(What’s Left of) Our Economy: The Latest on the Virus, Lockdowns, and Jobs

Tags

California, CCP Virus, coronavirus, COVID 19, Jobs, Labor Department, lockdowns, New York, public health, states, stay-at-home, Wallethub.com, Wuhan virus, {What's Left of) Our Economy

With the release last week of the Labor Department’s U.S. state-level employment data for December, we have a great new handle on the relationship between the various lockdown and stay-at-home policies mandated throughout the country, and the still horrific toll on job losses during the CCP Virus era.

And as with recent statistics on state-level economic growth (and contraction) rates (see here and here), the numbers seem to point to the economic curbs themselves as the biggest influence on employment levels and changes, as opposed to other factors, like individuals’ virus-induced fear of using various types of in-person services (like travel) and the resulting knock-on effects throughout the entire economy.

One major indication of the mandates’ impact comes, as with the growth figures, from the outsized job losses experienced in New York and California, two states with some of the most severe lockdown regimes imposed over the past year.

In December, 2019, just before the virus began spreading to the United States, New York and California accounted for 18.37 percent of all the nation’s non-farm jobs (the Labor Department’s U.S. jobs universe.) But one year later, their employment losses came to 27.91 percent of the U.S. total.

Additional reasons for blaming the mandates for the employment damage come from comparing the performances the best and worst jobs performers, and the least and most restrictive states. As with the previous post on growth levels, the ranking of mandate strictness comes from the Wallethub.com website. (And sharp-eyed readers will note that the rankings have changed over the last few months, which makes perfect sense since the lockdown regimes’ extent has fluctuated, too.)

First let’s see the Wallethub ranks of the states with the best employment records between December, 2019 and December, 2020. (The lower the rank, the more “open” the state.)

Top 10 job performers (by % change)       Wallethub.com rank

1. Idaho: +0.6                                                          14

1. Utah: +0.6                                                             6

2. Mississippi: -1.4                                                  21

3. Alabama: -1.7                                                      12

3. Georgia: -1.7                                                       18

4. Nebraska: -2.3                                                     17

5. South Carolina: -2.4                                            10

6. Arizona: -2.8                                                       30

6. Arkansas: -2.8                                                       4

6. Indiana: -2.8                                                       20

7. Montana: -2.9                                                     13

7. South Dakota: -2.9                                               2

8. Missouri: -3.1                                                       7

9. Tennessee: -3.2                                                  19

10. Texas: -3.3                                                        28

Right off the bat you’ll see that because of ties, the Top 10 is really a Top 15 – which actually serves our purposes even better. And the big takeaway here is that with one exception (Arizona) and one near-exception (Texas), all of these states rank in the top half on the open/closed scale (26 and lower for the 50 states plus the District of Columbia).

And of these 15 states, four were among the ten most open, and twelve were among the twenty most open.

Does the reverse proposition hold? Have the most closed states generally compiled the worst employment records? Here’s what the numbers say:

Bottom 10 job performers (by % change)     Wallethub.com rank

1. Hawaii: -13.8                                                          43

2. Michigan: -10.9                                                      29

3. New York: -10.4                                                     39

4. Massachusetts: -9.1                                                49

5. Vermont: 9.0                                                           45

6. New Hampshire: -8.8                                             23

7. Rhode Island: -8.7                                                  36

8. Minnesota: -8.3                                                      32

9. California: -8.0                                                       51

9. New Jersey: -8.0                                                     34

10. Delaware: -7.8                                                      33

10. Pennsylvania: -7.8                                                35

10. Oregon: -7.8                                                         37

Because of the “tie effect,” this Bottom 10 set is really a Bottom 13. Four of them fall in the category of ten most restrictive states (ranked between 51 and 41 on the Wallethub scale), and seven more are among the next ten most restrictive states. Moreover, only one state (New Hampshire) has been in the top half of most open states. So the relationship between lockdowns and employment performance looks strong from this perspective as well.

