The ‘opened too soon’ economic relapse from the coronavirus resurgence

Elected officials were all warned by economists — serious economists, not those asshats in the White House Council of Economic Advisors — that opening up the economy too soon would result in a resurgence of the coronavirus spread, inevitably leading to the necessity of shutting down the economy again, a far worse result with more serious economic consequences than simply staying the course of the initial economic shutdown.

There was never a national strategy for an economic shutdown from the federal government, unlike almost every other country in the world. Instead, citing federalism (“states rights”), the Trump administration left it to the 50 states to decide for themselves stay-at-home orders, social distancing, wearing masks, shutting down businesses, etc. Some states did a full lockdown, other states were nonchalant, and still others never did anything at all.

The only way to “bend the curve” to arrest the spread of a pandemic is to “test, trace, isolate and treat.” The American response has been nothing short of a catastrophic disaster. There has never been enough testing and tracing, and now we have unchecked community spread of the coronavirus because no one wanted to stay the course of the shutdown and insisted upon opening up the economy too soon.

Remember all those right-wing protestors who demanded an end to stay-at-home orders and threatened state legislatures and governors with armed insurrection? This disaster is as much the fault of these misfits and malcontents as it is the fault of Republican leaders, from the president and vice president to state governors, who insisted upon reopening the economy too soon.

America’s great economic reopening is now hitting the “opened too soon” relapse, just like all the economists warned. We are going to pay a price for this lack of patience and perseverance.

The New York Times reports, Texas Pauses Reopening as Virus Cases Soar Across the South and West:

Just 55 days after reopening Texas restaurants and other businesses, Gov. Greg Abbott on Thursday hit the pause button, stopping additional phases of the state’s reopening as new coronavirus cases and hospitalizations soared and as the governor struggled to pull off the seemingly impossible task of keeping both the state open and the virus under control.

The announcement by Mr. Abbott — which allows the many shopping malls, restaurants, bars, gyms and other businesses already open to continue operating — was an abrupt turnaround and came as a growing number of states paused reopenings amid rising case counts.

The latest developments call into question any suggestion that the worst of the pandemic has passed in the United States, as rising outbreaks in the South and the West threaten to upend months of social distancing meant to help keep the virus at bay.

The nation recorded a new high point with 36,975 new cases on Wednesday, nearly two months after many states began to reopen with the hope of salvaging the economy and the livelihoods of millions of Americans. Alabama, Missouri, Montana and Utah all hit new daily case records on Thursday.

The Associated Press adds, Governors who quickly reopened backpedal as virus surges:

The backpedaling is not just in Texas, where Abbott ordered bars to shut down again Friday and scaled back restaurant dining and is now urgently telling people to stay home. Arizona Gov. Doug Ducey, also a Republican, did the same, declaring the state “on pause” as hospitals accelerate toward capacity.

Last week, Ducey changed his mind on local restrictions. Under extreme pressure to act as COVID-19 cases soar, Ducey gave local leaders the power to require masks, while avoiding making it a statewide mandate.

The numbers “continue to go in the wrong direction,” Ducey said Thursday.

The most widespread about-face in GOP states is a sudden openness to letting local authorities mandate masks — a concession that cities including Phoenix and Little Rock, Arkansas, quickly put into action but is increasingly criticized as insufficient as the outbreaks rage.

As an alarming coronavirus resurgence sets records for confirmed cases and hospitalizations across the U.S. South and West, governors are retreating to measures they once resisted and striking a more urgent tone.

Critics bristle that the actions are too little, or worse, possibly too late as patients fill up intensive-care beds and the U.S. closes in on hitting all-time highs for daily confirmed cases.

And governors are not entirely bending in their resolve: Florida Gov. Ron DeSantis, who until recently had rarely worn a face covering, has said he won’t impose statewide mask orders or delay reopening. And Abbott says shutting down the Texas economy again is a last resort.

