How much will my money be worth by the end of 2020? Should I stick it under a mattress or deposit it in an aggressive growth fund?Kevin Drum

When we finally defeat COVID-19 and everyone goes back to work (think positive!), are we due for a big bout of inflation? Or a big bout of deflation? You’d think top-flight economists could agree on at least this much, but no.

Here’s the basic case for inflation: As the economy opens up, people will go back to work pretty quickly. They haven’t been spending much during the lockdown, and the poor have been showered with money via the stimulus and the bonus unemployment checks. They’ve got a lot of money to spend, so demand is going to be high while supply is still trying to catch up. Thus inflation.

The case for deflation is basically the mirror image: Businesses that have been shut down can rehire workers pretty quickly and get their factories going in a short time. Ditto for service workers like hair cutters and loan consultants. Meanwhile, consumers are still in a state of shock and are going to be pretty careful with their spending for a while. After all, the UI bonus may have been great for the poor and working classes, but the engine of consumer spending is the middle and upper-middle classes, and they lost income during the pandemic. The result is that supply will get on its feet quickly while demand is still uncertain. Thus deflation.

So which is it? My personal view is neither. With a few exceptions, businesses don’t need to produce at full capacity instantly. Likewise, consumer spending isn’t likely to rise to pre-COVID levels immediately. Businesses will get their inventories back up to normal levels while they watch what’s happening to consumer spending. Consumers will start spending more as shortages go away and they gain confidence that another coronavirus wave isn’t coming. Business will see that and produce more. Consumers will see that and spend more. After a few quarters, everything will be back to normal with no significant effect on inflation at all.

I could, of course, be totally wrong. All of this depends not on twenty pages of Greek-letter math, but on a simple prediction of human behavior. If consumers, in particular, turn out to be far more cautious than I think, deflation may be in our future. Conversely, if it turns out they all want to party and they want to do it now, then we might get some inflation. I’m not willing to place a bet on either one, but if you think you know human nature better than me, Wall Street will be happy to take your bet on an inflation target for the next few months. Go for it.

POSTSCRIPT: Of course, this all assumes we don’t get a huge second wave of COVID-19 that kills us all, in which case inflation will be the least of our worries. Think positive!

Here’s the coronavirus death toll through May 25. After due consideration, I ended up removing Switzerland and Spain from the set of charts and adding Brazil and Colombia. Switzerland got the axe because it’s small and seems to be well under control (i.e., uninteresting for our purposes going forward). Italy and Spain are pretty similar, but someone suggested that since Italy was the first of the European countries to explode it would be interesting to follow them all the way to the bitter end. That sounded reasonable to me.

Of the South American countries, Brazil is an obvious choice because it’s huge and has a lunatic president who seems to think Brazilians are naturally immune to viruses or something. Colombia is interesting for the opposite reason: its president was an early and aggressive advocate of strict quarantine measures. Colombia is also a pretty large country, which makes it a reasonable comparison to Brazil.

NOTE: Whenever I make a large change to the charts, there’s a possibility that I screwed something up. I checked everything against yesterday’s charts pretty carefully, but still, you never know. If you notice something that looks off, let me know and I’ll look into it. (Eagle-eyed observers will note that some of the charts look slightly different today, but that’s because I fixed an old error. The current charts are correct.)

The raw data from Johns Hopkins is here. The Public Health Agency of Sweden is here.

Here’s a nice, close-up picture of a mourning cloak butterfly. We haven’t seen many of them in recent years, but perhaps they’re making a comeback? They mostly look black to the naked eye, but when the morning sun is backlighting them you can see the rust-colored wings and the pale blue spots along the edges.

POOL via ZUMA

The Wall Street Journal reports that Japan has lifted its state of emergency now that COVID-19 infections are under control. “We have showed the power of the Japanese model,” declared Prime Minister Shinzo Abe. But what is that model?

That model, in contrast to many other developed countries, didn’t include broad testing to establish the general extent of infection. Instead, when a person with clear Covid-19 symptoms was identified, health officials used a shoe-leather interviewing approach to trace the origin of infection clusters. Once the origin was identified, those connected to the cluster—in one case a pleasure boat in Tokyo, in another a concert venue in Osaka—were also tested and isolated as necessary. “We’ve been quite early in detecting new cases through this cluster-tracing approach,” said Kazuho Taguchi, a health ministry official involved in Japan’s virus response.

So that’s it? Just shoe-leather cluster tracing? That sounds promising, but I wonder if—

In declaring a nationwide state of emergency on April 16, Mr. Abe asked businesses to close or reduce hours voluntarily and white-collar workers to work from home. People were told to avoid close contact with others in crowded, confined spaces. Many restaurants remained open but closed by 8 p.m. The voluntary request was enough to shut down shopping districts and sharply reduce traffic in urban centers, and soon the surge of infections ebbed. Mr. Abe also called in late February for schools to close and major sporting and cultural events to be suspended.

OK, so aside from the business closures, working at home, avoiding close contact, shutting down shopping districts, closing schools, and suspending sporting events—aside from all that, all they did was cluster tracing. Perhaps the Japanese model is not quite as unique as they believe.

Here’s the coronavirus death toll through May 24. I got a suggestion today that it might be time to add a couple of Latin American countries to my charts. That seems like a good idea, but nine countries is my limit. This means I need to figure out which countries to add and which ones to delete. Brazil is an obvious candidate to add, but which other country is the most interesting? Mexico, because it’s our neighbor? Colombia, because I vacationed there last year? Or someone else?

