Friday, June 26, 2020

A Terrible Covid-19 Week, with Projections to Match

Though at least this past Friday, it had seemed the United States was on the way to getting out of the coronavirus pandemic.  Now it doesn’t look that way at all.  I’m not basing that on a bad outcome, on one or two pessimistic predictions, or even on general disappointment about jobs, the economy, or our progress in daily life.  Here I have eight different articles with varying things worth worrying about.

Whether we label it a second wave or not, the word, over three months after the Covid-19 turned the nation upside down, that “U.S. Sets Record for Daily New Cases as Virus Surges in South and West” (The New York Times, June 25th) is seriously bad news.  Although states in the Northeast are far below their infection peaks, those in the South and West, especially Florida, Texas, Oklahoma, Arizona, and South Carolina, are doing the worst.  As a result, New York, New Jersey, and Connecticut, the first two the most dangerous American places in March, are, in an indication of deficient federal action, requiring that Americans arriving from states with the highest rates quarantine themselves for 14 days.

On the economic front, we have settled in to a typical 1.5 million state unemployment claims per week, putting the lie to any idea that all job movement is now people returning to work.  Ben Casselman and Tiffany Hsu’s “Continued Layoffs Signal an ‘Economic Scarring’,” from the June 18th New York Times, documented that we had 13 consecutive weeks with at least one million filings, up to 14 with The Washington Post’s June 25th Economy Alert that “another 1.48 million people filed for jobless claims last week.”  Amazingly, there had not been more than a weekly 695,000 for the previous 37 years.  As well, “Millions of Job Losses Are at Risk of Becoming Permanent,” per Olivia Rockeman and Jill Ward on June 14th in Yahoo Finance.  That is because efficiency, the largest reason for the number of jobs to decrease long-term after automation and globalization, has jumped with companies’ discoveries that they can run remarkably well without workers laid off or furloughed.  In March, almost all employees losing their income expected that, after the pandemic, they would be back on the job, but now we and they strongly suspect otherwise.  It is true that many people are resuming their pre-coronavirus employment, but, overall, we are still in serious trouble.

Over the past four weeks there were three broader looks at how we are doing with Covid-19, and all were negative.  Yascha Mounk’s The Atlantic “The Virus Will Win,” subtitled “Americans are pretending that the pandemic is over.  It certainly is not” almost forecast attitude changes since then manifested in this past Wednesday’s 700-point Dow Jones drop.  Since per one poll, the share of Republicans trusting “the information you hear about coronavirus from medical experts” went from “nearly nine out of 10” to “just about one in three” in two months, “it is now difficult to imagine that anybody could muster the political will to impose a full-scale lockdown for a second time,” especially in the states listed above, all of which Donald Trump won in 2016.  Similar sentiments were expressed by Michelle Goldberg in the June 22nd Times “America is Too Broken to Fight the Coronavirus,” along with “Republican political dysfunction” making “a coherent campaign to fight the pandemic impossible,” and the statistic that after “slowly declining,” “the number of new cases” are “up a terrifying 22 percent over the past 14 days.” 

More ambitious in scope if not longer is Annie Lowrey’s June 23rd Atlantic “The Second Great Depression.”  She projected a recovery, instead of looking on a graph like a V or a U, resembling “a kind of flaccid check mark, its long tail sagging torpid into the future.”  Given the steady and way-high unemployment claim numbers that may be most realistic, also with the Congressional Budget Office not only projecting an $8 trillion next-decade economic activity cut but expecting consumer spending to drop “$300 billion to $370 billion” each quarter through 2021 year-end.  Now, per Lowrey, “economists expect that 42 percent of people recently let go will not return to their former employers,” and, with lower tax revenues, we will have “a budget crisis for state and local governments.”  She also pointed out that “never getting the pandemic under control means never unleashing the economy.”

The good news is that Trump is, for the first time in years, a substantial reelection underdog.  I say that not because of poll results, but from, an offshore betting facility located where it is legal to wager on elections, which, as of yesterday morning, had the Democratic candidate, presumably Joe Biden, as slightly better than a 3 to 2 favorite.  This company cannot afford to be biased, as bettors would exploit that, so its lines are the most realistic actual probabilities.  Yet it is still more than four months until November 3rd, and a lot more can and will happen. 

Otherwise, we should root for a vaccine to be available by Christmas or sooner.  But until then, we need to keep evaluating our choices – and to keep our expectations in line.

