans won't be around, infrastructure will be destroyed, our acquired knowledge and skills are lost...
The absolute worst case scenario is that this virus mutates regularly (perhaps with higher mortality rates) and we aren't able to manage it. Each mutation comes with significant risk of death. Although the risk could low for many, multiple exposures to relatively low risk leads to higher more realized unwelcome outcomes. This would absolutely force a complete systematic restructuring of societies, how we interact, how we work, etc. long term.
Based on what we currently know this will be a fairly long decline in productivity that most will be immune to and life will probably continue on mostly as is. It all boils down to questions about who deserves what, who takes the hit on losses, etc. Right now it looks like your average US citizen will see a larger decline in standards of living and our economic system will further consolidate/concentrate wealth and power barring some sort of (hopefully non-violent) social revolution.
As isolation habits go, it's slightly safer to overindulge in news than in liquor, but not much less unhealthy.
If you're worried about a real collapse, then do what you can to prepare, sure - ideally remembering that, by all the accounts of people who've been through such collapses and later told the tale, what really gets you through in the long run isn't liquor, smokes, or bullets, but relationships.
You don't need to soak in the news to do that. Indeed, soaking in the news probably makes it harder. Anxiety can get paralyzing, and there's a lot in the news to be anxious about. But it's also worth remembering that what's going to happen is going to happen whether you obsess over it or not. It can't be hurried, helped, or fought. It can only be dealt with as best you can, and from here it seems like you're not really helping yourself by what you're doing just now. So, maybe consider trying doing something else for a while? You know, just to see if it feels any different.
For food, fuel, and other essentials? If stuff like that starts getting disrupted to the point that people are actually dying, you can bet that we are going to lift our shelter-in-place. I have seen no evidence of that being borne out at all.
> I think this is closest to actual doomsday since the peak of Cold War
I agree, but I think that more speaks to the relative safety and stability of the post-Cold War era than any particularly huge danger from the pandemic. 2 million deaths is terrifying and we should do what we can to prevent it - I don't see any evidence that this is the lead up to general societal collapse or even substantial supply chain disruption for things you need to survive.
Because countries are shutting their borders and we have a tightly coupled network. Add to that decades of streamlining logistics to avoid any inventory and consistent dividends and stock buy backs that make scaling up additional capacity difficult and you can quickly see disruption.
If this triggers a financial crisis, then working capital can disappear so even if capacity exists liquidity won’t and there won’t be enough purchase power to float inventory.
I worked at the best corporate bankruptcy law firm in the country in 2008. I can tell you there was a real concern that lack of liquidity would result in grocery stores not having food for extended periods from lacking working capital. That can happen fast.
Not to mention that when the healthcare system gets overloaded with all the covid-cases, everything else that requires medical intervention also becomes dangerous.
The curve will barely flatten, before 'peak infection' is reached. At the current rate, we have only 1 or 2 months to accomplish this, and no progress so far.
Many folks will get sick; the oldest will die at home. For others it will suck, and there will be no help even from neighbors, churches etc (like the last time, they quit functioning entirely)
Some will not notice at all, apparently. They will survive into a world changed by loss, conservatism, suspicion and paranoia.
An initial recession, while paradoxically goods are plentiful due to the reduced demand
The Social Security fund will disappear entirely as a topic of discussion
Civilization won't fall, and public order will only be occasionally disrupted in small localities
I'd recommend establishing a network of close friends who will support one another during this time. It's about the only support we can expect.
> The curve will barely flatten, before 'peak infection' is reached. At the current rate, we have only 1 or 2 months to accomplish this, and no progress so far.
The curve is flat (at least the new "X" curve) in both Seattle and the Bay Area. That's definitely progress.
Yeah, well, I unnecessarily asked my question in the indirect way. What I meant is: what do we expect to see? Wars and famines, or just little hardship? Or something in between?
I've done some preparations over a month ago, but these were preparations for a short-term supply chain disruption. Not for what increasingly seems like a global economic meltdown.
Obviously it's impossible to say for certain. This was/is a relatively controlled economic crash landing. The decision was made to take the plane from 30,000 feet to the runway in record time. So everyone has bumps and bruises, some are going to have broken bones and a few may die as a result of their injuries... but that was the best option available at the time.
Personally, I find this a lot less scary than '08. The main objective of the current exercise is to ensure the healthcare system does not collapse... because if that happens, things could get dicey. (i.e. blind terror would likely cause more damage than the virus itself) Once we get to the point where the medical community feels like 'OK, we've got this under control' things should start looking up since we'll know for sure what the bottom looks like from a health/mortality standpoint. Then people can start sorting out the economic side of the equation. Right now there's fear because no one knows where the bottom is for either situation.
