The real danger of Covid-19 lies in the exponential power of compounded growth rates and asymptomatic transmission. For these reasons, lock down and extreme social distancing measures, still seen by some as an overreaction, are the only valid reaction.

COVID-19 Economic and Epidemiological Impact – Analysed in just a few gobbets for time-starved, over-solicited decision-makers

 

  • At the moment, in a majority of western countries, the number of confirmed Covid-19 cases seems to be growing at an average rate of about 33% a day. To understand the exponential power of compounded growth rates and the reason why it makes personal overreaction to the risk the right strategy, you can watch this 8 min tutorial: It explains in simple terms how small social distancing measures can make a very major difference in outcome.
  • The whole European continent is entering a lockdown situation, with the economy coming to a quasi-complete standstill. The decision was prompted by the realization that, unless drastic confinement measures are implemented, all countries will suffer the same fate as Italy that is facing a catastrophic situation in terms of public health. Italy – further down the path (1 or 2 weeks) of the pandemic than other European countries and the US – vividly illustrates what will happen to other countries if they don’t intervene with stringent social distancing measures.
  • New empirical research based on a comparison between patterns of infection in two Italian cities (Codogno – a small town where the Italian outbreak originated and that was sealed off from the rest of the county in February, and Bergamo – the city with the highest number of Covid-19 cases per capita in Italy) shows that social distancing plays a strong and effective role in flattening the curve of the pandemic. Put simply: social distancing lowers the spread of the virus, and the lower the spread the fewer the deaths.
  • It is now clear among scientists that the transmission of the coronavirus can occur before symptoms develop. This explains why contamination will become so prevalent UNLESS drastic confinement measures are being put into place. In the US, the CDC predicts that in a worst-case scenario (that is: under the assumption that nothing is done to slow the spread of the virus), as many as 214 million Americans could be infected with 1.7 million deaths. The CDC scenarios have not been publicly disclosed because there is still so much uncertainty about certain key assumptions, but according to a “conservative best guess” projection from prominent US health experts, some 100 million people in the US could be infected, with 5% (5 million) needing hospitalization, 40% of these 5 million (2 million) requiring intensive care, with about half of those 2 million (1 million) needing the support of ventilators. Around 50% of these 1 million would die: 500,000 people. By contrast, about 20,000 to 50,000 people have died from flu-related illnesses this season according to the CDC.
  • Our Covid-19 note of a week ago prompted reactions from some of our members telling us that it was far “too pessimistic” about the recession risk. What a difference just a few days makes! We are already in economic recession and all data in the next weeks (and most likely few months) will be dreadful. To get a sense of what’s coming with the large-scale lockdowns in Europe, consider the following: in China, industrial production for the combined months of January and February plunged 13.5% Y-o-Y, while retail sales fell by 20.5% and fixed asset investment by 24.5%. This is far worse than the consensus among economists had predicted. The strategy of EU Governments is to prevent a catastrophic landing by engineering the best possible hard landing.
  • A fundamental economic, political, societal and personal question is: how long will confinement and social distancing last? At the very least until the inflection point in terms of news cases is reached, but probably longer and possibly in intermittent forms until a vaccine is found (18 months or more). The reason is this: transmissions could quickly rebound if policy measures (quarantine, etc.) are relaxed.