Friday, June 19, 2020

The May Jobs Report, Revisited, Will Stand

The most recent Bureau of Labor Statistics Employment Situation Summary was as controversial as any I have seen.  It showed a solid improvement, including 2.5 million more jobs and an unemployment rate cut to 13.3%, although analysts had forecasted 19.8% and a 7 million loss instead.  I didn’t believe it, calling these outcomes “severely in error,” citing the report as saying “BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address this issue,” and mentioning the possibility of deliberate distortion.  On its release date and soon afterwards, many commentators, from economist Paul Krugman to former Vermont governor Howard Dean, voiced similar concerns. 

Since then, though, a flurry of articles, all in the New York Times, have defended these results.  Ben Casselman, in his June 8th “No, the Jobs Report Wasn’t Rigged.  Here’s What Happened,” called it “all but impossible to manipulate the jobs numbers undetected,” and said that, classification problems notwithstanding, joblessness still dropped in May.  The muddle, per Casselman, came from people describing themselves as ““employed but absent from work” – a category meant to reflect vacation, family leave or other temporary absences.”  Clearly, many people invoked this label expecting to automatically return to their labor once the pandemic abated or ended; while most will be, all the talk about the coronavirus causing permanent workplace changes suggests a large number of others will not return.  And the question remains:  Just how bad was the American jobs situation in mid-May?

Two others were released not only in the same place but on the same date.  “About Those Jobs Numbers…” from the Dealbook Newsletter, said “the job growth reflected mostly laid-off or furloughed workers returning to their jobs,” and that, per Neil Irwin of the Times, we are seeing an “epic collapse in demand.”  Krugman asked “Will the Jobs Report Destroy Jobs?” by impeding further “emergency aid” in part responsible for recent economic improvements, and projected that “there will soon be many more layoffs unless aid comes soon.”  “Don’t Cheer Too Soon.  Keep an Eye on the Core Jobless Rate,” on June 15th by Jed Kolko, just added to the murkiness, but, echoing Krugman, said that May’s output “could give false hope, and lead to complacency about the labor market from public officials.”  

Overall, what can we keep and reject from these updates?  Per Casselman, a previous BLS chief said that group is “extremely reluctant to make any changes, in part because doing so would invite charges that the agency was massaging the numbers for political or other reasons.”  Indeed we can’t have that, even if the data we did get was poor.  Expect no corrections from me or anyone else.  But we don’t, either, need to jump to the conclusion that the economic side of the crisis will soon be over.  June’s data, which is now being collected, will tell us more, and we can go from there, as well as we can.

Friday, June 12, 2020

The Coronavirus: Must We Lose, Give Up on It, or Fail the Marshmallow Test?

United States response to the COVID-19 pandemic is now solidly in a new phase.  We’re past the time when mandated closings dictated what we could or could not do, and are moving on into “reopening.”  With that, there has been a flurry of views suggesting we, collectively, are not doing so well. 

When Paul Krugman said “America Fails the Marshmallow Test” in the June 9th New York Times, he referred to “a famous psychological experiment that tests children’s willingness to delay gratification” by offering them one marshmallow now or two in 15 minutes.  While “other advanced countries, even hard-hit nations like Italy and Spain” now have sharply reduced new infection rates, “it now looks likely that by late summer we’ll be the only major wealthy nation where large numbers of people are still dying” from the virus.  He named South Korea, one of the most prosperous and densely packed countries in the world, and New Zealand, elsewhere in the news for now having zero cases, as achieving great success by not only getting the most from social distancing but by implementing “a regime of testing, tracing and isolating, quickly identifying any new outbreak, finding everyone exposed and quarantining them until the danger is past.”  He blamed us being “too disunited, with too many people in the grip of ideology and partisanship.”  Americans, judge thyselves.

Avoiding the latter, columnist Ross Douthat, in the June 7th edition of that same publication, came out with “Why the Coronavirus Is Winning.”  He quoted a computer science doctoral student (of all people) reminding us that all the organism “wants is targets,” is totally unaware of and unresponsive to “the elaborate social nuances humans have carved out through patterns of communication, representation and discourse,” and in the process “has exposed how much of Western society… is permeated with influential people who have deluded themselves into thinking that their ability to manipulate words, images and sounds gives them the ability to control reality itself.”  Douthat tracked resistance to avoiding coronavirus exposure as starting from Republicans, “who embraced the idea that economic carnage was just the result of misguided government policy,” despite crashing demand being roughly concurrent with legal restrictions, and, after George Floyd’s death, moving “to the public health establishment, many of whose leaders are tying themselves in ideological knots arguing that it is not only acceptable but essential, after months circumscribing every sort of basic liberty, to encourage mass gatherings to support one particular just cause.”  With those most responsible for objective public policy now infected, so to speak, Douthat proclaimed that “there will be no further comprehensive attempt to fight the virus.”  At the least, we must prepare for that possibility.

