The Coronavirus Outlook: Worse than Expected?

02/13/20 03:47PM EST

Below is an excerpt from a new Demography Unplugged research note written by Hedgeye Demography analyst Neil HoweClick here to learn more and subscribe.

The Coronavirus Outlook: Worse than Expected? - 2 13 2020 3 43 11 PM

In my Tuesday podcast, I expressed extreme skepticism about the smooth trend in the reported coronavirus (nCoV) numbers.

Everyone on the ground--and I mean everyone--agrees that infections and deaths in Wuhan were vastly under-reported through most of January. Hardly any test kits were available and sick people were routinely just told to go home and stay isolated there.

If reporting has since improved, we should have expected some kink in the line as all the newly uncovered cases were revealed. But we haven't seen anything like that. The line has been perversely smooth--a bit like China's GDP numbers. The signs of managed data are everywhere.

Well, earlier today in China, we finally got our kink in the line.

New total cases per day, after slowing to under 3,000, jumped by 15,407. New total deaths per day, after showing a linear trend of about 100, jumped by 253. [Data as of 1 pm EST, 2/13/20]

The Coronavirus Outlook: Worse than Expected? - Corona Chart1

Why the jumps? Unclear. The NYT suggests it is due to a shift in the criteria used in Hubei province for diagnosing patients as positive for nCoV.

Until yesterday, officials were using tests that directly detect the virus's genetic signature. These tests are complex and time consuming (requiring centrifuges to be run for a couple of hours, etc.); they often generate false negatives, requiring retesting; and the test kits themselves are limited in number.

Yesterday, apparently, officials have started using simpler diagnostic criteria such as chest scans: If you have the characteristic shadow pattern on a chest scan, you're positive. Clearly, the sure but slow method makes no sense for cities overflowing with tens of thousands of badly symptomatic patients.

Why did officials wait until now to change the procedure? Possibly due to Xi Jinping's appointment yesterday of Ying Yong as the new Communist Party Secretary of Hubei province. Ying, a protégé of Xi, used to be mayor of Shanghai where he gained some renown as administrator of health measures to control the spread of pneumonia in that city.

This is a striking move for Xi. No political reshuffling at this level ever happened during the SARS epidemic. Presumably, Ying has a lot more freedom to reveal all the bad news upfront and take whatever measures are necessary.

Still, many questions remained unanswered.

  • Why did the number of deaths also jump? Hard to believe this too is related to diagnostic criteria. If it is, then maybe officials have been undercounting deaths as well for weeks.
  • Other provinces are still constrained by the genetic-test diagnosis. Will they too soon switch over to a broader diagnostic standard? If so, that may point to further "upward kinks" in the days ahead. Oddly, at least one northern province seems to have shifted to a more restricted definition of "infection"--which actually reduced the official caseload a few days ago. As usual in China, provinces do what they want... until the emperor shows up on your front door.
  • Once the diagnostic criteria are standardized across China, will we at last possess true knowledge of nCoV deaths across China? Or will we be hit by repeated further upward kinks in the weeks to come?

My outlook is that we should expect a lot more of these big upward corrections.

The reason is that the public misunderstands what's wrong with the official statistics. The problem is not just that they greatly under-report what they are supposed to be reporting--all seriously symptomatic cases. It's also that these types of cases vastly under-represent the total number of infected persons. Why? Because most infected persons show few or no obvious symptoms.

According to the latest estimate by the MRC Centre for Global Infectious Disease Analysis (CGIDA) in London, the mortality rate for nCoV is only about 1%. That may sound like good news... until you look at the official count of "resolved" cases: As of the last official count, roughly 20% of all resolved cases are resulting in deaths (6,271 recovered versus 1,370 dead). But of course this means 20% of all severely symptomatic cases, usually requiring hospitalization… which is why Chinese officials counted them as "cases" in the first place.

In most developed countries in which nCoV-infected persons have been detected, the case mortality rate is lower for this very reason. Developed-country health systems have put in place a lower bar for nCoV detection. This chart by the CGIDA clarifies what's going on.

The Coronavirus Outlook: Worse than Expected? - Corano Chart2

So now let's follow the numbers. If the true mortality rate is only 1% and total nCoV deaths are 1,370, then total resolved infected cases are actually around 137,000 And then keep in mind that all resolved cases must have first become infected 3 weeks ago. If we assume that infections are doubling every week, then the current number of infected persons are around one million. That number is 20X larger than the official count of "currently infected patients."

Could the official count be this far off? Could the actual infected count be one million? Actually, it could very well be according to a newly published research paper by the CGIDA. Per the findings in this paper, the official count of the infected is off by a ratio of about 20-to-1. Also, I highly recommend you listen to this interview of Dr. Neil Ferguson, founding director of the MRC's Centre for Outbreak Analysis and Modelling. According to this interview (on February 5):

  • Ferguson estimates that every infected person is on average infecting 2.6 others. If the average time from infection to transmission is under 2 weeks, this is consistent with his estimate that the nCoV numbers are roughly doubling every five days.
  • His best estimate of current new infections per day is 50,000, nearly 20X higher than the official count. This implies a total infected number of roughly one million today. (See this New Scientist review of the work by Ferguson's team that comes to the same conclusion.)
  • The nCoV is very transmissible, more like a classic influenza than like SARS. And with influenza, standard quarantine measures are seldom effective. For this reason, Ferguson sees "only limited evidence" that the spread of nCoV may be slowing down.
  • On its current growth path, he expects infections to peak in Hubei in about a month's time. And in the rest of China about a month later.

OK, here are some (admittedly) back-of-envelope calculations. If the infected number is now one million, that alone will eventually generate in the next 2-4 weeks roughly 10,000 deaths.

If the infection total is doubling every 5 days, then we will be up to 2 million infected by February 18, generating 20,000 eventual deaths. As for further doublings over the rest of February and into March--well, you can keep doubling these numbers just as easily as I can.

What's the best way to assess whether or not the real infection trend remains on its upward exponential trajectory? Here's the suggestion I made in my last podcast: Don’t look so closely at the official numbers.

Look instead at real-time video cams of the streets of major cities like Shanghai, Guangzhou, and Beijing. Right now, they're still pretty quiet. Once they're bustling again, you can start to relax.

So if the mild-mannered professor Ferguson is correct, OK, I think I can go ahead and say it: The outlook for the coronavirus is indeed worse than expected.

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Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.

A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.

Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."

Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.

Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.

Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.

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