2/7/20: America's Scariest Charts Updated

Some updates from the US Labour Markets to our America's Scariest Charts series today.

First, headline official Non-Farm Payrolls data for the month of June 2020 is out today. Here is the visual:

Total Non-Farm Payrolls dropped during the COVID19 pandemic to the crisis-period low of 130,303,000 in April 2020. This marks a drop of 22,160,000 on pre-crisis high - a decline of 14.53%, the sharpest drop on record for any recession. Since then, the payrolls improved in May and again in June. Payrolls rose 2,699,000 in May and by 4,800,000 in June, prompting the White House (and the army of its trolls) to herald an 'unprecedented' 'tremendous' recovery. However:

• Despite these gains, current employment levels remain 14,661,000 below pre-COVID19 highs.  
• Relative to the pre-COVID19 trend, current payrolls are 15,398,000 below where they would have been were the pre-crisis trends to remain place. 

Hardly 'tremendous' success so far.

Summary of comparatives of the current recession to prior recessions:

Now, next in the set of our America's Scariest Charts: initial unemployment claims 9also released today). The table above already shows the latest print for these series - for the week ending June 27, 2020, at 1,445,481 new claims filed. This was virtually unchanged on the revised final estimate for the week ending June 20, 2020 that came in at 1,460,056. New claims have basically stabilized from the week of May 30th through latest. 

The six-months moving sum of all initial unemployment claims filings is now at a massive 47.477,907. This number, of course, are reflective of claims filed. And it does not reflect expired claims or people moving from unemployment to employment. Hence, it is useful in only highlighting the relative magnitude of the current jobs crisis controlling for duration.

Prior to the COVID19 pandemic, there has been only one instance of initial unemployment claims exceeding 1 million count in any given week - during the week of January 9, 1982, when there were 1,073,500 new claims filed. Which means that last week's print - although well below peak COVID19 filings - still stands almost 35% above the worst weekly unemployment claims filing in pre-COVID19 history. 

So here is the overall 'recovery' to-date:

You can call it 'magnificent' or 'tremendous' or you can call it 'ugly'. I guess your perspective will depend on your party affiliations and the membership in the 1% vs 99% clubs.

2/7/20: COVID19 Update: World Cases and Deaths

Updating charts for data through today's ECDC release:

Global cases (above) are at an all-time high, global deaths are trending up (below).

Rates of growth, smoothed, confirm the above:

1/7/20: COVID19 Update: Three Charts on COVID19 Developments in Major Emerging Markets

Via Danske Bank Research, three really neat sets of visualizations for abating COVID19 crisis dynamics in major emerging markets:

Note: the number of tests per capita in Russia is in part explaining the lower death rates from COVID19 there. Russia runs earlier testing and interventions, leading to longer stays in hospitals, higher hospitalization rates with lower ICU use rates, allowing for earlier interventions. However, Russia also produces death statistics for COVID19 that are different in methodology to the EU27 standards. Specifically, Russia claims to carry out more autopsies in cases of all deaths, allowing it to attribute deaths to primary causes, e.g. cardiac failures, that may have COVID19 as underlying trigger.

1/7/20: Manufacturing PMIs Q2 2020: BRIC

BRIC economies reported their June manufacturing PMIs, so we can update Q2 2020 data. Here is the chart:

Despite improving PMIs in all BRIC economies through June 2020, quarterly readings remains deeply recessionary in all BRICs except for China.

