It is clear that the southern United States is in the grip of a major wave of the Covid-19 pandemic. About half of US states, mainly in the south and southwest, have rising daily infections; and for the whole country, daily new cases are fast approaching 30,000, up sharply from the rate of around 20,000 a day that prevailed in late May and early June. Just how serious a problem is this for the US economy?
Until now, I have taken the view that rising case numbers alone would not be enough to convince state governments to slow down or roll back economic reopening plans. Instead, we would need to see sharply higher death tolls, or sharply increased pressure on hospital systems. As of our last report, these were not much in evidence (see US Reopening Tested By Regional Covid Outbreaks). But the risks to this core scenario are mounting quickly.
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