Friday, April 17, 2020
Mitigation: the process or result of making something less severe, dangerous, painful, harsh, or damaging
U.S. retail sales suffered a record drop in March as mandatory business closures to control the spread of the novel coronavirus outbreak depressed demand for a range of goods.
The outbreak set up consumer spending for its worst decline in decades.
Retail sales plunged 8.7% in March, the biggest decline since the government started tracking the series in 1992, after falling by a revised 0.4% in February, the Commerce Department said.
We are almost certainly in a Recession.
So what you’re telling me, Captain Obvious, is that when businesses are closed, when people are ordered to shelter-in-place, many of whom are now unemployed or expect to be so very soon; when a global pandemic occurs and we take drastic measures in response…what you’re telling me is that the economy implodes. Who could have imagined such a thing?
We are where we are and second guessing will do no good. We’ll never know how many would have died if we had taken less drastic measures to mitigate the spread of COVID-19. But we do know that more would have died. We are also starting to experience the consequences of those drastic measures. And make no mistake, those consequences will be deadly for many who would likely have survived the virus. We just don’t know how many and never will. The lives saved by shutting down the economy vs. the lives that will be lost from doing so….unknowable.
So we chose to mitigate the spread of the virus. Now we must decide how to mitigate the damage that mitigation has created. Whatever we do, it’s a no win situation. Start opening up the economy in early May and COVID-19 outbreaks are inevitable. Wait until June or July, there is still no guarantee that outbreaks will not occur and the economic damage may become irreversible. Taking half-measures to re-open the economy yet still contain the spread might be the worst of all options…or it might be the best. We don’t know.
What we do know is that we cannot wait months for a vaccine. That is not an option. Without a vaccine, whatever action we take comes with deadly risks. We are reaching a tipping point where we have to consider the long-term consequences of our actions. Just as viral spread is exponential, economic collapse expands exponentially. But there is no flattening curve and no herd immunity when it comes to the economy. Those who lose jobs and life savings do not develop antibodies that protect them and restore them to economic well-being. Many will fall and never get back on their feet.
Whatever we do will be politicized, especially in this election year. Politicians, being who they are, will choose the half-measures option. Open up enough of the economy to say they are “opening the economy”, but maintain enough restrictions to protect “the most vulnerable among us”. With the damage already done and without a vaccine, even those who have jobs will not fully return to normal activities or spending money. We may be able to stop the economic free fall, but recovery depends on that vaccine. Whether COVID-19 is really a monster or we have made it a monster, in today’s world it is a monster and that’s all that matters. Mitigation will only get us so far. Find the cure or learn to live with the monster.
Friday, April 3, 2020
“Nature doesn't ask your permission; it doesn't care about your wishes, or whether you like its laws or not. You're obliged to accept it as it is, and consequently all its results as well.”- Fyodor Dostoevsky
The Covid-19 Pandemic is like nothing we have seen in our lifetime. In terms of global impact, certainly not since WWII or the Great Depression. Those two events not only had devastating impact when they occurred, but went on to change the way people lived afterwards. The Great Depression brought New Deal style government intervention into our economy in ways never seen before. It also helped shape a generation of people who valued hard work and saving for the future. WWII made America a truly great global power for the first time and ushered in an era of prosperity and growth for the middle class. From the ashes of WWII and with the looming threat of Communism, the United States became the world’s leading force for economic expansion and globalization. But this all came with a price and we’ve been paying it for the last 40 years, mostly by going deeper in debt. After giving the world the shirts off our backs, we’ve been borrowing money for decades in order to buy those shirts back, along with sneakers, televisions, smart phones and automobiles.
And now we are going through another life-changing event. We will get through it. There will be new and better ways to treat and comfort the sick. Ultimately there will be a vaccine. We will put this behind us. But it will be a long time, perhaps a generation or two before it is forgotten… or at least until the next crisis comes along. And in its aftermath, things will change.
Here is a list of ten things which I predict are likely to happen after this pandemic is over.
_1 We will certainly be better prepared for something like COVID-19 in the future. It may not be enough and we may face something totally different. But there will be massive investment in preparation for everything we can imagine and, perhaps even for things unimaginable.
_2 The Federal government will take a more active role in healthcare. Some version of national healthcare or Medicare for all will be a reality before the end of this decade.
_3 The inevitable decline of brick and mortar retail will accelerate. What was likely to happen over the next ten years will happen within five.
_4 There will be a significant increase in telecommuting. Many workers will have demonstrated that they can do their jobs just as well from home, if not all the time, at least most of the time or often enough so as not to be needed in the office every day. This in turn will have major implications for where and how people choose to live, how often they trade cars and all of the services that rely on the masses commuting to work every day (fuel, food, parking, auto repair, office space, etc .).
_5 Business travel may never go back to the way it was before COVID-19. More people will realize that many of those in-person meetings weren’t really all that necessary, certainly not worth the time and expense and that most of what needs to be accomplished can be done just as well via video conference.
_6 International travel will be more restrictive and closely monitored. Be prepared for longer lines, more questions and someone taking your temperature.
_7 Western industrialized nations will insist on having more control over critical supplies, equipment and information; especially that which is related to healthcare, technology, energy and national defense.
_8 Hand-washing, social distancing, crowd-avoidance...a lot of people will keep doing these things long after the pandemic has passed. How that translates to attendance at concerts, sporting events, conventions, etc. remains to be seen. But my guess is that it may be a few years before we return to hugging the person next to us.
_9 More people will start eating at home and eating healthy. When restaurants reopen there will be a surge of returning customers who just need to get out and eat at their favorite places. But many will have found that preparing meals at home can be a lot healthier and a whole lot more affordable.
_10 There will be major reforms in the way senior care facilities are managed. Most people, especially those who have had an elderly family member in one of these places, already knew that there are often issues with the quality of care. But now after COVID-19 and with an aging population, most of whom vote, there will be plenty of pressure to clean up this industry.
These items are just the tip of the iceberg. There will be many more. That’s why it’s called a life-changing event.