• Brazil Manufacturing PMI averaged 40.6 in 2Q 2020 down from 1Q reading of 50.6. Brazil Manufacturing sector growth was slowing down from the start of 4Q 2019 and was showing anaemic growth (statistically, zero growth) in 1Q 2020 before COVID19 restrictions kicked in. June 2020 monthly reading rose, however, to 51.6 - signalling pretty robust growth on a monthly basis for the first time since the end of February. Some good news, but not enough to lift 2Q 2020 average above 50.0 mark.
• Russia Manufacturing PMI remains below 50.0 in June, as it did consecutively since the end of April 2019. This marks 14 months of continued contraction, only accelerated by COVID19. Quarterly PMI for 2Q 2020 is deep under water at 39.0 - the worst reading in history, matching that of the lows of the 2009 recession in 1Q 2009. June monthly uptick to 49.4 is still leaving Russian Manufacturing index below zero growth mark of 50.0. 
• India Manufacturing PMI rose from 30.8 in May to 47.2 in June 2020, but remains well below zero growth line. Quarterly index is now at 35.1 for 2Q 2020, which is an all-time low. 
• China Manufacturing PMI was the only BRIC index to reach into positive growth territory in 2Q 2020, at 50.4. Statistically, this reading is indifferent from zero growth conditions in the sector, however. 

Overall, GDP-shares weighted BRIC Manufacturing index is at 45.0 in 2Q 2020, down from 49.1 in 1Q 2020. Not as bad as 4Q 2008 - 1Q 2009 readings of 43.1 and 43.7, respectively, but bad. Still, BRICs as a group managed to sustain less manufacturing decline than the Global Manufacturing index which collapsed to 43.6 in 2Q 2020 from 48.4 in 1Q 2020.

30/6/20: COVID19 Update: Russia

Russia is going to the voting booths and the country is - by a mile - nowhere near being ready to relax COVID19 restrictions. This is risking tragic consequences in the near future.

Cases and deaths are still high. For deaths, this holds even if we do not correct for Russian reported death rates, influenced by hell knows what - different methodology (yes), shoddy local reporting (may be), lags in reporting (probably), Kremlin conspiracy (probably not, but who knows) and so on.

Correcting Russian data on reported deaths is hard, primarily (in my opinion, due to different methodologies in reporting - link below). At the upper tail end of the arguments for adjustment (https://www.themoscowtimes.com/2020/06/10/moscow-sees-58-mortality-spike-in-may-as-russias-low-virus-deaths-questioned-a70532 and https://www.theguardian.com/world/2020/jun/04/st-petersburg-death-tally-casts-doubt-on-russian-coronavirus-figures) we have Moscow and St Petersburg cases in May (peak contagion and deaths growth month in the most severely impacted region in Russia with massive population density). So ca 60% estimate for understatement in Moscow most likely runs at around 45 percent for Russia as a whole. Which would roughly be in line with my model.

Notice, even with adjustment (which yields mortality to-date 44% higher than reported), Russia death rate from COVID19 remains relatively low (see comparatives to BRIICS below).

Key takeaway: Russia is not ready to relax COVID19 restrictions beyond modest local restrictions easing. The country is most certainly not ready for allowing in-person voting.

30/6/20: COVID19 Update: US vs EU27

World counts update for today can be found here: https://trueeconomics.blogspot.com/2020/07/30620-covid19-update-world-cases-and.html.

Now, updating charts for the U.S. and the EU27. Note: normalized charts show cases and deaths adjusted for population differences. 7-days lagged data reflects differences between the two data sets in terms of arrival of first deaths.

As always, all comments in the charts (click on the chart to enlarge).

Total counts unadjusted for population size differences. Key: this shows the U.S. catching up with (larger in population) EU27 in total numbers of deaths, having vastly outstripped the EU27 in the number of cases already:

Adjusting for population differences:

Illustrating the distance between the U.S. and the EU27 in the number of deaths, adjusted for population differences and a time lag in the U.S. onset of deaths, relative to the EU27:

Actual cases, daily arrivals:

Actual deaths, daily additions:

The U.S. cases dynamics behave distinctly from every other advanced economy, and not in a good way. U.S. death counts also significantly exceed those in the EU27, as well as every other large advanced economy. Again, not in a good way.

30/6/20: COVID19 Update: World Cases and Deaths

New cases and deaths updated. All commentary in the charts (click to enlarge).

