What the California economy might look like by the time it is allowed to reopen. Photo of abandoned farm in North Dakota by James Ulvog.

Over the last several weeks I have accumulated a number of articles describing the economic and health damage caused by the government ordered shutdown of the economy.

I’ve been wanting to post these for a while. In light of the California government imposing more severe constraints on when the economy will be allowed to start functioning again, it is now time to publish.

Economic damage

7/30/20 – Wall Street Journal – US Economy Contracted at Record Rate last Quarter; Jobless Claims Rise to 1.43 million – The preliminary estimate of the collapse in the US economy for the second quarter came in at an annualized 32.9% drop. Again, that is annualized. In addition, it will be revised in each of the next two months as additional data is gathered by the feds.

That follows an annualized drop of 5% in the first quarter.

8/25/20 – CNBC – American Airlines to cut 19,000 jobs when federal aid expires in OctoberConditions attached to the federal funds provided to airlines require no layoffs until 1 October. American expects to let go 19,000 staff. The airline had over 140,000 employees in March and expects it will have about 100,000 in October. Article says they expect in the fourth quarter to have one quarter of the capacity they did a year ago.

A month ago United wanted may have to lay off 36,000 staff.

Southwest doesn’t expect any involuntary layoffs because over one quarter of their staff have already accepted leave or a voluntary buyout.

8/7/20 – CBS 46 – Delta warns of layoffs; asks for more unpaid leave from employees – Early in the month the airline announced possible layoff of a mere 816 staff on October 1. This is only possible because thousands of employees have already taken extended unpaid leaves, shifted to working in alternating months, or split schedules with other staff.

Delta says there burn rate is down to $30 million a day. That is a burn rate of $0.9 billion a month.

7/8/20 – United Airlines Warns It May Furlough 36,000 Staff / The airline’s involuntary cuts are likely to be set in August and go into effect from Oct. 1  – Furlough would affect about 15,000 flight attendants, 2,250 pilots, and about 11,000 customer service reps.

United says it is burning through $40 million of cash a day. That is a burn rate of $1.2 billion a month.

Delta has also issued a required legal notice it may furlough 2,500 pilots.

General expectations are it could take between three and five years for air travel to recover to the level it was in 2019.

Back to that massive shrinkage of the GDP . . .

7/30/20 – Wall Street Journal – The Lockdown’s Destruction – The numbers behind a 32.9% annualized drop in economic output during the second quarter are more frightening than the headline number.

Consumer spending collapsed 34.6%. That accounted for 25 points of the 33 point drop. (table 2, line 2)

More frightening is that healthcare shrank 9.5%. That accounts for7.8 points of the 34 point drop (table 2, line 17).

Article asks how healthcare can collapsed so much. Simple. All nonelective healthcare was canceled for the first several months of the pandemic. It was difficult to get into see a doctor. As a result many people did not get necessary medical care.

Editorial points out that the damage to health care will be showing up for years to come. Unknowable and uncountable numbers of people will find out they have cancer or heart disease or some other life-threatening issue that was missed or detection was delayed or treatments were postponed making the condition worse.

The health damage from the shutdown will be severe. And none of that damage will be credited to the shutting down the economy or credited to the politicians who decided to order healthcare halted.

For more news of the impact on health from the government ordered shutdown, check out the next post.


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