America is on the Road to Relapse Not Recovery
Opinion
Niall Ferguson
America is on the road. But is it on the road to economic recovery or a pandemic relapse? Fans of “On the Road” — Jack Kerouac’s 1957 classic of beatnik literature — will recall that its giddy, low-punctuation style is sometimes a little hard to follow. The same might be said of the data Americans are currently generating, some of which undoubtedly points to a rapid (if not quite V-shaped) recovery, and some of which seems to indicate either a second wave of Covid-19 infections or simply the continuation of the first wave. The two are not separate stories, but rather a single, intertwined narrative. The best title for this tale was devised by my Hoover Institution colleague, the economist John Cochrane. He called it “The Dumb Reopening.” A smart reopening is the sort that has been possible in countries such as Taiwan and South Korea, which were so quick to ramp up testing and contact tracing that they didn’t need to do lockdowns in the first place. Among European countries, Germany and Greece have also successfully adopted these methods, which ensure that any new outbreaks of Covid-19 can quickly be detected, so-called super-spreaders isolated, their recent contacts swiftly traced and tested, and the outbreaks snuffed out. Other signs of smartness are the persistence of behavioral adaptations by ordinary people, such as social distancing and wearing masks. We know that these practices, which can be adopted by citizens without any government decree, are effective in restricting the spread of the virus SARS-CoV-2. Less widely appreciated is that social distancing is more effective as policy than lockdowns, as a forthcoming paper in the journal Nature shows. This is also the implication of work by researchers at Oxford’s Blavatnik School who show that there is no correlation between the stringency of government measures and containment of Covid-19. Measures designed to protect groups that are especially susceptible and vulnerable to Covid-19 -- notably the elderly, especially those with pre-existing conditions –- are also smart. A dumb reopening eschews all such precautionary measures. So is that really what the US is doing? The answer is pretty much yes. Testing has improved, but contact tracing is primitive. And social distancing and mask-wearing are least prevalent where reopening is happening fastest. The economists I like best prefer data to fancy models. These days they are in clover because the age of the Internet and the smartphone is already a golden era of high-frequency data about economic behavior. When I say, “America is on the road,” I can say it with conviction because mobility data generated by Google, Apple and less well-known tech players such as SafeGraph show it. Recent official statistics on unemployment and retail sales surprised economists, but they shouldn’t have: The mobility data were already pointing to rapid recovery some weeks ago. In the trough of pandemic panic, between mid-March and mid-April, Apple’s Mobility Trends (which track changes in routing requests to Apple Maps since Jan. 13) pointed to declines in driving and walking of around 60%. (For public transport the decline was 89%.) But since late April, the trend for foot and road traffic has been steadily upward. Requests are now up 12% and 33%, respectively, relative to January. (Transit requests are still down 54%.) SafeGraph offers a more granular view of foot traffic, based on aggregated and anonymized smartphone location data. Relative to Jan. 2-3, Americans were walking between 60% and 70% less by the beginning of April. But in Dallas and Houston, foot traffic is now just a quarter below the start of the year. General merchandise stores, counter-service restaurants and supermarkets are almost back to where they were. But perhaps the most useful mobility data for economists come from Google’s Community Mobility reports, which show how visits and length of stay at different places have changed relative to a Jan. 3-Feb. 6 baseline. By subdividing destinations into six categories — retail and recreation, grocery and pharmacy, parks, transit stations, workplaces and residential — the Google data help us zero in on what matters economically. No recovery was ever driven by visits to parks (up 53% since January, not surprising given the improved weather in most places). Grocery and pharmacy visits weren’t much impacted the pandemic, as they were essential. The big story is retail and recreation: down 49% nationwide at the trough (April 5), but now down just 16%. Mobility data predicted the recent positive statistics on retail sales. In May, the monthly jump in sales reported by the Commerce Department was 17.7%; the monthly jump in Google’s data for retail and recreation visits was 24.4%. New and old data alike are voraciously devoured by Wall Street analysts. Combined with the Federal Reserve’s multiple liquidity and credit facilities, which are designed to shore up the prices of pretty much all financial assets, they explain why US stocks are back where they were in early March, before the pandemic panic. Mr. Market is acting as if Covid-19 is over. The trend you can infer from the Google data points to July 10 as the date when consumption will be back to normal. The problem is that Covid-19 isn’t over. As some of us have been warning for some time, the failure to contain the spread of the virus in the US has made a second wave inevitable in many of those places where case numbers had fallen significantly, and a continuation of the first wave inevitable in those places where they had not. The national data for new cases and deaths don’t show this, as they are dominated by improvements in the Northeast (New York and its neighbors). Eyeballing the latest data on confirmed cases, I see second waves in Arizona, Florida, Idaho, Nevada, Oklahoma, Oregon, Washington and Wyoming, as well as second ripples in Hawaii, Kansas and Montana. First waves continue in California, Mississippi, South Carolina, Tennessee, Texas and Utah. Trends in case numbers, positive tests and hospitalizations look especially worrisome in Arizona, Florida and Texas. As Americans hit the road in increasing numbers, including longer-range trips to vacation destinations, we can also expect rising numbers of cases in states with hitherto low numbers