Covid-19: The Third Wave Continues

By Charlie Bilello

07 Nov 2020

The third wave of COVID-19 in the US continues, with an acceleration in recent weeks.

Let’s take a closer look at what that means through a series of questions and answers…

When did the 3rd wave begin?

New cases started trending higher again in mid-September after falling for the two months prior.

They hit their highest level ever yesterday (125,552). The 7-day average of new cases (97,010) is also at a new high.

Is the recent rise in new cases solely due to more testing?

Unfortunately, no. If more tests were the only reason for more cases we would see the % of positive test results staying flat or moving down.

Instead, we are seeing just the opposite since late September, with the % of positive tests moving from a low of 4.5% to 7.3% nationally.

Tests in the US over this time have moved from 934,664 per day to 1,320,942 (7-day average), an 41% increase.

If more cases were simply from more testing, we would see a similar % increase in new positive cases. Instead, we find a 130% increase in cases over the same time period (42,089 to 97,010 per day).

Are rising cases leading to an increase in hospitalizations?

Yes. Covid-19 hospitalizations are trending up again, at their highest levels since July 31. Hospitalizations lag the increase in cases, and therefore we would expect this trend to continue as long as cases are rising.

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Are rising cases and hospitalizations leading to an increase in deaths?

Yes. While deaths lag both cases and hospitalizations, we are already seeing a trend higher at over 939 deaths per day in the last week (up from 667/day in early October).

Will the new high in cases lead to a new high in daily deaths?

This is unlikely at current case levels for a few reasons:

1) Hitting a new case high do not mean that the virus itself is as prevalent across the US as it was in March and April.

Testing in the US is up 13x from the levels at the end of March and 8x from the April peak in cases.

If we attempt to adjust the prior cases for lower testing, this is what the chart looks like…

What you see is that the current state of the outbreak is now at its highest level since late April, but still well below the prior peak.

2) Importantly, the new cases today are showing a shift to a younger population and from the increased testing we are picking up many more cases with milder symptoms that have a lower probability of death.

All cases are not equivalent – far from it.

There is a massive difference in fatality rates between younger and older populations.

We don’t have good data nationwide on the age distribution of new covid-19 cases over time, but it is certainly trending younger, and we should not expect to see an equivalent number of deaths as long as that is the case.

That’s not to say there’s no risk to the virus spreading in younger populations (there clearly is and if it spreads widely enough it eventually will find it’s way into older populations), just that the outcomes for this virus are vastly different depending on who gets it (ex: those 85+ are 14,500x more likely to die of a covid-19 infection than those 5-14).

Is there a 3rd wave everywhere?


While nationally this has the appearance of a 3rd wave, the US is a large country with many differences across regions.

A closer look at regional numbers shows a 1st wave that hit the Northeast hardest, a 2nd wave hitting the South/West hardest, and a 3rd wave that is (thus far) hitting the Midwest hardest with all regions showing a rise of late…


While all regions are showing increased community spread, the Midwest is the only region thus far to hit a new high in hospitalizations and none of the regions (thus far) are showing a new high in daily deaths.


In terms of the percentage of positive tests, these are the states with the lowest and highest rates over the last week (as of 11/6/20):

The spike in the per capita death rate in South Dakota shows that the high % positive is not simply due to a lack of testing, but instead a high prevalence of the virus.

Is covid-19 on the rise elsewhere in the world?

Yes, particularly in Europe, which started its second wave before our third wave began. We’re seeing new case highs across most of Europe…

Why are there waves (ups and downs) in the virus over time?

Changes in behavior is the most likely explanation. When the virus gets bad enough in an area, people take more precautions (more mask wearing, social distancing, etc.), governments enact more restrictive measures, and the virus eventually starts turning down. When the rates are low enough, people naturally start to let down their guard and take less precautions, leading to an eventual rise.

Every state and every country is different in this regard which is why no two paths of the virus are alike.

Is immunity playing a role in the waves as well?

This is likely a factor with debate over how much. The lack of resurgence in the hardest hit areas of New York City could very well be due not only to increased fear (and therefore, increased precautions/restrictions) but also the fact that it is harder for the virus to spread when so many have already gotten it.

In one area of Queens, more than 50% of people tested were shown to have antibodies and across the city the rate was more than 27% (as of late September).


There is much debate over whether “herd immunity” can be achieved at lower levels than previously thought (see here) with no clear answer as of yet.

There is also a debate over whether herd immunity can be achieved by allowing the younger/healthier population (with significantly lower risk of death) to take more risk while protecting the elderly and the vulnerable (see here and here). There doesn’t seem to be much public support for such an approach, but it’s an interesting thought experiment that could actually end up saving more lives than the current strategy. There are downsides, of course, if you cannot effectively protect the elderly and if there are unknown long-term ailments from the virus that make herd immunity unpalatable.

Will most people eventually get the virus?

Hopefully not, but given how easily the virus spreads, the longer we go without an effective vaccine or treatment, the more people will get it.

In many respects, we are trying to buy time for the most vulnerable population until we find that miracle cure.

Even when the vaccine is available, we should not expect covid-19 to immediately disappear. Many will be hesitant to take the vaccine (see poll results below) and it is not likely to be more than 50% effective.


Is a continued worsening of current COVID-19 wave inevitable?

Nothing is inevitable.

While a complete eradication of the virus is currently an unrealistic goal, we have shown time and again that containing it (to protect the hospital systems and the most vulnerable) is not.

The doomsday exponential curves of cases and deaths predicted back in March were all wrong.

The infection fatality rate ended up being significantly lower than originally projected while small changes in behavior were significantly more effective at slowing the spread than was ever thought possible.

We all play a small role in whether it does. With some discipline (i.e. washing handswearing masksavoiding large gatherings), compassion (making sure we protect those most vulnerable), and continued sacrifice, we’ll get through this.

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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For our full disclosures, click here.

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