“You may not like me but you have to vote for me
or else your 401(k) will be destroyed by the Democrats”. - President Trump
speaking @ a MAGA rally before the Covid-19 pandemic struck.
Trump had thought the economy was the key to his winning
re-election but China’s deceitful hiding of the Wuhan
coronavirus & then promoting its spread around the world provided the excuse
for state & local government officials to shut the
economy down thereby taking the issue away unless Trump convinces voters he is
best @ rebuilding the economy.
After the political judicial decisions this past week the
importance of the President appointing judges & Supreme Court Justices, that
require Senate approval, has also re-emerged as another key issue not only for
the presidency but also Republicans retaining control of the
Senate.
The above graph was part of the Congressional Budget Office’s
(CBO) response to NY Senator Chuck Schumer’s request regarding the comparison of CBO’s May 2020 Interim Projections of Gross Domestic
Product & Its January 2020 Baseline Projections.
In short, Schumer wanted to see CBO’s analysis of the damage
done by the government’s shut down of the economy under the pretense of
protecting people from Covid-19 – although he would not have expressed it
exactly that way.
CBO projects that the economy will produce $7.9 trillion less
growth in real inflation-adjusted GDP (2019 dollars) when comparing their
January forecast of just before the government shut down to right after the
results of curtailed consumer spending from business closings & re-openings,
with social distancing, & the drop in U.S. investment in the energy sector
could be estimated. Mathematicians in the readership should test their ability
to estimate the $7.9 trillion using the area under the curve on the above graph
– a fun exercise.
Although the CBO projects growth it is not fast enough to
catch the January baseline projection until the fourth quarter of 2029.
In a separate study, a week after the aforementioned CBO
report, the National Bureau of Economic Research (NBER) announced that they had
determined that the U.S. had entered a recession in February.
The NBER’s recession dating committee does not go by the
rule-of-thumb recession definition of two consecutive quarters of declining GPD
but rather determines a recession start date using data for employment &
production & incomes minus government benefits. A recession begins when an
economy reaches a peak of activity & ends when the economy reaches its
trough. Between trough & peak, the economy is in an expansion so this
recession could turn around quickly & not exceed two consecutive quarters of
declining GDP.
But regardless of economic statistics about how long a
recession might last or when it started the damage done by the government’s shut
down of the economy has been devastating as the shutdown sent the U-3
unemployment rate from a fifty year low of 3.5% in February to a post-World War
II high of 14.7% in just two short months. This means millions of people might
not go back to their old job or even their old industry if demand is reduced for
goods & services that social distancing precludes. The first quarter of 2020
contracted @ a 5.0% annual rate (2nd estimate – BEA) even though only the last
two weeks of the quarter were directly affected by the government shut down
orders. The decline in payrolls shows that in one month all the jobs added in
the past decade were wiped out. The April jobs report showed U-6, the
government’s broadest measure of unemployment & underemployment, climbed to
22.8%. Many other workers took pay cuts – I have recommended a U-7 category be
added which would include all of U-6 plus those employed full time who make a
fraction of their former pay.
Another 1.5 million people filed new applications for
unemployment benefits in the week ending June 13. Over forty million
Americans have lost their jobs in 2020. Economists estimate
that it will take one, two, or even three years to get back to pre-Covid levels
because the entire globe is affected. This is a different measure than the CBO
calculation detailed above.
But there is a balance between quickly reviving the country’s
economic activity from the depths shown above & having both workers &
consumers willingly returning to the old normal - unafraid of infection by
Covid-19. A good place to start is the age profile from the following
graphic.
Social distancing, wearing masks, & maneuvering around
plexiglas shields can only add to the cost of doing business & is a constant
reminder to both workers & consumers of the supposed danger that has been
brainwashed into the unsuspecting American citizenry. Robert Rosenkranz writes
in the WSJ that in reality “it is extremely rare for people who are otherwise
healthy to die of Covid-19. Most of the people who die with Covid-19 – 98% in
one study – have @ least two other major life-threatening conditions, such as
diabetes & heart disease. Surprisingly little data has been collected to
sort out these multiple causes”. More on Mr. Rosenkranz’s last point
below.
