Brexit and a smoke-free Britain

 As we know that recent COVID-19 has taken its toll on everyone around the globe but

considering nations like the UK or EU where a number of residents are indulged in unhealthy

activities like smoking cigarettes have eventually caused an increasingly high rate of untimely

death of its dwellers.

We all are well aware of the fact that Brexit had its pros and cons for both nations i.e UK and

EU but considering the life-threatening situation of COVID-19, the inhabitants of the UK who are

highly prone towards smoking weren’t able to fight their battle against this pandemic due to

weak lungs. So the British government has decided to take necessary measures in order to

downgrade cigarette import in the country which will eventually help in dropping the

consumption of smoke. As a result, the government has decided to increase tax rates on all

sorts of cigarettes.

I think this is an excellent initiative by the government to increase tax rates on tobacco

products in order to keep in out of buying capacity for the common man. High tax rates will

eventually decrease in imports of cigarettes which will make the price of common cigarettes

extensively high for the general public resulting in less sales of the product. This will help in

accomplishing the objective of the government which is to make the UK smoke free nation.

https://theconversation.com/brexit-is-an-opportunity-to-stop-britons-smoking-150204

Monoply of Facebook is challenged

Facebook has been sued by many states and the federal government for the alleged abuse of its dominance in the digital marketplace and for being engaged in anticompetitive behavior

The Federal Trade Commission seeks a permanent injunction in federal court that demands divestment of FB assets, including Instagram and WhatsApp.

According to the officials, Facebook's monopoly denies consumers the benefits of competition and the company must be checked for its anticompetitive conduct so that innovation and free competition can thrive.

Facebook bought 2 key services in the social media empire in 2012 Instagram for $1 billion, and in 2014 WhatsApp for $19 billion.

Facebook has its dominance and monopoly for more than 10 years and crushes smaller rivals and competitors.

The state suit calls for a court order binding Facebook to notify state officials before buying any existing brand valued at $10 million or more.

Facebook has prepared well to face the music and presented its narrative that Facebook accepts the regulation but this kind of restriction could risk giving other countries like China a competitive edge in the fast-moving technology sector.

Facebook is not the only company to be taken to court by the US and state government officials. Google and Microsoft had been going through the same kind of allegations in the past. Apple and Amazon have also been probed for potentially anticompetitive behavior.

However, the Government will have to prove in court that Facebook's alleged misconduct led to real-world, measurable harms to consumers or competition.

According to the state suit, Facebook's alleged misconduct harms the consumers.  Internet users have fewer choices. Moreover,  Facebook opens its platform to new app developers and later cut off their access to Facebook's services once Facebook feels them be a competitive threat.

Such cases take years to settle but can greatly impact the market.  Experts credit the Microsoft suite for Google's rise.

Similarly, a court decision to breaks up Facebook or to imposes certain behavioral limitations could have made a place for new products for the consumers.

https://www.google.com/amp/s/amp.cnn.com/cnn/2020/12/09/tech/facebook-antitrust-lawsuit-ftc-attorney-generals/index.html

President Donald Trump and US economy in 2020

In January 2017 President Donald Trump started with a healthy economy that continued to grow by leaps and bounds during his first three years in office. The unemployment rate was 4.7%, lowest in 10 years. With the all-time highest corporate profit rates and high stocks, gross domestic product was growing around 2.5% per annum.

 

Each presidency from Ronald Reagan to Trump commenced under different circumstances. George W. Bush’s first year was tarnished by the September 11th attacks while Barack Obama’s started with the Great Recession, a devastating housing crash and a global financial crisis. Despite all these hard times, these presidents have presided over a growing economy during their era. The Trump presidency, however, will be marked by a health crisis and an economic crisis resulted by Covid-19 pandemic. About 15% of Americans lost and Trump ran the elections under the worst job loss in American history.

On the contrary during Obama’s Presidency the job market was up 0.4% and the situation got even better later in his time and as result, Trump started with the strongest job market in American History. The Covid-19 changed the situation and joblessness went 10% higher from where Trump has started, a historical spike in history. 

 

A data released by the Census Bureau in September 2019 around 9% increase from 2016 in the income of an average American and almost 20 states raised their minimum income. The pandemic has definitely reduced those numbers in 2020. The Stimulus checks made a temporary increase in the income of unemployed people but the future of people who had to shut their businesses and who had lost their jobs is still at waters. Economists think that the businesses and workers will not fully recover from this setback for years.

https://www.cnn.com/interactive/2020/10/business/us-economy-trump-vs-other-presidents/

U.S. Trade Deficit Widens

 The United States trade deficit has widened 1.7% in October to $63.1 billion. The can be attributed to the trade gap with China and Mexico increasing. The deficit with China rose 9% to $26.5 billion while the gap with Mexico rose 10% to $11.8 billion. This year so far the overall gap in the trade of goods and services with the rest of the world has rose to $536.7 billion which is up 9.5% from Jan-Oct 2019. The thing to keep in mind is that President Trump has vowed to decrease the deficit and it will be interesting to see what kind of trade policy President-elect Joe Biden implements. COVID-19 has not helped shrink the deficit either as it has upended trade in services such as education and travel which the U.S. runs surpluses in. The exports for the U.S. are down nearly 20% this year while trade surpluses dropped $18.3 billion in October. This has been the lowest since August of 2012. Lastly the United States ran a deficit of $81.4 billion in the trade of autos and appliances. Overall, it will be interesting to see what happens once Biden takes office to see what kind of policies he will implement.  

https://www.cnbc.com/2020/12/04/us-trade-deficit-widens-by-1point7percent-to-63point1-billion-in-october.html

Brexit is an opportunity to stop Britons smoking

 

Even though COVID takes up the majority of the health news smoking remains the most prevailing part of preventable death in the UK. As the UK seesaws on the edge of Brexit they have the freedom to add higher tobacco restrictions. UK has had a high amount of people dying soon after getting COVID but that does not compare to the high amount of people drying from smoking. Many UK adults are smokers and that’s a major difference in life expectancy between wealthy and non-wealthy individuals. The UK laws have a lot of origins from the EU, especially for tobacco. The EU is very much responsible for tobacco-related good supply to the UK. Now, with the decision to leave the EU the tobacco regulations will definitely be affected. Yet, older laws made through the EU still remain just because they are a part of UK law now. Now that the UK is not bound to EU laws, they have a chance to make changes to the tobacco policy. Tobacco control can be made flexible and counter various tactics of the tobacco industry. Even if current regulations are removed public health will improve. A huge majority of tobacco goods still come from the EU. With a lack of trade deal between the EU and UK, the imports will become tariffed starting 2021 which will raise prices and raise tax for the UK. Research shows high prices are the way to lower tobacco use. The UK government is in a strong position after Brexit to turn tobacco-related regulations/laws in their favor. 

