Friday, September 25, 2020

The American Economy, As It Stands and May Soon Be

This month, we have seen a lot of updates on how business and personal prosperity are doing, along with their immediate prospects.  How does it look?

“A Top Fed Official Warns That Economic Risks Aren’t Over,” by Jeanna Smialek in the September 1st New York Times, related that Federal Reserve governor Lael Brainard claimed “a lot of uncertainty” and that “downside risks continue to be important,” disagreeing that we have already seen the worst from the pandemic.  It also included the information that the Fed, sensibly, “will now aim for 2 percent inflation over time, instead of as a more or less absolute goal,” and expects to keep interest rates as is even if it slightly surpasses that mark.  Although money supplies have shot up since March, it is still not circulating enough to cause that problem.  Per a New York Times article by Justin Wolfers the next day, though, “Inflation Is Higher Than the Numbers Say,” as “people are buying more of those goods whose prices are rising the fastest,” online grocery shopping is more expensive, and “the quality of many services has gotten worse,” the latter including, as examples, restaurant meals, college courses, and therapy sessions.  How we measure inflation will, indeed, either need to change or be accepted as being less accurate. 

Yes, “Americans still spending money despite expiration of $600-a-week unemployment aid” (Fox Business, also September 1st), though more than expected.  A J.P. Morgan economist saw little worsening, let alone a disaster.  I think the difference has been in the general attitude toward Covid-19, that more Americans have accepted that our situation will not be changing soon, and so are not waiting to spend until it does.  There are, of course, exceptions galore, but this is encouraging.

On September 7th, also in the Times, Richard V. Reeves and Christopher Pulliam surprised by telling us about “The Tax Cut for the Rich That Democrats Love.”  Three very prominent members of that party want to end the $10,000 deductions cap, which can cost those in the highest income brackets a great deal.  The authors ended by saying that “it is a shame to see Democrats urging a big tax break for the richest, whitest families, which is arguably the very last thing the country needs right now” – except, perhaps, that bigoted attitude.

Two indications that the economy was stronger than we may have thought were the subject of “Median U.S. household income rises 6.8% to $68,700 in 2019, poverty rate falls for fifth year,” by Paul Davidson in the September 15th USA Today.  I like to see medians, which on such numbers these days are especially valuable, but assessing poverty has long been muddled and controversial, as products fall as well as rise in price and some become newly available.  The data’s keeper, the Census Bureau, however found real respondent bias in that those losing their jobs were less likely to participate, which, if such numbers were compiled today, would be much worse.

The clearest statistic yet I have seen showing such charges are unsustainable was that “9 of Every 10 Restaurants and Bars in N. Y. C. Can’t Pay Full Rent” (Mihir Zaveri and Daniel E. Slotnik, The New York Times, September 22nd).  Allowing indoor dining at 25% of capacity, scheduled for next week, won’t help that much, and sky-high Manhattan payments will need to come down.  Property values will also dive, and the city will come under pressure to reduce taxes.  The free market, which caused these amounts of money to be so large, works both ways, and now it has begun to speak loudly. 

An obvious need and an obvious source of revenue became clear in “Gas tax hikes pile up:  States become desperate for road repair revenue as COVID-19 reduces driving,” (Nathan Bomey, USA Today, September 23rd).  Gasoline averaged $2.18 per gallon, or 49 cents lower than a year before, this week, which means higher levies on it will be less painful – some planned or recently implemented are 9.3 cents per gallon more in New Jersey, 5 cents a gallon higher in Virginia, and smaller hikes in Nebraska, California, South Carolina, and Alabama.  An oil analyst claimed that we are now using about 15% less than “normal,” which, if anything, seems high.

In general, “200,000 dead:  COVID-19 is creating ruinous economic damage that will take years to repair” (Paul Brandus, USA Today, September 22nd) is both an accurate headline and a suitable summary.  Among other concerns, we have lower Social Security intake moving its projected trust fund exhaustion date up to 2031, a loss of many workers from the labor force becoming permanent as they will no longer have the skills to be rehired, and mental health problems becoming more common.  These results, “intertwined and destructive,” will end at various times, most long after vaccine distribution.  But our overall charge is clear – to roll with the punches and be as healthy and ready as we can when the economy, and life, moves on.

Friday, September 18, 2020

Autonomous Vehicles Fizzling Out – Why, and What Does That Mean More Generally?

 Aah, for the old days, when the future seemed so bright. 

I’m not talking about just before the pandemic started, though that would qualify too.  I’m talking about the fall of 2017, only three years ago.  Then there was so much news about driverless cars, certain to upend American employment and vastly more, that, so other topics could squeeze in, I needed to put formal limits on how much I would write about.  For example, The New York Times devoted almost an entire Magazine to different aspects of what seemed to be an inexorable mass of social changes, not to mention a total ground transportation makeover – do you remember the picture of the steering wheel moldering in the earth? 

Now, though, progress and milestones here seem to have come to an end.  Published articles are so scarce that I will be going back over four months to get you the latest. 

