I believe flattening the curve helps, but that its benefit is overstated when we factor in economic costs.
The Great Depression had peak unemployment of 24.9% in 1933. Today, that would be 40mm unemployment Americans. If we extrapolate Goldman’s forecast of 2.5mm unemployed Americans last week, it would take just four months to hit 40mm unemployed. Doesn’t seem implausible that we are under quarantine for four months, does it?
There is a growing consensus that Q2 could be the second worst economic quarter in the history of our country, only behind the worst quarter of the Great Depression. Meanwhile, total US deaths thus far are 350. This number will ultimately be much higher, but how high does it need to go before it justifies another Great Depression?
You want to go all-in for the next two to four weeks? OK, I’m in. Get the tests built. Help out the hospitals. But after that, the natives will be getting restless. Maybe we un-quarantine in a scheduled manner? Workers start going back to work while elderly stay home and kids stay out of school. Restaurants and bars re-open, but with rules. Something.
If not, more Americans will start running the cost/benefit analysis. “I can’t pay my bills. I can’t pay for food. I will take my chances. Open the doors and let the chips fall as they may.”
Many of you reading this are months or maybe even years away from needing to think that way. But your tenants, and the employees of your tenants, are already facing that horrific decision. Unchecked, you may eventually face the same decision. Will your commitment to social distancing be as strong then as it is now? Will mine?
At some point, are we better off just resuming life and taking our chances?