2008 started in 2007, things move slow until they don’t. Banks are just as leveraged as they were then. They started doing many of the same things they did then in recent years. They are stronger in part because of the stress tests and implications fed back stop they are counting on so luckily the won’t likely panic and stop lending to each other. But make no mistake. If mortgages and credit cards start to default their balance sheets have limits on what they can with stand. Tightly coupled systems implode quickly even with small changes.
I live in a state barely touched by COVID-19. Since Mar 15, I've never seen a roll of TP in any of the stores in town. Not Costco, Sam's Club, Target or the local grocery chain. I feel bad for people who didn't manage to stock up.
You speak as if the toilet paper factories have shut down and the delivery trucks are all sitting idle. Everyone decided to rush the stores and buy up all of the toilet paper, and unsurprisingly the stores don't stock enough for every household to buy 200 rolls in the same week.
All you need to do is wait for the next delivery to show up (which it will). The problem is, people like you will continue to buy up everything as quickly as possible, so after the first couple hundred customers the shelves will be empty again. Until the next delivery. That is the problem, not supply shortages.
Don't feel bad for people who didn't horde resources at everyone else's expense. Help those people by buying what you need plus only a little extra.
Thanks for the ad hominem and patronizing reply. I haven't been trying to buy TP, I just noticed it was missing every time. There may be plenty of TP (and other goods) in the pipeline, but that doesn't matter to the end user. They're just SOL because there's so little slack in supply chain management anymore.
Your post was completely and factually incorrect, then you not only blame me, but blame the people trying to adjust to a supply issue. How do you determine "what you need plus only a little extra" when you can't determine when TP will be in stock? It's been weeks now, and it's perfectly rational to buy more than you need since you can't count on the supply chain.
Your math doesn't check out. 5% of people that get it (among a wide range of ages) require serious medical care for weeks. And if we send 5% of any population to the hospital in a given month the death rate for ALL diseases goes way up.
It still sends as many people to the hospitals as it sends to the hospitals, weak epidemiological data or no. If that's more than the hospitals can handle, people start dying who otherwise wouldn't. That, too, is not an indicator subject to measurement bias imposed by lousy testing regimes. It's also a thing that is happening. We will see more of it before we see less.
> 5% of people that get it (among a wide range of ages) require serious medical care for weeks
Just based on the experience in other countries, GP seems quite spot on in terms of who is impacted, who dies, and the percentage of the population. Your comment seems speculative and substantial number of non-70+ year olds dying has not been borne out by the data at all.
There are far more deaths in Italy and France then statistics show...
> On Tuesday night, the health authority in the Grand Est region said two-thirds of its 620 old people’s homes had been affected by the coronavirus pandemic and 570 residents had died.
> Those 570 people are not recorded in France’s official coronavirus death toll, which reached 4,032 on April 1, but so far counts only those who have died in hospital.
> In an Italian retirement home in Mediglia, outside Milan, 52 of the 152 elderly staying there had died from Covid-19 infection by last week.
> In the province of Bergamo, 2,060 deaths were attributed to the virus in March. However L’Eco di Bergamo, a local newspaper, found that a total of 5,400 deaths occurred in the province in March, up from just 900 in the same month in 2019.
I was under the impression that Italy did test for covid also post-mortem? there were claims here couple days back that this was the case (and a claim that apparently Germany didn't). if that's the case then how could the numbers be different?
People also die now for example because of a heart attack that cant be treated due to overwhelmed hospitals. Not saying that is the case for the numbers, I dont know.
In London someone died of malaria last week because it took 9 hours for an ambulance to show up.
It kills 1% if ICU care is available. It kills a lot more if the healthcare system is overwhelmed. Look at Spain or Italy. Case fatality rate is around 10%.
Letting it run its course it needs to infect 60-70% of the population before herd immunity kicks in. 1% of 60% of the population of the US is 2 million people. World-wide you're looking at 45 million people for a very optimistic scenario. The numbers could easily be 5 or 10 times larger. If we're lucky and the number of asymptomatic cases is very high, the numbers could also be lower. At this stage we really don't know, but I don't think it's ethical to take that risk.
Spain and Italy have fatality rates of 10% because the infection exploded far before they could ramp up testing capacity, so they were only testing the people who were in serious medical distress.
This is obvious if you compare the numbers between different countries versus their relative level of hospital capacity.
The comment you're replying to referred to "1% of the people who get it", which has basically nothing to do with CFR. Getting the virus is necessary but far from sufficient to become a case.
Not quite. 1% of people who get it don't survive when healthcare resources are not strained. But when ICUs fill up, that number starts to skyrocket, because people who need intensive care cannot get it.
