Written by rjs, MarketWatch 666
News posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. We cover the latest economic data, especially the prospects for an infrastructure bill, stimulus checks, government funding, the Fed, the latest employment data, housing market reports, mortgage delinquencies & forbearance, layoffs, lockdowns, and schools, as well as GDP. The bulk of the news is from the U.S., with a few more articles from overseas at the end. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.
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The news associated with the pandemic was reduced this week. There are a few articles from around the world at the end:
Reuters poll: Fed’s core PCE inflation concern threshold is 2.8% – economists (Reuters) – The Federal Reserve’s preferred inflation gauge would have to hit a high of 2.8% to discomfort U.S. policymakers, according to a Reuters poll which also suggested the central bank would tolerate that rate for three months at least before it acts. Stocks slumped and Treasury yields jumped on Wednesday after data showed annual U.S. consumer prices unexpectedly rose by the most in nearly 12 years in April, prompting earlier policy tightening bets. In the 12 months through March, the core personal consumption expenditures (PCE) price index – the Fed’s preferred inflation measure for its 2% average flexible target – increased 1.8%, the most since February 2020. That inflation gauge would have to rise as high as 2.8% to cause discomfort at the Fed, according to the median of 41 economists in response to an additional question in the May 10-13 poll. While forecasts ranged from 2.3% to a high of 4.0%, the most common response, or the mode, was 2.5%. James Knightley, chief international economist at ING, said, “I have put 2.8%, but to be honest anything above 2.5%. However, it is more about how sustainable it looks rather than a specific monthly figure and has to be viewed in the context of what is happening to growth and jobs.” “If we have core PCE above 2.5% in early 2022 as well, we will seriously have to consider an accelerated QE tapering with a rate hike before the end of the year,” he added.
Consumers Expect Higher Inflation, Posing Potential Trouble for the Fed – Americans are penciling in higher inflation not just over the next year but over the next five years, according to a survey measure that Federal Reserve officials have a history of watching closely. That could spell trouble for the central bank, which relies on low and stable inflation expectations as an enabler of its low-interest-rate plans. The University of Michigan’s consumer survey’s two inflation expectations indexes both surged in preliminary May data released Friday. The measure that gauges near-term inflation expectations popped to 4.6 percent from 3.4 percent. A closely followed index that traces expectations for the next five years rose less, but hit its highest level in a decade, jumping to 3.1 percent from 2.7 percent in April. The numbers are subject to revision and mark just one data point, but they come at a time when market-based inflation expectations are surging and real-world price gains are picking up faster than expected. That matters for the Fed, which is tasked with keeping inflation low and stable while fostering full employment. Inflation has been low for years – in fact, worryingly weak – and the Fed has pledged to keep interest rates low and monetary policy supportive of the economy until prices have risen above 2 percent and the pandemic-damaged job market has totally healed. But if expectations jump by too much, it could undermine the ability to stick with that plan. That’s because economists think that the modern era of low inflation owes partly to economic fundamentals – globalization, an aging population and technology – and partly to contained inflation expectations. After the Fed stamped down runaway price gains in the 1970s and 1980s, consumers and businesses came to expect price gains to remain steady and slow. Because shoppers were unwilling to accept higher prices, leaving businesses unable to raise them, that belief helped to drive reality. If inflation expectations rocket higher after years of slipping, it could make businesses feel more comfortable passing on labor or input cost increases to consumers – lifting real-world price gains. That’s the sort of thing that could turn today’s higher inflation – which is expected to be temporary because it is the product of data quirks, supply chain shortages and a demand surge tied to reopening from the pandemic – into a more long-lasting phenomenon. Measures of inflation expectations are notoriously tricky to understand, and the forces that drive inflation itself remain a hot topic in economics. But the new reading, coming in a measure that Fed officials have often cited, is likely to add fuel to an ongoing debate over whether big government spending, supply and demand mismatches driven by the economy’s reopening, and the central bank’s new policy of added patience could push price gains into higher gear.
Seven High Frequency Indicators for the Economy – These indicators are mostly for travel and entertainment. The TSA is providing daily travel numbers. This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red). The dashed line is the percent of 2019 for the seven day average. This data is as of May 9th. The seven day average is down 36.9% from the same day in 2019 (63.1% of 2019). The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities. This data is updated through May 8, 2021. This data is “a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. Note that this data is for “only the restaurants that have chosen to reopen in a given market”. Since some restaurants have not reopened, the actual year-over-year decline is worse than shown. Florida and Texas are above 2019 levels. This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue). The data is from BoxOfficeMojo through May 6th. Movie ticket sales were at $19 million last week, down about 92% from the median for the week.This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. Occupancy is now above the horrible 2009 levels. This data is through May 1st. Hotel occupancy is currently down 17% compared to same week in 2019). This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019. As of April 30th, gasoline supplied was off about 10.2% (about 89.8% of the same week in 2019). Gasoline supplied was up year-over-year, since at one point, gasoline supplied was off almost 50% YoY in 2020. This graph is from Apple mobility. From Apple: “This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities.” There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. This data is through May 8th for the United States and several selected cities. The graph is the running 7 day average to remove the impact of weekends. : All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I’m just using the transit data. According to the Apple data directions requests, public transit in the 7 day average for the US is at 70% of the January 2020 level. It is at 70% in Chicago, and 65.0% in Houston – and moving up recently. Here is some interesting data on New York subway usage. This graph is from Todd W Schneider. This is weekly data since 2015. This data is through Friday, May 7th. Schneider has graphs for each borough, and links to all the data sources.
Q2 GDP Forecasts: Around 10% – From Merrill Lynch: We look for growth of 10.0% qoq saar in 2Q. [May 14 estimate] From Goldman Sachs: We left our Q2 GDP tracking estimate unchanged at +10.5% (qoq ar). [May 14 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at 4.9% for 2021:Q2. [May 14 estimate] And from the Altanta Fed: GDPNow The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in thesecond quarter of 2021 is 10.5 percent on May 14, down from 11.0 percent on May 7. [May 14 estimate]
CBO: Deficit through April hits $1.9 trillion – The federal budget deficit hit $1.9 trillion in the first seven months of the fiscal year, according to estimates released Monday by the Congressional Budget Office (CBO), larger than any full-year deficit before 2020. That figure is $449 billion, or 23 percent, more than the same period last year, only two months of which were dramatically affected by the COVID-19 pandemic. The increase alone is similar in size to the entire deficit in the same period of the 2019 fiscal year, which came in at $531 billion. The deficit rose $225 billion last month alone. The role of government spending in the economy has taken center stage since President Biden was sworn into office. Republicans have argued that the scale of stimulus and government spending he has proposed are far greater than what the economy needs to recover from the coronavirus pandemic. Biden pushed through the latest COVID-19 relief package, a $1.9 trillion behemoth, without Republican support. He has also proposed $4 trillion in additional spending on infrastructure and family support programs that he says will serve as investments in the economy’s future prospects. Biden is meeting with both Republicans and Democrats this week to hash out a possible compromise over the hard infrastructure portions of the package, which the GOP says should cost no more than $800 billion. The precipitous rise in the 2021 deficit through April was due to government interventions to rescue the economy amid the pandemic. “Most of the increases in 2021 arose from spending for refundable tax credits (particularly recovery rebates), unemployment compensation, and the Small Business Administration’s Paycheck Protection Program,” CBO noted in its report. Revenues were up 16 percent, perhaps in part because last year, some employers were offered deferrals on paying some of their taxes in response to the pandemic. Outlays, on the other hand, were up 22 percent, driven by stimulus checks, payments through Small Business Administration programs and additional unemployment benefits.
Biden to go one-on-one with Manchin – President Biden is having a one-on-one meeting with Sen. Joe Manchin (D-W.Va.) on Monday to discuss his infrastructure proposal, the White House said, a discussion that is likely to cover disagreements over the corporate tax rate. Biden has proposed raising the corporate tax rate from 21 percent to 28 percent to pay for his $2.3 trillion infrastructure proposal, a hike that Manchin has said is too high. Manchin has indicated he would support increasing the corporate tax rate to 25 percent. Manchin has also expressed general concerns about the price tag of Biden’s agenda, which also includes a $1.8 trillion plan to expand prekindergarten and community college and offer tax credits to low- and middle-income families. Manchin’s support is key to any bill that Democrats try to pass using the budget reconciliation process, where they need every Democrat in the Senate to vote in favor of a piece of legislation in order for it to pass. Biden said last week that he was open to compromise on his plans to raise the corporate tax rate but said he would not back a bill that is not paid for due to concerns about the deficit. “I’m willing to compromise but I’m not willing to not pay for what we’re talking about,” Biden told reporters on Wednesday. “I’m not willing to deficit spend. They already have us $2 trillion in the whole.” Biden is also trying to negotiate with Republicans on a potential compromise on infrastructure, and those efforts face a critical test this week.
Biden pleads with Republicans for bipartisan infrastructure bill – President Joe Biden completed three days of high-level meetings at the White House where he has sought some semblance of Republican support for the $2.3 trillion infrastructure bill his administration put forward last month. While repeatedly praising these talks as “good faith” negotiations, he has evaded the obvious contradiction: The party with whom he is bargaining denies his own legitimacy as president. The Republican Party is entirely subordinated to former President Donald Trump, who has declared the 2020 election a fraud and Biden an illegitimate president. On Wednesday morning, the House Republican Conference removed Representative Liz Cheney as its chair because she opposed Trump’s baseless claims of election fraud and held him responsible for the January 6 attack on Congress. House Minority Leader Kevin McCarthy engineered a swift purge of Cheney – in response to orders from Trump – and 90 minutes later was sitting in the White House meeting with Biden and Vice President Kamala Harris, side by side with House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell. Afterwards McCarthy denied the obvious contradiction, saying that he now acknowledged Biden as the president and was not seeking to dispute the election any further. But his political office sent out a fundraising letter only minutes after the meeting, declaring, “I just met with Corrupt Joe Biden and he’s STILL planning to push his radical Socialist agenda onto the American people.” This political reality – that the Republican Party denies the legitimacy of the Biden administration – underlies the entire process of “bargaining” and “negotiations” which is under way. In keeping with the longstanding trend in American capitalist politics, the Democratic Party, which controls the White House and both houses of Congress, acts as the supplicant, and the Republican Party, which lost the 2020 presidential election by a considerable margin, seven million votes, acts as though it had a political mandate.
