Inflation as measured by the consumer price index will surge 5.1% year-over-year during the fourth quarter, forecasters for the National Association for Business Economics (NABE) said, raising their estimate in May for a 2.8% year-over-year increase in prices. The forecasters anticipate inflation will ease to 2.4% year-over-year during the fourth quarter of 2022, according to a survey.
“Inflation expectations have moved up significantly from those in the May 2021 survey,” according to Holly Wade, survey chair and executive director for the research center at the National Federation of Independent Business. “But panelists anticipate inflation will ease in 2022.”
The NABE panel reduced its estimate for growth in gross domestic product (GDP) this year to 5.6% from 6.7% in May, citing the coronavirus delta variant as the biggest risk to the expansion.
NABE expectations that inflation will cool next year align with the view of Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen. Both policy-makers have staked record stimulus in part on the premise that the fastest price gains in decades will slow as pandemic-induced kinks in supply chains even out.
The Fed’s preferred inflation measure — the core personal consumption expenditures price index — rose 3.6% in July compared with a year earlier, well above the central bank’s 2% target.
In an estimate released after a two-day meeting on Wednesday, Fed officials forecast that so-called core inflation will rise 2.3% next year, slightly above the 2.2% estimate by the NABE panel.
Confident that inflation will ease, Fed policy-makers indicated after their meeting that they may begin to cut $120 billion in monthly purchases of Treasury and mortgage bonds as early as their next scheduled gathering in November. Powell said that the Fed will gradually taper and may conclude bond buying “around the middle of next year.”
Half of the 18 participants in the Fed’s policy-making committee expect to raise the benchmark interest rate from a record low by the end of 2022.
“I expect inflation to decelerate,” Fed Governor Lael Brainard said Monday in a speech to NABE. “But with delta disrupting the rotation from goods to services and prolonging supply bottlenecks, it is uncertain just how fast and how much inflation will decelerate over the remainder of the year and into next year.”
With the delta variant disrupting demand and supply, the employment report for September due out on Oct. 8 “may be weaker and less informative of underlying economic momentum than I had hoped,” she said.
More than half (58%) of the NABE forecasters see downside risks to economic growth for the remainder of 2021, while 16% “expect the balance to be to the upside — a complete reversal from the May survey results,” Wade said.
Sixty-three percent of panelists identify the delta variant as the leading risk to growth, while 5% of respondents said fiscal policy inaction or gridlock as their greatest growth concern, NABE said. Two-thirds (67%) of survey respondents predict that nonfarm payrolls will return to pre-pandemic levels by the end of 2022.
Powell and Yellen will have an opportunity to update their views on inflation and the economy, and the outlook for record monetary and fiscal stimulus, in testimony scheduled for Tuesday before the Senate Banking Committee.
The NABE panel of 47 forecasters spans a range of organizations, including economists from Ford, Grant Thornton, Moody’s Analytics, the Conference of State Bank Supervisors, Nationwide Insurance, Morgan Stanley, the National Association of Homebuilders, Visa and Wells Fargo.
Nearly 396 million doses of the COVID-19 vaccine have been shipped to various U.S. states as of this afternoon, of which some 343.4 million doses had been administered, according to TIME’s vaccine tracker. About 49.3% of Americans had been completely vaccinated.
More than 195.3 million people around the world had been diagnosed with COVID-19 as of 1 a.m. E.T. today, and nearly 4.2 million people have died. On July 27, there were 614,584 new cases and 9,937 new deaths confirmed globally.
Here’s how the world as a whole is currently trending:
And here’s every country that has reported over 3 million cases:
The U.S. had recorded more than 34.6 million coronavirus cases as of 1 a.m. E.T. today. More than 611,000 people have died. On July 27, there were 70,740 new cases and 462 new deaths confirmed in the U.S.
Here’s how the country as a whole is currently trending:
Here’s where daily cases have risen or fallen over the last 14 days, shown in confirmed cases per 100,000 residents:
All numbers unless otherwise specified are from the Johns Hopkins University Center for Systems Science and Engineering, and are accurate as of July 28, 1 a.m. E.T. To see larger, interactive versions of these maps and charts, click here.
Unemployment claims jumped last week, as the delta variant of the coronavirus sparked rising caseloads around the country and renewed fears about the potential for more restrictions and business closures.
The number of new claims grew to 419,000 from 368,000, the third time in six weeks that they had ticked up, according to data from the Department of Labor.
Economists said the uptick was concerning but cautioned that it was too early to tell whether it was a one week aberration or telegraphed a more concerning turn for the labor market.
