BUSINESS: COVID-19: US economy sees sharpest contraction in decades – BBC News

New Yorkers in need receive free produce, dry goods, and meat at a Food Bank For New York City distribution event at Lincoln Center on July 29, 2020 in New York City.
Food banks have seen a surge in demand – GETTY IMAGES

The US economy shrank at a 32.9% annual rate between April and June as the country grappled with lockdowns and spending cutbacks during the pandemic. It was the deepest decline since the government began keeping records in 1947 and three times more severe than the prior record of 10% set in 1958.

Reduced spending on services such as healthcare drove the fall.

Economists have said they expected to see the sharpest drop in the second quarter, with recovery thereafter.

But as virus cases in the US surge and some areas re-impose restrictions on activity, the rebound is showing signs of stalling.         

US GDP chart

More than 1.4 million people filed new claims for unemployment last week, up slightly from the prior week for the second week in a row. Other data points to spending cuts and falls in confidence in July.

Job losses

Jerome Powell, the head of America’s central bank, on Wednesday warned of renewed slowdown, describing the downturn as the “most severe in our lifetimes”.

He urged further government spending to help American households and businesses weather the crisis.

That call was echoed by other business leaders on Thursday as the figures brought into focus the scale of the economic crisis facing the country.

“The staggering news of the historic decline of the gross domestic product in the second quarter should shock us all,” said Neil Bradley, chief policy officer at the US Chamber of Commerce, a business lobby group. “This jarring news should compel Congress to move swiftly.”

The International Monetary Fund has predicted that global growth will fall by 4.9% this year. On Thursday, Germany reported a record quarterly decline of 10.1%, while Mexico’s economy also reported a double digit contraction.

Compared with the same quarter a year ago, the US economy contracted 9.5%. Exports and imports were both down more than 20% from a year ago, while consumer spending – the main driver of the US economy – fell 10.7% year-on-year.

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‘No signs of getting back to normal’

Anthony LoPorto, owner Bean Post Pub

New York City pub owner Anthony LoPorto has been serving drinks at his Bean Post venue since 1994. He’s never known it so bad.

After waiting months to re-open, he is now struggling to fill his tables as people worried about the virus or loss of income stay home. It is a drop-off in trade that is magnified across the US – a reason why the GDP numbers were so bad.

“This is now going on for months and we were told that there would be an opportunity for us to start getting back to some normalcy around this time – there’s no signs of normalcy whatsoever,” he says.

“I have a ‘don’t stop, won’t stop’ type of attitude… but it’s getting to a point where I’m nervous and I’ve got to be honest – I’m nervous that even if I continue to go on, what’s going to happen with the neighbourhood?”

The more offices that close or keep staff at home, the more the Bean Post’s custom dwindles.

“I don’t believe in a quick bounce-back at all,” he says. “This is a long time that people have not been making money.

“There are nights when there’s just nobody around… There’s just not enough money in people’s pockets and not enough want in people’s spirits.”

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The US has lost nearly 15 million jobs since February, despite strong hiring in May and June. The US census estimates more than half of American adults live in households that have seen incomes cut since the pandemic.

Economists warned it will take years for the US to recover from the devastation.

“Even when the economy saw rapid bounce-back in May and June, the Covid-19 economic shock inflicted so much damage in earlier months that the net result was an economic catastrophe for the second quarter,” wrote Josh Bivens, director of research at the Economic Policy Institute.

“The fact that initial jobless claims have risen for a second week is worrying and underscores that the nascent consumption recovery is at risk,” said Madhavi Bokil, vice president of Moody’s Investors Service.

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  • Clyde Duncan  On July 31, 2020 at 10:17 pm

    Why Do Asymptomatic COVID-19 Cases Even Happen?

    Health officials are concerned about why some people who test positive for the coronavirus never feel sick. Could it be the luck of genetics? The blessings of youth? Or something else?

    Sarah Elizabeth Richards | National Geographic

    THE FACTS OF COVID-19 include this disturbing reality:

    WE HAVE LITTLE IDEA WHO AMONG US IS SPREADING THE DISEASE.