What do you guys think the UK should do?

Reference: https://theconversation.com/brexit-is-an-opportunity-to-stop-britons-smoking-150204

The U.S. Economy is going to GET WORSE before it gets BETTER

There is a promise of the vaccine that will be coming out and be effective, but before everything gets to normal, the economy is going to worsen before it gets better. The economy added about 245,00 just last month, with about 60% of those jobs tied to transportation companies. This pattern that we can see here during this pandemic has been compared to the recession in the 2000-2001 recession. 

A separate survey measured the household’s employment rate, which was negative for the first time since the pandemic had started in April. There is labor - market deterioration because we can see that the government’s survey on the households and saw that the number of jobs created each month. During the 2007-2009 recession, the household survey had begun to show a decline in employment 10months before the establishment survey. 

There have been many new cases that have been building up over this week. According to the New York Times tracker, the U.S. counted 216,548 new cases on Thursday and 2,885 set on Friday. 

Do you guys think that 2021 is going to go the same way it did this year?

https://www.marketwatch.com/story/the-u-s-economy-is-going-to-get-worse-before-it-gets-better-11607113936

Online Shopping Faces Top Holiday Test

 Since the beginning of March, when covid-19 was declared a pandemic, it has caused widespread changes in all our lives. One major change is the way we buy things. In shops, buying had reduced to online shopping or e-commerce. This put a huge strain on companies like Amazon and FedEx to deliver consumer goods on time even though they were getting much larger traffic than they could come with. 

An estimated three billion packages will take this festive season through the nation’s shipping infrastructure — about 800 million more than delivered last year.

Whether packages get delivered or not could break smaller retailers who have seen much less revenue due to the lockdowns and traffic in their stores. 

Many brands are trying to deliver before Christmas day and have set deadline days for items to be purchased. For example, Beatrice Bakery has set a deadline of 9th December, and Disney Store has theirs on 10th December.

Shipping companies have expanded their delivery serviced and hired more people to deal with the greater number of deliveries they have to make. “Demand exceeds capacity, no matter what part of the country you are in,” said Satish Jindel, president of ShipMatrix. 

To make up for the increased numbers, these shipping companies are hiring more workers. FedEx is 70,000 seasonal employees, and UPS, 100,000. Amazon, 100 new fulfillment warehouses, sorting centers, and delivery facilities across North America. The company has hired 275,000 full-time and part-time workers since the start of the year and 100,000 seasonal workers. 

Hopefully, all this enough to get packages to arrive in time with minimal delays, and everyone has a great festive season.

https://www.nytimes.com/2020/12/05/business/ecommerce-shipping-holiday-season.html

A $900 Billion Plan Would Help the Economy, but Not Fix It

There is talk about a $908 billion aid package possibly coming in the future. It is a bipartisan framework assembled by a group of senators. Economists have been calling for Congress to approve a stimulus for months. “The economic recovery, slowing for months, is in danger of going into reverse.” By no means is there any final plan for who it is distributed to, but “experts say the plan would provide relief to several battered corners of the economy. It includes nearly $300 billion for small-business aid, $180 billion for unemployed workers, and $160 billion for state, local and tribal governments.” Unfortunately, a plan this small won’t be able to help everyone who needs it, but it is a little boost. Biden said that even if Congress does reach a deal before the end of the year, he will be pushing more spending when he takes office. The package would extend the initial programs set to expire at the end of the year that expanded and extended the unemployment insurance program. Many restaurants and retailers made job cuts in November leading to the weakest monthly gain of recovery in unemployment data so far. At the moment, this plan would be more of a compromise and the goal is most likely to prevent millions of families from losing their income the week after Christmas based on the direction of the economy.

Tankersley, Jim, and Ben Casselman. A $900 Billion Plan Would Help the Economy, but Not Fix It. 4 Dec. 2020, www.nytimes.com/2020/12/04/business/economy/congress-stimulus-economy-impact.html

U.S. economy gains just 245,000 jobs in final report of 2020

  In November, the U.S. economy added 245,000 jobs (Bureau of Labor Statistics) while the unemployment rate fell to 6.7%. This figure fell short from many economists projections of 440,000 jobs.

    This has been most likely caused by the recent surge of Covid-19 cases across the country. State governors have seriously considered implementing a second shutdown, and many have already placed restrictions on bars and gyms. 

    "Today’s report is both a wakeup call and a warning," said Nick Bunker, Indeed economic research director. "Coronavirus cases are surging throughout the country and several federal relief programs are set to expire this month. Progress in the labor market has slowed at the worst possible time. We might be optimistic about the spring, but the winter could bring another round of economic pain."

    Shutdowns are known to slow down business which may reduce employers desire to hire new workers. Do you all believe we will inevitably experience another nationwide lockdown? And what are the long-term effects of shutdowns on bars, restaurants and the airline industry?

https://www.nbcnews.com/business/economy/u-s-economy-gains-just-245-000-jobs-final-report-n1249983

Biden's Limited Options to Revive the Economy

    Heading into the start of his term, Biden will have to take on the tough job of stabilizing and revitilizing the economy. Something, that at the start of his Vice-Presidency, he also had to deal with in 2009. At that time, the economy was in significantly worse shape, though author Greg Ip of the Wall Street Journal argues that the tools he had then far outweigh the tools he will inherit now. For one, when Biden and Obama came into office in 2009, the Democrats controlled both the House and the Senate. This allowed them to aggressively push through stimulus packages and legislation to help get the economy back on its feet. On top of this, interest rates were at a level where they could be lowered to encourage spending and expansion.