Biden: Workers can’t turn down job and get benefits –President Biden announced Monday that his administration would affirm that workers cannot turn down a “suitable” job they are offered and continue to take federal unemployment benefits. “We’re going to make it clear that anyone who is collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits,” Biden said in remarks on the economy from the East Room, noting there would be “a few COVID-19-related exceptions” to the guidance. After a monthly report showed a slowdown in job growth last week, Republicans and business groups have argued that the supplemental unemployment benefits incentivized people not to work and should be done away with. Certain workers can get a $300 weekly supplemental unemployment benefit through the $1.9 trillion coronavirus rescue package that Biden signed into law in March. The increased benefits are slated to last until September. Critics argue the latest disappointing jobs report is evidence some aren’t returning to work because of the benefits. Others argue there is little hard evidence to suggest this is a factor. Some have also pointed to the problem of child care as being a serious issue that is preventing some workers from going back to work. Biden’s remarks on Monday signal the administration does not want to be perceived as providing benefits that might serve as a disincentive to work. The president did insist there was no evidence that the expanded unemployment benefits contributed to the slowdown in job growth during the month of April.
Pelosi: House Democrats want to make child tax credit expansion permanent — Speaker Nancy Pelosi (D-Calif.) said Tuesday that House Democrats want to make the expansion of the child tax credit (CTC) permanent, after President Biden proposed extending the increased credit amount through 2025. “We want to have it longer,” she said at a virtual event. The event was focused on making people aware that they should file tax returns by the May 17 deadline so that they can receive advance payments of the expanded CTC this year. President Biden enacted a coronavirus relief law in March that includes a one-year expansion of the CTC. The law increases the credit amount from $2,000 to $3,600 for children under age 6 and to $3,000 for older children, makes the credit fully available to the lowest-income households, and directs the IRS to make advance payments of the credit on a periodic basis from July through December. The current expansion of the credit is just for 2021. Biden released a proposal last month, called the American Families Plan, that calls for the CTC to permanently be fully available for the lowest-income families and proposes to extend the other parts of the CTC expansion, such as the higher credit amount, through 2025. Many House and Senate Democratic lawmakers want to make the CTC expansion permanent, and have vowed to continue to push for permanence following the release of the American Families Plan. They say that the CTC expansion is important because it helps to reduce child poverty. Pelosi said that House Democrats are pleased that a one-year expansion of the CTC has been enacted, and are also pleased that the Biden administration wants to extend the expansion. But she also said that House Democrats want more than just an extension through 2025. An obstacle to making the child tax credit expansion permanent is the cost of doing so. Pelosi said that it would cost about $650 billion to make the expansion permanent in a bill based on Biden’s proposal, but that child poverty has an even greater cost to the U.S. of $800 billion to $1 trillion annually. “We figure it’s a saving,” she said.California man bought Lamborghini, luxury cars with PPP loan, prosecutors say -Prosecutors say a California man used a loan under the COVID-19 relief bill’s Paycheck Protection Program (PPP) to purchase a Lamborghini and other luxury cars, according to a New York Times report. The U.S. attorney in the Central District of California announced on Friday that authorities had arrested Mustafa Qadiri on charges of fraudulently obtaining $5 million in loans under the program, which was meant to help businesses survive the pandemic.According to the press release, prosecutors claim that Qadiri ran four now-defunct businesses and in May and June of 2020 he submitted false PPP loan applications on those businesses using his employees’ paid wages, and someone else’s name and Social Security number. He is accused of transferring the money to his personal accounts. Prosecutors say Qadiri spent the $5 million on vehicles, including a Lamborghini, a Ferrari and a Bentley. Prosecutors said police had seized the vehicles he purchased, according to the release. Qadiri also is accused of spending the money on lavish vacations.A grand jury on Wednesday indicted Qadiri, 38, on four counts of bank fraud and wire fraud, one count of aggravated identity theft and six counts of money laundering.A spokesman for the U.S. attorney’s office told the Times that if Qadiri is convicted, he could face up to a maximum sentence of 302 years in prison.
The Biden administration moved more than $2 billion earmarked for COVID measures to deal with the influx of migrants at the border – The Biden administration is funneling more than $2 billion toward the care of migrant children by and along the southern border, Politico reported.That money had originally been earmarked to go toward various measures to fight the coronavirus pandemic, according to Politico.The Department of Health and Human Services said $850 million will come from funds originally intended to expand testing for COVID-19, Politico reported.Another $850 million will be taken out of a fund set aside to help the country rebuild its emergency stockpile of medical items like masks, respirators, and gloves. The Strategic National Stockpile is meant to support the country as it deals with an emergency, but the pandemic has basically emptied it. Another $436 million coming from various health initiatives will also be diverted to support children at the border, according to Politico.At the US-Mexico border, there’s been an influx of migrants seeking entrance to the US and fleeing unfavorable or difficult conditions in their home countries.In response to the surge, the Biden administration opened several temporary federal shelters, and as of early May, Us officials are holding about 22,500 unaccompanied children. There’s concern that officials have struggled to adequately care for these migrant children. There are reports, for example, that say migrant children are not receiving enough food or appropriate mental health care.
Revealed: Big Pharma’s Plot to Derail US Covid-19 Vaccine Waiver – — While global health advocates applauded the Biden administration’s recent decision to support waiving intellectual property protections for Covid-19 vaccines as “critical,” “transformative,” and“unquestionably the right thing to do,” Big Pharma took a decidedly less optimistic view of the move and has been hard at work behind the scenes in a bid to thwart the policy, a reportpublished Friday by The Intercept revealed.In a bid to stymie U.S. support for a proposal by India and South Africa to enact a Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver at the World Trade Organization (WTO), the pharmaceutical industry is “distributing talking points, organizing opposition, and even collecting congressional signatures in an attempt to reverse President Joe Biden’s support for worldwide access to generic Covid-19 vaccines,” according to The Intercept’s Lee Fang.Fang obtained an email from Jared Michaud, a lobbyist with the Pharmaceutical Research and Manufacturers of America (PhRMA) – a trade group whose clients include vaccine developers AstraZeneca, Johnson & Johnson, and Pfizer – describing how Big Pharma and sympathetic U.S. legislators are pushing lawmakers to oppose a TRIPS waiver.The email explains that Reps. Buddy Carter (R-Ga.) and Vern Buchanan (R-Fla.) are leading an unreleased letter to Biden – which currently has 29 co-signers – “expressing concerns with the administration’s support for waiving IP protections related to Covid-19 vaccines under the WTO TRIPS waiver.””We urge you to contact offices and ask them to sign onto this letter,” said Michaud’s email.The letter additionally claims that the TRIPS waiver would cost U.S. jobs and be a boon for China, which would “profit from our innovation.”Michaud’s email contains talking points that paint the IP waiver as a national security threat that would “irreversibly damage American innovators” and the U.S. government’s “strategic engagement,” while a separate document marked “confidential” claims that “waiving intellectual property will undermine the global response to the pandemic and compromise vaccine safety.”According to Fang, “The metadata for the document shows that the PDF document was created by Megan Van Etten, an international public affairs specialist for PhRMA.” Fang notes that PhRMA spent $24 million on lobbying at the federal level last year “and is one of the biggest corporate players in election spending.”According to OpenSecrets, PhRMA has spent $8.7 million on lobbying so far this year. This, as client Pfizer has raked in $3.5 billion in profits from the sale of its Covid-19 vaccine in just the first three months of 2021.
Court decision muddies debt collector communications -A recent appeals court ruling is threatening to wreak havoc on the debt collection industry while raising questions about the viability of the Consumer Financial Protection Bureau’s debt collection rule set to take effect within months. In a surprise ruling in April, a three-judge panel of the 11th U.S. Circuit Court of Appeals said a debt collector violated the Fair Debt Collection Practices Act when it used a third-party vendor to issue an official notice to a consumer about an outstanding debt. The decision reversed a lower court’s ruling to dismiss the lawsuit, meaning the case could be sent back to reach an eventual outcome. Still, the appeals court said the collector ran afoul of the prohibition on disclosing a debtor’s information to a third party. Companies that routinely use third-party letter vendors, particularly mortgage servicers, say the decision has far-reaching consequences. For now, the ruling only applies to debt collectors in Florida, Georgia and Alabama, but some have raised the possibility that it could be applied more broadly. “It was a very surprising and tremendously disruptive decision,” said Justin Wiseman, associate vice president and managing regulatory council at the Mortgage Bankers Association. “It throws a cloud of uncertainty over [the MBA’s] members in these states. Mortgage servicers are looking at their vendor relationships in light of this decision.” The case involves the plaintiff Richard Hunstein who sued Johns Hopkins All Children’s Hospital over a debt for his son’s medical treatment. The three-judge panel ruled that his case against a Tampa, Fla., debt collector, Preferred Collection and Management Services Inc., can continue. The judges said Preferred violated the FDCPA by sending information about the debt electronically to CompuMail Inc., a Concord, Calif., collection letter vendor. The FDCPA bars any communication about a debt to a third party. But for decades, financial services companies have routinely outsourced to vendors back-office functions such as sending debt collection letters and other notices to consumers. Experts say the court’s decision upended long-established, standard industry practices. “Everybody has been doing this for years,” said Aaron Weiss, an attorney and shareholder at Carlton Field. “The information is electronically transmitted to the letter vendor, that’s what they do, that’s their stock-in-trade. And it was taken for granted that this isn’t an issue. Now this decision is going to change how things are done.”
