(What’s Left of) Our Economy: New Fed Figures Show the U.S. Manufacturing Recovery is Proceeding Nicely

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automotive, CCP Virus, China, coronavirus, COVID 19, Federal Reserve, inflation-adjusted output, lockdowns, manufacturing, manufacturing production, real growth, shutdown, stimulus package, Trump tariffs, Wuhan virus, {What's Left of) Our Economy

It’s not apparent from the overall numbers, but the most important takeaway from this morning’s monthly Federal Reserve report on U.S. manufacturing production is that American industry has continued a steady comeback from the ravages of the CCP Virus and the government-induced shutdown of much of the U.S. economy. And the continuing healthy pace of this comeback is all the more impressive given the stop-and-start nature of so many of the economic restrictions imposed by Washington, D.C. and by the states and localities, and given the recent uncertainty about a new virus-relief bill.

The overall Fed numbers, as indicated above, do show a manufacturing bounceback that’s losing noteworthy steam. In August (the latest available data month), inflation-adjusted manufacturing output grew by 0.96 percent sequentially. That’s definitely a weaker pace than July’s growth (now pegged at 3.97 percent on month), much weaker than June’s 7.64 percent monthly burst, and well short of May’s 3.91 monthly percent production rise.

Grounds for encouragement, though, are justified even by these aggregate figures, as revisions for recent months generally were positive, and July’s was really positive – that month’s previously estimated manufacturing real growth was 3.41 percent.

But the best and most important news comes from the numbers on manufacturing production outside the automotive sector. As known by RealityChek regulars, the wild sequential swings in output from vehicle and parts makers have dominated the Fed manufacturing production reports for nearly the entire CCP virus period. (See., e.g., last month’s post on this subject.) So important though automotive is – both because of its size per se and because it affects the rest of its industry due to its big domestic supply chain – the non-auto results arguably provide a more accurate picture of U.S. manufacturing’s fundamentals. And this picture looks remarkably good, and still displays significant momentum.

Ex-auto, as the cognoscenti put it, constant dollar manufacturing production increased by 1.40 percent on month in August. So since that’s much faster than overall manufacturing’s performance (up 0.96 percent) that means automotive output fell (by 2.13 percent, specifically).

The August sequential improvement for ex-auto manufacturing, moreover, isn’t dramatically lower than July’s (1.93 percent). And it compares pretty well with June’s (now estimated at 3.82 percent) and May’s (now judged to be 2.12 percent).

Even better, all the pre-July results have been revised up except for May’s.

When all is said and done, the August Fed report underscores just how resilient domestic manufacturing has been despite the formidable CCP Virus challenges (which also include major economic slowdowns in the foreign markets U.S. industry has always relied on for much of its sales). As of August, overall price-adjusted American manufacturing output was just 6.39 percent below its levels in February (the final month before virus effects began impacting the economy). Manufacturing ex-auto’s real production was just 7.04 percent less than in February. And automotive’s after-inflation production was a mere 1.98 percent below that February benchmark.

And another factor to consider: Since China’s has been the world’s first major economy to resume growth since the virus struck, and since its recent growth has been so markedly export-led, think of how much worse U.S. industry’s state would be had the steep Trump tariffs on hundreds of billions of Chinese goods normally sent to the United States not been imposed, or left almost completely in place by the Phase One trade deal.

(What’s Left of) Our Economy: Some Big Trade News in Today’s GDP Revisions

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constant dollars, current dollars, GDP, gross domestic product, inflation, real GDP, real trade deficit, shutdown, Trade, trade deficit, {What's Left of) Our Economy

And here I thought that the only big surprise in this morning’s U.S. government report on the nation’s economic output (the gross domestic product, or GDP) would come in the annual revisions – which update the data going back to the first quarter of 2015. After all, it’s long been obvious that the second quarter results would be dreadful, due to the CCP Virus-induced shutdown of so much of the U.S. economy.

The revisions were indeed pretty surprising, but the first set of estimates covering the second quarter of this year still contained one entirely (at least to me) unexpected finding: Despite the nearly 38 percent inflation-adjusted sequential crash dive of the economy (at annual rates), the real trade deficit didn’t fall much at all. Indeed, between the first and second quarters, the annualized decrease was only 3.71 percent (from $788 billion at annual rates to $780.7 billion).

The big virus-related effects came during the first quarter, when the annualized quarterly shrinkage was 34.13 percent annualized. Moreover, the price-adjusted trade shortfall had also plummeted by 37.33 percent at an annual rate between the third and fourth quarters of last year, as President Trump’s massive tariffs on China continued to be felt, and tariff front-running – which aimed at avoiding theatened and imposed new levies since the Trump trade wars began, and which inflated import totals over the short-term – subsided.

As for that huge first quarter sequential decrease in the price-adjusted trade deficit, it’s now the biggest such move since the 72.53 percent plunge between the first and second quarters of 2009, when the Great Recession was bottoming.

All the same, the revisions were indeed interesting – and important. For starters, that $788 billion annualized first quarter trade deficit was previously reported as being $815.5 billion. Meanwhile, the $780.7 second quarter after-inflation trade deficit is the country’s smallest quarterly gap since the $792.3 billion figure of the first quarter of 2017.