We begin with “Self-Driving Cars Are Taking Longer to Build Than Everyone Thought,” by Roberto Baldwin, dated May 10th but from the April 2020 issue of Car and Driver.  That publication won’t need to consider any name changes for a while, as “humans take the ability to manage the cognitive load of driving for granted, but building a computer system that can match our abilities is extremely difficult.”  That reminded me of the longstanding lack of automated facial recognition, which ended, though much later than observers around say 1990 thought.  Per Baldwin, “years of research and development are still needed before Level 4 autonomy – in which the car can safely perform all driving tasks but only in limited areas – is accessible to consumers” – in fall 2017, that got a consensus projection of completion by the next year’s Christmas.  Now, such forecasts include Nissan saying “that it’s unlikely to produce self-driving cars before the end of the decade,” and companies are still dealing with a need for common standards, what safety levels consumers will need, and known or feared resistance from the one-off 2018 pedestrian death. 

Soon after, The New York Times published “This Was Supposed to Be the Year Driverless Cars Went Mainstream,” on May 13th by Cade Metz and Erin Griffith.  They reminded us that “tech companies once promised that fully functional, self-driving cars would be on the road by 2020 and on the path to remaking transportation and transforming the economy.”  They blamed the coronavirus for preventing cars from being tested with two drivers, that “start-ups spend $1.6 million a month on average” (that seems, in context, like Puppy Chow to me), and that “bigger companies are hunkering down to wait out the delays,” making it clear that they have other problems – indeed, at least one firm was still struggling with getting vehicles to restart after they waited for traffic to pass, and, in general, “the cars still made mistakes in unexpected ways.”  On the same date the Times also came out with Shira Ovide’s “Where Is My Driverless Car?,” in which she claimed that “the ubiquitous computer-driven car that seemed just around the corner for a decade is now further away than ever,” and blamed mostly technology difficulties. 

One possible semi-solution for driverless technology companies has been, per Baldwin, focusing instead on assistance structures for other vehicles.  However, per “AAA: Partially automated driving systems don’t always work” (Fox Business, August 6th), those aren’t ready either, with AAA researchers finding such technology from five automakers producing “problems every eight miles,” including staying in lanes and avoiding stationary vehicles in their paths.  Overall, “researchers said little had changed from a test of four other vehicles in 2018,” with drivers getting “overly reliant on the technology” offsetting much of its advantage. 

What’s really going on here?  The problems are not financial – there has never been so much excess capital (if you doubt that, look at your bank’s interest rates), and potential profits, during most of our lifetimes, are into the trillions.  The problems are not pandemic-related – for one thing, very well-paid engineers and their families could form pods with others and end the multiple-safety-driver issue.  The problems are not technical – driving is algorithmic, and with continuing intense effort it can be solved.  The problems are not with government regulations or slow federal movement – it’s all in private, generally at least potentially fast-moving hands.  The problems are not excessive complexity – we landed on the moon 51 years ago, with only rudimentary software and project management knowledge.  The problems are certainly not from a lack of use or applications for autonomous vehicles.

The problem is will. 

For whatever reason, Americans no longer have what it takes to complete large technical projects.  It’s an exaggeration to say that over the past 20 years the only trappings of American life which have changed are software and telephones, but not much of one.  Until we understand and fix our will problem, nothing big and good will happen, be it hyperloop or viable supersonic transportation, cures for cancer and other chronic diseases, space settlement and industrialization, or anything else you can think of that has seemed within our grasp for too long.  For now, we can kiss true technological progress, which now slows down or stops progressing when future developments seem too hard, goodbye – in driverless cars and everything else.

Friday, September 11, 2020

The Logistics of the Upcoming Vaccine, and Other Early September Coronavirus Issues and News


It’s been three weeks since I wrote a post dedicated to Covid-19.  The United States has reached a relatively stable point, with the number of cases slowly declining, to a September 9th 7-day rolling average of 36,733.  The hot spots keep changing – here is yesterday’s New York Times map, with red showing counties with 56 or more coronavirus incidences per 100,000 population over the previous 7 days:

First and oldest up is “US stockpiling 3 different types of coronavirus vaccines through ‘Operation Warp Speed’” (Megan Hanney, FOXBusiness, September 2).  The title said it – our government is quickly amassing inventories of vaccines being tested, which cannot be used now but, if the FDA approves any, will provide a running start.  A fine tactic, even if any or all turn out to be worthless. 

Preparation was also the topic of more recent pieces, such as “What We Know About the C.D.C.’s Covid-19 Vaccine Plans,” by Carl Zimmer and Katie Thomas in the September 3rd New York Times.  This three-page primer answered questions we should all have, such as “how do these vaccines work” (by exposing human bodies to weakened or inactivated virus shells or pieces of same so they can learn to resist others), and “who will get it first” (not fully resolved, but probably health-care workers, “essential workers,” and those in the likes of nursing homes), along with a description of Phase 1, 2, and 3 testing.  Some here has been updated below, but it remains a worthy one-source reference.

