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Should we still be optimistic in the face of a global pandemic? March 16th.

Yesterday, I wrote about why I was optimistic that this global pandemic would be stopped far before a material (<5%) percentage of people in the US would get infected. A lot of really smart people are predicting many more people will be infected, possibly hundreds of millions in the US and billions globally. I am trying to stay sane and make good decisions by honing in on what I think are leading indicators of success and failure. Either way, as I mentioned in the post, it will be bad, the question is, "is it going to be painful and pass or is it going to be catastrophic?" We don't know yet, but I am still optimistic my short term prediction will be right - we will likely get it under control in the US in the next 3-6 months. However, I am more pessimistic that long-term we can actually contain the virus globally.


I was and am optimistic because: 1) disease surveillance combined with quarantines work, 2) humans naturally fear contagions, and 3) no person in power wants to see the global economy and social order fall apart. I mentioned the main things to watch are: 1) whether the Italian partial quarantine works, 2) the US disease surveillance capability and 3) the actions people in power are taking in other hotspots. So I thought I would track these. I have decided to include Iran because they implemented a quarantine on 3/9, the same day as Italy. We will look at these one at a time.


Are the quarantines in Italy and Iran working? Well, daily new cases stopped going up and, especially in Iran, started to decline. The data is still early, it is volatile on a day-to-day basis and there could be a lot of other factors "on the ground" driving temporary reductions in new cases. The red bars show what will happen if these countries follow China (about a 20% decline per day in new cases). Only time will tell, but on this front, things at least haven't gotten worse. Optimism +5 points.

How is the US disease surveillance coming? Better, but that isn't a high bar. Late last week, testing jumped from 1,500 a day to 2,500 a day. This is still hugely inadequate and represents the biggest risk to not getting this under control. New York can now do 1,000 tests per day and will be able to do 7,000 per day by the end of the week. That will mean by the end of the week, New York will be doing almost 3x more tests per day than the US was last week. Depending on how many people are infected, this may not be enough, but it is improving and that is promising. Optimism +1 point.


Are people in power making the tough decisions? This is a resounding yes! This one was the easiest to predict. People will act when threatened. All around the world quarantines are being implemented. In the hardest hit areas in the US, they have effectively implemented Italy style quarantines for the next two weeks. Schools are closing everywhere. And the CDC has recommended no gatherings of more than 50 people in the next 8 weeks. People are responding. Optimism +10 points.


What made me more pessimistic today? Two things: 1) the economic impact and 2) a "waves of pain" scenario.


The economic impact: Yesterday I said any country would take a 3-7% hit to their economy to stop a global pandemic. I also thought that impact would be in one quarter and things would be "back-to-normal" soon after that (maybe 6-9 months). While it is true that countries will take a hit to stop a pandemic, it looks like the price might be even higher; China got hammered by the quarantines. It depends on how fast the world can come back "online." All the good things the people in high places are doing means the US is going to get hammered, the EU will be hammered, everywhere is going to get hammered economically. This is going to crush many small businesses, increase deficits and strain public resources. Since we are so interconnected and it will happen serially and not in parallel, it is going to be ugly. This will also restructure large parts of the economy and that will take time. We will most likely experience a longer and deeper recession than I was thinking yesterday. Optimism -5 points.


"Waves of pain:" The virus is everywhere and will continue to travel around the globe affecting different countries at different times repeatedly. Since it is community spread almost everywhere at this point, with most being mild symptoms, it will likely keep popping up and remerging until we have "herd immunity," a vaccine, or effective drugs, all of which could take years. This virus is just virulent enough to be scary and not nearly virulent enough for us to chase down every single case globally. If it had a much higher mortality rate, say >10%, we would have eradicated it already. It makes lots of people mildly sick that don't die and they spread it when they are asymptomatic.


We may be able to contain it in western countries and I still don't think it will infect 100M Americans in the next 12 months, but eventually we have to reopen our borders and commerce. We can't wait for the pandemic to be over everywhere. This means it will likely be with us for a long time and will reemerge over and over again. Each time with less material consequences, but each time causing human and economic pain and suffering. Maybe we will decide the economic cost is too high and we will chase down every case globally, but we are almost certainly beyond containment globally and this is what is driving many really smart people to say it will infect hundreds of millions of Americans. I just hope this happens over years and not months.


This type of "foreign" virus also has the possibility to fuel the flames of nationalism and isolationism that will further hurt the global economy. Optimism -10 points.



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