17/7/20: Debt Servicing Burden: U.S. Households

Going into the COVID19 pandemic, the U.S. households cost of servicing debt and other financial obligations has been trending at historical lows. The data we have is through 1Q 2020. In April, personal disposable income rose 13.1 percent, before falling 4.9 percent in May. We won't know the data for actual debt servicing burden for June until July 31st, but the above monthly income figures suggest that the burden of overall financial obligations should have fallen to around 13.955 percent by the end of May, the lowest on record:

The above estimate is, of course, based on no extraordinary uplift in debt levels. It is, however, consistent with the significantly loosened conditions for credit in the U.S. banking system through

Given that April 2020 increase in disposable income was driven exclusively by fiscal transfers, and given the fact that a reduced burden of debt servicing for households is likely to sustain lower default rates on debt than would have occurred in absence of such transfers, the above illustrates a de facto channel for monetary policy transmission from QE (deficit monetization) to the households and then to the banks, with credit tightening peaking in early April and then easing through the week of July 10th.

16/7/2020: Updated: Trumpassery of Coronavirus

I just had to update the Trumpassery of Coronavirus chart with the latest leadership pearl...

The Commander in Beans...

16/720: Updated: America's Scariest Charts: Unemployment Claims

New data for the week prior on continued and new unemployment claims continues to support a view of a relatively slow and slowing-down recovery in the U.S. labour markets.

Continued unemployment claims:

Continued unemployment claims in the week of July 4 amounted to 17,338,000 down 422,000 on prior week. A week before, the rate of decline was 1,000,000, and in 4 weeks prior to the the week of July 4, 2020, average weekly rate of decline was 711,500. Current 4 weeks average rate of decline is 737,750 driven by two weeks of > 1 million declines. The good news is that we now have 8 consecutive weeks of drops in continued unemployment claims. The bad news is that we do not know how much of the decline from the COVID19 pandemic peak is down to benefits expirations, or due to benefits cancelations due to some income being earned, with restored income being below pre-COVID19 levels. In other words, we have no clue as to whether jobs being restored are of comparable quality to jobs lost.

Next, Initial Unemployment Claims: these remain troubling too. In the week of July 11, 2020, there were 1,503,892 new initial unemployment claims filed, the highest number in 5 weeks.

As the table above highlights, we now have more than 17 weeks of new unemployment claims filings in excess of 1 million. Note: new unemployment claims filings can reflect many factors, including:

1. A person becoming newly unemployed;
2. A person who was unemployed and temporarily left unemployment insurance coverage due to receipt of irregular earnings;
3. A person who was unemployed, and run out of benefits coverage, taking a temporary job, but re-listing as an unemployed at that job expiration; 
4. A person who was unemployed before but did not secure past unemployment benefits; and
5. A person who was unemployed but was denied prior benefits due to various reasons.

Here is the history of the Initial Unemployment Claims, smoothed out to a 3mo moving sum:

An updated employment outlook for July 2020:

14/7/2020: Updated: Trumpassery of Coronavirus

President Trump, his leadership and the economics of pandemic, aka: Trumpassery in Action

13/7/20: COVID19 Update: Sweden v Nordics

Updating charts comparing Sweden and ex-Sweden Nordic countries, normalizing population of the latter to that of Sweden:

Nope, no 'herd immunity' in Sweden. But there is a crushed curve for new cases and deaths in the Nordics. 

13/7/20: COVID19 Update: Russia

Russia continues to report slowly declining numbers of new cases, while official death rates are trending up:

The above numbers confirm what I have been saying for some time now: relaxation of constraints in advance of the constitutional referendum vote was too fast, too early to achieve a meaningful control over the pandemic numbers.

One controversial statistic reported by the Russian authorities is the death rates (see more on this here: https://trueeconomics.blogspot.com/2020/07/30620-covid19-update-russia.html). Russian reported mortality rates have finally rose to the levels within the 95% confidence interval of the mean for BRIICS economies:

13/7/20: COVID19 Update: US vs EU27

While I was whitewater rafting over the weekend, the US of A has finally surpassed the EU27 in terms of overall death counts relating to COVID19 pandemic. This is without adjusting the figures for population size or pandemic onset timing, etc.

So here are the updated charts comparing the U.S. and the EU27:

In case numbers, the U.S. is on a clear 'lead' relative to 'slow' EU27. The latter has smashed the curve, the former is 'enjoying' a public health disaster befitting a country with no real public health institutions:

Or illustrated from a different angle:

Like a mighty Ford F150 smashing the puny Euro Fiat 500, the U.S. totally dominates the chart of new COVID19 cases... you know, if only we could force China and Mexico to buy more of those in a new trade deal... 