The issue can be examined the other way around, too – by examining the employment performance of the most open and least open states. Here are the results for the ten most open states. (As with the list of ten most closed states below, the Top Ten here really is a Top Ten.) They’re presented in descending order of openness.) 

Ten least restrictive on lockdowns         Job creation rank (out of 37)

Oklahoma:                                                                15

South Dakota:                                                            6

Iowa:                                                                         11

Arkansas:                                                                   5                  

Florida:                                                                    14

Utah:                                                                          1

Missouri:                                                                   7

Wisconsin:                                                               25

Alaska:                                                                    24

South Carolina:                                                         4

Revealingly, fully half of these states were among the ten states with the best employment records, three more were in the next ten. Consequently, eight of the ten ranked in the top half on the openness scale. (Because of the “tie effect,” the top half here starts at number 19 – of 37 differing state rankings).

And although Oklahoma looks like something of an exception here (the most consistently open state being only the 15^th best jobs performer), there’s a pretty simple explanation: Oklahoma’s economy is energy-heavy, and that sector has been absolutely slammed the deep recession experienced during the CCP Virus period.

Florida, which relies so heavily on tourism, has an “excuse” as well. (By the same token, though, it’s no coincidence that the worst employment performer, Hawaii, is tourism-dependent as well, along with fellow job laggards California and, to a lesser extent, New York.)

Finally, the table below shows how the most closed states fared in terms of job loss.  These are presented in descending order of “closed-ness.”

Ten most restrictive on lockdowns          Job creation rank (out of 37)

California:                                                                  31

Virginia:                                                                     12

Masschusetts:                                                             34

District of Columbia:                                                 21

New Mexico:                                                             26

Washington:                                                               18

Vermont:                                                                    33

North Carolina:                                                          10

Hawaii:                                                                      37

Illinois:                                                                      24

Fully four of these ten have been among the five worst employment states during the virus period (including tourism-reliant Hawaii and California). Three more (Illinois, New Mexico, and the District of Columbia) joined them in the bottom half. Of the two exceptions, Virginia’s solid employment record surely stems from its status not only as a state with a strongly growing information technology sector and an army of federal workers (many of whose jobs in turn owe to federal contracting).

One last point should be remembered as well: As extensively documented, the lockdowns and stay-at-home orders have generated their own serious healthcare damage . So the states with the relatively limited mandates surely have curbed both these CCP Virus costs as well as economic damage. Meaning that the already compelling case for anti-virus measures targeting the most vulnerable rather than indiscriminately putting the clamps on businesses and other forms of activity has just grown that much stronger.

Im-Politic: Did “The Science” Give Us the Virus?

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Anthony S. Fauci, bio-weapons, CCP Virus, China, coronavirus, COVID 19, Im-Politics, Joe Biden, lockdowns, National Institutes of Health, New York, Nicholson Baker, pandemics, public health, SARS, stay-at-home, terrorism, Trump, virology, Wuhan virus

That’s a pretty stunning header, I know. But it’s anything but crazy, or even click-baity – at least if you take seriously a long, very serious, and very carefully reported article published January 4 about the CCP Virus’ origins in New York magazine, which hasn’t exactly been an enthusiast for President Trump or science- or China-bashing.

For author Nicholson Baker makes clear not only that for years before the Trump era, America’s top public health officials (who epitomize “The Science” that all the adults in the nation’s room from President-elect Joe Biden on down have anointed as the only valid sources of U.S. and global virus policy advice) pushed measures certain to boost the odds that something like Covid 19 would be created, and somehow escape from, a laboratory someplace in the world – including China.

And notably, one of the main pushers was one Dr. Anthony S. Fauci, Director of the National Institutes of Health’s (NIH) National Institute of Allergy and Infectious Diseases.

It’s important to make clear here what Baker isn’t saying. He isn’t saying that the Chinese manufactured the virus as a bio-weapon. He isn’t saying that Beijing loosed this pandemic on the world on purpose. And he certainly isn’t accusing Fauci and the rest of the public health establishment of acting maliciously.

