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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This week the news associated with the pandemic includes Biden’s budget and housing market items, along with Fed news. There are a few articles from around the world at the end:
Fed’s Reverse Repos Surge to Historic $485 Billion: What’s Wall Street Afraid of This Time? – Pam Martens – The chart above has been compiled by the St. Louis Fed using the New York Fed’s data for its issuance of Reverse Repurchase Agreements, otherwise known as Reverse Repos. What’s a Fed Reverse Repo? According to the New York Fed, it is when counterparties loan the Fed money in exchange for collateral, which is typically Treasury bills.In the most recent action, we’re talking about the New York Fed, acting on behalf of the Federal Reserve, selling U.S. Treasuries to Wall Street banks, trading houses, mutual funds and government-sponsored enterprises in overnight and weekend deals and paying zero or next to zero as an interest rate when it buys back the securities.Why would the smartest guys on Wall Street, who never let a loose dime slip through their fingers in order to get a larger cut of the annual bonus pool, be willing to loan the Fed money at zero percent interest? These are, after all, some of the same guys making 10-to-1 margin loans to dodgy family office hedge funds like Archegos in order to maximize fee income. One of the frequently expressed theories is that there’s a surplus of cash swashing around Wall Street as a result of the $1.9 trillion stimulus bill passed by Congress in March and the attendant surge in deposits into banks and money market funds. There’s a problem, however, with that thesis. According to the New York Fed’s Excel spreadsheet of its daily Reverse Repos, the dollar amounts went from a low of $3.45 billion on April 5 – the month after the stimulus bill was passed and stimulus checks went out – to a high of $173 billion on April 30.The gargantuan surge in the Fed’s Reverse Repos occurred in May, not April, and has continued into the first days of June. During the last week of May, the Fed’s overnight Reverse Repos ranged from $369 billion on May 21 to an all-time historic high of $485 billion on May 27. In the case of the May 21 Reverse Repo, which fell on a Friday, that deal was not an overnight operation but lasted throughout the weekend, maturing on Monday, May 24. The counterparties who took Treasury collateral from the Fed and loaned it $369 billion for the weekend, earned zero interest according to the data at the New York Fed.Another theory making the rounds is that corporations are wary of parking their idle cash in money market funds holding securities other than U.S. government paper. That’s because the Fed had to create a bailout facility for those non-government paper money market funds during the March 2020 market crisis.Since Treasury money market funds, that so many corporations and institutions are flocking to, typically cannot hold anything longer than a one-year instrument, there may be a surge in demand to get one’s hands on one-year Treasury bills.Whatever is causing the rising fear on Wall Street, there is no question that the fear is spreading to more firms that do business with the New York Fed.In April, the number of counterparties engaging in these Reverse Repos with the Fed went from a low of four on April 5 to a high of 38 on April 29. During the last week of May, the number of daily counterparties ranged from 54 on May 24 to 50 counterparties on May 27, the day the Fed’s Reverse Repos hit an historic high of $485 billion.
Fed’s Taper Talk Is Pre-Emptive Strike Against Inflation Fears – – Inflation readings are coming in hotter than Federal Reserve officials expected and could accelerate the timing of when they debate scaling back their massive bond-buying campaign. Fed Vice Chairs Randal Quarles and Richard Clarida both declared this week that policy makers could begin this discussion at “upcoming meetings.” That echoes a line from minutes of the Fed’s April gathering but carries more weight coming from Chair Jerome Powell’s leadership team. Clarida called April’s consumer prices report an “unpleasant surprise.” On Friday, a key gauge of prices targeted by the Fed rose 3.6% from a year earlier, the biggest jump since 2008. “We are talking about talking about tapering,” San Francisco Fed President Mary Daly said in a CNBC interview on May 25, while cautioning that there were no plans to do anything now. The post-pandemic economic-growth surge, which has pushed up prices on everything from bicycles to lumber, has Fed officials on alert. While calling inflation “transitory,” they are also starting to wonder whether a slow response by the economy’s supply side — the millions of companies and people who make things and provide services — could result in several quarters of high inflation readings that start to creep into consumer psychology. “Inflation will be 2.5% or higher this year — mostly temporary — but inflation could well be above 2% next year,” said former Fed Governor Laurence Meyer, who sees them tapering as soon as December. “Risk management may be called for to avoid inflation expectations creeping upward, which would not be easily reversible.” The public conversation officials are having about tapering is a surprising shift because only a month ago, Powell was skeptical that actual inflation or expectations would move up in a lasting way “while there was still significant slack in the labor market.” “The fear they have is that this gets built into inflation expectations,” said William English, a former senior Fed staff economist. “There is tremendous uncertainty and the models that look at history to inform your forecast are much less useful because we have no history of something like this.”Risks are two-sided, said English, because an inflation scare could also cause officials to reel in stimulus too aggressively and slow the recovery, especially if fiscal support wanes. The agility Fed officials are showing now hearkens back to former Chair Alan Greenspan’s view that risk management was essential because the economy’s structure is always shifting. Asset purchases are the most flexible tool the Fed has now because they can be gradually adjusted as necessary. Raising interest rates, currently near zero, is a much more momentous decision.
US financial system awash with Fed money The extent of the wave of money surging through the US financial system flowing from the ongoing massive financial asset purchases by the Fed, running at an annual rate of more than $1.4 trillion, was underscored last week. Last Thursday, it was revealed that a facility that allows money market funds to place their surplus cash with the Fed came in at $485.3 billion – an all-time record that eclipsed the previous high of $474.6 billion recorded on New Year’s Eve in 2015. The parking of nearly half a trillion dollars with the Fed at zero interest was the result of a fall in yields on short-term Treasury bonds to below zero. The yield on short-term Treasury debt had moved into negative territory because the price of the assets has been pushed so high an investor would make a loss if they held them to maturity. Treasury bills with a maturity of less than one month were reported to be trading at yields of between minus 0.01 and 0.02 points, making the Fed’s reverse repurchase program (RRP) paying zero the better option. John Canavan, an analyst at Oxford Economics, told the Financial Times (FT): “The surge in demand for the Fed’s RRP operations has been incredible. It is also not over yet.” Gennadiy Goldberg, a senior analyst at TD Securities in New York said the RRP facility was “the only safety valve” for the pressure building up in money markets and was “just holding back the flood of cash coming.” The central role of the Fed in the operations of the money markets was highlighted by Priya Misra, the global head of rates strategy at TD Securities. “The Fed’s role in markets is only growing,” she told the FT. “Clearly the market is not functioning on its own.” A major component in the massive build-up of dollars in the money markets is the Fed’s asset purchasing program of $120 billion a month, comprising $80 billion of government debt and $40 billion of mortgage-backed securities, that was implemented after the market meltdown in March 2020 at the start of the COVID-19 pandemic. There is now growing pressure on the Fed to begin winding back its asset purchases in order to try to restore some degree of “normalcy” to financial markets. The rise in inflation is adding to this pressure but at this stage the Fed is insisting that its extraordinary interventions will continue until it begins to see “substantial improvement” in the economic outlook. Critics of this stand maintain this improvement is already visible as evidenced by the rise in inflation and a tightening in the labour market. They warn that if the Fed continues with its present policies it will be forced to slam on the monetary brakes, prompting a crisis in the financial markets and possibly triggering a recession.
Sixty Years of Money, GDP and the Price Level –Menzie Chinn – Looks like this: Figure 1: M2 to real GDP ratio (blue, left scale), and Personal Consumption Expenditure deflator, 2012=100 (red, right scale). NBER defined recession dates shaded gray, assumes last trough at 2020Q2. Source: Federal Reserve via FRED, BEA, NBER and author’s calculations.As noted in this December post, the explanatory power of the M2 to GDP ratio is essentially zero for the price level at the year horizon.In logs, the relationship appears similarly tenuous.Figure 2: M2 to real GDP log ratio (blue, left scale), and log Personal Consumption Expenditure deflator, 2012=100 (red, right scale). NBER defined recession dates shaded gray, assumes last trough at 2020Q2. Source: Federal Reserve via FRED, BEA, NBER and author’s calculations.For an examination of the instability of the quantity theory coefficients, see Sargent and Surico (2011), written in the wake of post-Great Recession quantitative easing.
Real Borrowing Costs for the US Treasury: May 2021 — Menzie Chinn – As of May 2021, the nominal 10 year Treasury rate is 1.6%. The real rate is -0.9%. Figure 1: Nominal 10 year Treasury yield (blue), 10 year TIPS (red), both in %. NBER recession dates shaded gray; latest recession assumed to end 2020M04. Source: Federal Reserve via FRED, Treasury, and NBER. It’s noteworthy that – despite the runup in real and particularly nominal rates – May 2021 real rates are still below anything experienced in the the recovery from the Great Recession, and only slightly higher than the all time lows recorded in August 2020 and January 2021 (monthly averages of daily data). Hence, this seems an ideal time for the Federal government to lock in interest rates.
Fed’s Beige Book: “National economy expanded at a moderate pace” — Fed’s Beige Book “This report was prepared at the Federal Reserve Bank of Cleveland based on information collected on or before May 25, 2021.” The national economy expanded at a moderate pace from early April to late May, a somewhat faster rate than the prior reporting period. The effects of expanded vaccination rates were perhaps most notable in consumer spending in which increases in leisure travel and restaurant spending augmented ongoing strength in other spending categories. Light vehicle sales remained solid but were often constrained by tight inventories. Factory output increased further even as significant supply chain challenges continued to disrupt production. Manufacturers reported that widespread shortages of materials and labor along with delivery delays made it difficult to get products to customers. Similar challenges persisted in construction. Homebuilders often noted that strong demand, buoyed by low mortgage interest rates, outpaced their capacity to build, leading some to limit sales. Nonresidential construction increased at a moderate pace, on balance, even as contacts in several Districts said that supply chain disruptions pushed costs higher and, in some cases, delayed projects. Demand for professional and business services increased moderately, while demand for transportation services (including at ports) was exceptionally strong. Lending volumes increased modestly, with gains in both household and business loans. Overall, expectations changed little, with contacts optimistic that economic growth will remain solid. …Staffing levels increased at a relatively steady pace, with two-thirds of Districts reporting modest employment growth over the reporting period and the remainder indicating employment gains were moderate. As the spread of COVID-19 continued to slow, employment growth was strongest in food services, hospitality, and retail. Manufacturers also added workers in several Districts. It remained difficult for many firms to hire new workers, especially low-wage hourly workers, truck drivers, and skilled tradespeople. The lack of job candidates prevented some firms from increasing output and, less commonly, led some businesses to reduce their hours of operation. Overall, wage growth was moderate, and a growing number of firms offered signing bonuses and increased starting wages to attract and retain workers. Contacts expected that labor demand will remain strong, but supply constrained, in the months ahead.
Fed’s Beige Book reports pickup in recovery, price pressures -The pace of the U.S. recovery picked up somewhat in the past two months, sparking price pressures as businesses contended with worker scarcity and rising costs, the Federal Reserve said. “The national economy expanded at a moderate pace from early April to late May, a somewhat faster rate than the prior reporting period,” the U.S. central bank said in its Beige Book survey released on Wednesday. “Overall price pressures increased further since the last report. Selling prices increased moderately, while input costs rose more briskly.” The report was based on information collected by the Fed’s 12 regional banks on or before May 25 and compiled by the Cleveland branch. Fed officials are considering how quickly to trim monetary policy support with an increased pace of vaccinations brightening the U.S. outlook. The Federal Open Market Committee will update its quarterly forecasts for interest rates, growth, unemployment and inflation at its June 15-16 gathering. The Beige Book reported that some businesses were able to take advantage of stronger demand to pass along higher input costs to customers. “Looking forward, contacts anticipate facing cost increases and charging higher prices in coming months,” the survey said. Several policy makers including Vice Chair Richard Clarida have said central bankers may be able to begin discussing the appropriate timing of scaling back their bond-buying program at upcoming policy meetings. Patrick Harker, president of the Philadelphia Fed, said earlier on Wednesday that officials should get that debate underway. Supply disruptions The report cited multiple anecdotes of companies struggling with higher input prices, supply chain disruptions and a shortage of workers. In St. Louis, for example, a group of restaurants held a job fair to fill more than 100 positions – but only a dozen applicants showed up. Leisure and hospitality firms saw increased business as vaccinated Americans sought to travel more frequently. In New York, hotel occupancy topped 50% for the first time since COVID-19 began and nightly room rates rose, while museums and restaurants saw a rebound. The FOMC has committed to only begin scaling back the $120 billion monthly pace of its asset purchases after there’s “substantial further progress” on inflation and employment. U.S. central bankers will get a fresh update on the status of the labor market on Friday. U.S. consumer prices showed hotter-than-expected inflationary pressures in April. Fed officials have largely written them off as owing to transitory factors associated with supply-chain bottlenecks and the reopening of service industries as the pandemic recedes. The Fed’s forecasts released in March showed officials don’t expect to raise interest rates from near zero before the end of 2023, even as they sharply upgraded projections for growth and employment this year.
Business Cycle Indicators as of June 1 –Menzie Chinn -Monthly GDP figures were released by IHS-Markit today, showing a rebound in April. In the context of key macro indicators followed by the NBER Business Cycle Dating Committee: Figure 1: Nonfarm payroll employment from March release (dark blue), Bloomberg consensus as of 6/1 for May nonfarm payroll employment (light blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (6/1/2021 release), NBER, and author’s calculations. The monthly GDP is only slightly below peak levels recorded in 2020M02. For a comparison against the official (2nd release) figure and the current IHS-Markit (formerly Macroeconomic Advisers) nowcast, see the below figure. Figure 2: GDP from advance release (blue bar), IHS-Markit monthly GDP (black line), and IHS-Markit nowcast of 6/1 (brown bar). Source: BEA 2021Q1 2nd release, IHS-Markit.
Energy expenditures as a percentage of PCE –Note: Back in early 2016, I noted that energy expenditures as a percentage of PCE had hit an all time low. Here is an update through the recently released April PCE report. Below is a graph of expenditures on energy goods and services as a percent of total personal consumption expenditures through April 2021.This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices. Data source: BEA.The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.In general, energy expenditures as a percent of PCE have been trending down for years. At the beginning of the pandemic, energy expenditures as a percentage of PCE, fell to a record low of 3.3% in May 2020.In April 2021, energy expenditures as a percentage of PCE had rebounded somewhat and were at 3.8% of PCE. This is about the same level as in early 2020 (pre-pandemic).