Observing the same variable standard began “America is Giving Up on the Pandemic,” by Alexis C. Madrigal and Robinson Meyer in The Atlantic on June 7th.  They say “Americans may wish the virus to be gone, but it is not,” as, outside the Northeast, “cases have only plateaued,” and “there’s no point in denying the obvious:  Standing in a crowd for long periods raises the risk of increased transmission of SARS-CoV-2,” with head epidemiologist Anthony Fauci calling these protests and subsequent police actions “a perfect set-up” for virus proliferation.  As well, United States residents “never stayed at home to the degree that most Europeans have.”  Overall, per Madrigal and Meyer, “the problems with our response to the pandemic reflect the problems of the country itself” – I add that they also illuminate cultural differences, specifically our higher independence and risk-taking, the same things that assure that our life expectancy will not match the likes of those in Japan or Norway.

Overall, our chance of getting or giving the coronavirus is now, more than ever, a function of our individual choices.  A great-seeming article idea, which precipitated “When 511 Epidemiologists Expect to Fly, Hug and Do 18 Other Everyday Activities Again” by Margot Sanger-Katz, Claire Cain Miller and Quoctrung Bui in the June 8th New York Times, was neutralized by respondents’ overriding view that it would depend on availability of “an effective vaccine or treatment,” but still provided worthwhile information.  Activities least likely for quick epidemiologist resumption were “sporting events, concerts and plays,” with most expecting to pass them up for more than a year.  “Weddings and funerals,” “airplanes,” and “visiting the elderly” were the most mixed and controversial.  But our own preferences and situations must dictate.  For me, I expect to fly within the year, but think my Chewbacca hairstyle is a small price to pay for avoiding close contact with someone who has had that with many others.  Group protest marches are out, but I can walk for exercise without a mask all I want, as here I rarely get within 20 feet of other pedestrians let alone 6.  As carryout is fine, I don’t want to eat at even a virus-modified restaurant.  You need to think about your own choices, as this thing isn’t ending soon and the law won’t protect you anymore.  Just don’t catch yourself settling for one marshmallow now instead of two soon, as the answer to the title question is “no.”

Friday, June 5, 2020

Totally Unexpected May Jobs Report Leaves Unemployment Lower and Jobs Added – AJSN Shows Latent Demand at 32.1 Million, Another Improvement

When the paragraph introducing this morning’s Employment Situation Summary popped up at its usual 8:30 on the Bureau of Labor Statistics site, I thought I was reading the wrong thing.  Here we were, expecting something like the published projections of 7 million more jobs gone and 19.8% unemployment, and both actually improved.

Per the document, we gained 2.5 million net new nonfarm positions, compared with April’s 20.5 million loss, and seasonally adjusted joblessness is down 1.4% to 13.3%.  Most other numbers followed the modest but significant improvement, with the labor force participation rate up 0.6% to 60.8% and the employment-population ratio rising 1.5% to 52.8%.  The count of people working part-time for economic reasons, or holding on to less than full-time work while seeking that, shed 300,000 to 10.6 million, and average private payroll nonfarm hourly wages fell 26 cents, no doubt due to more low-paying jobs being actually or allegedly reinstated, to $29.75.  The number of those unemployed for 27 weeks or longer, almost irrelevant to the current situation, gained almost 300,000 to return to March’s 1.2 million.  Unadjusted joblessness matched the adjusted version by losing 1.4% and came in at 13.0%.

The American Job Shortage Number or AJSN, the metric showing how many currently unavailable positions could be quickly filled if all knew they were out there, lost 2.2 million from April’s all-time record, as follows:

All but 400,000 of this upturn is from lower official unemployment, with almost all the rest from fewer people wanting to work but not looking for it for a year or more.  Compared with May 2019, the AJSN has gained 16.5 million, most from huge increases in these same two categories.

What happened?  The notes with the BLS numbers gave several possible reasons:  replacement of surveying at their regional data collection centers with more phone use, a 67% household survey response rate down from about 82% before coronavirus’s effect, and a possibility of confusion from workers still technically employed but “absent from their jobs” along with classification mistakes on people with other gray-area work statuses.  It seems certain that if complete lack of pay would make workers on payrolls officially unemployed, the rate would be far higher, and might indeed be roughly 20%.  As a result, “BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address this issue.”  We can only hope this is not a political scandal.

Accordingly, this data is not only obsolete, as was the case for the last two versions, but severely in error.  There is a good chance the BLS will issue a correction or at least a corrective estimate, and reopenings may have made 13.3% a reasonable estimate for today, but in the meantime, the turtle went backward, not forward.