    As of now, with the Georgia Senate seats heading to a run-off in January, all the Republicans have to do is win one of these seats to hold control of the Senate. This would leave fiscal policy at the mercy of a deeply divided Congress. Republicans will likely fall back on their hatred of a deficit, stymying legislation packages that will send large stimulus to the American people. On top of this, with interests rates already near zero, much of the monetary available has been exhausted. 

    With the odds seeming very daunting for President-elect Biden, there are some positives in the situation. For one, his nomination for the Treasury Secretary is former head of the Federal Reserve Janet Yellen. If approved, she will be the first practicing economist to hold the position in over two decades. Her knowledge and background will spark a great relationship with current head of the Fed Jerome Powell. Despite his now limited tools, Powell should be very cooperative and helpful to the Biden administration in their efforts.

  How do you see Biden's recovery efforts going? Will a vaccine return things to normal, or will economic recovery have to steered by the new administration?

https://www.wsj.com/articles/biden-to-have-a-better-economy-in-2021-than-in-2009-but-worse-options-11606926003?mod=hp_lead_pos10

If too few people agree to get immunized, the value of a vaccine will be limited

 https://www.economist.com/by-invitation/2020/11/30/katy-milkman-on-how-to-nudge-people-to-accept-a-covid-19-vaccine

According to Katy Milkman, a catastrophe will unfold if too many people reject immunization. 

    With the end of covid-19 being in sight as effective vaccines move closer to approval, society is faced with yet another challenge: encouraging people to take the vaccine for this disease. It is estimated that around 60-80% of the people will need to have taken the vaccine for the U.S to reach herd immunity, however, this past September only 51% of Americans said they would take a covid-19 vaccine when one became available. Two distinct problems must be overcome. First, people who aren't ideologically opposed to vaccines must be strongly encouraged. Second, we need to ensure that people are willing to follow through. As for the anti-vaxxers, they make up a small proportion of the population and can reasonably be written off. 

    There have been many suggestions as to how these problems can be solved. Relying on information, transparency, and encouragement is only the start. Researchers show that people look to their peers for cues on how to behave, therefore the focus must be on emphasizing wide support for the vaccine to those who are on the fence about it rather than the naysayers through public messaging. Moreover, it is also important to make those who have been vaccinated visible to the public to spur others to follow suit. It has also been suggested that those hesitant about the vaccine could be incentivized through traditional mechanisms of mandates and rewards. Requiring students and health care workers would not only follow precedent (influenza), but would also protect them and build community-vaccination norms. 

    There are still many issues that must be resolved before the vaccine is released and a solution to this problem will not only require due diligence but also a little creativity. Nonetheless, the biochemist have completed their work, now it is time for the behavioural scientist to shine. What are your thoughts regarding the vaccine? If not enough people accept to be immunized, the vaccine will be pointless and we will still be stuck with covid. We have already tried lockdowns, and it has proven to be ineffective as people simply do not listen. But, should we as people have to put our long term health at risk by taking a rushed vaccine?

 

Bitcoin Reaches All-Time High

 https://www.wsj.com/articles/bitcoin-hits-all-time-high-of-19-786-topping-record-from-december-2017-11606750573?mod=markets_lead_pos3

Bitcoin, a digital currency sold and bought online, just hit a record high of $19,786.24. This new record surpassed the previous one, set in December 2017, and marks a tripling in value in 2020 and an almost doubling in price since September. This rally comes alongside high performance in the stock market, as the Dow recently reached a record 30,000 points. Market jubilation comes as the result of the Federal Reserve’s inpouring of capital into markets, along with hopes for a Covid vaccine in the near future. Because of this anticipation, bond yields are low, as investors are willing to put their money in more risky assets: chief among which is Bitcoin, an asset known for its volatility. Additionally, services like Cash App and Robinhood (retail investment platforms) that sell stocks as well as bitcoin contribute to high asset prices. 

It will be interesting to see how the price of Bitcoin and the Dow change in the next month. Although BioTech companies have been scurrying to get the FDA to approve their vaccines, it is unlikely a vaccine will be widely available before the Spring. After some point, investors may be sick of waiting for the anticipated normalcy and these high stock prices may prove artificial. It is also likely that the advent of popular investment apps, such as Cash App and Robinhood, which make it easier for young people and first-time investors to invest, will contribute to cause high stock prices, as this larger base of investors pour into a wider range of stocks, even those that would not receive as much attention without the accessibility these apps provide.

JPMorgan becomes first major bank to say first-quarter GDP will decline because of Covid surge

     The JPMorgan economists become the first to disagree with Wall Street's forecast of 2021 Q1 showing positive economic growth and instead say that due to the recent surges in covid cases the first quarter of 2021 will be negative. They see the economic growth shrinking down by one percent in the first quarter and then rising to 4.5 in the second quarter and rising even more to 6.5 in the third quarter of 2021.This all being said JPMorgan economists still think that the year 2021 will be met with good expansion in the second and third quarters due to the hopeful development of a vaccine . Not only are they predicting that the positives of a vaccine will help the economy but more stimulus checks will help the economy to see increased growth in the second and third quarters as well.  In the end, the JPMorgan economists believe that this growth we were experiencing in the months after the shutdown was the economy opening up but now the majority of the economy is opened and running and now we are facing restrictions that will slowly close the newly opened economy, Sadly the side effects will be decreased growth from q4 of 2020 to q1of 2021. Hopefully, the positives of a vaccine and more financial help from the government will help the economy grow and move past the restrictions after they are implemented in 2021.

Do you think these factors will help the economy to see growth?

https://www.cnbc.com/2020/11/20/jp-morgan-says-first-quarter-gdp-will-decline-because-of-rising-covid-cases-and-restrictions.html

US economy to shrink as surging coronavirus infections foreshadow 'grim winter'

JPMorgan Chase & Co. expects that the U.S. economy will shrink in the first quarter as states push back coronavirus reopening due to the new a wave of Coivd-19 infections, as the daily new number of cases amount to more than 141,600 on Sunday, and there have been 12.3 million cases reported in The U.S. and nearly 257,000 deaths. A JPMorgan a team led by chief U.S. economist Michael Feroli said that “The holiday season, from Thanksgiving through New Year’s threatens a further increase in cases.”

Feroli mentioned “The new measures will cause the U.S. economy to shrink by 1% in the three months through March after growing 2.8% during the final quarter of 2020,” stating that a vaccine will “limit the damage.” However, the firm forecasts that the U.S. economy will grow at a seasonally modified annualized quarter-over-quarter rate of 4.5%, 6.5%, and 3.8% in the final three quarters of next year.