But what he is saying is awfully damning, and urgently needs to be examined by the incoming Biden administration, the entire U.S. political and policy communities, and of course the public.  For Baker marshalls and summarizes voluminous evidence for the proposition that the most reasonable theory of the virus’ origin is not that in its highly infectious form it developed naturally in some mammal species (like a bat) and then jumped to humans (e.g., at a wet market) – the explanation offered at various times by the Chinese government and by many infectious disease specialists. Instead, the author supports the idea that it was produced by scientists from a naturally occuring mammalian virus, specifically by scientists at one of the three advanced virology facilities in and around the city of Wuhan.

And then, Baker – who is extremely careful to distinguish between facts and suppositions – speculates that “it eventually got out” by hazard. Release via “a lab accident — a dropped flask, a needle prick, a mouse bite, an illegibly labeled bottle,” he emphasizes, “isn’t a conspiracy theory. It’s just a theory.” But he rightly argues that “It merits attention…alongside other reasoned attempts to explain the source of our current catastrophe.”

But where do the roles of the U.S. and global public health establishments come in? During recent decades, as Baker reports, scientists have been conducting “’gain of function’ experiments — aimed to create new, more virulent, or more infectious strains of diseases in an effort to predict and therefore defend against threats that might conceivably arise in nature.” And many of these experiments were funded by the Fauci’s Institute at the NIH. (Similar work was being funded by the Defense Department, whose interest in bio-weapons and fighting them was reawakened by the increase in global terrorism in the 1990s and the prospect that germs like anthrax would be used to advance extremist goals. This threat, of course, materialized right after September 11 with letters containing the germs sent through the mail – in an immense irony – by a U.S. government bio-weapons researcher.)

As implied immediately above, Fauci and his colleagues had the best of intentions. But as Baker documents exhaustively, they ignored numerous warnings from fellow professionals that, in no less than two related ways, they might be creating a problem far worse than that they were trying to solve. First,in their determination to design in the lab super-dangerous bio threats that terrorists hypothetically might some day create and use, they lost sight of how their own experiments could unleash such actual threats in the here-and-now due to the real possibility of leaks (hardly unknown in the world of biological research).

In Baker’s words, “Why, out of a desire to prove that something extremely infectious could happen, would you make it happen? And why would the U.S. government feel compelled to pay for it to happen?” Echoing these worries were numerous scientists, such as Johns Hopkins biomedical engineer Steven Salzberg, who noted several years ago, “We have enough problems simply keeping up with the current flu outbreaks — and now with Ebola — without scientists creating incredibly deadly new viruses that might accidentally escape their labs.”

Second, no evidence has been found yet that any of the coronaviruses that are naturally occuring and that have infected humans (like the SARS “bird flu” – which actually came from mammals – of 2002-03) are remotely as contagious as their lab versions, or are found in animals that often come into contact with humans outside China and its wet markets. In fact, Baker quotes Rutgers University microbiologist Richard Ebright has describing Chinese virologists’ efforts to scour remote locations for animal sources of natural coronaviruses that can be supercharged in a lab as “looking for a gas leak with a lighted match.”

In addition, Fauci arguably magnified these dangers by channeling some of the U.S. government funding for “gain of function” research to the Wuhan virology labs. On the one hand, this decision made sense (as long as gain-of-function was being sought in the first place) because China has been the origin point of so many mammalian coronaviruses, and therefore the home of so many leading virus specialists. On the other hand, safety first hasn’t exactly been a national Chinese watchword.

So the implications for simply “following The Science” seem clear. And they go beyond what should be (but isn’t) the screamingly obvious point that, especially in a field as new and rapidly changing as this branch of virology, there is no “The Science.” Expert opinion almost inevitably will be mixed, and politicians and their journalist mouthpieces flocking to one side while completely ignoring the other is bound to end badly. Matters are bound to end even worse, of course, when the favored faction aggressively tries to stamp out and discredit as “conspiracy thinking” the other’s theories – as Baker shows indisputably was the case with public health authorities and experts (including Fauci) who continue to try absolving the Wuhan labs from any responsibility.

