We know most people get infected in their own home. A household member contracts the virus in the community and brings it into the house where sustained contact between household members leads to infection.
But where are people contracting the infection in the community? I regularly hear people worrying about grocery stores, bike rides, inconsiderate runners who are not wearing masks…. are these places of concern? Well, not really. Let me explain.
In order to get infected you need to get exposed to an infectious dose of the virus; the estimate is that you need about ~1000 SARS-CoV2 viral particles for an infection to take hold, but this still needs to be determined experimentally. That could be 1000 viral particles you receive in one breath or from one eye-rub, or 100 viral particles inhaled with each breath over 10 breaths, or 10 viral particles with 100 breaths. Each of these situations can lead to an infection.
2. Here is the paper on vitamin D.
we show that the risk of severe COVID-19 cases among patients with severe Vit D deficiency is 17.3% while the equivalent figure for patients with normal Vit D levels is 14.6%
3. Annette Alstadsæter and others write,
First, layoffs started in sectors of the economy directly affected by the policy measures but then quickly spilled over to the rest of the economy so that after 4 weeks 2/3 of layoffs are accounted for by businesses that were not directly targeted. Second, close to 90% of layoffs are temporary rather than permanent and while this classification may change as the crisis progresses, that is one glimmer of hope in the data. Third, while permanent layoffs are a minority, they still correspond to a 1.5 percentage point increase in unemployment — an unprecedented monthly change. Fourth, the layoffs have a strong socio-economic gradient and hit financially vulnerable populations. Fifth, there are hints of the important role of childcare—within firms, layoffs appear to be skewed toward workers with younger children, in particular toward women. Finally, layoffs are more common in less productive and financially weaker firms so that the employment loss may be overstating total output loss
Pointer from John Alcorn.
This existing demand for safe assets is one reason why interest rates on long-term U.S. treasury bonds remain very low despite the large runup in public debt this year. It also helps explain low inflation, since the increased demand for safe assets means less spending. A new generation of more risk-averse investors will add to this already elevated demand for safe assets and create additional disinflationary pressure that will be with us for some time.
…The use and expansion of the Fed facilities to backstop markets sends another strong signal to foreign investors that the U.S. financial system will not fail. This will encourage them to hold more dollar-denominated assets issued in America. Put differently, the biggest kid on the financial block just got stronger.
This is another case of linking to a point of view with which I disagree. Vehemently.
The demand for low-interest U.S. paper is sufficient for now. But as Herbert Stein said, things that can’t go on forever stop. And in this case, the stop will be sudden and will catch markets by surprise. It will surprise David Beckworth and others who think it can go on forever.
Also, contrary to Beckworth and others, I believe that the additional issuance of government paper does nothing to solve the main problem for the economy, which is to discover new patterns of sustainable specialization and trade.
5. For speculation on the outlook that is closer to mine, consider a paper by Victoria Gregory and others.
We find that the recession has an L-shape. The finding is easy to explain. First, even when the cost of maintaining and reactivating a suspended employment relationship is fairly small—in the order of less than a month of the worker’s value added—the fraction of workers whose employment relationship is permanently terminated is about 35%. This is consistent with survey evidence, which finds that between 40 and 50% of the workers who have entered unemployment during the first month of the lockdown have no expectation of being recalled to their previous job (see, Adams-Prassl et al. 2020 and Bick and Blandin 2020). Second, the workers who are permanently laid-off are
disproportionately of the ”fickle” type, who need to search for several years in order to find a long-lasting job.
Pointer from JA. Note that the depiction of unemployment as a search/matching problem is not to my taste, because it makes it sound as if the job opportunities are given, rather than emerging from entrepreneurial trial and error. And simulation models are not to my taste. So I cannot endorse the methods, as much as I agree with the conclusion.
6. Leonidas Palaiodimos and others write,
Patients were classified in three groups based on the BMI: BMI<25 kg/m2, BMI 25-34 kg/m2, and BMI≥35 kg/m2 as per the most recent BMI assessment prior to or during the index admission. Severe obesity was defined as BMI≥35 kg/m2.
Pointer from JA. It might be somewhat counterintuitive, but this kind of piecewise linear specification is a more robust way of dealing with possibly nonlinear relationships than is imposing a particular nonlinear functional form, such as log or exponential. These investigators find a significant role for severe obesity along with the usual role for age.
Now, haul Arnold’s template over to The U.S. Labor Market During the Beginning of the Pandemic Recession, by Tomaz Cajner. . .
The highest employment drop, in Arts, Entertainment and Recreation, leans toward inessential + fragile. The second, in Accommodation and Food Services is more on the essential + fragile side. The lowest employment changes, from Construction on down to Utilities, all tending toward essential + robust.
