Shutting Down the Economy Will Not Stop COVID-19’s spread Through The United States
About two weeks ago now, I listened to the New York Times podcast The Daily. Health reporter Donald G. McNeil Jr. discussed the potential road ahead for the United States as it was deemed inevitable for the centralized Wuhan outbreak to make its way to our shores. As of now, the United States is sitting on about 120 cases of confirmed Coronavirus spread across 20 different states.
Public officials at the local, state, and federal levels have been scrambling to conceive a response. Governor Andrew Cuomo of New York officially declared a state of emergency over the 89 confirmed cases in the state as of Saturday night. Both Florida and Oregon have also declared a public health state of emergency. With these formal declarations, states have asked citizens to take some drastic measures. Citizens have been asked to cancel travel plans, and thousands have been asked to self-quarantine for at least a two week period.
Stocks have been on a roller coaster ride over the last two weeks, and are very likely to open up lower on Monday and continue their bearish slide. Especially after the world-renown tech conference, SXSW canceled after markets closed on Friday. The implications of this cancellation bring this whole situation to a new crossroads. It’s one thing asking a couple of thousand people in a country of 320 million to stay at home for a few days…but to cancel an estimated 300 million dollar conference for this is alarming. This is SXSW’s first cancelation in the festivals 34 years of existence.
Many other festivals already preceded SXSW in canceling, including popular EDM festival Ultra Music Festival in Miami. I understand these decisions are not weighed lightly, but these cancelations…that will likely continue, will have a drastic effect on the economy. Additionally, any tourism or live entertainment companies have already been slammed since this thing started. In one month, Six Flag’s stock has lost 44% of its value…that's billions of dollars gone from the largest commercial name in amusement parks. Airlines have seen a huge number of cancelations and low bookings, enough for some to cancel flight routes temporarily. Moral of the story…this scare is starting to see some serious impacts on some industries in this country, and as more cases are announced on a daily basis…I am afraid the fear-based reactions will continue.
I understand taking preemptive measures to curb the spread of this virus, but at the same time…we can not hurl ourselves over the edge of a recession. The Fed is expecting it…which is why they bottomed out rates this past week and the market didn’t know how to react. It’s expected that earnings from many historical blue-chip stocks will be effected on first-quarter earnings. If these stocks (along with the major indexes) continue to take a hit, that will be a huge setback for a generation that is already struggling to save for retirement. Millions are banking on their 401ks to survive one day. The mass hysteria of this virus is literally destroying the economic stability of the middle class.
And we haven't asked millions to stay home from work yet…
If this continues to spread, and most major cities start to show a couple of dozen cases…I assume we will see most public transportation shut down. Imagine the economic impact of millions of people not going to work for a month…or two. Statistics show that Americans do not have the finances to weather this sort of storm. The average American household has about $6,800 in monthly revolving credit card debt. All it would take is a couple of months for this number to balloon beyond levels that are normally manageable. Also, let's not forget the major bills such as a car payment, mortgage, or student loans.
If we do not manage the hysteria of this virus, we could see an economic downturn similar to the size of the “Great Recession”. This is not going to just screw big business. This could drastically impact the finances of millions of people across all social classes. More importantly, though, this could destroy the finances of the middle class in both day to day finances and their retirement savings.
I am always someone that bitches at authors for failing to provide a solution when discussing an alarming problem. I am no expert…but here is my take. The president needs to truly take the reins of this thing. He needs to stop campaigning immediately and should be visiting hospitals with known COVID-19 cases. This would reinforce the public’s confidence in medical personal, and reassure the public that this situation is not an existential crisis. Next, I believe the most beneficial response for all parties would be to isolate potential victims that are more prone to fatality from the virus. From early on, doctors have noticed which patients are more likely to not recover from the virus. Children do not seem to get the virus, and mortality rates of anyone under the age of 70 are extremely low. It is older individuals with pre-existing conditions that have been the hardest hit population with fatalities. I do believe we should continue to take rational preemptive measures in the public as a whole. Still, until a vaccine is secured, I believe the best move would be to isolate citizens that are prone to higher fatality rates. Maybe we could temporarily hold these people on military bases under the care of military medical professionals. That way, they are isolated from the general public where the virus will inevitably spread very easily. Of course, this would be strictly voluntary, and older citizens could elect to stay in their homes if they wanted to brave the risk of staying in public. As fewer people that are likely to die from the virus get the virus…the fatality rate will plummet and mass hysteria would decline. Thus, preventing the United States from grinding to a halt over this thing.
However, policymakers choose to continue with drastic measures that will could have slippery slope consequences for this country. We have to remember that over half of the 100,000 people that have had the virus are officially recovered and back in society. Potentially destroying peoples economic circumstances needs to be considered heavily in any decision-making room right now.