US, WASHINGTON (ORDO NEWS) — This is war. This is evidenced by governments around the world, forcing people to sit at home and shut down businesses. This is a new reality for corporations moving to the production of mechanical ventilation, masks and disinfectants for the fight against coronavirus.
This is the battle cry of celebrities and legions of lesser-known people, calling on fellow citizens to sacrifice social life for the common good.
Many in the coming weeks will try to understand how things are going at the front. Is the incidence increasing exponentially, or were we able to smooth out the curve? Will a new depression await us, or will we recover quickly? In short: are we winning?
Unpleasant answer: we do not know – and probably will not know in the near future.
Many of us have heard of the “fog of war.” This term was coined by the Prussian military theorist Karl von Clausewitz in the 19th century. It implies that war is often waged in a situation of uncertainty. The military does not know exactly how dangerous the enemy is, nor how combat-ready their own forces are.
We are now in a fog of a pandemic. Officials monitoring the situation with COVID-19 are drowning in statistics: incidence, mortality, economic indicators … However, now, in the early stages of confronting coronavirus, all this information is flawed, each in its own way. And we already see how political leaders are trying to use conflicting data and uncertainty to reject the advice of healthcare professionals.
For example, President Donald Trump readily grabs onto any excuse justifying his initiative to restore public life from mid-April, when the number of new cases may continue to grow every day.
In order not to succumb to either optimistic propaganda or senseless pessimism, it is important to understand the particularities of the data we are dealing with.
Let’s start with medical statistics. Just look at the data for America to see how terrifying the incidence rate is. In the United States, the number of confirmed cases doubles every three days – faster than in Italy, France or Britain.
However, do not rush to conclusions. Confirmed cases are a function of positive test results. The US tragically late began testing, but last week their number doubled. So what are we observing – an increase in the number of cases of coronavirus, an increase in the number of tests, or both? The answer is the same: we do not know yet and in the near future we will not know.
Other indicators used to measure the magnitude of the outbreak – such as the number of hospitalizations or deaths – are also not perfect. Not all states publish hospitalization data, and when hospitals are full, new cases may not be included in the statistics. Mortality is also a diagnostic function in each individual case and a methodology for determining the causes of death. It is possible that many deaths from COVID-19 were not correctly identified and continue to be incorrectly determined as the result of pneumonia or another respiratory disease.
Over time, with an increase in the number of tests, it will be possible to understand something. But for now, citizens should be patient, and leaders must come to terms with the fact that we still do not have reliable indicators. Even if we put together different statistics, we still get only an incomplete picture of the scale of the crisis.
On the economic front, nothing is clear either. Investment banks forecast a decline in GDP in the second quarter in the range from 12% (Bank of America) to 30% (Morgan Stanley). And this does not mean that economists are having a serious discussion. This means that they do not understand what exactly is happening.
And how could they understand that? Such a sudden recession has no precedent in American history. Our economic toolkit is not designed to quickly and accurately measure such sharp declines.
Take, for example, the official unemployment rate. The Bureau of Labor Statistics will publish a preliminary assessment for March 3. One would expect this report to finally clarify the economic picture in the United States.
However, do not flatter yourself. According to Erica Groshen, an economist at Cornell University, this document will say almost nothing about what happened in the second half of March. “BTS conducts preliminary research on the week of the 12th of the month,” she explained to me. “Therefore, in April we will receive unemployment data for this particular week.”
March 12 this year was Thursday. Many cities closed all restaurants and bars only the following Sunday. Therefore, the economy of the first two weeks of March is very different from the economy of the second half of the month. We won’t get an exact picture of March unemployment until the BTS publishes the next batch of data. This will happen in May, which is almost an eternity during a pandemic.
Economists also focus on the number of new applications for unemployment benefits – the so-called initial requests. Experts suggest that this figure will be the highest in history.
However, at first it may not reflect the full depth of the crisis. At the state level, the corresponding sites are crumbling under the influx of requests, three times the previous record numbers. To cope with what is happening, the states extend the working day and transfer officials from other departments to process requests and interact with the unemployed.
Official numbers are growing slowly, but there are unofficial ones – from sociological companies and according to network services. SurveyUSA and NPR / PBS surveys show that millions have lost their jobs. Homebase, a networked workforce management service, said that one out of four businesses has completely discontinued operations.
“The main question now is:“ When will we know more? ”The answer is only:“ Depends on the circumstances, ”explains Justin Wolfers, an economist at the University of Michigan. – On the financial front, we will see a growing catastrophe right away, because the credit market will collapse. If we talk about business, then in the coming months we will only have indirect data – such as the number of bankruptcies. As for the consumer side, we may not really understand anything until the victory over the virus.” Note that the Bureau of Economic Analysis will not publish its preliminary estimate of GDP growth in the second quarter, which includes an estimate of consumer spending, until July.
The US is waging war in a situation of uncertainty. It may take weeks before we see if we have smoothed the coronavirus curve, and months before it becomes clear what our economy will be like in the second half of the year. One thing is clear: America’s leaders cannot afford to wait until they have a clear picture of the health and economic situation based on accurate data. Every day, while Congress is arguing about a rescue package, thousands of families may lose their livelihoods, and hundreds of businesses are heading for bankruptcy. In the fog of a pandemic, action is necessary before perfectly reliable information is received.
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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.