“The unexpected bump in claims could be noise in the system, but it’s also not hard to see how the rise of the covid-19 delta variant could add thousands of layoffs to numbers that already are double what they were pre-Covid,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Overall, unemployment numbers have been falling gradually from the peaks at other stages of the pandemic, but they are still well above pre-pandemic averages.
The jobless numbers have provided a jarring catalogue about the economic devastation wrought by the pandemic — spiking to records as the pandemic unfolded in March 2020, and remaining at historic high levels throughout most of 2020.
The coronavirus surge last fall helped precipitate a rise in claims that saw the labor market, as seen in the monthly jobs report, slide backward too.
But until recently, the last few months been marked by strong jobs growth and a sense of optimism as vaccinations picked up, giving economists hope that the country was back on track to recovering the nearly 7 million jobs it is still down from before the pandemic.
Now, the delta variant is driving an alarming increase in covid-19 cases around the country, according to public health officials: the number of new cases increased more than 40 percent in the last week, sending jitters through the stock market, and is raising questions about whether state and local health authorities will reinstitute restrictions to slow the virus’ spread.
Frick said that the report showed the potential for unemployment claims to start trending upward after months of steady declines.
“There’s definitely a correlation, however loose, that the rise in covid does cause a rise in claims,” he said. “My fear is that the rise in the delta variant could cause claims to go back up…Certainly one week doesn’t show that. But I wouldn’t be surprised if we start to see claims rise.”
However, there are also lots of signs that the economy continues to rebound despite rising caseloads.
The more than 2.2 million people that the Transportation Security Administration said it screened at airports on Sunday was the most since late February 2020 — and nearly three times the amount it was on the same day last year.
Restaurant dining has largely rebounded in recent months, at times surpassing the levels from before the pandemic — on Saturday the number of diners was 1 percent higher than the same day in 2019, according to data from Open Table.
Last week, some 12.5 million claims were filed for unemployment insurance overall, according to the most recent numbers — down from 32.9 million filed at the same point last year.
Nevada, Rhode Island and California topped the list of states with the highest number of people on unemployment, the Labor Department said.
Economic concerns in recent months have been more focused on the ways that workers are still held back from filling some of the more than 9 million job openings in the country, than unemployment, with high hopes that school re-openings in the fall will help many parents get back into the labor force.
While CFOs, on the whole, remain optimistic about an economic rebound this year, they’re concerned about labor availability and accompanying cost pressures,according to a quarterly survey by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.
Over 75% of CFOs included in the survey said their companies faced challenges in finding workers. More than half of that group also said worker shortage reduced their revenue—especially for small businesses. The survey panel includes 969 CFOs across the U.S.
“CFOs expect revenue and employment to rise notably through the rest of 2021,” Sonya Ravindranath Waddell, VP and economist at the Federal Reserve Bank of Richmond said. “[But] over a third of firms anticipated worker shortages to reduce revenue potential in the year.”
As many companies struggle to find employees and meet renewed product demand, it’s unsurprising CFOs anticipate both cost and price increases, Waddell said.
About four out of five CFO respondents reported larger-than-normal cost increases at their firms, which they expect will last for several more months. They anticipate the bulk of these cost increases will be passed along to the consumer, translating into higher-priced services.
Despite labor concerns, CFOs are reporting higher optimism than last quarter, ranking their optimism at 74.9 on a scale of zero to 100, a 1.7 jump. They rated their optimism towards the overall U.S. economy at an average of 69 out of 100, a 1.3 increase over last quarter.
For many CFOs, revenue has dipped below 2019 levels due to worker shortage, and in some cases, material shortages, Waddell told Fortune last week. Even so, spending is on the rise, which respondents chalked up to a reopening economy.
“Our calculations indicate that, if we extrapolate from the CFO survey results, the labor shortage has reduced revenues across the country by 2.1%,” Waddell added. “In 2019, we didn’t face [the] conundrum of nine million vacancies combined with nine million unemployed workers.”
The delta variant of the coronavirus is sweeping through the United States, raising the average number of cases to 30,000-per-day, crowding hospitals in areas with large number of unvaccinated people and spurring questions about the nation’s recovery from the pandemic.
Stocks tanked on Monday, with the Dow Jones Industrial average dropping 725 points after being down more than 900 points at one time.
It was the worst one-day performance in the Dow since last October, and followed losses in markets around the world as investor fears about how the delta virus might slow both the health and economic recovery took hold.
Health officials have described the latest stage of the coronavirus as a pandemic of the unvaccinated while emphasizing that those who have had their shots are relatively safe.
