The US Economy Strains as the Virus Kills

It’s almost too painful to concentrate on the numbers in this week that is so full of death in the United States. Better to look to a brighter future and an economy that might begin staggering back at some point.

The day saw more than an additional 1,800 dead, the worst day so far. Of that, 731 were in New York. The total deaths will top 13,000 Wednesday, then Thursday, Friday and Saturday may well be “worst” days as well.

The new realisation that the nation’s black population is dying from the virus in several times greater numbers than whites seemed to shine new light on the unequal distribution of preventive health care.

It’s that kind of week.

The US has nearly three times as many virus cases as Italy. Monday it was 2.6 times, and now it’s 2.8 times as many as Spain. Those countries show signs of levelling new infections, the source of hope.

If China’s figures are correct, there were only two deaths in the latest 24 hours. The original epicentre of Wuhan has started allowing its citizens to leave – and they are, by the thousands.

In the US the hottest of the hotspots, the New York City metro area is showing three days of declining new infections, at the beginning of the illness pipeline. New Jersey, Illinois and Chicago were not as fortunate as their numbers also hit their worst totals yet without as definite a levelling of new cases.

If the glimmers turn into a new trend two and three weeks from now the overall death toll may follow that trend of new cases down if Americans keep taking the need to stay isolated as seriously as they have so far. Two to three weeks is a long time.

In US stocks Tuesday the Dow was up nearly a thousand points in the morning, following up Monday’s huge 1,600 point rally on the promising news from Europe and New York. By the end of Tuesday’s trading the gains had evaporated and there would not be two positive days in a row. There was no new burst of optimism in early Wednesday Asia trading of US stock futures.

Even without a national lockdown order or advice, there is hope among analysts, investors and traders there will be some kind of national reopening strategy someday. Such considerations may be wildly premature when the kind of antibody assays, contact tracing and massive virus testing of the general public necessary for even a small-scale return still does not exist. It doesn’t hurt to dream.

Mass private-sector government-paid testing along with perhaps Bluetooth proximity warnings has a long way to go before moving from the concept stage to reach a big enough proportion of the population to spread confidence you can go back to the office.

Asked about his mention a few days ago of an economic task force focused on reopening strategy, President Trump suggested without any solid confirmation that it is an idea that is floating around the White House. The minor dramas with which he always embellishes the briefings did not bear directly on the week’s grim distinctions, the days of “worst” numbers as the trajectory of bad news keeps steepening.

The possibility he raised of cutting off US contributions to the World Health Organisation as it battles a pandemic sweeping across 182 countries because it is allegedly “China-centric” was deemed by many as absurd, little more than the day’s clickbait, an echo of a National Review editorial circulated in advance. The president’s dismissal of the January 29 memo from adviser Peter Navarro, something he said he never saw, was expected. The memo was somewhat reassuring in that it showed at least someone in the White House had a realistic assessment of the threat.

The memo correctly predicted the dimensions of a pandemic in lives and dollars – and was ignored. Someday a congressional oversight committee will probably want to know who did read it.

President Trump’s explanation that while downplaying the dangers he was also blocking entrants from China doesn’t detract from the fact that move was very well advised – or lucky.

Meanwhile as the 15th of the month approaches, the point where an unpaid mortgage payment becomes overdue, the potential early erosion of the foundation of the multi-tiered housing finance system and its downstream markets is catching the attention of regulators. Capital-poor Fannie Mae and Freddie Mac may find themselves a Treasury-infused first-line of defence just when they were on the brink of achieving some of their old independence. REITs and other denizens of the fragile housing and commercial real estate finance system could suddenly rush to cash or at least massive borrowings, some of which is already under way leaving new holders to bet on recovery.

The Federal Reserve’s work on a so-called Main Street lending facility, intended to stave off bankruptcies for medium-sized firms, is still a hugely difficult work in progress. The small-business component designed to substitute for wages and pay landlords and utilities, dubbed the Paycheck Protection programme, has already loaned out about a fifth of the $350 billion Congress allotted. That means it needs another $250 billion by the end of the week.

Treasury Secretary Steven Mnuchin told an afternoon teleconference of bankers and small-business groups the Senate and House will turn over the money in what they hope will be voice – otherwise known as out-of-town – votes on Thursday and Friday.

Colin Lambert

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