Economic Recovery from Pandemic may favor the wealthy

 Many experts are beginning to worry about whether or not economic recovery from the coronavirus pandemic will further create a division between those under the poverty line and the top 1%. Primarily, economist are worried about a "K-shaped" recovery which would entail growth, but split sharply between industries and economic groups. As the stock market surged in March and see new heights, GDP plunged at its most ever at an annualized rate. Furthermore, something else to not is that 52% of stocks and mutual funds in the market right now are owned by America's top 1%. When examining what stocks have rose during this pandemic, it has been mostly tech companies. These dominating stocks help paint a picture of how our economy is shifting and leaving those behind with less access to the technology that will help shape our recovery. 

https://www.cnbc.com/2020/09/04/worries-grow-over-a-k-shaped-economic-recovery-that-favors-the-wealthy.html

Budget deficit to hit record $3.3 trillion due to virus, recession

"The federal budget deficit is projected to hit a record $3.3 trillion as huge government expenditures to fight the coronavirus and to prop up the economy have added more than $2 trillion to the federal ledger," the Congressional Budget Office said. This means that federal debt will exceed annual gross domestic product next year, which in the article is mentioned that this will be a milestone that would put the U.S. where it was in the aftermath of World War II when accumulated debt exceeded the size of the economy. The article also mentions that this $3.3 trillion figure is more than triple the 2019 shortfall and more than double the levels experienced after the market meltdown and Great Recession of 2008-09. This clearly is an alarming situation.

https://www.cnbc.com/2020/09/02/budget-deficit-to-hit-record-3point3-trillion-due-to-virus-recession.html

Job growth expected to slow sharply over the next decade, Labor Department says

     The Labor Department is expecting there to be 6 million new jobs added between 2020-2029, meaning the growth rate will only be around 0.4% per year in comparison to the 1.3% annual growth rate between between 2009-2019. In a bar-graph provided by the Bureau of Labor Statistics, Healthcare Support and Community and social service are expected to have the largest growth between 2020-2029  while occupations such as Farming, Sales, Production, and Office and Administrative support are expected to a negative percent change. They said that this is "a reflection of 'the outlook for business investment and efficiency gains anticipated in the use of labor and capital inputs.'"

North Korea's New Propaganda Push

 Recently, the North Korean regime has been busy with more ways to export their propaganda into western civilizations. Only this time, it is disguised in a different way. Normally, we are used to the North Korean propaganda that depicts the United States as the true evil and their issues with us. They usually try to show how strong of a military they have by flashing their arsenal as part of their tactic. However, now we are starting to see them shift away from this blueprint and into a different light.

    North Korean vlogger, Una, is now taking to the streets of North Korea to show a more softer side of her country. She shows viewers classrooms, grocery stores filled with items, places to run, and even all of the things you can do for fun in North Korea. The interesting part is she speaks in English and has French and North Korean subtitles. This is no doubt an attempt to export their propaganda into western countries. 

    We have talked a great deal in class about capitalism vs. socialism. Considering North Korea is one of the last remaining true socialist countries and there is a rise in people with socialist ideals within the United States and other countries this might become interesting. My only question is do you think this tactic will work or has North Korea is "too far gone" in the eyes of everywhere else?

https://www.wsj.com/video/north-koreas-new-push-to-export-its-propaganda/20405C1A-228A-46A9-844D-E43C64FA9EBE.html

US Debt to Exceed GDP for the First Time Since WWII

     As the coronavirus continues to ravage the nation and the economy, the government has been forced to support both business and workers with massive relief bills. Through multi-trillion dollar stimulus packages and massive industry bailouts, Congress has gone into the equivalent of war time spending. This has led to the US government debt exceeding the national GDP in the 2021 fiscal year, something that has not happened since WWII. The ratio of debt to GDP has exceeded 100% in quarters, though it has not exceeded it for a full fiscal year in almost 70 years.

    After WWII debt levels remained fairly stable and the debt to GDP level dropped to around 50%. However, economists today do not see this trend happening. The deficit was expected to continue growing over the next decade as much of the population aged and Social Security and Medicare remained in place, though the pace it is at now is unsustainable. The US is projected to be the only advanced economy to have a rising debt to GDP ratio after 2021. The issue with this comes with interest rates, and the sensitivity the debt will have to even small shifts in rates.