More important, this tale bears out what I and many others have written for months (e.g., here): The pandemic is a crisis with many dimensions – economic and social as well as medical. The public health establishment’s contributions are indispensible. But not only is its expertise limited. Like any other human grouping defined by common characteristics and experiences like fundamental interests and educational backgrounds and occupational environments, this establishment is influenced by its own distinctive unconscious biases and predispositions.

In this case, in Baker’s words, some of the most important are “scientific ambition, and the urge to take exciting risks and make new things.” All of which are perfectly fine and even praiseworthy – in their place.

Further, the medical dimension of the crisis is complex, too, as shown both by all the evidence of major public health costs generated by the lockdown and stay-at-home orders championed so singlemindedly by Fauci and his acolytes, and by the strong disagreements among the virologists and similar researchers laid out in such detail by Baker. So it’s the job of political leaders to take all these considerations into account, not to act as if only one cohort of advisers has a monopoly on wisdom in all relevant areas.

And let’s end on an O’Henry type note. I can’t resist pointing out that President Trump, too, has been one of those U.S. leaders whose administration has robustly funded this gain-of-function research – one of the few instances in which he’s, apparently with no objections, followed The Science.

(What’s Left of) Our Economy: The CCP Virus Lockdowns’ State-Level US Effects I

Tags

California, CCP Virus, Commerce Department, coronavirus, COVID 19, GDP, gross domestic product, inflation-adjusted growth, lockdowns, New York, real GDP, shutdows, states, stay-at-home, Utah, Washington, Wuhan virus, {What's Left of) Our Economy

One of my coolest holiday gifts came courtesy of Uncle Sam. Not a tax refund or stimulus check, but the Commerce Department’s release last week on “Gross Domestic Product by State, 3^rd Quarter, 2020.”

Seriously.

I always look forward to these data because they enable gauging how developments in the national economy are affecting individual states as well as regions, and vice versa, and this latest report is especially interesting because of all that it says about the economic impact of the highly diverse set of lockdowns and shutdowns and stay-at-home orders and the like that the states have imposed during the CCP Virus era.

This will be the first of two posts on the subject, and I’ll focus on some simple descriptive findings – many of which came as surprises to me. Beforehand, though, it’s important to lay out some warnings against drawing overly tight conclusions between a state’s economic performance and the virus curbs it’s put I effect.

Among the most important:

>The pandemic hit different states at different times, so differences in their growth rates (what these gross domestic product, or GDP, figures are particularly valuable for), in many instances have relatively little to do with their lockdown etc regimes.

>The states have highly diverse demographic profiles (e.g., average age of the population, population density) that can also produce highly diverse economic performances for reasons largely unrelated to economic curbs.

>Different state economies are also dominated by different industries, and as has become obvious, some industries’ health has been decimated by the virus (especially in-person services of all kinds like dining and travel and hospitality, but also energy) while some have held up fairly well (like manufacturing). It’s become just as obvious that many jobs that can be performed at home, and therefore the income and spending they generate have been much less affected by the pandemic than jobs requiring a worker’s presence (e.g., in those in-person service sectors).

>Finally (for now), state economies don’t exist in isolation from each other. Commuters and shoppers often cross state lines when traveling to work or stores, and their businesses often sell their products and offer their services to customers nation-wide – inevitably weakening or strengthening the impact of state-specific curbs.

Still, the new GDP-by-state numbers (which include the District of Columbia) reveal any number of important results since they take the story past the deep second quarter virus- and shutdown-induced downturn suffered by the entire national economy, as well as the strong third quarter rebound.

One big surprise: The entire U.S. economy saw output drop by 2.17 percent in inflation-adjusted terms (the gauge most closely watched) between the first quarter of the year (the last mainly pre-pandemic quarter) and the third. But two states actually managed to grow in inflation-adjusted terms (the gauge most closely watched by students of the economy): Utah (whose economy expanded by 1.04 percent in real terms) and Washington (0.44 percent).

The Washington result was unexpected, at least for me, because its West Coast location placed it closer to the CCP Virus’ origins in China, because the first virus case was recorded there in January (at least as far as is known to date), and because one of its economic crown jewels is aerospace giant Boeing, which has been hit so hard both by recent travel restriction and the safety woes troubling its jetliners.

