COVID-19 Update: The N̶e̶w̶s̶ Data is Mostly Good

First off, it’s time to call a spade a spade. When the Trump administration publicly projected 100,000 to 240,000 deaths in the U.S. last week, we couldn’t come up with a model that aligned with these numbers. Either they are/were seeing something in the data that we are not, or…they were managing expectations. This is an election year, after all. Even in the daily briefings since that forecast, the number of new cases reported have generally been lower than feared.

According to our forecasts, which were based on Italy and other countries’ leading virus-progressions (which were intentionally overestimated when compared to the probable U.S. trajectory), the U.S. would likely never plateau at rates above 50,000 new cases a day. The U.S. has 5.5 times as many people than Italy. Even if we overestimated that Italy was a model for the U.S. (which, as we projected, peaked two weeks ago at less than 7,000 cases a day), it was hard to model the U.S. peaking at more than 50,000 cases a day and likely that number will be closer to 40,000 or less. Italy maintained 85% of peak for nearly three weeks before declining. If we ascribe that to 40,000 new cases a day, the U.S. will likely add less than 750,000 new cases before meaningful decent. We believe we are already into that peak phase (currently with 400,000 cases). By our models, the U.S. will reach a total of approximately 1.5 million cases (or less), using the Italian infection model. With an above average fatality rate of 5% (we expect it will be lower), you would anticipate less than 75,000 deaths in the U.S., with the bulk of those coming in the next 4 weeks.

Importantly, Italy has one of the oldest populations in the developed world with an average age over 7 years older than the U.S. at 45.5 and a meaningful population in the most susceptible zone of the virus (above 70). Societally, they also live multi-generationally, which increases cross spread within families. Italy also failed to take protective measures until there was a considerable outbreak. They continued to allow flights in from China, their key textile trade partner, for over a week longer than the U.S., despite cases coming into Northern Italy directly through China. Further, Italy’s hospitals in the north were overrun with cases, which is not anticipated in most of the U.S. (see state by state data here). As such, we expect and hope that our estimates for U.S. data for the virus will prove to be higher than reality when the virus is eventually suppressed…at least this go around.

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With expectations that Italy’s progression may represent the worst pattern to date, we again look to Italy (and its close neighbors) to see if our indicators have continued on their paths of peak, plateau, and eventual decline. So far, with each new data point, we continue to be encouraged – with one troublesome outlier. Italy continues to report fewer and fewer new cases, as do their immediate neighbors to the north, Austria and Switzerland. In fact, Austria and Switzerland are already seeing the number of active cases in their countries decline.

As we have stated before, Spain, Germany, and France were the next countries to see the number of cases of the virus mushroom. There the recent reports are only partially good. Spain and Germany are following the pattern that we predicted just a few short days ago. Spain’s drop in new cases is especially encouraging, as many were beginning to compare its outbreak to that which was seen in Italy.

daily franMost of the other European countries we are following are exhibiting similar patterns, although earlier in their progression. The outlier is France. France has posted up some alarming and quite possibly anomalistic numbers in the last several days. North Pier will investigate this data in more detail in our full weekly update. We hope that this will prove to be atypical and that we will see the virus’s trajectory in France moderate soon.

The U.S. stock market seems to have turned its attention to this new phase of virus-related data. For the time being, the fear of the abyss seems to have abated. Ultimately, the real test will come when we finally turn our attention to the economy, and what the post-virus world will look like. However, those days are far off. There will likely be bouts of fear and euphoria between now and then. Along the way, we will do our best to keep you informed.

 

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