Biden’s new $1 trillion infrastructure offer reportedly swaps in 15 percent minimum corporate tax for tax hike – President Biden didn’t just lower the proposed price tag for his American Jobs Plan to $1 trillion, from $1.7 trillion, in a Wednesday meeting with Sen. Shelley Moore Capito (R-W.Va.), the GOP point person on infrastructure negotiations. He also said he’s open to dropping his proposal to fund the bill by raising the corporate tax rate to 28 percent, from 21 percent, The Wall Street Journal and The Washington Post report, citing people familiar with the talks. Instead, the package would create a new 15 percent minimum corporate tax rate.Republicans insist any bipartisan infrastructure bill not touch their 2017 $1.5 trillion tax cut package, their crowning legislative achievement of the past decade. A 15 percent minimum tax wouldn’t technically change that 2017 law, and according to a White House document from earlier this year, only about 180 of the largest U.S. corporations would qualify for the minimum tax and just 45 would have to pay, the Journal reports.”Corporations have paid a declining share in federal taxes since the 2017 GOP tax law dramatically slashed the corporate tax rate,” the Post reports, and 55 Fortune 500 corporations paid no federal income tax in 2020, according to the left-leaning Institute of Taxation and Economic Policy. Biden’s minimum tax proposal was originally part of a second package, the American Families Plan, and the White House says Biden is still committed to raising the corporate tax rate through other legislation, if need be.The latest GOP offer is $257 billion in new infrastructure spending over eight years, plus clawed-back COVID-19 relief funds and increased user fees and gas taxes. Biden reportedly offered to include about $75 billion in repurposed coronavirus funds in the package. Biden and Capito are scheduled to talk again on Friday, and “Republican leaders are still deciding whether to put forward another counteroffer or to walk away from the negotiations entirely,” the Post reports. Progressive groups, convinced Republicans will ultimately vote against any package and frustrated at the slow pace and concessions by Biden, hope Republicans walk away, letting Democrats pass their own bill through budget reconciliation. “We are rooting for them to be dumb,” one top consultant to several progressive groups tells Politico. “If they were smart they would take it. They’d box Biden in on it. And, not just that, he would legitimately be fine with it. And the left would be livid.”
Biden’s back door to wage hikes – President Joe Biden’s pledge to offer American workers a path to higher income and more jobs is getting a boost from an unlikely source: the country’s struggle to fully emerge from the pandemic..Labor shortages in key industries are giving many workers their best shot in years to bargain for substantial wage increases, with some companies ramping up pay to attract employees, particularly restaurants.Biden, who in April cheered worker advocates by renewing his call on Congress to nearly double the federal minimum wage to $15, is likely to benefit politically from the trend if it continues.”The ‘shortages’ we are seeing in lower-wage jobs and the accompanying wage pressures are an early sign of success” for the president’s agenda, said Julia Coronado, founder of MacroPolicy Perspectives.That success may be short-lived. Higher wages could be among the biggest factors in pressuring the Federal Reserve to raise interest rates if clear signs of an inflation spike appear. They also risk slowing hiring for those who will increasingly seek to return to the workforce as the pandemic subsides, as companies try to keep costs down. That’s why workers’ pay was a major focus for Fed officials in Friday’s U.S. employment report for May. They want to see wage gains for the workforce – but what’s behind those raises matters.Wage growth “is positive if it reduces hardship, reduces inequality and is not eaten away or reversed by higher inflation,” said Tim Duy, an economics professor at the University of Oregon and a former U.S. Treasury economist. “But we should be cognizant of the possibility that we’re inducing more inflation.”Income growth has been relatively strong, particularly in the last couple of months, despite disappointing overall job growth. Wages were up about 2 percent in May compared to the year before, and that number likely underestimates the real amount of income growth for technical reasons; lower-wage workers disproportionately lost jobs last year, making the overall average for those who kept their positions look higher then, and the opposite effect is now occurring as Americans return to the labor market. “Anyone looking at the 2.0% increase in yr/yr wages is missing the story,” Jason Furman, a Harvard professor and former top economic adviser to President Barack Obama, said in a tweet. “Nominal wages up 1.2% in April/May. That is a 7.4% annual rate. That is huge.”
Blinken to meet officials in Costa Rica amid migrant crisis –Secretary of State Antony Blinken will meet with Central American officials during a two-day visit to Costa Rica beginning Tuesday to discuss the “root causes” of immigration – a visit that comes as the Biden administration is still grappling with the dramatic surge of illegal immigrants arriving in the US. Since President Biden tapped Vice President Kamala Harris to oversee the immigration crisis in March, the vice president has held virtual calls with leaders of some Central American countries – and will travel to Mexico and Guatemala this month – but still hasn’t visited the border. The White House has stressed that Harris’ focus is on the “root causes” of migration but not the border security breakdown caused by the record number of illegal immigrants and unaccompanied migrant children flooding to the US. Speaking at the Washington Conference on the Americas last month, Harris pointed to “corruption” as one of the main reasons people are leaving their homes for America.”Citizens of El Salvador, Guatemala, Honduras are leaving their homes at alarming rates,” she said. “No matter how much effort we put in on curbing violence, providing disaster relief, on tackling food insecurity – on any of it – we will not make significant progress if corruption in the region persists.” While in San Jose, Blinken will meet with President Carlos Alvarado Quesada and Minister of Foreign Affairs Rodolfo Solano Quiros about US-Costa Rica relations, and later take part in a meeting with senior leaders of countries – including Mexico – involved in the Central American Integration System, the State Department said.
Biden administration taps groups to pick which asylum-seekers to allow into the country – The Biden administration has quietly tasked six humanitarian groups with recommending which migrants should be allowed to stay in the U.S. instead of being rapidly expelled from the country under federal pandemic-related powers that block people from seeking asylum.The groups will determine who is most vulnerable in Mexico, and their criteria has not been made public. It comes as large numbers of people are crossing the southern border and as the government faces intensifying pressure to lift the public health powersinstituted by former President Donald Trump and kept in place by President Joe Biden during the coronavirus pandemic.Several members of the consortium spoke to The Associated Press about the criteria and provided details of the system that have not been previously reported. The government is aiming to admit to the country up to 250 asylum-seekers a day who are referred by the groups and is agreeing to that system only until July 31. By then, the consortium hopes the Biden administration will have lifted the public health rules, though the government has not committed to that.So far, a total of nearly 800 asylum-seekers have been let in since May 3, and members of the consortium say there is already more demand than they can meet.The groups have not been publicly identified except for the International Rescue Committee, a global relief organization. The others are London-based Save the Children; two U.S.-based organizations, HIAS and Kids in Need of Defense; and two Mexico-based organizations, Asylum Access and the Institute for Women in Migration, according to two people with direct knowledge who spoke on condition of anonymity because the information was not intended for public release.Asylum Access, which provides services to people seeing asylum in Mexico, characterized its role as minimal.
Email Shows Researcher Who Funded Wuhan Lab, Admits Manipulating Coronaviruses, Thanked Fauci For Dismissing Lab-Leak Theory –Dr Fauci’s emails have been released via a Freedom of Information Act request, and there is some pretty interesting stuff in them, particularly one email where a researcher who funded the Wuhan Institute of Virology thanks Fauci for publicly dismissing the lab leak theory early on during the pandemic.The email from Dr. Peter Daszak, President of the EcoHealth Alliance, a group that has extensive ties to the Wuhan lab gain of function research, sent the email to Fauci on April 18, 2020, roughly six weeks after the outbreak had taken hold.The email states:“As the Pl of the ROl grant publicly targeted by Fox News reporters at the Presidential press briefing last night, I just wanted to say a personal thank you on behalf of our staff and collaborators, for publicly standing up and stating that the scientific evidence supports a natural origin for COVID-19 from a bat-to-human spillover, not a lab release from the Wuhan Institute of Virology.From my perspective, your comments are brave, and coming from your trusted voice, will help dispel the myths being spun around the virus’ origins. Once this pandemic’s over I look forward thanking you in person and let you know how important your comments are to us all.”Daszak, who also works for the World Health Organisation, is on record admitting that he was involved with manipulating coronaviruses. Here is a video of him talking in DECEMBER 2019 about how ‘good’ the viruses are for messing around with in a lab:Daszak notes that “coronaviruses are pretty good … you can manipulate them in the lab pretty easily … the spiked proteins drive a lot about what happens. You can get the sequence you can build the protein, we work with Ralph Baric at UNC to do this, insert into the backbone of another virus and do some work in a lab.”Elsewhere, the emails show that Fauci also knew very early on, before the WHO even declared a pandemic, that researchers suspected the virus had been ‘potentially engineered’ in a lab, as this exchange with Kristian G. Andersen of the Scripps Research Institute from January 2020 shows:The emails with Fauci show that Daszak had already dismissed the lab leak notion nearly a year before that ‘investigation’ began, and despite other researchers saying it looked potentially engineered.Perhaps the most disturbing aspect of this is that Daszak was one of the lead “investigators” on the WHO panel tasked with looking into the origins of the pandemic.Is it any surprise that this guy, whose organisation has shovelled at least $600,000 to the Wuhan Institute of Virology in the past few years to play around with coronaviruses inside the lab, determined within 3 hours of visiting the lab in February 2021 that there was ‘nothing to see here’?
Joe Biden Says He’s ‘Very Confident’ in Dr. Anthony Fauci, Despite Email Backlash -President Joe Biden says he isn’t bothered by Dr. Anthony Fauci‘s Republican critics who have called for the nation’s most prominent COVID-19 expert’s firing after a trove of his emails made headlines this week.”I’m very confident in Dr. Fauci,” Biden told reporters on Friday, his first public defense of his chief medical adviser, who has come under renewed scrutiny this past week over his response to the coronavirus pandemic and its origins.Questioned later in the day during a briefing with reporters, White House press secretary Jen Psaki said there is no circumstance in which she could see Biden firing Fauci.”Dr. Fauci is a renowned career civil servant. He’s overseen management of multiple global health crises, and attacks launched on him are certainly something we wouldn’t stand by,” she said.Republican lawmakers have been combing over thousands of Fauci’s emails – first obtained by BuzzFeed and The Washington Post via requests through the Freedom of Information Act – for any missteps or inconsistencies from Biden’s medical adviser during the early months of the pandemic. In addition to serving a key role in the coronavirus response in the Donald Trump and Biden administrations, Fauci has been the director of the National Institute of Allergy and Infectious Diseases (NAID) for nearly four decades. During the height of the pandemic, polls consistently showed that the public viewed Fauci positively and trusted his guidance. He also won praise from many celebrities and made the rounds on late-night talk shows and other popular programs.
What If the “Big Lie” Is the Big Lie? – Kunstler – Maybe now that Dr. Tony Fauci has begun to spill the beans on his doings in service to the Wuhan virology lab, the phrase “conspiracy theory,” flogged by the media as jauntily and incessantly as by the soviet kommissars of yore, will have worn out its welcome.In a sane polity, Dr. Fauci would be cooked. He looks circumstantially like an epic villain of history, who promoted and funded dangerous research activities knowingly, which led to an international disaster that killed millions of people and destroyed countless livelihoods and households, perhaps even the whole global economy, when all is said and done – and he appears to have lied at every step along the way.As a practical matter, what is the “Joe Biden” admin going to do about him? Throw him under the bus? I don’t think they can at this point. Dr. Fauci has come to represent not just the falsehoods employed around the Covid-19 fiasco but more generally the long campaign against truth itself by a grossly illiberal Jacobin Democratic Party seemingly out to punish and destroy Western Civ.Whether the Covid-19 pandemic was an overt tactic in that campaign, or just the result of Dr. Fauci’s catastrophic bad judgment, remains to be revealed. But at least half the country will conclude that there’s some connection between the terrible losses suffered in the pandemic year and the political bullshit they were force-fed in the four-year effort to defenestrate Donald Trump. All Joe Biden’s handlers can do now is fade Dr. Fauci out, keep him off the cable channels, and hope the public can be distracted with some new nonsense. You also have good reason to doubt that Merrick Garland will do anything but look the other way and whistle.
Fauci and Biden administration asking China for medical records of sick lab workers and miners -Dr. Anthony Fauci and members of the Biden administration are asking China to release medical records of lab workers and miners who fell ill prior to the coronavirus outbreak, as they may provide clues about the origins of the virus, according to reports.”I have always felt that the overwhelming likelihood – given the experience we have had with SARS, MERS, Ebola, HIV, bird flu, the swine flu pandemic of 2009 – was that the virus jumped species,” Fauci told the Financial Times. “But we need to keep on investigating until a possibility is proven.”The medical records in question are from three researchers at the Wuhan Institute of Virology who reportedly fell ill in November 2019 and six miners who got sick after entering a bat cave in 2012. Two of the miners died.Scientists from the Wuhan Institute of Virology later visited the cave to collect samples from the bats.”It is entirely conceivable that the origins of SARS-CoV-2 was in that cave and either started spreading naturally or went through the lab,” Fauci said.President Biden’s chief medical adviser called on China to release the medical records, according to the Financial Times report. China’s foreign ministry declined to say whether it would consider releasing the records at a press briefing on Friday.Biden last week ordered U.S. intelligence to come to a conclusion within 90 days about what started the pandemic. Speculation about a lab leak has ramped up in recent weeks, but public health professionals have said it is highly unlikely.Last month, the World Health Organization released a report in which it stated a lab leak, “was considered to be an extremely unlikely pathway.”Fauci has said several times he believes coronavirus was first transmitted to humans via animals.
Facing his July 4 vaccination deadline, Biden touts a major campaign, including free child care through big providers. – President Biden, facing a self-imposed July 4 deadline to have 70 percent of U.S. adults at least partly vaccinated against the coronavirus, tried Wednesday to rally the nation to meet that goal, announcing an offer of free child care for parents and caregivers while they receive their shots and a national canvassing effort resembling a get-out-the-vote drive.Declaring June a “National Month of Action,” Mr. Biden appeared at the White House to implore Americans not only to get vaccinated, but also to help persuade their friends and neighbors to do so.He laid out an aggressive campaign that will include incentives from sports leagues, like free tickets to the Super Bowl and to Major League Baseball games, and from private companies. United Airlines is offering a year of free flights in a sweepstakes open only to vaccinated Americans, and Anheuser-Busch has promised free beer to adults on Independence Day if the nation meets the president’s goal. “That’s right, get a shot and have a beer,” Mr. Biden declared. “Free beer for everyone 21 years and over to celebrate the independence from the virus.”
Bank of America fixes ordered after hacked customers ‘go hungry’ – Bank of America was ordered by a judge to change its practices after thousands of unemployed California customers receiving public benefits complained that when their prepaid debit cards were hacked, the bank made matters worse by treating them like criminals. In response to allegations to that the bank was refusing to investigate account holder claims and in some cases freezing accounts that weren’t affected by fraud, U.S. District Judge Vince Chhabria on Tuesday directed the bank to take several steps to improve its processes. The reforms were finalized in an agreement between the bank and lawyers for the customers who sued in January.”As California’s unemployment program faced billions of dollars in fraud, Bank of America’s No. 1 goal always has been to ensure legitimate recipients could access their benefits,” the bank said in a statement. “With this agreement, we are committing to additional measures to help those entitled to unemployment benefits receive those benefits as quickly as possible.” The San Francisco-based judge concluded last month that the account holders suffered “irreparable harm” after Bank of America used a faulty screening process to freeze accounts needed to “feed their families and keep a roof over their heads” through the pandemic. “Just as companies can establish irreparable harm by showing that losing money will likely cause them to shut down, human beings can establish irreparable harm by showing that losing wages or benefits will likely cause them to be evicted, go hungry, or be denied necessary medical care,” Chhabria wrote in May. Lawyers representing the account holders said in an emailed statement that the case will move forward with pre-trial information sharing, and that they’ll seek an order requiring the bank to make permanent changes to its practices as well as monetary damages. The case is Yick v. Bank of America, 21-cv-00376, U.S. District Court, Northern District of California (San Francisco).
