COVID Third Surge Won’t Sink Us: Economic Forecast
New Covid-19 cases DR. BILL CONERLY FROM DATA COMPILED BY USAFACTS.ORG
The United States is in a third surge of Covid-19 cases. The first sent the economy down sharply, the second probably delayed economic recovery, but what about the current surge? Most likely, spending and employment will level off despite the increased caseloads. The economy will continue at subpar performance until a vaccine or treatment has demonstrated success.
The recession that began in March was triggered by both governmental lockdown orders and voluntary choices by individuals about activity. Restaurant visits in Oregon, for example, were about half of normal just before the governor’s shelter-in-place order of March 16. Across the country, people adjusted their behavior voluntarily, with additional changes due to government orders.
From an economic forecasting perspective, the question is whether the current surge will lead to either lockdown orders or more voluntary isolation. In point of fact, the summer surge in cases did little to worsen economic activity, even though some governors or mayors did tighten restrictions on activity. Retail spending in July, during the peak of the second surge, rose briskly, though with somewhat slower growth the following month. Perhaps growth would have been even stronger in August were it not for fears stimulated by the summer surge.
New Covid-19 deaths in U.S. DR. BILL CONERLY BASED ON DATA COMPILED BY USAFACTS.ORG
The lower mortality rate we’re seeing now is good news, both for patients and for the economy. Some of the improvement is false, appearing in the statistics because we undercounted cases when testing was scarce. That made the death/case ratio look higher than it truly was. But some of the gain is real, thanks to doctors and nurses discovering better treatment practices for Covid-19 patients. And a portion of the mortality drop comes from the population now infected, which is skewing younger and healthier now.
Number of people hospitalized for Covid-19 in U.S. DR. BILL CONERLY BASED ON DATA COMPILED BY COVID TRACKING PROJECT
Because of the undercounting of cases in the early days of the pandemic, hospitalizations may be a more consistent measure of the disease’s incidence. That data shows a third increase, but not as severe—yet—as the previous two surges. The glass-half-full view is that this is nothing we haven’t already experienced. The glass-half-empty opinion is we’re sick and tired of this.
Press reports of the rising caseload and hospitalizations are triggering little public response, as measured by Open Table’s data on seated diners. A variety of daily or weekly measures are displayed by Calculated Risk each week, and most show business as (new) usual despite the third surge.
The third surge doesn’t help the economy at all, but it’s not bad so far. Possibly worse for economic activity is colder weather, which will make outdoor dining more difficult in much of the country. December is usually the peak month for restaurants, but that may not be the case in 2020. Fortunately, December for restaurants is not the make-or-break month that it is for, say, jewelry and apparel stores.
Repeating my April 6 economic forecast, “The most likely path is a V that turns level before reaching its previous peak, somewhat resembling a square root symbol.” The economy will return—and surpass—its previous peak when we get a vaccine or widely effective treatment. Until then, the waning and waxing of the pandemic will have little impact on our sub-par economic performance.
Disclosure: None.