Feroli further added that “One thing that is unlikely to change between 2020 and 2021 is that the virus will continue to dominate the economic outlook.”

What do you guys think?

https://www.foxbusiness.com/markets/us-economy-shrink-coronavirus-infections-surge-jpmorgan

Expiring Stimulus Programs threaten US Economy

Several critical COVID-19 economic relief programs will expire at the end of the year, which could force millions off of unemployment insurance, push many small businesses to close permanently, and raise the specter of mass evictions. This could threaten the stability of the US economy as the country enters an uncertain 2021.

In March, during the early days of the coronavirus pandemic, the $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, quickly passed both houses of Congress with bipartisan support, providing a lifeline to recently laid-off employees and businesses that were forced to close due to COVID-related shutdowns.

However, this legislative comity quickly dissipated as the pandemic wore on. The $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act, which followed the CARES Act, passed in the US House of Representatives in May but was stymied in the Senate. While Democratic House Speaker Nancy Pelosi championed the bill, GOP Senate Majority Mitch McConnell deemed it too expensive.

Stimulus gridlock has largely ensued ever since, with Treasury Secretary Steven Mnuchin working with Pelosi and McConnell for months with little progress. Pelosi wants a $2.2 trillion stimulus package, while McConnell has sought a $500 billion plan, but the leaders have not hashed out a compromise. Nor have their staffs worked together to forge any consensus on a potential bill. On November 19, Mnuchin expressed his desire to have $580 billion in unspent stimulus funds redirected to small businesses and extend unemployment benefits. It is unclear if this will occur, however, as it requires Congressional approval.

Do you think President-Elect Biden will be able to get stimulus package approved through the Congress?

https://www.businessinsider.com/stimulus-programs-cares-act-economy-covid-19-pelosi-mcconnell-trump-2020-11

October Home Sales see a 26.6% Increase

 Within the month of October, sales of existing homes soared well past expectations. In fact, sales rose 4.3% from the month of September and 26.6% annually. Also, in an interesting note, the median price for homes sold in October was $313,000 which is up 15.5% annually. This is actually the highest median price on record and reflects "the far stronger sales on the higher end of the market". 

I believe that this can be accredited to the extremely low interest rates that this country is seeing. More people are taking out loans and buying houses. The housing market is seeing a low supply and very high demand. From this, it is expected that prices increase as there is a shortage of the product.

My question for this would be, the housing market continues to increase when it is expected to "correct" and go into a decline, do you see this slowing down anytime soon? If you think it will, what are the indicators for your claim? 

https://www.cnbc.com/2020/11/19/october-existing-home-sales-see-spectacular-26point6percent-annual-increase.html

Vietnam Economy is Asia's Shining Star During Covid

 https://www.bbc.com/news/business-54997796

There have been many countries in the world that have gone through significant struggles over the past 8 months. Vietnam has actually come out of Covid doing quite well comparatively. They were able to get Covid under control pretty quickly and have been able to obtain a positive growth rate of over 2%, while many other countries will experience a negative growth rate this year. Another part of this growth has been in part due to a relationship with U.S., especially since the trade war has begun with China. Vietnam has become a spot for U.S. businesses to outsource to in search of cheap labor to make high end products. For example, Apple has started working on a production line that will produce Airpods in Vietnam. Vietnam has increased its exports to the U.S. by 23% in the first three quarters of this year. These are big steps forward for Vietnam in becoming one of the more developed countries in the world. 

Do you think that Vietnam has handled Covid so well because they didn't have the back stop of health infrastructure that say the United States has? With Vietnam's growth, what future problems is it possible that they have as they expand faster than the average developed nation?

U.S. companies with China operations look to the Asian giant for growth

https://www.cnbc.com/2020/11/17/china-important-for-us-businesses-hit-by-the-coronavirus-pandemic.html

The Covid-19 pandemic is not expected to prevent China from being the only economic power to experience positive growth in 2020. At least that is what caused the sharp rise in GDP in the third quarter. But the reliability of these data is questioned, suggesting a willingness of the Chinese authorities to take liberties with the economic reality as Beijing prepares its new five-year plan. These good results support the official rhetoric of the regime, which has repeatedly praised the resilience of the Chinese economy despite a very violent initial shock (a drop in GDP of 6.9% in the first quarter). These figures also seem to validate the policy pursued by Chinese leader Xi Jinping, who imposed draconian measures at the start of the year to contain the spread of the coronavirus in his territory. As related to US companies with Chinese operations, the article states “U.S. multinationals’ majority-owned affiliates in China brought in sales of $392.7 billion in 2018, up 4.8% from a year ago, according to the latest available data from the U.S. Bureau of Economic Analysis.” How do you think that disparity in economic recovery is going to affect multinational companies with China operations?

Is vaccine an elixir for all of economic woes?

 The world is facing dire consequences of the coronavirus pandemic. Lockdowns, social and travel restrictions, disruptions of production, cut off supply chains have created a new face of the world. Big economies are putting in a lot of cash to keep the economy afloat. The Winter surge of COVID-19 has raised new and complex questions.  is the vaccine a solution to all the problems?

Will it be an elixir to the economic woes? How quick? How far?

An effective vaccine, without any doubt, has kindled hope of getting back to normal. But the estimation and expectations of policymakers that the pandemic would be under control within a matter of months have already been failed. Clinical trials are taking place globally while Pfizer and BioNTech are on the way to get authorization by the end of this month.

While a successful vaccine will help the economy to recover in the upcoming months, but this recovery is dependent on many factors. First of all, the trail is demanding. It will take many to test and administer the vaccine to enough people before mass production. Lockdown measures have been reimposed across the West will further hinder difficulties to achieve the targets. Mass production of a vaccine that is needed globally is another challenge along with its availability. 

The price affordability also plays a key role in how easily accessible it will be and how quickly it is distributed. Wealthy and developed countries will undoubtedly be able to address the pandemic first as many countries have already placed orders for the vaccine in huge doses. This raises the question, “How long will it take for developing countries to get their hands on the vaccine?” At the end of the day, many experts think it will take up to two years to fully recover from the effects of the pandemic and for things to back to the normal speed of life. 

https://www.wsj.com/articles/a-covid-19-vaccine-would-boost-the-global-economy-but-not-all-at-once-11605087345

Small toy stores are worried they won't stay in business after this year.

