Shapes of Recovery: When Will the Global Economy Bounce Back?

Shapes of Recovery: When Will the Global Economy Bounce Back?

Visual Capitalist on Twitter: "Shapes of Recovery: When Will the Global  Economy Bounce Back? 📉📈 Full infographic and post:  https://t.co/40ABIBUFCx… "

The Shape of Economic Recovery, According to CEOs

Is the glass half full, or half empty?

Whenever the economy is put through the ringer, levels of optimism and pessimism about its potential recovery can vary greatly. The current state mid-pandemic is no exception.

This graphic first details the various shapes that economic recovery can take, and what they mean. We then dive into which of the four scenarios are perceived the most likely to occur, based on predictions made by CEOs from around the world.

The ABCs of Economic Recovery

Economic recovery comes in four distinct shapes—L, U, W, and V. Here’s what each of these are characterized by, and how long they typically last.

  • L-shape
    This scenario exhibits a sharp decline in the economy, followed by a slow recovery period. It’s often punctuated by persistent unemployment, taking several years to recoup back to previous levels.
  • U-shape
    Also referred to as the “Nike Swoosh” recovery, in this scenario the economy stagnates for a few quarters and up to two years, before experiencing a relatively healthy rise back to its previous peak.
  • W-shape
    This scenario offers a tempting promise of recovery, dips back into a sharp decline, and then finally enters the full recovery period of up to two years. This is also known as a “double-dip recession“, similar to what was seen in the early 1980s.
  • V-shape
    In this best-case scenario, the sharp decline in the economy is quickly and immediately followed by a rapid recovery back to its previous peak in less than a year, bolstered especially by economic measures and strong consumer spending.

Another scenario not covered here is the Z-shape, defined by a boom after pent-up demand. However, it doesn’t quite make the cut for the present pandemic situation, as it’s considered even more optimistic than a V-shaped recovery.

Depending on who you ask, the sentiments about a post-pandemic recovery differ greatly. So which of these potential scenarios are we really dealing with?

How CEOs Think The Economy Could Recover

The think tank The Conference Board surveyed over 600 CEOs worldwide, to uncover how they feel about the likelihood of each recovery shape playing out in the near future.

The average CEO felt that economic recovery will follow a U-shaped trajectory (42%), eventually exhibiting a slow recovery coming out of Q3 of 2020—a moderately optimistic view.

However, geography seems to play a part in these CEO estimates of how rapidly things might revert back to “normal”. Over half of European CEOs (55%) project a U-shaped recovery, which is significantly higher than the global average. This could be because recent COVID-19 hotspots have mostly shifted to other areas outside of the continent, such as the U.S., India, and Brazil.

Here’s how responses vary by region:

Region L-shape U-shape W-shape V-shape
Global (N=606) 32% 42% 16% 11%
U.S. (N=103) 26% 42% 23% 9%
Europe (N=110) 29% 55% 12% 4%
China (N=122) 25% 43% 11% 21%
Japan (N=95) 49% 26% 23% 1%
Gulf Region (N=16) 57% 26% 17%

 

In the U.S. and Japan, 23% of CEOs expect a second contraction to occur, meaning that economic activity could undergo a W-shape recovery. Both countries have experienced quite the hit, but there are stark differences in their resultant unemployment rates—15% at its peak in the U.S., but a mere 2.6% in Japan.

In China, 21% of CEOs—or one in five—anticipate a quick, V-shaped recovery. This is the most optimistic outlook of any region, and with good reason. Although economic growth contracted by 6.8% in the first quarter, China has bounced back to a 3.2% growth rate in the second quarter.

Finally, Gulf Region CEOs feel the most pessimistic about potential economic recovery. In the face of an oil shock, 57% predict the economy will see an L-shaped recovery that could result in depression-style stagnation in years to come.

The Economic Recovery, According to Risk Analysts

At the end of the day, CEO opinions are all over the map on the potential shape of the economic recovery—and this variance likely stems from geography, cultural biases, and of course the status of their own individual countries and industries.

Despite this, portions of all cohorts saw some possibility of an extended and drawn-out recovery. Earlier in the year, risk analysts surveyed by the World Economic Forum had similar thoughts, projecting a prolonged recession as the top risk of the post-COVID fallout.

