Pandemics have always had political effects. Between 1342 and 1353, the Black Death led people to question their relationships with the Catholic church. The spread of cholera across Europe in 1848 led to revolutions in 50 countries. The Spanish Flu outbreak of 1918 killed so many men it encouraged women’s rights.
Once again, we find ourselves in the midst of a pandemic.
Another one for the history books
We’ve always thought 2020 was going to be a transitional year. We were pushing things to extremes and something was going to change. What’s happened though is COVID-19 has accelerated us to a macro and societal inflection point. It will act as the accelerant for changes across politics, fiscal spending, globalization, and corporate capitalism.
From an economic perspective, our concern is unemployment
We remain deeply worried about the lasting economic fallout of COVID-19, especially in terms of employment. It is unrealistic to expect a rapid return to normality. Rather, what is likely to occur is a stulted recovery. Businesses opening in stages over many months as we grapple with spikes in the virus, ongoing social distancing, and a myriad of other restrictions.
The Bureau of Labor Statistics announced that unemployment rose to 4.4% in March. Today’s job report states unemployment currently sits at 14.7%. The highest on record since 1940.
In the last century, the shortest ‘trough-to-peak’ in unemployment was in 1949 and even that took ten months. Fundamental economic conditions, especially US employment, should not be expected to recover quickly. The question, however, is ‘where will unemployment go down to?’ because it’s not going back to 3.5%.
Trump takes on China
As the effects of COVID-19 continue to batter the economy, Trump’s presidential survival is at stake.
The US/China argument has been heating up for two years now and it’s not going to get better anytime soon. Especially as Trump continues to refer to COVID-19 as something ‘made in China’. The relationship is only going to get worse. This is fast becoming the Cold War: Part 2.
In retaliation to COVID-19, Trump is already threatening China with more tariffs. However, a leaked internal White House report predicts the daily death toll from the virus will reach around 3,000 on 1 June. If we reach those numbers, it’s likely he will really start to lay it on China.
What’s more, if he starts falling behind in the run-up to the November election, the real fear is we could see him play his extreme nationalist chip.