As the world heads towards easing of lockdowns, it is a good time to look again at the data. The tone I read in most media outlets, and certainly from the markets, is that the peak has passed and we will soon be able to return to something like normality. When I look at the data however, I struggle to reach the same conclusion.
One key metric is the pace of decline in daily deaths in countries/states which have been pursuing similarly strict lockdowns. Many of these have already eased some restrictions, or are actively planning to do so over the next few weeks.
If we turn the data into an % index series to adjust for different sizes of area/population and level of infection, we see a similar picture of slow declines.
Data notes: Source is Bloomberg. I have taken a 3-day moving average as daily data is very noisy in some countries. I have smoothed the mid-April spike in NY, due to major changes in data collection. I have also lagged the UK data by a week, as we imposed lockdown later.
Whilst we are past the peak of this wave of infection, it has taken extreme personal and economic restrictions to bring the virus transmission rate to an R0 marginally below 1.
Recent data from New York has been more encouraging, also tallying with information from the UK government that London data is improving more rapidly with some areas of the UK still getting worse. Last night, Chris Whitty, Chief Medical Officer for England, explained that we still do not know which lockdown measures really matter for slowing infection rates. This makes it very hard to partially ease restrictions with confidence.
The situation in the US overall looks are even more concerning. Here I exclude New York and New Jersey as their very high rates overwhelm the picture elsewhere.
At best, we could argue that we are at peak and that rates will decline from here, but it is premature to have much confidence in that. Yet the US is already materially reopening some States and is under pressure from Trump to open even more very rapidly.
If we look at state level data, most tell a similar story of stabilisation at best. Given the lags, we may see rates decline soon but we should then expect a rapid re-acceleration 3 weeks after lockdowns are relaxed. The absolute numbers are still low in most states, with only a small proportion of people being infected. This is perhaps why it is still possible to think that the problems are small and politicians can attempt to say they are under control. But we have seen over and over again, how with exponential growth we rapidly move from 50 deaths a day to 1,000 deaths a day
Not all US states are even as good as this; despite the “stay at home order”, we are still seeing an escalating problem.
Conclusion
The evidence suggests that in areas that enacted strict lockdowns, we are indeed past the first peak. However, lockdowns have not necessarily been as effective as hoped in rapidly bringing down infection rates. Outside worst hit areas, compliance may be far poorer.
An early relaxation of the current restrictions will mean limited respite for health services, and if infection rates rise again they will do so from an already elevated level. By the time we know the impact of policy changes, it will be too late to stop the next peak from being far higher than the last.
Applied Macro 