The worst performing states, in relative (percentage terms) were less surprising. The leader here far and away was Hawaii, whose constant dollar GDP shrank by 6.67 percent) followed by Wyoming (down 5.24 percent by the same measure) and New York (4.56 percent). The Aloha State has of course been victimized by the depression in the travel and tourism industries, Wyoming is energy dependent, and New York collectively caught the CCP Virus early, when so little was known about its virulence and deadliness, and about which Americans were least and most vulnerable.

Oddly, however, the number of states that appear to have been especially hard hit economically between the first and third quarters was pretty limited. Only nine overall experienced price-adjusted contractions of more than three percent. In addition to the three biggest losers above, they were Oklahoma, Tennessee, Alaska, Nevada, New Jersey, and Vermont. And bonus points for you if you see major energy (Oklahoma, Alaska) and tourism (Nevada and Vermont) effects at work here.

Other than that, the economies of eighteen states shrank between two and three percent in constant dollar terms between the first and the third quarters – meaning that, generally, they weren’t far from the national total of 2.17 percent. The rest contracted by less than two percent or (as with Utah and Washington) eaked out some growth.

But this isn’t to say that the economic impact of the virus and related economic curbs haven’t been highly concentrated in at least one respect: A way outsized share of this production destruction has taken place as of the third quarter in just two states: New York and California.  

New York’s the champ here. During the first quarter, its economy represented 7.74 percent of the U.S. total in inflation-adjusted terms. By the third quarter, though, its $67.80 billion contraction represented 16.36 percent of the entire country’s $414.33 billion. In other words, measured by lost output, it punched more than twice above its economic weight.

During this period, California’s real GDP fell by more than New York’s in absolute terms ($74.30 billion). But its economy has long been bigger than New York’s – accounting for 14.81 percent of constant dollar US GDP during the first quarter, or nearly twice New York’s share. So its 17.93 percent shrinkage was smaller relative to the size of its economy than New York’s.

Their combined impact, however, is genuinely astonishing. Accounting for a combined 22.55 percent of the U.S. economy adjusted for inflation in the first quarter, they generated 34.29 percent of the nation’s economic shrinkage – more than a third.

And this is where the lockdown angle comes in: By one gauge of virus-era state economic regimes, (which themselves have almost all been on and off at least to some extent, thereby creating yet another complication) New York’s and California’s were among the strictest. And the next RealityChek post will examine in more detail the relationship these curbs and state economic growth.

(What’s Left of) Our Economy: How Not to Rate the States’ Economies – & Their Prospects

Tags

California, demographics, domestic migrants, entitlement programs, Florida, Forbes, government workers, immigrants, inflation-adjusted growth, innovation, Medicare, Missouri, New York, New York City, Pennsylvania, population, private sector, productivity, retirees, seniors, Social Security, taxes, William Baldwin, {What's Left of) Our Economy

Thanks to Forbes magazine, it’s possible today to teach a useful lesson about the limits of statistics and the studies they’re based on – especially if those studies seem to be intended to prove a point rather than seek the truth.

The post in question, by former Forbes editor William Baldwin, looks like it makes a claim that’s not only important but irrefutable: U.S. states whose numbers of “takers” (government workers plus recipients of government transfer – welfare – and entitlements payments) greatly exceed the “makers” (private sector workers) are in “death spirals.” But states in the opposite situation have promising economic futures. In particular, employers are much likelier to create the private sector jobs crucial to continued healthy growth in the “maker” states.

It’s easy to understand Baldwin’s reasoning. The private sector undeniably is more innovative and productive than the public sector – two of the main ingredients of that healthy growth. And states with big populations of entitlements recipients (e.g., Medicare and Social Security) are almost by definition states with older populations – raising the question of who’s going to pay for all those benefits for non-working or even only semi-retired seniors. Case closed? Not exactly.