You're really missing my point. CFR is not the percentage of "people who get it" that don't survive. It's the percentage of "people who get it, get tested, test positive and are thus confirmed as a case" that don't survive. The actual mortality rate, whether ICUs are working or not (they mostly are), isn't known.
That was a prediction CDC made in early Feb for broader China. More recent CDC reports for United States (https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6912e2-H.pdf) say mortality is somewhere between 1% (lower bound) and ~30% (depending on age) based on calculations they did w/ cases having "known outcomes". The CDC says they only have 44 such samples at this time, and that ICU status data is missing or unknown for the several thousand or so other cases. So we really just don't know the facts yet.
I know. But we don't know the true fatality rate yet and we won't know it before it's way too late to act. I don't think it's okay to literally risk millions of lives on the off chance that we missed 95% of the cases with our testing.
That is a reasonable line of thought, but incomplete. How many lives are we risking by tanking the global economy? That seems like it should be a more quantifiable risk. It becomes a trade-off between the amount of lives we can calculate will be lost via our pandemic-prevention measures (and to what degree of certainty) and the number that might be lost without them (and to what degree of certainty).
The trade-off is between loss of lives one way versus loss of lives another way.
Okay, but you have to look at both sides of it. How many people aren't dying in road traffic accidents that don't happen because of isolation? How many people aren't dying of diseases they won't develop because reduced economic output has also reduced the output of carcinogens and toxins produced by manufacturing that's not being done? And like that - those are just the first two examples off the top of my head; there are more.
I don't see much mention of this among the "back to work at any cost" crowd, and I wonder why. It seems like a pretty obvious consideration.
Exactly this! The WHO estimates that air pollution kills 7M people annually[0]. A really big range of estimates suggest 20-50% decrease in airborne pollutants since the start of the pandemic. Even a 10% decrease, sustained, could save 700k lives/year.
Yes, bad economies harm people. But they also reduce harm. Pointing simply at directionality due to a bad economy is disingenuous.
A natural outcome when you have 30% unemployment in the worlds largest economies. Who knows, maybe we will get lucky and it will only be civil wars in China and India with only hundreds of millions dead.
It is quantifiable, however it appears that periods of economic decline are strongly associated with decreased mortality rates, at least according to the best evidence I can find from Nature.
In Italy you see 10% mortality because Italy tests only (really) sick people. It's really likely that millions of italians have covid. This is not really demonstrable at the moment, but still https://www.wantedinrome.com/news/coronavirus-report-six-mil...
Italy is treating every single patient with high standard healthcare. They did not reach the "0 free ICUs" moment yet.
What we can say as of today is that the high number of deaths do not depend on overwhelmed hospitals, but likely just because there are A LOT of covid patients. Also a greater average age and the fact that older people are much more integrated in the society played a role affecting mortality, but still those are only theories and we can't say how much they affected the total.
The US media reporting has also been terrible. CNN even noticed that a lack of testing was correlated with a higher reported percentage of deaths... and then went and concluded that the reason for this was that more testing caused fewer people to be infected, even though this wouldn't directly affect the mortality rate and there was other evidence indicating that the lack of testing had screwed with the denominator in the calculation.
sick of hearing this silliness: https://www.ecodibergamo.it/stories/bergamo-citta/coronaviru... so yeah, they barely test half the dead people (which are still double the normal deaths...). And A LOT of covid patients means a lot of deaths as well, bc. at 1.3% (Diamond Princess, where people are still not through it/dying) to 5% letality, the thing IS BAD.
But again, what was the age group on Diamond Princes? Because it matters, the death rate goes up with age. 5% says the average age was something like 50.
with emphasis on "should". Most people started to argue with the low number of deaths, when there were 5. Now there are at least 10 and about 100 people unaccounted in statistics...
Hm - 10 as of a few weeks or so ago, I doubt we will see any more and certainly not 2-3x more. That 10/800 = 1.2% and the cruise ship skewed older. 100 people entirely unaccounted for would only impact spread rates, not CFR, unless the unaccounted people are more likely to have died than those from the ship writ large.
I don't see where people are getting 5% from. 1% is already 10x worse or so than the flu, I don't see the need to exaggerate the facts.
There was an 11th death Apr 1, and 113 of the 712 are still active, not recovered. Didn't find from a quick search how critical or mild they are, but it is concerning that it's been this long...
That doesn't appear to be entirely correct - from my research, it appears to actually have been about 12 deaths (the last on March 28th from https://www.mhlw.go.jp/stf/newpage_10599.html) but there appear to be multiple sources on this.