 

The Winter holiday season is typically regarded as the busiest time of the year for small toy stores. Small toy stores experience a record number of sales during Thanksgiving and Christmas. Since the demand for toys and gifts increase during the festive season, shop owners expect more than usual traffic in the stores. However, this is not the case this year because the pandemic has forced people to stay inside and avoid public places. Since the pandemic, we have seen how businesses are adopting e-commerce activities and implementing strict health & safety guidelines. Similarly, consumers are also adjusting to online shopping creating a new normal. 

The small toy store retailers are concerned about the implementation of new operational protocols. They can’t keep up with their forecasted sales since there is a limit on the number of people allowed in a small retail outlet. Similarly, with low sales, it's difficult for them to maintain the expensive PPE inventories. Furthermore, small retailers in the toy industry don’t have the necessary resources to shift their businesses online overnight. This is where big businesses like Amazon and Big Box have an advantage over small toy stores. They can benefit from a situation like these by capitalizing on the customers lost by small toy stores. Experts suggest that this holiday season can further widen the gap between large chains and small toy stores. Do you think that the small toy store industry will be able to survive? 

https://www.cnn.com/2020/11/14/business/toy-stores-small-business-amazon/index.html 

Here are the things that scare Jerome Powell the most about the economy right now

In the article they talk about the many concerns that the chair of the Federal Reserve, Jerome Powell, has about the long term effects of the coronavirus. He says that he is worried about the long term affects on the children who are not getting the proper education due to the pandemic and the many business owners who have struggled as a result of the pandemic.

He also asserts that although we are recovering, our economy will not go back to what it was before the pandemic. Instead he believes that the new economy we are transitioning into will have an emphasis on technology. We have seen this through the adaptation of Zoom into the work environment. Powell believe that this new shift towards technology will make it even more difficult for some workers to get back on their feet.

I agree that this new focus and use of technology in the work environment will definitely affect lower skilled workers who are also often people who struggle financially. 

Fed leaders differ on how to boost virus-ravaged US economy

According to the article, the leaders of the US Federal Reserve banks differ in their views on what it will take to get the country’s economy back on track in a troubling surge in coronavirus infections. The St Louis Fed President James Bullard says that the economy can recover if households are just shoved in the right direction, where he means to push them to wear masks and take other steps that health officials have urged. For the New York Fed President John Williams, he believes a full economic recovery will have to wait for a vaccine, with the health crisis putting a question mark on the economy. Whereas, Minneapolis Fed President Neel Kashkari has called for a four to six-week national lockdown to try to stop the pandemic.

Likewise, Pfizer Inc announced that there experimental COVID-19 vaccine is more than 90 percent effective, according to initial trials. However, the very large rise in COVID-19 cases recently clearly puts a question on the ability of the economy to getting back on track.

https://www.aljazeera.com/economy/2020/11/13/us-federal-reserve-leaders-debate-economic-risk-as-covid-surges

COVID-19 Vaccine Eclipses US Elections as Economy Game-Changer

The COVID-19 Vaccine, announced by Pfizer, who developed the vaccine with Germany's BioNTech, has been proven to be 90% effective. The enthusiasm of having a vaccine brought hopes on Wall Street as a gamechanger. Even though there is a slow economic recovery on the main street, Wall Street has already started positioning portfolios for investors by looking at how the economy will be performing a few months from now. Many investors believe that with the announcement of the Pfizer vaccine, everything has become more normalized. People have started going out to restaurants, booking flights, hotels, and planning holidays. 

Joe Biden, the newly elected president, made sure to make it known that even though there is a vaccine, even if it does work well, it won't be made available until a couple of months, so we should stay safe. With the rise of Covid cases this week, everyone needs to take care of themselves and quarantine. Joe Biden has spoken about how there will be another wave of Coronavirus in a few months by looking at the number of cases. There have been records set this week of the number of people who have gotten Coronavirus. Because of the vaccine's announcement and the reckless booking of flights and holidays, advertisements are being sent out by different companies to stay home and enjoy. To watch movies at home instead of going to the theatre. 

With the vaccine being 90% effective, do you think that its effectiveness is good as a vaccine?

https://www.aljazeera.com/economy/2020/11/15/covid-19-vaccine-eclipses-us-elections-as-economy-gamechanger

Walmart resumes counting customers in stores and grocers reinstate limits on toilet paper as coronavirus cases surge

 Since yesterday Walmart has restarted counting the number of people/customers in their stores to track occupancy limits as COVID’19 cases have now started surging once again. Back in April, rules were strict as Walmart did not allow 20% occupancy exceeded in their stores across the U.S. Soon after COVID’19 cases had dropped in numbers, they stopped counting the number of people entering. Now, they are going back to taking precautions because U.S coronavirus cases, as mentioned, are rising rapidly by the day. Some of the major grocery brands had started putting purchasing limits on toilet paper and sanitizer, which goes back to when COVID’19 had started peaking months ago. Back then, panic buying had started, so stores are now taking precautions beforehand. Major names like Kroger, Wegmans, and Giant Foods have put purchase limits on certain items, just like those mentioned above. Walmart is also set to divide its Black Friday in-store sales into three separate events to prevent the spread of COVID-19. 

Do you think people will again go into “panic-buying,” or was that just a one-time thing. Have the various brand names mentioned taken the right decision to put purchase limits on certain products? Lastly, what effects will this latest surge of COVID-19 cases have on the economy?

