23/4/21: There are no 'social' winners amidst this pandemic

 

No one is left unscarred by the #covid19 pandemic when it comes to public approval trends for the major social stakeholders in Ireland: 

Source: Core Research. 

Broadly-speaking, the above is expected, although Core Research report contains one glaring omission: it does not survey public attitudes to media/press. Worse, the three improving stakeholder groups are also the three least impacted: own employer, citizens and large companies. Meanwhile, approval of the government is still nosediving. 

Covid pandemic is certainly testing Irish (and other countries') key institutional frameworks. The fallout from these tests is going to be long-lasting and deep. We went into the pandemic with huge deficits of trust in key institutions of our societies. And we are becoming more polarized and less enthusiastic in our support for these institutions since then.

22/4/21: Pew Research on Public Support for Economic Reforms in the US, UK, France and Germany

 

Here's an interesting insight from Pew Research surveys:

Set aside France results. Look at the U.S. and UK: 50-51 percent of the countries' population feel the existent economic system needs major changes or "complete" reform. 

While U.S. Right stands out as the least supportive of economic reforms across the Right spectrum voters in all four countries, U.S. Left shares the highest propensity for reforms with the French Left. This, of course, does not mean that what the U.S. Left sees as necessary reforms is aligned with what the French Left sees, but in terms of propensity to support reforms, the U.S. Left is closer to the more 'radical' French Left than to the more 'conservative' German Left.

There are other insights from the data accessible here: https://www.pewresearch.org/global/2021/04/22/many-in-western-europe-and-u-s-want-economic-changes-as-pandemic-continues/ .

19/4/21: COVID19: BRIICS

BRIICS are now in a fully-developed Wave 4 of the pandemic, like much of the rest of the world. This is confirmed across both new case numbers and weekly deaths counts:

I highlighted in the table below two BRIICS countries with seriously questionable data quality: China and India. China has been routinely reporting numbers that simply are out of line with anything reported by other countries around the world. India's death statistics appear to be similarly out line with experience in most countries. In the past, Russia received a lot of criticism for its reporting of Covid19 deaths, but their numbers do not appear to be out of line with other countries reported statistics.

These are six largest emerging and middle income economies in the world, and their pandemic dynamics, in the end, hold the key to the global efforts on combating the spread of the disease. Not surprisingly, these countries account for three of the four main variants of the disease to-date. If anyone thinks that Europe and North America can effectively insulate themselves from what is happening in these countries, by any means other than attaining a sufficient and robust immunity through vaccinations, they really need to reflect hard on their rational thought capacity.

19/4/21: COVID19: Most impacted countries

 

Updated tables for world's most impacted countries and regions below. Starting with the countries with the highest recognized levels of infections:

Followed by the countries with the highest rates of mortality:

• Andorra, Montenegro and Czechia are top three countries in the world in terms of infections rates
• Gibraltar, Czechia and San Marino are top three countries in the world in terms of mortality rates
• Of larger countries, with population > 100 million, the U.S. is the only country featured on both lists, while Mexico is on the list of countries with highest mortality.

A set of table for countries with more than 250,000 recorded cases:

• There are 57 countries on the list as of Thursday last week. 
• Across three metrics used (infections rate, deaths per capita and mortality rate per case), Hungary is rated the worst, followed by Belgium and Bulgaria. Czechia and Slovakia share the 4th and 5th places.
• The U.S. is ranked 3rd highest in the number of infections, in the 8th place in terms of highest deaths per 1 million of population and in the 32nd place in terms of deaths per 1,000 infections. Overall, the U.S. is ranked 8th worst country in terms of pandemic performance across the three metrics.

Table next shows comparatives by the same metrics across regions, treating regions as if they were countries (ranks):

Finally, looking at the major countries and groupings in terms of their cases and deaths counts within the context of their shares of global population:

Notably, majority of the most impacted countries are, currently, in the process of developing, or already experiencing, a new wave of the pandemic.

