Economic Lockdown – EOH 10/7

If COVID hysteria only meant people were stuck inside for a few weeks, perhaps it would be more understandable. Instead, across the world, it has led to economic and social catastrophe. Years of economic growth and rising social standards in countries like India have been destroyed in a few short months. We have rolled extreme global poverty back to the 1990s. Hundreds of millions are expected to go hungry by the end of this year. America has not escaped this social and economic pain as layoffs continue and social unrest spills into the streets.

2020 COVID lockdowns will be marked as one of the greatest modern policy errors in human history.

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COVID News

As cold weather arrives, U.S. states see record increases in COVID-19 cases

https://www.reuters.com/article/health-coronavirus-usa/update-1-as-cold-weather-arrives-us-states-see-record-increases-in-covid-19-cases-idUSL1N2GV080

Wow! Seasonality! This has never happened before! 

Nine U.S. states have reported record increases in COVID-19 cases over the last seven days, mostly in the upper Midwest and West where chilly weather is forcing more activities indoors. On Saturday alone, four states – Kentucky, Minnesota, Montana and Wisconsin – saw record increases in new cases and nationally nearly 49,000 new infections were reported, the highest for a Saturday in seven weeks, according to a Reuters analysis. Kansas, Nebraska, New Hampshire, South Dakota and Wyoming also set new records for cases last week. New York is one of only 18 states where cases have not risen greatly over the past two weeks, according to a Reuters analysis. However, New York City Mayor Bill de Blasio said on Sunday he is moving to shut non-essential businesses as well as schools in nine neighborhoods, starting on Wednesday. The lockdown would require the governor’s approval. Health experts have long warned that colder temperatures driving people inside could promote the spread of the virus. Daytime highs in the upper Midwest are now in the 50s Fahrenheit (10 Celsius). Montana has reported record numbers of new cases for three out of the last four days and also has a record number of COVID-19 patients in its hospitals. Wisconsin has set records for new cases two out of the last three days and also reported record hospitalizations on Saturday. On average 22% of tests are coming back positive, one of the highest rates in the country.

New York City is ‘on the edge of a precipice’ as coronavirus cases grow, former CDC director says

https://www.cnbc.com/2020/10/03/nyc-on-the-edge-of-a-precipice-as-coronavirus-cases-grow-ex-cdc-director-says.html

After a break, lockdown returns to New York.

Coronavirus infection rates in the New York City area continue to soar far above other parts of the state just days after it reopened indoor dining spaces and returned more students to classrooms for in-person learning.  New York is responding to growing clusters of coronavirus cases in 20 “hotspot” ZIP codes that are reporting positivity rates, or the number of tests coming back positive, as high as 18%, based on a weekly average, according to a statement from Gov. Andrew Cuomo’s office on Saturday.  More than half of the hotspot ZIP codes are from Kings and Queens counties, which are located in New York City’s Brooklyn and Queens boroughs. Two other counties slightly north of New York City — Rockland and Orange — make up the remaining hotspot areas.  Although the top 20 ZIP codes are home to 6.7% of the state’s population, they represented 26% of Friday’s new Covid-19 cases, Cuomo said. The average positivity rate among them is 5.2% — well above the 1% rate for the remainder of the state.  “So my message to New Yorkers is please stay vigilant and my message to local governments is do the enforcement. We can beat this thing if we work together and stay New York Tough,” Cuomo said in the statement. Dr. Tom Frieden, the former director of the U.S. Centers for Disease Control and Prevention under President Barack Obama, warned on Twitter Saturday that New York City is “on the edge of a precipice” and is at “a high risk of Covid resurgence.”

Unemployment and child health during COVID-19 in the USA

https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30207-3/fulltext

Years of human and social improvement  wiped out due to a few months of bad public policy. 

