COVID-19 Diary Number 4 (May 5, 2020)


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The president and several governors have begun considering, and in some cases beginning to end, the worst of the lockdowns and quarantines in the effort to reopen the economy.  It is none too soon.  As readers of this site know, the strictures to “flatten the curve” of infections and hospitalizations threaten economic collapse.  Dr. Anthony Fauci has described these strictures as “inconvenient.”  No doubt he means to sound sympathetic, but the lockdowns and quarantines are far worse than inconvenient.  These rules have attacked the essence of people’s lives, perhaps not as medical people and epidemiologists understand it, but surely as most people do.  It is a step far beyond inconvenience when some 30 million Americans have to apply for unemployment insurance in the space of five weeks!  That is almost 20 percent of the country’s workforce, a proportion that will only increase the longer today’s lockdowns and quarantines stay in place.

California has led in outlining the move back to work and it has identified specifics that would allow it.  That huge state is not alone.  President Trump and other states – governors in the Northeast acting in concert – have also indicated a path to economic reopening, as have various think tanks and advisory bodies.  These suggestions vary in detail, but each effectively foresees a three-stage process through which public health developments  — what the White House calls “gating criteria” — will allow a relaxation of today’s constraints and hopefully begin a return to former levels of prosperity.

Presently we are in the first phase and have been since mid-March. Here are its salient features:

  • People have been pressed to stay at home regardless of their vulnerability or symptoms.
  • Businesses have been shuttered, except those designated “essential.”
  • All states have banned large gatherings.

Without easy widespread testing, these and other aspects of this strict phase were the only way to guard against random infections and run the risk of overwhelming existing healthcare facilities.  Though the lockdowns and quarantines have been necessary, they have thrown millions of Americans out of work, most especially in the retail and hospitality industries, but also in manufacturing and professional services.

Current plans call for a continuation of this phase until at least mid-May.  Easing can occur, the authorities say, only when a state or region can see specific changes, the most significant of which are:

  • An ebb in new cases and a drop in hospitalizations. The redoubtable Dr. Fauci has characterized this easing as a concerted drop in new cases and hospitalizations over a 14-day period (the time over which an infected person will develop symptoms).  That hopeful sign, he and others have said, has begun to be in evidence, though no one is making any promises.
  • A transition would also depend on the ability to do widespread, same-day, point-of-care testing, even of the asymptomatic, in order for authorities to isolate only those who are sick. One researcher said an ability to do 750,000 tests a week would be a reasonable number.
  • Easing would also have to wait until healthcare facilities were considered adequate to handle a new spike in cases should it occur, and the necessary step of setting up contact tracing (as New York State has already begun) of those who have been infected.

Different states or regions will take such reopening moves at different times, and some states are coming up with their own interpretation of these steps—Georgia and New York being different examples; Georgia as of this writing opening up, while New York is still pretty much in lockdown.  Where they do open up, the authorities could still impose restrictions.  Some that have been proposed are:

  • Individuals identified as vulnerable would be urged to isolate, and there is some discussion of subjecting them to GPS tracking.
  • Rules would still forbid large gatherings
  • Restaurants would have to reconfigure to allow socially distanced (however defined) seating.
  • Staff at restaurants and other retail outlets would wear gloves and facemasks, and perhaps more protective gear.
  • Offices might reconfigure to make the by now famous six-foot separation distances easier to maintain.
  • Offices and factories might include temperature scanners as well as firm-wide testing for Covid-19 antibodies.
  • Airlines might forbid any passengers until six weeks after virus dissipation. Most major US airlines are already making passengers were masks during flight.
  • Sanitizer dispensers will become even more ubiquitous.
  • State parks and other facilities will reopen, but only to people who wear masks and arrive in groups of five or less (as Texas has already mandated).

The full reopening of economic activity — the final, third phase — would wait for a vaccine.  The authorities in California and elsewhere also include what they call “herd immunity” as a trigger for this phase.  (This is a slippery term that appears to mean that the population has had widespread exposure to the virus, that those who will succumb to the virus are no longer a concern, while, presumably, the majority of the population has developed immunity.)  Only then would the authorities allow us return to our former economic lives, and only then would the economy have the opportunity to recapture its pre-pandemic prosperity.  But forecasts on vaccines are by definition difficult.  Researchers are hopeful they can shorten the timeline, piggybacking on previous research on other viruses.  Estimates now say a vaccine for healthcare workers may be available by late this summer, or early fall, and by early next year for the general population – a long time to wait for full employment.

If this reopening proceeds in a promising way, it can only help financial markets build on their recent gains, most of which have come in anticipation of some progress on the virus and thus a good promise of economic relief.  There is the possibility, however, that given the way things go in the real world, some mishap (say, either a rise in cases or a miscalculation on easing restrictions) would create a period of market fear and accordingly a retreat.  As always in such events, good investors will keep their eyes on the longer term, and resist the temptation to give into fear.  Such a fearful moment might even present a buying opportunity, though, as my readers now should know well, I never advocate trying to time the market.





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