of Covid-19 infections, such as Montana. So what’s going to happen next? One possibility is that Americans will recoil from reopening when they see worse data on cases, hospitalizations and mortality in their states — or, more likely, if they see worse cable news reports or Internet clickbait about those things. (Watch for breaking news on Arizona’s intensive care unit capacity.) Any actions by state or municipal authorities to slow down the rush back to normality (mandatory masks in Raleigh, North Carolina, for example) may add to public anxiety. Polling by Civiqs shows that many Americans — Democrats much more than Republicans — are still “extremely concerned” or “moderately concerned” about Covid-19. Eminent economists — notably Michael Spence, who has sought to match mobility and infection data — look at the dumb reopening and conclude that it will end badly. Spence and his co-author Chen Long warn that “the US is heading for a situation comparable to the Great Depression.” They are in good company: Hardly any leading academic economist believes in the V-shaped recovery story, where output snaps back as far and as fast as it has fallen. The alternative, and I suspect more likely, scenario is that Americans carry on getting back to normal and tacitly accept further excess mortality as just a cost of doing business until a vaccine is available. That would be bad news for the significant number of Americans who, because of their age and/or pre-existing health problems such as obesity, hypertension or kidney disease, are potentially at serious risk from Covid-19. But it would not be without precedent. Although many commentators and scholars have looked back to the 1918-19 influenza pandemic for insights into our current predicament, it seems clear by now that SARS-CoV-2 is not as deadly a virus as H1N1 was just over a century ago. Estimates of the infection fatality rate of Covid-19 still range widely, from 0.02% to 0.86%, according to one recent survey (though some recent European serological studies imply higher rates), but the fatality rate of the so-called “Spanish Flu” was probably between 1.8% and 2.2%. Put differently, 675,000 deaths in the US were attributed to influenza and pneumonic complications in 1918-19 of which around 550,000 were “excess deaths.” An equivalent excess death toll in 2020 would be greater than 1.7 million, compared with a figure to date of around 100,000. Closer in terms of likely mortality is the less well-known “Asian Flu” pandemic of 1957-58. That caused up to 116,000 deaths in the US (the estimates for excess morality vary widely), which would translate into 215,000 deaths in 2020, roughly what I expect the final US Covid-19 death toll to be. It is quite probable you have never heard of that pandemic, even though its worldwide death toll was between 700,000 and 1.5 million. This is all the more surprising as, unlike SARS-CoV-2, the H2N2 virus of 1957-58 killed young people. As in most influenza pandemics, significant numbers not only of the very old (over 65) but also of the very young (under 5) died. In terms of excess mortality relative to baseline expected mortality rates, however, it was teenagers who suffered the heaviest losses. The biggest difference between 1957 and 2020, however, lies in the government and public response to the new pathogen. President Dwight D. Eisenhower did not declare a state of emergency in the fall of 1957. There were no state lockdowns and no school closures. Sick students simply stayed at home, as usual. Work continued more or less uninterrupted; AT&T reported peak absenteeism of 8%. Nor did the Eisenhower administration borrow to the hilt to fund transfers and loans to citizens and businesses. The president asked Congress for a mere $2.5 million (around 0.0005% of 1957 GDP) to support the Public Health Service in case of an epidemic. True, there was a recession that year, but it had little if anything to do with the pandemic. Eisenhower’s job approval rating deteriorated, declining from about 80% to 50% between January 1957 and March 1958, and his Republican Party sustained severe losses in the 1958 midterms, but no serious historian of the period would attribute these setbacks to the pandemic. The national mood of insouciance in the face of a new and contagious disease might be summed up in the phrase coined the year before by Mad magazine’s second editor, Al Feldstein: “What, Me Worry?” Huey “Piano” Smith and His Clowns even had a minor hit with “Rockin’ Pneumonia and the Boogie Woogie Flu.” Whereas public health officials reached a consensus in March of this year that only full “lockdowns” could avert disaster, the Association of State and Territorial Health Officers declared on Aug. 27, 1957, that there would be “no practical advantage in the closing of schools or the curtailment of public gatherings as it relates to the spread of this disease.” As a Centers for Disease Control official later recalled, “ASTHO encouraged home care for uncomplicated influenza cases to reduce the hospital burden and recommended limitations on hospital admissions to the sickest patients … most were advised simply to stay home, rest, and drink plenty of water and fruit juices.” As today, there was a race to find a vaccine. Unlike today, however, the US had a head start, thanks to the acumen of one exceptionally talented and prescient scientist, Maurice Hilleman, who was chief of the Department of Respiratory Diseases at the Army Medical Center (now the Walter Reed Army Institute of Research) from 1948 to 1957. The first New York Times report of the outbreak in Hong Kong — three paragraphs on page 3 — was on April 17. The Army Medical Center received its first influenza specimens from Hong Kong on May 13. Nine days later, Hilleman had identified the new strain. As early as July 26, doctors at Fort Ord in California began to inoculate military recruits. Approximately 4 million one-milliliter doses were released in August, 9 million in September, and 17 million in October. It was a different America, no question. For one thing, many Americans today would appear to have a much lower tolerance of risk than their grandparents and great-grandparents six decades ago. Bloomberg
from Asharq AL-awsat https://english.aawsat.com/home/article/2357031/niall-ferguson/america-road-relapse-not-recovery
No comments:
Post a Comment