At $49.1 Trillion, the U.S. Stock Market Is Larger than the Combined GDP of the U.S., China, Japan and Germany – Pam Martens –When the motherlode of stock market bubbles finally pops, exposing the corrupt edifices on which it was built, you can count on one thing for sure – there will be lots of testimony before Congress that no one could have seen it coming. The simple chart above, that took us 30 minutes to prepare in an Excel spreadsheet, is proof that anyone among the legions of Wall Street bank regulators at the Federal Reserve, the OCC, the FDIC, and the SEC can see what’s coming.The chart compares U.S. GDP to the total stock market value at December 31, 1999, prior to the bursting of the dot.com bubble; at December 31, 2007, prior to the bursting of the subprime and derivatives bubble; and on December 31, 2020, prior to the bursting of whatever the bailout boys decide to call this bubble. Our data for total stock market value comes from Siblis Research. Our data for GDP comes from the U.S. Bureau of Economic Analysis as compiled by the St. Louis Fed. (Put your cursor on the graph line in the St. Louis Fed link for the GDP numbers by quarter.) The data shows that just prior to the dot.com bust on December 31, 1999 that resulted in the Nasdaq stock market losing a stunning 78 percent of its value from peak to trough, the total stock market value was 1.77 times GDP. At year-end 2007, prior to the greatest Wall Street collapse since the Great Depression, the total stock market value was 1.34 times GDP. As of December 31, 2020, total stock market value represented 2.10 times U.S. GDP. Siblis Research further shows that as of March 31 of this year, total stock market value in the U.S. stands at a breathtaking $49.1 trillion. (That includes U.S. based public companies listed on the New York Stock Exchange, Nasdaq Stock Market or OTCQX U.S. Market.) A $49.1 trillion stock market is larger than the combined GDP of the four largest industrialized nations (U.S., China, Japan and Germany) according to International Monetary Fund data. The absurdity of the valuations in the U.S. market are captured in this statistic: just five companies (Apple, Microsoft, Amazon, Google’s parent Alphabet, and Facebook) account for a total of $7.85 trillion of the $49.1 trillion total stock market value. That’s five companies out of thousands and yet they represent 16 percent of the total stock market value. And here’s another deeply troubling thought: each of those five stocks are being traded in the Wall Street banks’ secretive Dark Pools. The U.S. economy and millions of our fellow Americans suffered terribly during each of the last crashes, which must be placed directly at the feet of the regulators who failed to do their job on behalf of the American people, opting instead to audition for lucrative jobs on Wall Street.
Fannie and Freddie: REO inventory declined in Q1, Down 58% Year-over-year –Fannie and Freddie earlier reported results two weeks ago for Q1 2021. Here is some information on Real Estate Owned (REOs). Note that COVID is impacting foreclosure activity, from Freddie: “The volume of foreclosures declined significantly, year-over-year, primarily due to the foreclosure moratorium that will remain in effect through June 30, 2021.” emphasis addedFreddie Mac reported the number of REO declined to 1,604 at the end of Q1 2021 compared to 4,168 at the end of Q1 2020.For Freddie, this is down 98% from the 74,897 peak number of REOs in Q3 2010.Fannie Mae reported the number of REO declined to 6,918 at the end of Q1 2021 compared to 16,289 at the end of Q1 2020.For Fannie, this is down 96% from the 166,787 peak number of REOs in Q3 2010. Here is a graph of Fannie and Freddie Real Estate Owned (REO).REO inventory decreased in Q1 2021, and combined inventory is down 58% year-over-year.This is well below a normal level of REOs for Fannie and Freddie.
MBA Survey: “Share of Mortgage Loans in Forbearance Decreases to 4.36%” — Note: This is as of May 2nd. From the MBA: Share of Mortgage Loans in Forbearance Decreases to 4.36%%: The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 11 basis points from 4.47% of servicers’ portfolio volume in the prior week to 4.36% as of May 2, 2021. According to MBA’s estimate, 2.2 million homeowners are in forbearance plans.The share of Fannie Mae and Freddie Mac loans in forbearance decreased 10 points to 2.32%. Ginnie Mae loans in forbearance decreased 20 basis points to 5.82%, while the forbearance share for portfolio loans and private-label securities (PLS) remained unchanged at 8.55%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 12 basis points to 4.58%, and the percentage of loans in forbearance for depository servicers declined 15 basis points to 4.47%.”The pace in the declining share of loans in forbearance quickened in the last week of April. This 10th week of decreases reflected a faster rate of exits and a steady, low level of new requests,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Homeowners who have exited forbearance and been able to take up their original payment again are performing at almost the same rate as the overall mortgage servicing portfolio.”Added Fratantoni, “More than 47 percent of borrowers in forbearance extensions are past the 12- month mark as of the end of April. Many homeowners continue to struggle and are falling farther behind on their obligations each month. We expect that a robust economic and job market recovery over the next several months will help these families regain their jobs and their incomes.”This graph shows the percent of portfolio in forbearance by investor type over time. Most of the increase was in late March and early April, and has trended down since then.The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained unchanged relative to the prior week at 0.05%”
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Decreased – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.This data is as of May 11th.From Black Knight: Forbearance Volumes Continue to Decline We saw another week of good news in terms of forbearance volumes, which fell by 61,000(-2.7%), continuing the strong trend of early-in-the-month improvements. Declines were seen across the board this week, with GSE forbearance volumes falling by 13K (-1.9%), FHA/VA plan volumes improving by 19K (-2.1%) and PLS/portfolio forbearances decreasing by 29K (-4.6%). Total plan starts are down 13% month-over-month, and continue to slowly decline.Some 250K plans are still listed with May 2021 expiration dates, which will provide a moderate opportunity for additional improvements over the next few weeks, and more acutely in early June. Another 860K plans are currently slated for review for extension/removal next month, the final quarterly review before early forbearance entrants begin to reach their 18-month plan expirations later this year. Thirty-eight percent of loans reviewed for extension/removal over the past month have been removed from forbearance, the highest such removal rate since mid-FebruaryAs of May 11, 2.16 million (4.1% of) homeowners remain in COVID-19 related forbearance plans, including 2.5% of GSE loans, 7.3% of FHA/VA loans, and 4.6% of portfolio/PLS loans.
NMHC: Rent Payment Tracker Shows Households Paying Rent Decreased Slightly YoY in Early May –From the NMHC: NMHC Rent Payment Tracker Finds 80.0 Percent of Apartment Households Paid Rent as of May 6: The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 80.0 percent of apartment households made a full or partial rent payment by May 6 in its survey of 11.7 million units of professionally managed apartment units across the country. This is a 0.1 percentage point decrease from the share who paid rent through May 6, 2020 and compares to 81.7 percent that had been paid by May 6, 2019. This data encompasses a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price. “This month’s findings are part of what seems to be an increasingly clear pattern of economic recovery and strong demand for multifamily housing,” said Doug Bibby, NMHC President. “With more and more vaccines being administered, job creation on the rise and tens of billions in rental assistance being distributed to residents and housing providers in need, the outlook for the industry is a positive one. This graph from the NMHC Rent Payment Tracker shows the percent of household making full or partial rent payments by the 6th of the month compared to 2019 and to the first COVID year. Although payments are down from 2019, rent payments are mostly unchanged from last year. This is mostly for large, professionally managed properties. The second graph shows full month payments through April compared to the same month the prior year. For April, rent payments were up compared to April 2020, and down compared to April 2021. CR Note: There are some timing issues month to month.
Leading Index for Commercial Real Estate Increased in April — From Dodge Data Analytics: Dodge Momentum Index Increases In April: The Dodge Momentum Index posted an 8.6% gain in April, climbing to 162.4 (2000=100) from the revised reading of 149.5 in March. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. April’s gain marks the fifth consecutive monthly increase, and similar to February and March, was due to a large increase in institutional buildings entering the planning stage while commercial planning eased by less than one percent.Since hitting its nine-year low in January, institutional planning has rebounded substantially, climbing 77% over the last three months. Healthcare and laboratory projects continue to dominate the sector, pushing institutional planning 50% higher on a year-over-year basis. Conversely, the commercial component has slipped in recent months as fewer warehouse projects have entered planning, though the sector is 21% higher than in April 2020. Overall, the Momentum Index is 31% higher than last April, which was the first full month of COVID-19 shutdowns.This graph shows the Dodge Momentum Index since 2002. The index was at 162.4 in April, up from 149.5 in March.According to Dodge, this index leads “construction spending for nonresidential buildings by a full year”. This index suggests a decline in Commercial Real Estate construction through most of 2021, but maybe a pickup towards the end of the year.
Hotels: Occupancy Rate Down 17% Compared to Same Week in 2019 –Note: The year-over-year occupancy comparisons are easy, since occupancy declined sharply at the onset of the pandemic. However, occupancy is still down significantly from normal levels.The occupancy rate is down 17% compared to the same week in 2019.From CoStar: STR: Increased Supply Leads to Lower US Hotel Occupancy in First Week of May: Due to more supply in the marketplace, U.S. hotel occupancy fell slightly from the previous week, according to STR’s latest data through May 8. May 2-8, 2021:
Occupancy: 56.7%
Average daily rate (ADR): US$110.19
Revenue per available room (RevPAR): US$62.50
Demand was up week over week, but an increase in supply from both reopenings and new properties pulled national occupancy down. Major markets, such as New York City and San Francisco, are showing the most movement with properties coming back online. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020). Occupancy is now slightly above the horrible 2009 levels.
NY Fed Q1 Report: Total Household Debt Increased in Q1 2021, Mortgage Origination Credit Scores Edged Up – From the NY Fed: Credit Card Balances See Second Largest Quarterly Decline in Series’ History, Driven by Paydowns Among Borrowers and Constrained Consumption Opportunities: The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued itsQuarterly Report on Household Debt and Credit. The report shows that total household debt increased by $85 billion (0.6%) to $14.64 trillion in the first quarter of 2021. The total debt balance is now $344 billion higher than the year prior. While mortgage, auto loan, and student loan balances have continued to increase, credit card balances have substantially decreased. The Report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative random sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data. Mortgage balances – the largest component of household debt – rose by $117 billion in the first quarter of 2021 and stood at $10.16 trillion at the end of March. Credit card balances declined by $49 billion in the first quarter, a substantial drop and the second largest quarterly decline in card balances in the history of the data (since 1999). Credit card balances are $157 billion lower than they had been at the end of 2019, consistent with both paydowns among borrowers and constrained consumption opportunities. …New extensions of credit were strong in 2021Q1 in both mortgages and auto loans. Mortgage originations, which include mortgage refinances, reached $1.1 trillion, only slightly below the record high seen in 2020Q4. Auto loan originations, which includes both loans and leases, edged down slightly but remain high at $153 billion. Only 15% of the $153 billion of newly originated auto loans were originated to borrowers with credit scores below 620, the lowest share seen in the history of the data.. Here are two graphs from the report:The first graph shows aggregate consumer debt increased in Q1. Household debt previously peaked in 2008, and bottomed in Q3 2013. Unlike following the great recession, there wasn’t a huge decline in debt during the pandemic. From the NY Fed: Aggregate household debt balances increased by $85 billion in the first quarter of 2021, a 0.6% rise from 2020Q4, and now stand at $14.64 trillion. Balances are $499 billion higher than at the end of 2019. The second graph shows the percent of debt in delinquency. The overall delinquency rate decreased in Q1.