At least as interesting, the GDP revisions make the Trump administration’s trade record look a good deal better than previously reported, while leaving the results for the last two years of the Obama administration basically unchanged. That’s not obvious from the table below, which shows the old and new constant dollar trade deficit results for the last four full years in billions of dollars:

                 New                    Old

2019:       917.6                  953.9

2018:       877.7                  920.0

2017:       816.8                  858.7

2016:       763.6                  586.3

2015:       719.5                  540.0

But there’s a big problem with these statistics. They’re measuring apples versus oranges. The 2017-19 results have been presented by the Commerce Department in terms of 2012 dollars. The original 2015 and 2016 results, however, (which I found by going through pre-revisions GDP releases) were presented in 2009 dollars, but in their updated versions, they’re presented in 2012 dollars. In other words, the inflation adjustment factor is different. All the same, the Trump deficits, themselves, are notably smaller than they were previously reported.

To permit a legitimate comparison between the two administrations, it’s necessary to drop the inflation adjustment altogether, and present the annual trade deficit results in current (billions of) dollars. That’s what the next table shows:

                 New                   Old

2019:       610.5                 631.9

2018:       609.5                 638.2

2017:       555.5                 578.4

2016:       512.5                 521.2

2015:       526.6                 522.0

All three Trump results are, again, better than previously reported, although the difference is significantly smaller than for the inflation-adjusted figures. For the Obama years, the 2016 results are a little better, but the 2015 results are a little worse.

Even so, there’s still no doubt that the Trump trade deficits are higher than those of the last two Obama years. But as known by RealityChek regulars, sometimes individual data sets like this don’t tell the whole story. And with the trade figures, it’s important to compare them with the size of the whole economy. For this exercise, let’s keep it simple and stick with the new pre-inflation statistics. This table shows the current dollar trade deficit as a percentage of current dollar GDP:

2019:  2.85 percent

2018:  2.96 percent

2017:  2.84 percent

2016:  2.73 percent

2015  2.89 percent

Here a modest edge goes to those two Obama years, at least looking at the average. At the same time, the former President was conducting trade policy business-as-usual. Mr. Trump is conducting a major experiment in disruption that’s bound to create adjustment-related inefficiencies, at least in the short run. That is to say, the full results aren’t in. And a major question looming over the U.S. economy in this election year is how long it will be permitted to continue.

(What’s Left of) Our Economy: Behind the Recent Surge in U.S. Imports from China

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Apple Inc., CCP Virus, China, coronavirus, COVID 19, imports, recession, shutdown, tariffs, Trade, trade war, Trump, U.S. International Trade Commission, Wuhan virus, {What's Left of) Our Economy

Well, this took longer than I expected. When I put up my post on the latest official U.S. monthly trade figures (for May), I noted that American goods imports from China kept growing robustly despite the CCP Virus-induced downturn of the overall U.S. economy and the stiff Trump tariffs remaining on the overwhelming share of products Americans buy from China.

As I observed, these results begged the question of what the heck was being bought, and I promised to provide the answer as soon as possible. But it wasn’t until yesterday that I found online the detailed U.S. International Trade Commission (USITC) I needed to keep my word.

Three important conclusions can be drawn. First, the big increases in these merchandise imports from China are highly concentrated in a handful of industries. Second, there’s a strong case to be made that tariffs really can affect import flows when they’re high enough. And third, largely as a result, the biggest U.S. corporate beneficiary by far has been Apple Inc.

To review, the overall data, between January of this year and May, U.S. goods imports from China have risen by 9.97 percent. Given that America’s total non-oil imports (the best global comparison with imports from China) fell by 14.48 percent during that period, that’s stunning enough.

It’s true that merchandise imports from China itself were still 20.11 percent lower during the first five of this year than during the comparable period last year. That’s nearly twice as much as the 10.35 percent decrease in all U.S. non-oil imports, so it’s not like China is still laughing all the way to the bank due to its sales to the United States. But that increase from January through May this year is still puzzling.

Less puzzling – but still puzzling – is the huge disparity between China import numbers from February (when they bottomed) through May, and those for U.S. non-oil imports as a whole. The former jumped 60.43 percent, while the latter fell by 12.09 percent.

After all, the 31.45 percent drop in U.S. goods imports from China between January and February (when Beijing shut down most of its economy in order to containt the virus) was much greater than the 2.72 percent decrease that month for all America’s non-oil imports. At the same time, products made in the rest of the world didn’t face the kinds of Trump tariffs imposed on most goods from China.

Since the CCP Virus is still (deeply) depressing the U.S. economy while China’s recovery (including its export-heavy industries) seems well underway, it will be months at best until it will be possible to see normal bilateral trade flows again.

What does come through loud and clear, though, is the dominance of just a few sectors in these trade flow shifts. In January, for example, the top four categories of U.S. purchases from China (according to the U.S. government’s North American Industry Classification System) were (in descending order) computers; broadcast and wireless communications equipment (the grouping that include cell phones); miscellaneous textile products; miscellaneous plastics products. They made up a hefty share of the total of $33.281 billion worth of goods Americans bought from China that month – just under 24 percent.

But in February, when the Chinese shutdown took hold and U.S. goods imports from the People’s Republic crash dove by 31.45 percent – to $22.813 billion – the four aforementioned goods categories accounted for nearly 34 percent of the decrease.

