Table of Contents
The human coronavirus comes in 4 broad subcategories, including Alpha (229E, NL63), Beta (OC43, HKU1), Gamma, and Delta groupings. These viruses came to light in the 1960s, and there are 7 broad viruses that can infect human beings, including the aforementioned human coronaviruses, as well as MERS, SARS, and SARS-CoV-2 – the novel coronavirus we are now faced with.
The most commonly occurring coronaviruses such as the Alpha and Beta strings listed above pale in comparison to those which are transmitted between animals and humans, notably bats, rats, swine, bovines, and equines. The CDC has stressed the severity of the latest pandemic, given its high infection rate (extreme virulence and ease of transmission), and high mortality rate. It bears striking similarities to the Severe Acute Respiratory Syndrome (SARS) disease, hence its name SARS-CoV-2, or COVID-19.
Rapid Infection Rates Devastating Global Economy
The CDC, WHO, and other powerful government agencies all over the world are attempting to come to grips with a pandemic that is spreading faster than it can be contained. The latest confirmed cases and deaths by country, territory, or conveyance paint a grim picture of an outbreak of epic proportions. At the time of writing (Tuesday, March 24, 2020), a total of 417,042 people had contracted the virus, with 18,595 deaths, 290,147 active cases, 12,981in serious/critical condition, and 108,300 recoveries. That means the mortality rate of the current pandemic (based on those who have tested positive) is 4.46 %. The countries with the highest concentration of infected people and fatalities include the following 3 countries:
- China – 81,171 cases with 3277 deaths
- Italy – 69,176 cases with 6820 deaths
- USA – 52,921 cases with 684 deaths
The USA has rapidly climbed up the list, as hundreds of thousands of test kits are being rolled out to each of the 50 states; an ominous portend for the US economy, and by default the greater global economy. While the US death count is lower than China and Italy, the infection rate in New York state, California, and Washington is extremely concerning. From a social perspective, lockdowns have been implemented across the union, with governors implementing curfews and outright bans on public gatherings from beaches to parks. The raison d’être for these stringent measures is to flatten the curve to prevent the US from experiencing an explosion of viral outbreak, with the attendant 3% – 5% mortality that comes with it.
Various theories have been postulated regarding the severity of infection that could result if left unchecked, with German Chancellor Angela Merkel saying that up to 70% of Germany could contract the coronavirus. The White House medical adviser explained that this figure takes place over multiple cycles (several seasons). Nonetheless, the impact on the economy, and on individual industries has already been devastating. The Dow Jones, NASDAQ, S&P 500 index, and Russell 2000 have been hit with a force never before seen. All the Trump-era gains on the stock market (record-setting by all accounts) have been eliminated. The Dow effectively dropped from 30,000 points to 20,000 points in the space of a few weeks, erasing 401(k)s for hundreds of millions of Americans.
The economic devastation is only in its infancy stages. The pandemic has curtailed economic activity from grassroots level businesses to the ivory towers. We are seeing the shuttering of entire industries, notably travel and tourism, hospitality and entertainment, food and dining, and beyond. Airlines have been grounded, cruise ships have docked, the restaurant industry is reeling, and small and medium businesses across the board are laying off employees by the tens of thousands. Companies like Boeing are in desperate need of multi-billion-dollar bailouts from the Federal government, and that’s just the tip of an impending economic collapse.
President Trump, in his anxiety to get America back to work, is pushing for the US to be open for business by April 12, 2020. This may or may not prove to be viable, but the alternative of remaining in lockdown appears to be far worse for the US and global economy. If Americans become unproductive, factories will shut down. This will immediately curtail production, cause the widespread closure of corporations, small, medium, and large, and render the US economy a failure.
The Federal Government has pulled all the strings to kickstart the US economy, first implementing a nationwide lockdown for 15 days, with the possibility of an extension on the cards. There is no way to gauge the financial impact so early on. As the data suggests, we are in the midst of a rapid escalation in the number of infections, with the potential for hundreds of thousands more positive test results, perhaps millions.
Given mortality rate of 3% – 5%, 1 million sick people would result in 30,000 – 50,000 dead. 10 million sick people would result in 300,000 – 500,000 people dead. While the US mortality rate is much lower at 1.3%, these numbers would still be devastating. 1 million infected Americans would result in the death of 12,924 people. 10 million infected Americans would multiply that figure by 10 times and leave 129,249 people dead. It’s not hard to see how critical this containment time is for the US economy, the broader global economy, and specifically individual sectors.
How has the US Economy Already Been Impacted?
