Coronavirus Quick Take April 14

KCS Wealth (Byline: Ken Waltzer)

April 14, 2020

Welcome to another day of Coronavirus Quick Takes. Today we’ll address a question that’s been in the news: How (and when) do we restart the economy?

We’ve been hearing a lot lately in the US about reopening the economy, how to do it and when to do it. Countries overseas are having similar conversations. Before we can answer the “when” question, though, we need to figure out the “how.”

Epidemiologists tell us that there are four things that need to be in place before any region can think about reopening their economy:

  1. COVID-19 testing must be universally available, at least for everyone with symptoms.
  2. Hospitals in the area must be able to treat all patients requiring hospitalization.
  3. Public health departments must be able to trace and monitor all cases and their contacts.
  4. There must be a sustained reduction in coronavirus cases over a 2-week period.

Regarding #1 (testing), the US has made great progress in testing availability over the past few weeks. We’re now testing about 140,000 people per day, but even this isn’t enough: experts tell us we’ll need to perform millions of tests each day. It seems likely, however, that we’ll have sufficient testing capacity by May, which is probably the earliest that any area of the country will be ready to reopen for business.

A note about the reliability of testing. While the COVID-19 test itself is extremely sensitive and accurate (a single strand of viral RNA is enough for a positive test), the false negative rate (percentage of people who have the virus but test negative) is high, at around 30%. Why? The main issue seems to be sampling error. If you have ever had a viral swab, you know that the Q-Tip needs to go all the way to the back of your nasal passage. This is very uncomfortable and it’s likely that many samples are inadequate. For this reason, more than one test is often required, and a contact of a known COVID-19 patient needs to be treated as infectious regardless of test results.

Hospital capacity (#2), and especially availability of ICU beds and ventilators, varies significantly by region. Some states, such as California, are doing very well and their hospitals are in little danger of being overwhelmed by coronavirus cases. Other states, including New York, New Jersey, and Massachusetts, as well as certain cities such as Detroit, Chicago and New Orleans, are in real danger of exceeding their hospital resources. Fortunately, it now appears that cases in all these areas are leveling off and that the worst-case projections will be avoided. We should know for sure in the next week or so.

Number 3 is the biggest barrier to reopening the economy. If we are to permit people to venture back into the wild, there must be a way to not just identify coronavirus cases, but also trace all their contacts and quarantine those who are not immune. This takes both data and manpower. The latter will require substantially more funding of public health departments around the country, who must then hire and train large numbers of case trackers. At this point, it isn’t clear when public health infrastructure will be sufficiently in place to permit thorough case tracking. Most likely, it will vary by state.

Fortunately, technology is helping. Google and Apple have embarked on a rare collaboration to enable their smartphone owners (about 3 billion people worldwide) to know if they have been in contact with a known coronavirus carrier. In the absence of outreach from public health departments, the value of this information for disease mitigation will depend heavily on personal responsibility. Hopefully, the majority of people will take the information seriously and self-quarantine and/or present for testing.

The fourth criterion depends mainly on how well the population adheres to physical distancing. So far, most people are adhering to the various safer at home orders, and new cases of COVID-19 appear to have peaked in many areas. However, in no state has there yet been a sustained decline in new cases, suggesting that the soonest any state could relax its restrictions would be early May.

What does re-opening the economy look like? We’ll talk more about this in a subsequent Quick Take. In broad strokes, it involves people gradually returning to work, but with persistent restrictions and physical distancing. Crowds will continue to be discouraged. People still won’t be traveling much. Many restaurants will look very different, with more space between tables and strict disinfection regimens. Offices and factories will keep people further apart, discourage in-person meetings and set up physical barriers between workers when possible. And everyone will be wearing masks.

Serology testing, which is a blood test to measure immunity to the coronavirus, needs to start being deployed widely to determine how much of the population remains at risk and to identify those who no longer need to worry about becoming ill or infecting others. People with documented serologic immunity will likely be the first to go back to work, particularly in jobs requiring contact with the general public. One piece of good news is that the actual number of cases—and thus the percentage of the population that is immune to the virus—is probably at least 10 times the number reported. Thus, immunity will soon be relatively common in the population.

Until we have a vaccine that is widely distributed, the above scenario will likely continue and the global population will be divided into two groups: those still at risk for COVID-19 and those who are immune. It feels a bit like a sci fi story, but that is the new reality of our world. Fortunately, it won’t go on forever, as an effective vaccine is almost certain to be available sometime next year—and the sooner, the better.

We’ll continue to write Coronavirus Quick Takes periodically during the pandemic. Please feel free to comment and ask any questions that come up.

Yours truly,

Ken Waltzer MD, MPH, AIF®, CFA, CFP®

KCS Wealth Advisory is a registered investment adviser. Our services include discretionary management of individual and institutional investment accounts, along with personalized financial, estate and tax planning services.

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