The country is locked in a battle with an invisible virus that, in the US, has infected over 65,000, killed over 900 and crippled the American economy. We are making progress against this outbreak and investors expressed their optimism with the Dow Jones Industrial advancing 2% yesterday. That followed Tuesday’s astonishing gain of 11%, which was prompted by rising hope that Congress will pass a badly-needed emergency funding package to aid American workers and businesses.

The market is often irrational, and during the past few weeks it has behaved like a mercurial child. We have observed unprecedented swings up and down that have left investors bewildered and exhausted. Measures of market volatility have swung wildly, reminiscent of the Great Recession. This will likely continue until investors are convinced that the crisis has abated and recovery, both public health and economic, is certain.

We’ve been following this crisis closely, because it is so unusual and because it profoundly affects our work for you. Here’s where we think we are.

We still don’t know the scale of the problem. Why? Because testing for the coronavirus is still too limited for “big data” health analysts to inform policymakers (and the rest of us) how many Americans are affected.

There are some obvious hot spots in the US: The New York City metro area, the San Francisco Bay Area, southern Louisiana, Seattle, Chicago, Detroit. You can see an interesting map created by Johns Hopkins University of Medicine. Until we get adequate testing, we won’t really know the rate of infection.

Why aren’t we testing more? Because testing kits haven’t yet been made widely available. This virus caught the American health care system totally unprepared. There are 330 million people in this country. While it isn’t realistic or even necessary to test everyone, we need to test everyone who has symptoms. We cannot do that right now.

Without proper testing, policymakers are relying on the limited information they do have. It suggests that the rate of infection, if not checked, will overwhelm the health care system in many parts of the country. That is alarming, and government officials are doing everything they can to prepare for the tsunami that they know is headed at hospitals and health care providers. The measures they’re taking will rapidly increase the capacity of the system and act to dramatically slow the rate of infection. This latter concept has been as described as “flattening the curve” and it simply means that the cases of infection need to be controlled and spread out over time. This will enable the health care system to bend and not break under the onslaught of this virus.

Much of the country has been directed to stay home. Why? Health policy experts don’t know who is infected. So, they’ve encouraged government officials (i.e. the President and state governors) to essentially prevent people from moving around. A person who is immobile (i.e. at home) cannot transmit the virus. It would be better policy to simply quarantine only those who are known to be infected. But, again, we don’t know who all of those people are. So, to be safe and cautious, health officials in many (but not all) parts of the country have asked people to stay home.

The White House Coronavirus Task Force, led by Vice President Mike Pence, has advocated President Trump’s Coronavirus Guidelines for America during the “15 Days to Slow the Spread.” You’ve probably heard about this on TV, the radio, via social media (Facebook) and a postcard in the mail. Health experts have also advocated the practice of “social distancing” – encouraging people to stay at least six feet apart when out in public. All of these measures were designed to slow the rate of transmission.

Many health care experts felt even more should be done. But President Trump has not been willing to require more limiting behavior and has deferred to states to implement their own policies, based on the circumstances in each state. Many people haven’t taken the crisis seriously and chose to ignore the recommended behaviors. So, governors, including California’s Gavin Newsom, Oregon’s Kate Brown, and Washington’s Jay Inslee have ordered people to remain home (“stay home, stay home”) and travel only for essential purposes.

What happened to the economy? It has been shuttered and crippled. Shuttered, because entire industries have been forced to close (e.g. office-based businesses, non-profits, schools and universities, restaurants and bars, malls and retailers, entertainment venues, etc.). Crippled, because demand for non-essential goods and services (so-called discretionary spending) has plummeted. We’re buying the basics right now and having those items delivered by Amazon and the local grocery store.

The result will be a recession. We’re beginning see the statistical evidence of this. This morning we learned that unemployment claims increased by a record 3.3 million last week. This is seven times the worst week during the Great Recession. Consumer spending will fall. Production will drop.

Will the government respond? It has. The Federal Reserve has committed unlimited resources to support the monetary system. The Senate passed a $2.2 trillion emergency spending plan. The House is expected to pass companion legislation tomorrow and the President will undoubtedly sign it into law. Will that be enough? For now, yes. But, if this crisis continues to negatively impact the economy, more will be needed.

How long will this last? This is perhaps the most relevant and difficult question. If you watch the White House Corona Task Force news conferences, the question comes up all the time. President Trump would like to start opening the economy again soon (he mentions Easter) and he’s experiencing tremendous pressure from certain quarters to do so. Health authorities, however, are non-committal when asked about a time line to ease up on social distancing and resume normal economic activities.

The health care system must be able to manage the COVID-19 epidemic. It’s relying on policymakers to keep measures in place that will bring down the rate of infection and “bend the curve.” So, government officials at the federal, state and local level are implementing actions to buy time. If they relax these measures, it’s entirely possible that this pandemic could spiral out of control and collapse the fragile health care system.

This may seem rather sobering, but to truly resume life as we knew it “pre-corona”, we need a vaccine and an anti-viral drug that will kill the coronavirus. The pharmaceutical industry is telling us that it will take 12-18 months to develop and mass produce a vaccine. There are many clinical trials underway for drugs that may kill the virus.

Until we have such drugs, it is likely that we’ll all be required to take preventive measures that will continue to impact our lives.

Final Thought
We will get through this. Some of the smartest people on the planet are working to combat the coronavirus. They will succeed and we will relatively soon return, for the most part, to our normal lives.

Keep the faith, be safe and stay healthy.

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