Every day there are fresh reports of the devastating impact from the shutdown of the economy. Damage is widespread. Impact is growing.
Just a few of the recent articles:
- Early screening for cancer slowed down earlier, resulting in more serious cancers discovered now
- People showing up for treatment have more advanced cancer
- Wave of tenant evictions is on the horizon
- State government budgets are collapsing
- Freshman enrollment at colleges is down 16%
There is a severe cost to be paid from early mistakes and ongoing mistakes by a wide range of government officials.
Devastating impact from more serious cancers
10/15/20 – Wall Street Journal – Covid-19 Outbreaks Led to Dangerous Delay in Cancer Diagnoses – The closing of many health facilities meant regular screenings for cancer were not available for several months this past spring. Next, widespread panic kept people away from doctors’ offices. One insurance company reports the number of daily screenings for colorectal cancer dropped between 50% and 80% for about three months.
Only at the end of August was the number of screenings back to the normal amount compared to prior years.
The expected result?
A cancer care provider reports an increased number of patients are arriving with advanced stages of cancer.
Stories of this sort need to have one specific case to illustrate the overall trend. In this report, one particular man had an x-ray a year ago that showed a tiny spot on as lung. He was advised to get another x-ray in three months. Then the pandemic hit and it was 12 months before he had a follow-up x-ray. At that point it had already metastasized.
Study by a consulting firm looked at Medicare billings and calculated that new visits to oncology doctors, in other words the first visit after screening test indicated cancer is present, dropped between 29% and 70% in the first five months of the pandemic. The drop in first-time visits doesn’t mean cancer has gone away – it just means those cases which otherwise would have been treated are actually left to grow.
The director of National Cancer Institute says the skipped screening procedures will lead to increased mortality over the next decade. He thinks his previous estimate of 10,000 excess deaths from breast and colon cancer is low.
Let me rephrase that – he thinks there will be will be more than 10,000 additional deaths beyond what would have happened otherwise because of the shutdown of healthcare facilities and postponement of assessments. At least an extra 10,000 people die from colon and breast cancer.
Because of shutting down the economy.
10/24/20 – The Star – Ontario shutdown non-urgent health services in the spring. Now hospitals are seeing many more patients with advanced cancers – Healthcare facilities in the province of Ontario shutdown cancer surgeries and screening for cancers for the first several months of the pandemic. When surgeries were reopened, with reduced capacity, much of what was available was allocated to the most serious cases on the surgery backlog. Medium serious cancers had to wait. Screening capacity was slowly brought online.
As was fully expected then and fully expected now, the number of people showing up in advanced stages of cancer is extremely high.
The numbers are frightening because they are essentially predicting the increase in future deaths.
Between the middle of March and late October the number of all surgeries is down 51% from prior year. That means people who need cancer surgery aren’t getting treated.
In the 75 days between mid-March and the end of May, screenings for mammograms were down 97%, Pap tests were down 88%, and fecal tests were done 73%. Some unidentifiable percentage of those skipped tests were for people who have cancer and their cancers will not be found until they are advanced.
People are dying today and will continue to die over the next several years because of the lockdown.
We haven’t traded jobs for lives. We have traded lives for lives.
10/27/20 – Wall Street Journal – Struggling Rental Market Could Usher in American Housing Crisis – A patchwork of rental eviction moratoriums exist at the federal, state, and city level across the country.
These moratoriums have protected unknown millions of people from being evicted from their apartment. From now until January 2021 these moratoriums are going to expire.
That means over the next 90 days all the people who have not been evicted for missing several rent payments will have to come up with all the cash to cover those back months. Those people who could not make the rent because they were out of work because their employer’s doors were closed will hardly have cash on hand to catch up.
That means we may see waves of eviction requests moving into the court system in the next three months with evictions to follow anywhere from a few days to a couple months court actions.
The Philadelphia Fed guesses outstanding rent could reach $7B by the end of the year. Another analysis guesses there could be $70B. The latter guess estimates that could be about 13M families behind an average of $5400. If you’ve been out of work some or most months in the last half year it would be impossible to catch up on that in a month or two.
Another analysis estimates one fourth of families renting their home are behind on the rent.
Homeowners are in better shape for several reasons. Overall, homeowners likely have higher incomes and tend toward white-collar. People in those categories have worked from home and probably have not seen many, if any, missed paychecks.
Furthermore, it’s much easier to resolve a mortgage delinquency by adding payments on at the end of the mortgage term. In addition, level of housing sales are strong and prices are rising. Someone who couldn’t cover the mortgage payments could likely sell the house, at an higher gain that what could have been realized a year ago, to catch up and have cash to move into a small place or rent something.
10/28/20 – Wall Street Journal – US States Face Biggest Cash Crisis Since the Great Depression – How does this sound for a good description of the economic impact from the federal and state governments’ actions to shut down the economy – a comment from the budget director of Connecticut, which I will quote:
“We hit the brakes so quickly on the economy that we went through the windshield.”
Now states are facing a severe cash crisis.
Consider the cascade effects:
- When lots of people are out of work, the payroll taxes which weren’t withheld don’t flow to the state and cities.
- When restaurants are closed, there are no sales taxes to remit.
- When just about all retail outlets other than grocery stores close the doors, or curtail their hours, or see the customers disappear, there is again no sales tax to remit.
- When landlords have no cash flow from many of their tenants, postponing property taxes payments may be one of the steps necessary just to stay alive, meaning payment of property taxes will drop.
- Collapse in oil prices means there’s less royalty payments going to states.
- Landowners seeing their royalty checks shrink means there are less estimated payments due.
- When people cannot vacation in Hawaii or other resort locations, the exorbitant taxes on hotels are not collected, there’s no sales tax from meals that aren’t eaten, and there is no payroll tax from the staff laid off at the hotels, restaurants, and sightseeing businesses.
- People working from home mean there is less gas tax collected and remitted to the states.
Perhaps, just perhaps, some of the governors who have their states on a harsh lockdown might want to maybe, possibly, reconsider a few of their brutish rules.
Devastation in higher education
10/15/20 – Wall Street Journal – College Enrollment Slid This Fall, With First-Year Populations Down 16% – Overall statistics indicate total undergraduate enrollment is down 4% this year while count of incoming freshmen is down 16%.
Impact is more severe for certain sectors. Check out the change in freshman enrollment by type of school:
- +3.7% – private for-profit (4% increase!)
- -11.8% – private nonprofit
- -13.7% – public four-year
- -22.7% – public two-year (community colleges)
Graduate enrollment is up 2.7%, but that is the typical path for graduating students when the economy is in the dumps. I’ve observed over the last several decades that when the economy is terrible, many people can postpone entering the market by going to grad school.
There’s also a serious gender imbalance with overall enrollment by men down 6.4% with overall enrollment for women down 2.2%.
If you worked in the finance department or senior leadership of a college, how would you like to do budgeting with your tally of new customers down 12% or 23% knowing that shrinkage will work its way through your finances next year and the following and the following.