The COVID-19 pandemic has led to high rates of unemployment across advanced economies.1 The burdens associated with unemployment, however, have not hit all households equally. Families with children and unemployed parents have reported especially high rates of hardship, with potential long-term consequences for child wellbeing and development. The increase of parental unemployment in the USA necessitates greater attention towards these potential consequences. First, the share of children with an unemployed parent (defined as jobless and looking for work) has reached historic highs in the USA, since the onset of the pandemic. In April, 2020, 21·7% of children had at least one unemployed parent, the highest rate observed since at least 1967.2 By July, 2020, the share of children with an unemployed parent had dropped to 14·3%, which is still higher than the peak of 13·2% during the Great Recession in 2010. Mothers have been hit hardest; the share of children with an unemployed mother reached 18·8% in April, 2020, again the highest rate since at least 1967. The data also reveal that care responsibilities are driving down employment rates, in particular for mothers. Among all mothers between the ages of 25 and 44 who lost a job after the onset of the pandemic, 30% report care responsibilities as their primary reason for not being employed, as of July, 2020.3,4 Among fathers of a similar age, the rate who attribute their unemployment to care responsibilities is 15%. For mothers with children experiencing distance learning, the share reporting care responsibilities as their primary reason for unemployment is even higher (36%) than for mothers whose children are attending school in person (29%). This pattern suggests that school closures have increased the care burden for parents and for mothers, in particular.

New Layoffs Add to Worries Over U.S. Economic Slowdown

Covidnomics gone wrong. 

The American economy is being buffeted by a fresh round of corporate layoffs, signaling new anxiety about the course of the coronavirus pandemic and uncertainty about further legislative relief. Companies including Disney, the insurance giant Allstate and two major airlines announced plans to fire or furlough more than 60,000 workers in recent days, and more cuts are expected without a new federal aid package to stimulate the economy. With the election a month away, an agreement has proved elusive. The White House and congressional Democrats held talks on Thursday before the House narrowly approved a $2.2 trillion proposal without any Republican support. It was little more than a symbolic vote: The measure will not become law without a bipartisan deal. After business shutdowns in the early spring threw 22 million people out of work, the economy rebounded in May and June with the help of stimulus money and rock-bottom interest rates. But the loss of momentum since then, coupled with fears of a second wave of coronavirus cases this fall, has left many experts uneasy about the months ahead. “The layoffs are an additional headwind in an already weak labor market,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “As long as the virus isn’t contained, this is going to be an ongoing phenomenon.” The concern has grown as measures that helped the economy weather the initial contraction have wound down. The expiration of a $600-a-week federal supplement to unemployment benefits was followed by a 2.7 percent drop in personal income in August, the Commerce Department said Thursday. In a separate report, the Labor Department said 787,000 people filed new applications for state jobless benefits last week. The total, not adjusted for seasonal variations, was a slight decline from the previous week, but continued to reflect the highest level of claims in decades. The most recent layoffs are not included in that figure, nor will they be reflected in September data to be released by the department on Friday, the last monthly reading on the labor market before the election. The report is expected to show a continuing slowdown in hiring, with barely half of the spring’s job losses recovered, although there is more uncertainty than usual around the estimates.

Research

Projected poverty impacts of COVID-19 (coronavirus)

http://pubdocs.worldbank.org/en/461601591649316722/Projected-poverty-impacts-of-COVID-19.pdf

How much of this was COVID-19 or caused by lockdowns? 