In Arkansas, Gov. Asa Hutchinson has urged people to cover their faces and even begins his daily briefings by showing off his mask. But the Republican governor has resisted calls to require them, arguing that it would be difficult to enforce in a rural state.

A June survey from The Associated Press-NORC Center for Public Affairs Research says many Americans never fully embraced the reopening effort now underway in many states. A majority of Americans still have concerns about contracting the virus that causes COVID-19, and significant shares still support the kinds of public health restrictions that states have rolled back.

UPDATE: On Friday, Texas and Florida close bars after explosion of COVID-19 cases: The governors of Florida and Texas closed down the bars Friday to slow down the spread of the coronavirus that has been rampaging at record levels through their states.

The lead story in the Washington Post today is How Arizona ‘lost control of the epidemic’ (excerpt):

Arizona has emerged as an epicenter of the early summer coronavirus crisis as the outbreak has expanded, flaring across new parts of the country and, notably, infecting more young people.

Maricopa County, which includes Phoenix, is recording as many as 2,000 cases a day, “eclipsing the New York City boroughs even on their worst days,” warned a Wednesday brief by disease trackers at Children’s Hospital of Philadelphia, which observed, “Arizona has lost control of the epidemic.”

But physicians, public health experts, advocates and local officials say the crisis was predictable in Arizona, where local ordinances requiring masks were forbidden until Gov. Doug Ducey (R) reversed course last week. State leaders did not take the necessary precautions or model safe behavior, these observers maintain, even in the face of compelling evidence and repeated pleas from authoritative voices.

At critical junctures, blunders by top officials undermined faith in the data purportedly driving decision-making, according to experts monitoring Arizona’s response. And when forbearance was most required, as the state began to reopen despite continued community transmission, an abrupt and uniform approach — without transparent benchmarks or latitude for stricken areas to hold back — led large parts of the public to believe the pandemic was over.

The state’s cases began rising dramatically about May 25, 10 days after Ducey allowed the state’s stay-at-home order to expire, said Joe K. Gerald, an associate professor and public health researcher at the University of Arizona who is part of the academic team providing models to the state health department.

Ross F. Goldberg, president of the Arizona Medical Association, said that “people thought it was back to normal times.”

And now, Arizona is facing more per capita cases than recorded by any country in Europe or even more than the confirmed number of cases in hard-hit Brazil. Among states with at least 20 people hospitalized for covid-19, the disease caused by the coronavirus, no state has seen its rate of hospitalizations increase more rapidly since Memorial Day.

Public health experts warn that hospitals could be stretched so thin they may have to begin triaging patients by mid-July.

This was entirely predicted, and yet Governor Ducey did it anyway. His reckless disregard for the public health is criminal negligence. DHS Director Dr. Cara Christ should resign or be fired for her complicity in his crime.

The pandemic is actually worse than the “official” statistics, which are under-reported. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, said on Thursday that the number of people in the United States who have been infected with the coronavirus is actually about 10 times higher than the 2.3 million cases that have been reported. CDC chief says coronavirus cases may be 10 times higher than reported. “We probably recognized about 10 percent of the outbreak,” Dr. Redfield said in a call with reporters. At least 24 million Americans have been infected so far.

The fallout from the “opened too soon” economic relapse has just begun.

On Thursday, the Department of Labor announced that 1.48 million people filed for initial unemployment benefits last week, the 14th consecutive week that states have processed over a million first-time applications — and a larger weekly figure than economist predictions of 1.35 million. 1.48 million people filed for first-time unemployment last week, worse than predictions:

[An additional 700,000 people applied through a program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.]

As the downturn wears on, economists are paying closer attention to continuing claims. According to the latest release from the federal government, around 20 million are still out of work and receiving ongoing benefits.

“We would hope that they would be coming down,” said James Knightley, ING’s chief international economist. “They are not coming down as quickly as we would like to be seeing.”

James Knightley, ING’s chief international economist, who has been digging into data from Homebase, a company that works with small businesses, said “the true picture of the labor market is worse than the official jobs reports are suggesting.”

