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FIRST IN NIGHTLY: Other nations recommend wearing masks to avoid coronavirus. But the Trump administration doesn't see a benefit. Ben Schreckinger investigates.
HIT GETS REAL — The full extent of the damage to the U.S. economy from the coronavirus will become even clearer this week as scores of bills come due for American citizens and businesses — from rent and mortgages to payrolls, credit cards, auto loans and much more. Here are three scenarios that could play out for the U.S. economy. None of them are good.
The bad — This would require the U.S. to start bending the infection curve sometime in April. People would return to work by May or June, and the federal government’s rescue programs would work quickly and seamlessly and stem the flood of layoffs.
New filings for unemployment would start to decline. The U.S. reports weekly jobless claims Thursday. The consensus estimate from economists is for 2.5 million new filings for unemployment benefits across all states, on top of the record-smashing 3.3 million last week. If the number is far higher — and it may be — this scenario would become even less likely than it already is.
Under this merely bad scenario, economic growth would drop only 5 percent or 10 percent in the second quarter and then start to rebound in the third and fourth quarters as pent-up demand is unleashed and people still have jobs.
The government reports the March jobs number on Friday. But that number won’t mean much as the survey week occurred before the big wave of coronavirus lockdowns. Consensus is for a loss of just 100,000 jobs. The real hit will show up in the April numbers. Our gut-sense odds of this scenario: 25 percent.
The very bad — Medical professionals mostly say it will take longer than one month to bend the curve as new hot spots emerge from New Orleans to Detroit and Los Angeles. This would extend lockdowns into the summer.
The initial infusion of cash from the federal government would not be able to keep up. Jobless claims would continue to rise and the unemployment rate could quickly hit double digits. State budgets would also start cratering. And consumer confidence would plunge, leading to a sharp pullback in spending. The Consumer Confidence number will be out Tuesday morning, and is expected to drop to a 40-month low.
Some economists fear the number has far further to fall. Washington would have to intervene again. Economic growth would drop even more sharply in the second quarter and stay down the rest of the year. Odds of this scenario: 65 percent.
The worst — The doomsday scenario involves multiple recurring outbreaks in the U.S. and a death toll topping 1 million. This could require a total quarantine of the entire nation, perhaps for months.
That would destroy economic growth and lead to a depression in which the stock market collapses, entire industries go bankrupt and joblessness easily tops the Great Depression high of 24.9 percent. This scenario could also entail mass public unrest that could require a military response. Odds of this scenario: 10 percent.
Welcome to POLITICO Nightly: Coronavirus Special Edition, a nightly intelligence brief from our global newsroom on the impact of the coronavirus on politics and policy, the economy and global health. Your host is hunkered down in Austin and hoping the city doesn’t close its glorious running trails. Reach out: [email protected] and @renurayasam.
From the Health Desk
THE UNITED STATES OF HOT SPOTS — New York may remain the hottest of the hot spots for some time, executive health care editor Joanne Kenen writes us. Its density, its reliance on public transport, and the fact that the testing debacle let the disease spread widely before it was detected all contributed to the calamity that has forced FEMA to dispatch refrigerator trucks to relieve the morgues.
But if people are thinking that it can’t happen elsewhere — that New York is somehow unique — think again. There’s a growing list of cities, including some midsize ones, that have rapidly increasing numbers of confirmed cases.
That might be the dominant, if disturbing, Covid-19 story of the week. Where next? And then where? And then where?
“When you look at all of them [the states] together, all of them are moving in exactly the same curves,” said White House coronavirus response coordinator Deborah Birx today.
New Orleans, Detroit and Chicago are just the leading edge. Midsize and smaller cities are not protected. Both Albany, N.Y., and Albany, Ga., have recorded worrisome increases in the past couple of days. The Seattle/King County area is still fighting to contain the coronavirus, though researchers there reported today that social distancing does seem to be reducing transmission. Not enough to be able to un-hunker down (which is not yet a word but may well soon be), though. This is a long haul.
China File
WHAT’S IN A NUMBER? Our colleague David Wertime emails us from San Francisco:
Is Beijing lying about its Covid-19 numbers? That’s the latest scuttlebutt, with some Wuhan residents telling Radio Free Asia that cremation incinerator activity is inconsistent with the hotspot city’s reported death toll, and Sen. Marco Rubio tweeting that Chinese Covid-19 cases are “significantly more than [what] they admit to.”
While we should not accept China’s case numbers as completely accurate, neither do we have reason to expect a second outbreak there.
Let’s distinguish deaths from active cases. Only the second number would drive a renewed nationwide outbreak. On that front, it’s clear Beijing thinks the risk is now tolerable. China’s aging leaders know they have to eat their own cooking; a lockdown ended under false pretenses would be dangerous to their own health. And the political fallout would be disastrous. “Even the CCP couldn’t hide” a nationwide outbreak, says Maximilian Mayer, a professor of international studies at University of Nottingham’s campus in Ningbo, a large port city on China’s east coast. “People would see the hospitals overflowing, like they saw in Wuhan.” That could spell real trouble for a Party billing itself internally as a Covid-19 slayer.
