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July 31, 2020

Covid-19 led to the sharpest economic contraction in American history

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    Federal data released Thursday shows the United States saw a record drop in gross domestic product (GDP) during the second quarter of this year, and, as the country continues to grapple with economic declines spurred by the coronavirus epidemic, millions of Americans who lost their jobs because of the epidemic are likely to also lose a federal bump in unemployment benefits that is set to expire Friday.

    How Covid-19 will impact the financial outlook for the health care industry

    US new coronavirus cases surpass 4.5M, deaths top 152K

    The data comes as America's coronavirus epidemic appears to have settled into a new peak, with officials reporting an average of more than 65,000 new coronavirus cases per day—about double the average number of new cases the country had reported each day during the epidemic's previous peak in the spring. U.S. officials on Thursday reported 67,167 new cases of virus, bringing the total number of coronavirus cases reported in the country since the epidemic began to 4,502,500 as of Friday morning—up from 4,435,300 cases reported as of Thursday morning.

    Data from the New York Times shows that Puerto Rico; Washington, D.C.; and 25 states saw their average daily numbers of newly reported coronavirus cases rise over the past 14 days: Alaska, Colorado, Delaware, Hawaii, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Virginia, and Wyoming.

    The Times' data shows that the average daily numbers of newly reported coronavirus cases over the past two weeks remained mostly stable in Guam and 19 states: Alabama, Arkansas, California, Connecticut, Florida, Georgia, Idaho, Iowa, Louisiana, Michigan, Montana, Nevada, New York, North Carolina, Ohio, Oregon, Washington, West Virginia, and Wisconsin.

    The U.S. Virgin Islands and six states—Arizona, Kansas, South Carolina, Texas, Utah, and Vermont—saw their average daily numbers of newly confirmed cases decrease over the past 14 days, according to the Times' data.

    As growth in new coronavirus cases has started to slow in Arizona, Florida, and Texas, some public health experts and officials hope that recent outbreaks in the country's Sunbelt are coming under control, Reuters reports. However, Deborah Birx, who is coordinating the White House's coronavirus task force, told Fox News Thursday that coronavirus outbreaks in Southern states still are "very serious."

    Further, Birx warned that six states in the Midwest—Kansas, Kentucky, Missouri, Nebraska, Ohio, and Tennessee—are now seeing rapid growth in their daily numbers of new coronavirus cases and emerging as epicenters of America's epidemic, and she attributed the spikes to "vacations and other reasons of travel." In addition, Birx added, "[W]e continue to have problems across the coast—Washington, Oregon, California, Idaho, and Utah, and now increases in Colorado."

    Meanwhile, growth in America's national coronavirus-related death rate has been rising in recent weeks.

    According to the Times' data, Puerto Rico and 29 states saw their average daily numbers of newly reported deaths linked to the coronavirus rise over the past 14 days: Arizona, Arkansas, California, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin

    Three states—Arizona, Florida, and Mississippi—on Wednesday reported record-high single-day increases in their numbers of deaths linked to the coronavirus. Overall, officials as of Friday morning had reported 152,431 U.S. deaths linked to the new coronavirus—up from 151,194 deaths reported as of Thursday morning.

    US GDP sees record decline, 1.4 million Americans file unemployment claims

    As America continues to grapple with its coronavirus epidemic, data released Thursday by the Department of Commerce's Bureau of Economic Analysis (BEA) show the country's GDP decreased by 9.5% in the second quarter (Q2) of 2020, which is the largest one-quarter drop that the country's seen since the federal government began tracking the metric about 70 years ago. The data also showed that America's GDP dropped by an annual rate of 32.9%.

    BEA attributed the decline to the country's "response" to the global coronavirus pandemic. "As 'stay-at-home' orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses … rapid shifts" occurred "in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending," BEA said.

    For example, BEA said, "Decreases in personal consumption expenditures," and particularly in health care, contributed to the decline in the country's GDP.

    Larry Levitt, EVP for health policy at the Kaiser Family Foundation, in a tweet posted Thursday explained, "Over one-quarter of the decline in GDP in the [Q2] was due to health care. That's not only unprecedented, it also seems likely to have long-term health consequences." He continued, "If the large decline in health care use during the pandemic doesn't result in longer-term health problems, we may have finally found some clues to the question of how much of health care is 'wasteful.'"

    Meanwhile, the Department of Labor (DOL) on Thursday announced that 1.4 million Americans filed initial claims for state unemployment benefits last week, up by about 12,000 from the prior week. DOL said the number of Americans who are continually filing for unemployment benefits increased by about 867,000, rising from about 16.1 million during the week ending July 11 to about 17 million during the week ending July 18.

    Policymakers fail to reach agreement to extend bump in unemployment benefits

    The increase in unemployment filings comes as policymakers on Thursday failed to reach an agreement to extend a $600 per week bump in unemployment benefits.

    Under a coronavirus relief package that federal policymakers implemented earlier this year, unemployed Americans were able to receive a flat, weekly additional benefit of $600 that was funded by the federal government on top of typical state unemployment benefits. The federal supplement is scheduled to expire on Friday, and federal lawmakers this week took part in negotiations on a newly proposed relief package that would have extended the benefits increase.

    Senate Republicans in a draft bill unveiled this week proposed to extend the increase, but at a lower amount. Under the draft bill, unemployed Americans would receive a flat, weekly additional benefit of $200 on top of typical state unemployment benefits through the end of September. Starting in October, the flat, weekly additional benefit would be replaced by a system under which unemployed Americans would receive typical state unemployment benefits plus an additional federal weekly benefit of up to $500 that, when combined, would equal 70% of an individual's lost wages.

    However, although Senate Republicans' draft proposal has the White House's support, it was viewed largely as a starting point for negotiations. Some Republican lawmakers have argued that the unemployment boost needs to be lowered because, in its current state, it encourages some Americans to remain unemployed, as they may collect higher unemployment amounts than they would be paid if they return to work. But some Democratic lawmakers have argued that the unemployment benefit enhancement is still needed to help support Americans who lost their jobs because of the coronavirus epidemic and are not yet able to return to work.

    Federal lawmakers had not reached an agreement to extend the benefits as of late Thursday, and senators on Thursday blocked two separate extension proposals—one offered by Republicans and one offered by Democrats. The Senate adjourned on Thursday without passing an extension and the chamber is not scheduled to reconvene until Monday, meaning the benefits bump is likely to expire today.

    Trump questions whether US should postpone presidential election

    Separately, President Trump in a tweet posted Thursday suggested that the United States should push back November's presidential election because of the country's coronavirus epidemic, but experts quickly noted that the U.S. president does not have the authority to unilaterally make such a change.

    Rep. Zoe Lofgren (D-Calif.) said, "Only Congress can change the date of our elections, and under no circumstances will we consider doing so to accommodate [Trump's] inept and haphazard response to the coronavirus pandemic."

    Some Republican lawmakers also said they would not delay the presidential election (Moreno, The Hill, 7/30; Lambert/Caspani, Reuters, 7/30; Casselman, New York Times, 7/30;  Basu, Axios, 7/30; Levitt tweet, 7/30; Carney, The Hill, 7/29; Lesniewski/Shutt, Roll Call, 7/30; Taylor/Mascaro, Associated Press, 7/31; Morello, Washington Post, 7/30; Axios, 7/31; New York Times, 7/30 [1]; New York Times, 7/31 [2]; BEA release, 7/30; Rosenberg, Washington Post, 7/30).

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