Analysis of current economic conditions and policy
Continued Recovery in June (II)
ADP releases its figure for private nonfarm payroll. Bloomberg consensus is for BLS is for an increase.
The obvious question: will July register an increase, as restrictions are re-instituted?
9 thoughts on “Continued Recovery in June (II)”
Moses Herzog
I think it gets back to enforcement of the restrictions. If California and Texas enforce widespread restrictions then that has to have an impact. As far as that particular part of it, I could see it going either way. But this is the standard state Governor excuse “If I make masks required how do I enforce that??” and the truth is, you really can’t, because no police department wants to “process” a COVID-19 carrier in the precinct offices and they don’t want them spreading it in their jail detainee population either. So the only way they enforce is if “Karen” starts acting like a mental health specimen and being semi-violent at the local Walgreens or breaking everyone’s eardrums with her screeching.
Ivan
This paper suggests that the actual driver of economic impact of the virus is the publics fear and choices (regardless of government rules). https://bfi.uchicago.edu/working-paper/2020-80/
The government restrictions are only marginally driving economic activity. However, as far as infection rates goes, smart government policies can in the long run have influence on infection rates and fears. The stupid states governors reduced restriction way before they had the virus under control and now are dealing not only with overflowing hospitals, but also an economic shutdown because consumers are staying home (whether businesses are open or not).
Dr. Dysmalist
I suspect that the federal mitigation measures have been damping the economic slowdown effects regardless of the cause of them. I fear that, as/when states resume restrictions in the absence of federal mitigation measures (because they expired), the negative economic effects that result will be significantly greater.
Moses Herzog
@ Ivan & Dr. Dysmalist
In my state, although I have no quoted numbers to support this, only my own subjective observations, If you think of federal, state and city as “parents”, it is actually the Mayors of cities here that have been put in the role of the “baddy” disciplinarian parent. Because neither federal or even state level government has taken on their duties, for they fear losing the high school popularity contest with citizens. https://www.readfrontier.org/stories/city-leaders-frustrated-by-inadequate-leadership-from-state-county-during-pandemic/
It should also be noted that Oklahoma Republican legislators have been siphoning off money and resources from public education for DECADES, some of which is absconded with by “private schools” which are funded with public money, which the private school “administrators” (if you can call them that) abscond with taxpayer funds after they lie about student enrollment numbers. They LIE about student enrollment numbers because they can demand more taxpayers dollars to classroom seats that are indeed EMPTY, and “administrators” can skim off into their own bank accounts. I suspect this fleecing of public education is going on in many other states, but not to the severity it does in Oklahoma.
Why am I on a rant about public education dollars being robbed to give to Republican legislators’ cronies in “voucher” schools?? Because when it happens over an extended period of time as it has in Oklahoma, it effects voting constituent’s general attitudes to science and facts and the degree to which they can be “led around by the nose” like children. Which in Oklahoma, they very easily are.
Willie
Washington’s governor instituted a mask requirement recently. I do not believe there’s any enforcement provision. It will still do some good, because it will allow small businesses to enforce their own mask policies by refusing service if they choose to do so. It is not a perfect solution, but it sure beats a complete lockdown. That’s the alternative as I see it.
Ivan
It is better than nothing but should be much more tight. There should be fines for entering a business without a mask (in South Korea its $5000, but less could do). There should also be a loss of business licenses for any business where the employees are not wearing masks. All of this should be enforced by the government – that’s what they do with other reckless behavior such as speeding.
Willie
Businesses can now be cited for serving maskless customers. It is a different means to the same end.
Alan Goldhammer
The main recovery problem is that a lot of us in the >65 age bracket with a lot of disposable income are not spending. My wife and I won’t go out to dinner or the movies. Arts in DC are shuttered through the end of the year if not longer. I was listening to an economist who runs a well known newsletter about four weeks ago. He groups things into thirds. The older third such as us is extremely cautious, the middle third is on the fence but if things start getting worse in terms of infection rates moves into the cautious group. The remaining third doesn’t really care and forces the hand of the middle third. The economist pointed out that even if we get back to 90% by the end of the year, that’s still pretty much of a disaster.
Personally, I still think 12% unemployment is realistic going forward. It could have been much better with a more conservative approach to opening but it is going to be difficult to turn this thing around. My newsletter mantra has been “Stay Safe, Mask Up & Wash Hands” Pretty simple but basically ignored by a huge swath of Americans.
baffling
alan, your assessment is about right. our household is pretty cautious. however, beginning in june i planned on sending kids back to daycare, but paused to see what memorial day held. now daycare will probably be on hold through july, at least. the early reopening is hindering the states ability to truly recover economically because the bottom third behavior will keep us from controlling the virus. lacking daycare impacts a state’s economic efficiency. this is a big problem that is being ignored by the president and most governors.