Poverty projections suggest that the social and economic impacts of the crisis are likely to be quite significant. Estimates based on growth projections from the June 2020 Global Economic Prospects report show that, when compared with pre-crisis forecasts, COVID-19 could push 71 million people into extreme poverty in 2020 under the baseline scenario and 100 million under the downside scenario. As a result, the global extreme poverty rate would increase from 8.23% in 2019 to 8.82% under the baseline scenario or 9.18% under the downside scenario, representing the first increase in global extreme poverty since 1998, effectively wiping out progress made since 2017. While a small decline in poverty is expected in 2021 under the baseline scenario, projected impacts are likely to be long-lasting. The number of people living under the international poverty lines for lower and upper middle-income countries – $3.20/day and $5.50/day in 2011 PPP, respectively – is also projected to increase significantly, signaling that social and economic impacts will be widely felt. Specifically, under the baseline scenario, COVID-19 could generate 176 million additional poor at $3.20 and 177 million additional poor at $5.50. This is equivalent to an increase in the poverty rate of 2.3 percentage points compared to a no-COVID-19 scenario. A large share of the new extreme poor will be concentrated in countries that are already struggling with high poverty rates and numbers of poor. Almost half of the projected new poor will be in South Asia, and more than a third in Sub-Saharan Africa. Under the baseline scenario, the number of extreme poor in IDA, Blend and FCV countries is projected to increase by 21, 10 and 18 million, respectively. The increase in the extreme poverty rate and number of extreme poor are projected to be significantly higher under both the baseline and downside scenario if inequality were to increase as a consequence of the crisis.

Explaining the Wall/Main Street disconnect

https://voxeu.org/article/explaining-wallmain-street-disconnect

Covidnomics ignoring the little guy.

The blue line in Figure 1 shows the acute drop in the stock market index once the economic impact of the COVID-19 shock became apparent. The figure also shows the dramatic recovery of stock prices after the Fed announced its massive policy response (e.g. it cut the policy rate to zero and pledged close to 20% of GDP in asset purchase and credit support facilities). Other financial assets show a similar pattern. While the Fed was successful in reversing the financial meltdown, it did not prevent a dramatic collapse in the real economy. The red line (inverted scale) in Figure 1 shows that the US continued jobless claims rose substantially and remained high. This disconnect between the quick recovery of financial markets and the sluggish response of the real economy has been the source of much debate, as highlighted by the cover page of The Economist on 9 May 2020, “A dangerous gap: The markets v the real economy” (see also Igan et al. 2020). To explain this discrepancy, some observers point at what they see as irrational exuberance in financial markets, while others point at the ineffectiveness of the Fed’s policies in helping main street. Our main claim is that the patterns in Figure 1 are consistent with optimal monetary policy once we consider the subtleties of the relationship between monetary policy, the stock market, and the economy. First, the stock market is not representative of the average firm – let alone the average asset that matters for economic activity. In standard macroeconomic models, the Fed (and other central banks) can be thought of as stabilising risk-driven fluctuations in the price of the market portfolio (Caballero and Simsek 2020a). This portfolio includes houses and bonds in addition to the stocks of all firms – including those of non-traded small firms. While the stock market index can sometimes act as a proxy for the market portfolio, this is not the case for the COVID-19 recession. The major indices are overrepresented by sectors and companies which are not nearly as affected by the virus as the average firm, but which still benefit from the expansionary monetary policy aimed to contain the economic downturn.

The Trump White House as a Covid-19 Hot Spot

https://www.wsj.com/graphics/trump-white-house-a-covid-19-hot-spot/

A visual analysis of the COVID outbreak at the White House Rose Garden event.

President Donald Trump announces Amy Coney Barrett as Supreme Court nominee at an outdoor ceremony attended by dozens of officials, including former White House adviser Kellyanne Conway, former New Jersey Gov. Chris Christie, Utah Sen. Mike Lee (R., Utah), Thom Tillis (R., N.C.), Kelly Loeffler, (R., Ga), Deb Fischer, (R., Nebraska), Ted Cruz (R., Texas) and Notre Dame University President the Rev. John Jenkins, many of whom were seen without masks shaking hands and hugging other guests. First lady Melania Trump and press secretary Kayleigh McEnany also attended. Mr. Trump holds a press conference in the White House briefing room with a number of other top officials, including Centers for Disease Control and Prevention Director Robert Redfield, National Institutes of Health Director Francis Collins, coronavirus task force adviser Scott Atlas, and Food and Drug Administration Commissioner Stephen Hahn. First lady Melania Trump hosts a private reception at the White House in honor of Gold Star families.

Charts and Graphics

NY vs GA COVID Deaths Per Million

The media said Georgia would be a second New York… Nope!

