Coronavirus Impact on the U.S.

The world has completely changed in less than half a year. Because of an irresponsible Chinese Communist Party, the Chinese coronavirus (COVID-19, also known as the Wuhan virus) has been unleashed upon the world. The coronavirus impact on the U.S. itself promises to be the worst economic catastrophe since the 1930s Great Depression.

Many other parts of the world have faired far worse per capita than the United States, at least so far. Cases in point are China itself, Iran, Italy, Spain, Germany, and France. Below is a Johns Hopkins University graphic that details the worldwide impact of COVID-19 as of March 23.

Nevertheless, the U.S. outbreak conceivably might be the worst economic catastrophe since the Great Depression of the 1930s. Let us look at how hard the United States is being hit.

The Cold Statistics

Until the Corona Virus epidemic passes, I will be following some statistics defining its evolution. They will be displayed under the Statistics main menu item as the subitem Novel Coronavirus (COVID-19) in the United States. I will endeavor to update these statistics daily.

As of March 22, the total accumulated U.S. cases were 33,546, the number of active cases was 32,949, and the number of new cases was 9,339.

From March 13 to March 21, the data strongly suggested that new cases of the coronavirus were reaching a peak. However, on March 22, New York state recorded a huge increase in new cases (5,418 new cases). Some (including the Governor of New York) have suggested this huge increase was due to vastly increased testing finding already existent infections. This is quite possible, and if true it tells us we should see many days of falling new cases before declaring a peak.

Indeed, the data for new U.S. deaths before March 22 seemed to be telling the same tale of a peaking epidemic. Nevertheless, the most recent New York state data also destroyed that hope, as shown below.

The red curve gives the total accumulated U.S. deaths in the time period. The blue curve shows the number of new U.S. recoveries and the black curve the number of new U.S. deaths each day. The U.S. death rate from coronavirus is displayed by the green curve. It is calculated from the ratio of the total number of deaths to the total number of cases. 

The peak in the green curve is not to be taken seriously for several reasons. First, the time period around the peak had a very small number of cases, and small changes in deaths could cause huge changes in the death rate. The peak in the death rate curve was on March 3, 2020 when there had been a total number of 124 cases and a total number of 9 deaths. Second, the novel coronavirus appears to last a very long time before recovery. The most susceptible to infection, the elderly, are also the most likely to succumb to the disease. This makes the death rate peak long before a steady-state is achieved. Third, as time goes on, health professionals are likely to find additional ways to limit the disease through quarantines, social-distancing, and treatments. These are likely to bring the death rate down.

As the number of new deaths went up, so did the number of new cases. The number of total deaths divided by the number of total cases still gives an asymptotic death rate at around 1%. The latest value for the U.S. death rate is 1.25%.

Finally, the next plot shows the percent of the U.S. population that is infected with the virus. It is calculated from the ratio of the number of active cases to the population number. The U.S. population is taken as  329,410,000.

As of March 22, 2020, the percent of the population infected was 0.0100 percent.

Clearly, the disease continues to expand at an exponential rate. Active cases seem to be doubling approximately every three days. However, the death rate appears to be approaching a steady-state rate of around one percent, and fatalities seem to be mostly among the elderly. As of now, an infinitesimal fraction of the U.S. has been infected.

The Body Blow to the Economy

The advent of the Chinese coronavirus has converted the American economy from a robustly growing free-market to an economy teetering on the edge of a deep recession – perhaps even a depression.

Until we can cure the infected and immunize the rest of the population, there is only one way to halt the virus’ progress. That is to isolate the sick from the healthy. This fact has motivated a great many states to issue orders that people cannot leave their homes with few exceptions. These exceptions typically include getting food or other essential supplies, obtaining health care, or going to an “essential” job.

States with such “lockdown” orders include California, Connecticut, Delaware, Florida, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, West Virginia, and Wisconsin. That is a list of 21 states including the most populous states of the union.

Many of these states have explicitly prohibited the operation of businesses that bring large groups of people together. Examples of such businesses are dine-in restaurants, bars, theaters, nightclubs, and gyms. Some states have even banned any business or activity, including religious gatherings, in which more than 10 people attend. Many states have closed public schools.

At the federal level, the borders with Canada and Mexico have been closed to individual travel. Travel restrictions to and from Europe, China, and Iran have been implemented.

In effect, the U.S. economy is coming to a standstill. Layoffs and unemployment claims are soaring. As many businesses halt their operations, it seems inevitable that the United States will fall into recession. If the tactics to halt the epidemic cannot be changed, what will limit the abrupt halt of most economic activity? What will stop our economy from falling into a 1930s level depression? If close to total business shutdowns thrust the nation into a depression, would we be able to continue to support the health care system?

