America Is on the Road to Relapse Not Recovery
(Bloomberg Opinion) - America is on the move. But is it on the way to economic recovery or a pandemic relapse?
Fans of "On the Road" - Jack Kerouac's 1957 Beatnik classic - will remember that his dizzying, low-punctuation style is sometimes a little difficult to track. The same holds true for the data Americans are currently generating, some of which are undoubtedly indicative of a rapid (if not entirely V-shaped) recovery, and some of which indicate either a second wave of Covid-19 infections or simply that indicate continuation of the first wave.
The two are not separate stories, but a single, intertwined narrative. The best title for this story was designed by my colleague from the Hoover Institution, economist John Cochrane. He called it "The Dumb Reopening". Smart reopening is possible in countries like Taiwan and South Korea, which have performed tests and contact tracking so quickly that they have not had to block them at all. Among the European countries, Germany and Greece have successfully used these methods to ensure that new outbreaks of Covid-19 are quickly identified, so-called super spreaders isolated, their recent contacts quickly tracked and tested, and the outbreaks can be deleted.
Other signs of cunning are the persistence of behavioral adjustments by ordinary people, such as social distancing and wearing masks. We know that these practices, which can be adopted by citizens without government regulation, effectively limit the spread of the SARS-CoV-2 virus.
What is less recognized is that social distancing is more effective as a policy than lockdowns, as an upcoming paper in Nature magazine shows. This is also the result of the work of researchers at Blavatnik School in Oxford, who show that there is no link between strict government policies and Covid-19 containment. Measures to protect groups that are particularly vulnerable and vulnerable to Covid-19 - especially the elderly, especially those with pre-existing diseases - are also wise.
A stupid reopening avoids all such precautions. Is the US really doing this? The answer is pretty much yes. Testing has improved, but contact tracking is primitive. And social distancing and wearing masks are rarest where reopening is quickest.
The economists that I like best prefer dates to unusual models. Nowadays they are in Klee because the age of the Internet and the smartphone is already a golden era of high-frequency data on economic behavior. When I say: "America is on the move", I can say that with conviction, because mobility data generated by Google, Apple and lesser known tech players like SafeGraph show this.
The economists were surprised by the latest official statistics on unemployment and retail sales, but they shouldn't have: The mobility data already indicated a rapid recovery a few weeks ago. In the midst of the pandemic panic between mid-March and mid-April, Apple's mobility trends (which have been tracking changes in routing requests to Apple Maps since January 13) indicated a decrease in driving and walking behavior of around 60%. (The decrease in public transport was 89%.) Since the end of April, however, the trend for foot and road traffic has been steadily increasing. Inquiries have now increased by 12% and 33% respectively compared to January. (Transit requests are still down 54%.)
SafeGraph provides a more detailed view of pedestrian traffic based on aggregated and anonymized smartphone location data. Compared to January 2nd and 3rd, Americans walked between 60% and 70% less in early April. In Dallas and Houston, however, pedestrian traffic is only a quarter below the beginning of the year. General stores, counter service restaurants and supermarkets are almost back where they were.
Perhaps the most useful mobility data for economists, however, comes from Google’s Community Mobility reports, which show how visits and length of stay in different locations have changed from January 3 to February 3. 6 baseline. By dividing the goals into six categories - retail and leisure, food and pharmacy, parks, transit stations, workplaces and residential buildings - Google data helps us to find out what is economically important.
Visits to parks have never led to a recovery (53% increase since January, which is not surprising given the improved weather in most places). Food and pharmacy visits have had little impact on the pandemic as they were essential. The big story is retail and recreation: 49% nationwide at the low point (April 5), now only 16%.
Mobility data predicted the latest positive retail sales statistics. In May, the monthly sales jump reported by the commercial department was 17.7%; The monthly increase in Google data for retail and leisure visits was 24.4%.
Wall Street analysts are swallowing up new and old data. Combined with the Federal Reserve's numerous liquidity and credit facilities to support prices for nearly all financial assets, they explain why US stocks are back where they were in early March before the pandemic panic. Mr. Market pretends that Covid-19 is over. The trend that you can derive from Google data points to July 10 as the date on which consumption is back to normal.