How we respond to hotspots or a second wave of infections will
be very important to our freedom, standard of living, & economic future.
The evidence is clear that the government did almost nothing right on our first
go round starting in March – shutting down schools where American children are
virtually immune to the Wuhan coronavirus, transporting recovering Covid-19
patients to close contact with the most vulnerable elderly & aged people in
nursing homes, & paying people more in unemployment benefits than they were
earning while working have all been detriments to returning to normal life.
If there is a next time the government should butt out. Everyone knows
the common sense precautions for avoiding Covid-19, the seasonal flu, or the
common cold (also caused by a coronavirus) & we will be quite capable of
policing ourselves, much like we are doing now.
If you encounter people who are reckless or foolish in this
regard simply avoid them with no explanation, because they don’t deserve one, if
they are that reckless & foolish to be so cavalier about a disease that
people die from every day & doctors & nurses die from working their
fingers to the bone in intensive-care-units.
We have learned that the Wuhan coronavirus spreads in close-up
face-to-face interactions for extended indoor periods of @ least fifteen minutes
especially in crowded events, poorly ventilated areas, & places where people
talk, sing, or cheer loudly – & that it especially attacks Americans over 60
who are medically fragile. About 80% of Covid-19 cases in America are mild,
moderate, or asymptomatic. The Wuhan coronavirus hits younger people harder in
poor countries than in America because of demographics, a greater prevalence of
underlying conditions @ an earlier age, & weaker if not precarious
healthcare systems. See graphic below of coronavirus deaths in Mexico & the
U.S.
The statistics show that Americans under 60 can resume a
normal life using common sense to not go looking for trouble or infection while
those 60 & older, especially the elderly who are medically fragile with
serious underlying health conditions wait for a vaccine or other treatment to be
developed before returning to a pre-Wuhan coronavirus life. Sorry to those over
60 but the Wuhan coronavirus is a constant threat until a vaccine or other
treatment becomes available. This may not be easy for the elderly as a life of
separation from loved ones could continue for some time before the all-clear is
signaled.
People 65 & over make up 11% of the U.S. workforce thereby
further complicating the trade off between working & staying safe. Many of
this 11% will have to be replaced. It includes 15% of dentists, 13.3% of family
doctors, 12.5% of surgeons, & 20.9% of school bus drivers. These numbers
increase when you add in people 60 to 65.
We need Johns Hopkins or other services to provide meaning
data not just figures on the number of deaths. Providing the percentage of
infections & deaths as a function of the number of people tested is much
better information than just the number of infections & deaths – i.e., of
course the total numbers will go up as the number of tests
increases.
Also, the Covid-19 statistics should be presented each day
along with other statistics to put the danger in perspective. How many deaths
are recorded each day for Covid-19 (& the ages & whether or not there
were underlying medical conditions), the seasonal flu, cancer, suicide,
abortion, traffic accidents, drug overdoses, & communicable diseases would
provide a much more complete picture & understanding than we currently have
of the Covid-19 risk.
In summary, it looks like the economic recovery has started
which is bad news for the opponents of President Trump. For over two months the
federal government (the swamp @ the CDC) deceptively & intentionally
misrepresented warnings & recommendations for fighting the Wuhan coronavirus
while blue state governors kept their states locked down with the belief that
Trump would be blamed for the ensuing economic disaster. And of course the
hostile anti-American media plays right along with headlines such as “Virus
Deaths Swell as Crisis Deepens” or “Millions More File Jobless Claims” – what
did they expect with the mandatory shut downs? Such headlines should have been
written months before.
All of this hatred & obsession with Trump is so mindless
that you can only complete the circle when you see it is
deliberate.