Deutsche Bank Orders Bankers Back To The Office After Labor Day – JP Morgan and Goldman Sachs were the first megabanks to recall their employees to the office (most of their full-time white-collar staff started back at the office a few weeks ago, though most are still working on a rotation). And although their European rivals have been much slower to follow suit, it appears Deutsche Bank, which employs 1,500 investment bankers in the US (mostly in NYC), has finally put its workers on notice. According to an internal memo cited by the FT, Drew Goldman, Deutsche’s head of investment banking coverage and advisory, and James Davies, the head of US investment banking, have informed staff that all of the bank’s American teams should aim to resume working in the office no later than the Labor Day holiday on Sept. 6.“If you are currently working remotely, please begin to plan accordingly with your team and manager to re-establish a presence in the office before or by that date,” Goldman and Davies wrote in the memo seen by the Financial Times.Still, as the FT points out, Deutsche’s timetable is closer to the “gradual” approach favored by European banks than the accelerated approach favored by Wall Street. HSBC and SocGen are following a similar path.That American banks are returning to the office more quickly than their European peers isn’t exactly a surprise. The US vaccination rate has far outpaced that of the EU.Fortunately for DB’s back-office bankers, the memo outlines which type of employees will be required back at the office five days a week, and which will still be able to enjoy “a greater degree of freedom.”So-called risk takers that invest the bank’s capital will probably return to Deutsche’s offices full-time, whereas “client-facing” staff will be permitted to work remotely about one day a week. Support staff also will be allowed to work remotely sometimes.
How Fed aims to help banks spot synthetic identity fraud – The Federal Reserve has embarked on a multipronged effort to alert financial institutions about the threat of synthetic identity fraud, which has already cost lenders an estimated $6 billion in losses and drained resources from the Paycheck Protection Program. Some analysts say fraud committed by creating fake personas is now the fastest-growing crime in the U.S. However, defining and identifying synthetic identity fraud has proved challenging for risk managers and law enforcement that historically have been more focused on stopping fraud from more traditional identity theft. After publishing three white papers on the topic, the Fed in September launched a focus group of 12 industry experts to agree on a standard definition for synthetic identity fraud. In April, the group defined it as the use of a combination of personally identifiable information to fabricate a person or entity in order to commit a dishonest act for personal or financial gain. The idea is to focus bankers’ efforts on flagging instances of fraud that are distinct from the more garden-variety instances of when a person steals another’s identity. One common approach by synthetic fraudsters is to create a fake persona with a made-up name and address that are combined with someone’s actual social security number, often stolen through a data breach. “It’s a fantastic first step,” Greg Woolf, a member of the working group and CEO of the fraud detection software provider FiVerity, said of the standardized effort to define synthetic identity fraud. “The definition is a start, and as this unfolds, the Fed is looking to educate the market and implement this in a way that will help the financial industry.” Growth in criminals committing synthetic identity fraud began to catch the attention of Fed officials in 2018, said Jim Cunha, senior vice president for secure payments at the Federal Reserve Bank of Boston. “Synthetic identity came in as something that appeared to be growing dramatically,” he said. “We felt like this was an area where the Fed, as a leader catalyst, could provide value.” Although there is scant and varying data on synthetic identity fraud, the associated losses for banks are generally expected to climb. Aite Group has estimated that by 2023, synthetic identity fraud could account for $2.42 billion in unsecured credit losses, up from approximately $1.63 billion in 2019. Officials said part of the Fed’s aim is to highlight the risk of fraudsters creating fake businesses, instead of just fake individuals, that then try to apply for credit. “Our definition is sort of precise, in that it talks about personally identifiable information, and it talks about an individual and an entity,” said Mike Timoney, vice president of secure payments at the Boston Fed. “Most of what we saw in original definitions was really focused around an identity, but it really didn’t take into the side that it could be a business or an entity that actually has a fake identity as well.”
Why more banks are weaning themselves off overdraft fees –For several decades, U.S. banks reaped huge revenues from fees charged to customers who spent money they didn’t have, while also enduring a consumer backlash that tarnished their reputations. Now the calculus is changing at a growing number of large and mid-sized banks. These firms are reducing or eliminating their reliance on overdraft fees at a time when regulatory scrutiny seems likely to increase, and as competition from lower-cost alternatives is on the rise. The latest moves are by Ally Financial and Huntington Bancshares. Ally’s online-only bank announced Wednesday that it will permanently stop charging overdraft fees. One day earlier, Columbus, Ohio-based Huntington launched a line of credit for emergency expenses that figures to erode its overdraft fee revenue. Those banks joined PNC Financial Services Group and Cullen/Frost Bankers, both of which announced changes earlier this year that are expected to reduce their haul from overdraft fees. The moves reflect a greater focus at banks on the financial health of customers. “Industry is sending a clear message: it is time to move on from overdraft,” said Aaron Klein, a senior fellow in economic studies at the Brookings Institution. While larger banks are getting out in front of what could be a more aggressive stance from Biden-era regulators, it could take time for smaller firms to move on, Klein said. “For those smaller banks and maybe a few credit unions that are so intertwined in overdraft, it would be difficult for them to let the product go and still survive. It will be quite a difficult transition,” he said. Ally’s decision to ditch overdraft fees permanently grew partly out of customer feedback that the company received during the COVID-19 pandemic, said Diane Morais, president of consumer and commercial banking at Ally Bank. In March 2020, as businesses were shuttered, Ally waived overdraft fees for 120 days. “These are things we did last year that we learned a lot from,” Morais said in an interview. Ally Bank, which has a large online savings franchise, collected $5 million in overdraft fees for all of last year, according to regulatory filings. That is a far smaller percentage of its deposit base than is the case at many other banks. While the fees have not been a major revenue source for Ally, Morais noted the stress that overdraft charges can put on households. Black and Hispanic customers, in particular, have been impacted extensively by the practice, she said. Research by the nonprofit Financial Health Network found that roughly 56% of the estimated $12.4 billion in overdraft fee revenue collected by banks last year came from households that were classified as “vulnerable,” meaning that they struggle in almost all areas of their financial lives. Another 40% of the revenue came from “coping” households, which struggle with some aspects of their finances. While 35% of U.S. households were classified as “healthy,” they only accounted for about 4% of overdraft fee revenue.
GOP senator wants to cut deal on GSE reform. Will Democrats listen-– – More than a decade after Fannie Mae and Freddie Mac were placed under government control, another senior lawmaker has come forward willing to craft a bipartisan deal on housing finance reform. Yet once again, legislative progress may be elusive. Sen. Pat Toomey of Pennsylvania, the top Republican on the Banking Committee, has adopted an optimistic tone on reforming the government-sponsored enterprises. He has remarked at recent industry conferences and hearings that he thinks the two parties aren’t that far apart, and released GSE reform principles in March that echo ideas supported by Democrats. But many say Toomey may be an outlier in his focus on GSE reform and that Democratic leadership in the House and Senate appear to be focused on other things. Whereas Democrats had gotten behind reform frameworks in the years following the financial crisis, today they sound less interested in changing the status quo. “The reality is [Democrats] have other housing priorities that they consider more important” than GSE reform, said a financial services lobbyist who spoke on the condition of anonymity. Some said Democrats might have been motivated to focus on a comprehensive GSE overhaul had the Trump administration made more progress on its plan to release Fannie and Freddie from their government conservatorships. The Supreme Court is expected to rule soon in a case deciding whether President Biden can fire Federal Housing Finance Director Mark Calabria, who was appointed by then-President Donald Trump. “If you’ve got Calabria in place, then maybe the need for legislative GSE reform from a Democratic perspective is more pressing,” said Jim Parrott, a fellow at the Urban Institute. “But if you’ve got a progressive FHFA director in place, then I think you’re going to want to give them some time to figure out what a progressive FHFA and thus a progressive GSE channel looks like.” As the economy recovers from the coronavirus pandemic, Senate Banking Committee Chairman Sherrod Brown of Ohio and House Financial Services Committee Chairwoman Maxine Waters of California have advocated for expanding access to affordable housing. Issues like emergency rental assistance and a broader infrastructure plan “are clearly much higher on their housing priority list than GSE reform,” the lobbyist said. Former Rep. Jeb Hensarling, R-Texas, who chaired the House Financial Services Committee from 2013 until 2019, said at a Mortgage Bankers Association conference in May that he wouldn’t expect any changes to the conservatorships of the GSEs with Brown at Waters atop the banking committees in the Senate and House.
MBA Survey: “Share of Mortgage Loans in Forbearance Slightly Decreases to 4.18%” –Note: This is as of May 23rd. From the MBA: Share of Mortgage Loans in Forbearance Slightly Decreases to 4.18%: The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 1 basis point from 4.19% of servicers’ portfolio volume in the prior week to 4.18% as of May 23, 2021. According to MBA’s estimate, 2.1 million homeowners are in forbearance plans.The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 2.19%. Ginnie Mae loans in forbearance decreased 4 basis points to 5.55%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 11 basis points to 8.37%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 2 basis points to 4.36%, and the percentage of loans in forbearance for depository servicers declined 1 basis point to 4.34%.”The share of loans in forbearance slightly declined, dropping by only 1 basis point, due to a slower pace of forbearance exits. This was the 13th straight week of declines,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Forbearance re-entries increased to almost 5.6 percent, as more homeowners who had canceled forbearance needed assistance again. There was also an increase in the share of PLS and portfolio loans in forbearance, while the share for Fannie Mae, Freddie Mac, and Ginnie Mae loans decreased.”, “Housing market data continue to paint a picture of strong demand and constrained supply. The resulting rapid growth in home equity will benefit homeowners, whether they choose to retain or sell their properties.” 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 2020, and has trended down since then. The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.05%.”
CoreLogic: House Prices up 13% Year-over-year in April – The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: Multi-Generational Demand: US Home Prices Post Third Month of Double-Digit Growth in April, CoreLogic Reports CoreLogic … released the CoreLogic Home Price Index (HPI) and HPI Forecast for April 2021. Sparse inventory and high demand continues to place upward pressure on home prices, creating challenges across generations as buyer preferences shift. Younger millennials continue to enter the market in droves while older millennials look to upgrade and upsize their homes. In a recent CoreLogic consumer survey, the need for more space was noted as the top driver (64%) for demand among these cohorts. The increased competition among buyers may cause a ripple effect and create affordability challenges for baby boomers interested in downsizing or relocating. Notably, 72% of this cohort list the desire for a new location as the main reason for wanting to purchase a new home. However, in response to rising prices, baby boomers – who own 54% of the nation’s homes – may wait to sell, creating further inventory pressures for older millennials seeking move up-purchases. “As older homeowners become more comfortable with listing their homes, they are faced with the reality that if they sell, they may get a smaller home for the same price as what they already have,” said Frank Martell, president and CEO of CoreLogic. “Rather than decreasing their financial burden and cashing out equity to support their retirement, baby boomers may choose to stay put – which could exacerbate inventory challenges.” … Nationally, home prices increased 13% in April 2021, compared with April 2020. On a month-over-month basis, home prices increased by 2.1% compared to March 2021. At the state level, Idaho and Arizona continued to have the strongest price growth at 27.2% and 20.4%, respectively. South Dakota also had a 19.3% year-over-year increase as new home buyers seek out more affordable options, space and low property taxes.
The Atlantic: “Why You Should Wait Out the Wild Housing Market” – McBride – I’m quoted several times in this article from Derek Thompson at the Atlantic: Why You Should Wait Out the Wild Housing Market “In my time studying housing markets, I’ve seen bubbles and I’ve seen busts,” says Bill McBride, an economics writer who famously predicted the 2007 housing crash. “But I’ve never seen anything quite like this. It’s a perfect storm.” … “It’s not clear at all to me that things are going to slow down significantly in the near future,” he said. “In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.” In the article, I suggested waiting … but I’d like to add, if you do buy now, be careful about location (like near a busy street) because that can’t be fixed. Also bad layouts are difficult and expensive to fix. Defective homes will make you unhappy, and they are also hard to sell in a normal market (you might have to wait for the next boom). Hot markets are when the defective homes (bad location, bad layout, etc.) are sold. Don’t buy one of those!
Construction Spending increased 0.2% in April -From the Census Bureau reported that overall construction spending increased: Construction spending during April 2021 was estimated at a seasonally adjusted annual rate of $1,524.2 billion, 0.2 percent above the revised March estimate of $1,521.0 billion. The April figure is 9.8 percent above the April 2020 estimate of $1,387.9 billion. Private spending increased and public spending decreased:Spending on private construction was at a seasonally adjusted annual rate of $1,180.7 billion, 0.4 percent above the revised March estimate of $1,175.4 billion. … In April, the estimated seasonally adjusted annual rate of public construction spending was $343.5 billion, 0.6 percent below the revised March estimate of $345.6 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Residential spending is 7% above the bubble peak (in nominal terms – not adjusted for inflation). Non-residential spending is 9% above the previous peak in January 2008 (nominal dollars), but has been weak recently. Public construction spending is 6% above the previous peak in March 2009, and 31% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 29.7%. Non-residential spending is down 4.8% year-over-year. Public spending is down 2.2% year-over-year. Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential will be under pressure. For example, lodging is down 21.8% YoY, multi-retail down 28.4% YoY, and office down 1.6% YoY. This was below consensus expectations of a 0.6% increase in spending, however construction spending for the previous two months combined, was revised up slightly.
Update: Framing Lumber Prices Down from Recent Peak, Up Sharply Year-over-year Here is another monthly update on framing lumber prices. This graph shows CME framing futures through June 1st. Lumber price are up 240% year-over-year.There are supply constraints, for example, sawmills cut production and inventory at the beginning of the pandemic, and the West Coast fires in 2020 damaged privately-owned timberland. And there has been a huge surge in demand for lumber. Note that the tariffs on Canadian lumber were reduced late last year from 20% to 9%, but last week, the Commerce Department released a preliminary report that might lead to raising the tariffs again.
SoftBank-Funded Silicon Valley Unicorn Katerra, Which Was to “Transform” the Construction Industry, Collapses –“Incremental progress isn’t enough – we are pursuing transformational change on a massive scale,” says the LinkedIn profile of Katerra, a six-year-old Silicon Valley unicorn startup. “Katerra exists to help transform construction through technology – every process and every product,” it says. It had received about $2.2 billion in funding, largely from SoftBank’s Vision Fund, to disrupt the commercial construction industry “through technology,” as it says.But it’s shutting down and will lay off the remaining employees – it once had as many as 8,500 employees before the layoffs started – and abandon numerous construction projects that it had agreed to build, according to sources cited by The Information.The executive that informed employees on June 1 in a video call of the shutdown and layoffs told them that the company didn’t have enough cash for severance packages or unused paid time off. The executive blamed the out-of-money moment on the effects of the Pandemic and the rising costs of labor and construction materials, according to The Information.Katerra was in the business of modular commercial construction – apartment buildings, office buildings, and other commercial buildings, with the goal of “transforming construction through innovation of process and technology,” as it still says on its website.This type of big commercial building is where modular construction is the most promising, but with enormous pitfalls.So it says that its “Katerra Building Platforms take the risk out of construction by applying the principles of repeatable manufacturing to entire buildings. Katerra buildings are made from manufactured assemblies and components; including wall and floor panels, casework, bathroom and kitchen kits, and more,” it says. But the risks are not at all taken out.Michael Marks, Katerra’s co-founder and CEO was fired in May 2020. Paal Kibsgaard, former CEO of Schlumberger, and the COO of Katerra at the time, was named the new CEO. He stepped down in May 2021. And Katerra is currently being run by folks from the consulting firm Alvarez & Marsal, according to The Information. This is the second major SoftBank backed company to collapse this year before reaching the IPO window; the first being Greensill, the supply-chain finance giant that collapsed and filed for insolvency in March. Its German bank was taken over by banking regulators, amid allegations of missing funds.
