THE BIG ECONOMIC DEBATE
Trump Halts Covid-19 Relief Aid Talks Until After Election The president said he is pausing efforts to get more aid to struggling households and businesses until after Election Day.
(…) Later Tuesday in another tweet, Mr. Trump called on Congress to approve additional assistance for airlines and a small-business aid program. He also tweeted that Congress should pass a bill providing another direct check to many Americans. Democrats have largely resisted passing piecemeal bills, pushing instead for an overall agreement.
The call to end talks came hours after Federal Reserve Chairman Jerome Powell warned of dire economic consequences if Congress and the White House don’t provide additional support to households and businesses disrupted by the pandemic. (…)
Mr. Trump and other Republicans have characterized the push for state and local aid as an effort to bail out Democratic-led states. Mr. Trump reiterated that sentiment in his tweet on Tuesday. (…)
Just this past weekend, Mr. Trump had issued a statement supporting another fiscal package. “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE,” he said on Twitter. (…)
An attempt to quickly pass legislation focused solely on airlines fell apart Friday. (…)
But there were overnight tweets:
Just hours later, the president seemed set to shift course. He said in a series of overnight tweets that he was “ready to sign right now” if he was sent a stand-alone bill for sending $1,200-checks to Americans. He also urged lawmakers to approve a $25 billion package to support airlines’ payrolls, and another $135 billion for the Paycheck Protection Program, aimed at helping small businesses.
The WSJ editorial board:
President Trump decided Tuesday to walk away from talks on another coronavirus spending blowout until after the election, and that’s the best decision for the economy and taxpayers. Speaker Nancy Pelosi and Democrats refused to accept anything below $2 trillion, and their political ransom demand is what blew up the deal. (…)
Mrs. Pelosi’s biggest demand was more than $400 billion for states, cities and tribal lands. This is a bailout for Illinois, New York, California and other Democratic states that refuse to adjust their budgets to post-Covid realities. It’s an income redistribution play from Florida and Texas taxpayers to blue-state public-union pensions. She also insisted on at least $500 a week in enhanced jobless benefits, which means millions of Americans would earn more by not returning to work. (…)
Federal Reserve Chairman Jerome Powell stuck his chin into the debate on Tuesday by claiming the economy will suffer without more fiscal aid. But that’s far from clear. The economy is still rebounding in robust fashion, enough so that at their September meeting the Fed Governors had to update their too pessimistic predictions from June. St. Louis Fed President James Bullard told the Journal this week that the economy is healthy enough that no more monetary stimulus may be needed. (…)
A rebounding labor market and a 14% savings rate pave the way for more consumer spending without $1,000 checks. (…)
Fed’s Powell Says U.S. Faces ‘Tragic’ Risks From Doing Too Little to Support Economy Federal Reserve Chairman Jerome Powell warned of potentially tragic economic consequences if Congress and the White House don’t provide additional support to households and businesses disrupted by the coronavirus pandemic.
(…) “At this early stage, I would argue that the risks of policy intervention are still asymmetric. Too little support would lead to a weak recovery, creating unnecessary hardship.”
By contrast, the risks of providing too generous relief are smaller, he said. “Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” he said. (…)
Some facts:
If we exclude stimulus money, aggregate payrolls of private employees remain negative YoY and pretty much in line with total consumption expenditures. Retail sales have been stronger because Americans bought goods with money saved from services lockdowns. Overall since June, they seem to be spending along with their labor income.
All series are swooshing. Will the “haves” keep buying goods, potentially offsetting the “have nots” forced to hunker down?
Employment remains very weak and shows no clear signs of a rapid bounce back to February’s level as Haver Analytics illustrates. If still jobless, or afraid of soon becoming jobless, whatever savings you have is unlikely to be used to splurge.
The Bureau of Labor Statistics reported that on the last business day of August the job openings level dropped 3.0% to 6.493 million, down 9.4% y/y. The job openings level in the construction sector fell 25.2% y/y but in manufacturing, it rose 3.4% y/y. It fell by 17.1% y/y in leisure & hospitality and by 8.2% y/y in the professional & business service sector. In government, the number of job openings rose 16.1% y/y.
In August, the level of hiring improved 0.3% to 5.919 million (1.4% y/y) following a 15.3% July decline.
Job openings were already in a downtrend while hirings were flattening. The tips of the arrows are the February-August averages:
Pretty crucial call pre-holiday season. I lean with Powell on the risk/reward equation.
San Francisco office rents fell 4% from the end of March to the end of September, a decline that was more than double that in any other major U.S. city, according to data firm CoStar Group Inc. San Francisco office owners signed only 700,000 square feet in new leasing deals in the third quarter, down about 81% from 3.6 million square feet during the same period in 2019. (…)
Office occupancy for the San Francisco region was in the 15% range last month, compared with about 25% nationally, and even lower in the city center, according to real-estate services firms. (…)
Green Street, a commercial-real-estate analytics firm, projects that office rents could drop as much as 20%. (…)
About half of the city’s 3,900 restaurants are likely to fail because of the pandemic, said Laurie Thomas, executive director of the Golden Gate Restaurant Association. (…)
THE BIG VIRUS DEBATE
Focused Protection: The Great Barrington Declaration of Oct. 4, 2020:
(…) We know that all populations will eventually reach herd immunity – i.e. the point at which the rate of new infections is stable – and that this can be assisted by (but is not dependent upon) a vaccine. Our goal should therefore be to minimize mortality and social harm until we reach herd immunity.
The most compassionate approach that balances the risks and benefits of reaching herd immunity, is to allow those who are at minimal risk of death to live their lives normally to build up immunity to the virus through natural infection, while better protecting those who are at highest risk. We call this Focused Protection.