It remains to be seen whether this will ultimately indeed be the trajectory we’re in store for.

 

 

 

U.S. Jobless Claims Fall, but Layoffs Continue: Live Updates

U.S. jobless claims fall in mid-September, but the economy still suffering  lots of layoffs - MarketWatch

New claims for state unemployment insurance fell last week, but layoffs continue to come at an extraordinarily high level by historical standards.

Initial claims for state benefits totaled 790,000 before adjusting for seasonal factors, the Labor Department reported Thursday. The weekly tally, down from 866,000 the previous week, is roughly four times what it was before the coronavirus pandemic shut down many businesses in March.

On a seasonally adjusted basis, the total was 860,000, down from 893,000 the previous week.

“It’s not a pretty picture,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “We’ve got a long way to go, and there’s still a risk of a double-dip recession.”

The situation has been compounded by the failure of Congress to agree on new federal aid to the jobless.

A $600 weekly supplement established in March that had kept many families afloat expired at the end of July. The makeshift replacement mandated by President Trump last month has encountered processing delays in some states and has funds for only a few weeks.

“The labor market continues to heal from the viral recession, but unemployment remains extremely elevated and will remain a problem for at least a couple of years,” said Gus Faucher, chief economist at PNC Financial Services. “Initial claims have been roughly flat since early August, suggesting that the pace of improvement in layoffs is slowing.”

New claims for Pandemic Unemployment Assistance, an emergency federal program for freelance workers, independent contractors and others not eligible for regular unemployment benefits, totaled 659,000, the Labor Department reported.

Federal data suggests that the program now has more beneficiaries than regular unemployment insurance. But there is evidence that both overcounting and fraud may have contributed to a jump in claims.

 

 

 

 

More cities and states are opening bars and restaurants despite mounting evidence of potential danger

https://www.washingtonpost.com/health/2020/09/14/covid-spread-restaurants-bars/?arc404=true&itid=lk_inline_manual_28&itid=lk_inline_manual_10&itid=lk_inline_manual_9

More cities and states are opening bars and restaurants despite mounting  evidence of potential danger — TodayHeadline

In New York City, diners will be able to have a meal inside a restaurant at the end of the month, something that hasn’t happened there since the coronavirus pandemic began. In some parts of Florida, bars reopened Monday for the first time since late June.

One decision appears to be riskier than the other, according to an analysis of cellphone and coronavirus case data by The Washington Post.

States that have reopened bars experienced a doubling in the rate of coronavirus cases three weeks after the opening of doors, on average. The Post analysis — using data provided by SafeGraph, a company that aggregates cellphone location information — found a statistically significant national relationship between foot traffic to bars one week after they reopened and an increase in cases three weeks later.

The analysis of the cellphone data suggests there is not as strong a relationship between the reopening of restaurants and a rise in cases, nor with bar foot traffic and cases over time, except for a handful of states.

But like with so much in the pandemic, easy answers can prove elusive.

A study by the Centers for Disease Control and Prevention of nearly 300 adults who tested positive for the coronavirus found that they were more than twice as likely to have dined at a restaurant in the two weeks before getting sick than people who were uninfected. Those who tested positive and did not have close contact with anyone sick were also more likely to report going to a bar or coffee shop. The same effect was not seen in visits to salons, gyms and houses of worship, or in the use of public transportation.

“You’re sitting there for a long time, everyone’s talking,” said Linsey Marr, an environmental engineer at Virginia Tech. “And that’s just a recipe for spread.”

Few states make their contact-tracing data available, but in two that do — Colorado and Louisiana — bars and restaurants are responsible for about 20 percent of cases traced to a known source. San Diego traced nearly one-third of community outbreaks to restaurants and bars, more than any other setting.

But Louisiana’s experience suggests bar patrons contribute more to the spread of the virus than restaurant diners. There have been 41 outbreaks tied to restaurants and the same number of outbreaks associated with bars, but bar outbreaks appeared to result in more infections, with 480 cases traced to those establishments compared with 180 from restaurants.