Hotels: Occupancy Rate Down 4% 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. So STR is comparing to the same week in 2019. The occupancy rate is down 4.2% compared to the same week in 2019 (skewed by timing of Memorial Day), but the 4-week average is still down significantly compared to normal.From CoStar: STR: US Weekly Hotel Occupancy Reaches Highest Level Since Late-February 2020: Boosted by the Friday and Saturday of Memorial Day weekend, U.S. weekly hotel occupancy reached its highest level since late-February 2020, according to STR’s latest data through 29 May.
23-29 May 2021 (percentage change from comparable week in 2019*):
Occupancy: 61.8% (-4.2%)
Average daily rate (ADR): US$122.06 (-1.6%)
Revenue per available room (RevPAR): US$75.42 (-5.7%)
Percentage changes were skewed more to the positive because the 2019 comparable was the week after Memorial Day. Regardless, this past Saturday’s 83.0% occupancy level was the country’s highest since October 2019. Weekly ADR and RevPAR were boosted to pandemic-era highs as well. STR analysts note that while the positives around leisure demand are obvious headed into the summer, the path to recovery remains a rollercoaster with a lack of business travel, both domestic and international, preventing hotels in many markets from making up more of the ground lost in 2020.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, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020). Occupancy is now above the horrible 2009 levels and weekend occupancy (leisure) has leisure has been solid.
Inflation rises to 13-year high in US — The personal consumption expenditure (PCE) index, a primary measure of the cost of living in the United States, rose 3.6 percent in April, the highest rise in 13 years, according to a report released by the Commerce Department last week. The increase in the index, which was larger than economists had expected, underscores a global problem of rising costs, especially for consumer staple goods and basic components of such products. The impact is disproportionately borne by working people. The cost of living in the United States, as in most countries around the world, is on a steep upward curve. To give some examples:
- Meat prices rose by 1.5 percent just in April and have risen 4 percent this year, driven by price increases for animal feed grains like soybeans and corn.
- Lumber costs have risen by 300-400 percent over the last year, driven by disruptions and mismatches in the supply chain due to COVID-19.
- Used car prices jumped 10 percent in April and are up by 21 percent since a year ago. The average cost of a used car broke $25,000 for the first time in the US.
- In the last year, fuel prices have increased by over 50 percent, going from a national average of about $2.00 to $3.00.
- Fruits and vegetables were up 3.3 percent in April compared to the same month in 2020. Food prices as a whole were up 2.4 percent.
- Electricity prices were 3.6 percent higher compared to the same period last year, jumping 1.2 percent in April from the previous month.
- Less-densely populated areas in the interior of the United States have seen surging home prices, as residents from larger, often coastal, cities move. Boise, Idaho, for example, has seen a 32 percent increase in home prices over the last year.
Another major US index, the consumer price index (CPI), increased even more than the PCE, rising by 4.2 percent in April. The CPI puts more weight on costs workers bear out of pocket, such as housing, utilities, consumer goods and insurance payments. The PCE is a more abstract measure of inflation in the economy, including the cost of services not necessarily directly impacting most consumers.
The great private jet shortage? –As we have written about a couple of times recently, used cars are currently mooning because of a combination of pent-up demand and supply-chain disruption.And it turns out that automobiles aren’t the only used vehicles that are in short supply: the number of second-hard private jets for sale is also at an all-time low. According to the International Aircraft Dealers Association (IADA), just 1,130 – about 5 per cent of the world’s fleet – of private jets are currently for sale. That’s less than half of what is normally available, we’re told, and compares with about 17 per cent during the financial crisis. And when it comes to the less rusty ones – which we imagine the ESG set who use them to fly between climate change conferences would prefer due to considerations for their own lives – the shortage is even more acute. According to research from AMSTAT, a company that provides data on business aircraft in the US, “of 252 large, long-range jets currently for sale, just 20 of these are less than five years old”.With so few jets available in the US, potential buyers are having to look to Asia for possible jets. As Chad Anderson, president at Jetcraft – another private jet market research firm – sombrely puts it:It is no longer a case of picking the best from the litter but taking opportunities when you find them.Gosh. The heart really does bleed doesn’t it?And not only are buyers (or their staff, to be more precise) having to look for jets in different continents, but the current buying process seems to have about as much dignity as a late-night eBay bidding war. Anderson tells us: Private jets are selling within hours of being listed. Buyers have to act very quickly, they can’t hesitate.Now of course you might be asking why billionaires can’t just buy new private jets, but there is a shortage of those too. Manufacturers are accelerating production but apparently it will take six to nine months to speed up the supply chain. Until then, buyers have to look at older models. It’s not just the supply chain that’s limiting the number of jets on sale either. It turns out that cryptoland is not the only place in which people HODL. Anderson tells us that some clients are holding on to their aircraft in case prices rise further. But what’s driving the higher demand? Well it turns out that private jets provide quite a good way of making sure you’re not breathing in, say, a scary virus. Anderson says the number of first-time buyers has doubled over the past year.The pandemic has raised awareness of the flexibility, security and degree of control that flying privately provides. Owning your own business jet means you can reduce your ‘touch points’ at the airport significantly, protecting your family and work ‘bubble’. Flying privately also offers you the ability to reach your destination much more easily while airline schedules are still disrupted. Just when you thought the pandemic had been good for climate change action . . .
May Vehicles Sales decreased to 16.99 Million SAAR – The BEA released their estimate of light vehicle sales for May this morning. The BEA estimates sales of 16.99 million SAAR in May 2021 (Seasonally Adjusted Annual Rate), down 9.5% from the April sales rate, and up 40% from May 2020. This was below the consensus estimate of 18.0 million SAAR. This graph shows light vehicle sales since 2006 from the BEA (blue) and the BEA’s estimate for May (red).The impact of COVID-19 was significant, and April 2020 was the worst month.Since April 2020, sales have increased, and are now close to sales in 2019 (the year before the pandemic). Sales-to-date are up 1.5% compared to the same period in 2019. The second graph shows light vehicle sales since the BEA started keeping data in 1967. Note: dashed line is current estimated sales rate of 16.99 million SAAR.Sales in May were likely impacted by supply issues.
AAR: May Rail Carloads down, Intermodal Up Compared to 2019 –From the Association of American Railroads (AAR) Rail Time Indicators. U.S. rail volumes in May 2021 were encouraging. Total originated carloads averaged 241,089 per week, the most since October 2019 and up 30.4% over May 2020…Meanwhile, intermodal averaged 287,956 originated containers and trailers per week in May 2021. That’s down a bit from April – when the weekly average of 293,488 set a new all-time record – but it’s still the seventh most for any month in history and by far the most ever for May.This graph from the Rail Time Indicators report shows the six week average of U.S. Carloads in 2019, 2020 and 2021: In May 2021, total U.S. rail carloads averaged 241,089 per week – up 30.4% over May 2020 and the most for any month since October 2019….Carloads excluding coal were up 26.6% in May 2021 over May 2020 and down 1.2% from May 2019.The second graph shows the six week average of U.S. intermodal in 2019, 2020 and 2021: (using intermodal or shipping containers):For intermodal, volumes in May 2021 were up 26.2% over May 2020, averaging 287,956 containers and trailers per week. That’s down a bit from April 2021 – when the weekly average of 293,488 set a new all-time monthly record – but it’s still the seventh most for any month in history and by far the most ever for May.
Cover Story: How a perfect storm created a global chip shortage – A chip shortage that has squeezed global automakers since late last year offered a snapshot of how the Covid-19 pandemic and geopolitical uncertainties have distorted supply chains in the highly globalized semiconductor industry.The question is: Will it lead to a reshaping of the industry’s global landscape? It’s a multibillion-dollar question involving massive investment flows and potentially sweeping economic and geopolitical consequences. As technology has advanced, semiconductors have come to dominate not only the auto industry but also almost every part of consumer goods manufacturing as the tiny electronic devices supply the brains for products ranging from computers to mobile phones to toothbrushes.
ISM Manufacturing index Increased to 61.2% in May — The ISM manufacturing index indicated expansion in May. The PMI was at 61.2% in May, up from 60.7% in April. The employment index was at 50.9%, down from 55.1% last month, and the new orders index was at 67.0%, up from 64.3%. From ISM: May 2021 Manufacturing ISM Report On Business: “The May Manufacturing PMI registered 61.2 percent, an increase of 0.5 percentage point from the April reading of 60.7 percent. This figure indicates expansion in the overall economy for the 12th month in a row after contraction in April 2020. The New Orders Index registered 67 percent, increasing 2.7 percentage points from the April reading of 64.3 percent. The Production Index registered 58.5 percent, a decrease of 4 percentage points compared to the April reading of 62.5 percent. The Backlog of Orders Index registered 70.6 percent, 2.4 percentage points higher compared to the April reading of 68.2 percent. The Employment Index registered 50.9 percent; 4.2 percentage points lower than the April reading of 55.1 percent. The Supplier Deliveries Index registered 78.8 percent, up 3.8 percentage points from the April figure of 75 percent. The Inventories Index registered 50.8 percent, 4.3 percentage points higher than the April reading of 46.5 percent. The Prices Index registered 88 percent, down 1.6 percentage points compared to the April reading of 89.6 percent. The New Export Orders Index registered 55.4 percent, an increase of 0.5 percentage point compared to the April reading of 54.9 percent. The Imports Index registered 54 percent, a 1.8-percentage point increase from the April reading of 52.2 percent.” This was close to expectations. This suggests manufacturing expanded at a slightly faster pace in May than in April.
May Markit Manufacturing: Survey Record in Orders, Supply Chain Still Affected -The May US Manufacturing Purchasing Managers’ Index conducted by Markit came in at 62.1, up 0.5 from the 60.5 final April figure.Here is an excerpt from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release:“US manufacturers are enjoying a bumpe r second quarter, with the PMI hitting a new high for the second month running in May. Inflows of new orders are surging at a rate unsurpassed in 14 years of survey history, buoyed by reviving domestic demand and record export sales as economies reopen from COVID-19 restrictions. However, elevated levels of other survey indicators are less welcome: prices charged by manufacturers are also rising at an unprecedented rate, linked to soaring input costs and unparalleled capacity constraints.“Not only is operating capacity being curbed by record supply chain delays so far in the second quarter, but firms have also been increasingly unable to hire sufficient staff. Hence backlogs of work are building up at an unprecedented rate, as firms struggle to meet demand.“These backlogs of orders should support further production growth in the next few months, adding to signs of impressive economic expansion over the summer. But manufacturers’ expectations further ahead have moderated, hinting that the growth rate is peaking, linked to worries about capacity limits being reached, rising prices hitting demand and a peaking of stimulus measures.” [Press Release]Here is a snapshot of the series since mid-2012.
May manufacturing continues white hot; April construction spending shows signs of being constrained by materials and costs –It’s the first of the month, which means we get our first look at May data in the form of the ISM manufacturing index, as well as April construction spending. The questions we are looking for information to answer from these two leading sectors of the economy, manufacturing and residential construction, are: (1) is the Boom still ongoing, and is it likely to continue in the coming few months; and (2) is there evidence that inflation is creating a bottleneck on growth?The answers for the two sectors appear to be different.First, the May ISM manufacturing index increased slightly from 60.7 to 61.2. The new orders component of the index, which is the most leading, increased even more, up 2.7 from 64.3 to 67.0, very close to its December and March highs: The boom in manufacturing is continuing, with no evidence of a slowdown in the near future.Residential construction spending is not quite as leading as new home sales or permits, but it has the virtue of having very little noise and almost all signal. But there is a quandary, because for the first time in 20 years, the direction of this indicator differs sharply depending on whether or not one factors in the prices of construction materials.The below graph shows residential construction spending unadjusted for inflation (red), which made another all-time high in April; compared with the same but adjusted for the cost of building materials (blue), which has turned down by 11.5% since December (red); and single family permits (gold), which have turned down by 9.5% since January: This looks like a bottleneck putting the brakes on growth. Spending is growing, but only because the price of materials has gone up sharply. That the downturn in construction permits and spending adjusted for the cost of materials occurred nearly simultaneously and by similar percentages looks like it is the cost of materials which is decisive – I.e., costs – due to shortages in materials – are driving the numbers.
May Dallas Fed Manufacturing – This morning the Dallas Fed released its Texas Manufacturing Outlook Survey for May. The latest general business activity index came in at 34.9, down 2.4 from 37.3 in April. All figures are seasonally adjusted.Here is an excerpt from the latest report:Texas factory activity expanded but at a slower pace in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 18 points to 15.7, a reading still well above average and indicative of healthy output growth. Other measures of manufacturing activity also pointed to slower but still-solid growth this month.Expectations regarding future manufacturing activity remained highly positive in May. The future production index held steady at 47.6, and the future general business activity index slipped five points to 31.4. Other measures of future manufacturing activity showed mixed movements, but all remained solidly in positive territory.Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator.
May Regional Fed Manufacturing Overview – Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country’s GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. The latest average of the five for May is 27, down from the previous month.
Chicago PMI Up Again in May, Highest Since 1973 — The Chicago Business Barometer, also known as the Chicago Purchasing Manager’s Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity. The latest Chicago Purchasing Manager’s Index, or the Chicago Business Barometer, jumped to 75.2 in May from 72.1 in April, which is in expansion territory and its highest since 1973. Values above 50.0 indicate expanding manufacturing activity. Here is an excerpt from the press release:The Chicago Business BarometerTM, produced with MNI, jumped to 75.2 in May, the highest level since November 1973. Demand provided a boost to business activity, but supply chain constraints remain. Among the main five indicators, New Orders and Order Backlogs saw the largest gains, while Employment recorded the only decline [Source] Let’s take a look at the Chicago PMI since its inception.
ISM Services Index Increased to Record High 64.0% in May – The May ISM Services index was at 64.0%, up from 62.7% last month. The employment index decreased to 55.3%, from 58.8%. Note: Above 50 indicates expansion, below 50 contraction.From the Institute for Supply Management: May 2021 Services ISM Report On Business: “The Services PMI reached another all-time high in May, registering 64 percent, which is 1.3 percentage points higher than April’s reading of 62.7 percent. The previous record high was 63.7 percent in March. The May reading indicates the 12th straight month of growth for the services sector, which has expanded for all but two of the last 136 months.”The Supplier Deliveries Index registered 70.4 percent, up 4.3 percentage points from April’s reading of 66.1 percent. (Supplier Deliveries is the only ISM Report On Business index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Prices Index registered 80.6 percent, which is 3.8 percentage points higher than the April reading of 76.8 percent, indicating that prices increased in May, and at a faster rate. The last time the Prices Index was this elevated was when it registered 77.4 percent in July 2008; the all-time high is 83.5 percent in September 2005.”According to the Services PMI, all 18 services industries reported growth. The composite index indicated growth for the 12th consecutive month after a two-month contraction in April and May 2020. There was continued growth in the services sector in May. The rate of expansion is very strong, as businesses have reopened and production capacity has increased. However, some capacity constraints, material shortages, weather-related delays, and challenges in logistics and employment resources continue,” says Nieves. The employment index decreased to 55.3% from 58.8% in April.
