A airline passenger has her temperature checked at check-in
The events in Minneapolis overshadow everything this week. Protests, some of them violet, have broken out in a number of American cities in response to the killing of George Floyd by a police officer. We really don’t have words to properly express our sadness.
The Economy
Over the past few weeks, many states have started easing restrictions implemented in March intended to limit the spread of the coronavirus. But the reopening process has been inconsistent, and is impacting some states and employers more than others. In some states, a very high percentage of the labor forces is collecting unemployment benefits. For example, in Nevada it’s estimated that nearly 27% of workers are collecting jobless benefits, while in Florida the number is estimated at 25%. And in California, the most populous state, over 20% of the work force is currently claiming unemployment benefits.
Some 2.1 million Americans filed unemployment claims last week, bringing the 10-week total to over 40 million. However, the number of continuing claims, or claims being collected for two weeks or more, fell. That suggests that businesses are slowly rehiring employees as states allow employers to reopen.
This historic unemployment rate threatens the economy’s recovery. On Wednesday, the Federal Reserve highlighted precipitous declines in consumer spending, domestic tourism, manufacturing activity and agricultural conditions over the course of the pandemic.
But even as unemployment has skyrocketed over the past two months, and the economy remains stuck in a recession, the stock market has rebounded strongly from its March lows (see more below). For an interesting perspective on the divergence between the economy and the stock market, read this (somewhat technical) article.
On Wednesday, the House of Representatives passed on a bipartisan basis the Paycheck Protection Program Flexibility Act of 2020 which would, among other things, allow forgiveness for expenses beyond the 8-week covered period to 24 weeks; increase the current limitation on non-payroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25% to 40%; extend the program from June 30 to Dec. 31, and extend loan terms from two to five years. It’s not clear if the Republican-majority Senate will also pass the legislation, or if the President would ultimately sign it.
The Markets
The Down Jones Industrial Average closed Thursday at 25,400, while the broader S&P 500 Index closed at 3,029. Both indices are up over 35% since their March lows, but are still about 14% off of their all-time highs.
The Public Health
As states begin to reopen their economies, public health officials are emphasizing the importance of wearing a face mask when in public, even as they caution that masks are not a replacement for proper social distancing.
Some states and businesses began issuing mask requirements in early April, but the rules vary widely by state, industry and who they apply to (employees, customers, or both). Some counties and cities also have different rules. In many areas, residents are confused about who will enforce orders, some of which have misdemeanor penalties for non-compliance.
Yesterday, New York Governor Cuomo said that he plans to sign an executive order allowing businesses to turn away customers if they’re not wearing masks. San Francisco Mayor Breed requires city residents to wear a mask whenever they come within 30 feet of others.
Unfortunately, disagreements over whether masks should be worn have turned into another “culture war”, and some people who refuse to wear them have protested outside businesses. A bar in Austin, Texas has received publicity for banning masks.
The race to develop a vaccine continues. Swiss pharmaceutical manufacturer Novartis will start producing a genetic coronavirus vaccine this month. Novartis joins pharmaceutical and biotech firms such as AstraZeneca, Moderna, Merck and Novavax in the pursuit of a vaccine. Clinical evaluations have started for ten potential vaccines and more than 100 others are in pre-clinical stages, according to the World Health Organization.
BARDA, a federal agency that funds research and development projects, has received $6.5 billion from Congress and is partially funding five vaccine developers. The Health & Human Services Department said it hopes to have the first doses of AstraZeneca’s investigational vaccine ready as early as October.
But, even after a vaccine is discovered and distributed, the coronavirus will likely remain for decades to come. Many experts think the coronavirus may be endemic – resistant to efforts to totally eliminate it, like HIV, measles and chickenpox. At the same time, that doesn’t mean the future will be as dire as the situation today. There are already four endemic coronaviruses that circulate continuously, causing the common cold. And many experts think this virus will become the fifth, its effects growing milder as immunity spreads and our bodies adapt to it over time.
Perhaps unsurprisingly, a new poll showed that about half of Americans aren’t sure whether they’d get a vaccine if one became available.
Covid-19 Numbers
Globally, across over 180 countries, 5.8 million have contracted the virus, and over 361,000 have died. In the US, over 1.7 million have contracted the virus, and over 101,000 lives have been lost. The United States has had 28% of global deaths despite having only 4% of the world’s population.
Keep the faith, be safe and stay healthy.
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