Is America One Country?

Yes, but it is also a country comprising 50 states.  States’ rights is a complicated issue, but sufficed to say, state Governors have considerable powers, specifically enumerated in the U.S. Constitution, and do not have to always march in lock step to edicts from Washington.  This may prove to be a good thing in assessing the outlook for an economic recovery from the impact of fighting the risks associated with COVID-19.

About two months ago the U.S. economy was substantially closed in an effort to flatten the curve of new cases of COVID-19 that threatened to overwhelm hospitals’ ability to treat patients.  Now steps are being taken to gradually reopen the economy.  Interestingly, each state Governor is taking a different approach, which should provide some insight into what works and what doesn’t.

Investors should take note of progress and consider public reports carefully.  Data can be incomplete and/or potentially misleading.  Consider the reporting around the COVID-19.  Many reports suggest that the U.S. has significantly more events than any other industrialized country.  This is true, but if the data is refined to reflect events per million of population, the U.S. is somewhere in the middle.  If you further parse the data to eliminate New York, an obvious outlier, the other 49 states have an excellent record and rank with the most effective countries.  Let’s see how the various states do going forward.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA