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The Double-Barreled Coronavirus Threat: Death by Virus or by Ensuing Economic Disaster


The Hill, Thursday, March 19, 11:30amThe ultimate infection and mortality rate from the coronavirus (COVID-19) is unknowable at least for weeks, but the economic fallout is not. We appear headed into serious recession, if not depression. Bad economic times also affect public health and, ultimately, we might see more deaths from a deep economic decline than from coronavirus.

On Monday, China released its economic data for January and February, when COVID-19 erupted and the country went into lockdown. The data were much worse than analysts forecast: China’s factories slumped 13.5 percent, retail sales fell 20.5 percent and home sales plummeted 34.7 percent. This, in an economy that has experienced 9.4 percent average annual growth over four decades of uninterrupted year-over-year quarterly growth.

On Wednesday, Deutsche Bank forecast a full first-quarter Chinese GDP decline of 32 percent annualized. The bank predicted a second-quarter drop of 24 percent in Europe and 13 percent in the U.S. from first-quarter levels – a decline the Wall Street Journal said “would be the biggest in recorded history.” That is why the stock market has plunged more than 30 percent and U.S. Treasury interest rates have fallen to near-zero levels. (To avoid any confusion, Wall Street is an indicator; this is not to say it is in need of a bailout.)

In the face of such drastic economic damage and associated public health deterioration, we should consider how soon and why certain of the recently adopted shutdown measures might be lifted to prevent economic Armageddon.

The general construct and rationale for our extreme measures is to spread out over time the incidence of coronavirus infections, to keep it below hospital capacity. If illness spikes above capacity, there is no treatment available for many of the afflicted, and the mortality rate spikes as the untreated die. This construct has become known as “flattening the curve,” keeping the rising curve of coronavirus cases below a straight line representing medical capacity.

Why not increase that capacity? Most of the policy discussion seems to assume that hospital capacity is relatively fixed, but China built two hospitals in Wuhan in two weeks; New York Gov. Andrew Cuomo has called on the Army Corps of Engineers to build new hospitals here. The sooner and the more we increase capacity, the sooner we may be able to ease some of the extraordinary measures and mitigate the coming economic recession.

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