Link: https://www.cnbc.com/2020/11/14/coronavirus-walmart-resumes-metering-customers-in-its-stores.html

Coronavirus in Spain

Spain is a very important country in the world, however it needs to undergo serious systematic market reforms. The coronavirus crisis has destroyed Spain’s economy leading to its worst recession since the civil war, and the low tourism and shutdowns make a recovery seem very far away. Spain had one of Europe’s largest outbreaks and strictest lockdowns so their economy came to a stop in March and stayed that way up until the end of June. It shrank 18.5 percent in the second quarter, a drop so harsh that it wiped out all of the recovery achieved since the 2008 global financial crisis. The government relied on tourists from northern Europe and further to contribute to a third quarter recovery, but quarantines and travel advisories have ruined this as Spain has new localised outbreaks of Covid-19. Their tourism numbers decreased even more when Britain required all travelers to Spain to quarantine when they arrived home and Germany put three Spanish regions, including Catalonia and Barcelona, on its list of high-risk areas. Spain normally received about 80 million tourists annually and has depended on tourism for about 12 percent of economic output. Spain needs to start reforming to make a recovery from its sufferings this year.

https://www.reuters.com/article/us-spain-economy-gdp/spain-dives-into-deep-recession-tourism-woes-bode-ill-for-rebound-idUSKCN24W0WF

Covid cases rising across the U.S.

Over the past two weeks, the U.S. has experienced a third surge of positive COVID tests. Since September cases have risen from under 50k a day to a little over 150k currently. On Friday, California became the second state to hit one million Covid cases, after Texas. And while deaths have lowered, around 1,000 people succumb to complications associated with the virus each day.

In response, many governors are starting to implement more restrictions on bars, gyms, and restaurants. They have even considered the idea of going into a second lockdown. The Oregon governor started a two week mini-shutdown to help slow the spread, saying "I'm not asking you, I am telling you, to stop your social gatherings ... and your house parties and to limit your social interactions to six and under, not more than one household."

Do any of you believe a second lockdown is imminent? And, if so, what will the long-term implications on our economy look like?

https://www.bbc.com/news/world-us-canada-54935700

Housing Prices Continue To Rise

Before Covid, the housing market was experiencing high prices and growth. In fact, most homes increased in value at all time records. Once Covid hit, one would expect this market to take a hit like many others did. However, we were wrong.

Covid has actually increased housing prices as the pandemic boosted housing market activity in a way not seen in recent history. Moreover, during the third quarter of the year 181 metro areas tracked by the National Association for Realtors was "higher in the third quarter from a year earlier." 

Houses have appreciated at record highs for a long period of time now surpassing the predicted decline in the market. Do you foresee any signs of slowing down in the future, or will this market just continue to increase because if a pandemic cannot stop it, what can?

https://www.wsj.com/articles/home-prices-are-rising-everywhere-in-the-u-s-11605220823

Jobless Claims Lower

 The weekly jobless claims which were reported for the week of November 7th were lower than expected by the Dow Jones' economists. The week prior, claims were at 757,000 and economists were expecting around 740,000 claims to occur the week of the 7th. In reality claims came in at 709,000 which marks the fourth consecutive week that claims have decreased.

Although numbers are lower in the last four weeks, there are still serious concerns about the lasting effects of coronavirus on the economy. With a large number of people still unemployed and a lack of a stimulus since the original one in April. The Fed is calling for another stimulus to be passed soon to assist in the safety of the economy.

https://www.cnbc.com/2020/11/12/us-jobless-claims-709000-vs-740000-estimate.html

Jerome Powell's thoughts on the economy

 On Thursday Federal Reserve Chairman Jerome Powell indicated that his main concern regarding the pandemic surrounds women, children, and business owner who are susceptible to the long term consequences from the pandemic. He goes on to explain by elaborating on each piece of his statement. He first begins by saying that it is not by choice that women are out of the labor market as the pandemic has caused this. What was interesting is when he explained his concern about children he said he was concerned about kids not receiving the education that they should be getting. Within the grand scheme of things Powell talks about the business owners who have just simply been out of work and are losing the connection to the labor force as well as the life they had. With the expected surge in COVID cases Powell indicates that displaced workers will need to receive extended support. An interesting point that Powell makes is that the economy we will be returning to will be heavily leveraged in technology, this poses a challenge for many workers who are not versed in technology like the younger generations. Overall Powell's main take away was that even after the pandemic becomes subdued with the vaccine there will still exist a group of people who will still require support due to the fact that the economy is vastly different than the one they once worked in. 

https://www.cnbc.com/2020/11/12/here-are-the-things-that-scare-jerome-powell-the-most-about-the-economy-right-now.html

The Case Of The Soaring Car Prices

 The Case Of The Soaring Car Prices - Podcast

Usually, cars depreciate over time. However, since the pandemic hit, car prices have been skyrocketing. A guy named Aaron Springer was able to sell his 2014 Volkswagen Jetta SportWagen during the pandemic that he bought used in 2018 for $1500 more than what he paid for. Why are cars getting so expensive?

There are four main reasons why supply of cars is decreasing. First, production of vehicles stopped as a safety measure when the pandemic hit. Second, some states put a moratorium on car repossessions since it is a really devastating time to lose a vehicle, meaning less used cars are entering the market. Third, rental car companies weren't buying new cars to replace their older used cars which usually injects around 2 million used cars into the market every year. They've held onto their vehicles because no one was driving what they already had. Fourth, lease extensions were granted because no one wanted to deal with lease renewals during a shutdown, so those cars didn't enter the market when they were supposed to.

There are also four main reasons why demand increased. First, the stimulus check stimulated demand because people wanted to put the money towards a car. Second, people are afraid of using public transportation due to fear of getting sick, so cars are the safest transportation option. Third, people who had a car are now looking for a different car due to lifestyle changes from COVID. For example, someone may now have a longer commute, and they want a more eco-friendly, small car. Fourth, people who are working during the pandemic have extra money to spend because they aren't going out and spending their money. Plus, interest rates are low.

These eight culprits are the reasons why car prices have been soaring during this pandemic when people predicted the opposite. There's more competition struggling to get cars from a smaller pool of options.

Fed’s Bullard Says Economy Has Recovered Faster Than Expected

The Federal Reserve Bank of St. Louis leader James Bullard gave an update today. He said that the US central bank policy is in a good place right now following Covid challenges. Regarding the monetary policy, Bullard said “we don’t know what’s around the corner as far as the crisis goes, so all those things make me think that we’re in a good position for now.” 

The interest rates are at very low levels which aren’t expected to change much and there is seemingly a significant pace of purchases. He didn’t show much concern towards more stimulus because of the larger first round of fiscal stimulus which is still helping the economy. He also thinks that there is more improvement still coming with the unemployment rate. He said unemployment, which is currently at 6.9%, “could fall to between 4.9% and 5.5% by year-end, depending on when workers are called back.” Unfortunately, Bullard didn’t give any insight into possible policies going forward, but he noted that central bank and government aid have been effective during this Covid economic shock.  