Marr said indoor dining can be reasonably safe in a restaurant operating at 25 percent capacity and with a ventilation system that fully recirculates air every 10 minutes. New York City’s policy will allow for only 25 percent capacity at first, with a scheduled increase to 50 percent in November if transmission rates remain low.

Still, Marr said, she “will not eat inside a restaurant until the pandemic is over.” As one of the first scientists to begin emphasizing that the virus was spread primarily by air, she has been concerned about indoor drinking and dining since March.

“People go to restaurants to talk,” she said, “and we know that it’s talking that produces a lot — 10 to 100 times more — aerosols than just sitting.”

Other countries facing outbreaks imposed stricter and longer shutdowns on bars and restaurants. Ireland has yet to open its pubs. Countries that did reopen bars and restaurants have, like American states, scaled back in the face of fresh outbreaks.

Researchers at the Massachusetts Institute of Technology say that because U.S. policies vary by state and county, waves of closures and reopenings may have perversely led to more viral spread, as people traveled to enjoy freedoms not allowed closer to home.

The National Restaurant Association argues that restaurants are safe if they follow proper mitigation guidelines and that the industry has been unfairly maligned by the actions of an irresponsible few.

“Bars become particularly risky,” said Larry Lynch, who handles food science for the restaurant trade group. “Anybody who had been in bars knows that conversations get louder, people get closer.”

But, he said, “we haven’t seen … any kind of systemic outbreaks from people going into a restaurant that’s practicing what we ask them to practice.”

Lynch questioned the methodology of the CDC study, noting it covered only 295 people and did not identify the sources of transmission.

The American Nightlife Association, which represents the bar and nightclub industry, did not respond to a request for comment.

Kristen Ehresmann, director of the Infectious Disease Epidemiology, Prevention and Control Division at the Minnesota Department of Health, agreed that when restaurants and bars abide by guidelines designed to reduce transmission, few cases of the coronavirus have been traced to those establishments.

But there are more than a few bad actors, she said: 1,592 cases of covid-19, the disease caused by the coronavirus, have been tied to 66 bars and restaurants in Minnesota. And in 58 other establishments, cases were reported among only staff members, resulting in 240 illnesses. One bar in St. Cloud, Minn., the Pickled Loon, was the only place visited by 73 people who got sick and was one stop among several for 44 other people.

“The bottom line is, we’re seeing a big chunk of our cases associated with these venues, and those cases go on to get other cases in other settings,” Ehresmann said. “We can’t ignore the impact.”

Iowa’s first big spike in coronavirus cases originated in the meatpacking industry. Then, says University of Iowa epidemiologist Jorge Salinas, came bars in college towns such as Iowa City, where he is based.

“It was very clear,” Salinas said. “We reviewed records for patients, and they all shared that common exposure of having been to a bar in the previous five days or so. Usually, the same bars that tend to be very crowded and very loud, rather than a place you just sit down to go and have a beer.”

He said those bars began closing not because of government intervention, but because so many staff members fell ill. By that point, the young people who got infected at bars had begun spreading the virus to an older population through family and work.

After about two months, the outbreak in Iowa City started to burn out. But then college students started returning to campus.

“It’s just a different group of young people but similar exposures — going to bars, hanging out, going to large parties,” he said.

He said an order from Gov. Kim Reynolds (R) closing bars in Iowa City and five other hard-hit counties was welcome but overdue. In the past two weeks, more than 1,000 young people in the region have become infected.

“Unfortunately, it’s late in the game,” Salinas said. “It would have been better if it had been done to prevent this rather than as a reaction to this.”

Politicians who favor an aggressive approach to containing the coronavirus have been hesitant to shut down bars and restaurants. Expanded federal unemployment benefits lapsed more than a month ago. Loans to small businesses are forgiven only if they can keep workers on the payroll, which is usually impossible while running at reduced capacity.

According to the Bureau of Labor Statistics, 2.5 million jobs in bars and restaurants have been lost since February. Although that’s an improvement from the spring, many restaurant owners say they are barely hanging on.