Regardless, I'll admit that I was wrong - there are still people dying. Regardless, we'd have to get about 3-4x the number of deaths we've had so far to reach 5% - and from the sources I can find most of those remaining cases are non-critical (though there could be even a doubling).
What do you feel is stupid about the response to this? 1% is a lot of people. The whole point of social distancing and staying at home is to not overwhelm the healthcare system and to give more time to develop proper care procedures.
Playing devil's advocate for a moment, 1% would be approximately the same number of deaths we get in a typical year. Slightly more, yes, but some number of the COVID deaths are probably people that had a high likelihood of dying this year anyway, so it seems like an okay estimate.
In that case we are doubling our deaths for a year. Very significant, but in the grand scheme of things it poses no real danger to the species. I haven't decided if I agree with the position that collapsing the economy is worse than letting those deaths happen, but I understand how someone could feel that way. Ask me again after I lose my cushy software job because it's a luxury companies can no longer afford with nobody buying anything.
And yet you did not address the issue that the health care systems will collapse. Why are you (and many others) ignoring that outcome?
Everyone seems to get tied up in the % of fatalities. Debating those numbers are a waste of energy, everyone is just cherry-picking numbers that support their own arguments. But we know for a fact that without containment measures (and even with them), this virus can result in the health care system getting overwhelmed and possibly collapsing.
This has a number of impacts, 1) Health care workers will die at a much higher rate than normal. This will have lasting impacts. 2) Anyone who needs health care for any reason will be in trouble (cancer patients, diabetes patients, pregnant women, accidents, etc...). I read somewhere that ~30% of home births require emergency hospitalization. How would our economy do if ~30% of pregnant mothers died during child birth? 3). Even without government mandated shut-downs, people will reduce economic activity to avoid the risk of getting COVID or getting into an accident that would require a hospital visit. Many companies were cancelling events and implementing WFH policies before local governments required it.
This isn't really an either/or option. The economy is going to take a massive hit regardless of the actions we take. But by implementing shut-downs we can save lives and also potentially get back to normal business faster than we would otherwise.
I'm in the fashion industry right now, I get the layoff worries. But, okay, worst case, I get laid off and then I get a less cushy job in an industry that's less affected. Maybe I draw down my savings for a couple of months before I find one. It's not the end of the world. That's a major benefit of having a skillset as portable as ours.
I'd definitely rather risk that than risk a couple million people dying over the course of a few months - 1% of 70% of 320M, and that's just in the US. What effect on the economy do you expect would come of that?
> What effect on the economy do you expect would come of that?
On the economy? Very little. Most of the people dying are not in the job market any more nor are they big consumers. It might even reduce the load slightly on Social Security and Medicare.
No, the risk of letting a couple million extra people die this year is a social/moral one, not an economic one IMO.
Even in countries with no lockdown in place, economic activity is way down.
For instance in Sweden, at least when I read about it a few days ago, restaurants and everything were still open.
If I remember correctly, they had between 10-20% of the usual activity.
Even if it's not mandated, people don't want to take the risk, either for others or for themselves.
All of this to say: I don't think the options are between close the economy to save people (at least short term), and don't close the economy and bear the hit.
The latest one is not an option, the economy will mostly shut down by itself
>I'd definitely rather risk that than risk a couple million people dying over the course of a few months - 1% of 70% of 320M, and that's just in the US. What effect on the economy do you expect would come of that?
A hugely positive one because the deaths are for people who no longer work and generally are net drains on the economy, with either multiple diseases, old age or some other disability.
The effect of wealth transfer between generations alone would be amazing, with 20-40 year olds inheriting housing for the first time since the 90s in large numbers.
> I haven't decided if I agree with the position that collapsing the economy is worse than letting those deaths happen
Have you considered the position that a collapsed economy is inevitable due to deaths? Or that it would lead to less pollution, saving lives (although who knows what the net-net would be)?
7M people die annually from air pollution, according to the WHO. Early estimates of pollution reduction are in the 20-50% range; even a sustained 5% reduction is 350k lives saved/year.
You should check the numbers coming out of Italy. It’s not 1% if the medical system is overwhelmed. Moreover, you do realize that’s 3 million dead in the US alone?
It's also not the reported number in Italy. The sources of error in the data are enough to make the data fairly meaningless.
1. We have no idea how many people were infected
2. We have no idea how many people who have died died from Covid 19
3. The population pyramid in Italy is extremely disparate from the rest of the world.
The medical system being overwhelmed is a portion of the contribution, and what it means to be 'overwhelmed' is about as clear as what it means to have an error in your application. Are you overwhelmed due to lack of beds? Lack of ventilator access? Lack of doctors? What are the numbers for these in the remainder of the world?
Treating any modeling we have of the impact of Covid 19 as reliable is an exercise in insanity.