The problem is that Covid-19 isn't over yet. As some of us have been warning for some time, failure to curb the spread of the virus in the United States has made a second wave inevitable in many places where the number of cases has dropped significantly, and the inevitable continuation of the first wave in those places that they didn't have. National new case and death data do not show this because they are dominated by improvements in the northeast (New York and its neighbors).
When I look at the latest confirmed case data, I see second waves in Arizona, Florida, Idaho, Nevada, Oklahoma, Oregon, Washington, and Wyoming, and second waves in Hawaii, Kansas, and Montana. The first waves continue in California, Mississippi, South Carolina, Tennessee, Texas and Utah. In Arizona, Florida, and Texas, trends in case numbers, positive tests, and hospitalizations are particularly worrying.
As the Americans are traveling more and more, including trips with greater range to holiday destinations, we can also expect an increasing number of cases in countries with a low number of Covid-19 infections such as Montana.
What will happen next? One possibility is that Americans will withdraw from the reopening if they see worse data on cases, hospital stays and mortality in their states - or more likely if they see worse cable news or internet clickbait about these things. (See the latest news on Arizona ICU capacity.) Any action by state or local authorities to slow down the return to normal (such as mandatory masks in Raleigh, North Carolina) can increase public concern.
Civiqs polls show that many Americans - Democrats much more than Republicans - are still "extremely concerned" or "moderately concerned" about Covid-19. Well-known economists - especially Michael Spence, who tried to compare mobility and infection data - consider the stupid reopening and come to the conclusion that it will end badly. Spence and co-author Chen Long warn that "the US is headed for a situation comparable to the Great Depression". You are in good company: Hardly any leading academic economist believes in the V-shaped recovery story, in which production falls back as far and as quickly as it has fallen.
The alternative, and I suspect, is that Americans continue to return to normal and tacitly accept further mortality as a mere business expense until a vaccine is available. This would be bad news for the large number of Americans who may be at serious risk from Covid-19 due to their age and / or pre-existing health problems such as obesity, high blood pressure, or kidney disease. But it would not be without precedent.
Although many commentators and scientists looked back on the 1918-19 pandemic of influenza to gain insight into our current situation, it now seems clear that SARS-CoV-2 is not as deadly a virus as H1N1 just over a century ago . The Covid-19 infection mortality rate is estimated to still be between 0.02% and 0.86%, according to a recent survey (although some recent European serological studies imply higher rates), but the so-called "Spanish flu" death rate Probably was between 1.8% and 2.2%. In other words, between 1918 and 1919, 675,000 deaths in the United States were attributed to influenza and lung complications, of which approximately 550,000 were "excessive deaths". A corresponding excess number of fatalities in 2020 would be more than 1.7 million, compared to around 100,000 to date.
In terms of probable mortality, the lesser known Asian Flu pandemic of 1957-58 is closer. This has resulted in up to 116,000 deaths in the United States (estimates for excessive morale vary widely), which would result in 215,000 deaths in 2020, roughly what I expect for the final number of Covid 19 deaths in the United States.
It is very likely that you have never heard of this pandemic, even though the worldwide death toll was between 700,000 and 1.5 million. This is all the more surprising since the 1957-58 H2N2 virus, unlike SARS-CoV-2, killed young people. As with most influenza pandemics, not only the very old (over 65) but also the very young (under 5) significant numbers died. However, in terms of excessive mortality compared to expected mortality rates, it was the teenagers who suffered the greatest losses.
The biggest difference between 1957 and 2020, however, lies in the reaction of the government and the public to the new pathogen. President Dwight D. Eisenhower declared no state of emergency in the fall of 1957. There were no government locks and no school closings. As always, sick students simply stayed at home. The work continued more or less continuously; AT&T reported a maximum absence of 8%. The Eisenhower government has also not borrowed to fund transfers and loans to citizens and businesses. The president asked Congress for just $ 2.5 million (about 0.0005% of 1957 GDP) to support public health in the event of an epidemic.