I agree with him that policies and aid thus far have been effective. I am not sure that I agree with stimulus being unnecessary at this point because many people and many businesses are still facing serious hurt. Do you agree or disagree with Bullard’s statements? What possible economic events do you think are coming our way that could change our current economic position?

Derby, M. S. (2020, November 13). Fed's Bullard Says Economy Has Recovered Faster Than Expected. Retrieved November 13, 2020, from https://www.wsj.com/articles/feds-bullard-says-economy-has-recovered-faster-than-expected-11605274229

 

What a vaccine means for America’s economy

The news of a vaccine may curb the threat of the US economy sliding into a recession. Before the news of a vaccine was publicized the US economy was already recovering better than what was predicted. With many countries in Europe begging shutdown and lockdowns the US will likely follow suit in the next coming months but not as severe as European countries, these more relaxed restrictions will help the economy not lose much momentum on its journey of recovery. As the news of the vaccine breaks the chance of having a vaccine will only help our economy in it a trend to pre covid levels, all this being said the economy is still not predicted to be in the state it was in before covid until 2022 or even later but the signs of a vaccine will help the US decrease it record-breaking infection rate. Everything in the US economy seems to be trending in the right direction but we must keep in mind that these future lockdowns will hamper economic growth and employment growth. The delay of stimulus packages being passed is also a problem we will have to face. Even though the signs of a vaccine have appeared, the economy can still be set back by the constant increase in covid cases through the US, we still have a long road to travel to fully recover but it seems the road is paved for us to travel.

What do you think the act of having a vaccine will have on the economy and do you think it will come in time before the US sees lockdowns and restrictions?

https://www.economist.com/finance-and-economics/2020/11/14/what-a-vaccine-means-for-americas-economy

Big tech and corporate tax cuts: the targets of Joe Biden's urgent economic plans

When Joe Biden enters the White House on 20 January, he will face arguably the biggest set of challenges a president has had to tackle since the end of the second world war. The coronavirus is raging through the US, millions of Americans are still losing their jobs each month, and the climate crisis – ignored by the Trump administration – is deepening. Biden has set out his economic and policy plans, but without control of the Senate he may struggle to realise them. Official GDP figures for the third quarter showed the size of the economy was still almost 4% below its previous peak, despite a 7.4% recovery from the spring lockdown according to the article.

Biden intends to use wartime legislation known as the Defense Production Act (DPA) to compel US businesses to make personal protective equipment (PPE), medical supplies, ventilators and whatever else the US needs to tackle the pandemic. The DPA gives the president broad powers to force a business to come to the aid of the country.Biden has also set out plans to increase unemployment insurance, send more direct payments to struggling Americans, forgive some student loans and provide more aid to small businesses.

Climate change is the “number one issue facing humanity”, Biden said last month and his administration has ambitious plans to tackle a crisis that the Trump administration downplayed and ridiculed. His plans include ensuring the US achieves a 100% clean energy economy by 2035 and reaches net-zero emissions no later than 2050, raise the corporate tax rate to 28%, from 21%, impose a minimum tax on all foreign earnings of US companies located overseas in an attempt to stop the use of foreign tax havens and a few others.

Do you think Biden's policies will prove effective to recover the economy?

https://www.theguardian.com/us-news/2020/nov/07/joe-biden-most-urgent-economic-plans-key-elements

How to fix America's Treasury Bond Market

     It is no secret that this year has been an extraordinary one for American government debt. Typically, the American treasury bond market is the worlds most liquid bond market even in times of economic downturn. However, in March, the market seized up and as panic about Covid-19 flooded the U.S. To fix this, the Fed bought back as many treasury bonds in a span of two months than it did during the five year period of quantitive easing following the 2008 financial crisis. The market has become flooded with new issuances, but over the past week bond yields have begun to fluctuate as investors weigh the odds of more stimulus now that the election has come to an end. 

    Regardless of whether or not a stimulus is passed in 2021, the budget deficit will most likely stay 8% above GDP, an ageing population will continue to lift health care spending, and the Fed will be unable to cut rates any lower. These three factors combined with a supersized bond market will amplify the probability of increased market stress and its consequences. According to Randal Quarlers, vice-chairman of the Fed, the "sheer volume" of new issuance could lead to disruption of the U.S gov's ability to borrow and cause tremors around would financial systems. 

    There are currently two fault lines for these markets. The first one being that when Uncle Sam issues new debt, a group of dealers (mostly banks), are obliged to buy it up at a reasonable price and leave it to pile up on their balance sheets and pushing banks closer to breaching capital requirements set by regulators. This will lead to banks being unable to act as intermediaries for investors, and would ultimately cause investors to pull their money out of markets. The second fault line is the possibility "repo" interest rates spike up drastically in a short period of time. The repo interest rate is extremely important in terms of economic stability and anchors borrowing rates for businesses and households. 

    There are a few quick fixes to this problem. A temporary exemption of cash and treasuries from banks leverage rations should be made permanent and the number of primary dealers could also be expanded to minimize any issues if some of them get in financial trouble. Nevertheless, it would be wise to implement a more long term solution. The primary-dealer system should be phased out for a clearing house for treasury trades which would let smaller firms dealer with each other rather than having an intermediary middle man clogging up the market. The Fed must also get a grip on rates in the repo market by lending at its target rate to any entity that can provide short term treasuries as a collateral. 

https://www.economist.com/leaders/2020/11/07/how-to-fix-the-market-for-treasury-bonds

EU's lawsuit against Amazon

 

Antitrust charges have been brought against Amazon by the European Union regulators. They say Amazon has been using its size to unfairly bully and harm smaller merchants that rely on them to reach their customers. 

The regulators say Amazon takes data from sellers of products to customers and in turn makes similar products and sells them for lesser prices, thereby undercutting and pushing out the original seller of that product. Margrethe Vestager, the commission’s vice president for digital issues, said "We must ensure that dual role platforms with market power, such as Amazon, do not distort competition". 

This charge has also been slapped on tech giants Apple, Google, and Facebook. In October, the Justice Department of the USA leveled antitrust charges against Google. These charges on all these tech giants are only so they don't become monopolies and distort markets for their sole benefits. 

