Today is March 22, 2020, it has been 62 days since the first COVID-19 case was discovered here in the United States. Currently, the U.S. has approximately 29,211 cases and 349 deaths with new cases increasing by the day. This has caused state governments around the country to take unprecedented actions to combat the spread of COVID-19.
As of last Wednesday, there were 91,000 public and private schools that had closed affecting at least 41.7 million students. Many businesses across the country are closed, either voluntarily or as a result of a mandate from their governor. Many restaurants that are not closed have gone to carry out and delivery only. The big 3 automakers have closed all their factories at least until the end of the month, they are reassessing the situation weekly. Most airlines have shut down many of their routes due to a dramatic drop in passengers. A growing list of states are ordering their residents to stay home and shelter in place.
In my opinion the worst part of all of this is the uncertainty, no one has any idea when this will end so life can start getting back to normal. Even the experts are struggling to model how bad things are getting or will get as the shutdown continues.
Here is a quote from Credit Suisse economist James Sweeney “There is no blueprint for the current shock, and uncertainty about the extent of contagion and the economic consequences is overwhelming”. He also said this on Friday “Economic data in the near future will be not just bad, but unrecognizable”.
Bank of America economists led by Michelle Meyer wrote on Thursday “We believe that the US economy has fallen into recession, joining the rest of the world, and it is a deep plunge,”. They also wrote “Jobs will be lost, wealth will be destroyed and confidence depressed. The salvation will come if there is a targeted and aggressive policy response to offset the loss of economic activity and ensure a sound financial system... There is a large uncertainty band around the forecasts.”
Deutsche Bank economists led by Peter Hooper said. “These are truly unprecedented events with no adequate historical example with which to precisely anchor our forecast. The evolution of the virus is also highly uncertain “.
St. Louis Federal Reserve President James Bullard said, “Output in the second quarter could be half the norm, a hit of about $2.5 trillion”. His ballpark estimate is that unemployment could hit 30%, higher than in the Great Depression and three times more than the 2007-2009 recession.
Below are my thoughts on this crisis.
What we are going through right now is uncharted territory. As bad as things seem right now and with the growing feeling that everything is out of control, it is possible that things could get a whole lot worse. IMO this has the potential to spiral into something that we can't even fathom right now. My hope is that there will be a pre-existing drug that will be effective in at least slowing the spread of COVID-19. I realize this is almost hoping for a miracle but at this point, a miracle may be the only thing that keeps this pandemic from leaving the U.S./global economy in ruins. I also hope that our government and governments around the world will respond quickly enough and with enough resources to limit the loss of life and damage to the economies.
There are many facets to this problem we are facing, two of the most important IMO are the health and economic aspects. At this time, it is still too early to determine how bad each of these will be affected. My hope health-wise is that this can be contained somehow, and loss of life is kept to a minimum. On the economic side, I feel as though we have a very limited amount of time to get the parts of the economy that are shutdown back up and running before there is very serious and long-term damage done. IMO there is no question that we will slip into a recession because of this, the only question is for how long and how deep it will be and if we can avoid something even worse.
Please stay safe, spend time with your loved ones and don’t lose hope.