CoVid Update and the Economy

Posted by HFM Team on July 02, 2020

In our modern world of increased information flow, the CoVid-19 pandemic seems to be confusing at every turn, even for experts. Even though much of the information can seem confusing or unclear, we believe each day is bringing greater clarity to the virus and its economic impact.

Treatment Options & Vaccine Progress

Researchers continue to learn about the virus and discover additional treatment options. Recently, for patients that are seriously ill with CoVid-19, a new treatment option was discovered by researchers in the United Kingdom. Per their announcement, “Dexamethasone was beneficial for those who had been sick for more than a week, reducing deaths by one-third among patients on mechanical ventilators and by one-fifth among patients receiving supplemental oxygen by other means.”1 This is one example of welcomed news on the treatment front.

Treatments such as this have greatly enhanced patient survivability rates. The graph below shows the percent of CoVid-19 deaths as a percent of hospitalizations in the United Kingdom. As the graph illustrates, we are getting better at treatments for the virus as time goes along.


On the vaccine development front, the newspaper USA Today conducted a roundtable of various experts to give an update on the progression of a vaccine. They concluded we are about one-third of the way to a vaccine. Developments on this front will have far reaching implications beyond CoVid-19. We expect any substantial news regarding vaccine development to impact on our presidential election in November. It can be expected any substantial pro vaccine news potentially favoring President Trump and any news against a vaccine should favor Joe Biden.


Mask Effectiveness & Economic Impact

More and more reports are showing that wearing masks are an efficient and effective way of slowing the transmission of the virus. The graph below shows the growth of cases of countries with mask mandates and those without. The economic impact of a national mask wearing protocol was studied by Goldman Sachs. Their report estimated that a national policy to wear masks could prevent further shutdowns and prevent the loss of 5% of GDP (Gross Domestic Product). This could further aid a recovery and prevent further disruptions to the economy.


Stimulus Packages & Recovery Thoughts

Many people have been betting against the current stock market recovery. Even though the unemployment rate is higher than before, the key to sustaining the recovery has been the government stimulus. The amount of stimulus has been swift and massive, as stated in previous communications. The chart below is the inflation adjusted total labor income and unemployment benefits since 1960. What stands out is the recent decline due to CoVid-19 and the massive resurgence to all time highs due to the stimulus packages from the Federal Reserve and Government. In addition to the stimulus enacted so far, the Treasury has approximately $1.5 trillion in its general account. This can be thought of potential stimulus that can be brought forth at a moment’s notice.


Closing Thoughts

The CoVid-19 Virus was swift and massive in affecting our health, our economy, and our way of life. There are some bright spots in the news as we progress through this crisis. It is not over, but it is something we will overcome. If we adhere to prudent polices of mask-wearing, continue to develop additional treatments and a vaccine, and continue with our stimulus packages to help those affected, we can overcome the trauma this virus has wrought. We will continue to monitor the progression of this crisis and will update each client’s plan as appropriate. Feel free to reach out with any questions or concerns. Have a happy 4th of July weekend and stay safe!