Covid-19 Economic Update by Dr Peter Linneman Chairman RE Wharton
“True unemployment rate at this moment is about 18%.”
In the past week, another 6-10 million became unemployed. As of this moment there are about 28 million unemployed. It was 5 million the end of the first week of March. True unemployment rate at this moment is about 18%. It was 3.5% the end of the first week of March. We must quickly flatten this curve. The human destruction that lock down has created is unmeasurable. It is not dollars versus lives; it is lives versus lives.
If COVID does not disappear and instead becomes a part of life, we will have ongoing deaths due to it. Assume the worst that each year we have a 4x (net of those would have died from something in the near term in any case) normal flu deaths (which includes people who would have died of other causes) means a future of an additional 200,000 deaths a year in the US year after year. This would increase US deaths from 2.8 million a year to 3 million, a 7% increase.
US death rate was 9.4-9.6 from 1950 to 1974. It has risen from 8.1-8.2 from 2008 to 2013 to about 8.9 prior to COVID as drugs and chronic diseases took their toll. A further 10% increase raises the death rate to about 9.8, or slightly above what it was from 1950-1974 (when it fell to 8.1 by 2008). That is, drugs and chronic diseases have increased our death rate in the past 7 years about like COVID will change it going forward (absent a vaccine or treatment).
These additional deaths would reduce US population growth by about 5 bps a year. In addition, reduced economic activity (for example, reduced travel and leisure activities) because of COVID fears might reduce long-term growth by about 10%, or about 20 bps. That means our growth rate would fall by 25 bps, which is about $52 billion a year.”
-Dr Peter Linneman
Founding Chairman of Wharton's Real Estate Department
Dr Peter Linneman’s Full Covid-19 Economic update: https://lnkd.in/e2UhSyK
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