The Covid Feedback Loop

from Zero Hedge

In the first of a three-part series published by Bank of America, the bank’s global economist Ethan Harris looks at the theoretical feedback loops and trends linking the economy and coronavirus, focusing on how changes in consumer behavior resulting from the pandemic are impacting the economy.

Having analyzed “many countries and multiple episodes” of covid around the world, Harris has seen a “simple cycle in countries that have not contained the virus” which is as follows:

  1. When COVID cases come down, both individual behavior and official rules are eased.
  2. With a multi-week lag that boosts the economy.
  3. However, it also allows the virus to come back.
  4. Finally rising cases lead to rising hospitalizations with about a two week lag and that in turn leads to higher fatalities with another two week lag.


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