EDIT: To be clear this isn't to say that the responses are unwarranted. It's just to say that they are conservative and acting on knowingly incorrect information. If they were the right decisions remains to be seen. The impact of global financial collapse isn't just 'stocks down', but has tangible impacts on life expectancy, healthcare quality, and quality of life globally. Time will tell.
> Treating any modeling we have of the impact of Covid 19 as reliable is an exercise in insanity.
In detail, yes. In general, you can still make some good back-of-an-envelope calculations.
Conservative estimates are that the coronavirus has a CFR of about 1% given adequate medical care (South Korea's statistics, where testing has been comprehensive enough that we should have identified any wide pool of asymptomatic cases), and another low estimate of its R0 factor is 2. Left unsuppressed, this implies that the disease would spread to infect about half of the population, and it would kill 1% of those infected.
For the United States, that implies that a "flattened curve" -- where mitigation prevents medical resources from being overwhelmed but does not fully suppress the disease's spread -- will kill about 1.6 million people.
Beyond that, we know that the disease requires intensive care at some multiple of the death rate (say 2x) and hospitalization at another multiple (say a further 3x). These estimates are reasonably consistent with New York's numbers (https://nymag.com/intelligencer/article/new-york-coronavirus...). Testing shortfalls could make these multiples worse, if there are hospitalized or ICU patients positive for the virus but not included in these totals.
Given overwhelmed medical services, we can presume that a large fraction (say half?) of ICU patients would die for want of care, and a smaller but still significant fraction of hospitalized patients would do the same (1/8?).
This implies that an un-flattened curve would have roughly triple the death rate, with the excess caused by inadequate care. With a 3% inadequate-care CFR, if left to run its course the disease would then kill about 4.8 million Americans.
> It's just to say that they are conservative and acting on knowingly incorrect information.
If policymakers are acting on "knowingly incorrect information," it's because their assumptions are too benign rather than too severe. I believe that my estimates above should be uncontroversial, and to the extent they err I've tried to err on the less-deadly, less-contagious side.
Various models and data sets put asymptomatic cases at between 20% and 50%. Those are fully asymptomatic - i.e. total end-to-end progression with either very mild symptoms indistinguishable from a minor cold, or no symptoms at all.
It's almost impossible to estimate expected population mortality with limited and noisy data, but I've seen estimates from 1.5% to 0.05%.
The only thing that can be said with certainty is that social distancing, testing, and tracking all do a lot to prevent initial infection, and good access to ICU hugely improves chances of survival after infection.
The rest is guesswork at this point. Having said that - my current hand-wavy estimate of deaths in the UK is high five, low six figures. Multiply by five or so for the US.
> Various models and data sets put asymptomatic cases at between 20% and 50%. Those are fully asymptomatic - i.e. total end-to-end progression with either very mild symptoms indistinguishable from a minor cold, or no symptoms at all.
That's why I use South Korea as a model. They've tested enough that they should have found the majority of asymptomatic cases, and they still have CFR above 1% (1.7% as of this writing).
That also puts a bound on reasonable levels of occult spread. We can support maybe 50% of cases being totally asymptomatic and undetected, but if that is significantly greater then we'd see contact-tracing (again, SK-style) entirely fail as a control measure.
So it seems like an absolute best-case CFR is 0.5%, if it would be 1% among symptomatic cases and there again that many that never notice / are diagnosed with the disease. For the UK, that would give an optimistic projection of (66e6 * 50% * 0.5% =) 165k deaths in a "herd immunity" outcome with a "flat curve", so this is consistent with the range of your "hand-wavy estimate."
We will not know how effective testing has been until we have serological tests. There are a few assumptions being made regarding the efficacy of testing, and contact tracing will certainly miss pockets of asymptomatic people.
The financial probelms are a given. Joining some political death cult to sacrifice the weak and elderly portion of our population to feed the COVID-19 Volcano isn't going to make the virus end any sooner, and you'll have even fewer consumers left after it's all over if governments choose to go that route. The virus doesn't care, and as far as I'm concerned any economic system that isn't capable of protecting the vulnerable isn't worth reviving.
”Joining some political death cult to sacrifice the weak and elderly portion of our population...isn't going to make the virus end any sooner”
Barring the development of a vaccine (which is far from guaranteed, and a year or more away, in the best case), letting the virus sweep through the population is pretty much the only thing that would bring this to an end quickly. We could achieve herd immunity in a few months and have it behind us.
This situation is a direct tradeoff of time (and money) for lives.
Letting it sweep through uncontrollably quickly by pretending it's business-as-normal out there will lead to many times more deaths due to hospital overutilization.
