Today is crossover day, what is normally one of the busiest days of the Georgia General Assembly. And yet, the thoughts and actions of many are elsewhere, and thus a few words here about the Covid-19 virus, reeling financial markets, potential government responses, and what the next few weeks will likely look like.
Imagine if you will that sixty one million Americans catch a rapidly spreading and not yet fully understood illness. That would be almost one in every five of us. It would change everything permanently, right?
It already happened – just one decade ago. In 2009, the H1N1 “swine flu” virus did just that according to the CDC. I was told that number this morning by a friend and I pushed back hard. It had to be a typo. People would have had to have had that virus and not even known it…
I believe that’s likely where we are, and/or will be with Covid-19, a/k/a Caronavirus. Right now, there’s still a lot we don’t know, and everyone is assuming the worst. It’s with the stat we have in hand from 2009 that we can start to put perspective over panic, but still understand what lies ahead and prepare.
First, let’s understand that because of a wide disparity of testing among countries in the first wave of this disease, we’re still not even sure what the mortality rate of this virus is. We’re tending to test those that are showing the worst symptoms, and early death rates on any new virus outbreak are always much higher than the actual mortality rates, as those with less severe conditions are often not tested/diagnosed with the illness at all.
Here’s a slide show attempting to put the nature of this virus into perspective of a likely actual mortality rate, as well as severity compared to other widely know, easily spread communicable diseases. Short answer: If you’re not older/elderly and/or have preexisting issues with your cardio-pulmonary system, your Covid-19 risk is mostly a bad case of the flu. Note the last slide. I don’t “blame the media”, but it’s clear we’re obsessed with this disease far more than any other disease outbreak, ever. Again, perspective is needed.
Regardless, countries around the world are undertaking massive and unprecedented efforts to contain the spread of this virus which is spread by person to person contact. Even as I type this, closures and cancellations are escalating too rapidly to mention individually. This is both a result of, and contributing to, the anxiety surrounding the disease.
That’s not to say everyone is overreacting. Let’s go back to the unknowns, and I’m not trying to second guess anyone here – especially those that have better and more current information than I do.
The rest of March and likely early April will be like no spring we’ve experienced in decades, if ever. We’re going to be asked (at least, for now it’s an ask) to stay home. We need to as much as possible.
Let’s go back to the H1N1-Swine Flu stats. If one in five of us got that, then likely a lot of us already have Covid-19, or will have it. We may never know that we have it, but we can still spread it without knowing it. Thus, we need to be especially careful with interactions with those in high risk groups. These people again, are older/elderly Americans and those with lung or heart issues.
So, a lot of people will be looking to government for solutions, while others will be blaming them because “someone should have done something”. I commend the Governor and his task for for gathering the information available and disseminating facts without inflaming panic, while also marshaling the state’s resources to further prepare and act. I likewise commend The Speaker, Lt. Governor, and Legislative leaders for getting the supplemental budget done with additional funds for Covid-19 response so that the state is fully funded through June, and then acting as an example in the suspension of legislative activities.
In times like this, it’s important to remember that the power of government has limitations. We have a responsibility as individuals and citizens to take precautions from constant hand washing to limiting our participation in public events.
This is going to have a major impact on the world’s economy, and the American economy is not immune. The stock market has gone from a record high to a bear market in the shortest time on record. If you haven’t sold stocks now, not only are you likely too late, but quite possibly will find yourself selling at the bottom. Again, perspective over panic.
90 days from now we’ll likely not be dealing with Covid-19. The Fed today announced a technical move to add $1.5 Trillion of liquidity to backstop the financial system. Expect a litany of fiscal proposals to keep consumers spending.
There will be economic pain, and it will be real. Now’s where it is time to remember that many economic statistics are lagging indicators. We’ll almost certainly see the economy contract this quarter and next, considering spending in many sectors of the economy will be frozen for the March, the last of Q1, and April, the first month of Q2. That means we’ll almost certainly be in a recession. By the time that becomes official in mid-summer, we’ll likely already be out of it. Internalize this now, so you don’t get bogged down by this “bad news” later.
The collapse of the oil market combined with the lowest interest rates on record will put money in a lot of spender’s pockets too. When the panic subsides, most sectors of the US economy will be awash with cash. Markets will rebound. So again, look past the current panic and inconvenience and think what things will be like before making any economic decisions for your household.
There are a lot of policy angles that will be proposed in a panic to fix this problem, the oil market, and the overall economy. Let’s focus on making sure the health crisis is fixed as the top priority. We’ll then need to make sure those most affected that work paycheck to paycheck in industries most affected (think hospitality workers who make no money when people don’t book hotels or go out) have a safety net.
Beyond that, we can sort out bigger picture policy/spending issues in a more methodical manner. Let’s not minimize what must be done in this crisis, but let’s also beware of those who wish to use the crisis for unrelated agendas.
Be prudent. Be proactive. But above all, keep it all in perspective.