“Winter is coming, and I’m staring down the barrel of the gun of what’s going to happen,” said Ivy Mix, owner of a restaurant called Leyenda in New York and author of the book “Spirits of Latin America.” Even when indoor dining reopens, Mix said she is not sure she and her staff would be comfortable serving enough people inside her Brooklyn restaurant to make a profit.

“This is almost like being thrown a deflated life-jacket — the action and the symbolism is there, but the actual aid is not,” she said.

That’s why she says the only solution is federal legislation introduced by Rep. Earl Blumenauer (D-Ore.) that would issue $120 billion in grants to independent bars and restaurants. A Senate version would cover some chains as well.

“Eleven million people work for these independent restaurants,” Blumenauer said. “If we don’t do something, the evidence suggests that 85 percent of them are not going to survive this year.”

His office estimates that the legislation would more than pay for itself, generating $186 billion in tax revenue and unemployment savings. He said President Trump was receptive in a meeting with supporters earlier this year, but that in recent weeks the administration “has basically shut down meaningful negotiations.”

Arizona reopened indoor restaurants and some bars at the end of August, after a hasty spring reopening and more than 5,000 deaths.

“We really kind of reaped the whirlwind,” said David Engelthaler, a former state epidemiologist now at the Translational Genomics Research Institute. “A lot of that was driven by people going into bars and nightclubs, typically the 20- to 30-year-old set, interacting, socializing like they did prepandemic. And that just supported a kind of wildfire of cases.”

He said he thinks it is probably feasible to reopen restaurants at reduced capacity, but bars are a different story.

“One thing that all bars have in common is that they create a lowering of inhibition, and I think more than anything, this will cause the spread of covid,” he said. “We get more complacent, more comfortable, covid starts spreading.”

With temperatures still regularly topping 100 degrees in Arizona, the appeal of outdoor food and drink is limited. After a rapid May reopening led to a spike in cases and deaths, the state has just begun trying a more cautious approach.

Under Arizona’s new, more deliberate reopening, businesses must apply to reopen and bars must serve food to qualify. But Saskia Popescu, an epidemiologist based in Phoenix, said it is unclear whether those requirements are sufficiently stringent.

“If you put out two items does that count?” she asked. “I just worry that we’re kind of all doing this at once.” She noted that more than 500 new cases a day continue to be reported in Arizona, about the same as during the first reopening: “We’ll see if we learn from our lessons.”

 

 

Cartoon – National Pandemic Strategy

Head For The Hills Cartoons and Comics - funny pictures from CartoonStock

Fauci Says It Will Be ‘Well Into 2021’ Before U.S. Returns To Normal From Coronavirus

https://www.forbes.com/sites/sarahhansen/2020/09/11/fauci-says-it-will-be-well-into-2021-before-us-returns-to-normal-from-coronavirus/#4eb5a0862f7c

Dr Anthony Fauci disagrees with Trump over the coronavirus says US has not  turned the final corner | Daily Mail Online

TOPLINE

Dr. Anthony Fauci, the country’s top infectious disease official, told MSNBC on Friday that because of the timeline for manufacturing and distributing a coronavirus vaccine, it will be well into next year before American life returns to normal.

 

KEY FACTS

President Trump suggested this week that a vaccine will be ready in time for November’s election, but Fauci has said such an accelerated timeline is not realistic. 

Fauci said Friday it’s possible that a vaccine could be available by the end of this year or early 2021.

Manufacturing the vaccine in large quantities and distributing it to the majority of the population will take significantly longer, however, meaning that returning to “normal” life—including indoor and enclosed activities like movie theaters—won’t happen until the middle or end of next year. 

Fauci on Friday also refuted Trump’s comments Thursday that the U.S. is “rounding the corner” on coronavirus, characterizing the current data on the virus, which shows about 40,000 new cases and 1,000 deaths a day, as “disturbing.”

During a discussion with doctors from Harvard Medical School on Thursday, Fauci said the U.S. needs to prepare to “hunker down” this fall and winter and warned against looking only at the “rosy side of things,” CNBC reported. 

 

CRUCIAL QUOTE

“If you’re talking about getting back to a degree of normality, which resembles where we were prior to COVID, it’s gonna be well into 2021,” Fauci said. “Maybe even towards the end of 2021.”

