The new assumption is that we can’t return to pre-COVID behavior until we have a vaccine. I’m not sure what happens if we don’t have one in 2 years … which is kind of the over under. GDP is down 38% … so far.
Let’s be brutal for a moment.
We could return to normal behavior tomorrow if we wanted to. This thing would wash through most of the country this year, we’d have herd immunity by the end of the fall, and about a half million to a million people would die, almost all retirement age, a huge slug of which would be in their 70s and 80s. We’d have to watch stacks of bodies on TV for about four months and our funeral system would be overloaded. In the end, about one out of every 300 to 600 Americans would be dead because of it. It would be way less bad than the measles, or really any sort of disease outbreak from the prior century, but there would be a huge amount of screaming and yelling about all the dead people. A million dead people is a lot of people, even if it’s only a third of a percent of the population.
And by the time we were done, not only would the economy rebound, but we’d be on the receiving end of about a trillion dollars worth of economic stimulus as a result. Here’s the math on that:
The Long-Term Economic Benefits of a Deadly Epidemic
Examining the possibility that economic environmental changes from COVID-19 may generate stimulus in the trillions.
If we did that, we’d be reaping the post-Covid salad days for a decade. The economy would not only be back to normal, it would be great.
But we don’t want to return to normal behavior. Even if the government literally told us to return to normal behavior, many people would still choose not to do so, and choosing not to leave the house is their right just like leaving the house is (should be) someone else’s right. So we’re stuck with some amount of GDP drop no matter what we do. And if this thing were to rip through the country, more people would stay at home, and you end up with a lot of those GDP hits purely from voluntary action. So there’s a counterfactual to take into account.
We won’t have a vaccine for a year or two, if we have one at all, and we won’t know whether it’ll work long term even after we have it. Some states like New York might be close to herd immunity in a year, because they allowed themselves to get so sick on the front end, but a state like Georgia isn’t going to reach herd immunity at its current (very low) infection rate for something like five years.
So it’s a shit sandwich. And even folks who refuse to take a bite are just going to be biting off a different piece of it.
In truth, the “stay at home” crowd may be doing the “reopen” crowd a favor by staying at home. Every one of them that’s out of the mixer reduces the Rt on net, which gives a little buffer for a “reopen” person to leave the house without contributing as much to the problem.
In the end, this is going to be a big mess and everyone’s going to blame everyone else for the mess except the people who need to be blamed, which in my humble opinion is probably some lab technician in Wuhan who improperly handled a bat specimen.