    Up to half of stealthy spreaders “feel fine” on Saturday night — but by the time they come down with the telltale cough, fever, and fatigue on Monday, they’ve potentially infected multitudes.

    Meanwhile, what could be an even more elusive bunch — PEOPLE WHO ARE INFECTED WITH THE CORONAVIRUS BUT NEVER, EVER FEEL SICK — make up 40 percent of infections in the United States, according to estimates from the Centers for Disease Control and Prevention.

    What’s especially puzzling is why these two groups—pre-symptomatic transmitters and asymptomatic cases — appear so frequently.

    OTHER VIRUSES, SUCH AS INFLUENZA AND COLDS, SPREAD SILENTLY TOO. BUT THE EXTREME EVASIVENESS OF COVID-19 MAKES IT HARDER TO CONTROL.

    Part of the problem is knowing so little about how the disease manifests. We know that people who are old, obese, or have other health conditions such as asthma or diabetes, are more likely to develop a severe form of COVID-19.

    YET THE PEOPLE WHO GET INFECTED BUT ESCAPE THE WORST OF ITS WRATH ARE HARDER TO COMPREHEND.

    Researchers are racing to understand the biology of these sneaky cases and to develop models that predict how they might be spreading COVID-19. Emerging evidence suggests that a mixture of genetics, age, and individuality in people’s immune systems might factor into who gets a mild or barely noticeable case.

    HARD TO MEASURE

    THE BIGGEST CHALLENGE IN STUDYING SYMPTOM-FREE TRANSMISSION IS FIGURING OUT HOW OFTEN IT HAPPENS. If you don’t feel sick, you’re not likely to get tested, right?

    AND EVEN IN PLACES THAT HAVE CONDUCTED WIDESPREAD TESTING, SUCH AS CHINA AND ICELAND, RELIABLE DATA HAVE BEEN HARD TO COME BY.

    One reason is that research studies don’t follow patients for a significant amount of time after testing to see if they might have developed symptoms later. One new study in Nature estimated that 87 percent of the infections in Wuhan, China, in the early days of the pandemic were missed because health officials didn’t know about pre-symptomatic spread.

    AS FOR THE PEOPLE WHO NEVER FEEL ILL, IT’S UNCLEAR HOW CONTAGIOUS THEY MIGHT BE BECAUSE RESEARCHERS HAVE A HARD TIME DOCUMENTING THEIR TRANSMISSION.

    The CDC estimates asymptomatic cases are 75 percent as infectious as symptomatic ones, but the agency cautions that this assumption is based on a murky understanding of what’s known as “viral shedding”, in which people unknowingly release contagious virus into the atmosphere.

    PERHAPS ASYMPTOMATIC PEOPLE DON’T CARRY AS MUCH VIRUS TO BEGIN WITH, OR THEIR IMMUNE SYSTEMS BEHAVE LIKE THOSE FOUND IN BATS.

    “Bats have these viruses, but they don’t get sick at all. They seem to have an immune response that allows them to clear the virus,” says Stanley Perlman, a professor of microbiology and immunology at the University of Iowa in Iowa City.
    These theories could shed light on new Chinese research showing asymptomatic individuals have a weaker immune response overall and produce fewer antibodies, one of the immune system’s weapons.

    BAFFLING BIOLOGY

    RESEARCHERS ARE ALSO TRYING TO FIGURE OUT WHO’S MORE LIKELY TO GET A STEALTHY KIND OF COVID-19.

    For this virus, the young are mostly spared the worst outcomes, according to an analysis of nearly 17.3 million British health records that linked the risk of dying from the virus to old age.

    WHEN IT COMES TO SEVERITY, “BY FAR THE MOST POWERFUL PREDICTOR IS AGE”, says Paul Sax, clinical director of the Division of Infectious Diseases at Brigham and Women’s Hospital in Boston and professor of medicine at Harvard Medical School.

    Yet the reason is more complicated than younger people being healthier in general. One theory holds that the most vulnerable people have more ACE2 receptors, the cellular doorways for the coronavirus.