 

KEY BACKGROUND

According to a New York Times tracker, there are 38 coronavirus vaccine candidates being tested on humans in clinical trials. This week, pharma giant AstraZeneca announced it had paused a late-stage vaccine trial after a participant developed what is suspected to be an adverse reaction to the drug. The heads of nine pharma companies have also pledged that they would not submit their coronavirus vaccine candidates to regulators until they are shown to be safe and effective in large critical trials. 

 

 

 

 

The Pandemic’s Most Treacherous Phase

https://www.project-syndicate.org/commentary/us-pandemic-crisis-will-worsen-in-october-by-barry-eichengreen-2020-09?utm_source=Project+Syndicate+Newsletter&utm_campaign=d57658f7c7-sunday_newsletter_13_09_2020&utm_medium=email&utm_term=0_73bad5b7d8-d57658f7c7-105592221&mc_cid=d57658f7c7&mc_eid=5f214075f8

The most dangerous phase of the COVID-19 crisis in the US may actually be now, not last spring. If the economy falters a second time, whether because of inadequate fiscal stimulus or flu season and a second COVID-19 wave, it will not receive the additional monetary and fiscal support that protected it in the spring.

April marked the most dramatic and, some would say, dangerous phase of the COVID-19 crisis in the United States. Deaths were spiking, bodies were piling up in refrigerated trucks outside hospitals in New York City, and ventilators and personal protective equipment were in desperately short supply. The economy was falling off the proverbial cliff, with unemployment soaring to 14.7%.

Since then, supplies of medical and protective equipment have improved. Doctors are figuring out when to put patients on ventilators and when to take them off. We have recognized the importance of protecting vulnerable populations, including the elderly. The infected are now younger on average, further reducing fatalities. With help from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, economic activity has stabilized, albeit at lower levels.

Or so we are being told.

In fact, the more dangerous phase of the crisis in the US may actually be now, not last spring. While death rates among the infected are declining with improved treatment and a more favorable age profile, fatalities are still running at roughly a thousand per day. This matches levels at the beginning of April, reflecting the fact that the number of new infections is half again as high.

Mortality, in any case, is only one aspect of the virus’s toll. Many surviving COVID-19 patients continue to suffer chronic  and impaired mental function. If 40,000 cases a day is the new normal, then the implications for morbidity – and for human health and economic welfare – are truly dire.

And, like it or not, there is every indication that many Americans, or at least their current leaders, are willing to accept 40,000 new cases and 1,000 deaths a day. They have grown inured to the numbers. They are impatient with lockdowns. They have politicized masks.

This is also a more perilous phase for the economy. In March and April, policymakers pulled out all the stops to staunch the economic bleeding. But there will be less policy support now if the economy again goes south. Although the Federal Reserve can always devise another asset-purchase program, it has already lowered interest rates to zero and hoovered up many of the relevant assets. This is why Fed officials have been pressing the Congress and the White House to act.

Unfortunately, Congress seems incapable of replicating the bipartisanship that enabled passage of the CARES Act at the end of March. The $600 weekly supplement to unemployment benefits has been allowed to expire. Divisive rhetoric from President Donald Trump and other Republican leaders about “Democrat-led” cities implies that help for state and local governments is not in the cards.

Consequently, if the economy falters a second time, whether because of inadequate fiscal stimulus or flu season and a second COVID-19 wave, it will not receive the additional monetary and fiscal support that protected it in the spring.

The silver bullet on which everyone is counting, of course, is a vaccine. This, in fact, is the gravest danger of all.

There is a high likelihood that a vaccine will be rolled out in late October, at Trump’s behest, whether or not Phase 3 clinical trials confirm its safety and effectiveness. This specter conjures memories of President Gerald Ford’s rushed swine flu vaccine, also prompted by a looming presidential election, which resulted in cases of Guillain-Barré syndrome and multiple deaths. This episode, together with a fraudulent scientific paper linking vaccination to autism, did much to help foster the modern anti-vax movement.5

The danger, then, is not merely side effects from a flawed vaccine, but also widespread public resistance even to a vaccine that passes its Phase 3 clinical trial and has the support of the scientific community. This is especially worrisome insofar as skepticism about the merits of vaccination tends to rise anyway in the aftermath of a pandemic that the public-health authorities, supposedly competent in such matters, failed to avert.