February saw the start of that powerful four-month, 60.43 percent leap in total U.S. merchandise imports from China. The top fours share of that bounceback? Fully 63.57 percent. That was more than three times their share of total February U.S. imports from China.

For now, Apple and the tariff treatment of its products go far toward explaining what resilience China’s sales to the United States have shown. The evidence is found in the data from three categories of imports from China – computers, broadcast and wireless communications equipment, and computer parts (which happen to be the fifth biggest category of U.S. goods imports from China). Apple’s monster-selling Chinese-made products of course figure prominently in all these groupings.

The widespread China shutdown – including of all Apple-related factories – was clearly responsible for U.S. imports of these products sinking by 47.79 percent. This nosedive was steeper than that for U.S. imports from all goods from China, and of course steeper than that for total U.S. non-oil goods imports. But the February-through-May comeback staged by these goods was epic – just short of 156 percent. As a result, whereas U.S. imports of all merchandise from China in May were up over the January total by the 9.97 percent mentioned above, for the three electronics-related categories combined, they were more than a third higher.

Just as interesting: although on a January-May basis, all U.S. goods imports are down this year so far by the 20.11 percent mentioned above, for the three electronics categories, they’re off by somewhat less – 16.06 percent.

And what do tariffs have to do with all this? Lots. Because lots of Apple’s Chinese-made final products, and Chinese-made parts and components for the Apple products that are assembled in the United States have been exempted from tariffs altogether.

In other words, if you’re interested in figuring out whether tariffs work, it’s important not only to know what happens to imports when they’re present, but also when they’re not allowed to work at all.

Im-Politic: Biden’s CCP Virus Fairytales

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Angela Merkel, CCP Virus, contact tracing, coronavirus, COVID 19, election 2020, Germany, Im-Politic, Jobs, Joe Biden, lockdown, reopening, shutdown, testing, unemployment, Wuhan virus

I totally get that Joe Biden would want to throw cold water all over this past Thursday’s U.S. jobs report (for June), whose reported massive gains smashed expectations for the second straight month. He’s virtually certain to be formally named the Democrats’ presidential nominee this year. Therefore, he naturally has a strong interest in portraying the state of the nation, including its economy, in the worst possible terms.

I also totally get that the nation’s media would report Biden’s gloom-mongering. He’s a major political candidate, and what he says is by definition news.

What I totally don’t get is how none of the country’s pundits and other political analysts have caught the glaring weakness and equally glaring internal contradiction in Biden’s core claim that a million more Americans “would still have their job if Donald Trump had done his job.”

The weakness: Biden apparently is charging that the President should have shut down the economy and strongly recommended mask-wearing and social distancing measures (which of course inevitably have their own, independent economy-depressing effects) much earlier than he did (the first such Trump action – a stay-at-home guidance – came on March 16). As a result, he suggests, the U.S. jobs market would be in much better shape. 

But as reported in this Washington Post examination of Biden’s CCP Virus record, nothing of the kind had issued from the former Vice President or his camp by that time. So much, therefore, for any contention that he’s been especially prescient when it comes to the virus’ impact on the economy and on employment in particular.

The contradiction: Let’s say that Biden had indeed recommended a much earlier shutdown – and that the Trump administration had taken his advice immediately. And let’s suppose that the President’s record had been much better in terms of testing and contact-tracing – which Biden has called “the key to restoring enough confidence for businesses to reopen safely and consumers to reengage with the economy” (as opposed to what he has described as the President’s reopening plan: “just open”). Would the massive job losses suffered by the U.S. economy have been avoided, as Biden has suggested? Would even “a million more Americans” be employed – and presumably safely employed (a number whose source I haven’t found, and that represents a small fraction of the 15 million jobs that remain lost since the CCP Virus’ full effects began to be felt)?

Biden and many Americans clearly would like these claims to be true. But good luck finding any supporting evidence. Indeed, everything we know about the anti-virus efforts even of countries that allegedly have dealt much better with the pandemic reveals those expectations to be wholly unrealistic.

Germany is probably the best example – since it’s not a totalitarian dictatorship like China that can lock down massively while truly trampling on the few individual liberties it ever allowed the slightest breathing room. Even so, it’s been widely depicted as the gold standard for anti-virus success.

To summarize, on March 22, Chancellor Angela Merkel imposed on the country one of Europe’s strictest lockdowns. A cautious easing began on May 6. And how have the country’s workers fared? Take a look at the chart below (from Bloomberg.com). That joblessness spike looks an awful lot like America’s. P.S. These figures don’t include millions of German workers not officially counted as unemployed only because of Bonn’s work-sharing programs, which has kept them nominally at work via wage subsidies.

Moreover, practically no sooner did Germany’s reopening begin, than significant virus case flareups began.

In other words, even Germany’s experience makes clear that if you favor maximum anti-virus efforts, like pervasive lockdowns, there’s no avoiding massive unemployment. And given the disease’s transmission rates – which may have worsened, possibly due more to mutation than to any reopenings, even as its never extreme lethality may be weakening – anyone insisting on the contrary deserves to be seen as just another cynical politician peddling fairytales.