In time we would find out if the charges on all these companies change the course of our way of life. 

https://www.nytimes.com/2020/11/10/business/amazon-eu-antitrust.html

Vaccine news gives a much-needed boost to economic outlook

 https://www.cnbc.com/2020/11/09/vaccine-news-gives-a-much-needed-boost-to-the-economic-outlook.html

Pfizer came out early this week to announce that their vaccine had a 90% success rate in trials. This news gave a gigantic boost to the economy in hopes that we may be moving to getting a working vaccine out the public. This vaccine would mean big things for many businesses, such as they would be able to go back to running at full capacity. In addition to this, there are also consumers who have not been leaving their homes. This news follows just a week after we saw record breaking GDP growth in Q3. Also this news comes at a time where we continue to have record breaking cases day after day and it is beginning to become more of a concern. 

The speculation is that a vaccine would add a lot of hope to the economy in terms of growth and jobs. However, I think at the same time a vaccine could help out the economy a good amount, there are also corporations that have thrived amidst the pandemic. These companies such as Zoom, Amazon and other tech stocks have seen some unprecedented growth. But this growth may end up being wiped out by a vaccine because they have established themselves as a way to get around the virus. 

Do you think that this boost to the economy may actually be taken away from because of the losses to companies like Amazon and Zoom? How quickly could a vaccine help the economy?

“Systemic racism is a drag on the US economy”

It is undeniable that systemic racism is still an issue in the United States. Oftentimes, however, we do not always assume the consequences it can have on the economy and its vitality. In this article from msn.com, the authors argue that systemic racism is a challenge to the U.S. economy. They attribute two reasons to this: knowledge and talent. According to them, “Knowledge is developed by talent, and it takes talent to effectively make use of knowledge.” Systemic racism stalls economic vitality in the sense that it restricts supply of talent which, in turn, threatens both our prospects for growth and social cohesion. Moreover, it deprives and/or limits minority groups and lower class individuals from access to key structures and goods and services which would play in their knowledge and talent development, which the authors categorize as intangible capital.

The authors also state that “by opening the gates of knowledge and talent, we can advance social justice, combat prolonged recession and build much-needed social cohesion.” In fact, for example: “research journals suggests that between 20 percent and 40 percent of the growth that took place in the United States between 1960 and 2010 can be explained by the removal of racial and gender discrimination in talent development.” All evidence from research and others mentioned in the article show and indicate that addressing systemic racism is critical for U.S.economic recovery and long-term vitality. What are your suggestions on how systemic racism can be addressed, and how that would specifically transform the U.S. economy?

https://www.msn.com/en-us/news/politics/systemic-racism-is-a-drag-on-the-us-economy/ar-BB1aJw0u?ocid=uxbndlbing

Where Does Friedman Fall Short?

 https://www.gsb.stanford.edu/insights/anat-admati-milton-friedman-justice?sf131463165=1

In this article, Anat Admati criticizes one of the most popular tenets of Milton Friedman: that corporations should be solely concerned with maximizing shareholder’s wealth. While this approach is not inherently immoral, Admati argues that Friedman’s argument rests on the assumption that “businesses operate in an environment of ‘open and free competition without deception and fraud’” (Admati, 2020, para. 2). This position presupposes that governments are able to fairly monitor and control corporate corruption and that businesses intend to act in the best interest of society. Admati highlights the ease in which corporations can be formed, often for immoral purposes such as to instigate money laundering schemes. Once these corporations are formed, there is often limited government regulation. For instance, Admati notes a lawsuit where PG&E only paid $4 million in legal penalties for committing 84 cases of manslaughter, due to their role in a California fire. Similarly, despite several fraud charges against Purdue Pharma, for aiding in the illegal sale of opioids, no individual from the company was sent to jail. While it is easy to point to these and other examples as merely a few instances of corporate wrongdoing, Admati notes the difficulty that the U.S. Department of Justice faces in combating corporate crimes.  

These problems raise a question central to this class: how much should the government be involved in an economy’s operations? Given that corporations have been able to get away with an array of crimes, Admati argues that Friedman’s view of limited government is not able to handle a society that can truly maximize shareholder wealth. It is possible that the American public’s hostility toward government intervention is ultimately backfiring, as corporate misconduct that hurts those we assume it will protect. With a less binary view of government as something that should either be completely absent (advocated by Friedman) or completely controlling (as found in socialism), it will be easier to regulate corporations and ensure they are truly working on behalf of their shareholders.

PRESIDENTIAL DEBATE (Healthcare) (BLOG 5)

The final presidential debate was held between Donald Trump, representing the Republican party, and Joe Biden, representing the Democratic party. The discussion was much calmer and more relaxed this time. Both the President and the Vice President did not argue as they did in the previous debate. This debate was made by Kristen Welker, a journalist who works for NBC News.   

Affordable Health Care is very important because of COVID – 19 and with the economy not doing, people losing their jobs they need to have some sort of way to afford Healthcare. The first question was asked to President Trump about how he would do better health care acts and his first response. Not to talk about the plan but talk about how the elimination process is going for the Obama Care. He pointed out how there were problems in health care since it was run, so people would have to pay a lot of money. He pointed out that the Removal of Obama Healthcare is in process at the Supreme court. He then followed on to talk about how he would come up with a ‘brand new beautiful health care’. 

On the other hand, Biden care was a fully ready plan to launch and be provided to the public which is going to be run by the government. He said that this would have a public option, so people who have their private insurance would not have to change to this health care. There was an analysis done by a nonpartisan who said that this plan that Biden is proposing would reduce the prices on the ACA exchanges and lower the Employer-Based Premiums. Trump had promised that he would make a better plan than the ACA which was going to protect people who had preexisting conditions, but when this plan was studied by the experts, they said that is going to be pretty expensive compared to the previous Healthcare. Trump also started talking about Bernie Sanders and the idea that he had failed and Biden’s response to him was that Trump didn’t know who he was standing against him because he was mentioning people he beat. Biden said that ‘I beat all those other people because I disagreed with them.’ 

What do you guys think about the answers from both parties? Do you think they justified their answer?

www.nbcnews.com/politics/2020-election/trump-says-obamacare-must-die-biden-says-he-ll-make-n1244454.