William D. Johnston

Chairman

Economic Commentary

At this writing, there are six states that have announced the phased reopening of their economies, or what perhaps is better stated as a beginning of reducing previous requirements to stay-at-home that were ordered by the respective governors of those states. These are in addition to the few states that never had stay-at-home executive orders issued. It is estimated that 97% of the US population lived most of the month of April under stay-at-home orders with the majority of that number doing so under similar orders beginning in the middle of March.

The results of the executive orders were dramatic with respect to the economy and, as of now, uncertain with respect to the progress on battling the COVID-19 virus. We are approaching one million cases and 50,000 deaths related to COVID-19 in the United States, while we have surpassed nearly three million cases resulting in slightly over 200,000 deaths globally.

In general, the data seems to illustrate some stability in China and South Korea and downward trends of new cases, hospitalizations and deaths in Europe. The epicenter of cases in the United States (over 50% of diagnosed cases were in New York, New Jersey, Massachusetts and Connecticut) reveals some flattening of the curve of new cases, but not yet consistent with the 14-day target being suggested as meaningful by the CDC. What appears to be the case in Southeast Asia, Europe and the United States is that economic shutdowns and stay-at-home restrictions have reduced population exposure to the virus and therefore flattened the curve of new cases. I use the term ‘appears’ intentionally, because we haven’t yet tested enough of the population to know who has or has had COVID-19, who has recovered, and — importantly — who has some level of immunity.

Public health experts learn new information every day about the disease and its impact. They learn most of that information by collecting and analyzing data, which grows exponentially as time passes. What is known changes, or is affirmed as data samples build. It was natural in the early stages of the COVID-19 pandemic to focus on the immediacy of care as the infection rate resulted in concentrated illness in specific concentrated locations, which had the power to overrun the capacities of care and recovery.

From a public health perspective, creating the circumstances to allow our health care system to survive the onslaught of cases was critical. The focused attention on large population centers such as major cities and large populated states was essential. It was not that those places had populations less healthy than other cities or states, but simply a matter of numbers and capacity to respond. Flattening the curve allowed the capacity, stretched as it is, to treat those infected and to save lives in the process.

Flattening the curve, however, should not be confused with winning the battle against COVID-19. At best, it is the military equivalent of beating back an ambush until reinforcements arrive, and when they do arrive, have better weapons with them. To date, we only know who has had the disease as a result of being treated by a health care system. We do not have, as of yet, a national plan to test a representative sample of our entire population, which is necessary to determine the breadth of the infection and the potential size of those with immunity. Both of these data points are critical to actually winning the battle we are in, and also crucial to defining the new normal and resulting new economic landscape.

All novel diseases have a bandwidth of patient experience and outcomes. Some people never know that they have had the disease; their symptoms did not exist or were so minimal it did not occur to them to be treated. With respect to COVID-19, the majority of our data is concentrated to those with more aggressive symptoms that required health care system intervention. This data is important to collect, study and know, as are the successful medical protocols that are learned with this population set. It is, however, only measuring a fraction of what is needed to return to whatever will be the new normal.

Governors that use 14-day success trends on cases identified, hospital admissions, discharges and deaths as criteria for removing restrictions on movement, work and travel will also be missing the knowledge of the potential disease exposure of the other 334,000,000 people in our country that have not reported symptoms to date.

The debate to remove restrictions on movement, work and travel is growing by the hour, and the success of that debate is not going to be about if we are going to remove restrictions, but rather how we are going to protect the most vulnerable as we do it. The benefit of stay-at-home orders was to slow the disease spread while healthcare capacity caught up with, and in some fashion survived, the initial onslaught of demand. What the stay-at-home orders also did was to slow the natural buildup of immunity that occurs within a population that experiences “normal” exposure, symptoms and recovery from the virus.

Public health experts would argue that the health of our population as a country is not nearly as good as it should or could be, and that chronic disease is a major contributor to immune deficiency. Immunity is not just about the virus but also about the immune system of those exposed. As a medical system, we are very good at treating, not curing, chronic diseases. Respiratory and cardiac disease, diabetes, obesity and inflammatory disease are all soft targets for viruses as all contribute substantially to immune deficiency. Removing restrictions on movement, work, travel and recreation without specific plans to protect those most vulnerable (age and medical condition) will be replacing one healthcare capacity issue with another.

Dr. David Katz, the founding Director of Yale Medical Schools Prevention Research Center, has spent his entire medical career in public health and has written extensively on the topics of pandemics. His writing and videos express ideas that are not often spoken of as our country grows impatient with the restrictions we are currently under. Dr. Katz cautions that the phase one plan was to flatten the curve, but if there is not a phase two plan, the need for phase one will simply occur over and over again. Phase two must, he argues, include “harm minimization.” When we recognize and structurally plan for those that we know are of high risk for bad outcomes, we will successfully minimize harm.

Much of that structure that Dr. Katz speaks of must be creatively built. Logistics and industrial design will be newly crafted, just as Ford and General Motors have done with respect to becoming ventilator manufacturers. How we teach and learn will be forever changed. The velocity of change and adaptation of technology will grow exponentially. How we function as consumers will never return to previous models. Some people will never return to work or their previous normal life because their vulnerability is too pronounced. Decision trees will be needed, not just for public health policy, but also for individual families. Unique individual circumstances will require unique individual lifestyle adjustments. Chronic disease kills slowly over time. When novel virus meets chronic disease, it speeds up that process and, in the age of globalization, medical protocols for the treatment of chronic disease will have to emphasize immune deficiency given the implications of treatment vs. cure.

Those that battle the global spread of novel viruses like COVID-19 know that they often face the reality of recommending public policy that serves the immediacy of the crisis. They also know that as the crisis begins to be mitigated their stage gets smaller and their message diffused into the next geopolitical issue that arises. Restrictions are being modified, eased and lifted. People are impatient, and the desire to return to work is palpable. Our success in this new phase of the journey is yet to be known, but will probably be best done if — as a country inclusive of individual states, communities and individual families — we consider the concept that Dr. Katz lays out when he speaks of “harm minimization.” On behalf of the entire team at Greenleaf Trust, I extend our heartfelt wish of good health and safe passage to each of you.

A Message from William D. Johnston

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