17/4/21: COVID19: Europe and EU27

 

Looking at Europe and EU27 data for Covid19 pandemic through Week 14 of 2021 (week ending Thursday, April 15):

Since Week 7, the EU27 are in Wave 3, although it appears that this wave might have peaked around Week 12. Latest weekly case counts are below week 12 reading and are lowest in three consecutive weeks. Nonetheless, latest weekly counts rank 10th highest in the history of the pandemic.

EU27 weekly death counts are currently (week 14, 2021) rank 16th highest in the entire 67 weeks-long history of the pandemic.

As summarized in the table below, EU27 new cases are this week down 9% on 4 weeks average, while death counts are up 6%

17/4/21: COVID19: Worldwide Data

 
Despite the ongoing efforts to accelerate vaccinations, we can now, sadly, confirm that globally, we are in the fourth wave of the pandemic:

As reminder,  we exited Wave 3 that started Week 34, 2020, peaked in Week 1, 2021, and bottomed out in Week 7 of 2021. Since Week 8 of 2021, we are seeing growth of a new wave, Wave 4 which has now reaching the peak of Wave 3. The latest level of new infections is now second highest weekly count in the history of the pandemic, at 4,833,991 cases compared to 5,284,581 cases at the peak of Wave 3 in week 1 of 2021.

There is a two weeks lag in the dynamics of deaths counts compared to the dynamics of new cases registrations. Nonetheless, we can now confirm Wave 4 development based on weekly deaths as well as on weekly new case counts. The latest weekly death counts as of Week 14, 2021, ranks 5th highest in the history of the pandemic.

Mortality rates remain subdued, as through the Wave 3 of the pandemic. Which is the only decent news from the recent data.

A summary table by region:

In summary: the pandemic is not abating, despite significant inroads made in terms of vaccinations, especially in the advanced economies. It is a loud and clear reminder to us all that vaccinations in the advanced economies are not enough to cut global rates of infections, and every day lost to lower rates of vaccinations in the emerging economies is another day left to virus to potentially mutate and produce yet another more contagious and deadly variant.

17/4/21: Collapsing Labor Force Participation: A Secular Trend

 

For those of you following this blog this would be a familiar sight: I have been worrying about the underlying structure of the U.S. labor markets for some time now. The ongoing recovery appears to be relatively robust in terms of headline figures, e.g. GDP growth rates and declining continued unemployment claims. But in reality, it has been nothing but the return to trends that persisted before the pandemic - trends that are extremely worrying.

I covered the fact that longer term unemployment has now gone through the roof: https://trueeconomics.blogspot.com/2021/04/14421-share-of-those-in-unemployment-27.html. And beyond this, there is a bigger problem of historically low levels of labor force participation. We are witnessing a massive pull-away within the skills distribution in the U.S. economy: there are shortages of skilled labor, including in manufacturing, and there is massive outflow of people from the labor markets in lower skills groups.

Just look at the absolute disaster of the 'recovery' when it comes to people who have left the workforce alltogether:

And consider the gender mix in this: 

1. Women labor force participation is down:

2. Men participation has collapsed:

The above appears to show more benign trend in female labor force participation trend than in male, and... here comes the kicker: women labor force participation currently sits around the levels comparable to 1987; men - at around ... well... never.

The above table puts matters into perspective: the gap between the pandemic period and prior high participation period is almost 5 times larger for men than for women. But... the gap between women and men participation rates in the pandemic period and pre-pandemic period is much smaller: at roughly 48% higher for men than for women. For the latest data point (March 2021) the latter gap is roughly 80%. In other words, the dynamics in terms of labor force participation for women are becoming much less benign, relative to men. than they were during the pre-pandemic period.

To put this into a different perspective: secular pre-pandemic trend for men were woeful. They were less so for women. But pandemic is accelerating longer term pressures on both men and women in pushing them out of the labor force.

If you think this is a 'robust' recovery, you really need to think a bit harder: we are having a secular stagnation in the female labor force and we are having a long term depression in the male labor force. And these trends are not subject to demographics of aging. 

14/4/21: The share of those in unemployment > 27 weeks is rising

 

One way to look at the state of the real (as opposed to financialized and corporate-value focused) economy is to look at unemployment. And one of the strongest indicators of longer term changes in the structure of the real economy is the fate of the longer term unemployed. Here is an interesting snapshot of data: the percentage of those unemployed for 27 week or longer in the total pool of the unemployed. The higher the number, the more structural is the unemployment problem. 