 

Im-Politic: The Case for Shutdowns Remains Far from Open and Shut

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Arizona, California, CCP Virus, coronavirus, COVID 19, Doug Ducey, Gavin Newsome, hospitalizations, Im-Politic, infections, reopening, shutdown, Wuhan virus

OK, enough with the History Wars/Cancel Culture stuff (for now)! Let’s turn to something relatively uncontroversial (!) – like the resurgence of CCP Virus cases in the United States. And in particular, let’s focus on the common argument that these increases, along with higher hospitalization rates, show conclusively that the states that closed late or reopened early or never closed or never closed much (you get the picture), were tragically and even recklessly mistaken, and that the states that closed early or stayed closed for the longest and have reopened only very gradually were the truly responsible actors.

There’s one set of actions that certainly seems to clinch the case for the “closers” – the decisions of many of the late closing/early opening states to pause or slow their reopenings, or even roll back many. According to this report, the number of states and cities taking such steps now totals 15.

But this loudly nagging question remains: What’s the actual evidence that supposedly irresponsible reopening measures have caused either the growing case or even hospitalization numbers? Pretty flimsy, as it turns out.

Let’s begin with Arizona – widely described as a quintessential reopening disaster. It’s true that confirmed virus cases have shot up since very late May, with new daily cases per hundred thousand residents soaring from 248.5 on May 27 to 1,063.9 on June 28. That’s about a four-fold increase. (All such infection figures and change come from the Washington Post‘s continually updated virus tracker feature.) 

But figuring out the impact of shutdown-type policies involves not only identifying how many new cases and other indicators have worsened recently. It much more importantly involves comparing rates of worsening during the shutdown periods and afterwards.

In Arizona’s case, Republican Governor Doug Ducey began imposing limits in mid-March, and canceled school for the remainder of the current academic year and issued a stay-at-home order on the 30^th. (My Arizona dates come from this timeline.) On that day, new case numbers stood at 16.7 per hundred thousand. On May 11, he decided to reopen restaurants. On that day, new cases hit 163.8 per hundred thousand – meaning that they.rose a little less than ten-fold during the shutdown.

As described above, the latest Arizona numbers show 1,063.9 new daily cases. So during reopening phase, the state’s new daily case numbers rose about 6.5-fold. In other words, cases rose much more slowly during the reopening phase (which Ducey paused as of yesterday) as it did during the shutdown phase. So that’s supposed to be evidence that its shutdown policies have been reckless?

Even taking into account the laws of large and small numbers (which teach that the lower the absolute number baseline you begin with, the easier it is to produce big percentage gains), I’m glad I don’t have to use them to strengthen the case for stricter reopenings – if only because the virus seems to spread so rapidly. As a result, independent of improving testing rates (which themselves should be revealing more cases), the rate of infections should be speeding up the more infections are recorded, not slowing down.

Even harder to explain from the standpoint of shutdown enthusiasts: On March 30, when the state’s major shutdown phase began, Arizona CCP Virus-related daily hospitalizations stood at 51 (total). By May 11, when major reopening began, it had fallen to 41. Since hospitalization rates are often called the most important measure of progress or backsliding against the virus, that’s a big sign that shutdowns work, right?

Not exactly. For yesterday’s new hospitalization number (the latest available) was only two. In all fairness, between the start of major reopening and June 8, this number doubled – from 41 to 82. But since then, the daily hospitalization rate has sunk like a stone. Even granted the reality of lags between new case identifications and hospitalizations, these figures make clear that the state of Arizona’s economy and the regulations governing activity have had no discernible impact on its new case numbers or its hospitalization numbers.

Of course, Arizona’s only one state. So let’s look at another – and the biggest in terms of population. That’s of course, California. Even better, California was a state praised for shutting down early and aggressively, and has reopened cautiously – till very recently, when it mandated some rollbacks. And its experience strengthens the case for sweeping shutdowns not one iota.

California’s new case numbers have been rising, too – though without the recent spike seen in Arizona. Even so, they’re now at an all-time daily high as well: with 553.1 new cases per hundred thousand residents. This total is only a little over half of Arizona’s latest, which would seem to reenforce the case for stricter shutdown policies. But again, that’s not the new case statistic that deserves the most attention. It’s imperative to look at California’s new daily cases and how they’ve changed during both the state’s shutdown phase and its reopening phase.

The Golden State’s Democratic Governor, Gavin Newsom, issued a state-wide stay-at-home order on that went into effect March 19 — actually, not so very different from when Arizona’s shutdowns began in earnest, though they were narrower. That day, the state’s reported cases per 100,000 residents stood at 2.6.  

On May 8, California began a gradual reopening. That day, its reported cases per 100,000 residents was 159.7, meaning that during the shutdown, they skyrocketed by 61 times. Because the latest such figure is 553.1 per thousand, the rate of increase during the reopening was 2.46 times. Again, not results that speak well for the spread-inhibiting record of shutdowns.

The California hospitalization story is more complicated than Arizona’s – but anything but a slam dunk for shutdown supporters. The state tracks hospitalization differently from that of its neighbor, recording daily changes in net hospitalizations (i.e., admissions minus discharges). What the numbers show, according to this chart, is that is that shortly after the stay-at-home order went into effect (March 20), they fell pretty steadily through very early June,stayed roughly level until the middle of the month, and soared thereafter.