We all know people on social media who enjoy decrying lockdown violators and protesters as “covidiots.” Project Fear works by appealing to believers’ sense that they are smarter than their peers, better able to read the tea leaves to see the impending disaster and also better able to protect society from its more benighted members. And don’t discount the joy in the sense of moral superiority when one’s position allows one to value “lives” when one’s opponents care only about “the economy.”
Pointer from Alberto Mingardi. Fear of the virus has been transformed into Fear Of Others’ Liberty. So even though Vitamin D is protective, many people applaud the California governor for closing the beaches.
9. Finally, if Tyler can link to an A-WA music video, I can link to a video of an A-WA song with me dancing to it. I need to study the video to remember the last section before the very end.
Fully agree on Beckworth. To make matters worse, they have no Plan B. They are “all-in” on their world view. The process of losing confidence in a currency isn’t linear and there may be little warning.
Let’s also not forget one big reason why we have “excess demand for safe assets.” Too much capital. Capitalism normally destroys large chunks of misallocated capital via recession. When you systematically short-circuit that process via the injection of new capital you end up with large amounts of “wealth” relative to the underlying economy. Combine that with inequality (low velocity of wealth) and you get “excess demand for safe assets.” And of course the academic answer becomes…inject more capital.
Good point about the safe-asset thinking rich going “all-in”. I now suspect the big US bailout of irresponsible rich investors from 2008-9 means even more rich folk want US assets. Making the big US dog even bigger — along with the Chinese virus, and future lawsuits against it, hugely reducing the Renminbi / Yuan alternative, while Italy & other Euro PIIGS keeps that alt currency down.
If we have too much capital, it’s because we have too few investment opportunities with ROIs whose positive expectations outweigh the uncertain risky negatives.
Low ROIs is a huge problem; “too much capital” is because … the middle workers aren’t getting enough and the top 1% / 10% are getting too much. The rich are getting richer faster than the median, and the tax policies should use that metric (1% level of income / 50% median level of after tax income) to measure and try to improve the trend.
Agree. Of course you are going to have a lack of perceived investment opportunities when: 1) the median consumer is heavily indebted and facing stagnant wages, 2) labor force growth is slow.
I believe we wrongly interpret this as “too little willingness to take risk” instead of “too much capital relative to mediocre growth prospects.” It never feels right to let capital be destroyed (it’s always some “one-time” event)…but then you end up exactly where we are.
There is a whiff of condescenion toward low wage workers in the Gregory paper and the Searls piece, at least that is what I felt.
The reason that some workers are “fickle” about taking new jobs is that many of the jobs they are offered are pretty awful in terms of wages, benefits, dignity, advancement, or all of the above.
It is a painful situation, without a doubt. The low-wage workers in bars, restaurants, hotels, meat-packing plants, et al are frankly not very important to America’s overall prosperity or productivity. They are not living the lives that we thought would be universal with all our technological advances.
But as the saying goes, they gotta eat, and their children have to be schooled and hopefully have a stable family life. Attention must be paid, even if it is not a very attractive economic cohort.
Never once have any of the governors and mayors banning religious services offered any reasoning like that offered in entry 1. Given neither they, nor their “experts” know or consider they owe justification to the citizenry, I’m happy to watch them burn the churchgoing constituency they may find useful should elections be held.
But then even that author doesn’t acknowledge that masks recommended to the public do nothing to inhibit small aerosolize particles. And even N95 masks for health care workers let in 5% and thus aren’t protective for hours and hours of exposure. He doesn’t address cumulative exposure over several work periods.
1) “The main sources for infection are home, workplace, public transport, social gatherings, and restaurants. This accounts for 90% of all transmission events. In contrast, outbreaks spread from shopping appear to be responsible for a small percentage of traced infections.”
I’m inclined to believe this is true. However, if there was spread from shopping and other casual contact, would tracing and case studies be able to reveal that? How would patients be able to report all the strangers that they passed by momentarily in a grocery store?
The demand for low-interest U.S. paper is sufficient for now.
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Our efforts to use central government to share volatility results in a serious skew toward market concentration. Our central government signals a long term bet, the agents bet the long term companies, markets becomes less complete. The Fed borrowing is a seigniorage tax, like a sales tax, and is being passed down to retail deposits and loans, so retail regulated banking dries up. Government cannot see future tax revenue, absent retail regulated banking. a meeting of the elders. Meeting of the elders, triggers Post Nixon Shock syndrome.
David Beckworth and inflation.
I am reminded of a 10-year-old joke that goes something like this: “There is absolutely no question and I am 100% certain that inflation should have been much higher than it has been for the last 30 years.”
I don’t understand it myself. Perhaps rising global incomes yet widening income stratification has resulted in chronic capital gluts, thus low interest rates, but weak aggregate demand, thus low inflation.
Will the US become over-indebted? Perhaps, but then the US Federal Reserve evidently has the ability to print money and buy back debt.