Adding a new graph to collection: this looks at smoothed-trends in both deaths and counts of new cases:

30/6/20: COVID19 Impact on SMEs and Employment

Some really good mapping in terms of financial exposures/risk and COVID19 vulnerabilities within the U.S. small and medium enterprises sectors, via McKinsey & Co:

Source: https://www.mckinsey.com/featured-insights/americas/which-small-businesses-are-most-vulnerable-to-covid-19-and-when. Interactive graphs: https://covid-tracker.mckinsey.com/small-business-vulnerability.

Additional: vulnerabilities across jobs https://covid-tracker.mckinsey.com/vulnerable-jobs/industry-occupation.

30/6/20: Long-Term Behavioral Implications of COVID19 Pandemic

My article on the behavioural economics and finance implications of COVID19 pandemic is now available on @TheCurrency website: https://www.thecurrency.news/articles/19675/debt-distress-and-behavioural-finance-the-post-pandemic-world-be-marked-by-deep-and-long-lasting-scars.

Hint: dealing with COVID19 impact will be an uphill battle for many and for the society and economy at large.

This is a long read piece, covering general behavioural fallout from the pandemic, and Ireland-specific data.

29/6/20: The Scale and Distributional Effects of Monetary Activism During Pandemic

A neat summary of global monetary policy supports deployed during the COVID19 pandemic via McKinsey & Co:

In effect, globally, monetary authorities are underwriting government and private corporate debt for larger companies. This, naturally, will lead to reduced investment and competition from smaller firms, including more innovative ones, raising the relative cost of debt to these companies. Both, directly and indirectly, the monetary policies favour equity investment in top-tier, larger companies, effectively increasing not only the cost of debt, but the cost of capital in the medium term for smaller and medium-sized companies.

29/6/20: Arithmetic and Retail Sales: Ireland's Case

Monthly v annual, downside v upside... when it comes to rates of change, COVID19 is a good reminder of how hard, intuitively, arithmetic can be...

Take Irish retail sales. Gloriously, monthly changes in retail sales are booming, up 29.5% m/m in volume and 28.4% in value. A 'V-shaped' thingy. Un-gloriously, year on year the sales are 26.6% in volume and 29.1% in value. But here's the ugly thingy: suppose a year ago you were retailing 1 unit (in volume or value). Annual rate of change in these was around 2.55% over 2016-2019 for value and 4.4% in volume. Which means you were 'rationally' expecting to be selling 1.0255 units in value and 1.044 units in volume around this time 2020. You are selling, instead 0.705 units in value and 0.734 units in volume. You have, prudently, planned your investment and spending allocations, based on similar expectations. Your reality is that you are down 31.3 percent on where you were supposed to be in value and 29.7 percent in volume. Notice the 'wedge' between volume and value. Deeper deterioration in value than in volume means not only that your revenue fell off, but that you are working harder to deliver on what revenue you do derive. In basic terms, you now need to be selling roughly 5 percentage points more of volume to derive the same euro value.

In simple analogy terms, you are trying to swim back to shore in a gale-force head wind, with a 12 feet swell, and against a roaring riptide. But otherwise, it's a 'V-shaped' looking thingy...

29/6/20: Eurocoin Growth Indicator June 2020

Using the latest Eurocoin leading growth indicator for the Euro area, we can position the current COVID19 pandemic-related recession in historical context.

Currently, we have two data points to deal with:

1. Q1 2020 GDP change reported by Eurostat (first estimate) came in at -3.6 percent with HICP (12-mo average) declining from 1.2 percent in January-February to 1.1 percent in March.
2. Q2 2020 Eurocoin has fallen from 0.13 in March 2020 to -0.37 in June 2020 and June reading is worse than -0.32 recorded in May. This suggests continued deterioration in GDP growth conditions, with an estimate of -2.1 percent decline in GDP over 2Q 2020. HICP confirms these: HiCP dropped from 1.1 percent in March 2020 to 0.9 percent in May. 

Here are the charts:

We are far, far away from the growth-inflation 'sweet spot':