The Coronavirus Aftershock

AP Photo/Marcio Jose Sanchez

The secondary effects of the coronavirus pandemic are now manifesting themselves across the globe. The most obvious are the economic declines caused by lockdowns and quarantine measures meant to control the disease. For instance, U.S. GDP plunged by an almost unbelievable third in the second quarter of 2020.

The damage extended across the private economy—from business investment to manufacturing and housing. But the greatest harm was from the collapse of consumer spending as the shutdown crushed the service economy….

Consumer spending fell 34.6% and accounted for some 25 percentage points of the GDP decline. The fall in transportation, recreation, food services and hotels was brutal. But the biggest surprise was the plunge in health-care spending during a health-care crisis. Health care represents about 12% of the U.S. economy and its collapse subtracted 9.5 percentage points from GDP.

How does that happen in a pandemic? The answer, as our friend Don Luskin points out, is that politicians panicked in March and waited for a surge of Covid-19 patients that the pandemic modelers told them would arrive. Blessedly, the modelers were wrong, and far fewer hospital and intensive-care beds were needed. But the economic harm from stopping all elective surgeries and barring visits to doctors was severe and unnecessary

The economic carnage was not confined to America. Europe, as exemplified by the shrinkage of the German economy, also reeled under what has been called the “recession of a century.”

BERLIN (Reuters) – The German economy contracted at its steepest rate on record in the second quarter as consumer spending, company investment and exports all collapsed during the peak of the COVID-19 pandemic, wiping out nearly 10 years of growth. …

“Now it’s official, it’s the recession of a century,” said DekaBank economist Andreas Scheuerle.

“What has so far been impossible to achieve with stock market crashes or oil price shocks was achieved by a 160 nanometre tiny creature named coronavirus.”

According to the United Nations, the economic collapse means hunger is now a real possibility for the world’s poorer countries.

According to the United Nations, the four pillars of global food security are availability, access, utilization and stability. New research suggests the global economic slowdown caused by the COVID-19 pandemic has imperiled all four. …

In many parts of the world, lockdowns necessitated by uncontrolled COVID-19 outbreaks have disrupted the labor market, threatening the food supply chain and the stability of agricultural and food markets.

Nor was the collateral damage caused by public health measures limited to dollars and cents. It is costing lives too. The British medical journal Lancet estimated that the deaths caused by delaying or foregoing “elective” medical treatment on just four types of cancers have totaled about 60,000 years of lost life. YLL estimates the years of potential life lost due to premature deaths.

Substantial increases in the number of avoidable cancer deaths in England are to be expected as a result of diagnostic delays due to the COVID-19 pandemic in the UK. …

Since a national lockdown was introduced across the UK in March, 2020, in response to the COVID-19 pandemic, cancer screening has been suspended, routine diagnostic work deferred, and only urgent symptomatic cases prioritised for diagnostic intervention. In this study, we estimated the impact of delays in diagnosis on cancer survival outcomes in four major tumour types….

We collected data for 32 583 patients with breast cancer, 24 975 with colorectal cancer, 6744 with oesophageal cancer, and 29 305 with lung cancer. Across the three different scenarios, compared with pre-pandemic figures, we estimate a 7·9–9·6% increase in the number of deaths due to breast cancer up to year 5 after diagnosis, corresponding to between 281 (95% CI 266–295) and 344 (329–358) additional deaths. For colorectal cancer, we estimate 1445 (1392–1591) to 1563 (1534–1592) additional deaths, a 15·3–16·6% increase; for lung cancer, 1235 (1220–1254) to 1372 (1343–1401) additional deaths, a 4·8–5·3% increase; and for oesophageal cancer, 330 (324–335) to 342 (336–348) additional deaths, 5·8–6·0% increase up to 5 years after diagnosis. For these four tumour types, these data correspond with 3291–3621 additional deaths across the scenarios within 5 years. The total additional YLLs across these cancers is estimated to be 59 204–63 229 years.

Perhaps less obvious but nevertheless statistically alarming is that the economic slowdown may result in 500,000 fewer Americans born in the years to come. As Brookings puts it, the “coronavirus is transforming human behavior”.

The COVID-19 episode will likely lead to a large, lasting baby bust. The pandemic has thrust the country into an economic recession. Economic reasoning and past evidence suggest that this will lead people to have fewer children. The decline in births could be on the order of 300,000 to 500,000 fewer births next year. We base this expectation on lessons drawn from economic studies of fertility behavior, along with data presented here from the Great Recession of 2007-2009 and the 1918 Spanish Flu.

Some of these behavior changes are showing up as political unrest. Recently, thousands in Berlin protested against coronavirus restrictions.

Thousands protested Germany’s coronavirus restrictions Saturday in a Berlin demonstration marking what organizers called “the end of the pandemic” — a declaration that comes just as authorities are voicing increasing concerns about an uptick in new infections.

With few masks in sight, a dense crowd marched through downtown Berlin from the Brandenburg Gate.

Protesters who came from across the country held up homemade signs with slogans like “Corona, false alarm,” “We are being forced to wear a muzzle,” “Natural defense instead of vaccination” and “We are the second wave.”

“We are the second wave,” declared the protesters. That political swell may be terrifying the European establishment. The New York Times claims the German far-right, once believed extinct after years of self-reflection, is being supercharged by a deadly cocktail of resentment against migrants, hard times, and restrictions against the virus.

Of course, the extreme left-wing across Europe and the U.S. has been openly marching for some time. William Barr calls them a real threat, Jerry Nadler calls them a myth. A march through Brixton in the UK by uniformed left-wingers was denounced by Nigel Farage as “terrifying” and hailed as a sign of love by the Greens.

‘Terrifying scenes in Brixton today. A paramilitary-style force marching in the streets. This is what the BLM movement wanted from the start and it will divide our society like never before.’

However, co-leader of the Green Party Jonathan Bartley responded to Mr Farage’s intervention. He tweeted: ‘You are just trying to create division. But these people in Brixton today know that love and justice will conquer the fear and hate that you peddle. Hope is what people need right now and they are showing the pathway toward it.’

Whether Antifa and BLM can show the world the escape from our troubles through the pathway of love remains to be seen, especially as European authorities brace for a second coronavirus wave. One thing has led to another as the global world faces the unforeseeable consequences of its own actions. The psychological context at the start of the outbreak was that the world could “beat the virus” with a relatively short but strict lockdown. Now, with the 2020 past the middle, it’s dawning on nations that we don’t know how long the pathogen will be with us and when — or if — a vaccine will be available.

The turns on our tortuous journey is compounding. We’re no longer on the map. The winding cavern has closed about us. When the Great War broke out in August 1914, the expectation was that it would be over “before the leaves fall from the trees.” Among the Brits, only Herbert Kitchener realized it would last for years. He was right. By the end, Europe found itself in a future it had never imagined.

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