The Impact of COVID-19 on Global Extreme Poverty

Lockdowns have lethal consequences to health. 

Record Contraction

Years of economic growth lost in a few months. 

The Coronavirus Crisis Is Different

Those who can’t work remotely suffer the most. 

COVID-19’s Crushing Impact on International Tourism 

Whoops! Turns out closing off the entire world and scary people leads to the collapse of globalization 

International News

As hunger rises, Australia must step up COVID response in world’s hardest hit places

https://www.sightmagazine.com.au/17384-essay-as-hunger-rises-australia-must-step-up-covid-response-in-world-s-hardest-hit-places

Expect no apologies.

Conducted against the background of the COVID pandemic – forcing most world leaders to speak via pre-recorded video messages – a record number of member states took part in the general debate, reminding us of the UN’s power to bring together dignitaries and – in theory – forge solutions to the world’s most pressing challenges.  But as politicians and diplomats celebrated the UN’s 75th anniversary, for millions of the world’s people, especially in poor and war-ravaged countries like Afghanistan, Syria and Mali, things are about as bad as they have ever been in those 75 years. Take hunger, for example. The number of women, men and children around the world going hungry is increasing at the fastest rate in decades. Despite so much abundance in our world, 690 million people went to bed hungry last year – up by 10 million from 2018, and by nearly 60 million in five years.  COVID-19 is estimated to push another 120 million people over the edge by the end of this year. And, sadly, children are bearing the brunt of the current food crisis. A toxic mix of destitution, armed conflict, climate change, and now the pandemic and its knock-on effects has put children’s health and long-term development at grave risk. Millions are on the brink of losing their futures as a result of rising poverty and pressure to earn money instead of going to school. School closures across the developing world are having a particularly catastrophic impact, as they give many children at least one decent meal each day and, through quality education, lift their prospects of a brighter future. Communities going hungry is bad enough, but last month the world learned that in some countries, hunger is about to evolve into something far more sinister – famine. Parts of Yemen, Congo, South Sudan, and Nigeria all on the brink. Famine means families lose the ability to feed themselves, become entirely dependent on outside support and, ultimately, many people die from hunger. The four countries – like many others such as Syria, Afghanistan or Myanmar – are experiencing a perfect storm of armed conflict and a pandemic that have conspired to push families out of their homes, force cuts to national food production and imports, and drive up food prices, precisely at a time when people’s jobs and incomes are being decimated.Closer to home, the pandemic has also triggered a hunger crisis. A recent World Vision assessment found that a staggering 93 per cent of households in countries like Bangladesh, India, Indonesia, Myanmar and the Philippines have had their livelihoods affected by the COVID-19 crisis.

Extreme poverty is getting worse across the globe for the first time in decades

https://www.vox.com/future-perfect/21492321/global-extreme-poverty-getting-worse-hunger-death-covid-19

Will anyone be held accountable?

For decades, one of the most important indicators of global well-being has kept moving in the right direction: Extreme poverty has been falling. Although experts can and do debate the details, hundreds of millions of families moved from subsisting on less than $1.90/day (the World Bank’s standard for “extreme poverty”) to living on a little more. To be sure, it’s still not enough, but it has meant less hunger, less premature death, and more opportunity. Despite wars, famines, and natural disasters, extreme poverty has fallen for the last 50 years. In just one year, Covid-19 has changed that picture profoundly. The World Bank predicts the number of people living in extreme poverty will rise by anywhere from 70 million to 100 million this year, and may stay that way for several years as the coronavirus-related slowdown in economic growth is expected to linger — especially in countries such as Nigeria and India, where many of the world’s poorest people live. The number of people surviving on less than $3.20/day (the World Bank’s standard for “poverty”) is also expected to rise, by between 170 million and 220 million people. By other means of measuring poverty, the toll might be even worse: The United Nations has a metric that tracks access to clean water, adequate food, electricity, and schools, and it estimates that 490 million people will lose access to one of those things within the next year. While extreme poverty was rare outside of sub-Saharan Africa in 2019, many of the people projected to slip into it live in South Asia. In a September 28 report, the World Bank finds that in South Asia, “The COVID-19 shock is not only keeping people in poverty, but also creating a class of ‘new poor.’” That’s not only in countries hit hard by the virus but on the broader region. “The employment and earning impacts of the pandemic have been large and widespread,” the report states, a consequence of a triple shock from “the pandemic itself, the economic impact of containment measures, and reverberations from the global recession.”