March Markit Services PMI: “Business activity growth rate accelerates to record high in May” The May US Services Purchasing Managers’ Index conducted by Markit came in at 70.4 percent, up 5.7 from the final April estimate of 64.7 and a record high.Here is the opening from the latest press release:Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:“The US economic recovery shifted up a gear in May, with output of the combined manufacturing and service sectors surging past all prior peaks by an impressive margin. The strong correlation between the PMI and GDP means the economy looks set to enjoy rapid – potentially double-digit – growth in the second quarter.“Further robust expansions are indicated for the summer months, with an improving order book situation accompanied by elevated levels of business confidence and the further easing of virus restrictions both at home and abroad. But the survey’s price gauges have also climbed to unsurpassed levels, which will add to inflation worries. These unprecedented output and price growth rates will inevitably lead to speculation about an earlier than previously expected tapering of Fed policy.” [Press Release] Here is a snapshot of the series since mid-2012. Here is an overlay with the equivalent PMI survey conducted by the Institute for Supply Management, which they refer to as “Non-Manufacturing” (see our full article on this series here). Over its history, the ISM metric has been significantly the more volatile of the two.
Services Surveys Signal Stagflation As Firms Increasingly “Pass On Higher Costs To Clients” – Following the stagflationary signals from this week’s Manufacturing survey data, ISM and Markit were expected to show further gains in the Services sector even as the ‘hard’ data continues to serially disappoint, and both surveys significantly beat expectations, rising to new record highs…The data was, for once, in somewhat of an agreement – though Markit respondents are notably more excited than ISM’s…
- Markit US Manufacturing up in May to 62.1 – a record high
- Markit US Services up in May to 70.4 – a record high
- ISM US Manufacturing up in May to 61.2 – well below the March highs
- ISM US Services up in May to 64.0 – a record high
Markit notes that service providers stepped up their efforts to pass on higher costs to clients, with the pace of charge inflation quickening to the steepest in the survey’s history.Companies mentioned that greater costs were being progressively passed through to customers amid burgeoning demand.Stagflation fears persist as ISM notes that similar to the group’s manufacturing survey, the report showed elevated price pressures, growing order backlogs and softening in the pace of hiring.Limited availability of both materials and skilled workers risks tempering the pace of economic growth.The US Composite PMI posted 68.7 in May, up from 63.5 in April, to signal the steepest upturn in business activity since data collection began in October 2009.Once again, inflationary pressures intensified in May.The rate of cost inflation was unprecedented amid substantial supplier shortages and delays. As a result, firms sought to pass on greater costs to their clients, with the pace of charge inflation quickening to a new series high.US Composite PMI is leading the world…
Weekly Initial Unemployment Claims decrease to 385,000 -The DOL reported: In the week ending May 29, the advance figure for seasonally adjusted initial claims was 385,000, a decrease of 20,000 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 down by 1,000 from 406,000 to 405,000. The 4-week moving average was 428,000, a decrease of 30,500 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 down by 250 from 458,750 to 458,500. This does not include the 76,098 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 93,559 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 458,750.The previous week was revised down.Regular state continued claims increased to 3,771,000 (SA) from 3,602,000 (SA) the previous week.Note: There are an additional 6,368,301 receiving Pandemic Unemployment Assistance (PUA) that decreased from 6,515,657 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 5,293,842 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 5,191,642. Weekly claims were lower than the consensus forecast.
ADP: Private Employment increased 978,000 in May – – From ADP: Private sector employment increased by 978,000 jobs from April to May according to the May ADP National Employment ReportTM. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by the ADP Research Institute in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery,” said Nela Richardson, chief economist, ADP. “While goods producers grew at a steady pace, it is service providers that accounted for the lion’s share of the gains, far outpacing the monthly average in the last six months. Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the panemic and economy.” This was well above the consensus forecast of 650,000 for this report. The BLS report will be released Friday, and the consensus is for 650 thousand non-farm payroll jobs added in May. The ADP report has not been very useful in predicting the BLS report.
May Employment Report: 559 Thousand Jobs, 5.8% Unemployment Rate — From the BLS: Total nonfarm payroll employment rose by 559,000 in May, and the unemployment rate declined by 0.3 percentage point to 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance. . The change in total nonfarm payroll employment for March was revised up by 15,000, from +770,000 to +785,000, and the change for April was revised up by 12,000, from +266,000 to +278,000. With these revisions, employment in March and April combined is 27,000 higher than previously reported. The first graph shows the year-over-year change in total non-farm employment since 1968. In May, the year-over-year change was 11.900 million jobs. This was up significantly – since employment collapsed in April 2020. Total payrolls increased by 559 thousand in May. Private payrolls increased by 492 thousand. Payrolls for March and April were revised up 27 thousand, combined. The second graph shows the job losses from the start of the employment recession, in percentage terms. The current employment recession was by far the worst recession since WWII in percentage terms, but currently is not as severe as the worst of the “Great Recession”. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate decreased to 61.6% in May, from 61.7% in April. This is the percentage of the working age population in the labor force. The Employment-Population ratio increased to 58.0% from 57.9% (black line). The fourth graph shows the unemployment rate. The unemployment rate decreased in May to 5.8% from 6.1% in April. This was below consensus expectations, however March and April were revised up by 27,000 combined.
May jobs report: almost all positive, but not good enough — HEADLINES:
- 559,000 jobs added: 492,000 private sector plus 67,000 government. The alternate, and more volatile measure in the household report indicated a gain of 444,000 jobs, which factors into the unemployment and underemployment rates below.
- The total number of employed is still 7,629,000, or 5.0% below its pre-pandemic peak. At the rate jobs have grown this year, it will take another 12 months for employment to completely recover.
- U3 unemployment rate declined -0.3% to 5.8%, compared with the January 2020 low of 3.5%.
- U6 underemployment rate declined -0.2% to 10.2%, compared with the January 2020 low of 6.9%.
- Those on temporary layoff declined -291,000 to 1,823,000.
- Permanent job losers declined -295,000 to 3,234,000.
- March was revised upward by 15,000, while April was revised upward by 12,000, for a net gain of 27,000 jobs compared with previous reports.
- the average manufacturing workweek increased 0.1 hour to 40.5 hours. This is one of the 10 components of the LEI.
- Manufacturing jobs gained 23,000. Since the beginning of the pandemic, manufacturing has still lost -509,000, or 4.0% of the total.
- Construction jobs declined -20,000. Since the beginning of the pandemic, -225,000 construction jobs have been lost, or 2.9% of the total.
- Residential construction jobs, which are even more leading, rose by 4,400. Since the beginning of the pandemic, 32,400 jobs have been gained in this sector, or 3.9%.
- temporary jobs rose by 4,400. Since the beginning of the pandemic, there have still been -294,100 jobs lost, or 10.0% of all temporary jobs.
- the number of people unemployed for 5 weeks or less declined by -391,000 to 2,023,000, which is -59,000 *less* than just before the pandemic hit.
- Professional and business employment increased by 35,000, which is still -708,000, or about 3.3%, below its pre-pandemic peak.
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.14 to $25.60, which is a 2.4% YoY gain. This contrasts with the 5%+ YoY gains recently seen, and reflects the rehiring of low-wage workers in sectors like food and beverage serving.
- the index of aggregate hours worked for non-managerial workers rose by 0.2%, which is a loss of 4.3% since just before the pandemic.
- the index of aggregate payrolls for non-managerial workers rose by 0.7%, which is a gain of 2.2% since just before the pandemic.
- Leisure and hospitality jobs, which were the most hard-hit during the pandemic, increased 292,000, but is still -2,538,000, or 15.0% below its pre-pandemic peak.
- Within the leisure and hospitality sector, food and drink establishments gained 186,000, but is still -1,480,400, or 12.0% below its pre-pandemic peak.
- Full time jobs increased 223,000 in the household report.
- Part time jobs increased 178,000 in the household report.
- The number of job holders who were part time for economic reasons rose by 28,000 to 5,271,000, which is an increase of 873,000 since before the pandemic began.
SUMMARY: This was a very positive report, but still one which shows how far we still have to go. Negatives were almost non-existent, consisting of declines in nonresidential construction jobs and temporary jobs (but the latter may be temps transitioning to permanent employment). The more consistent theme, though, was that while there were gains, they weren’t nearly of the order we need for a quick recovery to pre-pandemic levels. Overall jobs are still 5% below where they were in February 2020, and the hard hit leisure and hospitality sector is 15% below its pre-pandemic peak! The upward revisions in March and April were tepid, confirming my suspicion that March may have been as much as or more of an outlier than April. This month’s number was close to the combined March and April average.Further, the YoY gains in hourly wages have been more than eaten up by inflation. As the stimulus payments wear off, I suspect we are going to see a faltering in sales, which would not be good.The brightest spot was the new low in short-term unemployment, which was even lower than before the pandemic, and among the 10 lowest months in the past 10 years. In essence, this report showed that there are very few new layoffs, but not enough new hires to keep the new expansion growing robustly.
May jobs report is a promising sign that the recovery is on track: Initial comments from EPI economists -EPI Blog -EPI economists offer their initial insights on the May jobs report below. While they see strong growth in employment, including in leisure and hospitality, the U.S. labor market is still facing a large jobs shortfall. Relief and recovery measures – including expanded unemployment benefits – should be sustained for workers and their families as the economy continues to recover. From senior economist, Elise Gould (@eliselgould): Read the full Twitter thread here.
- +559k jobs in May is slightly better than the average growth of the prior 3 months. If this pace continues over the next year, we will likely get down to 4% unemployment by mid-2022 and will be fully recovered before the end of 2022, fully absorbing losses plus population growth. – Elise Gould (@eliselgould) June 4, 2021
- The labor market is down 7.6 million jobs since February 2020, but the total jobs shortfall should take into account pre-pandemic labor market trends or at least growth in the working age population. When those are included, the jobs shortfall is in the range of 8.6-10.7 million.pic.twitter.com/njpUX7KGPx – Elise Gould (@eliselgould) June 4, 2021
From senior economist and director of policy, Heidi Shierholz (@hshierholz): Read the full Twitter thread here.
- The labor market added 559,000 jobs in May, very strong growth in line with expectations. The unemployment rate dropped to 5.8%, and most of that drop was for “good” reasons, people getting jobs. 1/ – Heidi Shierholz (@hshierholz) June 4, 2021
- Employment in leisure and hospitality (l&h) grew by 292,000. Over the last two months, l&h has added 620,000 jobs, roughly three-quarters of the economy-wide jobs added over that period. Folks this is just not signaling a massive labor supply shortage. 5/ – Heidi Shierholz (@hshierholz) June 4, 2021
Comments on May Employment Report – McBride – The headline jobs number in the April employment report was below expectations, however employment for the previous two months was revised up slightly. Leisure and hospitality gained 292 thousand jobs. In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 2.54 million jobs since February 2020. So leisure and hospitality has now added back almost 70% of the jobs lost in March and April 2020. Construction employment declined 20 thousand in May, and State and Local education added 103 thousand jobs. Manufacturing added 23 thousand jobs. Earlier: May Employment Report: 559 Thousand Jobs, 5.8% Unemployment Rate. In April, the year-over-year employment change was 11.900 million jobs. This turned positive in April due to the sharp jobs losses in April 2020. This graph shows permanent job losers as a percent of the pre-recession peak in employment through the May report. (ht Joe Weisenthal at Bloomberg). These jobs will likely be the hardest to recover. This data is only available back to 1994, so there is only data for three recessions. In May, the number of permanent job losers decreased to 3.234 million from 3.529 million in April. Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. The prime working age will be key in the recovery. The 25 to 54 participation rate was unchanged in May at 81.3% from 81.3% in April, and the 25 to 54 employment population ratio increased to 77.1% from 76.9% in April. Part Time for Economic Reasons The number of persons working part time for economic reasons increased slightly in May to 5.271 million from 5.243 million in April. These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 10.2% from 10.4% in April. This is down from the record high in April 22.9% for this measure since 1994. Unemployed over 26 Weeks This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 3.752 million workers who have been unemployed for more than 26 weeks and still want a job, down from 4.183 million in April. This does not include all the people that left the labor force. This will be a key measure to follow during the recovery. Summary: The headline monthly jobs number was below expectations, however the previous two months were revised up by 27,000 combined. The headline unemployment rate decreased to 5.8%, but the participation rate declined slightly. There are still 7.6 million fewer jobs than in February 2020, and 3.2 million people have lost jobs permanently.
Half of US states end enhanced pandemic unemployment benefits -Half of the states in the U.S., all led by Republican governors, have announced plans to cut off billions of dollars in federal unemployment benefits for residents, as the number of Americans who have been vaccinated continues to increase.The enhanced weekly checks were at one point hailed as a key part of the country’s response to the pandemic. As the vaccination effort in the U.S. progresses, however, the payments have become the focus of a political battle among lawmakers over how to propel the country out of the current economic decline.Maryland, led by GOP Gov. Larry Hogan, became the 25th state to announce an end to the weekly $300 COVID-19 unemployment benefits on Tuesday, according to Reuters.Hogan said that while the program provided “important temporary relief” during the pandemic, it is no longer needed because “vaccines and jobs … are in good supply,” according to Reuters.A chorus of GOP state leaders and business lobbying groups are now saying that the checks should come to an end because they are causing people to decline good jobs, which is leaving companies without the staff needed to reopen. The Biden administration, Democrats, workers, activists and a handful of economists however, disagree with that analysis. They say a chunk of the workforce remains unemployed because of a lack of child care, fear of infection and low wages.Additionally, White House officials are reportedly concerned that ending the benefits too quickly, before mass vaccination efforts are completed, could hurt workers and the economy, both of which are still recovering from the negative effects of the pandemic.When asked why the White House thinks there is currently a shortage of workers in the U.S., White House press secretary Jen Psaki on Wednesday said “it’s going to take time for workers to regain confidence in the safety of the workplace.”Alaska, Iowa, Mississippi and Missouri will stop sending benefits on June 12, according to Reuters. For the other 21 GOP-led states, checks will phase out through July 10.Reuters noted that while unemployed workers may still be entitled to regular state unemployment benefits, those guidelines vary.Approximately 2.8 million people were receiving pandemic benefits in the 25 states set to stop them as of May 8, according to Department of Labor records cited by Reuters.A new working paper from the Federal Reserve Bank of San Francisco published last month determined that the additional $300 in emergency unemployment benefits likely only has a small effect on recipients’ decision to take jobs. Last month, however, the U.S. Chamber of Commerce called for states to stop offering the weekly checks, after April’s below-expectations jobs report.
