U.S. Labor Market

 The labor market is finally starting to see improvements after COVID-19 swept through the world. Although unemployment claims are still well above the claims that were filed during the 2007 recession, the numbers are starting to decline. This means that more people are getting back into the work force and the economy is starting to return to its state before the virus. Even though people are getting hired again, the demand for most businesses is still low, so these companies are unable to pay their employees and some are being forced to shut down. Consumer spending is seeing a little increase but is still 4% lower than it was before the pandemic. June was a great month for potential employees with an increase of more than 4 million jobs. This gives the community hope that things are starting to turn around and get back to where they should be. This will be a long process since nobody is certain on when or if this virus will be manageable so many people are still skeptical about going out in public.

https://www.reuters.com/article/us-usa-economy-idUSKBN26M650

Trump Tests Positive for Coronavirus - Markets Uncertain

 Source:

After Trump tested positive for Coronavirus last evening, after hours prices began to rapidly drop. While the market is already quite uncertain, the "leader of the free world" getting ill only will make it worse. Comparing to previous presidential health issues, such as Eisenhower having a heart attack, the market did not react as harshly. 

While it does not put the US in a great situation currently, I believe the past effects of the pandemic, and the certainty that under this republican administration we are unlikely to see any new shifts in foreign policy are key to realizing that the economy will not be drastically hurt by todays news. 

How do you think this new story will continue to affect the hopeful economy as we are attempting to climb back from the coronavirus market crash in March? 

US unemployment drops to 7.9% but hiring slows pre-election

While the U.S. unemployment rate has dropped to 7.6% in September, data shows that hiring of workers has slowed down with many Americans giving up on looking for work during the pandemic. Only 660,000 jobs were brought back or created in September. Since the government does not count people that are unemployed BUT are not actively looking for a job, the fall in the unemployment rate from 8.4% in August is mainly a reflection of the decline in people looking for work rather than a surge in hiring. Businesses in the travel and tourism industry continue with layoffs and the number of laid-off workers with permanent job loss rose from 3.4 million to 3.8 million.  With the uncertainty and fear from the pandemic, some are saying that it could take until 2023 for the job market to fully recover.

Women and minorities (African Americans and Hispanics) have bared the brunt of the recession with more women leaving the workforce compared to men to either help their children with at-home schooling or industries such as retail and health being hit hard by the recession. Unemployment for African Americans and Hispanics,12.1% and 10.3% respectively, are still considerably higher than it for whites at 7%. 

https://apnews.com/article/virus-outbreak-us-news-economy-bda32f552bd450be2b804131cd5d49e6

Hard for U.S. Economy to Recover from Debts after Covid

Initially, the U.S. economy had some sort of plan as to how to go about their debts and to recover from it in the future. But when Covid struck, it wrecked all chaos in every section of the economy since the coronavirus brought an end to the longest economic expansion in U.S. history making it nearly impossible for the U.S. to come back from this mess. The most importance piece of recovery of debt for the U.S. is of consumer spending, which accounts for nearly 70% of the U.S. economy. Why this matters is because economies carrying a lot of debt generally have weaker recoveries. Businesses and consumers focus on cutting their liabilities during downturns rather than spending cash and spending is what an economy needs to rebound from. Right now, the borrowing of money along with low interest rates adds up to about $64 trillion in consumer, business and government debt which is more than triple the country’s GDP. 

What people do not realize is that if the country keeps on going like this, it will lose the GDP growth that it has had for the past few years. There will come a time when the U.S. will be stuck in paying off its own debt, not being able to invest more in order to increase GDP. From student loans to credit cards, each factor plays a role in increasing debts. Businesses have also borrowed at a record pace in recent years, leading to high levels of corporate debt and during a recession, such a thing could force companies to slow spending and hiring to repay what they already owe which in turn would increase the unemployment rate and decrease the GDP due to decrease in consumer spending. 

If such an inevitable situation does occur for the U.S., then the country would have to decrease all aspects of its spending including health care. The only good news is that federal debt is the least concern than during past recessions, due to low interest rates. 

What do you guys think could be a solution for this? Do you think increased taxes and decreased government spending would be enough to come back from such a nightmare? 

    Shifflett, S. (2020, October 01). The U.S. Economy Was Laden With Debt Before Covid. That's Bad News for a Recovery. Retrieved October 01, 2020, from https://www.wsj.com/articles/the-u-s-economy-was-laden-with-debt-before-covid-thats-bad-news-for-a-recovery-11601566931 

DraftKings and Sports betting as a whole.

