Balancing The Return To Economic Growth While Protecting Against Covid-19

“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.