Coronavirus: a dilemma before the age of 40
Saturday, 07/11/2020 – 22:00
Last week, Jim Reid of Deutsche Bank made a startling observationone that threw all comparisons of coronavirus with Spanish flu, and the upcoming second wave of a pandemic, for the cycle.
In particular, Raid quoted article This influenced market thinking in the early days of the Covid-19 pandemic and considered the impact of non-pharmaceutical interventions such as social distance and school closures during Spanish flu (link Here) The paper said US cities that implemented these measures tended to have better economic results in the medium term. This provided historical support for the argument that there wasn’t such a big compromise between economic activity and public health because you had to suppress the virus so that consumers became more confident and the business worked normally.
However, the main difference between Spanish flu and Covid-19 was the age distribution of deaths, as shown in the table below:
Here is the highlight: for Covid-19, the elderly were in the vast majority of cases. The Spanish flu of 1918 also affected young people of working age. In fact, mortality from pneumonia and influenza this year among the 25-34 year olds in the United States was more than 50% higher than among the 65-74 year olds, which is “a remarkable difference from Covid-19.”
Now, in a subsequent observation from Raid, the DB loan strategist points to another feature of the coronavirus: the fact that the virus practically does not lead to the death of people under 45 years of age.
According to Reid, the UK was one of the most affected countries in the world when it comes to per capita mortality from Covid-19. The country has registered about 60,000 excess deaths compared with the past 5-year average. But given the scale of these numbers, Reid points out a “wonderful fact” that among people under the age of 40, mortality was about the same as in the previous 5 years (using data from England and Wales). This confirms previous observations of what the Covid-19 was with age discrimination.
This is not only the United Kingdom: in Sweden (population 10.25 m), where there was no blockage, huge international criticism of his strategy and one of the highest deaths per capita in the world – only 70 people under the age of 49 have died from Covid-19, out of 5,482 of the total number of deaths from the virus (1.3%) to date. For context, the average annual mortality in Sweden over the past 5 years for children under 49 was 3417.
And yet, despite the fact that coronavirus practically does not lead to excess mortality among young age groups, it is the young layers of society that are most susceptible to economic disconnection, as a result of which tens of millions of unemployed have grown.
Indeed, as the second DB chart below shows, locks are likely to result in 2020 becoming the worst year for the UK economy in 310 years.
As Reid provocatively put it, “Young people will suffer the most from the economic impact of Covid-19 for many years, and we are wondering how history will judge a global response.” However, since the economic crisis caused by Covid-19 also led to full-scale helicopter money, as well as the largest round of corporate rescue of insolvent and zombie companies in history, we are confident that the tsunami represents a global moral hazard – which will leave tens of millions of young workers without work – they will allow central banks to sleep peacefully at night.
Raid’s conclusion: “The discussion is more subtle than 250-word email can cover (for example, the potential long-term effects of Covid-19 on the health of individuals, the need to protect health systems, etc.), but it’s a good discussion to have.”
Alas, the lot has already been cast, but now it is too late.