I think it gets back to enforcement of the restrictions. If California and Texas enforce widespread restrictions then that has to have an impact. As far as that particular part of it, I could see it going either way. But this is the standard state Governor excuse “If I make masks required how do I enforce that??” and the truth is, you really can’t, because no police department wants to “process” a COVID-19 carrier in the precinct offices and they don’t want them spreading it in their jail detainee population either. So the only way they enforce is if “Karen” starts acting like a mental health specimen and being semi-violent at the local Walgreens or breaking everyone’s eardrums with her screeching.
This paper suggests that the actual driver of economic impact of the virus is the publics fear and choices (regardless of government rules).
https://bfi.uchicago.edu/working-paper/2020-80/
The government restrictions are only marginally driving economic activity. However, as far as infection rates goes, smart government policies can in the long run have influence on infection rates and fears. The stupid states governors reduced restriction way before they had the virus under control and now are dealing not only with overflowing hospitals, but also an economic shutdown because consumers are staying home (whether businesses are open or not).
I suspect that the federal mitigation measures have been damping the economic slowdown effects regardless of the cause of them. I fear that, as/when states resume restrictions in the absence of federal mitigation measures (because they expired), the negative economic effects that result will be significantly greater.
@ Ivan & Dr. Dysmalist
In my state, although I have no quoted numbers to support this, only my own subjective observations, If you think of federal, state and city as “parents”, it is actually the Mayors of cities here that have been put in the role of the “baddy” disciplinarian parent. Because neither federal or even state level government has taken on their duties, for they fear losing the high school popularity contest with citizens.
https://www.readfrontier.org/stories/city-leaders-frustrated-by-inadequate-leadership-from-state-county-during-pandemic/
This has resulted in some mayors receiving death threats (at least two from employed town police in the nearby vicinity). As far as I am aware, that police officer was never disciplined or fired.
https://www.enidnews.com/oklahoma/police-investigating-threats-against-norman-mayor/article_da0e20f9-e645-54a1-9d48-bdeba013a167.html
It should also be noted that Oklahoma Republican legislators have been siphoning off money and resources from public education for DECADES, some of which is absconded with by “private schools” which are funded with public money, which the private school “administrators” (if you can call them that) abscond with taxpayer funds after they lie about student enrollment numbers. They LIE about student enrollment numbers because they can demand more taxpayers dollars to classroom seats that are indeed EMPTY, and “administrators” can skim off into their own bank accounts. I suspect this fleecing of public education is going on in many other states, but not to the severity it does in Oklahoma.
Why am I on a rant about public education dollars being robbed to give to Republican legislators’ cronies in “voucher” schools?? Because when it happens over an extended period of time as it has in Oklahoma, it effects voting constituent’s general attitudes to science and facts and the degree to which they can be “led around by the nose” like children. Which in Oklahoma, they very easily are.
Washington’s governor instituted a mask requirement recently. I do not believe there’s any enforcement provision. It will still do some good, because it will allow small businesses to enforce their own mask policies by refusing service if they choose to do so. It is not a perfect solution, but it sure beats a complete lockdown. That’s the alternative as I see it.
It is better than nothing but should be much more tight. There should be fines for entering a business without a mask (in South Korea its $5000, but less could do). There should also be a loss of business licenses for any business where the employees are not wearing masks. All of this should be enforced by the government – that’s what they do with other reckless behavior such as speeding.
Businesses can now be cited for serving maskless customers. It is a different means to the same end.
The main recovery problem is that a lot of us in the >65 age bracket with a lot of disposable income are not spending. My wife and I won’t go out to dinner or the movies. Arts in DC are shuttered through the end of the year if not longer. I was listening to an economist who runs a well known newsletter about four weeks ago. He groups things into thirds. The older third such as us is extremely cautious, the middle third is on the fence but if things start getting worse in terms of infection rates moves into the cautious group. The remaining third doesn’t really care and forces the hand of the middle third. The economist pointed out that even if we get back to 90% by the end of the year, that’s still pretty much of a disaster.
Personally, I still think 12% unemployment is realistic going forward. It could have been much better with a more conservative approach to opening but it is going to be difficult to turn this thing around. My newsletter mantra has been “Stay Safe, Mask Up & Wash Hands” Pretty simple but basically ignored by a huge swath of Americans.
alan, your assessment is about right. our household is pretty cautious. however, beginning in june i planned on sending kids back to daycare, but paused to see what memorial day held. now daycare will probably be on hold through july, at least. the early reopening is hindering the states ability to truly recover economically because the bottom third behavior will keep us from controlling the virus. lacking daycare impacts a state’s economic efficiency. this is a big problem that is being ignored by the president and most governors.