In his inauguration speech as 32nd President of the United States, Franklin D. Roosevelt said the following: “the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance.” His New Deal - a muscular package of public spending and make-work programmes aimed at the Great Depression - dragged the country out of the economic doldrums and back into robust economic health during the next six years.
It is perhaps worthwhile looking back at FDR’s snappy line on ‘fear,’ now that we all seem to be staring into an abyss caused by the coronavirus pandemic. That’s because, despite the relatively mild effects for most people of the SARS-CoV-2 virus (which is in the same family as the common cold and SARS, and which causes the disease COVID-19), the impact of the outbreak has been magnified worldwide by fear. The amplifying effects of fear can clearly be seen in a recent example.
When on 11 March Mr Trump announced a ban on Europeans travelling to the US, it seemed not to be on epidemiological grounds, since most experts have suggested that such a ban will have next to no effect on the eventual spread of the virus in the US. However, the move seems to have backfired in spectacular fashion and instead of reassuring the markets that the administration was ready to take effective action, it instead showed that it was not. The markets promptly fell 10%, one of the worst days for stock markets for several decades, with Mr Trump’s 11 minute address credited with eliminating US$500bn of value from global exchanges. Whether Mr Trump and Mr Pence can between them take effective action to stave off an epidemic in the US remains to be seen.
Some ‘facts’
In his opening remarks at the March 3 media briefing on COVID-19, WHO Director-General Dr Tedros Adhanom Ghebreyesus stated: “Globally, about 3.4% of reported COVID-19 cases have died. By comparison, seasonal flu generally kills far fewer than 1% of those infected.” Later studies1 have suggested an overall mortality rate of between 1 - 3%. Additionally, the incubation period (time from exposure to the development of symptoms) of the virus is estimated by the WHO to be between 2 and 10 days.
The transmissibility (how rapidly the disease spreads) of a virus is indicated by its reproductive number (Ro, pronounced R-nought or r-zero), which represents the average number of people to which a single infected person will transmit the virus. The WHO estimated on January 23 that the Ro for coronavirus to have been 1.4 and 2.5. Another study2 suggests that the earlier number is an underestimate and that the true value is likely to be around 3. Critically, the transmissibility can be influenced by our own behaviour.
Above: Comparison of mortality rate and transmissability of novel coronavirus and other epidemic pathogens. Source: https://www.nytimes.com/interactive/2020/world/asia/china-coronavirus-contain.html.
Note log-scale on mortality rate.
Rapidly changing situation
As you may have seen in the rest of this month’s magazine, we have taken the usual step of putting on several articles the dates that they were created. This allows you to take into account the level of knowledge of the situation that was available at that time. Please take into account that this column was written on Friday 13 March (unlucky for some). By the time you read this (in digital or print version), the situation will have changed dramatically. Despite this rapidly changing scene, it is of some use to look at how the coronavirus outbreak might develop, and how it might end.
China has managed to subdue its own outbreak by quarantining tens of millions of people. It is clear, given the size of the ‘official’ outbreak, that the virus was left to spread unhindered for too long - certainly for several weeks after the first cases emerged in mid-November 2019. Arguably, China took about three weeks from finally realising the magnitude of the situation and taking robust action to seeing a serious reduction in daily infection rates. Its tough measures appear to be bringing the situation under control (see the graph, below).
Above: Progress of individual country epidemics (total infected) with time (note China’s numbers are divided by ten for easier comparison). Data from https://ourworldindata.org/coronavirus-source-data
Italy’s outbreak was also allowed to fester for weeks before it was properly recognised, and before the government of the country first quarantined the north of the country, and then finally the whole of the country. Despite the quarantine, there is currently no sign of the numbers being infected dropping on a day-to-day basis, although that will inevitably change.
South Korea’s outbreak has had a different course to these other two countries: It has largely been confined to a particular group of people, and it has not infected a significantly wider cohort. The Koreans are now testing more than 20,000 people per day for the virus, in the hopes of identifying individuals or hotspots, before the virus can be passed on. (By the time that the Koreans had tested 100,000 people, the UK had tested 25,000, and the US fewer than 5000). South Korea has already started to see the cumulative number of cases in the country plateauing, suggesting that it is on top of the transmission of the virus. It managed to do this within around 21 days from the first significant number of infections.
France, Germany and Spain appear to be 10 - 14 days ‘behind’ where Italy was. The UK seems to be a further week behind (but the government has admitted that the ‘real’ number of infections is likely to be 10 times higher than the official statistics, a situation that is likely to be mirrored in every country in the world without blanket testing). However, it is not inevitable that each epidemic will have the same trajectory as in Italy.
Above: Forecast of the number of new infections in the UK, with and without preventative action. No scale given for ‘y’ axis. Source: UK Department of Health
The epidemic will die out when the number of people that the virus is passed on to by each person infected (the transmissability) decreases below 1. Whether through washing one’s hands, good respiratory hygiene, self-isolation, enforced quarantine (or an effective vaccine, which is not likely to arrive in 2020), if fewer people are infected than currently have the virus, then the epidemic will be on its way to being over. We have it in our power to end this situation.
Will we use this power? The answer seems to be ‘perhaps.’ Those countries that are prepared to take swift and effective action will (as shown by South Korea) be able to end their own national epidemics. It is clear that before the situation improves, every country will have to take significantly tougher decisions with regards to onwards transmission of the virus. It could be that one country manages to ‘beat’ the virus, but at the same time, through not taking effective measures against it, the epidemic could be ongoing in other countries (or States). Despite the WHO declaring the situation a pandemic, I see this as many individual epidemics, each one with its own characteristics.
Mohamed El-Erian, the highly respected chief economist of insurer Allianz, said4 that “The advanced economies are now likely to feel the full force of economic sudden stops that destroy both supply and demand at the same time. The collapse in economic activity risks being amplified by the economics of fear, uncertainty and adverse economic-financial feedback loops. I believe there is a high probability of a global recession.”
Aside from a general economic downturn, the coronavirus pandemic will affect the building materials industries in other ways, for example:
- Concrete transport and placement labour shortages due to quarantine and illness;
- Delays in construction planning and contracting due to heightened risk aversion and lack of labour;
- Stressed supply chains for some raw materials and equipment spare parts;
- Labour shortages at production plants.
Infection is not inevitable: Please take precautions and stay safe. Good luck.
1 https://www.bbc.co.uk/news/health-51674743
2 https://www.sciencedaily.com/releases/2020/02/200214111519.htm
3 https://www.theatlantic.com/health/archive/2020/03/coronavirus-testing-numbers/607714/
4 https://www.theguardian.com/world/2020/mar/12/coronavirus-global-recession-fears-intensify-as-trumps-europe-ban-fails-to-reassure
