12/8/20: Beware of Longing for Pre-COVID19 Days

 

We tend to focus on shorter-term and sharper shocks than on longer-term trends, a sort of 'boiling a frog' conundrum in our behavioural biases. Hence, with the development of the current pandemic, we seem to have forgotten a simple fact of pre-COVID19 reality: things weren't going all too happily for the global economy in 2019 before the pandemic struck.

Here is a reminder: look at the economic policy uncertainty measures from the late 1990s through today

As it says in the chart comment box, economic uncertainty was running at elevated levels well before the pandemic struck. 

Here is another way to see this point:

There is a 'problem', folks, even though there is no Houston to page about it. The legacy of the Global Financial Crisis did not dissipate when non-performing loans were finally (largely) wiped out from the banks balance sheets. Since the 'recovery' from the Great Recession, we have been living in a state of perpetual precariat all the way into the current pandemic shock. This state of precariat has been evident in the world data and the European data, so the problem is not 'demographic' or at least not that of ageing. May be it is generational? 

Here is an interesting view on generational changes via Pew Research: https://www.pewsocialtrends.org/essay/on-the-cusp-of-adulthood-and-facing-an-uncertain-future-what-we-know-about-gen-z-so-far/.  As education levels rose across generations, state of insecurity rose as well. Quote; "There are already signs that the oldest Gen Zers have been particularly hard hit in the early weeks and months of the coronavirus crisis. In a March 2020 Pew Research Center survey, half of the oldest Gen Zers (ages 18 to 23) reported that they or someone in their household had lost a job or taken a cut in pay because of the outbreak. This was significantly higher than the shares of Millennials (40%), Gen Xers (36%) and Baby Boomers (25%) who said the same. In addition, an analysis of jobs data showed that young workers were particularly vulnerable to job loss before the coronavirus outbreak, as they were overrepresented in high-risk service sector industries." Note that GenZ has higher levels of educational attainment of any generation. And yet, they are more susceptible to labour market shocks. 

The younger generations are also progressively more attuned to news flows and more anxious about key structural (non-COVID shock) problems we face. 

Have the mid-2010s been a pivoting point toward the new Age of Anxiety? Did COVID19 pandemic exacerbate this onset of the new age? In the long run, these are more important questions than the coronavirus threat alone.