Sat, 11 Apr 2020 01:54:35 +0000
By the end of April 2020, public debate in the US will broadly shift from immediate COVID-19 triage to the question of how and when to reopen the economy and exit lockdowns.
“the big question that everyone is going to be asking by the end of April is what now?” View on YouTube
A COVID-19 vaccine will take at least 18 to 24 months to arrive (putting availability no earlier than roughly October 2021), and until then the US economy will not return to 100% of its pre-pandemic level, with about two years of continued difficulty ahead.
“in the absence of a vaccine which looks like at best 18 to 24 months from now we will never get to a hundred percent” View on YouTube
A COVID-19 vaccine (Pfizer-BioNTech) received FDA Emergency Use Authorization on December 11, 2020, roughly 8 months after this April 2020 taping, far sooner than the predicted 18-24 month timeline.
A widely available COVID-19 vaccine will not arrive for approximately 18–24 months from April 2020 (i.e., not before roughly October 2021 at the earliest), and until then (through about spring 2022) the US economy and society will not return to 100% of pre-COVID activity levels and will face sustained difficulty.
“in the absence of a vaccine, which, um, looks like at best 18 to 24 months from now, we will never get to 100% of where we were before, or at least the potential to be at 100%. Um, and so I just think that over the next two years, we're in for a tremendous amount of difficulty.” View on YouTube
From roughly April 2020 through April 2022, the US will experience significant, persistent economic and social disruption related to COVID-19, rather than a quick return to normalcy.
“over the next two years, we're in for a tremendous amount of difficulty.” View on YouTube
If the COVID-19 health crisis lasts longer than a few months, the Fed and Treasury's efforts to plug the resulting hole in the economy will fail, triggering a cascade of corporate defaults and bankruptcies.
“the result is going to be a cascade of defaults and bankruptcies and effectively a great unraveling of our economy” View on YouTube
The health crisis did last well beyond a few months, but no cascade of defaults or 'great unraveling' occurred; unprecedented Fed intervention (unlimited QE, emergency lending facilities) and the $2 trillion CARES Act stabilized markets, and the S&P 500 recovered to record highs by August 2020, the fastest bear-market recovery on record.
California will not lift its COVID-19 lockdown until June 1, 2020 at the earliest, with the actual reopening more likely landing in mid-to-late May if the case curve is decaying by then.
“I don't think we're going to get out of lockdown until June 1st at the earliest” View on YouTube
California began its phased reopening in mid-May 2020, matching the prediction closely: curbside retail resumed May 8, and dine-in restaurants, offices, and some schools were allowed to reopen in qualifying counties starting May 12.
If the US economy has a V-shaped recovery from the COVID-19 recession before the November 2020 election, Trump will win reelection in a landslide; if the recession is deep or prolonged instead, the race is a toss-up.
“if there is a v-shaped recovery of any kind Trump will win in a landslide” View on YouTube
The stock market did complete a V-shaped recovery, hitting new all-time highs by August 2020, yet Trump still lost the November 2020 election decisively (306-232 electoral votes), contradicting the prediction that a V-shaped recovery would produce a Trump landslide.
Total combined U.S. fiscal and monetary COVID-19 support (broadly construed stimulus, backstops, lending facilities, etc.) will ultimately reach on the order of $20 trillion, approximately equal to one year of U.S. GDP, once the programs are fully rolled out.
“But, you know, what is putting $10 trillion or whatever the final number is, it'll probably be 20 trillion, you know, one one times US GDP.” View on YouTube
A U.S. policy mix of very large fiscal plus monetary stimulus in response to COVID-19, similar in scale/approach to China’s 2009–2010 response, will result in significant misallocation of capital (“fake growth”) and high inflation in subsequent years.
“No, I think the best better example is what happened in to China, which is a combination of fiscal and monetary stimulus in 2009 and ten. And the results are basically a lot of fake growth and massive inflation.” View on YouTube
The probability of a dark-horse presidential candidate emerging to replace Joe Biden on the Democratic ticket for the 2020 U.S. election is effectively zero.
“Zero.” View on YouTube
Joe Biden will remain the Democratic nominee for U.S. president in 2020 and will not be replaced at the top of the ticket unless he experiences a serious health emergency.
“Barring a Biden health emergency. I mean yeah I mean he is yeah. He's you know not a spring chicken.” View on YouTube
In the near term (spring–summer 2020), the primary U.S. political debate will center on strategies and timing for exiting COVID-19 quarantines and lockdowns, rather than on whether to impose them.
“I think the next big political debate is, is going to be around this. What now? You know? Yes, the quarantines have arrested the exponentiality of the virus, but how do we get out of them?” View on YouTube
If the U.S. economic recovery from COVID-19 is V-shaped (rapid return to prior levels) before the November 2020 election, Donald Trump will very likely win re-election (be a “shoo-in”).
“I agree, I agree with Thomas that if if this ends up being V-shaped, um, Trump is a shoo in.” View on YouTube