Crowds return to US stadiums, airports, in a series of super-spreader events – More than 135,000 people packed into the grandstands of the Indianapolis Motor Speedway Sunday, in the largest single crowd assembled in one place since the coronavirus pandemic began. Despite the false reassurances of the Biden administration and state governments, however, the crowds assembled at sporting events over the holiday weekend that traditionally marks the beginning of the American summer are likely to be so many superspreader events, triggering a further upsurge in the pandemic. In the grossest of symbolic gestures, Dr. Rochelle Walensky, director of the Centers for Disease Control and Prevention and former chief of infectious diseases at Massachusetts General Hospital, threw out the ceremonial first pitch at the game at Saturday’s baseball game in Fenway Park, Boston. The state has rescinded its mask mandate and Republican Governor Charlie Baker declared, “the great majority of the state-mandated COVID-19 restrictions that have shaped life in Massachusetts since last March will no longer be in effect starting Saturday.” The state ranks fourth, with 53.4 percent of the population fully vaccinated. Baker added, “Unless something very odd happens, I would say that it is pretty much over.” However, health officials are raising concerns that across many states, vaccinations are slowing drastically, and death and infection tolls remain unacceptably high in many states. Dr. Walensky, at the helm of the national public health agency, has been instrumental in rapidly navigating the country back to “normalcy,” all while the pandemic has continued to kill more than 500 people per day indiscriminately. In her usual attempt to talk out of both sides of her mouth, she told reporters, “I’m cautiously optimistic, and yet, I’m not declaring victory. What I would say is we in America are doing better than we had been, for sure, yet no one is safe until everyone is safe.” In three short months, the CDC has abandoned all COVID-19 public health measures, abdicating any role as the nation’s public health protector. The CDC has step-by-step dismissed the social distancing guidelines at schools, relaxed restriction guidelines for vaccinated individuals, essentially abandoned the need for mask usage by those fully vaccinated, relying on “the honor system” for those that aren’t, and, most recently, discontinued tracking all breakthrough infections, which focus on those that develop severe illness, hospitalization or death after being fully inoculated.
Air travel hits a pandemic peak, but more passengers are resisting mask mandates. – Memorial Day weekend is typically the start of the busy summer travel season, but this year it represents something more: the end of one of the roughest chapters in U.S. airline history.Passenger traffic has been climbing for much of this year and hit a pandemic peak on Friday, when more than 1.95 million passengerspassed through security checkpoints in the nation’s airports, according to the Transportation Security Administration. That level was last reached in early March 2020, as the coronavirus was just beginning its devastating spread across the United States.However, with the return of passengers and the prospect of an end to billion-dollar losses, airlines have also seen a surge in disruptive and sometimes violent behavior – and a frequent flash point is theT.S.A.’s mandate that passengers remain fully masked throughout their flights.Since Jan. 1, the Federal Aviation Administration has received about 2,500 reports of unruly behavior by passengers, of which about 1,900 involved refusals to comply with the mask mandate. The agency said that in the past it did not track reports of unruly passengers because the numbers had been fairly consistent, but that it began receiving reports of a “significant increase” in disruptive behavior starting in late 2020.”We have just never seen anything like this,” Sara Nelson, the international president of the Association of Flight Attendants, said during an online meeting with federal aviation officials on Wednesday. “We’ve never seen it so bad.”Two major airlines, American and Southwest, have postponed plans to resume serving alcohol on flights because of such incidents. American Airlines specified that alcohol sales – except in first and business class – would remain suspended through Sept. 13, when the T.S.A. mask mandate is set to expire.Both airlines announced the shift after a woman punched a flight attendant in the face on a Southwest Airlines flight from Sacramento to San Diego a week ago, an assault that was captured on a widely watched video.The flight attendant lost two teeth, according to her union, and the passenger has been charged with battery causing serious bodily injury and barred for life from flying Southwest.
What if it’s not a labor shortage, but just the return of tipping customers driving wage growth in restaurants? – EPI – One of the most widely discussed data points from last month’s jobs report was the rapid acceleration in wage growth for the leisure and hospitality (L&H) sector, particularly among production and nonsupervisory workers. This sector-specific wage acceleration (not seen in other sectors), combined with disappointing economywide job growth for the month, launched a huge debate about potential labor shortages. We wrote previously about why concerns over labor shortages were largely misplaced. Among other things, the rapid wage growth in L&H was accompanied by very fast sectoral job growth, so there was no evidence that any labor shortage was impinging on overall growth.Further, this acceleration of wages in L&H might provide less evidence of even a sector-specific labor shortage than previously thought. When economists or other analysts express concerns about labor shortages, they generally mean a shortfall of potential employees that forces employers to gouge deeper into their profit margins to raise wages to attract workers. At some point this gouging will become unsustainable and so hiring will lag.However, there is compelling evidence that the wage acceleration in L&H in recent months is not driven by employers raising base pay to attract workers, but instead by just an increase in tips stemming from restaurants filling back closer to pre-COVID capacity. Put another way, since December 2020, the rise in tip income, not an increase in base wages, can likely entirely explain the acceleration of wages for production and nonsupervisory workers in restaurants and bars. If this is the case, the wage acceleration will stop when restaurants get back to normal capacity. The evidence that the L&H wage acceleration is largely just a resurgence in tip income is as follows:
- Full-service restaurants and drinking places – two sectors in which tips constitute a very large portion of overall wages – are a significant part of the overall L&H sector, accounting for over a third of overall hours worked by production and nonsupervisory workers.
- Full-service restaurants and bars accounted for all the recentacceleration in wages in L&H through March.
- The rise and fall of sales in restaurants and bars have matched wage trends for production and nonsupervisory workers in these subsectors very tightly.
- When the jobs report data for these subsectors’ wages are released for April, it will likely show another big step up in wage growth. But this is likely because restaurant sales in April increased sharply as well, allowing tips to provide another big boost to wage growth in this sector.
Below, we expand a bit on each of these points.
Chicago school officials announce mandatory in-person attendance in the fall — At a school board meeting on May 26, Chicago Public Schools (CPS) officials announced plans to require full-time, in-person learning starting in the fall, with few exceptions. The move to end remote learning in Chicago and throughout the state, even while large numbers of parents continue to keep their children learning safely at home, is part of a national campaign to declare an end to the pandemic and send both children and workers back to unsafe buildings to increase the wealth of the superrich. A report in the Chicago Sun-Times about the plans, which have not been finalized, suggests in-person attendance will be mandatory for all students, except for those who are “medically fragile and immunocompromised.” This is in line with comments made in early May by CPS CEO Janice Jackson, who said she was “looking to the state … to get us back to normal from a schooling perspective where everyone is expected to go to school in a brick-and-mortar building every single day unless there are extenuating circumstances, medical circumstances, that prevent them from coming to school.” Orders from the state to reopen came on May 19, as the Illinois State Board of Education (ISBE) voted unanimously to endorse a declaration by State Superintendent Carmen Ayala, which stated, “Beginning with the 2021-22 school year, all schools must resume fully in-person learning for all student attendance days,” with only those children, who remain ineligible to receive a vaccine and remain “under a quarantine order by a local public health department or the Illinois Department of Public Health,” being granted the option of remote learning. Given the speed at which all levels of government around the country have been shedding public health measures, it is unlikely any such quarantine orders will remain. This means unvaccinated children, even those under 12, who are not expected to be eligible until September at the earliest, will be expected to attend, putting themselves, their family and friends at risk of contracting COVID-19.
Bill that would mandate Asian-American history lessons in Illinois schools heads to governor’s desk – A bill that would require Asian American history lessons be taught in Illinois schools cleared the final hurdle in the state legislature on Monday, and will now head to the governor’s desk for signature.The bill, dubbed the Teaching Equitable Asian-American History Act (TEAACH), would mandate that beginning in the 2022-2023 school year, history curriculums in public elementary and high schools must include “a unit of instruction studying the events of Asian American history,” including the history of Asian Americans in Illinois and the Midwest and their contributions toward advancing civil rights from the 19th century forward.The legislation also says the State Superintendent of Education can prepare and make available instructional materials for all school boards that can be used as a “guideline” for developing units of instruction.The regional superintendent of schools will monitor school districts’ compliance with the curriculum requirements, according to the bill.The state House passed the final version of the bill on Monday in a 108 to 10 vote, after the Senate unanimously approved the legislation last week. If Gov. JB Pritzker (D-Illinois) signs the bill into law, Illinois would be the first state to mandate a unit of Asian-American history be taught in schools, according to Reuters.
Class action lawsuit filed against company pushing unsafe ionizers to reopen classrooms across the US – In the interest of reopening schools as soon as possible, hundreds of K-12 school districts, private schools, and universities across the US have spent hundreds of millions of dollars in federal relief funding provided by the American Rescue Plan Act (ARPA) to purchase Needle Point Bipolar Ionizers (NBPIs), supposedly to clean indoor air and kill coronavirus particles.Despite their lofty claims to neutralize virus particles, recent independent studies show that NBPIs do not improve indoor air quality. A recently filedclass action lawsuit consolidates the science by air quality experts and puts forward strong refutations against the claims made by manufacturers, and echoed by hundreds of districts and campuses across the country, that NBPIs are safe and remove pathogens including SARS-CoV-2 from the air.Michael Mills, one of the attorneys on the case, told the World Socialist Web Site, “The evidence is overwhelming. We are convinced we are right. I don’t know how districts can continue to use these products. If teachers or students get sick, these districts have zero protection.”The lawsuit was filed last month against Global Plasma Solutions (GPS), a top selling manufacturer of NBPIs. The suit charges the company with fraud and claims the company used false, deceptive and misleading claims to sell its products and capitalize from the COVID-19 pandemic. As part of the mad dash to reopen schools, ionizers have been installed in classrooms, school buses, offices, gymnasiums and cafeterias, providing a false sense of protection from COVID-19. Furthermore, harmful byproducts produced by the technology place the health and safety of millions of students and staff at heightened risk.
Corruption in healthcare worsens the health of patients and the quality of nutrition – Bribery in the public healthcare does not solve the problem of poor quality of services, and even exacerbates it, researchers argue. The same can be said about the well-being of patients and their own assessment of health. In other words, bribes in the healthcare do not provide good quality services and do not pay off. Such conclusions were reached by an international team of researchers, including Olga Popova, the article’s co-author, an associate professor at the Ural Federal University (UrFU, Russia).Researchers examined survey data on 41,000 citizens from 28 post-communist countries in Central and Eastern Europe, as well as the former Soviet republics, including Russia (information provided by the World Bank and the European Bank for Reconstruction and Development). The research results were published at the Journal of Comparative Economics.”In general, the corruption mechanism that undermines people’s health is as follows,” said Olga Popova. “As everyday practice shows, the poorest strata of the population have the greatest health problems. They are also the ones who most often use medical services and, as a result, are more inclined than others to solve their problems with the help of bribes.”Corruption is also fueled by the fact that healthcare workers can deliberately reduce the quality of service in order to receive informal remuneration, the researchers presume. “However, the plight in public health together with dismissive and irresponsible attitudes toward the poor population groups lead to the fact that giving a bribe does not solve such problems,” said Olga Popova. “The other problems, including the frequent and unjustified absence of doctors, long waiting times for services, disrespectful treatment by the staff, unavailability of medicines, and uncleaned premises are not solved as well. The mismatch between the consequences of bribery and expectations while giving a bribe as well as the risk of disclosure lead to a deterioration in the well-being of patients who bribe.”
What if there was a way to detect fraud for SUD facilities? -Millions of Americans struggle with substance use disorder, with estimates suggesting as many as 1 in 13people needed treatment in 2018. Between high demand for services and lack of regulation, this is an area of health care already rife with predatory behavior. Substance use disorder fraud was a significant problem before the COVID-19 pandemic, and it could potentially get even worse.According to the Centers for Disease Control and Prevention (CDC), more individuals reported an increase in substance use during the COVID-19 pandemic, and overdose deaths have gone up significantly. Now that vaccination rates are increasing and social distancing measures are being lifted throughout the United States, well-intentioned individuals or concerned family members may view rehabilitation facilities or treatment centers as a logical next step to address some of these issues.But it’s not as easy as Googling “substance use disorder rehab facility near me” to find treatment centers that can provide appropriate – or even genuine – treatment. The amount of fraudulent behavior that has occurred in the past decade can make it feel as if there are equal numbers of results for substance use disorder treatment facilities and horror stories.In some cases, individuals have been sent out-of-state as part of elaborate and profitable patient brokering schemes that do not actually connect them to treatment. Some treatment facilities have profited off patients by overbilling for unnecessary drug tests. Treatment facilities with a known history of violations have continued to operate, resulting in the deaths of patients. In Florida, a man running sober homes was found to have coerced residents into prostitution.Using news articles and publicly available legal filings, it might be possible to identify potential warning flags for facilities by looking at their websites or asking certain informational questions, such as:
- What is included on a facility’s website? References to accreditation can indicate a facility has met certain standards set by an outside organization (i.e., the Joint Commission).
- What’s not included on a facility’s website? Does it omit what kind of treatment plans are provided?
- What treatments or services does the facility provide? Medication assisted treatment is evidence-based, but equine therapy is less so.
- Who is going to provide treatment? For example, are staff members named and licensed?
- Are there clear policies in case of emergency (i.e., overdose)?
- Is recovery guaranteed? (This is not possible for a facility to guarantee.)
- Is there any financial assistance offered to help offset paying for care at the facility? A sliding scale financial assistance payment model can be helpful but offers of being paid (in cash or in kind) should be viewed with skepticism.
Tokyo pushes ahead with Olympics despite growing demands to cancel – With the Tokyo Summer Olympic Games scheduled to start on July 23, broad opposition to holding the event continues to grow in Japan as the COVID-19 pandemic worsens throughout the country. Despite this, the government of Prime Minister Yoshihide Suga, backed by the International Olympic Committee (IOC), is pushing ahead with the event despite the strong possibility that the Games will be held under a state of emergency. Protests against the Olympics have taken place on social media with small, in-person demonstrations also occurring in Tokyo and other cities. Organizers are now holding weekly protests on Friday evenings in Tokyo. While many are understandably cautious of attending these demonstrations, online petitions demanding a halt to the Games have garnered hundreds of thousands of signatures. The concerns that people have are well founded. The Suga government on Friday extended the state of emergency until June 20 for nine prefectures and cities, including Tokyo. As of Sunday, there have been 741,674 confirmed COVID-19 cases and 12,920 deaths. This included 3,599 new cases from the previous day. The official figures are certainly an undercounting as people find it difficult to receive tests or treatment. In addition, only 2.4 percent of the population is fully vaccinated. Last Thursday, Naoto Ueyama, the head of the Japan Doctors Union, warned that holding the Games could lead to a new “Olympic” strain of the COVID-19 virus. “All of the different mutated strains of the virus that exist in different places will be concentrated and gathering here in Tokyo. We cannot deny the possibility of even a new strain of the virus potentially emerging after the Olympics,” he stated at a news conference. Underscoring this, health officials in Vietnam on Saturday announced that they had detected a new hybrid variant of the virus, a combination of the UK and Indian strains. Health Minister Nguyen Thanh Long stated that the new hybrid strain spreads quickly through the air and is “very dangerous.” The major concern of the Japanese establishment is not for the lives of people around the world, but on the economic impact to big business of cancelling the Olympics. Bloomberg warned, for example, that cancelling the Games could wipe out much of Japan’s 2021 economic growth, with a direct loss of up to 1.8 trillion yen ($16.4 billion dollars). This is just a fraction of the amount Tokyo spends on its military. Despite the pandemic, Tokyo approved another record-high military budget of 5.34 trillion yen ($51.7 billion) in December.