Studies have shown that living through a pandemic negatively affects confidence that vaccines are safe and disinclines the affected to vaccinate their children. This is specifically the case for individuals who are in their “impressionable years” (ages 18-25) at the time of exposure, because it is at this age that attitudes about public policy, including health policy, are durably formed. This heightened skepticism about vaccination, observed in a variety of times and places, persists for the balance of the individual’s lifetime.

The difference now is that Trump and his appointees, by making reckless and unreliable claims, risk aggravating the problem. Thus, if steps are not taken to reassure the public of the independence and integrity of the scientific process, we will be left only with the alternative of “herd immunity,” which, given COVID-19’s many known and suspected comorbidities, is no alternative at all.

All this serves as a warning that the most hazardous phase of the crisis in the US will most likely start next month. And that is before taking into account that October is also the beginning of flu season.

 

 

Cartoon – Containing Your Hot Spot?

Editorial cartoons for Sunday, June 21 | HeraldNet.com

Another 884,000 Americans filed new unemployment claims last week

https://finance.yahoo.com/news/jobless-claims-coronavirus-unemployment-week-ended-september-5-2020-165121299.html?.tsrc=fin-notif

Another 884,000 Americans filed for first-time unemployment insurance benefits last week, matching the previous week’s level.

The U.S. Department of Labor (DOL) released its weekly jobless claims report at 8:30 a.m. ET Thursday. Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:

  • Initial jobless claims, week ended Sept. 5: 884,000 vs. 850,000 expected and 884,000 during the prior week
  • Continuing claims, week ended Aug. 29: 13.385 million vs. 12.904 million expected and 13.292 million during the prior week

Last week’s new jobless claims were upwardly revised slightly to 884,000, from the 881,000 previously reported. This marked the first time since March that jobless claims came in below 1 million for back-to-back weeks, as claims remained stubbornly elevated but off their peak from the worst point of the pandemic.

The past couple weeks of jobless claims appeared to improve considerably from the more than 1 million new weekly claims reported in mid-August. However, this was due to a technical change in the way the Labor Department made its seasonal adjustments, which applied for the first time to claims counted during the week ended August 28. Previous weeks’ claims were not revised to reflect the new counting method.

The change was made to account for the fact that the pandemic generated a far greater level of new claims per week than would typically occur over the course of a year, throwing off the Labor Department’s usual system of making adjustments for seasonal hiring trends.

Most economists agreed that the new methodology would produce a more accurate dataset on jobless claims during the pandemic period. It also produced a lower reported number of seasonally adjusted jobless claims than would have been generated under the previous method. Under the old method of seasonally adjusting claims, new jobless claims for the week ended August 29 would have risen to 1.02 million, according to an analysis by Ian Shepherdson, chief economist for Pantheon Macroeconomics.

“Interpreting the seasonally adjusted figures is complicated by a recent change in methodology, but in both an SA [seasonally adjusted] sense and an NSA [non-seasonally adjusted] sense, it looks like the trends for both initial and continuing claims filings have flattened out lately after a period with more notable declines,” JPMorgan economist Daniel Silver said in a note Thursday. “This flattening out has been evident in the initial claims data for a few months and in the continuing claims data for a few weeks and it is broadly consistent with the idea that the labor market recovery has lost momentum lately.”

Unadjusted claims have shown a clearer picture of the stalling recovery in the labor market. Last week, unadjusted new weekly jobless claims totaled 857,148, for an increase of 20,140 over the prior week. This was the fourth straight week of increases in unadjusted new claims.

Other economic indicators offered a more upbeat picture of the U.S. labor market. The Labor Department’s monthly jobs report released last Friday showed the U.S. economy added a greater-than-expected 1.371 million payrolls in August, and that the unemployment rate dipped more than anticipated to 8.4%. Wednesday morning, the JOLTS jobs report showed employers had more than 6.6 million job openings in July, topping expectations by over 600,000.