Our current actions are focused on the goal of leveling the curve, not putting up a wall. There aren't armed guards outside our homes preventing us from leaving. The grocery stores are open. We can come into contact with others to order just about all goods we've always been able to order. We can go to parks and trails and beaches. This will cause more infections, and we all know it; but thanks to these measures, ER visits in our city are down over 20%, allowing healthcare some capacity to deal with the influx infected people, and our daily growth of infections doesn't look exponential anymore.
This thing hospitalizes many young (under 40 years of age) people as well, and in our state that has been on lockdown for longer than many others, medical fellows and residents from unrelated specialties are being asked to help with COVID-19 cases. In a week or two at most it's expected they'll be required to help. If our government wasn't taking these defensive measures, we'd already need more space to store the bodies.
Yeah, I get it. It was implicit in the point I was making: we’re explicitly trading time for lives.
Literally the fastest way to get this over with is to let it sweep through the population. More people might die if we did that, but it would get it over with quickly.
Remember, it's a ratio. What matters isn't the raw number of missed cases, it's the ratio of missed-to-detected cases versus uncounted-to-counted deaths.
If Italy has missed half of its deaths but also half of its total cases, the fatality ratio would remain the same. To bring its CFR down to the level of South Korea, you'd have to make the implausible assumption that Italy has caught nearly all of its deaths but missed more than 85% of its total cases.
Yes, I know it’s a ratio. That’s why I used the term “numerator” and “denominator”.
It’s not at all implausible that Italy has missed the vast majority of it’s cases, because they’re barely testing, and they’re not testing minor cases. It’s essentially guaranteed that they’re missing a huge number of cases.
A reasonable estimate is that they’re missing 10 cases for every one they actually detect. The error in the denominator is much larger than the error in the numerator.
It's universally true that the people eager to feed the olds (and a bunch of non-olds, too) into the wood chipper never seem to have their, and their parents', do-not-treat orders signed.
We don't like to think about it explicitly, but human life has a market or dollar value. You can figure it out by how much we spend on things like safety measures and court settlements and judgments for deaths. As it turns out, it runs about $7 million per person in the United States.
That does make some sense. None of us picked the circumstances of our birth, but we have billions of people because of the economy, because we don't all grow our own food, because some people specialize in scientific research, etc. Now, we have billions of people that depend on a functioning economy, and if it doesn't function, people will die that way as well.
So what if it's 1%. It's life. Nothing else matters.
Should we shut down the country and quarantine ourselves during every flu season? In an average year the flu kills about 0.01% of the population, and nothing else matters but trying to save those tens of thousands of people, right?
Afaik Norway was one of the first countries that made similar numbers public, as about a week ago they had announced that unemployment had risen from app. 2% to 10.4%. The article is here [1]. My ballpark estimate is GDP going down by 20-30% for the next two quarters at least.
If the unemployment rate continues to rise at this pace (about 7% every two weeks), it will match the peak during the Great Depression (25%) around the end of April.
That's 40 million people who will have no income and likely no health care in the middle of a pandemic.
Not sure how to process this information honestly.
>That's 40 million people who will have no income and likely no health care in the middle of a pandemic.
if the government were to help regular people that would be say $1T/40M = $25K - one can survive a month or two on that (and those money would have naturally trickled promptly up thus also supporting the top of the economy - corporations, banks, etc. - instead of being directly accumulated there like in the current trickle down approach). My understanding that is what they ultimately did in Great Depression - by way of public works and rudimentary safety net - though the things had to get really bad before they did it, and one can only wonder how much things have to get bad this time.
You can't extrapolate trends ad infinitum, and I didn't.
I extrapolated them for four weeks.
All we need is four more weeks of what has happened for the last two (and most authorities are saying that the lockdowns will last at least this long), and we're at the peak of the Great Depression, unemployment-wise at least.
Moreover, by assuming constant linear growth, I was being optimistic about the slope of the curve. The second week of jobless claims was worse than the first.
Correct. Todays number isn't even much of a surprise, although it's still shocking to see. I thought the consensus estimate was way too low. Some analysts have been kicking around 20%-30% unemployment before this is all over.
The virtuous cycle provided by a functioning market is not a pyramid scheme. Not even close.
Pyramid schemes transfer wealth from the bottom to the top while creating no new additional wealth. America is creating tons of additional wealth and how much each gets from that wealth is proportional to one's leverage and one's leverage is generally proportional to how much one is able to contribute to wealth generation (in either talent or useful capital)
You're going to have to elaborate on what you mean by "destroyed".
Also, the US isn't a single entity. It's an agglomeration of 330 million people interacting with one another and it's various levels of governance at the local, state and federal level.