Credit card balances slide again even as consumer spending rebounds – U.S. households again reduced their credit card balances in the first quarter, the Federal Reserve Bank of New York said Wednesday, even as vaccinations and reopenings were helping to rekindle consumer spending. Card balances fell by $49 billion in the quarter, as stimulus payments and more limited travel and entertainment activities put Americans in better shape to pay off revolving debt. The debt reduction was short of the $76 billion quarterly dive at the start of the pandemic but still marked the second largest decrease in the data. The New York Fed’s quarterly household debt and credit report uses figures dating back to 1999. “The decline in the first quarter of 2021 is remarkable because it stands in sharp contrast to the recovery underway in the retail sector as the U.S. economy reopens and travel resumes,” a team of New York Fed officials wrote in a blog post. Though credit card balances continued to drop, increases in mortgage, auto and student loan balances pushed overall household debt up by $85 billion. U.S. households had $14.64 trillion in total debt during the first quarter, up by nearly $500 billion since the end of 2019. The trimming of credit card balances has been happening among residents of higher-income areas and lower-income ones, though members of the former group have paid down debt at the highest rates. The trend is evident among all age groups, with borrowers ages 20 to 29 accounting for the smallest share of the decline, but still showing decreases. The paydowns have weighed on major banks’ card revenues, though the card issuers have also benefited from better credit quality.
Retail Sales Unchanged in April – On a monthly basis, retail sales were unchanged from March to April (seasonally adjusted), and sales were up 51.2 percent from April 2020. From the Census Bureau report: Advance estimates of U.S. retail and food services sales for April 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $619.9 billion,virtually unchanged from the previous month, and 51.2 percent above April 2020. … The February 2021 to March 2021 percent change was revised from up 9.7 percent to up 10.7 percent. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 0.1% in April. The stimulus checks boosted retail sales significantly in March and April. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 49.5% on a YoY basis. Sales in April were slightly below expectations, however sales in March were revised up (February was revised down).
BLS: CPI increased 0.8% in April, Core CPI increased 0.9% From the BLS: — The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in April on a seasonally adjusted basis after rising 0.6 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.2 percent before seasonal adjustment. This is the largest 12-month increase since a 4.9-percent increase for the period ending September 2008….The index for all items less food and energy rose 0.9 percent in April, its largest monthly increase since April 1982. Nearly all major component indexes increased in April. Along with the index for used cars and trucks, the indexes for shelter, airline fares, recreation, motor vehicle insurance, and household furnishings and operations were among the indexes with a large impact on the overall increase. The all items index rose 4.2 percent for the 12 months ending April, a larger increase than the 2.6- percent increase for the period ending March. Similarly, the index for all items less food and energy rose 3.0 percent over the last 12 months, a larger increase than the 1.6-percent rise over the 12 month period ending in March. The energy index rose 25.1 percent over the last 12-months, and the food index increased 2.4 percent. CPI and core CPI were well above expectations. I’ll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.
US Core Consumer Prices Explode Higher At Fastest Pace Since 1981 – After March’s blowout 0.6% MoM surge in headline CPI, analysts expected a modest slowdown MoM, but surge YoY due to the base-effect comps from April 2020’s collapse. However, it appears analyst massively underestimated as headline CPI surged 0.8% MoM (4 times the +0.2% expected) and exploded 4.2% YoY. That is the biggest YoY jump since Sept 2008 (and biggest MoM jump since June 2008) Core CPI was expected to rise by the most this millennia, but it was hotter than that. The index for all items less food and energy rose 3.0% over the past 12 months; this was its largest 12-month increase since January 1996… and the MoM jump of 0.92% is the biggest since 1981Energy and Core Services dominated the surge… Services prices soared 4.4% YoY – the highest since 1991…Under the hood, everything was extremely hot… A 10.0-percent increase in the index for used cars and trucks was the largest contributor, but many indexes increased substantially. The index for lodging away from home rose sharply, increasing 7.6 percent. Rent inflation slowed again, from 1.83% Y/Y to 1.80%, but, shelter inflation rebounded strongly from 1.70% to 2.11%…The index for airline fares also rose sharply in April, increasing 10.2 percent. The indexes for recreation and for household furnishings and operations each increased 0.9 percent in April after rising 0.4 percent in March. The motor vehicle insurance index continued to rise, increasing 2.5 percent in April. The index for car and truck rentals increased sharply in April, rising 16.2 percent.The index for communication rose 0.4 percent in April after being unchanged in March. The apparel index rose 0.3 percent in April after declining in each of the 2 prior months. The indexes for education, alcoholic beverages, personal care, and tobacco also increased in April.The medical care index rose 0.1 percent in April, the same increase as in March. The index for prescription drugs rose 0.5 percent and the index for hospital services increased 0.2 percent. The index for physicians’ services, however, declined 0.3 percent in April after rising in each of the last 3 months.As a reminder though, there is nothing to see here, Fed is focused on jobs, not inflation which is “transitory”… forget about your crumbling cost of living… as real wages crash…
Here Is The Heatmap From Today’s “Eye-Popping” CPI Report – As BOfA economist Alexander Lin writes, the “eye-popping” April CPI report was a “massive surprise” as core CPI strongly rose 0.9% (0.92% unrounded) sequentially, which was the largest gain since 1981 and blew away consensus forecasts of 0.3% (for a full range of shocked reactions from traders and strategists see this).However, in some potentially mitigating details, BofA reveals that near-term inflation pressures were driven by goods shortages and the reopening “and that was certainly the case this month as these two themes accounted for at least 70bp of the rise in core.”
- First on shortages, auto prices jumped 4.3% mom with particular strength in used cars, which posted a record increase of 10.0% mom. Despite this historic increase, there is likely further upside in the pipeline with Manheim wholesale used cars rising another 8.2% in April, which builds on the 11% increase from Jan through March.
- Household furnishings & supplies also jumped 0.9% mom, with strength in other goods like recreation (+1.2%) and education & communication (+3.1%).
- Related to the reopening, lodging away from home rose 7.6% mom and transportation services jumped 2.9%.
- In transportation services, airline fares leapt 10.2% mom and car & truck rental leasing surged 16.2% mom, which follows an already impressive 11.7% gain in March.
- The gains in lodging and airfares were both record highs, but prices remain 17.7% and 4.9% lower than pre-pandemic levels which means scope for further significant price increases in coming months.
- In leasing, rental car companies have been impacted by the production cuts in the auto sector as well, which has forced them to build back their fleets with used cars as travel recovers.
- Motor vehicle insurance prices also rose 2.5% mom, which could reflect more people getting back on the roads.
Meanwhile, Lin argues that more persistent sources of inflation were tamer. Rents and OER both came in at 0.2% mom, which while in line with the recent trend, is about to change as we discussed in “And Now Rents Are Soaring Too.” Furthermore, as Joseph Carson notes, housing prices are up 18% in the past 12 months, a record increase and nine times the increase in owners’ rent. “The old CPI included house prices. Inserting house prices in place of non-market owner rents, reported inflation would have been twice the 4.2% gain.”Meanwhile, medical care inflation was flat as the boost from stimulus around the turn of the year faded. Within healthcare, insurance was a big drag, contracting 1.0% mom. Professional services also inched down -0.2% mom, while hospital rose 0.3% mom.A visual summary of the data looks like this, first on a M/M basis, where the base effect has no impact as it is sequential…n … and then the YoY CPI print which is less relevant due to the collapse last March.
Cleveland Fed: Key Measures Show Inflation Increased in April –The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% April. The 16% trimmed-mean Consumer Price Index rose 0.4% in April. “The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report”.Note: The Cleveland Fed released the median CPI details for April here. Car and truck rental was up 505% annualized! Used cars and trucks were up 215% annualized.This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.1%, the trimmed-mean CPI rose 2.4%, and the CPI less food and energy rose 3.0%. Core PCE is for March and increased 1.8% year-over-year.Note: We saw negative Month-to-month (MoM) core CPI and CPI readings in March, April and May 2020. We also saw negative MoM PCE and core PCE reading in March and April 2020. Although inflation picked up in April, the year-over-year change was impacted the base effect (decline last year).
April Producer Price Index: Core Final Demand Up 0.7% MoM – This morning’s release of the April Producer Price Index (PPI) for Final Demand was at 0.6% month-over-month seasonally adjusted, down from a 1.0% increase last month. It is at 6.2% year-over-year, up from 4.2% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.7% MoM, unchanged from the previous month and is up 4.1% YoY NSA. Investing.com MoM consensus forecasts were for 0.3% headline and 0.4% core. Here is the summary of the news release on Final Demand: The Producer Price Index for final demand increased 0.6 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 1.0 percent in March and 0.5 percent in February. (See table A.) On an unadjusted basis, the final demand index moved up 6.2 percent for the 12 months ended in April, the largest advance since 12-month data were first calculated in November 2010. About two-thirds of the April advance in the final demand index can be traced to a 0.6-percent increase in prices for final demand services. The index for final demand goods also moved up 0.6 percent. The index for final demand less foods, energy, and trade services rose 0.7 percent in April following an increase of 0.6 percent in March. For the 12 months ended in April, prices for final demand less foods, energy, and trade services moved up 4.6 percent, the largest advance since 12-month data were first calculated in August 2014. More … The BLS shifted its focus to its new “Final Demand” series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.