Next was “’Mind-bogglingly complex’:  Here’s what we know about how Covid-19 vaccine will be distributed when it’s approved” (Elizabeth Weise, USA Today, September 6th).  A Johns Hopkins operations manager, someone who should know, was responsible for the title quotation, but Weise clearly and understandably compressed its subject into four-plus printed pages.  Here we learned that “no one will be charged for the actual dose” (though insurance-plan treatment is not yet established), that “people at high risk for severe disease” may also get high priority, that the Pfizer and Moderna products now “are seen as the front-runners” among American-made efforts, that sites for vaccinations will be approved by the CDC and will order their product from their state governments, how the doses will be handled considering that the two leading contenders must be stored at -4 and -94 degrees Fahrenheit respectively, and even something about the producers’ “specially designed transportation containers.”  Once more we are reassured, by knowing that great effort has put into vaccine logistics and coordination.

Then two days ago came out “SD governor criticizes study suggesting Sturgis bike rally led to 260,000 COVID-19 cases,” by Megan Raposa in USA Today.  The Center for Health Economics and Policy Studies, located at San Diego State University, did that research, concluding that the 462,000 people attending that August event, at which masks and social distancing were far from universal, could have propagated over half a new case per person, resulting in, per another study, a $12.2 billion, or $26,500 per attendee, public health cost.  These estimates were getting heavy criticism yesterday and may change.  As of the latest New York Times data that same day, though, North Dakota had the highest number of new daily per-capita Covid-19 cases of the 50 states, followed by South Dakota.  It is certain that such a huge and arguably imprudent gathering would be bad for the pandemic, regardless of exact or even approximate numbers. 

Also September 9th and in the same publication, by its Editorial Board, came “Rushing coronavirus ‘Holy Grail’ vaccine could turn into a curse.”  It warned of “politics bullying science” being able to “cripple health institutions’ credibility for years” if “Donald Trump’s great bid for redemption after so many coronavirus failures… also fails because of mismanagement.”  Such a reelection-related tactic has at least a real chance of being attempted, and, as this piece warns, cannot be allowed to influence the FDA.  This will remain a polarized controversy, whether we want it to be or not, through at least November 3rd.

Last was one from yesterday, “Pay People to Get Vaccinated” by economics textbook author N. Gregory Mankiw in The New York Times.  From a strictly economic view, Mankiw wrote that, given the disheartening 36% of Republicans and the downright depressing 58% of Democrats saying in an NBC News/Survey Monkey Weekly Tracking Poll that they would “get the vaccine,” and that 70% to 90% of Americans would need it for the country to “develop herd immunity,” it would be worthwhile for our government to offer a monetary incentive, the amount of $1,000 per person suggested by a Brookings Institution economist.  That could be $300 billion, but would be a bargain if it completely ended the pandemic.  More food for thought, and something, as with the above topics, we will hear much more about – I will report it here.

Friday, September 4, 2020

August Jobs: People Went Back to Work While Coronavirus Cases Decreased – AJSN Down 3.5 Million as Latent Demand for Work Now 24.3 Million

Two things happened with this morning’s Bureau of Labor Statistics Employment Situation Summary which haven’t for a bit. 

First, both the 7-day average Covid-19 cases and the unemployment rate improved.  The former went from 65,418 to 51,603 from July 16th to August 16th, yet seasonally adjusted joblessness at the same time plunged from 10.2% to 8.4%.  Second, the published projection of net new positions, 1.4 million, was not only reasonable but right on the money.  We are now at 13.6 million, down 2.7 million, unemployed with an unadjusted rate, off 2.0%, of 8.5%.

The report showed us other real progress.  The count of those in temporary layoff plunged from 9.2 million to 6.2 million.  Those working part-time for economic reasons, or holding on to less than full-time jobs while looking thus far unsuccessfully for conventionally longer-hours ones, counted 7.6 million, down 800,000.  The two measures of how common it is for people to be either working or officially unemployed, the labor force participation rate and the employment-population ratio, gained 0.3% and 1.4% respectively and are now at 61.7% and 56.5%.  The downside was an increase in those out for 27 weeks or longer, up 100,000 to 1.6 million, and another gain, this one 8 cents, in hourly earnings for average private nonfarm payroll workers, which at $29.47 is elevated enough to mean that former low-pay employees are not returning in significant numbers.

The American Job Shortage Number or AJSN, the measure showing succinctly how many more positions could be quickly filled if all knew that getting one would be as easy as getting a pizza, improved 3.5 million over the previous month as follows:


We continued the trend of those marginally attached to the labor force getting fewer.  Of the July to August drop, 677,000 was not due to lower official unemployment – that included 657,000 from  a reduced count of people wanting work but not looking for it for a year or more and 135,000 from fewer people calling themselves discouraged.  However, 1.4 million more Americans claimed no interest in employment, offsetting the above by 70,000.  The share of the AJSN from those officially jobless fell from 54.7% to 50.9%.     

Although we are recovering, both from the coronavirus and from the economic shock it caused, we are still far worse than before the pandemic began.  The unemployment count and percentages are more than double what they were in August 2019, and the AJSN is 8.1 million higher.  If we can stay on track, both with employment-related indicators and with Covid-19 case counts, that will be good.  If one or the other relapses, we will be in even more trouble.  Although the turtle cannot see where he was as recently as March 2020, he, indeed, took a big step forward this month.