Yet Los Angeles County on Saturday reinstated a mask mandate for indoor public settings, a sign that local communities may decide to reimpose restrictions as a safety measure.
An Olympic gymnast and an Olympic women’s basketball player both announced they had tested positive as they prepared for the Games, which is being held in a state of emergency in Tokyo where the rate of vaccinations is behind the United States.
Canada had also been well behind the U.S. in its vaccination rate but surpassed its southern neighbor on Monday, a sign of how much more slowly the vaccination rate now is in the United States. A big reason is that many people who are unvaccinated do not want to get the vaccine, something the Biden administration has increasingly blamed on social media and some conservative media outlets.
While the 30,000 cases per day on average is more than double the 13,000 average at the end of June, that rate is still well below highs from last fall and earlier this year.
Still, deaths are also ticking back up, at around 240 per day.
Because vaccinated people are still overwhelmingly protected, especially from severe outcomes, case and death numbers are likely to stay well below the worst of last winter’s surges, before vaccines were widely available.
But unvaccinated people are at increasing risk, especially given the rise of the highly transmissible delta variant, and the vaccination campaign is hitting a wall, leaving more than 30 percent of adults without any shots and exposed to the full dangers of the virus.
States with lower vaccination rates are seeing the worst outbreaks. Arkansas, Missouri, Florida and Louisiana are the four states with the highest per capita new cases per day, according to data from the Covid Act Now tracking site. The percentage of the population with at least one shot in those states is 44 percent, 47 percent, 56 percent, and 40 percent, respectively.
In contrast, Vermont and Massachusetts, where the vaccination rate is over 70 percent, are faring much better.
Vaccine resistance among some leading conservative commentators and lawmakers is raising fears that many of the remaining unvaccinated may never get the shots.
Sten Vermund, a professor at the Yale School of Public Health, said he is “not particularly worried” about COVID-19 for himself, because he is fully vaccinated.
“What worries me is my fellow Americans who for a variety of reasons choose not to get vaccinated; they continue to be in harm’s way,” Vermund said.
In the rare instances where vaccinated people do get COVID-19 cases, symptoms are likely to be much milder.
CDC Director Rochelle Walensky said Friday that 97 percent of people entering the hospital with COVID-19 are unvaccinated, part of why she said it “is becoming a pandemic of the unvaccinated.”
Conservative resistance to vaccination is stiffening. A Washington Post-ABC News poll released earlier this month found that 47 percent of Republicans said they were unlikely to get vaccinated, compared to just six percent of Democrats. Among Republicans, 38 percent said they definitely would not get the shots.
Former President Trump has previously encouraged people to get vaccinated, though he has not made a forceful push, for example by recording a public service announcement or getting his own shots in public.
On Sunday, though, Trump appeared to justify people not taking the vaccine, blaming President Biden.
“He’s way behind schedule, and people are refusing to take the Vaccine because they don’t trust his Administration, they don’t trust the Election results, and they certainly don’t trust the Fake News, which is refusing to tell the Truth,” Trump said in a statement.
Asked if Biden would request Trump film a public service announcement on vaccination, White House press secretary Jen Psaki said “we don’t believe that requires an embroidered invitation to be a part of.”
“Certainly any role of anyone who has a platform where they can provide information to the public that the vaccine is safe, it is effective, we don’t see this as a political issue,” Psaki said. “We’d certainly welcome that engagement.”
She also emphasized, though, that the administration is focusing on local doctors and community leaders to try to boost vaccination rates, not national officials.
The effort is hitting its limits, though. The pace of vaccinations has fallen to around 500,000 per day, down from over 3 million at the peak in April, according to Our World in Data.
“I’m not that hopeful that we’re going to get to people who have refused to be vaccinated,” said Preeti Malani, an infectious disease expert at the University of Michigan.
Experts increasingly say the best remaining hopes of reaching the remaining unvaccinated are school and employer mandates for their workers or students to get vaccinated.
France is experiencing a surge in vaccinations after President Emmanuel Macron announced this month that proof of vaccination, or a negative test, would be required for everyday activities like going to restaurants. The Biden administration has repeatedly ruled out a national vaccine passport in the U.S., though, and Republicans have rebelled against the idea.
Full approval of the vaccines from the Food and Drug Administration, as opposed to the current emergency authorization, could also help assuage some people’s fears, and some experts have called on the FDA to move faster on issuing a full approval.
The Biden administration has stepped up its calls for Facebook and other technology companies to do more to fight vaccine misinformation on their platforms.