 DraftKings has had its price increase from over 60% in the last 3 weeks on the New York Stock Exchange. Reasons for this rapid increase in price include, Michael Jordan joining DraftKings executive board, the allowing of the continuation for all professional sports in the United States, as well as the increase of states legalizing sports betting. As of today, only 18 states legalize sports betting. Experts predict this number to increase drastically in as little as 5 years. I wanted to bring this up because a lot of people say that sports are one of the main drivers of America. You may have never thought about this but I want you to think about it now. Think about all the people in the United States that watch and follow sports often every year. It's something that brings people together and starts discussions. It is a known fact that when a local professional sports team performs well, the city that it is located in does very well economically. This is because people are eager to come and watch the games in person. Local restaurants, hotels, bars and shops all do very well because people are pouring in from all over to watch the game. With this in mind, I believe that with the continuation of the legalization of sports betting across the nation, the country will benefit strongly economically. This is because being able to bet on sports makes the game even more enjoyable and more engaging. This is because the bettor now has something at stake when watching the game. I have also heard of many people that have said that sports aren't interesting to them because they don't have any incentive to watch. With sports betting being legalized, these same people are now able to be engaged in the sport and have a reason to cheer on a team/player. What do you guys think? Do you believe that sports betting will benefit the country like I do? 

https://www.barrons.com/articles/draftkings-stock-rises-on-philadelphia-eagles-deal-51601568824

The First Female Recession Threatens to Wipe Out Decades of Progress for U.S. Women

 “The pandemic is disproportionately affecting women and threatening to wipe out decades of their economic progress. As the crisis drags on, some of the biggest pain points are among women of color and those with young children.” During the last recession, women helped pull the U.S economy out. This recession is being characterized as the “female recession.” Instead of shrinking the wage gap, the economists say the wage gap following this pandemic will likely be more than two percentage points wider. Women between the ages of 25 and 54 are leaving the workforce in order to care for their children. If millions of women don’t return to work following the pandemic, there could be a significant decrease in GDP. “McKinsey & Co. expects global gross domestic product could be $1 trillion less in 2030 than it would be without a gender unemployment gap.” Not only could this female recession slow the economic recovery, but this is a major setback for women in the workforce and the decades of progress.

Rockeman, Olivia, et al. “U.S. Recovery: Women's Job Losses Will Hit Entire Economy.” Bloomberg.com, Bloomberg, 30 Sept. 2020, www.bloomberg.com/news/articles/2020-09-30/u-s-recovery-women-s-job-losses-will-hit-entire-economy?utm_campaign=news.

"Disney Lays Off 28,000, Mostly at Its 2 U.S. Theme Parks"

https://www.nytimes.com/2020/09/29/business/disney-theme-park-workers-layoffs.html

The United States has some of the world's best theme parks. Americans and people from around the world swarm to them year round, especially in the summers.  However the COVID-19 pandemic prevented many from opening to full capacity or opening at all.  Disney theme parks especially took a blow.  Much of the state of California is still on a short leash compared to the rest of the United States where most activity has resumed.  Although park owners of every type have pushed back on keeping parks closed, Gov. Newsome and the California State Health Department are not budging.

Disneyland and Disney World employed over 110,000 people before the pandemic. Disney World was able to open in Florida, but the popular family vacation park has not experienced the crowd it anticipated. Rather than risk the visit, families are choosing not to attend and wait until all of the restaurants, fire works, live shows, and hugs from favorite characters return.

The closing and soft openings of Disney parks, and many other amusement parks, has left people of all sorts without jobs. Live entertainers, grounds keepers, culinary artists, engineers, and many more lost their jobs. Live entertainers are especially out of luck in a time like this. Amusement parks provide a substantial amount of employment to live entertainers, it is without a doubt that these people will not be returning to work any time soon.

Could this mean a drop in college and university students pursuing degrees in the arts? Will the lack of consumption within amusement parks and similar places show in the GDP? With consumption going down, are people saving more? Will unemployment begin to rise again as companies begin to lose hope?

U.S. economy plunges 31.4% in the second quarter but a big rebound is expected

 

    During this past quarter, the GDP of the economy has plunged at a record rate of 31.4 percent. This drop in GDP is the biggest drop in US history. With this news, the economy is in fact expected to rebound in the present quarter we are in. Some even expect it to swing back at a record breaking increase and economists believe that the economy will expand at an annual rate of 30 percent in the current quarter due to a lot of businesses starting back up.This quarters growth will not be announced until October 29 which is 5 days before the election. With Trump's second term somewhat hinging on a rebound economy, many economists believe even with the expected increases it is still a long shot to see such improvement so quickly. Even with all this expected increase there is still a big chance that the economy can retopple back into a recession if  congress fails to pass another stimulus bill.

Do you think that the stimulus bill will prevent the economy from going back into a recession ?

https://www.cnbc.com/2020/09/30/us-gdp-q2-2020.html

Emissions Among COVID-19

 Global warming is a continuous threat to out world; while hope often seems lost of saving it, this might be one of the few good things to come out of COVID-19. Many factors play a role in creating greenhouse gases; thanks to the shut down, we saw a huge reduction in emissions. There have been many changes made to energy supply, demand, and prices in both the short and long run. COS emissions outlook has been reduced by 27.5 gigatons (GT) for the next 30 years; however, this reduction needs to be increased 10 times to meet the target set by the Paris Climate Accord. The achievements that have been made put us in a position equivalent to where we needed to be by 2027, which shows that the necessary changes are possible.

