Gavin Newsom aims to reverse the spike in Covid-19 cases in California by shutting down bars and indoor restaurants. His decision is based on a simple insight: as spending at bars and indoor restaurants rises, so — eventually — do cases of Covid-19. The economic implications of this relationship are stark. Until everyone has been injected with an effective, long-lasting Covid-19 vaccine, I think it would be wise to keep bars and indoor restaurants closed. Otherwise, the rapid rise in Covid-19 cases could overwhelm the healthcare system. Moody’s Analytics chief economist Mark Zandi told me July 2 that unless policymakers take action “the economy will be stuck in quicksand and threaten to go under. ”In the meantime, investors ought to stop expecting a V-shaped recovery. Instead I think they should look for a reverse square root symbol or a string of Ws. How Gavin Newsom’s Success Shifted Into ReverseIn the early months of the Covid-19 outbreak, California was the first governor to issue a statewide shelter in place order. While other states began reopening in May, California remained in lock-down, according to the Wall Street Journal. However as Covid-19 cases stabilized, counties such as Riverside and Orange began allowing businesses to reopen — defying California rules. With May unemployment in the state at 16. 3%, the sixth highest in the nation, Newson said in a June 15 news conference, “You can’t be in a permanent state where people are locked away. ”In that conference, he also predicted that reopening the state would boost the number of cases. He was right — but I doubt he anticipated the speed and severity of that increase. July 1, weeks after allowing counties to reopen as they chose, California’s coronavirus statistics indicated that the demand for Covid-19 treatment was rapidly outstripping the supply. How so? Newsom is shutting parts of the state back down. On July 1, he mandated the closure of many bars and indoor restaurants, movie theaters, zoos, and museums in 19 counties — representing 70% of California’s population, according to the Journal. Bars and Indoor Restaurants As Powerful Coronavirus VectorsAt the risk of oversimplifying, in California and other states, opening up bars and indoor restaurants is a major cause of a rise in cases. 500, 000 people in LA County — with rising case numbers — visited its bars the day after they reopened. In San Francisco, “where infection rates have stayed comparatively low, ” bars and gyms remained closed, according to the Journal. Bars and indoor restaurants are ruthlessly effective places for the Coronavirus to spread due to “their prolonged close contact and loud talking, ” according to the Wall Street Journal. Indeed, with a three week lag, a rise in restaurant spending predicts an increase in virus cases, according to J. P. Morgan Chase economist Jesse Edgerton.
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