Natural disasters can destroy wealth by destroying assets. Individuals can squander their wealth through bad investments. A government can steal wealth through taxes. Wealth can be forfeited through civil or criminal proceedings. Wealth can dwindle in real terms due to inflation. So on and so forth.
But to say that the "US destroyed wealth" makes no sense and isn't either a supportable or falsifiable statement.
“Virtuous”. It is fueled by artificial growth. It demands growth and makes sustainable, stable businesses a liability. It is absurd to see companies folding barely two weeks into hardship.
> It is absurd to see companies folding barely two weeks into hardship.
Why? Companies sitting on tons of cash is a bad thing. That cash either needs to be invested through hiring, buying equipment, etc...or paid out to the shareholders (who then spend, invest, etc...). Sitting on cash traps capital that could be doing something else to create value.
And before you say companies need to plan better, companies do plan for downturns. But, no company plans for their revenues to go to near zero overnight.
^ for anyone who doesn't know, 1893 seemed to be the first of many Argentine financial crises, caused by a wheat crop failure, which caused a negative feedback loop as (mostly) European investors pulled out of South Africa and Australia. The effects spilled over into the US and UK financial systems, led to runs on the banks, and caused a severe recession for 2 years.
Then again for the part of that which is related to corona it’s mostly through the mechanism of temporary unemployment, where the state takes over paying part of the paycheck for the duration of the time that the workers can’t work, and they are expected to return to their jobs once the lockdown is over. Of course not all companies will survive post-corona but it seems like an approach that potentially better preserves the social and economic tissue.
The US' unemployment rate was much, much lower than many western European unemployment rates prior to coronavirus, so it doesn't make sense to compare the absolute number here - instead you should be comparing relative figures. The US' unemployment rate has tripled in the past 2 weeks based on this analysis.
This is just a personal opinion, but I think ~15% unemployment peak is far too optimistic.
I believe that 50-75% of restaurants will never reopen. 20-35% of small to mid-size hotels, venues, spas will declare bankruptcy within this year. Both employ a lot of people.
So I'm afraid the number is going to much higher, maybe even double.
I know it's really not PC to talk about this (how dare you value money over human lives!?), but at what point does the economic damage this causes become too much? 15% joblessness would be ~50M americans. If just 0.1% of them commit suicide as a result of losing their jobs or businesses, that would be 50,000 dead.
Maybe there's some kind of intermediate between forcing everyone to stay home and not having any mitigation measures in place whatsoever? Maybe a midway strategy would be less destructive. Protecting the economy isn't just about protecting the rich. The rich will be fine, they will get huge government bailouts (zero-interest loans). However, as you point out, a large percentage of small businesses will never reopen. If anything, this crisis is hugely benefitting Amazon & co.
the problem with your statement that NOT doing any of the counter measures (like self isolation) would result in the overloading of the healthcare system and many people dying.
(heck, the healthcare system in the US seems to be overloaded already).
When you have no further option for healthcare because the system is broken and overloaded, why would going into work make any sense if it resulted in either an period of illness with structural symptons or even death.
In times of crisis, people want food on the table and a roof over their head, if the cost benefit of doing legal work and following the rule of law turns negative, people might aswell just steal food and stop paying rent, who is there to stop them?
I think the difference here is that virus bring death to us. Suicides can be reduced if governments create the correct stimulus.
Again, it's super easy to criticize when not in charge, but my reaction would have been to shut down any means of travels to and from the country, shut down the country for 45 days completely, slowly restart the economy from crucial business to less and introduce couple of strong measurements to compensate workers for lost income.
At start of year, situation normal, the economy we had was unsustainable. We were collectively waging war on our environment and winning. Folks mostly had jobs, which was good, but income inequality was nuts and lots of jobs didn't pay a living wage. Housing costs, healthcare and college were out of control.
In short, the world could really use a correction. The pollution reduction from this shutdown has been dramatic and wonderful.
This will hit the economy very hard. The rich will be livid and will push hard to return to business as usual. The rest of us will suffer terribly. Maybe so terribly, and in such numbers, that we have to address it. Maybe we'll come out the other end with something more sustainable for everyone.
> Maybe so terribly, and in such numbers, that we have to address it
That’s unfortunately my reading. There are stores boarding their storefronts in LA [0]. Very very premature but gives you a glimpse into the believes of some.
I’m sure at the end we will come out of it in better place that we entered it, but I’m dreading the path we have to take to get there.
After this is over (whenever that is) we expect people to resume eating out and traveling. I agree that it's likely that 50% of restaurants and 25% of hotels/spas would become bankrupt and shut down, but that does not mean a 50% / 25% reduction of employment; I would expect most of the bankrupt restaurants and hotels/spas to be immediately replaced with new ones, employing much of the same people and renting much of the same premises (only cheaper), and ran/owned by the same people. In such an environment, the main impact of a restaurant going bankrupt is that the creditors and investors of that restaurant lose their capital, but it can reopen after a reorganization when there's demand once again.