LA Area Port Traffic: Strong Imports in April – Note: Import traffic was heavy in February and March – ships were backed up waiting to unload in LA. “some vessels are spending almost as much time at anchor as it takes to traverse the Pacific Ocean.” They were still backed up in April!Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average. On a rolling 12 month basis, inbound traffic was up 2.4% in April compared to the rolling 12 months ending in March. Outbound traffic was up 0.2% compared to the rolling 12 months ending the previous month. The 2nd graph is the monthly data (with a strong seasonal pattern for imports).Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year. 2021 has started off incredibly strong for imports. Imports were up 37% YoY in April (collapsed last year due to pandemic), and exports were up 2.5% YoY.
Industrial Production Increased 0.7 Percent in April — From the Fed: Industrial Production and Capacity Utilization: Total industrial production increased 0.7 percent in April. The indexes for mining and utilities increased 0.7 percent and 2.6 percent, respectively; the index for manufacturing rose 0.4 percent despite a drop in motor vehicle assemblies that principally resulted from shortages of semiconductors. An important contributor to the gain in factory output was the return to operation of plants that were damaged by February’s severe weather in the south central region of the country and had remained offline in March. The weather-induced drop in total industrial production in February and the subsequent rebound in March are now estimated to have been larger than reported last month. At 106.3 percent of its 2012 average in April, total industrial production has moved up 16.5 percent from its level in April 2020 (the trough of the pandemic), but it was 2.7 percent below its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.5 percentage point in April to 74.9 percent, a rate that is 4.7 percentage points below its long-run (1972 – 2020) average. This graph shows Capacity Utilization. This series is up from the record low set in April, but still below the level in February 2020.Capacity utilization at 74.9% is 4.7% below the average from 1972 to 2020. The second graph shows industrial production since 1967.Industrial production increased in April to 106.3. This is 2.7% below the February 2020 level. The change in industrial production was below consensus expectations.
Weekly Initial Unemployment Claims decrease to 473,000 – The DOL reported: In the week ending May 8, the advance figure for seasonally adjusted initial claims was 473,000, a decrease of 34,000 from the previous week’s revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week’s level was revised up by 9,000 from 498,000 to 507,000. The 4-week moving average was 534,000, a decrease of 28,250 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised up by 2,250 from 560,000 to 562,250.This does not include the 103,571 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 101,815 the previous week. The following graph shows the 4-week moving average of weekly claims since 1971.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 534,000.The previous week was revised up.Regular state continued claims decreased to 3,655,000 (SA) from 3,700,000 (SA) the previous week.Note: There are an additional 7,283,703 receiving Pandemic Unemployment Assistance (PUA) that increased from 6,863,451 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance. And an additional 5,265,193 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 4,973,804.Weekly claims were close to the consensus forecast.
BLS: Job Openings Increased to Record 8.1 Million in March — From the BLS: Job Openings and Labor Turnover Summary: The number of job openings reached a series high of 8.1 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Hires were little changed at 6.0 million. Total separations were little changed at 5.3 million. Within separations, the quits rate was unchanged at 2.4 percent while the layoffs and discharges rate decreased to a series low of 1.0 percent.The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. This series started in December 2000.Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for March, the most recent employment report was for April. Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs – when it is below the columns, the economy is losing jobs.The huge spikes in layoffs and discharges in March and April 2020 are labeled, but off the chart to better show the usual data.Jobs openings increased in March to 8.123 million from 7.526 million in February. This is above the previous series maximum of 7.574 million.The number of job openings (yellow) were up 40.8% year-over-year. This is a comparison to the beginning of the pandemic.Quits were up 20.9% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for “quits”).
Job openings surged in March as the economy continues to recover from the pandemic —EPI Blog by Elise Gould – Today’s Job Openings and Labor Turnover Survey (JOLTS) reports an all-time high number of job openings, surging to 8.1 million for the end of March. This is a positive sign that the economy is moving forward. While hires were little changed, I’m optimistic that in coming months those job openings will translate into filled jobs. One important indicator from today’s report is the job seekers ratio – the ratio of unemployed workers (averaged for mid-March and mid-April) to job openings (at the end of March). On average, there were 9.8 million unemployed workers compared with 8.1 million job openings. This translates into a job seekers ratio of 1.2 unemployed workers to every job opening. Put another way, for every 12 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 1.6 million unemployed workers. As with job losses, workers in certain industries are facing a steeper uphill battle. In the construction industry as well as arts, entertainment, and recreation, there were more than two unemployed workers per job opening. In educational services, accommodation and food services, other services, and transportation and utilities, there were more than three unemployed workers for every two job openings There has been much bemoaning of labor shortages, particularly within accommodations and food services, even though there are no available jobs for one-third of the job seekers in that sector. Any potential shortage from the recent surge in job openings is likely to be quite short-lived, as before long many more workers will come back into job-search as it becomes increasingly safe to pursue these public facing jobs with improving public health metrics, as childcare and schooling becomes more reliable, and as wages rise to compensate for the extra risk of working in face-to-face places during the lingering pandemic. And, as we saw in the April employment data last Friday, the labor market added 241,400 more jobs in accommodation and food services, so the trend is already moving in the right direction.
March JOLTS report confirms that month’s strong jobs report –This morning’s JOLTS report for March confirmed that month’s stellar jobs report. Job openings made a new series high, while layoffs and discharges made a new series low. Hires, quits, and total separations all also moved in the right direction. This report has only a 20 year history, and so includes only two prior recoveries. In those recoveries:
- first, layoffs declined
- second, hiring rose
- third, job openings rose and voluntary quits increased, close to simultaneously
The recovery from the worst of the pandemic almost one year ago at first followed this script, but the winter surge, which led to a few month of flat, or worse, jobs reports, disrupted that trend. We now appear to have reverted to that prior trend. Let’s start out with layoffs and discharges (red) and total separations (blue), showing that these have followed their past patterns, as layoffs rapidly declined to a normal rate after last March and April. As noted above, this month’s report made a new series low: Next, here is the series-long record of hiring, quits, and job openings: Here is the zoom-in look at the past several years: What has been different this time around is that, after rapidly improving, hires declined again until bottoming in December and January. All three are now moving in the right direction. In the past few months, I have also highlighted YoY changes, but that view is useless now, as comparisons are with the worst of the March and April 2020 lockdowns. Last month I flagged the issue of whether “hires reassert themselves, as in the past two recoveries, or whether openings without actual hiring continue to soar as they did starting in 2015.” In March both happened, as hires increased and openings made an all-time high. Given the relatively subpar April employment report, the jury is still out on whether hires will continue to increase – as that appears to be the missing link in this jobs recovery.
Retail and food service industry complains of lack of workers – The US retail and food service industry is dealing with a severe labor shortage. According to Landed, a restaurant hiring app, the industry faces a deficit of 3.4 million jobs, a number which is expected to grow. One poll found more than 31 percent of restaurant company leaders have been forced to close stores because of a lack of workers. An additional 44 percent of respondents stated they were still considering whether to close. Retail CEOs and Republican politicians have argued that the $300 weekly federal unemployment benefits supplement incentivizes workers to stay at home instead of returning to work. Earlier this month, Representative David Rouzer tweeted a picture of a Hardee’s drive thru with a sign that read “Closed due to NO STAFF.” “This is what happens when you extend unemployment benefits for too long and add a $1,400 stimulus payment to it. Right when employers need workers to fully open back up, few can be found,” Rouzer tweeted. Some McDonald’s franchisees said the additional $300 per week unemployment payments were driving the shortage. The National Owners Association, an independent group of McDonald’s franchisees, sent a letter to its members on Sunday that suggested the industry worker shortage was due to the “perverse effects of the current unemployment benefits.” “What’s going on here? When people can make more staying at home than going to work, they will stay at home,” the letter said. In a bid to force workers back to work, multiple Republican governors announced they will stop participating in the federal government’s supplemental unemployment benefits program in June. Iowa Governor Kim Reynolds (R) announced Tuesday that residents will no longer receive the extra $300 a week after June 12. North Dakota, Mississippi, Alabama, Arkansas, South Carolina, and Montana have also announced an end to their participation. Others have called for an early termination of unemployment benefits, currently set to continue until September. After the publication of the April jobs report, which reported only 266,000 new jobs compared to the 1.3 million predicted by economists, the Chamber of Commerce urged Congress to end the weekly $300 in federal unemployment benefits. “The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” the Chamber’s chief policy officer, Neil Bradley, said in a statement.
Restaurant labor shortages show little sign of going economywide: Policymakers must not rein in stimulus or unemployment benefits – EPI Blog by Josh Bivens, Heidi Shierholz – Recent economic data suggest labor shortages in leisure and hospitality have popped up – but there is little reason to worry about spillover into the rest of the economy and no reason to change policy course. Yes, last week’s jobs report was disappointing, with employment growth slowing significantly from the months before. It would be a mistake, however, to make too much of a single month’s data – the monthly jobs report data are notoriously volatile, and there are still excellent reasons to believe that coming months will see very strong job gains. Further, as disappointing as last week’s report was, there is nothing in it that demands a reorientation of the general policy stance taken by the federal government. The relief and recovery aid already passed (including the boosts to unemployment insurance) should be continued and proposed packages (like the American Families Plan and the American Jobs Plan) should be passed. The argument that last week’s report demands a rethink of today’s policy orientation rests on claims that it contained clear evidence of damaging labor shortages induced by either too-extensive stimulus or too-generous unemployment insurance (UI). There is not compelling evidence of either of these. In fact, nothing in last week’s jobs report calls for a wholesale change of policy course from the federal government. The key takeaways from the data are:
- 1) Labor shortages – which we would define by a large acceleration of wage growth to a rate that would be hard to sustain over the next year – do seem to have popped up in the leisure and hospitality sector. But unless this dynamic threatens to spill over into other sectors or reduce growth within the leisure and hospitality sector enough to change aggregate trends, a short-term sectoral labor shortage does not come close to being sufficient justification for changing national policy priorities.
- 2) There is very little reason to worry that labor shortages in leisure and hospitality will soon spill over into other sectors and drive economywide “overheating.”
- The leisure and hospitality labor market is highly segmented off from other sectors, and wage pressures – upward or downward – have typically not spilled over from it to other sectors.
- For example, jobs in leisure and hospitality have notably low wages and fewer hours compared to other sectors. Weekly wages of production and nonsupervisory workers in leisure and hospitality now equate to annual earnings of just $20,628, and total wages in leisure and hospitality account for just 4% of total private wages in the U.S. economy. All of these facts make it highly unlikely to meaningfully change the wage trajectory of other sectors.
