Too Many Unknowns, Not Enough Knowns

By: Spencer Israel

On February 12, 2002, Secretary of Defense Donald Rumsfeld was asked during a press conference about whether there was evidence of weapons of mass destruction in Iraq. This was his response:

“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.”

Though mocked at the time, this quote has actually aged rather gracefully, and, I would argue, is the perfect quote for this moment in time. Right now, there are simply—to borrow from Rumsfeld—too many known unknowns for anybody to feel comfortable.

Known Unknowns
When will we get a vaccine?

Best case scenario, 12-18 months. That’s the timeline Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, gave reporters last month, though others have called that timeline “ridiculously optimistic.”

The World Health Organization lists 44 vaccine candidates under evaluation. Just two have advanced out of the pre-clinical stage into Phase 1 testing.

How long will it take to contain the spread of COVID-19?

Countries like South Korea and China have flattened the curve of new cases considerably after taking extreme social distancing measures. After going from 1,000 confirmed on January 24 to 74,000 on February 17, China has only reported 8,000 new cases in the ensuing six weeks.

With the slower implementation of social distancing and nationwide stay-at-home guidelines in the U.S., it’s not unreasonable to think it could take several more months for the spread of the virus to slow in the U.S. But, of course, nobody really knows.

How bad will the financial damage be for U.S. businesses?

The Federal Reserve and Treasury have gone to unprecedented lengths to provide a financial backstop for U.S. businesses. Is it enough?

Every industry will need help. But how much help will they get, and how will the government decide who gets what? The airlines have already been given some relief, as have small businesses. Other industries, like theatre operators and cruise liners, are up in the air. For oil and gas companies, the dominoes have already started to fall.

Many businesses can probably find a way to survive the current near-economic shutdown for a month, maybe two or three. But what if this extends into the summer or fall? How many businesses will fail, and what will that do to the economy?

How bad will the financial damage be for U.S. consumers?

10 million people have filed for unemployment in the last two weeks, and that’s not even counting the hundreds of thousands of people who have been furloughed.

U.S. adults who make less than $75,000 a year will receive one payment of $1,200 as part of the $2.2 trillion coronavirus stimulus package signed on March 27. That is something, but it is not enough for many.

Where This Leaves Us
These are just a few of the questions we are asking, and they don’t even address the unknown unknowns—the problems we don’t even know are coming. Could anybody have foreseen at the end of February that just four weeks later the country would be more or less shut down?

All we can really do in the meantime is take comfort in the precious few known knowns. We know how COVID-19 spreads, and we know the symptoms. We know what we have to do to slow it down. We know we’re heading for an economic recession, potentially worse. We know governments and central banks around the world are going to do what they can to provide a safety net. And we know much of this uncertainty would evaporate with a vaccine or viable treatment of the virus.

For now, that will have to do.

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