Is a Change in Government Strategy Required?

Many are beginning to believe the general government approach to the epidemic is far more draconian than it need be. One astute observer, a senior fellow at the Hoover Institution and an adjunct scholar at the Cato Institute named John H. Cochrane, has written the following:

The bill for the government response to coronavirus will be astronomical. The trillion-dollar “stimulus” is a lot of money, and it will eventually have to be paid for with taxes. The economic shutdowns are even more expensive. The U.S. economy produced about $21 trillion in 2019. If “essential” businesses still open are even half of that, each month of a national shutdown costs the economy almost a trillion dollars. The damage will become harder to fix as businesses fire workers and close forever.

WSJ Editorial, March 24, 2020: Flatten the Coronavirus Curve at a Lower Cost

It is often estimated one to three months of the current state governments’ “lockdown” policies would be required to flatten the coronavirus new case curve. If this were true, Cochran’s estimates of the immediate direct costs would be somewhere between one and three trillion dollars. That would be between 4.8 percent and 14.3 percent of the 2019 GDP. If one then included the costs from the bankruptcy of many small to not-so-small businesses, the economic and social costs would become far higher.

As a matter of perspective, consider the following: During this flu season in the United States, influenza has caused 36 million illnesses and 22,000 deaths. So far, as of March 23, the coronavirus has infected 43,734 people and killed 553. Yet, we do not seem to be on a war-footing with the flu.

This is not to denigrate the tragedy of deaths from COVID-19. But this observation does suggest perhaps we might adopt a more intelligent plan than the brute force approach of shutting down American society. From the evidence of the video below of a March 23 Trump press conference, Trump is thinking about another way himself.

What Else Can Government Do To Blunt the Coronavirus Impact?

One possibility is to use countermeasures of differing severity depending on the local severity of the epidemic. On March 24, New York’s 5,473 new cases accounted for almost half (49.4%) of the nation’s total of 11,075 new cases. Should the state of Montana with one new case; the states of North Dakota and South Dakota with two new cases each; or the states of Alaska, West Virginia, and Wyoming with four new cases each be shut down to the same degree as New York? The five most severely hit states reported the following statistics on March 24.

Data Source: Worldometers

These five states accounted for 67.04% of accumulated cases, 67.25% of new cases, 67.09% of active cases, 65.43% of total deaths, and 72.89% of new deaths in the United States. While in all states “social distancing” should be encouraged and quarantining of exposed individuals practiced, we could perhaps limit suppressive business shutdowns to those states most heavily hit.

Yet another way to ameliorate the economic problems is to recognize the ones most at risk are primarily the elderly over the age of 65. Could we not then allow those below 65 to go to work, theaters, bars, shops, etc. without hindrance? Younger people could still catch the disease, but they generally have milder cases and recover after about two weeks. This mimics the behavior of the flu and of that other coronavirus, the common cold.

As with the common cold and influenza, we will eventually get control of COVID-19 through “herd immunity.” That is, in the future, everyone will catch the virus, fall mildly ill for two weeks, then recover with antibodies that provide immunity. There will be much more severe cases among the elderly. This is what has happened in the past with the common cold and the flu, which are also deadly to the elderly.

Of course, we cannot yet generally depend on herd immunity. Herd immunity works only when most of the population already have some immunity. Then, those without immunity stochastically catch the disease to obtain their own immunity. Because the number of ill people is a small fraction of the population, the social perturbation will be small. It will also be temporary and mild for most individuals.

However, in our situation, almost no one has any resistance to COVID-19. If we just allow everyone to interact with others with no restrictions, we would end up with almost everyone catching the disease simultaneously. That would be just as destructive to society as draconian lockdowns. Therefore, until we get some degree of herd immunity, we must have some social restrictions. “Social distancing” and quarantine of the exposed must always be practiced.

Nevertheless, in areas not hit nearly as hard as New York, we could allow healthy younger people to interact without restriction. Businesses, bars, theaters, restaurants, concerts, and any other gathering place would be open to them. Randomly, some would become infected and then quarantined. At the same time, the elderly would be banned from such places. Such a process would begin the development of our country’s herd immunity. This process can be drastically shortened with the development of a COVID-19 vaccine. Such a vaccine is expected to be available after a minimum of a year to a year-and-a-half.

Whatever happens, we need to find a different way of defeating this scourge. The way we are going about it now, we will surely destroy our economy.

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