- 3) The labor shortages in leisure and hospitality so far do not seem to be dragging sharply on growth even within this sector – the sub-sectors within leisure and hospitality saw by far the most rapid employment growth in the last month.
- 4) Any signs that the more-generous UI benefits included as part of the American Rescue Plan (ARP) are driving wages higher in this sector are very faint – far too faint to justify a scaling back of these benefits or to justify state-level policymakers depriving their own workers of a needed boost to the safety net. For example:
- Low-wage sectors – where UI benefits should be a more binding constraint on labor supply – saw notably faster job growth than others.
- Evidence strongly suggests that continued caregiving responsibilities are impinging on the labor supply of women and constitute the primary labor supply bottleneck. Cutting back on pandemic UI provisions will not increase the labor supply of those who cannot work because of COVID-related caregiving responsibilities.
California’s population drops for the first time in its history, according to new state data – – California’s population shrank last year, the first time in its 171-year history that the nation’s most-populous state has seen a decline in the number of people living here. The state Department of Finance reported Friday that the population dropped by 182,083 people, or 0.46 percent, between Jan. 1, 2020, and the end of the year. The agency attributed the decline to out-of-state migration, slower international immigration and the coronavirus pandemic, which has killed nearly 61,000 residents at a time when the state is recording among the lowest birthrates in the nation. The numbers serve as a kind of postscript to data released last month by the U.S. Census Bureau, which showed that California grew 6.1 percent over the last decade. The growth rate, lower than the national average, will cost the state one of its 53 congressional seats during reapportionment, another state first. “Driven largely by a declining birthrate, the state’s population growth slowed in recent years and essentially hit a plateau,” said H.D. Palmer, the Department of Finance’s deputy director and chief spokesperson. “What’s temporarily tipped us into negative territory over the past year is deaths caused by covid, combined with the impact of immigration policy.” California has been a national and international destination for much of the last half-century. After decades of double-digit population increases, the state’s growth rate peaked at 37 percent after the 1990 Census. The state’s population growth has ebbed and flowed since then. The trends mostly have been driven by economic factors, from the exodus that followed the post-Cold War contraction of the defense and aerospace industry to the magnetic pull of the early dot-com era.But growth has slowed significantly over the last decade, particularly in recent years. High housing costs have been the catalyst for a massive in-state migration of residents heading east in search of a lower cost of living away from the expensive Pacific Coast.The new state figures add detail and depth to several trends that the census did not fully capture since the national count ended in April 2020.
California scores staggering $75B budget surplus–California’s budget is in the black – by a staggering amount. A state that expected perhaps the most severe budget crunch in American history instead has a more than $75 billion budget surplus, Gov. Gavin Newsom (D) said Monday, after a booming stock market and better-than-anticipated tax revenues over the pandemic-plagued year. As recently as a year ago, California’s top elected officials were staring into a budgetary abyss that made the Great Recession look like a pothole. Newsom’s office projected a budget deficit of up to $54 billion, or about a quarter of the entire state budget. Legislators prepared to cut state government to the bone. “We were scared, all of us,” state Assemblyman Chad Mayes (I) told The Hill last month. “We all agreed, ‘Hey, we’re going to take a hit because we’re heavily dependent on high-income earners.'” But the stock market’s rebound, and its yearlong rally, have helped repair the gap. California is unusually reliant on receipts from capital gains tax, so a strong year in the market is good news for state government. Initial public offerings from companies like DoorDash and Airbnb helped, while sales tax revenues also came in in greater amounts than expected. Newsom said in an address Monday that he would propose using much of the money to fund what he said would be the biggest economic recovery package in state history. Newsom’s $100 billion proposal would add $12 billion more in direct payments to California residents, including $600 to most people and an extra $500 to families with dependents. The payments would go to families making less than $75,000 a year. “California’s recovery is well underway, but we can’t be satisfied with simply going back to the way things were,” Newsom said in a statement. His office called the payments the largest tax rebate any state has ever given. The package also includes what Newsom said would be a major assistance package aimed at helping renters cover 100 percent of their past-due rent.
Poll: Nearly 50 Percent of Americans Think Some Social Distancing Measures Permanent -Sixty-four percent of Americans believe their local governments will loosen COVID restrictions within the next three months, while nearly 50 percent think some social distancing measures will remain permanent, according to a recent study by Signs.com. Just 8 percent believe that social distancing measures will never stop, while 79.1 percent think mask wearing will remain in place the longest. COVID measures have been in place in some capacity since March, when the pandemic hit the U.S. hard. Many cities and states have relaxed some restrictions, while other communities remain strict inlcuding in Seattle, Wa., where Gov. Jay Inslee is considering a rollback in his reopening plan in several counties, including King County, where cases of coronavirus have plateaued after rising steeply over the past month.The survey, published Friday, also found:
- 45.4 percent of respondents disliked the “new normal” of social interactions during COVID-19
- 43.1 percent believe the world would go back to normal, just as it used to be
- 41.3 percent thought that some social distancing measures would remain permanently, even after the pandemic ends
- 57.6 percent said they are uncomfortable visiting the gym, while 54.4 percent said the same about restaurants and 45.2 percent said the same about hospitals.
- 72.6 percent said they felt most comfortable going to places like parks (72.6 percent), grocery stores (59 percent) and pharmacies (57.9 percent) in person.
- 54.8 percent listed one-way aisles in stores as the most annoying social distancing measure
- 22.9 percent confirmed they were following social distancing rules more strictly now than at the beginning of the pandemic compared with 27.7 percent who had decreased their efforts in following the previously adopted practices.
Signs.com surveyed 1,009 people aged 19 to 81. The study has a margin of error of +/- 3 percent.
Sources: At least five New York Yankees coaches test positive for COVID-19 –At least five coaches for the New York Yankees have tested positive for COVID-19, sources familiar with the situation told ESPN on Tuesday. According to the outlet, the team has confirmed that third-base coach Phil Nevin tested positive for the virus. Manager Aaron Boone said that other coaches have not yet been confirmed. Nevin, who has been fully-vaccinated against the coronavirus, is reportedly following Major League Baseball’s quarantine protocol in Tampa, Fla. The Yankees are set to play the Rays in Tampa on Tuesday at 7 p.m. Boone told ESPN that the game is still scheduled to go on. Major League Baseball rolled back its coronavirus restrictions for vaccinated players and staff in March, lifting mandates for masks to be worn in dugouts, bullpens, or weight rooms. It also began allowing vaccinated players to go without masks when they are around with other fully vaccinated individuals in hotel rooms. Last week, the Yankees announced that they would open their stadium as a vaccination site for fans before games. They also promoted free tickets to attend the game if fans choose to get vaccinated.
Homeless Reflect on Life in a New York City Hotel Room, One Year Later –Since last April, thousands of homeless New Yorkers in the city’s shelter system have been staying in formerly private hotels – a need brought on by the pandemic.Mayor Bill de Blasio has set July 1 as the day the city is expected to fully reopen amid rising vaccination rates and decreasing infections. That’s also the day the city has suggested it will complete its transition of people from hotels back to the homeless shelter system, where people were 61% more likely to die of COVIDthan anywhere else at the height of the pandemic last spring. Yves here. These examples illustrate what a difference having a space, as opposed to living on the streets or in shelter, make to the homeless. With so much underutilized hotel and residential space, it’s a shame programs like this are being terminated because Covid is supposedly in retreat. The fact that American cities don’t even have public restrooms (much the less keeping them minimally clean as quite a few world cities seem able to do) is another manifestation of our hostility to the poor and outsiders.By contrast, this story describes what a powerful impact having one’s own bed, shower and toilet had made for these recently homeless New Yorkers. Having that small measure of control over their lives has enabled them to move forward on other fronts when before, merely surviving was a full time project. It also counters the old view of the early 2000s, as cited by Malcolm Gladwell, that the chronically and episodically homeless consisted of at least occasional substance abusers. Now, unaffordable housing is a significant contributor. From the National Low Income Housing Coalition: Record-breaking numbers of families cannot afford a decent place to call home:
Nationally, there is a shortage of more than 7 million affordable homes for our nation’s 11 million plus extremely low-income families. View The Gap
There is no state or county where a renter working full-time at minimum wage can afford a two-bedroom apartment. View the Out of Reach Map
Seventy-five percent of all extremely low-income families are severely cost-burdened, paying more than half their income on rent.
750 bodies of New Yorkers who died from COVID-19 last year still held in refrigerated trucks in Brooklyn – Last year, when the disease was running rampant in New York City, thousands of victims were placed in temporary storage when the medical and funerary systems were overwhelmed. Approximately 32,800 New Yorkers are recorded as having died of COVID-19 in the city since last March, though this is likely a significant undercount. Many families were unable to cope financially and emotionally with the burden of putting their relatives to rest, not to speak of the destitute and homeless who were dying in large numbers. News accounts reported cases of funeral homes storing bodies in unrefrigerated trucks in the street. While the intensity of the pandemic has somewhat abated in New York, for the moment, the legacy of mass deaths remains. The bodies of hundreds of COVID-19 victims who died during the height of the pandemic last year, when more than 800 New Yorkers were dying every day from the virus, remain “temporarily” stored by the city in refrigerated trucks at a site on the Brooklyn waterfront. At its height, up to 2,000 bodies were held there. Currently, approximately 750 bodies are still being kept at this location. Many of the victims’ families have requested that they be buried on Hart Island, the city’s cemetery for the poor and unclaimed dead. The city has lost touch with others, some of whom may themselves have also died of the disease. Many families are likely to have been overwhelmed by the price of a funeral, which typically runs into the multiple thousands of dollars, while suffering economic devastation due to the pandemic. The city provides a burial subsidy of only $1,700, up from $900 prior to the pandemic. Even this puts the cost of a funeral out of reach for many of the city’s working class. FEMA now offers a grant of up to $9,000 for funeral expenses to families who have lost someone to the disease and have so far received over 17,000 applications nationwide. But there is a complicated application process, which includes the requirement for a death certificate that specifically cites COVID-19 as the cause of death – given the undercount of deaths this will exclude many in need – and excludes applicants who are not US citizens or legal residents, which bars a significant portion of workers in the city. Others resist having their loved ones buried on Hart Island, due to its perceived stigma as a “paupers cemetery.” In the past, convict labor had been used to bury the dead on Hart Island. At the height of the pandemic, the city switched to the use of a private contractor to conduct the interments.