What’s especially interesting about these figures is that they seem completely unrelated to the shutdown phase and the reopening. After all, net hospitalizations kept falling for nearly a full month after the gradual reopening began (though at a somewhat slower rate). And the big increase in net hospitalization that began in mid-June didn’t start until some five weeks after the reopening. As a result, I don’t see much of a shutdown/reopening connection there, either.

It’s certainly possible that reopening decisions helped increase infection rates by encouraging Americans in those states to believe that all was clear, and that life could go back to normal, without any mask-wearing or social distancing and the like. But which state governors have made those claims? It’s more likely that many residents of those states decided to throw caution to the wind regardless of what officials said – which doesn’t speak well for them, although it also doesn’t say much about the enforceability of shutdowns. What’s the alternative, however? Handing state and local officials China-like powers? Raise your hand if you’d be happy with that outcome.

Moreover, these shutdown/reopening figures tell us nothing about another, and too often neglected, crucial dimension of the virus policy debate – what are the public health costs of prolonged continuation of shutdowns? Heart Disease Patients’ and Victims of Depression’s Lives Matter, too, after all.

So far, it seems clear that, like crises and other difficult situations in general, the keys to dealing with the CCP Virus pandemic won’t be hyping clearcut formulas,  false either-or-choices, and declarations of certainty as ringing as they are unjustified and blame-casting. There’s still no substitute for good judgment, common sense (and yes, that includes mask-wearing when in crowded indoor spaces, steering clear of them and outdoor crowds as much as possible, and washing your hands fanatically), and an ability to learn.  What a shame that the national stockpiles of those qualities seem so meager.  

(What’s Left of) Our Economy: A Major Virus-Related U.S. Economy Hit Confirmed – With Much Worse Numbers Sure to Come

Tags

CCP Virus, coronavirus, COVID 19, exports, GDP, goods, Great Recession, gross domestic product, imports, inflation-adjusted output, lockdown, real exports, real GDP, real imports, recession, services, shutdown, Wuhan virus, {What's Left of) Our Economy

This is a catch-up post on the CCP Virus-induced contraction of the U.S. economy growth, as well as a report on today’s latest update from the Commerce Department. The big news this morning: During the first quarter of this year, the economy’s sequential shrinkage for the first quarter of this year was pegged in this morning’s third, and final (for now) estimate at 5.09 percent at an annual rate in inflation-adjusted terms. That compares with the 4.87 percent drop in real output recorded in the first estimate, and a 5.15 percent decline estimated in the second estimate, which yours truly missed when it came out last month.

So things economic are looking slightly less terrible than previously thought – but still pretty terrible. In fact, this first quarter economic downturn was America’s most severe since the fourth quarter of 2008’s 8.66 percent – when the Great Recession spurred by the financial crisis was at its low point.

And there’s no doubt much worse to come in the second quarter figures, whose initial release will be a month from now (along with a regularly scheduled revision of all the data on the gross domestic product [GDP] and its changes going back to 2015). After all, the first quarter numbers only include the first month (March) during which the CCP Virus and its growth-killing effects began to be fully suffered.

Before delving into the trade-related details, a cautionary/explanatory note should be repeated: The phrases “at an annual rate” and “annualized” mean that an economic contraction of this historic scale didn’t take place al at once. Instead, they mean that in the economy contracted at a rate that would add up to the current 5.09 percent if the shrinkage continued at this pace for an entire year. This qualification is especially important because of the tremendous expected worsening of the slump in the second quarter.

Today’s GDP report revealed that the after-nflation annualized combined goods and services trade deficit during the first quarter was $815.5 billion. That’s a bit worse than the $816.0 billion figure reported last month but a bit better than the $817.4 billion calculated in the first estimate. And this so-far-final number represents a 9.34 percent decline from the $900.7 billion level reported for the fourth quarter of last year.

These results leave the drop-off the steepest since the 18.13 percent quarter-to-quarter nosedive during the second quarter of Great Recession-y 2009. And because the gap between these two results remains so big, it will be fascinating to see the numbers for the second quarter, when impact of mandated shutdown of much of the economy will first become apparent.

The quarterly decrease in total real exports for the first quarter is now judged to be 2.33 percent (non-annualized – as are the following numbers). This decline is worse than that estimated in the two previous first quarter GDP reports (2.24 percent and 2.25 percent, respectively). But as with the trade deficit figures, this slump pales with that suffered the last time constant dollar goods and services exports dropped significantly – the 8.08 percent crash dive during the first quarter of 2009, during the depths of that Great Recession.

On the import side, the 4.17 percent sequential price-adjusted fall-off reported this morning was bigger than either the 4.12 percent decrease previously judged and the 4.08 percent initially estimated. Again, however, that was the biggest such decline since a Great Recession result that was much greater – the 9.88 percent recorded in the first quarter of 2009.

The “final” first quarter figure for the inflation-adjusted goods deficit ($996.8 billion annualized) was 7.64 percent lower than the fourth quarter figure. But in services, the real surplus widened by 1.22 percent – even though the super-sector’s exports plummeted by nine percent. The first quarter annualized total of $714.9 billion annualized was the meagerest since the $706.2 billion level for the fourth quarter of 2013, and the rate of decline (much greater than the 0.49 percent in goods exports) was the fastest ever in a data series going back to 2002. In fact, the previous record was only 2.95 percent (during the Great Recession-y first quarter of 2009) – as with the export figures underscoring the outsized impact of the CCP virus’ impact on the travel industry.

