Total deaths in the US from COVID19 look like they'll hit at least 3,000 by the end of March. A potentially brutal April lies ahead.

In the meantime, the measures taken to limit deaths have temporarily tanked the US economy. Initial claims for jobless benefits soared to 3.283 million per week, easily the highest ever. The prior record was 695,000 in October 1982; the highest during the Great Recession was 665,000.



Policymakers have reacted to the economic damage with massive measures. The Federal Reserve has reduced interest rates to nearly zero, has begged banks to use the discount window, embarked on unlimited quantitative easing, and is backstopping an unprecedented array of markets, including commercial paper, money markets, commercial mortgages, and municipal securities.

Meanwhile, we have a newly enacted "stimulus" bill that could total $2 trillion, possibly more. These include IRS checks, a major expansion in unemployment benefits, as well as a broad combination of grants, loans, and loan guarantees for businesses (large and small), hospitals, schools, and state and local governments.

The federal budget deficit for this fiscal year, previously estimated by the Congressional Budget Office to be about $1.1 trillion, could easily run around $2.5 trillion, and that's without other major spending bills. Since World War II, the largest budget deficit relative to GDP was 9.8% in 2009; but a $2.5 trillion deficit this year could be about 11.8% of GDP.

Of course, these monetary and fiscal measures are on top of the massive economic interference - designed to stem the virus -by governments at all levels. The longer these measures persist, the greater the risk of atrophy setting in for small business across the country, making them less able to reopen in the future. The loss of intangible capital would be enormous, the internal knowledge of how to get things done. Slower economic growth in the post-COVID19 world would be the result.