President Trump was quick to implement a travel ban on China when news of the coronavirus first broke. However, the epicenter of the virus had already shifted to Europe, notably Italy which saw exploding levels of the contagion. A travel ban on Italy, Spain, France, Germany, and the UK was slow in coming. New York City is now ground zero for a devastating outbreak of the coronavirus. New York is also home to the world’s biggest stock exchanges – the NASDAQ, Dow Jones, S&P 500 index, and the New York Stock Exchange. Here are a few figures to understand just how much of an effect the coronavirus has already had on the US economy:
- Dow Jones Industrial Average – 26,957.59 on Wednesday, February 26 à 20,704.91 on Tuesday, March 24
- NASDAQ Composite Index – 8,965.61 on Tuesday, February 25 à 7,417.86 on Tuesday, March 24
- S&P 500 Index – 3,128.21 on Tuesday, February 25 à 2447.33 on Tuesday, March 24
Major US Industries Hit with Sledgehammer Force by Coronavirus
It is notable that several industries have suffered tremendously as a result of the pandemic, following:
Discretionary spending on entertainment, gambling, and sports has taken a huge hit. With people out of work, revenue streams are rapidly drying up. The focus will be on stockpiling food resources, medical supplies, and ‘Doomsday Scenario’ purchases. While government has urged the people to curtail hoarding, this has not helped. Supermarket shelves are barren, there are no cleaning supplies, rolls of toilet paper, and other necessities. Shopping hours have changed, social distancing measures are in place, and unnatural expenditure is taking place. The focus has shifted from discretionary spending on entertainment like movie theatres to in-home entertainment like Netflix and pay-per-view.
Traditional restaurant dining has shifted to in-home microwave meals, or delivery service/take-out. From an entertainment perspective, casinos have closed their doors in Las Vegas, Atlantic City, and beyond, and players are limited to demo-play casino games on Facebook and other social media channels via apps. However, in regulated states there is more online casino variety. Players in New Jersey, West Virginia, Pennsylvania, or Delaware have access to a selection of exciting online casino games like blackjack, roulette, baccarat, video poker, and slots. Given the precarious predicament of online sports betting, land-based sports betting, and the closure of land-based casinos, experts predict that online casino gaming may benefit.
Sports Betting Industry Hamstrung by COVID-19
Before the coronavirus outbreak, New Jersey’s online gambling scene was showing strong growth, with year-on-year gains for online casino activity, and online sports betting. However, the impact of COVID-19 on the sports betting industry has been grim. Virtually all professional sports leagues have been shut down. These include the NBA, NFL, MLS, NHL, MMA/UFC, PGA Tour, NCAA March Madness, and a long list of others. With virtually no professional sports leagues currently in session, now or for the foreseeable future, sports betting at land-based bookmakers and online bookmakers has all but dried up.
There is now a greater focus on eSports, and Virtual Sports like the F1 Virtual Grand Prix contests that are now being showcased around the world. In 2019, NJ online sports betting revenues grew at a furious pace. In the 12-month period after sports betting was legalized in NJ, the state raked in $3 billion in sports bets, with $200M in revenues. That figure continued to rise through the first quarter of 2020, until the coronavirus shut down the industry. The NCAAF typically brings in around $8.5 billion nationwide in betting activity, but it too was canceled. This has temporarily shuttered the nascent NJ online sports betting industry, which was readying for a massive spike in 2020. In Vegas, sports betting reels in $500 million per month, but for now it’s slim pickings as the industry realigns with virtual sports and eSports.
The prognosis for 2020 is hazy, given the constraints currently hamstringing the US economy.
The US gambling industry is estimated to be worth $261 billion, according to the AGA (American Gaming Association). Some 1.8 million people are employed in the US gambling industry across 40 states. Statista research suggests that the gambling industry contributed $137.5B (2018) to the US economy, while the GGY of the market was forecast to hit $495B by 2019. The postulation been blown out of the water with the latest coronavirus outbreak which has closed Las Vegas and Atlantic City casinos for the foreseeable future.
The strong and steady growth in New Jersey’s online casino revenue from January 2019 through February 2020 is likely to nosedive for March and April 2020. The uncertainty that currently grips the US and global economy is unlikely to translate into excess profits for the online gambling industry, or the land-based gambling industry. People are more likely to engage in home-based online entertainment while a lockdown is underway, but the exact correlation between that and gambling revenues remains unknown.
- The travel industry generates $5.7 trillion in revenues globally. It is also responsible for 319 million jobs, or 10% of all employment on the planet. With a dramatic and unprecedented drop in business travel, social travel, and job losses, the industry is expected to plunge into the abyss. There is no figure that can quantify the impact this is going to have on the travel and tourism industry.
- The oil industry has crumbled in the wake of the coronavirus outbreak. The price of crude oil has plunged to $24.25 per barrel for WTI crude oil and $29.95 per barrel for Brent crude oil. Low global demand, oversupply, high inventory levels, and a global economy that has ground to a halt are driving prices lower.
The future is uncertain, and the severity of the global pandemic depends on how quickly countries like the US, South Korea, Italy, Spain, Germany, and others can get the crisis under control. Right now, the US is reeling with soaring numbers of infections across the nation. As these numbers grow, healthcare systems will be stretched to breaking point. It is incumbent upon everyone to follow the directives of the Federal government to remain at home, away from other people, and not to go out unless absolutely necessary. This story is unfolding at a terrifying rate, but steady heads and sound policy will bring it under control.