By the way, the Swiss National Bank is printing up a hurricane of new money to keep down the value of the Swiss franc. In recent years the Swiss National Bank has printed up about $100,000 of new francs per Swiss resident to buy foreign sovereign bonds. This year Switzerland will probably go into deflation.
It is likely we will not see demand-pull inflation. Globally, every industry is glutted with capacity, even oil.
The existence of property zoning criminalizing new housing supply is a serious issue, and accounts for a large portion of what limited inflation we see.
I recommend the complete and total abolition of property zoning in the United States, but that is something of a pipe dream.
(4) Beckworth is right about no need to worry.
Arnold – where is your time-delimited probability estimate?
But as Herbert Stein said, things that can’t go on forever stop. And in this case, the stop will be sudden and will catch markets by surprise.
Yeah, I wouldn’t bet this continues for 1000 years; or even 100. But looking at the last 30 from Japan, I’d make a BIG bet that in the next 10 years there is no crash, no sudden stop.
I don’t see from you any falsifiable claims – so it’s mostly hot air.
Unfortunately.
Since studying Hayek & Austrians in the 70s, I’ve been an anti-gov’t deficit hawk … and against the 2008-9 bailouts. Like you – one reason I’ve been reading you off & on for so many years (since you Tech Central Station days! 2003-ish)
Being against increasing gov’t debt is one of my life-long beliefs, but is it really true?
How would I know if I’m wrong?
In Decision Analysis, one tool is the imaginary retrospective: after the Big Bad Event, what caused it that you didn’t expect? The 2000 dot com bubble was widely known and expected, but in general, not specifically.
The 2006 housing bubble pop had been expected for years based on it being “overvalued”. It led, thru dishonest (more than unregulated) banking practices with Mortgage Backed Securities to the 2008 financial crisis. The MBS/ CDO swap stuff was part of the unexpected significant cause.
If the big gov’t deficit “can’t go on forever”, for the USA, then it can’t go on forever for the Japanese, with their Yen and a national debt about 220% of their annual GDP – mostly denominated in JPY.
My current falsifiable claim – the US dollar will NOT suffer a big fall, nor massive inflation, before the Japanese Yen. In the next 5 years; 10 years; 20 years.
There could be such a fall in the Yen: China attacked and took over Taiwan! no, wait, another nuclear power plant blew up! no, wait, the price of oil and rare earths began spiraling up as investors started hoarding because of global prosperity! no, … some other reason
The world now has NO OTHER “safe asset” class of investments which has a great chance of outperforming the USD bonds in the $100 billion investment range.
(As mentioned above) As long as most of the stimulus money from the Fed ends up with the rich (top 1%, 10%, 20% quintile), most of that money will be looking for safe investment opportunities.
And certainly we can all calculate that by increasing the debt by 2% over the increase in GDP, it takes 50 years before a debt level of 100% of GDP becomes one of 200%.
See these cute links to debt and deficit:
https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287
https://www.thebalance.com/us-deficit-by-year-3306306
This conventional wisdom:
“The concern is that the country will not be able to pay. When that happens, debt holders demand higher interest to compensate for the higher risk. That increases the cost of all interest rates and can cause a recession.”
Either a) interest rates start rising, therefore providing a warning and invalidating your claim that “the stop will be sudden”. or
b) there will be a crash without an increase in the rate.
If this is what is meant, it should be said more clearly, and discussed far more fully.
From my view, 50 years is NOT forever – but finance problems that only happen after many decades are not a crisis for today, or this year, or even this President’s 4 yr term, or 8 yrs (2x).
The budget should grow less than the economy, so the budget deficit goes down, and this problem can be reduced. This won’t happen when those calling for restraint use catastrophe language.
The failure of the “catastrophe scenarios” of the Wuhan virus weaken the models of climate alarmists, but also of national debt alarmists.
#4. Beckworth writes that “the increased demand for safe assets means less spending”; but why think so?
What can you do with your money besides buy safe assets? Answer: you can buy risky assets, or you can buy consumer goods/services, or you can just hold (“hoard”) the money. With a given money supply, greater desire for safe assets means (*ceteris paribus*) less spending on risky assets or consumer items; but it means less spending *overall* only to the extent that it stimulates increased money hoarding. And even this outcome is dependent on the assumption of a fixed money supply: the Fed can always offset any tendency towards more hoarding by creating new money. Beckworth should have mentioned that his assertion was based on assuming insufficient quantitative easing by the Fed.
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As for your prediction that the markets will be surprised (by interest rates, or whatever): If Arnold Kling tells me one thing and the markets tell me the opposite, who’m I gonna believe?
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I agree that “to discover new patterns of sustainable specialization and trade” is now and *always* “the main problem for the economy.” But that does not mean that the Fed’s actions cannot solve, or exacerbate, an important secondary problem for the economy.