You are of course correct. There will be a bottom and then a recovery.
The speed of recovery will depend on how much liquidity will be available in the market. And I believe it’s going to be quite low.
You see, all of these business depend on discretionary income and after the shock to the people they will sit on any penny or they will not have it themselves.
I believe we will eventually get out of this but my timeline is 3-5 years. If people are unemployed for more than few months their prospects drop rapidly. People with no options produce ruthless competition that pushes salaries down producing wider inequality and limits the discretionary funds needed to spend in those establishments in the first place producing quite a vicious circle.
I agree that wider inequality is a likely outcome.
There will be people who won't be able to spend anything because the depression drained them absolutely, and there will be people who are accumulating income that they can't spend due to the lockdown, and will have the funds to resume all the postponed vacations with vigor as soon as they can - in the aftermath, tourism will be cheap for those who have discretionary funds for tourism, because many won't, and the service industry will be agressively competing for any income they can get while having a cheap workforce.
Very true. I spoke to a few economists and they believe there are going to be two or three waves of CARE ACT-like packages.
It's easy to criticize the government without having to bear the responsibility but I wish they did this much earlier, with more force to bring confidence to the people rather than markets.
I spoke with a branch manager at a bank day before they announced the extended timeline for shut down up until end of April. She was cheerful because she believed that this will be over in two weeks. I tried to gently tell her that I believe we are looking at months (two at minimum), not weeks of lockdown and even that might be very optimistic. She didn't take it well.
People are confused and scared. I do wish the govs (local and federal) would be the leaders everyone needs them to be, but unfortunately, that's not yet happening (there are some exceptions, but very few unfortunately).
Probably most small(and medium, and big) businesses can hold on for a month or two at this rate but failure rate is going to approach 100% as time goes on.
What happens to all this commercial rental space? Rents are going to drop through the floor, and any business who signs up will have dramatically lower operating costs than in January.
A bunch of Portland restaurants found that they were losing money faster by offering takeout versus simply closing their doors completely. Obviously, a number of factors play into whether this is true for any given restaurant but takeout business isn't necessarily a panacea.
That is interesting but probably not indicative of elsewhere.
Portland OR is a bit techy and boogie but even then it has still been hit HARD. The places I frequent all have had drastically reduced hours and business. I haven’t heard of any closed for good but more and more and just on a long hiatus or boarded over...
I live in LA. It's not that different. I did talk to some owners of the restaurants and they said that their revenue is down by around 80% even with takeouts. Most people are not spending money. So it's something, but hardly enough.
The weekly numbers are unemployment benefit claims, whereas I think the monthly employment statistics are based on surveying the population and counting the actual number of people who are employed, seeking work, etc.
Yeah I understand the distinction but the weekly numbers capture much of the same information and are more accurate. The monthly survey is just something we do because we’ve done it for a long time.
Everything that is non essential in California is closed and only companies that can function with only working from home are still operating AFAIK. It doesn't matter how bad the outbreak is here, we've been on a shutdown for longer than anywhere in the USA, at least here in Northern California. Many restaurants have closed, only some are open for take out, but that probably depends on area. This last week they finally told many construction/lawn maintenance workers to stay home as well, depending upon circumstances.
Florida could worse, they just shut things down yesterday(!) and they have more cases than WA today which has been effectively shut down for a month or so.
1. This week's 6.6M new jobless claims represents ~4% of the estimated ~160-165M US Workforce.
2. This is incremental to the 3.3M new jobless claims filed week ending 3/21, totaling ~10M total jobless claims in the past 2 weeks.
3. The US unemployment rate was ~3.5% as of EOM February [1], so cumulatively that means we've hit ~10% unemployment as of EOW 3/28 (~10M incremental jobless claims = ~6%). That number is likely low and continuing to increase, as new jobless claims do not account for gig workers and many state unemployment sites have been inundated by these claims resulting in site crashes and people unable to file claims. In addition, layoffs have almost certainly continued between 3/28 and today.
4. The consensus estimate for this week's jobless claims was ~3.76M jobless claims, and the 6.6M actual claims blow the consensus estimate out of the water. That said, some analysts such as Goldman Sachs had estimated ~5.5M joblesss claims. Goldman Sachs estimates that unemployment will peak at ~15%. [2]
[1] https://data.bls.gov/timeseries/LNS14000000
[2] https://www.cnbc.com/2020/03/31/coronavirus-update-goldman-s...