School districts across Texas implement massive austerity and cuts to staff – Despite the allocation of roughly $11.2 billion in federal funds ostensibly to support public education, school districts across Texas are cutting staff and closing schools. Over the past year, tens of thousands of teachers were forced to quit or retire early after the state government aggressively pressured districts to reopen amid the raging COVID-19 pandemic. Across the state, huge numbers of these teaching positions are being left as unfilled vacancies, encompassing nearly all the major school districts. This mass attrition follows the expiration of the state’s hold on cutting school funding that was extended through 2020, following declines in attendance due to the pandemic. Schools in Texas adjust funding every school year based on daily attendance rates, meaning that even one day of absence impacts funding. This is compounded by virtual learning, which has been difficult for many students to access and consistently attend due to the deliberate sabotage of online education by the state and federal government. The spread of COVID-19 has caused many parents concerned with outbreaks at schools to pull their children from in-person learning, or switch to homeschooling or private online schools. In the Austin Independent School District (AISD), which has an enrollment of 74,000 students, a district survey indicated that 22 percent of students were learning in-person in November. As of April 19, an estimated 23.6 percent were attending in-person, with the state threatening to withdraw $5 million in “hold harmless” funding from the school if attendance was not raised to at least 44 percent in the last six weeks of the semester. In the 18 school districts in the Houston metro area, 250,000 students, roughly a third of the total enrollment, were not in person, while 475,000 were back in school as of March 31. One of the factors underlying the drop in attendance has to do with the measures that the hated Texas Education Agency (TEA) implemented in order to quantify attendance for K-12 schools. In the TEA’s “School Year 20-21 Attendance and Enrollment FAQ,” it states that remote attendance is measured by daily progress in the “Learning Management System … Daily progress via teacher-student interactions, as defined in the approved learning plan … [or] Completion/Turn-in of assignments from student to teacher (potentially via email, on-line, or mail).” Many teachers have had trouble reaching out to students in order to ascertain attendance, with a frequent occurrence being not hearing back from some students despite numerous and repeated attempts via email, online learning systems like Blackboard and Google Classrooms, or by phone. The task of logging attendance every single day for every single student has become a Sisyphean task.
Illinois extended unemployment benefits to school workers in the summer, and Minnesota should follow suit –For over a decade, EPI has documented the significant pay penalty that teachers in our country’s K-12 schools suffer as a result of woeful underinvestment in public education. But it is not just teachers who have been underappreciated: Many other school staff who are essential for providing high-quality, safe, and nurturing learning environments face considerable financial challenges as a result of their decision to serve in public schools. Paraprofessionals, classroom assistants, administrative assistants, custodians, food service workers, bus drivers, and other nonlicensed staff in schools typically receive low pay and inadequate hours during the school year, and no employment from school districts over the summer months – meaning a potential loss of 10 or 11 weeks of paid employment. In 2020, Illinois took an important step toward fixing this last issue, by making nonlicensed school staff eligible for unemployment insurance during the summer months. Illinois’s experience offers guidance for other states considering similar programs, like in Minnesota where a similar measure is currently under debate. We’ll discuss the Illinois experience later on, but first it’s useful to understand a little more about who nonlicensed school staff are and the pay they receive. Many nonlicensed school staff are paid very little. A 2018 study by the American Federation of Teachers showed there was not a single state in the country where the average wages of a classroom teaching assistant covered a basic family budget for a one-parent, one-child household. As shown in Figure A, workers in the most common nonlicensed education occupations1 are paid less than the typical U.S. worker, whose median wage is $19.38 nationally. Janitors and cleaners, child care workers, and food service workers who work in K-12 education are all typically paid less than $15 an hour. In addition to frequently low hourly rates of pay, many nonlicensed staff may only be on the clock for the hours that school is in session.2
Oregon middle school teacher dies from COVID-19 within days of school reopening – A beloved sixth and seventh grade language arts teacher, Samantha Fox, 46, died from COVID-19 last Saturday, May 8, in Estacada, Oregon. She passed away one week after contracting the virus, with no underlying health conditions. She had taught in the district for 20 years and leaves behind her mother, husband and two teenage sons. Roger Clound, Samatha’s ex-husband, told local press, “You can’t go anywhere in Estacada without someone coming up to talk to her.” Fox’s death marks the first recorded death of a teacher by COVID-19 in Oregon. Other education workers in the state have also died from COVID-19, including a volunteer for the North Clackamas School District who died in December, and a Joseph Charter School bus driver who died in September. In recent weeks, case rates in Oregon and Washington have outpaced the national average. This comes in the aftermath of the March 5 issuance of an executive order by Democratic Governor Kate Brown demanding the reopening of schools, making Oregon one of the last states to resume in-person learning in the face of enormous opposition among educators. Estacada School District has tried to absolve itself from responsibility for Fox’s death, while the media has seized on the fact that she was unvaccinated when she contracted COVID-19. Fox’s last day teaching in-person was April 27. According to a spokeswoman for the district, 60 students have been told to quarantine. This number has been refuted by sources from within the school district, stating that by May 3 there are over 237 students in quarantine. In their attempt to cover up the spread of the disease, a district spokeswoman said there is “no evidence” of spread in any of the schools even though cases continue to rise, and almost 11 percent of the district’s students are under quarantine.
University of California system will no longer consider SAT, ACT scores in admissions process – The University of California system on Friday announced in a legal settlement with students and advocacy groups that it will no longer consider SAT and ACT scores when reviewing applications for admission or scholarships. Under the settlement, the university has agreed that SAT or ACT scores sent along in admissions applications to any of the campuses in its system between fall 2021 and spring 2025 will not be viewed by admissions officials. The university in May 2020 had already agreed to phase out the consideration of SAT and ACT scores for students applying for admission in or after fall 2025. The decision makes the University of California, which has nine campuses across the state and a total of about 225,000 undergraduate students, one of the largest schools to cut ties with the standardized tests that for decades have been an essential component in college admissions. Friday’s settlement seemingly ends a prolonged legal dispute over the use of standardized tests. In a 2019 lawsuit, a coalition of students, advocacy groups and the Compton Unified School District argued that the tests place an unfair disadvantage on students of color, as well as those with disabilities and those from low-income families. The University of California had joined other universities last year in making SAT and ACT scores optional for applications due to the coronavirus pandemic, and had already decided to extend this optional period another year. However, students sued the university, alleging that providing the option to voluntarily submit scores would still be unfair to students with disabilities, many of whom were not able to take the tests with their needed accommodations during the pandemic.
Students to sue college for keeping tuition after suspending them over mask violation – The families of three students from the University of Massachusetts at Amherst who were suspended from the spring semester for attending a party unmasked are planning to sue the school for the $16,000 in tuition that the school kept when they were kicked out of school. The freshmen were initially suspended after another student sent the March photo of them to the school, according to The Washington Post. “These beautiful young ladies who are honors students have had a full academic year stripped away and their paths broken of their higher education for alleged COVID violations,” one of the parents of the students told local ABC affiliate WCVB-TV. “Expectations regarding students’ responsibility to follow public health protocols, and the consequences for failing to do so, were clearly communicated to students before and throughout the spring semester, and students were updated regularly as conditions changed,” the university told the Post in a statement. However, some observers have accused to the school of having a double-standard for how it implements its COVID-19 policies, noting that some members of its hockey team were seen celebrating unmasked in April after they won the NCAA championship. The school told the Post it was “regrettable” that some players were unmasked, but argued this celebration took place later in the semester when infection rates were lower.
One in three college students are food insecure in the United States — Since the onset of the pandemic, food insecurity has skyrocketed throughout the United States. One of the hardest hit segments of the population has been students in higher education. Food insecurity now affects one-in-three college students. According to a survey conducted during the fall 2020 semester from Chegg.org, the research and advocacy arm of the course materials and services company Chegg, nearly one third (29 percent) of students have missed a meal at least once a week since the beginning of the pandemic. In addition, more than half of all students (52 percent) sometimes use off-campus food banks, and 30 percent use them once a month or more. According to the survey, nearly one third of students reported they had been laid off due to the pandemic, and 40 percent of those who skipped meals said they did so to pay for debt or study materials. For working class youth, making the decision to go to college means sacrificing basic necessities such as health care, adequate housing, and food security. Under the dire conditions created by the ruling class response to the pandemic, seeking higher education comes at a staggering price for a whole generation of youth. The cost of college alone is enough to keep working class youth chained to the banks well into old age. The average public university student now borrows $30,030 to attain a bachelor’s degree. The total student debt outstanding in the Federal Loan Portfolio is over $1.56 trillion. Many working class youth qualify for food assistance programs throughout their tenure at K-12 schools. The USDA National School Lunch Program provides low-cost or free meals to 29.4 million K-12 students of low-income families. The fact that so many children rely on these programs in order to eat each day is a staggering indictment of the difficult conditions facing working class families in the most “advanced” capitalist country in the world. When these students graduate high school, this meager safety net is no longer available. College students face strict eligibility requirements for the Supplemental Nutrition Assistance Program (SNAP). In a report from the National Student Campaign Against Hunger and Homelessness (NSCAHH) from 2016, 46 percent of US college students reported experiencing food insecurity in the past 30 days, yet only 18 percent of college students qualified for SNAP and just 3 percent received benefits. While there is limited data out on the situation over the last year, one can assume these figures are now much starker than in 2016. In December 2019, rule changes to the SNAP program specifically targeted “able-bodied adults without dependents.” These changes made it even more challenging for states to waive requirements that someone work at least 20 hours per week, excluding otherwise eligible students from the program. What this means in practical terms is that many college age students are forced to work 20 hours a week on top of a full class load just to be able to afford food.