Adopting measures to protect the vulnerable should be the central aim of public health responses to COVID-19. (…)
Those who are not vulnerable should immediately be allowed to resume life as normal. (…) People who are more at risk may participate if they wish, while society as a whole enjoys the protection conferred upon the vulnerable by those who have built up herd immunity.
(…) Surveys performed in countries affected early during the COVID-19 epidemic, such as Spain and Italy, suggest that nationwide prevalence of antibodies varies between 1 and 10%, with peaks around 10–15% in heavily affected urban areas. Interestingly, this is consistent with earlier predictions made by mathematical models, using death counts reported in national statistics and estimates of the infection fatality ratio, that is, the probability of death given infection.
(…) there is little evidence to suggest that the spread of SARS-CoV-2 might stop naturally before at least 50% of the population has become immune. Another question is what it would take to achieve 50% population immunity, given that we currently do not know how long naturally acquired immunity to SARS-CoV-2 lasts (immunity to seasonal coronaviruses is usually relatively short lived), particularly among those who had mild forms of disease, and whether it might take several rounds of re-infection before robust immunity is attained. Re-infection has only been conclusively documented in a very limited number of cases so far and it is unclear whether this is a rare phenomenon or may prove to become a common occurrence. Likewise, how a previous infection would affect the course of disease in a re-infection, and whether some level of pre-existing immunity would affect viral shedding and transmissibility, is unknown.
With flu pandemics, herd immunity is usually attained after two to three epidemic waves, each interrupted by the typical seasonality of influenza virus and more rarely by interventions, with the help of cross-protection through immunity to previously encountered influenza viruses, and vaccines when available. For COVID-19, which has an estimated infection fatality ratio of 0.3–1.3%, the cost of reaching herd immunity through natural infection would be very high, especially in the absence of improved patient management and without optimal shielding of individuals at risk of severe complications. Assuming an optimistic herd immunity threshold of 50%, for countries such as France and the USA, this would translate into 100,000–450,000 and 500,000–2,100,000 deaths, respectively. Men, older individuals and those with comorbidities are disproportionally affected, with infection fatality ratios of 3.3% for those older than 60 years and increased mortality in individuals with diabetes, cardiac disease, chronic respiratory disease or obesity. The expected impact would be substantially smaller in younger populations. (…)
At this stage, only non-pharmaceutical interventions, such as social distancing, patient isolation, face masks and hand hygiene, have proven effective in controlling the circulation of the virus and should therefore be strictly enforced. Potential antiviral drugs that reduce viral loads and thereby decrease transmission, or therapeutics that prevent complications and deaths, may become significant for epidemic control in the coming months. This is until vaccines become available, which will allow us to reach herd immunity in the safest possible way.
The Lancet, Sep. 19, 2020: A history of herd immunity
(…) With potential vaccines still likely to be many months away, and with lockdowns and social distancing causing social and economic disruption, there are no ideal options. British public health expert Raj Bhopal likened the situation to being in zugzwang, “a position in chess where every move is disadvantageous where we must examine every plan, however unpalatable”. (…)
Without a vaccine, many people would have to die from COVID-19 before population immunity is achieved. (…)
At one urgent care centre in a largely Latino, working-class neighbourhood in New York City—named, remarkably, Corona—68·4% of antibody tests came back positive. But it remains unclear whether these antibodies will protect individuals or generate herd immunity. Until there exist vaccines that can do both of those things, societies will need to continue to try to control the spread of the virus at the local level through public health measures and community action, to protect the most vulnerable people, and to support public health and medical systems. We should not simply put our faith in the immunity of our herd.
Do we really know enough to go all in on herd immunity?
Letting most people live normal lives while corralling innocent “risky” people? People do not die of their own virus like they die of their cancer.
And how about long term sequels from this still unknow virus?
A team at the Zhongnan Hospital of Wuhan University led by Peng Zhiyong, director of the hospital’s Intensive Care Unit, has been conducting follow-up visits with 100 patients since April. The first phase of the one-year program was finished in July, media reports said.
Ninety percent of 100 recovered COVID-19 patients who received treatment in a Wuhan hospital still have lung damage (…). The average age of the 100 patients is 59. (…) Some recovered patients have to rely on oxygen machines even three months after being discharged from the hospital, Liang Tengxiao, a doctor from the Dongzhimen Hospital, Beijing University of Chinese Medicine, was quoted as saying by the media. (…)
The results also showed that antibodies against the novel coronavirus in 10 percent of the 100 patients Peng’s team visited have disappeared. (…)
(…) Doctors now know that Covid-19 not only affects the lungs and blood, but kidneys, liver and brain – the last potentially resulting in chronic fatigue and depression, among other symptoms. Although the virus is not yet old enough for long-term effects on those organs to be well understood, they may manifest regardless of whether a patient ever required hospitalization, hindering their recovery process.
Another troubling phenomenon now coming into focus is that of “long-haul” Covid-19 sufferers – people whose experience of the illness has lasted months. For a Dutch report published earlier this month (an excerpt is translated here) researchers surveyed 1,622 Covid-19 patients who had reported enduring symptoms; the patients, who had an average age of 53, reported intense fatigue (88%) persistent shortness of breath (75%) and chest pressure (45%). Ninety-one per cent of the patients weren’t hospitalized, suggesting they suffered these side-effects despite their cases of Covid-19 qualifying as “mild”. While 85% of the surveyed patients considered themselves generally healthy before having Covid-19, only 6% still did so one month or more after getting the virus. (…)
Sweden vs other Scandinavian countries:
BTW: Concern over the coronavirus outbreak among Gen Z has begun to rise again, 58 percent of the youngest generation say they are very concerned about the outbreak, after dipping to 38 percent in September. Read more.
