The Top Line

• As COVID-19 continues to exact its toll on the economy, data suggests that unemployment filings may be slowing.

• Despite the effects of COVID-19 in the near-term, Federal Reserve Vice Chairman Richard Clarida sees prospects for a rebound and return to growth in the third-quarter of 2020.

• In the race to find treatments for COVID-19, researchers around the world are collaborating and using cutting-edge gene-based vaccines to combat the virus.

• Tech used to combat COVID-19 crisis has long-term value in stemming rising health care costs and the federal debt.

Unemployment Filings Slowing

As COVID-19 continues to keep large sections of the economy shut down, unemployment filings continue to increase with an estimated 3.17 million new claims in the week ending May 2, a continuation of the decrease from mid-April.

• On Friday, May 8, the Department of Labor released its monthly jobs report for April, showing a monthly decrease in nonfarm payrolls of 20.5 million.
• The report showed the U-3 “official” unemployment rate at 14.7%. The broader U-6 rate, which includes underemployed workers who would take more hours if available and workers seeking employment in the last year who’ve yet to find a job was 22.8%.
• Meanwhile, Google search data suggests that unemployment claims will slow based on the decrease in the number of searches for “file for unemployment.” (see above).
• The largest job losses were in the most public-facing sectors – restaurants, bars, hotels, and transportation.
• On May 6, ADP released its April payroll report showing a 20 million decrease in jobs for the month.

A Moment of Clarida

After helping orchestrate the Federal Reserve’s rapid and forceful response to the COVID-19 pandemic’s economic effects, Vice Chairman Richard Clarida sees a rebound for the economy in the second half of 2020.

• A third-quarter rebound is “personally my baseline forecast,” Clarida said when speaking about the outlook for the economy moving forward from COVID-19.
• Though unemployment will likely reach historic numbers, Clarida was resolute and confident that the Federal Reserve’s programs to support the economy would help guide us through the crisis and to a secure recovery.
• Clarida’s colleague, President James Bullard of the Federal Reserve Bank of St. Louis echoed those sentiments, saying "We have a better chance of a swift recovery with this shock than with others in the past.”
• The Fed’s monetary policy tools act as a complement to the extensive fiscal support Congress has injected into the economy in response to COVID-19.

Myth vs. Fact

MYTH: A common misconception holds that only the manufacturing sector of the economy stimulates production and drives growth.

FACT: The various industries in the services sector contribute nearly four-fifths of U.S. GDP through the value they add to consumers’ lives and wellbeing.

Crafting Cures

With scientists and medical researchers all over the globe collaborating in the race to find cures to combat COVID-19, hundreds of candidate drugs are at some stage of development and testing. Of those, only a handful are in Phase I human trials (see above) though new candidates are being added on a regular basis.

• Gilead Sciences announced preliminary findings from real-world tests of its drug Remdesivir as a treatment to lessen the effects and duration of COVID-19. In that test group, 62% of patients treated early with Remdesivir showed marked improvement and were discharged from the hospital versus 49% who were treated late. Results of two full laboratory trials are expected this month.
• Meanwhile, a collaboration between German pharmaceutical company BioNTech and U.S. drug-maker Pfizer to create a COVID-19 vaccine entering clinical trials in the U.S. last week.
• With the rapid spread of COVID-19 and need to quickly find a cure, traditional vaccine research methods have fallen by the wayside in favor of gene-based methods of production. Researchers use sections of COVID-19’s DNA or RNA to identify weak points to stop the virus from reproducing with companies like Inovio receiving grants to move the effort forward.

Disruption of the Week

Source: CBO – 2019 Long-Term Budget Outlook

Telemedicine is helping treat patients and protect health care workers from COVID-19 exposure. In the long-term, this tech could help counter one of the largest drivers of federal debt, increased health care costs.

• A few months ago we highlighted the benefits telemedicine services have provided during the COVID-19 outbreak and additional legislation, funding, and regulatory action has allowed for an even greater expansion of service. However, telemedicine should not just be viewed as a short-term solution to a current problem.
• As the U.S. population grows older and more Americans enroll in Medicare, one of the primary contributors to the growth in federal spending will be higher costs of health care services.
• With the increase in demand and higher prices, these health care costs will directly affect taxpayers and customers and serve to further increase our annual deficits and national debt.
• However, with its ability to streamline doctor-patient interactions and provide customers with a wider range of health care choices, telemedicine could drive down costs and allow for a more efficient health care system.
• Having proven its worth during the current crisis, it’s likely expanded telemedicine is here to stay. If we can grow on the experience gained during these tough times, we can ensure this tech helps provide cheaper, better, and more accessible long-term care for us all.

Further Reading

• In a city of skyscrapers, it’s sometimes easy to miss the thousands of small businesses that feed, clothe, and entertain the millions who call New York City home. Like the rest of America, these small businesses employ nearly half of the city’s labor force and are trying to keep their doors open in the wake of COVID-19. Christian Science Monitor

• With social distancing limiting the scope of available activities, one of the world’s oldest games has seen a rapid increase in interest as COVID-19 temporarily holds the economy in check. Wall Street Journal