A New Wave of Infection is Hitting the U.S. and Europe — and a Fiscal Wave Will Follow
It would not be correct to say the coronavirus is back — because it never actually left.
We can say, however, that coronavirus caseloads are surging again on two continents. The numbers are starting to look alarming, and it isn’t even truly cold yet. (The winter months are expected to make the pandemic worse, due to reduced outdoor activities, lower humidity levels, and greater exposure to indoor circulated air.)
In the United States, daily coronavirus cases topped 63,000 on Oct. 15 — the highest level since July. In the Great Plains and the Midwest, the Washington Post reports, hospitals are jammed, and intensive care unit (ICU) facilities are approaching capacity. In Yellowstone County, the most populated county in Montana, 98% of inpatient beds were full.
On Oct. 14, Wisconsin opened a new field hospital on the grounds of the Wisconsin State Fair Park outside Milwaukee. Wisconsin and Illinois both broke records for daily COVID-19 cases this week, surpassing earlier records set in April and May.
“At least 20 states have set record seven-day averages for infections,” the Washington Post notes, “and a dozen have hit record hospitalization rates.”
On a monthly basis, the numbers are even worse. “Forty-four states and the District of Columbia have higher caseloads than in mid-September,” the Washington Post adds. “Ohio set a new high, as did Indiana, New Mexico, North Dakota, Montana, and Colorado.” El Paso, Texas, is ordering new restrictions and lockdowns.
Nor is it just the United States. On the other side of the Atlantic, Europe is seeing a new wave of infections, with a million cases continent-wide over the past 10 days.
“Country after country is just declaring their highest ever numbers since the pandemic began,” the chief medical officer of Healix International, Adrian Hyzler, says of Europe. France, Spain, the Netherlands, the Czech Republic, and Italy are imposing new restrictions, including curfews.
Meanwhile, in the United Kingdom, new lockdown restrictions were announced in London this week, with 10 p.m. curfews for pubs and restaurants. Northern Ireland and Wales, fearing the U.K. government’s measures were not serious enough, imposed their own restrictions tighter than the rest of the U.K.
Infectious disease experts had long expected a “second wave” to show up in the winter months, possibly intensified by the co-arrival of the normal flu season. But what we are seeing now is less of a new wave and more of a resurgent blaze.
Michael Osterholm, the director of the Center for Infectious Disease Research and Policy at the University of Minnesota, has compared the coronavirus to a forest fire that doesn’t burn out. Instead, it hangs back and then flares up again, treating unprotected populations like kindling.
“The trick is to keep that burn at a controlled rate,” Osterholm said back in April. The U.S. and Europe have apparently failed to do that.
Fortunately, the mortality rate for COVID-19 has fallen, thanks to new treatments and more experience handling infections. We remain concerned about the high number of deaths, with the United States recording more than 900 deaths per day on multiple days in October.
The coronavirus resurgence threatens to weaken or destroy a fragile economic recovery. In Europe, the economic gains from containing the virus could be completely wiped out. In the U.S. and the U.K., complacent investors could be forced to rethink their market optimism.
For the United States, the question is not just whether new lockdowns will be imposed — the odds of that seem low, at least for now — but whether hospital systems will again be strained to the breaking point, and the degree to which economic activity slows down.
COVID-19 is not just an economy killer because of mandated rules to fight the virus, but because commerce slows to a crawl as consumers fearful of the virus stop eating out and visiting physical stores.
The coronavirus resurgence is also a threat to the profit-based U.S. hospital system on the whole. When hospitals are flooded with COVID-19 patients, they tend to lose money at a rapid rate, not just from the cost of COVID-19 patient care, but the loss of revenue in normal profit-producing areas like elective surgeries and standard treatments for the privately insured.
“The growing number of cases is threatening the very survival of hospitals just when the country needs them the most,” Bloomberg reports. “Hundreds were already in shaky circumstances before the virus remade the world, and the impact of caring for COVID patients has put hundreds more in jeopardy.”
Not only is the pandemic still with us, its most intense challenges are yet to be felt. Along with rising caseloads and greater hospital strain heading into the winter months, the harshest trauma impacts on the U.S. economy and the U.S. health care system have not yet materialized.
Optimism is a positive trait in most circumstances, but not when it encourages a blindness to reality. The reality here is that hard challenges are ahead, and the market is not reflecting those realities yet.
Either that, or the market is optimistic that a multi-trillion-dollar wave of rescue funds is coming, along with an economic solution that will keep the U.S. health care system and strained state budgets from financially imploding.
And yet, if trillions in rescue funds is the inevitable answer, that flood of stimulus will produce great inefficiencies, and supply-chain bottleneck inflation effects, that mean the price of gold and Bitcoin should be much, much higher.
Get ready to hunker down and prepare for a set of pandemic-driven economic circumstances that will force governments to act, unleashing fiscal rescue funds in staggering amounts. Every day they fail to do this, the potential damage toll grows larger, necessitating an even larger response, for good or ill, when they are finally roused from stasis.