Similar trends can be seen in after-inflation services imports. which sank by a record 8.06 percent in the quarter – much faster than the 3.19 percent fall in goods imports.

Im-Politic: How Much Did the Lockdowns Really Help?

Tags

African Americans, CCP Virus, coronavirus, COVID 19, economy, Georgia, hospitalizations, Im-Politic, lockdowns, public health, reopening, shutdown, Virginia, Washington Post, Wuhan virus

Is it time to start putting the CCP Virus economy-reopening debate shoe on the other foot, at least when it comes to one key measure of progress or backsliding against the pandemic? More specifically, is it time to put less emphasis on finding out whether states that have reopened relatively quickly have seen their virus situations worsening, and more on whether states that closed early and/or have stayed largely closed have achieved progress that’s been any better?

This question occurred to me this morning upon reading in my Washington Post that when it comes to new infections and fatalities, Virginia has just seen record highs recently whether we’re talking about single day totals or the more informative seven-day averages. That’s striking because Virginia has been one of those states that shutdown substantially quite early, and has reopened very slowly.

So I began wondering how Virginia’s record compares with a state that reopened very early – Georgia. And the numbers clearly show that their performances over the most relevant timeframes have been…pretty comparable. Which represents new evidence that the economically devastating lockdowns have been under-performers for containing the virus’ spread.

Virginia and Georgia are particularly interesting to compare because of their similarities. The latter’s total population is estimated this year at 8.63 million while the latter’s is a not greatly bigger 10.74 million.

Both states also have relatively big populations of African-Americans – who have been among the virus’ biggest victims. Blacks represent 31.03 percent of all Georgians, and 18.81 percent of all Virginians.

That Washington Post Virginia article did mention one area of continuing improvement for the state: new hospitalizations. They’re especially important both because fears of hospitals getting overwhelmed by the pandemic were prime justifications for the original shutdown orders, and because they’re the best measures of whether the virus is being contained or not. After all, numbers or new cases seem to depend heavily on increases in testing (which naturally reveal more and more infections). And controversies over identifying genuine CCP Virus-induced deaths remain heated – in large part because methodologies vary so greatly state-by-state.

By contrast, there have been no debates over how many patients with virus symptoms have been admitted to healthcare facilities. The only uncertainties are those stemming from how promptly these facilities report their admissions to state health departments.

That kind of uncertainty is still clouding Virginia’s data. As of today, (see this link and scroll down till you see the option for hospitalization data) the state has only reported new hospitalizations through May 20, and these data are divided between confirmed cases and probably cases. (The former are the great majority, though.)

Even so, because of Virginia’s lockdown policy – which began in earnest at the end of March, began easing in phases for the state’s least populous areas in mid-May, but which largely continue for its most populous areas (those closest to the District of Columbia)– it should be among the gold standard states for virus progress if turning off most economic activity is considered crucial. (Here’s an unusually informative lockdown timeline for Virginia, Maryland, and the District.)

Its interactive hospitalization chart is a little hard to read, but it seems to show that on March 31, the seven-day moving average of new admissions stood at just under 59, and through early May (when the lockdown began to be lifted). moved up steadily to a little over 81. So they rose by just under 39 percent. By May 20, this average had decreased all the way to just under 45. In other words, daily hospitalizations dropped by a little less than 45 percent. And for the entire period, the seven-day moving average for new hospitalizations dipped by 2.34 percent.

Georgia’s lockdown began only a bit later than Maryland’s (on April 2) but serious easing began much earlier (on April 24). Indeed, Governor Brian Kemp was widely pilloried for the decision.

During its three weeks of lockdown, Georgia’s seven-day average daily hospitalization numbers went from about 80 to about 130. (The non-interactive chart below is even harder to read precisely than Virginia’s interactive graphic, but check it out for yourself below.)

This roughly 62.50 percent rise in daily hospitalizations was much higher than Virginia’s during its lockdown period Did this discrepancy mean that Georgia ended its lockdown too soon? Or was its somewhat heavier African-American population density the major difference? Search me.

Georgia’s reopening has been more aggressive than Virginia’s, and that could well explain why its seven-day average hospitalization figure remained just about flat from the start of this phase through May 22.

But I’m not entirely persuaded that the lack of improvement during this period means that Georgia’s relatively fast reopening has flopped. Because for the first three weeks of this reopening, the state’s seven-day average new hospitalization figure fell by about half – faster than Virginia’s during its slower reopening. And as the Post has reported, despite Virginia’s caution, daily (although not yet seven-day averages) have been rising recently, too.

The fairest conclusion to me seems that the hospitalization data give an edge to Virginia’s more cautious lockdown-reopening strategy, but that the edge is on the modest side. And most important, it’s far from clear that this margin justifies both the economic and healthcare costs of relatively longer and/or more thorough lockdowns.

