Thursday, December 24, 2020

American Changes for 2021-2022 – I

A worthy topic is what our country will be like once this pandemic has greatly faded, which it will do over the next two years from some combination of deaths, people immune from vaccines, and people immune from previous infection.  There has been a steady stream of declarations.

The first, David Brooks’s “The Nuclear Family Was a Mistake,” was actually pre-COVID, turning up in the March 2020 Atlantic.  Brooks has written books on cultural issues, and here made a 30-page case that our most common three-plus-member family arrangement, relatively new to our species, is not optimal.  A full review of this thoughtful work would take much more than a paragraph, but the main points he made were that extended families better withstand relationship breakups such as divorces, they socialize children more effectively and more representatively, lower-income people would suffer less with them, kinship would be strengthened, and in them loneliness is vastly less of a problem.  We have moved on economically from the Industrial Revolution, when the nuclear family became predominant, and it may be time to do that socially.

The same publication on April 15th featured Olga Khazan’s “How the Coronavirus Could Create a New Working Class.”  It was misnamed, as it was about a new movement, and focused on making a case for better treatment of low-paid, infection-susceptible employees instead of explaining why that might actually happen.  True, “in 2021, the American working class might seize their moment,” but since publication the impetus for that seems to have faded. 

Ravin Jesuthasan, Tracey Malcolm, and Susan Cantrell looked at employment itself in “How the Coronavirus Crisis is Redefining Jobs,” on April 22nd in the Harvard Business Review, suggesting “three ways to shift work, talent, and skills to where and when they are needed most, thereby building the organizational resilience and agility necessary to navigate uncertain times and rebound with strength when the economy recovers”:  they were “make work portable across the organization,” “accelerate automation,” and “share employees in cross-industry talent exchanges.”  All are good, especially with the second suggested as it at least ostensibly “can speed up response times and free agents from transactional tasks so that they can focus on responding with the empathy and emotional intelligence that customers need now more than ever,” and all have surely been practiced more as the pandemic has rolled on.

There’s merit in never saying never, and in forever avoiding the last title word in Derek Thompson’s April 27th The Atlantic “The Pandemic Will Change American Retail Forever.”  Thompson saw “the big acceleration” of trends, such as department stores and the malls they anchor going away, along with “the flattening of the American city” with small business closing, “the end of the golden age of restaurants” especially in the likes of New York where “thin margins require filling every square inch with paying customers,” and “the all-delivery economy” assuming that such utility would continue even when need for it has gone.  I like better his thought that open storefronts and resulting lower rents will let neighborhoods such as Greenwich Village become eccentric again – thirty dollars might never again pay the rent on Bleecker Street, but it might not take $3000 either. 

Uri Friedman’s May 1st The Atlantic “I Have Seen the Future – And It’s Not the Life We Knew” is now obsolete, as it did not consider the effect of vaccines and was written before Denmark and South Korea, which Friedman praised for beating the pandemic, had serious relapses.  This story displayed the dangers of assuming present trends will continue, which in 2020 have not.  David Brooks returned, in the June 25th New York Times, with “America is Facing 5 Epic Crises All at Once” – in addition to “losing the fight against Covid-19,” he named “a rapid education on the burdens African-Americans carry every day” about which “public opinion is shifting with astonishing speed,” a “political realignment” especially around what it means to be Republican, “a quasi-religion” which he named “social justice” “seeking control of America’s cultural institutions” with opinions actually “weapons” meaning “words can thus be a form of violence that has to be regulated,” and that “we could be on the verge of a prolonged economic depression.”  Brooks ended with “the pragmatic spirit of the New Deal is a more apt guide for the years ahead than the spirit of critical theory symbology.”  Well, now that we will soon have a normal president…