Interestingly, doubts start arising as soon as you eyeball the author’s chart. For example, he places California in the “death spiral” category. Since the Golden State represented 13.40 percent of the entire national economy as of 2014, it’s clearly a crucial example. But U.S. government figures also make clear that California enjoyed inflation-adjusted growth last year (2.80 percent) that was considerably faster than the national average (2.20 percent). That doesn’t sound like much of a death spiral to me. And in case you’re wondering whether 2014 was an outlier, California also out-grew the nation as a whole from 2011 to 2014 – by 7.81 percent to 6.26 percent.

Demographics don’t support Baldwin’s portrait of California, either. According to the U.S. Census Bureau (click here for the various relevant spreadsheets), between mid-2010 and mid-2015, the United States population as a whole as a whole grew by 12.661 million. Nearly 58 percent of the increase came from more babies being born than legal residents passing away, and the rest came from net migration from abroad.

California was responsible for nearly 15 percent of this increase – which means that the state punched above its weight demographically. In 2010, its share of the national population was only 12.07 percent. So it looks like there will be plenty of new Californians to pay for public services and retirement costs. And although many of the nearly 835,000 immigrants to come to the state during this period were illegals, many obviously were not.

The situation in another one of Baldwin’s death spiral states – New York – doesn’t look nearly so dire, either, on closer inspection. New York’s after-inflation economic growth between 2011 and 2014 wasn’t as fast as California’s. But at 6.79 percent, it still beat the national average.

New York also lost a little population from 2010 to 2015 (22,308 residents moved away). But births outnumbered deaths by 1.59 to 1, which is a bit better than the national average. And although just over 653,000 New Yorkers moved out of the state during that period, nearly 631,000 immigrants arrived. Of course, many have been illegal and low-wage. But many others have been foreign oligarchs who have rocketed the New York City real estate market into the stratosphere. In fact, the city’s property and income tax receipts for the fiscal year ending June 30 are so immense that its budget surplus is likely to approach $1 billion. So there’s no revenue shortage there.

Now let’s move to one of Baldwin’s more promising states: Florida. The Sunshine State has handily beaten the national average on 2011-2014 growth (7.07 percent) – although its performance has been affected by the depth of its housing-bust-fueled recession. On the surface, its population trends look good, too – as has historically been the case. In 2010, Floridians represented 6.09 percent of all Americans, but over the next give years, the state’s increase came to 11.58 percent of the national total.

Less good, however, were the internals – especially for Baldwin’s “death spiral” thesis. Florida’s population growth has been powered by immigrants and Americans from other states to a roughly equal extent. Surely wealthy foreigners have been well represented in immigrant ranks along with poorly paid illegals. But anyone who knows Florida knows that many of the domestic migrants have been retirees. That can’t bode well for the tax base.

Florida’s neighbor, Georgia, is another odd Baldwin success story. Its 2011-2014 growth trailed the U.S. average (at 5.32 percent). Yet its population growth (4.16 percent of the nation’s total) was greater than its 2010 share of the overall population (3.14 percent). It’s true that Georgia’s subpar population increase may eventually translate into stronger-than-average growth. But should that be considered a solid bet? Stranger still is the author’s positive assessments of Missouri and Pennsylvania, which have been under-performing both in terms of economic and population growth.

Of course, Baldwin has pegged many states right. But misses that are this big, especially for places like New York and California, make clear that the sources of healthy growth and bright economic futures are much more varied than entitlement spending, government workforce sizes, and even generational demographics. Lifestyle clearly plays a major role – what else explains California consistently defying predictions of economic doom triggered by alarm over high taxes, burdensome regulations, and the like? Along with New York and Washington state (another one of Baldwin’s losers, despite the attractions of Seattle), it’s long likely to remain a magnet for talent, as well as wealth (whether ill-gotten or not).

Although I’ve never met Baldwin, I do know that Forbes has long been one of the media world’s strongest champions of Darwinian free market thinking – and of course an equally ardent opponent to Big Government. So it looks reasonable to me that this ideology overwhelmed a more holistic view of economics and business – which his successors at Forbes might have realized just by looking out the windows of their Manhattan offices.