According to Knightley, “If you are still firing 1.5 million people in the middle of a reopening story, that to me suggests that these are companies trying to adjust their workforces to a new future that they are anticipating.”

Mark Zandi, chief economist of Moody’s Analytics, said “hiring has obviously picked up, and we are getting net job growth, but the level of layoffs remains extraordinarily high.”

He argues the economy needs more sustained support, and he worries about what will happen when emergency benefits expire, at the end of July. A Democratic proposal would extend the expanded unemployment benefits that give jobless Americans up to an additional $600 a week through the end of the year.

Tens of millions of Americans would be out of work, Zandi said, and many of them would have no savings. “That is fodder for a recession,” he argued, adding that would be the case regardless of what happens with the COVID-19 pandemic.

President Trump predicted the economy would bounce back as states lifted lockdowns, but the growing number of out-of-work Americans filing for benefits suggests that is not happening.

The number of laid-off workers seeking U.S. unemployment aid barely fell last week, and the reopening of small businesses has leveled off — evidence that the job market’s gains may have stalled just as a surge in coronavirus cases is endangering an economic recovery. US job market’s modest improvement may be stalling:

The government also reported Thursday that the economy contracted at a 5% annual rate in the first three months of the year, a further sign of the damage being inflicted by the viral pandemic. The economy is expected to shrink at a roughly 30% rate in the current quarter. That would be the worst quarterly contraction, by far, since record-keeping began in 1948. Economists do expect a snap-back in the second half of the year, though not enough to reverse all the damage.

* * *

A separate government report Thursday said orders for durable goods unexpectedly jumped nearly 16% in May, reflecting a rebound in some business activity. Still, the pace of orders and shipments remains far below pre-pandemic levels. And excluding the volatile transportation category, so-called core orders rose only modestly, reflecting still-sluggish business investment.

The virus is once again squeezing companies across the economy.

The International Monetary Fund warned the U.S. economy will shrink by 8 percent this year. The economic recovery looks poised to stall as coronavirus cases surge:

The fund’s updated forecast shows a more severe slowdown than it projected just two months ago dragging on global growth. In a further sign the recovery may be stalling, some companies are delaying plans to reopen, including Disneyland, or closing down again, including Apple stores in Houston, out of concern over spiking cases.

Investors — looking past Trump administration assurances that the pandemic is in hand — zeroed in on the rising infections across the South and Southwest and sent stocks plummeting. The S&P 500 dropped 2.6 percent; the Dow Jones industrial average tumbled 2.7 percent; and the Nasdaq snapped an eight-day winning streak by falling 2.2 percent.

Nationally, it’s clear the first wave of infections never fully crested.

Rather, it dipped and then began surging as it spread to new areas of the country[.]

And now the virus has gained a foothold in some of the largest states[.]

Wednesday set a record for new records, with six states all recording their highest number of new cases to date[.]

All told, the state health departments reported more than 36,000 new cases, and many of them are in areas that power economic growth. “Overall, counties accounting for between one-third and one-half of U.S. GDP are suffering from worsening trends in new cases or Covid-19-related deaths, according to research by Deutsche Bank AG economists,” Bloomberg’s Rich Miller reports.

And yet Republican leaders remain in denial, unwilling to do what is necessary, because they are gaslighting us – and themselves – into believing “everything is fine, just go on with your lives as normal.”

• President Trump last week claimed “the numbers are very minuscule compared to what it was. It’s dying out.” And he said even without a vaccine or effective treatment, the virus is “fading away.”
• Vice President Mike Pence told Republican senators at their closed-door lunch Wednesday to focus on “encouraging signs,” and noted the mortality rate hasn’t spiked along with infections (yet).
• White House economic adviser Larry Kudlow told CNBC on Monday there is “no second wave coming,” rejecting all the predictions of medical experts.

Annie Lowrey at The Atlantic breaks down the economic trajectory on which we appear to be headed: The Second Great Depression. Give it a read.