10,000 volunteers for the Tokyo Olympics quit as the Japanese public’s opposition to the games grows – Thousands of volunteers for the Tokyo Olympics have quit, Japan’s national broadcaster said, citing the event’s organizers.NHK reported on Wednesday that around 10,000 of the 80,000 volunteers who signed up to help at the event had left their posts, according to Reuters.The games are due to start on July 23, after being postponed from 2020 due to the coronavirus pandemic.Japan and Olympic organizers have pledged that the event will be safe and have barred international spectators.But a large number of Japanese people and doctors in the country have called for the games to be postponed or canceled due to the pandemic.Public opinion has consistently moved against hosting the Games, with a poll in May showing that 83% of those surveyed didn’t want the Games to be held in Japan this summer. A poll just nine days before had shown 60% of people opposed to hosting the event.As of Wednesday, some 415,000 people have signed a Change.org petition asking the Japanese government to cancel the Games.Rising opposition to the Olympics among Japan’s public comes as coronavirus infection rates fall but remain at high levels, and much of Japan remains in a state of emergency.On Tuesday, it was confirmed that nine prefectures in the country have had their states of emergency extended until at least June 20, less than a month before the Games are due to begin.Tokyo reported 260 cases of COVID-19 Monday, the 18th straight day of declines, but the city’s Governor Koike Yuriko warned that cases could rise again if restrictions are loosened.”I’m very concerned that the movement of people could return to normal levels,” he said, according to NHK.
Forecasters in India offer dismal economic estimates.India’s coronavirus crisis is likely to hobble the country’s economy for months to come, forecasters said, with most states still locked down to contain a wave of new infections and vaccine supply struggling to meet the needs of a vast inoculation campaign. On Monday, India’s Ministry of Statistics and Program Implementation estimated that the country’s gross domestic product shrank by at least 7.3 percent over the financial year that ended in March, reflecting the impact of a nationwide lockdown that lasted for much of 2020. The ministry also reported that India’s economy grew by 1.6 percent during the first three months of this year, beating forecasters’ predictions. But economists say that those numbers, which reflected activity before the full impact of a ferocious second wave of the coronavirus, are likely unsustainable in the near future. Experts point to two main reasons for their gloomy estimates: India’s prolonged lockdowns and its vaccination rate, which has fallen from about four million doses a day last month to just over a million now as its large vaccine industry, which had been expected to supply much of the world, has struggled to keep up supply. India recorded 152,734 new infections and 3,128 deaths on Monday, the country’s health ministry reported. India Ratings & Research, a credit ratings agency, estimated that the country’s G.D.P. growth rate came in at minus 7.5 percent for the previous financial year that ended in March. Millions of people in India are already in danger of sliding out of the middle class and into poverty. The country’s economy was fraying well before the pandemic because of deep structural problems and the sometimes impetuous policy decisions of Prime Minister Narendra Modi’s government.
Delhi’s factories and building sites can reopen, but migrant workers are scattered. – New Delhi, India’s capital, began easing pandemic lockdown restrictions on Monday, allowing construction and manufacturing activities to resume as the city continued to record a steep decline in new coronavirus cases and deaths. Life on the streets of Delhi wasn’t expected to return immediately, with schools and most businesses still closed, but the limited reopening signaled officials’ optimism that the city of 20 million was past the worst of a second wave marked by desperation and death. From April 20, when the number of new reported cases peaked at 28,395, the official figure plummeted to 946 on Sunday. In late April, nearly one in three tests came back positive. Now, the positivity rate is 1.5 percent. Still, factory owners and construction foremen said it might take some time for activity to return to normal levels because of a shortage of workers. More than 800,000 migrant workers left the city in the first month of its six-week lockdown, according to a Delhi transportation department report. Ram Niwas Gupta, 72, the founder of Ramacivil India Construction and the president of the Delhi-based Builders Association of India, said that 75 percent of his work force for 10 projects across northern India had disappeared to their rural family homes. “Immediately we will not be able to start work, but slowly in six to 10 days we will be able to mobilize labor and material and start the work,” Mr. Gupta said. In a meeting with the city’s disaster management authority on Friday, Delhi’s chief minister, Arvind Kejriwal, said the lockdown would be eased according to economic need. “Our priority will be the weakest economic sections, so we will start with laborers, particularly migrant laborers,” many of whom work in construction and manufacturing, Mr. Kejriwal said. The pandemic is far from over in India, where cases are rising in remote rural areas that have limited to no health infrastructure. The state of Haryana, which borders Delhi and is home to the industrial hub of Gurugram, extended its tight lockdown by at least another week. And in southern Indian states where the daily case numbers remain high, official orders allowing manufacturing to resume have been met by resistance from workers.
India’s Covid Crisis Decimates Country’s Middle Class –Indian economy shrank 7.3% in fiscal year 1920-21, its worst performance since independence in 1947. Nearly 230 million middle class Indians have slipped below the poverty line, constituting a 15 to 20% increase in poverty since Covid-19 struck last year, according to Pew Research. Middle class consumption has been a key driver of economic growth in India. Erosion of the middle class will likely have a significant long-term impact on the country’s economy. “India, at the end of the day, is a consumption story,” says Tanvee Gupta Jain, UBS chief India economist, according to Financial Times. “If you never recovered from the 2020 wave and then you go into the 2021 wave, then it’s a concern.” Mainstream Indian media have long been afraid to cover the incompetence and failures of Prime Minister Modi’s government. But this is finally changing with the COVID pandemic hitting India’s newsrooms. Dozens of Indian reporters and their family members have died after being infected with coronavirus. The disastrous turn in the situation on the ground couple with the change in media coverage have brought focus on Modi government’s failed policies in handling the deepening health crisis and its devastating impact. The images of large numbers of people gasping for breath and dying on the streets for lack of oxygen have shocked the world. The covid crisis has exposed the hollowness of India’s super-power delusions fed by the country’s western boosters who see it as a counterweight to China. An example of such western propaganda is a recent novel by retired US Admiral Janes Stavirides. The authors of “2034: A Novel of the Next World War” portray Indians as heroes whose statesmen-ship de-escalates World War III, negotiates peace and helps India emerge as the new global superpower. Patel, the Indian uncle character of the Indian-American deputy national security advisor Sandeep Chowdhury tells him, “America’s hubris has finally gotten the better of its greatness.” The authors imagine the United Nations headquarters moves from New York to Mumbai after the war. Had this book been written after watching thousands of Indian victims of COVID19 gasping for breath and dying daily on the streets of New Delhi, I think Ackerman and Stavridis would have conceived and developed a completely different plot line for their novel.
Indian workers need a socialist strategy to combat the Modi government’s herd immunity policy – COVID-19 is surging throughout India like a tsunami, ravaging the lives of tens of millions of people. The working class and oppressed masses are bearing the brunt of this horrific crisis. According to official figures, India’s total number of coronavirus cases is now over 27 million and deaths over 320,000. Underscoring the ferocity of the pandemic’s second wave in India, more than 15 million of these cases have been recorded in just the past eight weeks. After repeatedly recording the world’s highest numbers of daily cases and deaths for a single country, over 400,000 and over 4,000 respectively, India is now reporting over 200,000 daily COVID-19 cases and over 3,000 daily fatalities. Despite the attempts by Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) government to exploit the relative decline in daily cases and deaths to boast the pandemic is on a “downward trend,” the reality is that it continues to rage. One reason for the recent decline in recorded infections is that COVID-19 is now running rampant through India’s vast rural population, where testing and health infrastructure are all but non-existent. Even when the official figures were at their peak, they represented a vast underestimation of the true extent of the catastrophe. India has maintained an extremely low rate of COVID-19 testing throughout the pandemic, ensuring that many cases go undetected. Even prior to the outbreak of COVID-19, only a quarter of deaths in India were medically certified. Many medical experts have warned that the real death toll is likely five to ten times the official figure. This would mean that a staggering 20,000 to 40,000 people have been dying every single day since mid-April. Although the pandemic is a biological phenomenon, the main reasons for the immense and ongoing health and social disaster are political. The threat of a global pandemic was both foreseeable and foreseen, but the capitalist profit system proved utterly incapable of preparing for such a predictable event and of taking the necessary containment measures once it had erupted. Governments in every country, from the imperialist centres of North America and Europe to the right-wing capitalist regimes in India and Pakistan, cut health budgets and starved their health care systems for decades, leaving them in no condition to deal with the surge of sick patients. Then, as the virus began to spread, they prioritised the protection of corporate profits over the safeguarding of human lives. Businesses were allowed to stay open, financial and social support were denied to workers, and millions were allowed to die because, in the words of US President Trump and the New York Times, “The cure can’t be worse than the disease.” The global capitalist elite’s callous indifference to human life finds its sharpest expression in the mass death currently occurring in India. Its dilapidated health care system has been overwhelmed. COVID-19 patients are dying in the streets and in their homes due to the lack of basic medical facilities like oxygen, ICU beds, and ventilators. Thousands of people severely ill with the virus can’t even get admitted to a hospital because they are full of patients – sometimes two to a bed. Dead bodies are being thrown en masse into rivers or buried in unmarked graves.
India cancels exams for over a million 12th graders – The Indian government, still trying to control a devastating second wave of the coronavirus, has canceled national exams for 12th graders, affecting the fates of more than a million students.The decision to call off the exams, which had been postponed from the spring, came late on Tuesday at a meeting of senior officials chaired by Prime Minister Narendra Modi. It showed that concerns around the spread of infections remain serious even as India’s official case count has dropped significantly from its peak a month ago.”Students, parents and teachers are naturally worried about the health of the students in such a situation,” Mr. Modi said in a statement. “Students should not be forced to appear for exams in such a stressful situation.”After India recorded more than 400,000 cases a day a month ago, the most in any country since the pandemic began, new infections there have dropped by more than half. Yet India is still averaging more than 3,000 deaths per day, a number that experts believe is a significant undercount. On Wednesday, the government reported 132,788 new cases and 3,207 deaths from the virus.Most states remain under some form of lockdown, and hardly any of India’s young people have been fully vaccinated against Covid-19. The Indian government only last month opened vaccinations to people under 45, and a shortage of doses has meant that most states have made little progress in inoculating the young. About 12 percent of people in the country have received at least one dose of a vaccine, according to a New York Times database.”This is the right step,” said Renu Singh, the principal of Amity International School in Noida, a suburb of New Delhi. “Most important is the safety, security and health of the child. Children are not vaccinated. If they come to school, they will be exposed.”Antra Rajpoot, a 12th grader at the school, said that the idea of sitting for an exam with large numbers of students felt “really unsafe.” The government’s decision “definitely brought about a sense of certainty, safety, and it’s a very happy decision.”Without the exams, which help determine placement in colleges and professional schools, Mr. Modi’s office said that the Central Board of Secondary Education, which administers the tests, would come up with an alternate method of assessing student performance.
Surging Food Prices Push Pakistan Overall Inflation Rate to 10.9% in May 2021 – Food prices in Pakistan rose 14.8% in May while the average inflation rate for July-May period of the current fiscal year came in at 8.83%, according to Pakistan Bureau of Statistics. Meanwhile, global food prices have surged by 40% in May, the highest rate in a decade, according to the United Nations Food and Agriculture Organization. Poor harvest due to bad weather and COVID19 pandemic-related disruptions in production and distribution are being blamed. In Pakistan, chicken prices shot up by 60%, followed by 55% increase in prices of eggs, 31% rise in prices of mustard oil and wheat prices were up by 30% year over a year, according to the PBS. Globally, prices of cereals (including wheat) jumped 37%, vegetable oil 124%, meat 10% and sugar 57%. Higher imports of food items at high prices and increased shipping costs have added to Pakistan’s food inflation woes. Among the factors contributing to elevated food prices are drought in South America and record purchases by China. Cooking oils have soared too on demand for biofuel.”We have very little room for any production shock. We have very little room for any unexpected surge in demand in any country,” Abdolreza Abbassian, senior economist at the UN’s Food and Agriculture Organization, warned in a phone interview with Bloomberg. “Any of those things could push prices up further than they are now, and then we could start getting worried.”Developing countries such as Pakistan where an average consumer spends 40% or more on food will be particularly hit by surging food prices. A jump of 37% in cereals is of special concern because people in poor nations get more than 50% of their daily caloric intake from cereals. Early reports indicate that Pakistan is seeing a record production of wheat with an increase of two million tons to 27.3 million tons from 25.3 million tons last year.
Food Insecurity: A Potentially Underrated Collateral Damage of the Pandemic – Global food security is being threatened by the COVID-19 pandemic and the restrictive measures to control it. Jammed food supply chains, falling incomes for some population segments, and rising food prices are placing food out of reach for millions of individuals. This column discusses the short-run relationship between food (in)security and income and food prices, and the implications of the current economic crisis for global hunger. The pandemic’s economic fallout risks setting us back a full decade on eliminating undernourishment, especially in low-income countries. Governments should strengthen social safety nets for the most vulnerable to keep inequality in check.
FAO’s Food Price Index surges for record 12th consecutive month in May – Xinhua | English.news.cn — World food prices surged in May, climbing for a record 12th consecutive month as supply chain issues sparked by the coronavirus pandemic combined to push prices nearly 40 percent above levels from a year earlier, according to data released on Thursday by the United Nations Food and Agriculture Organization (FAO). The steep 4.8 percent month-on-month rise pushed the overall FAO Food Price Index to 127.1 points in May, 39.7 percent above its level a year ago. All major components of the index increased, with grain, cereal, vegetable oil and sugar prices all exceeding their April levels by at least 6 percent. Grain and cereal prices, the largest component, rose 6.0 percent in May, pushed by higher prices for corn, barley and sorghum. But wheat prices fell in the second half of the month after surging over the first two weeks, while rice prices remained steady. In 2020, the overall index for grains and cereals climbed nearly 90 percent, the FAO said. Prices for vegetable oils rose 7.8 percent in May, driven by increased prices for palm, soy and rapeseed oils, which climbed due to lower production in Asia. Sugar prices were 6.8 percent higher due to speculation about low yields in Brazil. The other two major components saw more modest increases, with dairy prices inching 1.5 percent higher from April due to increased demand from China canceling rising supply from New Zealand. Meat prices, meanwhile, climbed 2.2 percent due to a steady increase in demand in east Asian countries, mainly China. The monthly FAO Food Price Index is based on worldwide prices for 23 food commodity categories covering prices for 73 different products compared to a baseline year. The next index is scheduled for release on July 8.