If the above is not clear enough, here is the same data expressed in the form of the range for each 12 months period (rolling) between maximum share of the longer term unemployed in the overall pool of unemployment and the minimum share:

All of the above suggests we are in deep trouble. And this trouble has been persistent since the Great Recession: we are witnessing a dramatic increase in the duration of unemployment spells. Part of this is due to the impact of Covid19 pandemic concentrated in specific sectors. Part of this is down to the generosity of unemployment benefits supplements and direct subsidies during the pandemic. Part of it is also down to the longer term changes in the U.S. labor markets and changes in households' composition and investment/consumption patterns.

Irrespective of the causes, the problem is obvious: the longer the person remains unemployed, the sharper is the depreciation of skills and their employability. If this (post-2008) experience is the 'new normal', America is developing a massive class of disillusioned and human capital poor workers. 

8/4/21: BRIC Composite PMIs 1Q 2021: A Mixed Bag for Recovery Votes

 

I covered BRIC Manufacturing PMIs for 1Q 2021 (https://trueeconomics.blogspot.com/2021/04/5421-brics-manufacturing-pmis-1q-2021.html) and BRIC Services PMIs (https://trueeconomics.blogspot.com/2021/04/8421-bric-services-pmi-1q-2021-slowing.html) in the two posts earlier.  Now, the round up analysis based on Composite PMIs:

• Brazil Composite PMI fell from 54.4 in 4Q 2020 to 52.1 in 1Q 2021, marking a slowdown in growth conditions in the economy. Quarterly activity in 1Q 2021 is still ahead of where it was in 3Q 2020 (51.6) and marks third consecutive quarter of growth. But, for the first time during this recovery period, Brazil Composite PMI is now below Global Composite PMI (53.43 in 1Q 2021).
• Russia Composite PMI increased from recessionary 47.7 in 4Q 2020 to still negative-growth (albeit statistically, indistinguishable from zero growth) 49.5 in 1Q 2021. Russian economy has now posted four quarters of contracting economic growth PMIs out of five quarters of the pandemic. Needless to say, Russian Composite PMIs are remaining well below Global Composite PMI as the did in 4Q 2020 as well.
• India Composite PMI slipped from 56.4 in 4Q 2020 to 55.7 in 1Q 2021 signaling slower, but still robust growth in the economy. India outperformed Global Composite PMIs in 4Q 2020 and 1Q 2021, the only two quarters of > 50 readings in India's case.
• China Composite PMI fell from 56.3 in 4Q 2020 to still robust 55.2 in 1Q 2021. Thus, China, like India, managed to outperform Global Composite PMIs in both of the last two quarters. Unlike India, China also beat Global Composite PMIs in 1Q and 2Q 2020 as well. Since Chinese economy was the only BRIC economy to regain its 2019 levels of activity back in 3Q 2020, the last two quarters of PMIs suggest strong rebound in the world's largest economy (or second largest one, depending on how one counts economic output).

8/4/21: BRIC Services PMI 1Q 2021: Slowing Growth Momentum

 Earlier this week, I posted on the latest PMI reports for BRIC economies for Manufacturing sector (https://trueeconomics.blogspot.com/2021/04/5421-brics-manufacturing-pmis-1q-2021.html).  Now, let's cover Services Sector 1Q 2021 PMIs. Remember, Markit - source of data - cover only monthly PMIs.

As reminder, Manufacturing PMIs fell in all BRIC economies except for Russia in 1Q 2021 compared to 4Q 2020. As the result, overall, BRIC Manufacturing Activity Index (GDP-weighted average of PMIs) fell from 54.8 to 52.8 between 4Q 2020 and 1Q 2021.

