It is as if life is on hold. The measures taken by many countries to enforce social distancing, limit numbers of people at events, reduce the use of public transport and discourage tourism have left major sectors of economies scarred.
Partial recovery is now possible, as sports personalities are allowed back into stadia, only to perform to a small adoring audience of coaches supplemented by ground staff. Actors and actresses look for work outdoors or perform for the TV cameras, as they await the safe return of the theatre crowds. Hotels, restaurants and bars come up with different interpretations of keeping people safe by limiting numbers, giving staff protective equipment, and requiring hand washing and temperature testing.
In this new twilight world, with the lights of economic recovery but half on, markets watch nervously as the imperatives of getting people back to work clash with the ultimatum to keep the virus down. Markets are currently unsettled, with less support coming from the Fed and the other central banks adding to the problems. Overactive buying of options and the use of borrowing to sustain tech share purchases has also caused a sharp retreat in the shares of the companies that do best in this current environment.
As a result of the relaxations to date, we now see cases of the disease rising again in many countries that had brought its incidence well down through lockdowns. Between 24 August and 6 September in France, new cases leapt up by 81,878 and deaths attributed to the virus rose to 188. In Spain, an extra 64,981 cases saw the death toll rise to 463. In hard-pressed Mexico, an additional 73,859 cases brought on 7078 more deaths, whilst India saw 1.09 million new cases and 14,200 deaths. In some cases, particularly in Europe, it appears that the second rise in cases numbers is more concentrated amongst younger people than before, and with fewer patients who get the severe life-threatening version. Some think it is only a matter of time before it spreads again to the elderly and more vulnerable. Others wonder if a more moderate version of the virus has emerged.
Data uncertainty
If you compare the numbers of deaths so far by country with the number of recorded cases you get very different death rates, from India and Russia at 1.7% to Italy at 12.8%. The problem is the rate of testing is so very different country by country, distorting the figures. Criteria for registering a death as from or with Covid-19 also vary, making these figures unreliable. If you look at deaths per million of the population Peru and Belgium still come out with the highest numbers. If you look at graphs you see Asia making new peaks in numbers of affected, whilst European numbers are rising again but still well below previous peaks.
This all matters, both because we all wish to see the death rate down, and because government responses to rising case numbers are usually harmful to the economies. So far in the second wave, governments prefer to use local lockdowns, intensified testing and tracing, and seeking to isolate those who have it or have been in contact with it. This is less damaging than a total lockdown but remains unsettling for confidence and means continuing impediments to businesses that need social contacts to thrive. The danger remains that too large a rise will trigger more widespread action.
The improving death rates in some countries may owe something to improving medical responses as well as to different age and health profiles of patients. The use of dexamethasone may be helping now it is approved as a treatment. Remdesivir was found to shorten the duration of the illness in some patients and may be useful. Knowledge of how to apply oxygen has also improved. The world awaits a range of other clinical trials of proven steroids, antivirals and other drugs which might help in this case.
The race continues
Meanwhile, the race for a vaccine continues. Several are now at stage-three clinical trials, where samples of the general population are given the treatment alongside a harmless alternative with no effect on Covid-19 to see if it works. Were one to emerge before Christmas, markets would be delighted, but it will still take time to roll it out and vaccinate in sufficient numbers for governments to be able to sound the all clear and remove all the restrictions. We are still waiting for a possible vaccine and watching as the measures to control the virus continue to scar large sectors of economies.
What is curious this summer is how little the story has moved on despite all the medical and scientific effort. This autumn is going to see some relapse in recovery in places where new selective lockdown measures are taken, and as governments move back to warning about the virus as its spread picks up. It's not time to dump all the online life just yet. There will be more travel bans, curfews and other restraints on the traditional economy to depress sentiment and profits.
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