Things aren’t going so great on the economic front



The Washington Post puts out a few excellent newsletters that I turn to first every morning. Today’s Today’s Opinions newsletter linked to a few very good – and disturbing - pieces on the economy.

The most important of these was about the Federal Reserve’s monthly meeting on June 9-10, the minutes of which were just released. Note that this meeting occurred before the recent spike in new cases (and BTW, yesterday the US had more than 50,000 new cases, for the first time ever). Even then, they were very concerned about the fragility of the current economic “recovery”:

Fed Chair Jerome H. Powell has repeatedly said that the path out of this recession will depend on containing the virus and giving Americans the confidence to resume normal work and spending habits. But the notes from the two-day meeting reveal how interconnected Fed officials view a prolonged economic recession with the pandemic’s continued spread — and why Powell often asserts that lawmakers will need to do more to carry millions of Americans out of this crisis.

According to the minutes of this meeting, Fed officials looked at a scenario in which “a second wave of the coronavirus outbreak” forces “another round of strict limitations on social interactions and business operations.” This would result in “a decrease in real GDP” and “a jump in the unemployment rate” next year, the minutes said.

In other words, the officials were saying two important things. The first is that the economy won’t be able to recover until people have confidence that the virus has been contained. They say that “if” there’s a second wave that forces another round of limitations on social interactions and business operations, people will lose whatever confidence they had.

Guess what? Within about a week of their meeting, the US entered this “second wave” (really just a continuation of the first wave, but this time across the South and West (so much for the hope that the summer heat will kill the virus, which even I expressed once or twice). The first part of the wave was along I-80. The second part is along I-10). Some people had just returned to work – especially in restaurants – and now are unemployed again. This is going to be a tremendous blow to confidence and thus to growth. Once again, we can’t fix the economy until we fix the virus.

The second point was that there needs to be another big round of support to carry Americans through this new crisis. More on that tomorrow.

As I wrote this, the news came out that 4.8 million more people were working in mid-June (when the data were compiled) than in mid-May. This is of course good news, but it needs to be balanced by the fact that weekly new unemployment insurance claims in the two full weeks since then have been about 1.5 million each week, for a total of about 2.9 million. We don’t know the number for this week yet, but it will probably be around 1.5 million again, meaning that 4.4 million jobs were lost – and given the new wave of shutdowns in the South and California, it’s very unlikely things will turn around next week. In other words, while we had 4.8 million new jobs in June, the July report could well be an even bigger loss than 4.8 million. Fix the virus, and we’ll fix the economy. Don’t fix the virus, and we’ll never fix the economy.


The numbers
Because the projected deaths numbers didn’t change very much from yesterday to today, I left that table out. The actual numbers below are updated as usual.

I. Total deaths
Total US deaths as of yesterday: 130,798
Increase in deaths since previous day: 675
Yesterday’s 7-day rate of increase in total deaths: 5% (This number is used to project deaths in the table above; it was 5% yesterday. There is a 7-day cycle in the reported deaths numbers, caused by lack of reporting over the weekends from closed state offices. So this is the only reliable indicator of a trend in deaths, not the three-day percent increase I used to focus on, and certainly not the one-day percent increase, which mainly reflects where we are in the 7-day cycle).

II. Total reported cases
Total US reported cases: 2,780,152
Increase in reported cases since previous day: 52,156 First time over 50,000.
Percent increase in reported cases since yesterday: 2%
Percent increase in reported cases since 7 days previous: 13%

III. Deaths as a percentage of closed cases so far in the US:
Total Recoveries in US as of yesterday: 1,164,794
Total Deaths as of yesterday: 130,798
Deaths so far as percentage of closed cases (=deaths + recoveries): 10% (vs. 10% yesterday)
For a discussion of what this number means – and why it’s so important – see this post. Short answer: If this percentage declines, that’s good. It’s been steadily declining since a high of 41% at the end of March.


I would love to hear any comments or questions you have on this post. Drop me an email at tom@tomalrich.com

Comments

Post a Comment

Popular posts from this blog

The tragedy in India

For a great account of what’s going on in India, read this WaPo article. And read this Atlantic article for a good commentary on how India’s wealthier class ignored the lessons of the 1984 Bhopal disaster and let the health care system stagnate, leaving the country unable to handle this sudden surge in the virus. Although it's wrong to say the system stagnated. For the wealthy, it became (and remains) world-class. Does this remind you of another health care system that, at least in the early days of the pandemic, was overwhelmed?  Both articles call attention to the Modi government’s failures, but they both try to spread the blame around. Yes, others are responsible, but the fact that – after a terrible response to the first wave of the virus – the government got lulled into thinking they’d beaten it, so they could open up completely (including holding big political rallies and allowing the annual Kumbh Mela to take place – this year in Haridwar, which I’ve visited and can ...
Read more

The Indian variant

The numbers keep improving every week. Both new cases and deaths grew at the same 0.7% rate in the past week, vs. 0.9% for both cases and deaths the previous week. And average daily deaths in the past week were 573. For perspective, the last time deaths were this low was March 31, 2020. But given that daily deaths hadn’t gone above 10 until March 15, the fact that they’d accelerated to 468 on March 31 was a bad sign (at the time, my big concern was that total deaths would end up in the low tens of thousands. In fact, they passed 600,000 last week). This morning, WaPo ran a story on the new Indian variant’s arrival in Britain, where it passed 2,000 cases recently. It seems to be at least 50% more transmissible than what we used to call the UK variant, but which is now the dominant variant in both the US and Britain. And that variant in turn easily displaced what had been the previous dominant variant in both countries, since the beginning of the pandemic (in fact, I remember a lot o...
Read more

Deaths and Recoveries

I’m not bothering with my usual Numbers section today, since the 1-day and 7-day rates of increase in deaths and cases haven’t changed at all, and the ratio of deaths to closed cases remains at 17%. The projected deaths numbers are close to what they were yesterday. I haven’t discussed the ratio of deaths to closed cases for a while, although I’ve been reporting it. To refresh your memory, this is the ratio of total Covid-19 deaths so far to “closed cases”; closed cases is the sum of deaths so far and “recoveries” so far. The fact that the US rate is 17% means that, of all closed cases so far in the pandemic, 17% of them have resulted in death. This is down substantially from the initial value of 41%, in late March, when Worldometers started reporting recoveries. But it is still quite high – it seems to mean that, if you’re determined to have a “case” of Covid-19, the odds are close to 1 in 5 that you will die. I’ve been periodically comparing the US performance in this ar...
Read more