 

 

Im-Politic: The CCP Virus Crisis Has Become Even More of a Nursing Home Crisis

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Canada, CCP Virus, coronavirus, COVID 19, Europe, Following Up, lockdown, nursing homes, reopening, seniors, shutdown, Sweden, The New York Times, United Kingdom, Wuhan virus

About three weeks ago, I posted about the degree to which total U.S. CCP Virus-related deaths were occurring in nursing homes and other special facilities for seniors. And I noted that the answer – “really big” – provided significant evidence for the idea that substantial reopenings of the U.S. economy were much more feasible than widely believed.

The reason: If the virus’ main dangers were so highly concentrated in a single, highly vulnerable, and already confined population, then by definition, such dangers to the rest of the public were considerably less serious than widely believed. Therefore, relatively low-risk populations could be permitted to reengage in normal economic activity sooner rather than later.

Three weeks later, the case for faster, wider reopenings is even stronger – along with the arguments for focusing virus containment measures on seniors, and especially those inside or outside such facilities.

For example, that previous post cited data indicating that about twenty percent of all U.S. virus deaths were taking place in elder care facilities. More recently, a comprehensive New York Times survey pegged the share at 35 percent.

Moreover, data are coming in making clear that this pattern is hardly confined to the United States. In Canada, the share has been reported at 81 percent. Across Europe, national shares are thought to be between 42 percent and 57 percent. In the United Kingdom, it’s estimated at 25 percent.

Possibly the most intriguing findings concern Sweden. That’s because its lockdown was the lightest imposed among the wealthier national economies. The overall Swedish virus death rates, however, have been right in the middle of the pack for Europe.  (See here for the latest numbers.) Yet the Swedish government has also reported that nearly half those deaths have taken place in elder care facilities.

In other words, if Sweden had its nursing home act together, its virus fatalities would have been about 185 per million people – which would have put it well behind the United States, Spain, the United Kingdom, Italy, France, Belgium, the Netherlands, and Switzerland. Sweden’s economy, unfortunately, seems unlikely to escape taking a major virus-related economic hit anyway. But the toll seems largely due to its relatively small size and as a result its relatively heavy reliance on foreign trade – not to its failure to shut down more broadly.

The United States, of course, is much less reliant on foreign trade. In theory, then, if its nursing and similar facilities get the aid they need, America’s economy can continue reopening – and even faster than at present – without running major further health risks. Indeed, as I’ve also noted previously, such reopening per se could well curb other emerging public health dangers. Moreover, as observed by the Washington Post editorial board, moving toward the Swedish model might speed up progress toward creating herd immunity in the United States. This status would mean considerable protection against the second virus wave that might arrive along with cooler weather this fall.

As always, “reopening” doesn’t mean an immediate, complete return to the pre-virus normal. And serious uncertainties continue surrounding the nursing homes data, and indeed all virus-related data. But a pattern visible in so many high income countries can’t be dismissed, either, and it should put ever more pressure on backers of slower reopenings to justify their positions.

(What’s Left of) Our Economy: A Respectable Case for Optimism?

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CCP Virus, China, consumer confidence, consumers, coronavirus, COVID 19, Federal Reserve, Jerome Powell, lockdown, recovery, reopening, restart, restaurants, retail, second wave, shutdown, social distancing, Sweden, testing, vaccines, Wuhan virus, {What's Left of) Our Economy

At the risk of being (undeservedly) tarred as a CCP Virus pollyanna, I can’t help but being struck by the some new evidence that the U.S. economy’s recovery from its pandemic-induced swoon will be faster than widely feared. In fact, I still share these fears to some degree. But I can’t ignore increasing signs to the contrary.

To be clear, this evidence has little to do with the subject of yesterday’s post. Just because data can be cited showing significant national progress in beating back the virus threat doesn’t necessarily mean that a more so-called “V-shaped” economic rebound is on the way. The same goes for the impact of this progress on the economy reopening decisions of individual U.S. states – even though the more decline seen in numbers of new cases (despite gains in testing that should be revealing much more infection), numbers of deaths, and numbers of virus-related hospitalizations, the more reopening obviously will be seen.

Nor are my views being shaped by the strong rebound seen in U.S. stock markets so far (including today so far), or by the newly bullish recovery views voiced last night on “Sixty Minutes” by Federal Reserve Chair Jerome Powell. And this post isn’t even driven by the latest news about vaccine progress (though such reports will clearly help as long as the results continue being validated).

The reason: I’ve been convinced that the key to the recovery’s strength will be Americans’ willingness to start patronizing businesses in an economy where most activity – and most income earning opportunities – depend on consumer spending. So I’ve put considerable stock in predictions that, even though all the objective conditions can show that a return to normality will be safe, too many Americans will remain too fearful to boost the economy significantly.

I also take seriously the idea that all the restrictions on visiting retail stores (including restaurants) and personal service businesses will limit their customer flow either simply by forcing them to operate substantially below capacity, or by dissuading many customers from visiting in the first place, and thereby sharply reducing impulse consuming. Further, I’m well aware that the much more modest shock administered to Americans by the Great Recession triggered by the 2007-08 financial crisis was painfully slow to wear off. (See here and here where I write about reasons for recovery pessimism.)

In addition, the experiences of other countries that started reopening earlier has reenforced consumer caution concerns. Sweden, for example, has imposed fewer economic restrictions than any other major country. But this survey by the consulting firm McKinsey & Co. reports that consumer spending has dropped significantly anyway, and may not recover for months. China claims that it’s beaten the virus and its regime has been easing factory lockdowns since February. But as of late April, retail sales were still way down.

