We are in the midst of a rising third wave of the pandemic, as well as facing multiple other issues (the election, the wildfires, and so on). But the economy continues to move forward. Consumer confidence is steady, personal spending is doing well, and business confidence and investment are strong. Even after the initial fiscal and unemployment support, the economy has continued to expand despite rising medical risks. Given all this, maybe it is time to take another look at where the risks are and whether they are as big as has been commonly assumed.

We have had a roller-coaster ride in 2020 so far, and the rest of the year looks to be no easier—and probably just as hard. The election is coming up, the third wave of the virus is underway, large parts of the country are on fire, and a record-setting hurricane season is in progress. And that’s just in the U.S. Looking abroad, at least two things—Brexit and the U.S.-China trade war—would be making bigger headlines here in any other year. There is a lot to pay attention to, a lot to worry about, and a lot that could go wrong. With everything in play, we need to remember to do something critical.

The medical news has continued to worsen since the last update, to the point that a third wave of infections is now underway around the country. Case growth has accelerated and is approaching the July peaks, while the geographic spread of this wave of outbreaks continues to widen. Case growth in many states is nearing levels that could threaten the health care systems there, indicating this is a growing problem.

"When the facts change, I change my mind.” This is a famous quote from John Maynard Keynes, which is followed by the sardonic question, “What do you do, sir?” Very wise and, of course, very witty. It’s not, however, necessarily useful.

Last week, I wrote that I was not worried about the deficit and the debt—at least in the short to medium term. We appear to have lots of running room before the debt is an immediate problem, which could be years (or more) away. While acknowledging it as a problem, looking at history and around the world, there are no real reasons it has to be an immediate problem.

The pandemic remains under control at the national level, and the case growth rate remains below recent peaks. Still, the medical news continues to get worse, as this past week has seen case growth continue to rise on a seven-day average basis. While some of this rise may be due to increased testing, most looks to be owing to widening outbreaks in many states. In fact, case growth in many states is starting to approach levels that could threaten the health care systems there, indicating this is a growing problem.

A month or so ago, I wrote about how worried I was that no one seemed concerned about the deficit or the debt. People were worried about lots of other things. But for some reason, I wasn’t getting any questions about the deficit or debt—and it worried me.

As of yesterday, the markets spiked again, taking the major indices back close to new highs. The S&P 500 closed at 3,534, less than 2 percent below the all-time high of September 2, just before markets tumbled. The Dow and Nasdaq results were similar. Clearly, the markets think everything is awesome.

On the medical front, the news is getting worse. The pandemic remains under control, and the case growth rate remains below recent peaks. But in this past week, case growth has continued to rise on a seven-day average basis. While some of this rise may be due to increased testing, most looks to be owing to a mix of schools and universities reopening and widening outbreaks in many states. In fact, case growth in many states is starting to approach levels that could threaten the health care systems there, indicating this is a growing problem.

September, as expected, was a difficult month, with markets in the U.S. and abroad down pretty much across the board. Despite this correction, which came after two very strong months, markets were left with strong gains for the quarter, both here and abroad. Overall, the quarter was good for investors despite the disappointing September, and the reasons why come from the same place—the pandemic.