As for deletions, Switzerland strikes me as an obvious choice. It’s a small country and it seems to be about done with COVID-19. Who else? Maybe Italy, which has been on the downslope for a long time and appears to be making steady progress?

The raw data from Johns Hopkins is here. The Public Health Agency of Sweden is here.

Today is crash day, so it’s not likely I’ll be posting much of anything. But yesterday I caught up with our kittens to see how they were doing, so I’ll put them up as a stress reducer for the rest of the day. They are now four months old and not really even kittens anymore, but they’re still adorable.

And if you love kittens, how about showing your love by pitching in a few dollars for our fundraising drive? I’ll have more to say about this later, but for now just click here if your stimulus check is burning a hole in your pocket.

First up is Blackie, in her Vogue fashion shot beautifully framed by red flowers in my mother’s backyard:

Here is Stripey, begging for an award as cutest kitten ever:

And Grayson, who is camera shy and hard to get a good picture of:

Here is mama Meowser under the orange tree:

And finally, as long as I was there, here is Tillamook looking annoyed that I found his hidey hole under the car:

Here’s the coronavirus death toll through May 23. France once again reported zero deaths. Very strange. The daily death rate in the US continues to decline at a slower rate than other countries, but it’s still a decline.

The raw data from Johns Hopkins is here. The Public Health Agency of Sweden is here.

Georgia was one of the first states to reopen, and since then it’s had several “oops” moments as the data it releases has turned out to be wrong in various crude and obvious ways—all of which, by coincidence, make the state look better than it really is. I don’t really care too much about that, though, because I don’t trust much of anything these days other than death rates, which are hard to manipulate. (Not impossible, but hard.) So let’s take a look at that:

So far I don’t see much of anything happening. Daily deaths look to be on a modest downward trend for the past month, probably due to the lockdown that was in place until mid-April. Starting on May 12, however, it looks like death rates started to increase again, which is about what you’d expect if there’s a three-week lag between interventions ending and death rates starting to increase.

Still, it’s too early to tell what’s really happening. A month from now we’ll probably have a pretty good picture of how Georgia is doing.

Would a hummingbird make you feel better for the rest of the day? Of course it would. Everyone loves hummingbirds and I happen to have a very nice new picture of one. Enjoy.

Senator Rand Paul has some advice for how we should be fighting COVID-19 as we move forward:

“Below 25 years old the fatality rate of COVID-19 is 0.00008%, or roughly one in 1.25 million . . .” Open our schools now!https://t.co/Md3zGjDmVV

— Senator Rand Paul (@RandPaul) May 22, 2020

Is Rand Paul an idiot? Or does he have a point? It’s a hard question to answer. Schoolkids may not usually show many symptoms of COVID-19, but they can get infected and they can transmit their infections to others. On the other hand, closing schools and forcing parents to stay home can also cause an indirect increase in COVID-19 deaths. The question is, how does this net out?

The ideal way to find out would be a natural experiment. Find two counties that are similar but that closed their schools at different times and see how this affected things. Unfortunately, school closures are done on a statewide basis, and virtually every state closed their schools within about a week of each other around March 18. So that’s out. This leaves us with the dreaded models. But since that’s all we have, let’s do a quick scan of what our modelers think. First off, here’s the conclusion of a study of Wuhan and Shanghai in Science:

While proactive school closures cannot interrupt transmission on their own, they can reduce peak incidence by 40-60% and delay the epidemic.

I’m not super thrilled about modeling studies that use Wuhan as their data source, but the authors did find that the incidence of new infections went down during school vacation periods. Next up is a note published in JAMA:

Although no official data are available, to our knowledge, on the effectiveness of school closure during the COVID-19 epidemic, the poor relevance of this restrictive measure seems confirmed by the evidence that in Taiwan, the spread of COVID-19 was minimized without widespread planned school closures….The poor effect of school closure during coronavirus epidemics has already been evidenced in some studies carried out during the SARS epidemic. In China, it was found that school closure for 2 months was not significantly effective for disease prevention mainly because of the very low incidence of symptomatic disease among school-aged children.

Here’s another published in the Lancet:

Our model estimates that if the infection mortality rate of COVID-19 increases from 2.00% to 2.35% when the health-care workforce declines by 15.0%, school closures could lead to a greater number of deaths than they prevent.

And a study published in Health Affairs suggests that school closures are not only ineffective, but might be associated with more COVID-19 deaths:

Finally, here’s a “rapid systematic review” of studies that have investigated the effect of school closure:

Recent modelling studies of COVID-19 predict that school closures alone would prevent only 2-4% of deaths, much less than other social distancing interventions. Policy makers need to be aware of the equivocal evidence when considering school closures for COVID-19, and that combinations of social distancing measures should be considered

None of this is conclusive proof. But at the moment, there is no conclusive proof. That said, the best evidence we have seems to suggest that school closures have a fairly minimal effect taken on their own, and a zero or maybe even negative effect when you net out the increase in COVID-19 deaths that they cause indirectly.

When you take this into account and then add two things . . .

• Schools know a lot more about effective social distancing practices than they did in March.
• By September the infection rate of COVID-19 should be lower than it is today.

. . . the case for reopening gets even stronger. Obviously things might change between now and September, and new studies might provide better insight into the real-world effect of school closures on a disease like COVID-19. For the moment, though, I’d say the evidence suggests that school closures have (a) little effect and (b) are probably nowhere near worth the tremendous impact they have on both parents and kids.