Food prices rose 40 percent in May amid expanding global hunger and social crisis triggered by pandemic –The United Nations Food and Agriculture Organization (FAO) food price index rose by 40 percent over the past year, including a rise of 4.8 percent since April. The FAO report released on Thursday states: “The May increase represented the biggest month-on-month gain since October 2010. It also marked the twelfth consecutive monthly rise in the value of the FFPI to its highest value since September 2011. … The sharp increase in May reflected a surge in prices for oils, sugar and cereals along with firmer meat and dairy prices.” The FFPI (FAO food price index) is a measure of the monthly change in international prices of a basket of food commodities. According to the report, corn prices are 67 percent higher than a year ago, sugar is up nearly 60 percent and prices for cooking oil have doubled. The surging food prices are catastrophic for millions of people around the globe – already facing desperate conditions from the coronavirus pandemic – with hunger driven up rapidly in the poorest countries of the world. The UN World Food Program reports that 270 million people are currently suffering from acute malnutrition or worse situations in the 79 countries in which the agency operates, double the number in 2019. Among the regions facing a rising hunger crisis that is exacerbated by skyrocketing food prices are Southeast Asia, Africa and Central America. The World Bank estimates that up to 124 million people sank below the international poverty line – living on less than $1.90 a day – in 2020 as a result of the pandemic. Up to 39 million people more are expected to be added in 2021, taking the total number of those living in extreme poverty to 750 million people. Analysts attributed the food cost increases to a series of global climate and economic factors. Bloomberg, for example, reported: “Drought in key Brazilian growing regions is crippling crops from corn to coffee, and vegetable oil production growth has slowed in Southeast Asia. That’s boosting costs for livestock producers and risks further straining global grain stockpiles that have been depleted by soaring Chinese demand.” Among the food supply issues driven by China’s economic expansion are an increased demand for feed to rebuild pig herds that were struck in recent years by disease. The pig feed contains staples, such as corn and soybeans, that are also consumed by people. Other analysts have pointed to the impact of the COVID-19 pandemic on the global food supply saying that restrictions on movement have increased logistics costs while decreased incomes have driven up demand for less expensive food items. Economists have warned that the resumption of eating out around the world, following the lifting of COVID-19 restrictions despite the ongoing pandemic, is adding to price increases. Abdolreza Abbassian, senior economist at the FAO, said, “The decline in eating out was not totally compensated with eating at home, but as people start to go to restaurants again, you will see food prices rise.”
Vaccine efforts for low-income nations get an extra $2.4 billion in promises. – Financial support for Covid-19 vaccination efforts in lower-income nations received a $2.4 billion lift on Wednesday when world leaders met at a virtual summit hosted by the Japanese government and Gavi, the Vaccine Alliance. The funds were pledged by wealthier countries, foundations and private companies. Five countries – Belgium, Denmark, Japan, Spain and Sweden – also announced plans to share a total of 54 million doses from their domestic supplies with countries in need. The support is primarily designated for Covax, a year-old initiative promoting equity in the distribution of Covid-19 vaccines. It has shipped more than 77 million doses to 127 countries and is led by Gavi, the World Health Organization and the Coalition for Epidemic Preparedness Innovations. The funds were sought to buy additional vaccine doses for the countries least able to afford them and to invest in new vaccine candidates. “Ability to pay should not determine whether someone is protected from this virus,” said Dr. Seth Berkley, the chief executive of Gavi. To date only 0.4 percent of all Covid-19 vaccine doses have been administered in low-income countries, according to the World Health Organization’s director-general, Tedros Adhanom Ghebreyesus, who spoke at the meeting. In many countries, even the most vulnerable adults and health care workers have not received vaccinations. Dr. Berkley said that on average, wealthy countries had vaccinated more than a third of their populations, whereas low income countries had vaccinated less than 1 percent. How quickly wealthier countries deliver on their promises to share doses remains to be seen; most previously announced gifts have yet to be delivered.
The West’s Not Very Hidden Hand in Debt Oppression in Central Asia – On 15 April 2021 about 15 women seized a local state administration building in Kyrgyzstan to demand a debt relief and a stop to housing repossessions. Barricading themselves inside the building, the women in black mournful headscarves, threatened to pour gasoline over their bodies and set themselves alight if the country’s Prime Minister did not arrive to negotiate with them. Gas cylinders were placed along the office windows and gasoline on floors set the scene for a large explosion. Struggling to breath in the room full of toxic fumes, the women announced: ‘We’re sick of financial slavery! Eradicate the usury!’ These were at the end of their tether after years of struggling against financial oppression. In 2019, Kyrgyzstan had the fifth highest real lending interest rate in the world. Many rural women have been protesting against debt, housing repossessions and exorbitant interest rates for the past 13 years. In 2016, their anti-debt struggles culminated in protests in front of the US Embassy in Bishkek, where they blamed the United States Agency for International Development (USAID) and the World Bank’s International Finance Corporation (IFC) for creating and funding exploitative microcredit companies in the country. In neighbouring Kazakhstan, urban residents of Nur-Sultan and Almaty held numerous anti-debt protests in front of the central bank, blaming it for predatory lending arising from Western credit flows.The Covid-19 pandemic exacerbated the debt oppression in the region by causing job losses. In Kyrgyzstan, thousands of migrants returned home, causing unprecedented decrease in remittances.The Kyrgyzstani state could not offer income support to its work force, of which 75% is self-employed. The pandemic pushed an additional 700,000 people into poverty, worsening the existing situation where 38% of the population is classified as poor. In oil rich Kazakhstan,42% of the population lost income, and applied for income support of 42,500 tenge (US$99). The government made a one-off payment in full in the first month, and a partial payment in the second month. In order to provide some relief, the central banks in the region recommended loan payments to be deferred up to three months. But commercial banks and microfinance institutions (MFIs) continued to charge interest on outstanding loans and commission fees for changing loan terms. Despite rising default rates,they refused to write off debt or suspend the accrual of interest, deepening indebtedness.
Copa America moved to Brazil amid COVID-19 increase in Argentina -The Copa America soccer tournament has been moved to Brazil, nearly one day after the competition’s governing body announced that Argentina would no longer host the event due to COVD-19 concerns.CONMEBOL, the governing body of the Copa America tournament, announced on Sunday that the competition, scheduled to be played from June 13 through July 10, would not be played in Argentina because of “present circumstances,” referring to the country’s spike in coronavirus cases, according to ESPN.Less than one day later, however, the South American soccer governing body announced that Brazil would host the games.Organization President Alejandro Dominguez wrote on Twitter that the council’s decision to move the tournament to Brazil was unanimous, according to a translation from ESPN.The tournament, which involves 10 South American countries, was originally supposed to be played in Colombia, in addition to Argentina, according to ESPN.Colombia, however, dropped out as a co-host on May 20 after CONMEBOL rejected its request to postpone the tournament, the cable sports channel reported. The country reportedly wanted to delay the competition because of social and economic unrest in the region.Argentina has seen a surge in COVID-19 cases and deaths in recent weeks. The country has recorded more than 3.7 million coronavirus cases and more than 76,000 deaths since the start of the pandemic, according to data from the World Health Organization.The country has administered more than 10.7 million doses of coronavirus vaccine.
Mass demonstrations in Brazil against Bolsonaro’s homicidal response to COVID pandemic -On Saturday, massive demonstrations took place in all 28 Brazilian states against the government of fascistic President Jair Bolsonaro and its criminal response to the COVID-19 pandemic. The total number of protesters nationwide may have exceeded 100,000, according to organizers’ estimates. In Sao Paulo, the country’s largest metropolis, the estimated number in the streets was over 80,000 people. In Porto Alegre, capital of Rio Grande do Sul, there were around 30,000. Thousands more also protested in Rio de Janeiro, Belo Horizonte, Curitiba, Brasilia and in smaller numbers in more than 100 other cities. In Recife, the demonstration was violently repressed by the Military Police under the command of Brazilian Socialist Party (PSB) Governor Paulo Camara in the state of Pernambuco. The police fired tear gas canisters and rubber bullets at the demonstration. Three people were wounded by the shots, and two of them, hit in the eye, were partially blinded. These were the largest demonstrations in Brazil since 2019, when students and teachers marched nationally against the cuts in the education budget implemented by Bolsonaro in his first year in office. They coincide with the mass uprising in the neighboring country Colombia, where there have been uninterrupted and radicalized protests, also opposing a right-wing government’s handling of the pandemic and the social crisis. In Brazil, the protests were called by social movements linked to the Workers Party (PT) and its pseudo-left satellite Socialism and Freedom Party (PSOL). Among these movements is the Frente Povo sem Medo (People without Fear Front), led by PSOL leader Guilherme Boulos. The dimension of the protests, however, expresses the growth of social opposition beyond the narrow political limits imposed by these organizations.
Why Colombia Has Erupted in Protest -Spiraling poverty and unemployment in the wake of the pandemic lie behind the widespread protests in Colombia that began on 28 April. Young people have been particularly badly affected, even though their generation has been largely excluded from the government’s negotiations with protest leaders – one half of an official response that has mixed dialogue with violent repression. As presidential elections approach next year, the situation is eroding people’s trust in political institutions. In the last year, an estimated 3.6 million people have fallen into poverty, while 2.78 million are now classed as living in extreme poverty. The result is that 42.5% of Colombia’s population now live below the poverty line, up from 35.7% in 2019. A decade of anti-poverty measures appear to have been reversed, at least in part. The figures mean that more than 21 million people are currently being forced to subsist on the equivalent of less than $88 per day, with 7.47 million people living on less than $39 per day. Big cities have suffered the most from the economic impact of the pandemic, and the social distancing policies that followed. In Bogotfl, Colombia’s capital city, 3.3 million people (of a total population of 7.1 million) are living in poverty. Other major cities, such as Medell’n and Cali, also have large numbers of people below the poverty line. Women are among the hardest hit, with 46.7% of women (compared to 40.1% of men) living in poverty. This has a knock-on effect for many families: according to the director of the National Administrative Department of Statistics (DANE), “the gender gap increased during the pandemic and this necessarily affects the incidence of poverty in households where women are heads of households”. For young people, meanwhile, unemployment has risen to 23.9%, up from 20.5% in the first quarter of 2020, in the 14-28 age category. Young people are also being forced out of education, because of the high cost of private universities, and a lack of capacity in the public system. Last year, an estimated 243,000 students dropped out of various forms of education. The trigger for the protests that began in April was a proposal to reform the tax system, although demands quickly expanded to a rejection of reforms to the healthcare system, too. For many people, the pandemic has exacerbated a situation that already sparked mass protests in 2019, adding unemployment and a lack of education opportunities to the mix.
Russia warns its economy is showing signs of overheating – There are signs that Russia’s economy is overheating with annual inflation currently at 5.9%, Anton Siluanov, the country’s finance minister, said Thursday. “If we continue with increased spending, what will we get? Overheating. Elements of overheating are already visible – high inflation,” Siluanov said at the St. Petersburg International Economic Forum, according to a Reuters translation. Consumer price inflation accelerated again in May, rising from 5.5% in April. Earlier this week Russia’s Central Bank Governor Elvira Nabiullina told CNBC that “inflation is accelerating” and that, unlike elsewhere, inflation was not seen as a temporary issue as economies reopened and consumer demand increased. “In our case, it’s different,” Nabiullina told CNBC’s Hadley Gamble earlier this week ahead of SPIEF. “We think that the inflation pressure in Russia is not transitory, not temporary. We see more persistent factors, monetary factors, that’s why we started to get a rate hike back to the neutral stance.” Investors will be looking to the next central bank meeting on June 11 to see what it does next, with speculation mounting that the bank could hike interest rates by as much as 50 basis points from a current level of 5%. The central bank’s inflation target is 4%. Nabiullina said the central bank would analyze all the factors, including the inflation forecast and the situation in the economy, but said that “we see the risk that our inflation expectations are elevated, and they remain elevated for several months.” On Wednesday, Russia’s central bank issued a bulletin in which it noted that the economy was continuing to grow in the second quarter and that gross domestic product could reach its pre-pandemic level in mid-2021. However, analysts at the bank noted that “economic growth is still uneven. Industries focused on export and intermediate products as well as the services sector have been recovering at outrunning paces during the recent months.” It added that uncertainty with respect to medium- and long-term consequences of the coronavirus pandemic remains high.
UK teachers suffer increased workload as government plans to lengthen working day – UK teachers are threatened with an extended work day in the next academic year. The government’s post-Covid recovery plan is placing the burden of “catch-up” learning on already overstretched schools and teachers. Ministers are considering two plans: A compulsory 30-minute extension of the school day – which would focus on academic catch-up – or an extension of the school day from 8am-6pm, with the extra time used for voluntary extracurricular activities. Sir Kevan Collins, the education recovery commissioner, is leading the initiative, having said previously that teachers “will be asked to increase learning time for pupils as part of the catch-up effort.” Arguing that a voluntary approach will not work, Collins favours a compulsory extension in order to “guarantee” that disadvantaged pupils attend. Collins is no stranger to squeezing value out of public services. In his 2009-2012 role as chief executive of the Labour Party-run London Borough of Tower Hamlets, he implemented Pound Sterling50 million in cuts over three years. Whatever plan is enforced on schools will intensify the exploitation of education workers, already exhausted by the government’s schools policies since the beginning of the pandemic. The government is utilising the coronavirus crisis to usher in long-planned education restructuring. This takes place amid an unprecedented increase in teacher workload related to the pandemic. In January, Prime Minister Boris Johnson cancelled A level and GCSE exams, but their replacement has put a huge burden on teachers. Secondary school staff have been tasked with carrying out “assessments” to replace the cancelled exams for secondary pupils. Teachers have been placed under intense pressure and media scrutiny to carry out the marking, moderation and awarding of teacher assessed grades (TAGs). The “assessments” that have been introduced expose the government lie that pupils have been herded back into school for their own well-being. Pupils in Year 11 and 13 have been put under intense pressure to perform, with some reports of pupils having over 30 different assessments over a two-week period. After all that these children have been through over the past year, they are now brought back from lockdown to be assessed!
British Medical Journal says UK government’s COVID-19 response created “maelstrom of avoidable harm” – On Tuesday, the BMJ (formerly, British Medical Journal ) accused the British government of having unleashed “a maelstrom of avoidable harm,” including the deaths of up to 150,000 people “who died earlier than they might have” as a result of its disastrous response to the COVID-19 pandemic. Executive editor Kamran Abbasi made this damning indictment in a comment on the testimony given last week by Dominic Cummings, former adviser to Prime Minister Boris Johnson. His account, Abbasi writes, leads to “the inescapable conclusion … that the disastrous manner in which the government is run is a major contributor to excess deaths in the UK, although Johnson persists with his denials.” Cummings’ evidence confirmed that the Johnson government “slept on the job,” “relied on flawed pandemic modelling,” “sought a narrow caucus of expert views and kept them confidential,” “prioritised the economy over health,” “failed to protect vulnerable people in care homes and lied about it,” “ignored the potential of airborne spread,” “delayed mass testing,” “left international borders uncontrolled” and “oversaw a calamitous and costly procurement strategy for personal protective equipment.” Britain “was ill prepared and had no pandemic plan, and even if it did it was a misguided plan that pursued herd immunity and was accepting of a large number of deaths. Johnson was dragged into each lockdown, particularly the first in late March 2020, and he delayed the key one in September by ignoring his own scientists and colleagues and backing cherry picked supporters of herd immunity.” The BMJ is identifying a record of staggering criminality, as confirmed by Cummings. Johnson and his collaborators, according to Cummings’ account, were actively considering the deaths of 500,000 people, and up to 800,000 in one scenario, in pursuit of herd immunity through infection. He confirmed that the prime minister shouted he would rather “let the bodies pile high in their thousands” than implement another lockdown at the end of October, precisely because he “prioritised the economy over health.” While he was still writing COVID-19 off as a “scare story,” Johnson even suggested in Trumpian fashion that he be injected “live on TV with coronavirus so everyone realises it’s nothing to be frightened of.”
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