Global GDP has been estimated to be lowered by $5 trillion. There is a direct correlation between GDP and energy demand. The estimated GDP decrease is equivalent to an energy demand of 7-9 million barrels of oil a day, 1.3-1.8GT of C02 emissions from coal, 0.8-1.1 GT of C02 emissions from oil, and 0.7-0.9 GT of C02 emissions from natural gas. All of these calculations are equal to about 2%-5% of annual energy emissions. GDP consumption is moving away from areas that require so many energy resources due to a shift in consumer dynamics. More people are working from home, companies are realizing that home offices could be a good alternative to offices, and there has been a general decrease in production that requires a lot of  energy resources. The expected decrease in GDP due to COVID-19 is going to help set the world on track to produce less emissions; even though it may not be much comparatively, its a good start.  

https://www.spglobal.com/en/research-insights/featured/emissions-emissions-does-covid-19-bend-the-curve-to-2-degrees

Presidential Debate

 https://www.forbes.com/sites/advisor/2020/09/30/tuesdays-presidential-debate-did-we-learn-anything-about-the-economy/#6632a4716464

If you watched the debate last night, regardless if you support the left or the right, you can agree it was an absolute disaster and frankly embarrassing to our country. As Trump and Biden continuously took jabs at each other, there was very few time to actually hear them speak on policies. We had some discussion about the affordable care act, among other things, but there was nothing on the fiscal stimulus package and the trade deficit which I was hoping to hear. 

The stock market jumped today, especially early in the day, despite this political turmoil. The market throughout the election will be very interesting to watch, and will likely be highly volatile if this keeps up. For the second debate, I hope they are able to keep both candidates to their allotted speaking times so we can hear more about their plans moving forward.

Curious to hear if any of you had other thoughts on the debate?

Why is America's economy beating forecasts?

     According to economist Lars Christensen, unemployment will be below 6% by the election. With lockdowns causing unemployment rates around 15%, the 6% prediction seems bold. However, the unemployment rate has been dropping drastically throughout the summer, and the economy is showing good signs. Earlier this month, the OECD predicted that the U.S economy will shrink only by 3.8% this year compared to the June prediction of 7.3%.

    Three factors seem to be contributing to the good news for the economy. The first factor is that the spread of coronavirus in the southern states has slowed. More importantly, another factor is that the United State's stimulus has been larger than any other country. From stimulus cheques to increases in unemployment insurance, the average American has had increases in disposable income since the start of the pandemic. The final factor that has helped the economy is the Unites State's flexible labour market. The fall in recent unemployment reflects people finding new jobs, and not discouraged workers. There has been a reallocation of workers from dying industries to up and coming ones. People seem to be transferring their skills to new jobs quickly. 

    A lot is still up in the air with the pandemic facing another possible surge in Europe, but the U.S economy is holding on.

https://www.economist.com/finance-and-economics/2020/09/26/why-is-americas-economy-beating-forecasts

UK economy nears 'perilous turning point' on Covid-19

 https://www.theguardian.com/business/2020/sep/29/uk-economy-nears-perilous-turning-point-on-covid-19

UK Covid cases are continuing to rise and are predicted to significantly increase into October overseas. The UK stock market is on a downfall and billions of pounds have been removed from the stock market. It went down by 3.5% just like many other economies throughout the world. Boris Johnson is predicted to impose business restrictions and more closures throughout the country, which could make things worse. The UK has lowered prices for recreational activities to force lower inflation. Studies show, however, that even before these restrictions, the economy already started to slow down. On the other hand, retail sales are even higher than what they were before the pandemic. How do you think actions in the UK compare to the US?

Strong Currency, Weak Central Bank

 Article: "Off Target", The Economist, 19 September 2020

Article in a Google Doc

After the European Union issued a collectively funded fiscal stimulus package this earlier this year, confidence in the bloc grew. The block's fiscal policymakers, it seemed, had finally gained enough influence and trust as the European Central Bank, the Union's monetary policymaker. Now the tables are turned. Confidence in the ECB is falling. An appreciating currency, falling prices, and depressed inflation expectations are all causing real interest rates to steadily rise. Meanwhile, the ECB has, as the article indicates, done little to curb the expectations of low inflation. It has not increased asset purchases, provided more fiscal stimulus, nor has it even fought "tooth and nail" to meet its inflation target of 2%. 

What should the European Central Bank do? What effects do you think prolonged expectations of low inflations will have? How will a lack of confidence in the ECB affect Europe's economic recovery from the pandemic?