Modi’s Key Reforms Stall as Pandemic Upends India’s Economy

https://www.bloomberg.com/news/articles/2020-10-05/modi-s-key-reforms-stall-as-pandemic-upends-india-s-economy

Sacrificing everything for COVID. 

India’s delay in appointing a new central bank committee to decide interest rates is just the latest of Prime Minister Narendra Modi’s key economic reforms that are failing to gain traction during the nation’s worst crisis in decades. Three of his major policies — the goods and services tax, a bankruptcy and insolvency law and the Monetary Policy Committee — have been mired in problems since the Covid-19 outbreak upended economic activity. Modi’s administration has delayed payments it promised India’s 28 states as compensation under the new consumption tax regime, increasing tension between the two tiers of government. The bankruptcy law has been suspended, frustrating the loan recovery efforts of lenders already saddled with one of the world’s worst bad-loan problem. And on top of that, the government didn’t appoint members to the central bank’s MPC in time for its scheduled policy decision last week, delaying possible stimulus that the economy desperately needs. “In such uncertain times, the least we can do is avoid unnecessary uncertainty. The MPC episode has just added to the ongoing chaos,” said Amol Agrawal, an assistant professor in the department of economics and public policy at Ahmedabad University. “Reforms have surely been dealt a blow by the pandemic.” K.S. Dhatwalia, a spokesman for the government, didn’t immediately respond to a call on his mobile phone for comment. Modi has been hailed by investors for his business-friendly reforms, which had been under discussion for years but pushed through in the first three years when he first took office in 2014.

Excel spreadsheet error blamed for UK’s 16,000 missing coronavirus cases

https://www.theverge.com/2020/10/5/21502141/uk-missing-coronavirus-cases-excel-spreadsheet-error

The UK government can’t be this incompetent. Then again, they believe lockdowns work.. 

The UK failed to add nearly 16,000 confirmed cases of coronavirus to its national track and trace system due to an Excel error. A number of reports, including from The Guardian, Sky News, and The Daily Mail, say the mistake was caused when an Excel spreadsheet used to track confirmed cases of the virus reached its maximum file size and failed to update. The government agency that helps oversee the UK’s pandemic response, Public Health England (PHE), said some 15,841 cases had been left out of national totals because of the error but did not specify what caused the so-called glitch. “Initial findings indicate that the issue was caused by the fact that some files containing positive test results exceeded their maximum file size, and they then failed to load into the central system because they couldn’t get through,” a spokesperson for PHE told BBC News journalist Leo Kelion. The spokesperson did not confirm or deny that Excel was involved. The revelation caps a weekend of soaring coronavirus cases for the UK, which many have speculated could lead to a second national lockdown for the country: 12,782 new cases were announced on Saturday followed by 22,961 on Sunday. The 15,841 “missing” cases made public today were originally recorded between September 25th and October 2nd. All those who tested positive for COVID-19 were notified by the UK’s health authorities, but the failure to upload these cases to the national database meant anyone who came into contact with these individuals was not informed. It’s an error that may have helped spread the virus further through the country as individuals exposed to the virus continued to act as normal. According to reports from The Guardian and Sky News, the mistake was caused when PHE tried to collate data from multiple sources in the form of CSV files by loading them into Excel. This popular spreadsheet software has limits in how many rows it can load — 65,536 rows in older versions and 1,048,576 rows in more recent versions. Based on these reports, it’s not clear which version of Excel PHE is using, but the row-limit was reached regardless. As PHE workers tried to load more cases into the national database, they were rejected.

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