David Leonhardt’s July 10th New York Times “It’s 2022.  What Does Life Look Like?” didn’t even attempt to answer that question.  He pointed out the ways Americans went back on track after financial crises (still bought stocks), after Obama’s presidency (no “racial conciliation”), after September 11th (more and more airplane passengers), and after the Vietnam War (“extended foreign wars without a clear mission” became even longer and more common), and then offered only three vague and obvious projections.  Brent Schrotenboer got more specific in the September 22nd USA Today’s “What could our lives be like in 2025?  Futurists think Americans may eat, fly and go to school differently post-COVID.”  He had “restaurant reinvention will follow decay” with emphasis on “smaller, more intimate experiences” and places being “more fluid in their offerings,” “’Frontier Spirit United’ will sort of be a thing” with
fewer brands in general,” “your reality will come by remote control” as organizations continue such practices after pandemic’s end, “air and gold will be sensible investments” with the former pushing demand for purification systems, and, continuing what Thompson wrote, “malls will be for Amazon, golf, pets and kitchens.”  All reasonable.

Finally and most recently, Farhad Manjoo threw a damper on forecasts of a great urban exodus, with “Why Should We Ever Return to Living and Working So Close Together?” in the December 22nd New York Times.  He answered that by saying that cities were “indispensable as engines of economic growth, catalysts of technological and cultural innovation,” as well as being “one of the most environmentally sustainable ways we know of for housing lots of people.”  Manjoo called the coronavirus crisis a chance for change, that it “does not have to kill cities – just our old idea of what cities were, how they worked, and who they were for,” and that “cities created the future” so “now we must secure theirs.”   

On New Year’s Day, what I think will happen and not happen.

Friday, December 18, 2020

A Week Before Christmas: Where We Are Going on Jobs, the Economy, and COVID-19


To start with the worst news, here is yesterday’s New York Times world map of coronavirus infection rates, with purple the highest: 

Our country comes in at 64 new daily cases per 100,000 population, exceeded, around the globe, only by eight in Europe, the most populous Serbia.  The 7-day average of new world infections, again on each individual day, was 631,803, another all-time high, as was the 11,319 deaths.

Back home, we had 935,000 new state unemployment claims filed last week, rising along with infection rates and over four times its consistent pre-pandemic result.  In the December 14th New York Times “What Happens to the Unemployed When the Checks Run Out,” Eduardo Porter cited a Century Foundation study showing that 12 million workers are now poised to lose their jobless benefits the day after Christmas.  However, a rescue is underway, documented in yesterday’s “Closing In on Stimulus Deal, Lawmakers Clash Over Fed’s Role,” by Emily Cochrane and Jeanna Smialek, also in the Times.  Headed by Senate Majority Leader Mitch McConnell, now choosing to further marginalize the president now doing little other than babbling like a madman about having won reelection, “the emerging package was expected to include direct payments of $600 for American families and children… as well as an extension of more generous unemployment programs… (and) a revival of enhanced federal unemployment benefits,” this time $300 weekly, “along with billions of dollars for small businesses, vaccine distribution and schools.”  Per the title the senators and representatives still have a few bugs to iron out, but since McConnell said “we need to complete this work and complete it right away” and “the Senate is not going anywhere until we have Covid relief out the door,” it’s going to happen.  Kudos to McConnell and the others – legislative focus and horse trading have come back. 

On the vaccine front, progress is brisk.  With approval of Pfizer’s product last week, 2.9 million doses – which according to some reports may actually be well over 3 million – were shipped a week ago and are now being administered.  And yesterday, per Denise Grady et al. in the New York Times, “F.D.A. Panel Endorses Moderna’s Covid-19 Vaccine,” and formal authorization, expected today, “would clear the way for some 5.9 million doses to be shipped around the country starting this weekend.”  The Moderna product “can be stored at normal freezer temperatures” and so “can go to more places.”  There are other vaccines in the pipeline as well.  While I think choosing to participate is clear-cut, according to Simon Romero and Miriam Jordan’s “The Vaccines Are Coming.  A Divided and Distrustful America Awaits,” in the December 11th Times, other objections include possible side effects, the expected conspiracy theories, and even “a crushing guilt in getting a vaccine that my child would not have access to at the same time.”  Well, some concerns are better than others.