China to partition Mount Everest amid rising coronavirus cases in Nepal –China announced on Sunday that it will partition Mount Everest due to rising COVID-19 cases in Nepal.According to multiple media reports, Beijing, which has expressed concerns about the spread of the coronavirus around the world’s highest peak since the first outbreaks in late 2019, plans to create “a line of separation” at the summit to keep climbers from Tibet from mingling with those who ascended the Nepalese side.The New York Times reported that China has only approved 21 permits to climb the mountain this year amid the pandemic. Nepal has already approved a record number of 408 permits to climb Everest, even though several base campers have tested positive for the coronavirus. Head of the Tibet Sports Bureau Nyima Tsering told state news that a group of Chinese nationals is currently on its way to the summit to set up the partition.State news agency Xinhua also reported that China will set checkpoints outside of its base camp where climbers will undergo temperature checks, disinfection and isolation from others. Nepal on Friday reported 9,023 new cases of the coronavirus, according to CNN, its highest single-day total.
China Sees Slowest Population Growth In Decades Raising Concerns About Aging Labor Force – A few weeks ago, we reported that China, the world’s largest country, reported a shrinking population for the first time in 70+ years, a sign that the global economy might struggle with long-term structural deflation as the population across the developed world shrinks. But according to the latest census data released Tuesday by China’s National Bureau of Statistics, China reported only 12 million births last year, the lowest annual reading since 1961, and down 18% from 2019. Looking back at the last 10 years, China’s population increased by just 72 million people (between 2010 and 2020)bringing the country’s total population to 1.41 billion. That breaks down to an average annual growth rate of just 0.53%, slower than the 0.57% seen in 2010, according to the FT.As analysts studied the data, Nikkei reported that the declining population growth reflects China’s “failure of policies designed to reverse China’s falling birth rate. The rate of increase is the lowest since China first conducted a census in 1953. The fastest growth was the 2.09% recorded in the 1982 census.” Unsurprisingly, the declining birth rate shows that China’s average age has increased substantially, posing a demographic crisis similar to what’s being experienced in Japan. People over the age of 65 now make up 13.5% of the population, compared with 8.9% back in 2010, when the previous census data was published. Meanwhile, the working-age population of people aged between 15 and 59 declined to 63.35% from 70.14%.
Modi pledges to “save India from lockdown” – not infection and death –India, home to more than one-sixth of the world’s population, is now engulfed by a health and social catastrophe that was both foreseeable and foreseen. Just in the past five days, India officially recorded 2 million new COVID-19 infections and 20,928 deaths. Since Monday, April 12, India’s COVID-19 cases have risen by 8.99 million, or more than 65 percent, bringing its total infections since the pandemic began to 22.6 million. During the same four-week period, the novel coronavirus killed 75,213 Indians, more people than it has killed in all but 11 countries throughout the entire pandemic. Harrowing as these figures are, they represent a mere fraction of India’s true number of infections and deaths, as is conceded by all but the most inveterate defenders of Prime Minister Narendra Modi and his far-right Bharatiya Janata Party (BJP) government. Union Health Ministry data shows COVID-19 test positivity rates currently running at more than 20 percent in 301 of India’s 718 districts, and more than 30 percent in Delhi, India’s national capital and largest urban agglomeration. The World Health Organization (WHO) has long insisted a positivity rate of 5 percent or higher indicates a serious undercount of infections. Prior to the pandemic, India’s ramshackle, chronically underfunded health care system recorded the medical cause of only a quarter of all deaths, with many deaths in rural India not even registered. Studies and surveys in recent weeks by health experts and journalists have shown that many times more people are being cremated and buried under COVID-19 protocols than are reported in the authorities’ death counts. To cite one example, a daily newspaper in Modi’s home state of Gujarat, Sandesh, has found that just one in 10 COVID-19 deaths in the state’s major urban centers is officially being attributed to the pandemic. In Rajkot, a city of 2 million, the official statistics showed 220 people had died of COVID-19 in the latter half of April. However, during that same period just one of the city’s “seven coronavirus-only” crematoriums handled 673 corpses. Across India and around the world people have been shocked and angered by the media reports of desperately ill people in Delhi, Mumbai and other major cities unable to gain admittance to overwhelmed health care facilities, of scores of patients dying from asphyxiation after their hospital ran out of medical oxygen, and of a burgeoning black market in oxygen cylinders and drugs, like Remdesivir, that are in short supply. In rural India, where two-thirds of the country’s population lives and where public health care facilities are largely non-existent, the catastrophe threatens to be greater still. In 15 rural districts, most or all with a population of a million or more, the COVID-19 test positivity rate is currently higher than 50 percent.
Dozens of corpses found floating in Ganges as India’s humanitarian crisis deepens – Shocking pictures showing dozens of corpses floating in the Ganges River, published by the Indian media Monday evening, provide yet further evidence of the mounting humanitarian crisis the COVID-19 pandemic has triggered in the world’s second most populous country. India, which has emerged over the past month as the global epicenter of the pandemic, passed the grim milestone of a quarter-million officially registered deaths this week. On Thursday, it added another 4,120 COVID-19 deaths, taking the death toll to 258,317. India currently accounts for half of new COVID-19 cases and 30 percent of new deaths worldwide, according to the World Health Organization. It is widely acknowledged that the official figures are a gross undercount of the true extent of the calamity. One recent estimate put the death toll at 1 million. The country’s total caseload stands at over 23.7 million. As of May 13, India had 3,710,525 active cases. Even so, the far-right Bharatiya Janatha Party (BJP) government continues to deny that India is experiencing “community transmission,” absurdly describing the pandemic as being characterised by “clustered cases.” In truth, Prime Minister Narendra Modi’s policy of prioritising corporate profits over the protection of human lives has produced a situation where the virus is totally out of control. India’s chronically underfunded ramshackle health care system has already collapsed under a surge of patients. In a disturbing video, which was shot at Buxer, a small city in the eastern state of Bihar, Times Now reported over 150 bodies recorded as COVID-19 fatalities were dumped on the banks of the Ganges River. “These COVID bodies will be washed down further and can be eaten by stray dogs which will further spread coronavirus,” the news website added. In a separate case, NDTV reported that on May 9, several partially burnt bodies were seen floating in the Yamuna River, a tributary of the Ganges, at Hamirpur in Himachal Pradesh. A few days later, multiple bodies were found buried in sand at two locations along the same river in Uttar Pradesh’s Unnao district, just 40km from the state capital Lucknow. These horrific stories point to both the criminal failure of the Modi government to deal with the pandemic, and the deliberate undercounting of COVID-19 deaths. According to AFP, residents believe that the bodies were dumped in the river because cremation sites were overwhelmed or because relatives could not afford wood for funeral pyres. These reports point to the emergence of the long-anticipated nightmare that would occur if the virus spread to India’s rural areas, where health care facilities are almost non-existent.
High school students in France protest against holding of final-year exams amid pandemic – Since last Monday, high school students have been mobilising against the Macron government, which wants to proceed with final-year high school exams in classrooms despite the pandemic. The students are demanding the cancellation of the examinations and the certification of high school diplomas via continuous assessment throughout the year. The Macron government has begun the ending of the limited lockdown announced at the end of March, including the reopening of schools over the last two weeks despite the large number of COVID-19 cases each day. These protests are part of an international wave of strikes and demonstrations by youth. The year 2020 saw a wave of mobilisations in Greece and Poland against in-person studies, and a wave of strikes to demand a halt to work in non-essential industries. This movement is continuing and intensifying. Many high schools were blocked last week in France, including in the Paris region, Toulouse, Grenoble, Annecy, Bordeaux and Bayonne. The main entrances to the schools were blocked with fences, rubbish bins and pieces of wood, with students organising on social media. The blockades continue this week, with 200 high schools blocked across France. The government has responded by sending in the police to crack down on the students. In front of a number of high schools, signs read “Continuous examinations” and “Precarity kills.” On Friday, high school students organised protests outside the Charlemagne, Sophie-Germain and Victor-Hugo high schools in Paris. According to actu.fr, “clashes broke out at the Victor-Hugo high school, when the police intervened to remove the students who were blocking the school with bins. Tear gas, shields and truncheons were used to repel the students.”
Pandemic Divergence: The Social and Economic Costs of Covid-19 – According to the IMFs latest World Economic Outlook (WEO April 2021), the pandemic recession is the deepest since the end of WWII, with a 3.5% output contraction in 2020, which represents a 7% loss relative to the IMFs 3.4% growth forecast back in October 2019. More importantly, the consequences of the shock will likely be long-lasting. While the medium-term costs are still uncertain and vary significantly across countries, it is safe to say that developing economies will suffer the most. Whereas the IMF projects that the world GDP will be 3% lower in 2024 relative to the no-Covid scenario, the number doubles to 6% for the developing world despite the fact that the shock, as measured by Covid-related deaths, was more muted in low-income economies. In a recent paper (Levy Yeyati and Filippini 2021), we run a preliminary assessment of these long-term costs by countries and regions. The long-term social and economic consequences of Covid-19 are uncertain. This column provides a preliminary assessment of the variation in costs across countries and regions, and suggests that developing economies will suffer the most lasting damage. The pandemic has exposed the differential capacity of governments to mitigate health and economic crises and to allocate scarce resources efficiently, while some labour market structures have inhibited government efforts to attenuate the pandemic’s impact – impediments that will also shape comparative recoveries.
Michel Barnier Calls For 3-5 Year Suspension Of Immigration Into EU —Michel Barnier has called for a 3-5 year suspension of immigration into EU countries, warning that the bloc’s external borders have become a “sieve” for criminals and terrorists. “I think we have to take the time for three or five years to suspend immigration,” Barnier told French media.The EU’s former Brexit negotiator cited links between between immigration and “terrorist networks that infiltrate migrational flows” as part of his reasoning for calling for the shutdown, while also highlighting the issue of human trafficking networks.The comments are particularly noteworthy because Barnier is known as a centrist – even a globalist in some ways – yet he is spouting rhetoric normally espoused by right-wing politicians.When asked whether the comments contradicted his “moderate” reputation, Barnier responded, “The problems of immigration are not moderate. I know, as the politician that I am, to see the problems how they are and how French people experience them and to find solutions.” However, Barnier made a point of asserting that the controls wouldn’t apply to “refugees,” despite the fact that there have been numerous terror attacks carried out in France and other European countries by refugees.
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