Finally, there’s the second wave threat, which could kneecap the economy as temperatures start dropping in the fall even if summer does witness a decent bounce back toward pre-virus consuming.

So the case against a relatively quick recovery with real legs is still awfully strong.

But don’t overlook reasons for more optimism. One that’s nothing less than amazing: The piece in this morning’s Washington Post reporting that even though virus testing is now much more widely available in the United States than previously, Americans are far from rushing to capitalize on these opportunities. Even accepting the various reasons offered in this article (e.g., not enough Americans know that the situation has changed; there’s too much mistrust of medical providers in some U.S. communities, particularly African-Americans), it’s difficult at least for me to conclude anything else but that many in the United States simply aren’t concerned enough about the pandemic to take this precaution. After all, if they were panic-stricken, wouldn’t they be following every bit of news about the supply of tests with baited breath?

Perhaps more important, the more news that emerges that the CCP Virus is much less lethal than early reports suggested, the (understandably) less concerned about infection more and more Americans seem to be.    

Then there are all the reports of Americans, whether in states that have eased lockdowns more vigorously and those that haven’t, violating social distance guidelines, either by not wearing masks where they’re supposed to, or seemingly ignoring social distancing rules in public place – and indeed returning to restaurants and bars and beaches in pretty impressive numbers. These reports are anecdotal, and therefore should be viewed with lots of caution. Also, please don’t assume that I’m endorsing this behavior! But there sure seems to be a lot of it, these reports also seem related to growing evidence of the virus’ relatively modest death rates, and and as an old adage goes, when enough anecdotes appear, they become data. 

Finally are several indicators pointing to an actual, non-trivial comeback in economic activity, and for a variety of sectors. This account mentions encouraging signs from the tech sector to the automotive industry. This article presents evidence of bottoming even in hard-hit bricks and mortars retail stores and restaurants. And click here for information on the housing industry.

Of course, the references above to “bottoming” could still be entirely consistent with pessimistic predictions of a painfully slow climb back to pre-virus prosperity. But I still find myself wondering if, having seen the overpoweringly depressive effect of various official edicts literally to halt and outlaw much economic activity, Americans might experience a reasonably powerful growth effect from their withdrawal – not to mention declining fears that infection is a death sentence.

Im-Politic: Some Winning Anti-Virus Numbers

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CCP Virus, coronavirus, COVID 19, Im-Politic, lockdown, reopening, shutdown, Wuhan virus

As well known by RealityChek regulars, I’m a strong believer in looking at the most detailed data possible in order to understand a development or situation best. (Just yesterday, they got a great example, in this post on the latest official figures on America’s manufacturing production.)

Sometimes, though, it’s helpful to get out of the weeds. And a loftier perspective seems necessary on the coronavirus crisis and the heated debate over how fast to open the U.S. economy. Of course, because the reopening is taking place on a state-by-state basis, and because even the earliest opening states have by no means restarted their economies all the way right away, the national picture, paradoxically, isn’t the whole picture.

All the same, because the main debate is clearly between those who would go slow (at best) on the one hand, and those who would go relatively quickly on the other, it’s unmistakably useful to review the progress (or lack of progress) made by the United States as a whole. And according to the figures below, it’s been impressive, however sluggishly it began.

Let’s start with the virus death count – of most urgent concern to everyone especially if a loved one has fallen sick. I couldn’t find a chart that could be cut and pasted here, but if you look at The New York Times tracker here, you’ll see that the seven-day average of new daily deaths (the best way to monitor trends over time) peaked on April 17 at 2,362. As of this past Friday, it stook at 1,563.  That’s a reduction of more than a third – not at all bupkis.

Now let’s look at the daily change in the numbers of reported U.S. cases.  This chart comes from the Vox.com news site, and also makes clear a steady dropoff: today: 

Now let’s look at the testing figures, which also come from Vox. Keep in mind that the number of confirmed cases will logically rise as testing increases: 

 

The clear message here is that the numbers of reported cases keep falling even as testing keeps rising. That’s hard to beat for (realistic) good news in this virus era.

Finally, here’s data straight from the U.S. Centers for Disease Control and Prevention showing the CCP Virus burden on the American healthcare system.  It presents the weekly change in the share of national emergency room visits accounted for by patients with flu-like illnesses (the blue line) and by patients with specific CCP Virus-like illnesses (the orange-y line). 

This statistic is especially important because a major original rationale for the shutdowns was to prevent virus cases from mushrooming so that the nation’s hospitals would be overwhelmed.  This chart only goes up to May 2, but those are major decreases over the preceding six weeks (which brings us back to mid-March.)     

I’m sure as heck not going to shout “Mission accomplished” when it comes to the CCP Virus crisis. And no one can forget the major uncertainties still surrounding the cases and fatalities numbers – according to various critics, on the overcount and the undercount sides.

But given the progress made so far, given the lack of evidence of any worsening of the situation in states that have reopened on the aggressive side (see, e.g., this post), and given the fearsome public health toll sure to result from prolonged national economic paralysis, it seems fair to say that at least some of the burden of proof in the shutdown-versus-restart arguments has shifted to the former.