After crushing the curve in the U.S., cases of COVID-19 have begun to rise rapidly again, with the resurgence occurring in new hotspots. According to Johns Hopkins, the average daily increase in cases is nearly 50,000, compared to just under 30,000 at the mid-April peak. The increase in cases coincided with the reopening of the economy, as 42 states and territories emerged from state or regional lockdowns. After all 50 states either fully or partially reopened, 21 states have now either paused reopening plans or reversed them.

Although cases are increasing rapidly, fatalities have fallen. This does not mean they will not rise ahead; fatalities are a function of the number of cases but operate on a lag. Statistical analysis on data since mid-March suggests that deaths from the virus occur approximately 13 days after cases are reported. Using lagged case data and the share of positive tests over the last four months, we estimate that fatalities could sadly rise in the weeks ahead before stabilizing.

However, while any loss of human life is substantial, fatalities this time around are unlikely to surpass the mid-April peak of about 2,200 per day. Part of this is better treatment, as medical care has improved as we have learned more about the virus. Most of it, however, is likely because the demographics of new cases has shifted. According to the CDC’s weekly publication, COVID View, and as highlighted in the chart below, the share of COVID-19 cases of patients 65 years and older has declined meaningfully since April, which has material implications on the number of fatalities. The mortality rate through May was roughly 1% for those under 60 years old, but it was about 15.6% for those 60 and over, according to CDC data.

For investors, the rise in cases and renewed restriction in economic activity is a headwind to the growth and earnings recovery, and a challenge to risk assets. However, from a public health perspective, this resurgence could be less lethal.

Share of COVID-19 cases of patients 65+ years old

March 1-June 27, 2020

Source: CDC, Johns Hopkins CSSE, J.P. Morgan Asset Management. Based on weekly data found in the CDC's "COVID View: A Weekly Surveillance Summary of U.S. COVID-19 Activity." Data are as of July 7, 2020.