 

And U.S. public health system, the pride of the nation and both President Trump and his competitor, Joe Biden, is firing on all cylinders:

Sarcasm aside, and recognizing the genuine nature of this tragedy, it is mind-boggling to think how the U.S. tolerates this level of leadership incompetence. If peak levels of deaths from COVID19 were coming from older patients (not that such a reality should have been acceptable in the first place), we are now witnessing increasing numbers of younger patients dying from the virus.

13/7/20: COVID19 Update: Worldwide Cases and Deaths

The COVID19 Pandemic is far from over. It is, in fact, is far from slowing down.

Worldwide new cases arrivals are still raging at a medium-term increasing rates:

Much of this growth, commented on in the chart above, is coming from the emerging and developing economies, with lower rates of testing, implying the true extent of the pandemic is much greater than thee official stats reflect.

Deaths counts are now trending at an elevated level, compared to the trough around late May and early June, caused by the crushing of the curve in Europe. Since then, U.S. and emerging economies' deaths counts have overtaken the trend.

Consistent with the comments above, growth rates in new cases remain positive and growth rates in deaths are now also in the positive territory:

Two summary tables for key descriptive statistics, covering G7+ advanced economies and BRIICS economies:

Put simply, we are heading into the period of new economic restrictions in the U.S. and pressures are mounting in MENA and Latin America to impose or maintain stricter controls on public mobility. The pandemic is still in Wave 1, and this wave is still accelerating.

13/7/20: COVID19, Self-Employed and Contingent Workforce

Self-employed workers rarely get any systemic/analytical attention from policymakers and business analysts. Despite their huge importance in modern economies. This especially applies to the current environment, impacted by COVID19, in which policy tools used to offer some security of income and jobs tenure as an insurance against the pandemic have been focused almost exclusively on protections and supports to regular employees and employers, leaving the self-employed outside the safety nets.

Germany's ifo Institute did some interesting research on the topic of self-employed and the impact of COVID19 on them. ifo's study found that 66% of the self-employed "recorded declines in sales" during the pandemic, as opposed to just 20% of those in more secure workforce positions. Per ifo: "...the vast majority of blue- and white-collar workers and civil servants (80 percent) have not suffered any loss of salary as a result of the coronavirus crisis". Furthermore, "More than half (61 percent) of the self-employed were unable to work at all or worked only to a limited extent during the pandemic. ... Among the self-employed, it has particularly affected women who are single parents, 85 percent of whom had to reduce or completely stop their activities. Among dependent employees, meanwhile, it is low earners, secondary school graduates, and blue-collar workers who have suffered the most."

10/7/20: COVID19 Update: Sweden v Nordics

Sweden has been continuing its uncontested-by-anyone-else march toward thee non-existent 'herd immunity':

And the pipeline of upcoming intensive care patients seems to be un-abating:

In the mean time, the rest of the Nordics have crushed the curve. And this is without inclusion of Iceland. 

Personally, I cannot understand how Sweden's resident are tolerating this, but... who knows... 

10/7/20: COVID19 Update: US vs EU27

Updating charts on the U.S. vs EU27 comparatives for COVID19 pandemic:

U.S. is now one day away from catching up with the EU27 in terms of total deaths, even without adjusting for the larger EU27 population:

Note: since higher rates of testing - per 1 million population - should result in earlier and better detection of the COVID19 cases, and since the U.S. population is younger, demographically, than that of the EU27, one should expect U.S. death rates peer 1 million of population to be lower than those in the EU27. This difference should furthermore favour the U.S. due to the fact that Europe experienced much earlier onset of community contagion, when neither testing nor treatment were widely available and as accurate/effective as they are today.

U.S. vs EU27 cases and deaths - daily arrivals:

The charts above clearly show that the EU27 have managed to 'crush the curve' of contagion and deaths, while the U.S. shows no signs of success in dealing with the pandemic.

Here is a more direct comparative between the U.S., EU27 and other major advanced economies:

10/7/20: COVID19 Update: World Cases and Deaths

Updating COVID19 data through today's ECDC release:

Worldwide, new cases are at a historic high of 227,756, reaching above 200K in three days in a row. In the last 7 days, we have had highest, second and third highest daily counts on record. This is despite the fact that testing remains spotty in higher growth geographies (emerging and developing economies). The trend is accelerating, as well (see last chart, blue line).

Deaths:

 In the last seven days, we had three days with daily deaths counts ranked in top 50 overall. The trend remains elevated, but relatively steady. As the chart below shows (orange line), rates of growth in daily deaths are now positive, once again:

The above presents a serious problem to the idea of opening international travel. Simple 'exclusion' or 'quarantine' rules applied to countries that remain hot spots of COVID19 pandemic are not sufficient to prevent pandemic growth re-accelerating in the countries which managed to significantly depress the curve, as international travellers can use different entry points relative to their point of origin.