Biden on Friday said social media companies are “killing people” with misinformation. On Monday, though, he dialed the criticism back down, instead pointing to 12 people responsible for much of the disinformation.
“Facebook isn’t killing people, these 12 people are out there giving misinformation,” Biden said.
“My hope is that Facebook, instead of taking it personally, that somehow I’m saying Facebook is killing people, that they would do something about the misinformation, the outrageous misinformation about the vaccine,” Biden added. “That’s what I meant.”
For its part, Facebook said over the weekend, before Biden’s walk-back, that the administration was “finger pointing” and the company was not the reason the president’s goal of getting 70 percent of adults at least one shot by July 4 was missed.
Los Angeles County’s move to return to an an indoor mask mandate, even for vaccinated people,
got mixed reviews from experts, but either way, it is unlikely to be replicated in places that are the hardest hit, given that places that are resistant to vaccines tend to also be resistant to masks.
“Vaccines are really the only way out,” Malani said. “We can’t live in masks forever.”
One of the underappreciated ways in which health systems create value in our healthcare economy, as was recently the topic of discussion with the CEO of an organization we work with, is their role as a “safety net”. We weren’t talking about safety-net providers in the traditional sense—those which serve low-income populations. Rather, we were talking about the ability of larger health systems to acquire and invest in smaller hospitals that might otherwise risk going out of business entirely due to economic pressures.
When economic shocks hit, as was recently the case with COVID, we often see firms close; think of all the restaurant and hospitality businesses forced to shut down over the past year. As the economy rebounds, new business spring up to take their places—that kind of “creative destruction” is commonplace in the larger economy. But when a hospital is forced to shut its doors, it’s a different story, one that could be potentially disastrous for the community.
Often the most economically vulnerable hospitals are sole providers for their communities; without them, critical medical services could be much less accessible for patients. Enter multi-hospital health systems, which have often stepped in to acquire hospitals in jeopardy.
By providing access to capital, technology, and management infrastructure, systems have probably kept hundreds of such smaller hospitals in business over the past several decades. Policy analysts are quick to criticize health systems for value destruction: leveraging scale to raise prices, and so forth.
Often valid criticism, but it would be myopic to overlook the fact that systems have also allowed many vulnerable communities to retain access to a viable local hospital. The pushback is often to posit that we simply have too many hospitals to begin with—but try telling that to patients and communities who have lost access to their local source of care.
An estimate from the Partnership for America’s Healthcare Future predicts that nearly four out of five 60- to 64-year-olds would enroll in Medicare, with two-thirds transitioning from existing commercial plans, if “Medicare at 60” becomes a reality.
In the graphic above, we’ve modeled the financial impact this shift would have on a “typical” five-hospital health system, with $1B in revenue and an industry-average two percent operating margin.
If just over half of commercially insured 60- to 64-year-olds switch to Medicare, the health system would see a $61M loss in commercial revenue.
There would be some revenue gains, especially from patients who switch from Medicaid, but the net result of the payer mix shift among the 60 to 64 population would be a loss of $30M, or three percent of annual revenue, large enough to push operating margin into the red, assuming no changes in cost structure. (Our analysis assumed a conservative estimate for commercial payment rates at 240 percent of Medicare—systems with more generous commercial payment would take a larger hit.)
Coming out of the pandemic, hospitals face rising labor costs and unpredictable volume in a more competitive marketplace. While “Medicare at 60” could provide access to lower-cost coverage for a large segment of consumers, it would force a financial reckoning for many hospitals, especially standalone hospitals and smaller systems.
Judging from the level of deal activity across healthcare in the first quarter of this year, post-pandemic euphoria is truly taking hold. After a substantial, COVID-related dip across most of last year, healthcare M&A began to accelerate in the fourth quarter of 2020, and hit a new high in the first quarter of 2021—up 19 percent. While all sectors saw an uptick in deal flow, the level of activity was particularly high among physician groups, as well as in the behavioral health and “e-health” spaces.
Although hospital deal activity waned somewhat in the first quarter, the average value of deals increased: the average seller size by revenue was $676M, around 70 percent above historical year-end averages. This reflects a shift from bolt-on acquisitions by health systems looking to add isolated assets, to larger health systems seeking to combine their portfolios. Private equity continues to fuel a large portion of deal activity, especially in the behavioral health and physician group space, contributing to an 87 percent surge in the physician sector.
We’d expect this flurry of M&A activity to persist—especially among physician groups and hospitals—as organizations seek financial security after a turbulent year, and as larger players look to scale their market presence and diversify revenue streams.