There was a recession this year, but it had little or nothing to do with the pandemic. Eisenhower's job approval rate worsened, falling from around 80% to 50% between January 1957 and March 1958, and his Republican Party suffered heavy losses in the medium term in 1958, but no serious historian of the time would attribute these setbacks to the pandemic.
The national mood of light-heartedness about a new and contagious disease could be summed up in the sentence that the second editor of Mad magazine, Al Feldstein, had coined in the previous year: "What, Me Worry?" Huey "Piano" Smith and his clowns even had a little hit with "Rockin 'Pneumonia and the Boogie Woogie Flu".
While public health officials reached a consensus in March this year that only complete "closures" could prevent a disaster, on August 27, 1957, the Association of State and Territorial Health Officials stated that there was "no practical benefit in school graduation or restricting public gatherings related to the spread of this disease. An official from the Center for Disease Control later recalled, "ASTHO encouraged home care for uncomplicated influenza cases to reduce hospital burden and recommended that sick patients be limited to hospitalization. Most were advised to just stay at home, rest, and drink plenty of water and fruit juices. "
Like today, there was a race for a vaccine. Unlike today, however, the United States had a head start from 1948 to 1957 thanks to the ingenuity of an exceptionally talented and forward-looking scientist, Maurice Hilleman, who was head of the Respiratory Disease Department at the Army Medical Center (now the Walter Reed Army Institute of Research) The New York Times' first report of the Hong Kong outbreak - three paragraphs on page 3 - was on April 17. The Army Medical Center received its first influenza samples from Hong Kong on May 13. Nine days later, Hilleman had identified the new tribe. As early as July 26, doctors in Fort Ord, California began vaccinating military recruits. Around 4 million one-milliliter cans were released in August, 9 million in September and 17 million in October.
It was a different America, no question about it. For one, many Americans today seem to have a much lower risk tolerance than their grandparents and great-grandparents six decades ago. As Clark Whelton recalled:
For those who grew up in the 1930s and 1940s, it wasn't unusual to feel threatened by contagious diseases. Mumps, measles, chickenpox and German measles swept through entire schools and cities; I had all four. Polio took a high annual toll, leaving thousands of people (mostly children) paralyzed or dead. There were no vaccines. Growing up meant waging an inevitable fight against infectious diseases. For college students in 1957, Asian flu was a well-known hurdle on the way to adulthood ... We accepted Asian flu. We said our prayers and took our risk.
The really striking contrast, however, is how much more competently the Eisenhower government reacted to the 1957 pandemic than its counterpart today, which shifted from carelessness in January and February to panic in mid-March. This is not to say that the threats posed by the two pandemics were the same, nor that we should have just dusted the "what, I'm worried?" Playbook. As we have seen, the smart playbook for Covid-19 used early, widespread testing and contact tracking to eradicate super-spreader events while protecting the vulnerable.
After inflicting an immense economic shock on lockdowns, we have tacitly decided to pretend the pandemic is over by returning to normal behavior and social distancing and wearing masks that further infect limit minimal costs, largely avoid. In short, we're on our way back to 1957, and implicitly aiming for herd immunity - and a lot more deaths - until a vaccine appears.
By chance Kerouac's "On the Road" was first published in 1957. The second line of the book reads: "I just got over a serious illness that I don't want to talk about." By the end of this year, several million Americans will be able to say the same words about Covid-19. Unfortunately, around 200,000 will not be able to do this.
(Updates estimates of Covid-19 infection mortality rate in the 20th paragraph of the article published on June 21st.)
This column does not necessarily reflect the opinion of the editors or Bloomberg LP and its owners.
Niall Ferguson is a senior fellow of the Milbank Family at the Hoover Institution at Stanford University and a columnist for the Bloomberg Opinion. Previously, he was a professor of history at Harvard University, New York University and Oxford. He is the founder and CEO of Greenmantle LLC, a New York-based consulting firm.
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