We end with good news, for investors anyway.  Still in the Times, Wednesday’s “Wall Street Sees Cold, Hard Cash in Vaccine Storage” by Andrew Ross Sorkin et al. reported that “private equity firms are pouring money into small companies that can store and help transport fragile coronavirus vaccines at required Antarctic temperatures.”  One well-positioned firm is CryoPort, “whose products can store matter at minus 180 degrees Celsius,” vastly colder than even the Pfizer vaccine needs.  When you consider that such a company can also provide household icebox-type capability, you have a fine opportunity – or would have a week or two ago. 

Expect next week’s post on Thursday, Christmas Eve.  Stay close – but not too close.

Friday, December 11, 2020

Small Businesses: Depressing Now, A New Life Later

It’s been sad to see Congressional Republicans putting large firms at the top of their pandemic stimulus bills.  Of all the people and organizations suffering, they probably need help the least, given extra-low interest rates, ample assets usable as loan collateral, and if all else fails great legal latitude in ridding themselves of debt while continuing operations.  Smaller enterprises are much more vulnerable, and employ most Americans, so need at least equal consideration anyway – what has been happening with them?

Many don’t exist anymore, as per Frank Miles’s November 29th Fox Business “Nearly one-third of NY, NJ small businesses reportedly closed in 2020,” which, per the subtitle and first sentence, only includes Covid-19-caused permanent shutterings.  He reported the national average as 29.8%. 

As for crisis payments, “More than half of emergency small-business funds went to larger businesses, new data show” (Washington Post Business Alert, December 1st), with “5 percent of the recipients” getting “more than half of the money from the Treasury Department’s loans for small businesses,” as “about 600 mostly larger companies, including dozens of national chains” got the Paycheck Protection Program’s $10 million maximum.  Alfredo Ortiz recommended extending that plan in the December 4th Fox Business “It’s Defcon 5 for America’s small businesses, this is what has to happen next.”  His statement that ”experts assume that the country will achieve vaccine-induced herd immunity by May,” on which he based the need to renew that program for only “a few more months,” is haywire, and he did not address where its money is going now, but even if it turns out to be for all of 2021 it would be worthwhile.

I don’t think, though, that we need to take the suggestion, “Let’s Talk About Higher Wages,” proposed by the New York Times Editorial Board on November 28th.  Valid points here are that people spending money instead of mainly hoarding it is good for the economy, and that tax cuts would not now be “a simple formula for economic growth,” but a time with many local businesses barely surviving is not one to force across-the-board pay increases.  The board called the stimulus effect of reducing taxes “tired,” but the other ideas they offer to support the vague notion of raising pay deserved that adjective more.

James Langford, in the November 27th Fox Business, forecast that “US economy sprints toward normal in 2021 but with coronavirus scars.”  In the piece, Bank of America’s head U.S. economist Michelle Meyer expected that “the country will welcome back experiences once it is safe, but we do anticipate there will be some scarring,” with the worst of the pandemic soon to follow and gross domestic product possibly now decreasing.  Indeed, there are three reasons why we won’t see March 2020 economic levels for a long time:  people’s reservations about spending money on many things even after the main danger is gone, what might be more than one-third of Americans refusing any vaccine, and yet-unknown changes in habits possibly reducing out-of-home activity.  Although we can project with confidence that most United States residents will be vaccinated in time for normal family holiday gatherings next year, we simply don’t know much more.  These developments would mean more small business failures in the next several months, but a solid chance of better times after that.

Except for the also nearly indisputable proposition that Joe Biden’s election will reduce Covid-19 cases, hospitalizations, and deaths, what might come from him and his Treasury Secretary nominee Janet Yellen?  Unfortunately, Giovanni Russonello’s November 17th New York Times “Biden’s Economic Plan for the Virus” didn’t offer much beyond that after the president-elect met with them, “C.E.O.’s and the union bosses had had agreed that the government must act boldly to bring the economy back up to speed.”  Since then, Biden has encouraged people to wear masks and practice social distancing but has not proposed any legal requirements, a stance good for small ventures which can set safety standards as they see fit.

