Thoughts on the Economic Impact of Covid-19

Let’s start with what we know of Covid-19 or the novel coronavirus. At this point there is more we don’t know than we do know but we know that the virus has a 14 day incubation period, it can take up to six days for symptoms to manifest, and that the infection can be spread while asymptomatic. Covid-19 spreads through droplets and can live outside the body for several hours. All of this adds up to the virus being highly contagious and effective at spreading. It is susceptible to hand washing and will be broken down by soap. I have seen conflicting information on whether or not the virus is heat sensitive.

The CDC estimates the mortality rate of Covid-19 to be 3.4%. Unfortunately that is not evenly distributed across all demographics and has a 16% mortality rate among certain groups of elderly. It has been estimated that the infection rate of Covid-19 will be between 20-60% of the population. The attending physician for Congress estimated that it will infect between 70 million and 150 million Americans putting the death toll at 2 to 5 million. We also know that satellite images have discovered mass graves in Iran, presumably for victims of Covid-19, and there are reports from citizens in Italy that hospitals are overcrowded and in a triage situation. What is lost in the report of the seemingly low mortality rate of 3.4% is that Covid-19 requires hospital stays to treat of 20% of the people it infects. Add that the hospitals already short on ICU beds and treating other illnesses and everything gets worse.

The precautions that are being taken by limiting travel, shutting down mass gatherings, and advising anyone feeling ill to self-quarantine are designed, not to prevent the spread, but to limit its impact being flattening the infection curve to make the infection rate more manageable.

Those are the facts of Covid-19 as I, an admitted lay-person, understand them. Now for the economic impact. I will speak only for myself in this regard. I will start by saying I am very frightened. My wife and I own a dog walking and pet sitting company. Our revenue stream is dependent on people traveling and going to work. We have already seen economic uncertainty limit travel. I noticed it in early February and contributed it to economic uncertainty of it being an election year as primary season was heating up and that was all over the news. Then as February drew to a close and March began we started hearing of countries shutting down international travel. Then we started to get cancellations due to the illness.

When I saw that it was Covid-19 that cancelled a clients travel I knew this was going to have a major impact. If my pet sitting and dog walking business was being impacted by business travel being cancelled then other businesses would be impacted as well. We had a few more cancellations like this and calls from potential new clients all but dried up. We are looking at a March that is down 50% in revenue from this time last year and could get worse as schools and other businesses start to close. Our city, Virginia Beach, has announced that schools are closed on Monday to assess the situation.

If things hold as they are we are looking at complete financial ruin. I am frequently checking the SBA website to see if they have made disaster loans available as we will need one before the end of this month. The saddest part of all this is our government flushed $1.5 trillion down the drain of a failing stock market instead of giving it as a stimulus to the people that need it. That would have been roughly $4,500 per person in the United States. That would have given our household $18,000 which is more than enough to pay our bills and make our payroll for the next couple of months. It is sad that our government cares more for the extremely wealthy than the average everyday American but here we are.

I know this situation is only going to get worse and if I am unable to get an SBA or other type of loan to keep the business operational through this crisis things will be bad for us, but not the worst they could be. We are in a better situation than some. While we could lose our business we are not going to lose our home and we will have each other. I am stressed and sad at the potential loss of something I worked so hard to build, but at this point it is unlikely. Financing is out there even if it isn’t from the SBA. Even if our government continues to use this crisis as an excuse to further enrich the rich and ignore the plight of the common man.

In 1918 one of the secondary impacts of the Spanish Flu were outbreaks of Chlorea due to sanitation issues. We are more insulated from those types of secondary effects but do not for a minute think that the economic issues manifesting from the necessary response to limit the spread of Covid-19 aren’t also human issues.

I am not thrilled to be someone so deeply impacted by this situation, and as I went about my day yesterday I felt like a terminally ill patient getting my affairs in order. The sun was shining, I saw all my normal clients, and overall it should have been a great day, but I know what is coming. The normal days aren’t going to last much longer. Schools will close, travel will stop, and businesses will be ordered to close. This is going to get worse before it gets better, and many people, people like me, may not make it to the other side whole.

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