Ann Marie Kimball, a professor emeritus of epidemiology at the University of Washington, helped establish China’s post-SARS reporting system in 2004, designed to avoid local officials’ meddling with data. It still fell prey to early political interference, but “at this point, they are being as transparent as they can be with the rest of the world,” she says. Kimball offers another indicator that Beijing believes it has things contained. “Look at the assistance China is giving internationally,” she says. “They would not be in position to do that if they were still at risk of a major population-based epidemic.”
In the meantime, the U.S. toll continues to grow, with a lack of needed equipment and capacity — all statistically verifiable — as urgent problems for American leaders to address.
The next bout of Twitter fulmination will happen when the U.S. death count surpasses China’s reported toll (alas, that is likely Tuesday). We will hear more cries of “Don’t believe China!!” as if that saves a single American life.
The Global Fight
LEADERS STRUGGLE TO COPE WITH COVID — Our editorial director Blake Hounshell emails us:
Some of Trump’s favorite world leaders find themselves on the wrong end of the Covid-19 pandemic.
Boris Johnson, the British prime minister who resisted calls for a lockdown for weeks, has the virus. Polls show that getting sick may have boosted his political standing at home, but it’s not exactly good news to be infected.
The so-called Brazilian Trump, Jair Bolsonaro, having survived a coronavirus scare of his own after a sojourn at Mar-a-Lago, is getting blocked on Twitter for promoting misinformation and faces a real-world backlash with voters. He has compared Covid-19 to “a little cold,” belittled his own government’s health experts and urged his supporters to hold rallies on his behalf.
Vladimir Putin, until he recently started sporting a bright-yellow hazmat suit, had projected calm about an outbreak whose impact seemed suspiciously muted in Russia. He’s been oddly silent as Moscow lurches toward “full Italy,” and the virus delays his plans for amending the constitution in his favor.
Shinzo Abe, who rushed to New York in 2016 to woo Trump during the presidential transition, had to cancel the Olympics. At first Japan’s caseload was low, but now it’s rising, and Abe faces growing criticism for allegedly cutting off travel from China too late.
DEMOCRACY DISTANCING — Hungary’s parliament today granted the government additional executive powers, including rule by decree, no elections, and up to five years in jail for anyone who spreads misinformation about the coronavirus, effectively until the government decides otherwise. Cabinet member and government spokesperson Zoltán Kovács told Ryan Heath of the legislature’s decision: “Parliament retains the right to revoke it anytime when the causes cease to exist, so there’s no disruption of democracy."
On The Economy
THE VALUE OF DISTANCE — $8 trillion. That’s how much the economic benefits of social distancing could add up to — with most of the benefits going toward people 50 and older, according to a recent working paper from University of Chicago economists Michael Greenstone and Vishan Nigam.
The economists used an estimate that showed that moderate social distancing could save 1.7 million lives between March and October, which would translate to $8 trillion using an economic tool called the value of a statistical life — the same tools used to calculate the costs and benefits of environmental policies. Even if the lives saved were only about 800,000, the benefits of social distancing would still equal $3.6 trillion, the economists estimate.
It wouldn’t be all savings, of course. The $8 trillion would be offset by jobs lost and businesses closed, an economic toll that the economists are still calculating. But Greenstone wanted to provide some context for those wondering about the benefits of a lockdown as businesses shutter and unemployment skyrockets.
“We’re all trying to sort out what the right response is to best protect people and our society,” said Greenstone in an interview. “It seemed like there was a vacuum of information.”
Talking to the Experts
What data are you monitoring right now to track the outbreak?
“The number that I watch most closely every day is the number of new cases diagnosed. Right now in most communities we are seeing the number grow, which means the interventions that we have put in place have not yet shown up in the data. We know it takes one, two, maybe even three weeks for anything we do today to really influence that number. Another important number is hospitalizations. The number of hospitalizations lags behind new cases, because it takes far longer for people to be sick enough to require hospital care than it does for them to be sick.” — Caitlin Rivers, associate professor at the Johns Hopkins Center for Health Security, associate editor of the journal Health Security and former Army epidemiologist.
“If you are thinking about it in terms of resources and response, hospitalization is a clear measure for us. That helps us figure out where do we need to allocate our resources. There’s been talk about this potential second wave — watching what’s happening in China and South Korea to get a sense of, if we were going to lift some of these social distancing measures, would there potentially be this second wave of infections? Then looking at the Southern Hemisphere, where we are starting to see outbreaks emerge in places like South Africa, that [will help us understand] does it present as a seasonal virus? Nationally I don’t think we have peaked yet. We have several weeks ahead of us before we get to that period.” — Amanda Castel, epidemiology professor at George Washington University and former CDC officer.
Nightly Number
71 — The percentage of registered voters who view Democratic New York Gov. Andrew Cuomo’s favorably, according to a poll released today by the Siena College Research Institute. His popularity among New Yorkers hit its highest point in over seven years. Only 23 percent view him unfavorably. (h/t New York reporter Bill Mahoney)
Parting Words
STOCKHOLM SYNDROME — As worldwide governments introduce draconian measures at breakneck speed, Sweden has stayed remarkably calm in the midst of a full-blown global pandemic. How come? The Swedes were practicing the coronavirus lifestyle long before the virus hit, Lisa Bjurwald writes. “U.S. media has enthusiastically suggested silver linings to the new confinement rules like: ‘You can Skype your grandparents!’ To a Swede, that’s already obvious. How else would you interact with them?” The elderly live in retirement homes, no matter if grandma and grandpa are sick or sprightly.
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