Economic and other secondary impacts of COVID-19

This is the 7th post in my series on the current state of knowledge around COVID-19. My last installment was about death and primary impacts, while in this one I'm focusing on economic and other secondary impacts. 

Like I noted last time, we know that current treatment in countries with good healthcare infrastructure leads to a mortality rate of about 2 deaths per 300 infections, and if left to itself would result in about 1.5 million deaths in the US ... if natural herd immunity is a thing, which is a big unknown. But what about secondary impacts, including deaths and other illness caused by the response to the pandemic?  And what positive developments might come from this worldwide tragedy?

Negative impacts

Deaths indirectly caused by the pandemic and responses

People were terrified at the beginning of the pandemic, and that led to many not seeking healthcare until it was too late.  Of course, it's hard to say exactly how many deaths fall into this category.  You can take the number of total deaths, subtract out the number of known COVID deaths, and compare that to the expected number of deaths for a year, and the difference are the relevant excess deaths, or at least that gets you in the ballpark.  But there are a ton of other factors, especially including the fact that many COVID deaths are likely not being marked as such, and public health responses decreasing deaths from other other communicable diseases (like the flu) makes the number of expected deaths a larger range.  Still, we know people were afraid to get care, and that has led to many deaths.

We also know that the entire world had to deal with an ongoing series of traumatic events, causing spikes in mental illness-related problems.  Suicide rates are up, with a staggering ~10% of respondents in a recent CDC study saying that had considered it.  It is hard to say how much is from anxiety related to the pandemic itself, or to the reactions of others such as governments, but ~40% of the respondents reported some mental illness. 

Overdoses (including both fatal and non-fatal) are up 20% from the same period in 2019.  Domestic abuse decreased at first, but was up a staggering 76% by August. This is 

There is another group of deaths that will be hard to measure related to philanthropic missions, but before we discuss those, let's dive into the economic impacts.

Economic impacts

In the US, unemployment hit at least 14.4% (and maybe higher), going from roughly 3.5% at the beginning of the year.  Entire sectors of the economy took hits from which they may never fully recover, such as child care, tourism and travel, live entertainment and TV, massaging and salons. Small businesses with little savings or room for error have been particularly hit.

The US GDP dropped an astounding 9.5% in the second quarter of 2020, laughing (hysterically) at the previous, puny 3% record. Over 3 trillion dollars have already been added to the US national debt this fiscal year, with a percent of GDP not seen since WWII. Over 8 million Americans have already slipped into poverty during the pandemic, and globally that number is forecast to be closer to 150 million in 2021.

Government impacts

When there is less productivity and higher unemployment, less money is taxed, so governments' coffers shrink precisely when more government services are needed.  Teachers, firefighters, police officers, and other government workers are the largest expense for most local governments, with a large portion also going to healthcare costs ... which have gone up.  The loss of tax revenue will be between $150 and 200 million in the US alone, for 2020, and similar amounts are likely in 2021, and maybe 2022.

That money comes from somewhere.  Will there be fewer teachers?  Will Medicaid be cut?  What will have to stop, and how long will those impacts last?  If you believe that government helps in any way, that help is likely to be less.

Philanthropic impacts

Of course, it's not just governments that lose out when the economies of the world shrink.  People have less money, and often much less disposal income, to spend, and so philanthropic missions suffer. And they may lay people off, or decrease payrolls, which further hurts the economy.

Corporate philanthropy has actually increased in many instances ... but much of it has been redirected to COVID, meaning that wherever the money was going to go originally is not getting it.

If you believe the advertisements, it only takes the price of a cup of coffee a day to save a life.  So when those businesses did not receive all the metaphorical coffees ... those lives were not saved.  Those immunizations in struggling countries were not delivered or administered.  The new infrastructure didn't get funded.

It will likely be some time before we can adequately estimate the impact here, but it is likely profound.

Positive developments

Okay, nothing in this list is going to come close to making all the deaths, illnesses, economic collapses, and other problems be okay.  But there are a few good things to come out of this mess.

Let's start with public health knowledge. This disease is horrible, but it could have been worse.  You don't have to go all the way to Captain Trips for it to be more calamitous ... just imagine it really had the 4% mortality rate originally thought, instead of a little north of 0.6%.  And what if there was NO immunity, and instead each time you contracted it, it got worse, or it never went away at all.  Now the governments of the world have experience dealing with a worldwide pandemic, and there is good reason to believe that they will work together to do better next time.  If something even worse comes along, this may seem like a dress rehearsal, and if that's the case, we will (I hope) be much better off.  Beyond that general knowledge, there is specific knowledge from ramping up testing, vaccine development, deployment, etc., that will help make our healthcare ecosystem less fragile. And people in general know much more about germs now, which hopefully will help in the long term.

There are also new business models, or at least greatly expanded business models that leapt into the breach revealed by COVID-19. A few small businesses are doing well:  Drive-in movies are making a comeback, as are those that can foods. Anybody that can deliver is doing well, including small boutique coffee shops and vineyards ... or mammoth organizations like Amazon and Walmart. Knowledge service workers, like tutors and editors, are having a heyday. And anybody that offers services or products for cleaning, of basically any sort, are hitting new highs if they can scale safely.

And, of course, let's not forget remote working. Those of us in IT have long wondered why we needed to go into an office every day to connect to a computer server in another building (or state or continent), but now a large swath of knowledge workers get to permanently work remotely.  It is changing living patterns, as people move closer to family and friends and out of expensive (and congested) cities.  It is allowing people to watch their kids grow up, or help their aging relatives. Traffic patterns are better. And, of course, hours are more flexible, which is often better for both the company and the employee. Speaking of the companies, they pay less for building infrastructure, utilities, etc., and also employees can work while mildly sick (and contagious!) without spreading illness, so the companies get more productivity.  Remote work isn't for everyone, and it takes different management skills, but this is changing work forever.

And it is probably changing education forever, too. Tuition costs are already really high and often difficult to justify, but without any of the in-person aspects, many are making other choices.  And with parents at home, online education is getting better, and the scope of the big problem of child care is just a little less ... though there are still lots of problems.  We don't know where education is going, but it likely is much further down digital trajectory now.

And that goes for most items that can be delivered contact-free.  Food delivery and outside pickup are likely to stay the norm, paper money is much less important, and basically everyone that CAN have a digital channel MUST have one, because their competitors will.  Telehealth, virtual house walkthroughs and open houses, etc.  And even social events will likely retain the digital channels, as it starts becoming a bit rude not to let your immunocompromised (or money challenged) loved ones attend via Zoom.

Conclusion

Even though there are some silver linings to the COVID-19 cloud, the majority of results from both the epidemic and the responses to it are bad.  We'll be feeling these results for a generation. Here's to hoping we are better ready for the next pandemic.