In the November 29th Business Insider, Ben Winck’s “Here’s how the US economy could transform under Biden after his appointment of Janet Yellen as Treasury Secretary – starting with sizable stimulus,” offered what might be called educated speculation.  He projected a “multitrillion-dollar” 2021 relief package, better cooperation between governmental financial entities as Yellen, “if confirmed, will be the first person to have run the Treasury, the Fed, and the White House Council of Economic Advisors,” offers more “focus” on her specialty of understanding employment and the labor market, and has shown an attitude of “recovering first and dealing with government debt later.”  She is also likely to keep interest rates low, her bias in the past and especially well justified now.  All of these are favorable for local enterprises.

So how should small business owners view the future?  The ideas in the last three articles are remarkably consistent, pointing toward survival followed by real opportunity.  We have consistently heard from those working with the pandemic that people need to maximize their chances of arriving alive to the post-coronavirus world.  That goes for small businesses as well – it’s what we and our enterprises both need to do.

Friday, December 4, 2020

The November Employment Report: Despite Pandemic Surge, Bad News, With AJSN Showing Latent Job Demand Still at 21 Million


We’re not doing well, folks.

This morning’s Employment Situation Summary had exactly five favorable things.  The seasonally adjusted and unadjusted unemployment rates each improved 0.2% and are now at 6.7% and 6.4%.  Accordingly, the number of jobless came down 400,000 to 10.7 million.  We added 245,000 net new nonfarm payroll positions, which though well below a 450,000 forecast is still positive.  The number of people on temporary layoff fell a similar amount to 2.8 million.

The rest of the report, though, was as bleak as some expect this winter to be.  Those officially jobless for 27 weeks or longer now count 300,000 more, or 3.9 million.  The two statistics showing best how many Americans are working or involuntarily removed from that, the labor force participation rate and the employment-population ratio, dropped 0.2% and 0.1% respectively and are now at 61.5% and 57.3%.  Those working part-time for economic reasons, or looking thus far unsuccessfully for full-time positions while keeping shorter-hours ones, held at 6.7 million.  Average hourly private nonfarm payroll wages, a reverse indicator since its large early-pandemic increase was from lower-paid workers disproportionately losing their jobs, gained another 8 cents per hour to $29.58. 

The American Job Shortage Number or AJSN, the figure showing how many more positions could be filled if all knew they were easy to get, improved 47,000 on official unemployment’s drop barely offsetting rises in almost every category of marginal attachment, in the second through eighth rows below, as follows:

Those claiming no interest in work increased again, as it usually does when jobs are scarce.  The share of the AJSN from legally defined unemployment fell to 44.1%, down 1.4%.  Compared with a year ago, the AJSN has gained almost six million. 

If this side of the jobs-and-pandemic coin was tarnished, the other was smashed up.  Per today’s New York Times, from October 16th to November 16th the 7-day national average of new daily Covid-19 infections jumped 176% to 155,532.  The same for daily deaths went to 1,155, up 66%, and that for the number of hospitalized patients soared 96% to 73,268.  All three have increased further since.

To what does all this add up?  We are sort of holding the line on employment, though the number of people working fell 230,000.  More people are taking refuge in statuses of marginal attachment.  The strange thing is why this set of employment numbers, given the out-of-control coronavirus situation, is as strong as it is.

Clearly our governments are making the wrong choices.  If fewer people were working in harm’s way, losses which could be mitigated by further support and stimulus packages, the pandemic numbers would drop.  Two hundred seventy-six thousand Americans have died from the virus, many while pursuing paychecks, and we’re nowhere near done.  With 2021 vaccine availability almost certain for all living Americans, that is needless.  As for the turtle, he didn’t move and can barely breathe.