In services sector:

• Brazil Services PMI slipped into a recessionary territory in 1Q 2021, falling from 4Q 2020 reading of 51.4 to 46.1 in 1Q 20201. This marks the lowest reading since 2Q 2020.
• Russia Services PMI rebounded robustly from 4Q 2020 reading of 47.7 to 1Q 2021 reading of 53.6. Russian Services PMIs have been very volatile during the pandemic period, hitting the low of 32.0 in 2Q 2020 and the high of 56.8 in 3Q 2020.
• India Services PMI improved from growth-signaling 53.4 in 4Q 2020 to even faster growth-consistent 54.2 in 1Q 2021. India and Russia were the two BRIC economies posting improvements in services sector in 1Q 2021.
• China Services PMI fell from 'very high growth' signaling reading of 57.0 in 4Q 2020 to moderate growth-signaling 52.6 in 1Q 2021.
• Overall, BRIC Services Sector Activity Index - a measure I calculate based on Markit PMI data inputs - fell from 54.8 in. 4Q 2020 to 52.6 in 1Q 2021, virtually matching the decline in Manufacturing Sector Activity Index over the same period of time. 
• BRIC Services Activity Index also underperformed Global Services PMI which average 53.3 in 1Q 2021. In 4Q 2020, BRIC Services Activity Index was ahead of Global Services PMI (54.8 to 52.3).

8/4/21: No Inflation Cometh?

 

Having written about strengthening signals of rising inflation globally and in the U.S. in particular before, here is today's note from Markit on the matter: https://ihsmarkit.com/research-analysis/global-price-gauge-hits-new-high-as-input-cost-inflation-accelerates-sharply-Apr21.html 

To quote: global inputs inflation pressures are at their highest since 2008:

By sector:

Factory gate prices are scaling up:

Manufacturing supply shortages at nearly historical highs:

Prices of all, but financial services and consumer services are up through the roof:

Profit margins are being demolished:

And consumer goods prices are going through the roof:

Which means that targeting 2-3% inflation at current monetary policies is plain bonkers. Unless Central Banks are willing to entertain inflation at +5-10 percent above current, the rates must go up. Keep leveraging, everyone. Credit cards, margin trades and mortgages are about to get 'uncertain'... 

7/4/21: Ireland PMIs for March: Growth and Inflation Pressures

 

Ireland PMIs for 1Q 2021 are out this week, so let's take a closer look at monthly activity data. 

• March services PMI came in at a surprising 54.6 - up on 41.2 in February and 36.2 in January. Given the country is in a phase 5 lockdown, and there has been little change on that in recent months, the new reading is a bizarre one. Per Markit: "Three out of four monitored sub-sectors registered higher business activity in March. The strongest rate of expansion was in Financial Services, followed by Business Services and Technology, Media & Telecoms respectively. Activity in Transport, Tourism & Leisure declined for the eighth month running, but at the slowest rate since last August." A lot of hope-for vaccines and 'getting back to normal' as well as exports rise behind these figures. Services PMI is now at its highest reading since February 2020.
• March Manufacturing PMI also performed well, rising to 57.1 from 52.0 in February. Manufacturing index has been more volatile in the pandemic than Services, so this rise is less of a surprise, given the global economic recovery and demand for Irish exports.
• We do not have full March data for construction sector PMI, which is reported mid-month, so all we do have is mid-March reading of 27.0. 

Official Composite PMI published by Markit was pretty upbeat in march 2021, rising to 54.5 - signaling strong growth, having previously posted 47.2 in February and 40.2 in January 2021. My own, Three Sectors Activity index - a weighted average of three sectors PMIs based on their share of gross value added - rose even more sharply: from 41.8 in January and 45.0 in February to 55.0 in March. If Construction sector PMI were to come in on-trend mid-April, the Three Sectors Index will be closer to 55.1-55.2 range.

As an aside, it is worth noting that Irish economic activity is showing similar trend to global activity when it comes to inflationary pressures (see: https://trueeconomics.blogspot.com/2021/04/5421-heating-up-inflationary-risks.html). Per Markit: "March data indicated soaring cost pressures. The Composite Input Prices Index posted a record one-month gain and signalled the fastest rate of inflation since July 2008. Cost pressures were much stronger at manufacturers than service providers." In other words, even small open economies with massive distortions coming from the multinationals' financial and tax engineering sides are now showing signs of heating up inflation.