    OLDER ADULTS HAVE MORE ACE2 LOCATED THROUGHOUT THE BODY AND IN THEIR VIRUS-WELCOMING NOSES THAN YOUTHS. OBESE PEOPLE ALSO HAVE MORE OF THEM.

    ANOTHER THEORY THAT’S GAINING TRACTION IS THAT YOUNGER PEOPLE HAVE MORE RESPIRATORY VIRAL INFECTIONS IN GENERAL, SO BY THE TIME THEY GET COVID-19, IT’S LESS DANGEROUS.

    “Their exposure to multiple coronaviruses gives them some partial protection against COVID-19,” says Sax. A peer-reviewed but not yet edited manuscript that was published last week in Nature makes the case that people who’ve recovered from certain kinds of coronaviruses might have pre-existing “memory T cells” that ward off COVID-19 or make them more likely to have a milder case.

    OTHER RESEARCH SUGGESTS ASYMPTOMATIC PEOPLE SIMPLY MIGHT BE GENETICALLY LUCKIER. Some people have variations of the ACE2 genes that make them more susceptible to getting infected by COVID-19’s spike protein, or more prone to inflammation, scarring in their lungs, or narrowed blood vessels that makes them sicker. Early reports from Italy and Spain claimed some blood types increase the risk for being hospitalized, but larger studies released this month counter this idea.

    JUST A LITTLE SICK

    Although people infected with other, well-known diseases can transmit them asymptomatically, too, it tends to be overlooked among scientists because studies usually focus on those who are seriously sick.

    One 2019 community study tried to document this underground spread. The project tested 214 people weekly at multiple locations throughout New York City for 18 different respiratory viruses, such as influenza, and a slate of cold-causing germs including some coronaviruses. In the course of a year and a half, the researchers found that a whopping 55 percent of positive cases were symptom-free, and asymptomatic infection rates exceeded 70 percent for most of the viruses.

    “It’s been a debate for many years,” says Ben Cowling, professor and head of the division of epidemiology and biostatistics at the School of Public Health at the University of Hong Kong. “With flu, the incubation period is one to two days.

    Transmission happens quickly, and most cases are mild. If you find people who have the flu and try to trace back how they were infected, it’s really difficult.”

    Despite the challenges of tracking COVID-19 transmission, Cowling says the coronavirus’s 14-day incubation period has given health officials more time to connect the dots and hunt down asymptomatic cases.

    YET WHAT’S REMARKABLE IS THAT SOME PEOPLE, WHEN TOLD THEY WERE INFECTED, CONCLUDED THEY WEREN’T COMPLETELY ASYMPTOMATIC, AFTER ALL.

    “WHEN ASKED ABOUT THEIR SYMPTOMS, THEY REALIZED THEY WERE FEELING OUT OF SORTS,” Cowling says. “There’s a gray area where you can have a mild thing like a tickle in your throat or a headache, or you don’t know if it’s a symptom of an infection or something that happened because you didn’t sleep well.”

    THIS CONFUSION OVER WHAT ARE CLASSIC COVID-19 SYMPTOMS ISN’T SURPRISING, CONSIDERING THAT THE LIST IS CONTINUALLY GROWING.

    Now they include loss of taste or smell, a purple rash on your toes, and even gastrointestinal woes such as nausea or diarrhea. A recent paper in Nature Medicine showed that people with no outward symptoms could still experience lung damage.

    In other words, what researchers thought were truly asymptomatic cases might actually be what’s known as paucisymptomatic, meaning their few symptoms are so mild they never suspect an infection.

    “THESE ARE THINGS THAT DON’T MAKE YOU FEEL LIKE YOURSELF, BUT YOU DON’T CHALK IT UP TO COVID-19,” says Lauren Ancel Meyers, professor of integrative biology at the University of Texas at Austin, who studies disease modeling.

    Gaining a better understanding of this gray area might be key to containing the spread of the virus.

    “IT WOULD BE VALUABLE TO UNDERSTAND WHAT MILD SYMPTOMS ARE COMMON SO WE COULD MORE RAPIDLY IDENTIFY AND ISOLATE PEOPLE,” Meyers says. “If there are fewer true asymptomatic cases than we think, that could have a huge impact on our projections and reopening policies.”

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