MORTGAGE CREDIT NEWS BY LOUIS S BARNES - May 1, 2020

Perhaps the most-feared sentence in any language: when our domestic partner says, “Dear, we need to talk.”
We need to talk about the economy. It is time now. From mid-March through April there was no point to an economic conversation -- then as useful as remarking beside Niagara Falls, “Dang, that’s a lot of water coming down.”
At the outset here, get a good public-policy fight going. Georges Clemenceau, prime minister of France during WW I said afterwards, “War is too serious a matter to entrust to military men.” A rephrase for 2020: a pandemic is too serious a matter to entrust to public health officials.
We must reopen the economy, no matter what, and right now. (Disclosure: I do not own any hotels or golf courses; but if my dad did, I’d hate to be the one to tell him how things are going). Here is the open-up-now logic.
So far the damage to the economy has fallen upon those least able to absorb the harm, working for cash, semi-underground, ineligible for unemployment insurance, often invisible to “stimulus” funding. These are the same people found in surveys who could not cover a surprise expense of $500. But in further economic cruelty also had the shortest distance to fall, spread the least damage to the rest of the economy, and if we’re lucky the fastest to recover to a survivable flow of income. With one exception: those whose work is too close for social distance.
“Hospitality and retail” are the job categories which enjoyed the most growth in the last half-dozen years -- restaurants, retail stores, and hotels, which if not shut might as well be. Hotel occupancy should be 65% and is 26%. Airline travel is off 90%. “Health care” has been another hot sector of employment, but low-end jobs more custodial than skilled, and today bringing terrible personal risk.
These are renters, not home owners and mortgage payers. Skipped rent will hurt some landlords, but nothing like the waves of distressed sales 2008-2012 down-spiraling the values of homes.
Most households, perhaps 80% have had little economic worry. So far, and if we reopen. Social Security still deposits monthly, same for other public and private pensions. If your job is IT, you moved home, income flowing. Some local governments have begun small layoffs, but federal employees are secure.
This divided economy has had some weird effects, this shutdown so different from any prior recession. In half-shut March by itself, personal income fell only 2.0% while consumer spending dove by 7.5%. In any other recession, incomes lead and drop with spending.
This shutdown so far has resulted in forced accumulation of savings! We can’t or won’t fly, travel, eat out, or drive. We have overspent only on masks and toilet paper (a shortage of red meat may help -- some people would rather not eat at all than confront a veggie). Household savings is income minus spending, and in the last 45 days the biggest bulge in savings on record. When we open up, most households will have more money to spend than before the shutdown (stock market losses aside, mostly in retirement accounts).
That’s the legitimate basis, combined with Fed and fiscal sustenance to hope for a fast and strong rebound. But only if we open up now. Right now.
If we don’t open, damage will spread sideways, undermining the large majority who are okay. Our economy is so linked and circular that no federal assistance can patch the holes. The biggest of these holes, other than the horror of mile-long lines at food banks: sales tax revenue to state and local government. Sales down, revenue down, then layoffs from the most secure jobs in town, and sales spiraling lower and more layoffs.
The federal government can print money, the Fed or by selling IOUs. However, the credit rating and borrowing of states, cities, and towns, depend on tax revenue. Run out of money, layoffs. The next domino: state universities. Then distressed sales of homes and unpaid property taxes.
And then no bottom. In March alone, US consumer spending fell by $1.1 trillion, and that much in addition in April. We must run the sales engine. Do your part. Go buy something from a store. Fill up your car, drive until half-empty and come home (windows up, don’t get out, mask not necessary). Repeat. That’s the best help to the stock market and preventive against $150 oil in July and standing in line to buy gas.
Now reach for the ol’ lab coat. Mike Pence finally put on a mask yesterday, so I can wear my coat.
The limit on running the sales engine is social distance. Social distance works -- really works, even if widely disregarded. Even with inadequate testing and impossible to back-walk new infections, social distance has collapsed the virus. However, well-intended public health officials, medics, and elected local leaders are trying like hell to keep us scared so that we’ll behave.
Maybe the worst risk to social distance now is too much “Wolf!” from the medics. The WHO this week said “there is no evidence that having had the virus confers immunity.” But today CIDRAP in Minnesota says we have two years to go, until 60%-70% of us have had the virus and we have herd immunity. Would you two mind getting your story straight? Otherwise leave the I and D out of your acronym.
We do have to behave, and the medics do have to hammer on us, local recurrence and re-shut inevitable. But to re-open the economy we must improve morale among the prisoners. The governor can lift orders, but we’re not going to shop until some reasonable sense of risk overtakes fear. Colorado’s improvement is so muddied in its official stats that the big-model dweebs say that we’re still a month away from opening: the IHME (UW and the Gates Foundation). The IHME has not responded to several vigorous efforts to explain their misunderstanding of our data, nor CNN which spreads the IHME virus. If you have Colorado completely backwards and don’t care, what else have you missed? (See below.)
We are learning more every day about social distance. South Korea says three feet. Amateur hunches supported by virologists working on exposure necessary for infection: if you are outside, risk falls 20-fold. There is no Star Trek force field in social distance, it’s just air flow and dilution. A 10-minute-mile jogger goes 8.8 feet in one second. The smaller the interior space and the more poorly ventilated, the risk expands exponentially. Sneeze or cough spray, deadly; ambient aerosol, not.
Sit in a low-ceiling and stale classroom or office or restaurant? On a stairmaster next to another? How about the weight room? A college dorm with a roommate? Or outside at a baseball stadium or sidewalk cafe or with an outdoor barber? How quickly can we reinvent air conditioning to suck-and-filter? A negative pressure vent above each table and desk? Offices and classrooms and gyms become standing hurricanes?
Protect the vulnerable, maintain common sense distance, ask a little intestinal fortitude from us, open up, and we’ll be okay.

Here is the IHME Colorado model and projection for the future: “After June 2, 2020, relaxing social distancing may be possible with containment strategies that include testing, contact tracing, isolation, and limiting gathering size.” The image is deaths per day, the scale 130 at top, zero at bottom:

The link to CO data is here. The state Department of Public Health and Environment is doing its best, including in the last two weeks reviewing every death certificate in the state, capturing additional Covid-19 deaths and “possibles.” However, the state has struggled to provide a clear picture of the course of the epidemic, adding toggles above charts -- often from the “as-reported” date, which adds historical cases appearing to be new ones, as opposed to “date of onset” or “date of death.” The state also refuses to separate community contagion from our only significant on-going infections: 130 nursing homes, several prisons, a meat-packer, and a cheese factory.

Here are deaths “as-reported,” picked up by the IMHE:

Here by actual date of death, including historical research:

And cases per day, inherently tricky data which inevitably make the infection peak seem later than actual -- an effect in data nearly everywhere. CO data misses perhaps thousands of cases prior to early April when testing began to increase. Ever since we have captured a larger and larger percentage of new cases, and mid-to-late April is inflated by the nursing/prison/plant hot-but-isolated spots. General community risk is near zero to those maintaining social distance. The gray area to right reminds us that some of the most recent cases may not have been reported.