Looking Back and Ahead

By most accounts the next two to three weeks will be the worst the US has yet experienced as far as COVID 19 infections and deaths are concerned. To some degree this is due to the fact there is near 100% awareness in the US. In past months people with a mild version of the virus might have assumed they were just dealing with a cold or flu – now they are more likely to be identified as having the COVID 19 virus. The most vulnerable populations have been exposed and they have become seriously affected. The pattern in the US has been similar to that in other nations as far as who has been affected. The vast majority (upwards of 85%) have either proved somewhat immune or have contracted a mild case that has made them sick but has not been life threatening. Once that vulnerable population has been attacked the virus begins to find less fertile ground and starts to fade. At least that is the hope.

It is not too early to look at the current situation in order to determine what should have been done to better protect the population. There have been plenty of wrong moves and it can only be hoped that these lessons are learned before the next such threat. According to most analysts the proper reaction consists of three interconnected reactions and all of them swift. Some have taken to refer to this as the “3 I’s” – identification, isolation and intervention. The US was woefully unprepared on all three counts but then again this was the situation with most of the rest of the world as well.

    Several months into this crisis and there is still not enough testing – the US is able to test about 30 to 40 out of every million people (South Korea is testing around 4,000 per million). The US has not even been able to test the two most crucial segments of the population – those in the medical field and those that are considered most at risk. The second step is isolation and the US has been extremely slow to implement even the most basic measures. It was weeks before the order to engage in “social distancing” was issued and by this time the virus had spread to all 50 states. The polls suggest that some 40% of the population have not complied and have no desire to do so. Most importantly the vulnerable populations have not been isolated or even identified in many parts of the country. Finally, there is the intervention stage and the US has not been ready. There are not enough hospitals or medical personnel and there is a very dangerous shortage of basic equipment.

    At this stage there is little to gain from attacking the poor decisions that left the US so vulnerable. The need is to look at these failures and ensure the mistakes are not made over and over again. The world gets hit by some kind of viral epidemic every year and these outbreaks kill people every year. This time it has been COVID 19, in the past it has been SARS, MERS, Zika, Swine flu, Avian flu, West Nile, Ebola. Marburg and any of a dozen strains of deadly flu. There will be more and future response can’t be this chaotic.

When does the world go back to work? This is not an easily answered question at this stage – there are far too many variables to make much of a prediction. There are some important prerequisites that might serve as guides to timing. First, it must be noted that the vast majority of Americans are still working and the vast majority of businesses are still functioning. There are those that have been deemed essential and they have actually seen substantial increases in business. Then there are the millions of people who have adapted to the mandate that they work at home. The hardest hit areas are very familiar by this time – anything connected to travel and tourism, restaurants, anything connected to entertainment and crowds, essentially any business that requires or encourages people to be in close proximity and in large numbers.

The process of getting the country back to work will have four phases. The first and likely the easiest will be allowing people to return to their office jobs. These will be the easiest to continue protecting as people can continue to practice good hygiene and it is possible to maintain some distance. The second phase will be opening retail operations fully. It has already been demonstrated that people can shop for groceries and other necessities and it isn’t a big leap to allowing other stores to reopen as long as that basic hygiene and care continue. The third and fourth phases will be trickier.

    To allow situations where people will be crowded together will require three adjustments. The first is that people who are at high risk will have to remain isolated, imposing a personal quarantine. Likewise, people that think they have any kind of illness will have to isolate themselves. The second adjustment will revolve around basic precautions such as personal hygiene. The restaurant will be more likely to open before the concert venue as there will be marginally more control over that hygiene. The third adjustment will be the most difficult of all as it will mean accepting a certain level of risk.

    The most optimistic assessments of the virus and its lifespan hold that it will remain in the population for months and months – at least until there are cures available and until there is a readily available vaccine. This will require a level of acceptance on the part of the public. The peak infection period is now upon the US and if this is similar to the experiences of other nations this is the worst it will be. There will be fewer infections and fewer deaths once the peak is reached. But the infections will still take place and there will still be deaths. How many will be judged tolerable? Will people be willing to resume their normal patterns? Some will not have a choice as they will either be ordered back to work or they will have to return as they need the money. Some will quickly resume old patterns as they have been very frustrated by the restrictions. The rest will remain cautious and may shun the return to normalcy for weeks and even months. Much will depend on the messages received from government and the health authorities and how that will be interpreted by the media.

I write the Business Intelligence Brief three times a week (MWF) and it is available at no charge. Lately it appears to have become the "plague report" but at some point it will return to its broader scope of economic analysis. If you would like to be on the distribution list send me an e-mail - chris.kuehl@armadaci.com (it really is free!)