    Deficit spending in a time of crisis is necessary and inevitable to stabilize the economy and support citizens. It is after these crisis' are solved when things must be done to rebalance the budget and the economy. In the coming years the US will be forced into tough realizations over what to do with its debt problem.

https://www.wsj.com/articles/u-s-debt-is-set-to-exceed-size-of-the-economy-for-year-a-first-since-world-war-ii-11599051137?mod=hp_lead_pos5

The Fed's View on Inflation Rates

 https://www.bbc.com/news/business-53933239

The Federal Reserve has recently come out and said that they will be targeting "an average of 2% inflation, rather than making 2% a fixed goal". This will allow for some variability in the inflation rate in the coming months and years. 

The Federal Reserve views this as necessary because of the current situation with the pandemic. They are trying to keep unemployment as low as possible, even if that means sacrificing the inflation rate. I'm confident that the Fed could get the inflation rate under control if they needed to by raising interest rates, but they are trying to make loans as obtainable as possible for corporations and individuals. 

Do you think it is a good idea to sacrifice the inflation rate to keep loanable funds readily available for those who need him? Or should the Fed be targeting inflation before unemployment and other issues?

More Space, Please: Home Sales Booming Despite Pandemic, Recession

    The world continues to suffer from the COVID-19 pandemic which has crippled the economies of several countries. Thousands of individuals within the United States lost their jobs while others moved to work remotely. Several industries have struggled and faced losses, whereas others have managed to emerge out of this pandemic stronger, for example, the housing industry.  

    In his article 'More Space, Please: Home Sales Booming Despite Pandemic, Recession', Chris Arnold discusses the various factors that have contributed to the rising sales in the housing industry despite the ongoing crisis. The housing industry saw a steep decrease in sale from mid-February to late May. In June, however, the sale of existing homes rose by 20% Although this seems like a huge increase, but in my opinion this percentage tells us nothing. There was an increase of 20% from the previous month but when we look at the numbers, we see that the actual numbers are lower than what they were pre-pandemic.

    In July, there was a 25% increase in sales, and the numbers were higher compared to those in the pre-pandemic world. We clearly see an increase in the number of houses being bought. The reason behind this rapid drive are low mortgage rates (which are continuing to drop).

    Despite the historically high unemployment and an uncertain outlook for the economy, the housing market is recovering.

https://www.npr.org/2020/08/28/906725372/more-space-please-home-sales-booming-despite-pandemic-recession/

American Airlines to cut workers up to 19000

Covid-19 has brought terrible misfortunes to people all around the globe. From losing family members to suffering through the terrible illness, to losing jobs and income, people's lives have been changed in such a short space of time that a lot of people couldn't have imagined. 

In a bid to slow the spread of the virus, measures have been put in place by various countries to varying degrees of success.

In the USA, this is no different. Many economists and well-renowned thinkers say a recession is imminent. Job losses in the thousands and even millions are pushing people into debt. A lot of people might lose their homes causing a chain of effects not seen I'm decades-at least in these numbers. 

The airline industry has been hit very hard as people are trying to follow guidelines and general fear of contracting this dangerous virus. Air travel isn't as it used to be and it might never be the same again. 

According to the New York Times, "American Airlines warned employees on Tuesday that it would cut up to 19,000 workers on Oct. 1, saying that there was little sign that the pandemic-induced reluctance to travel was diminishing."

It also goes further to say "the company expects to have about 40,000 fewer employees on Oct. 1 than it did before the pandemic, a 30 percent decline in its workforce." 

These announcements have been made to put pressure on the government to give stimulus packages to the airline industry so these companies can pay their staff and not have to resort to laying off these huge numbers of workers.

For many other businesses, like hospitality and live entertainment, time is running out for them. Other sectors remain either shut down or severely restricted.

Cases of the virus remain high throughout the country even though the numbers are dropping slowly.

Niraj Chokshi and Ben Casselman from NYT write "Things could get worse in the coming months. Restaurants and other businesses that have been able to shift some operations outdoors will struggle when the weather turns colder. And health experts warn that infections are likely to rise again in the fall and winter. That means businesses have to prepare for the crisis to last well into 2021 — which in many cases will mean further layoffs and cost-cutting."

American Airlines expects to fly less than half flights in the remaining months of the year as compared to last year.

United Airlines aims to fly 50% until a vaccine comes around.

Domestic travel has fallen 44% whereas international flights have fallen 75% in the USA alone. 

Airlines have gone to great lengths to try to comfort a hesitant public, including by imposing mask requirements, cleaning planes frequently, and limiting seating capacity. But those changes have not brought passengers back in force as expected by airlines. 

It is only a matter of time before we see if this situation gets better or suffers even more.

https://www.nytimes.com/2020/08/25/business/american-airline-furlough-19000.html

 https://theweek.com/articles/925458/coronavirus-crisis-capitalism

In this article, Noah Millman analyzes the impact of recent government assistance programs and how these policies demonstrate the complexities of a capitalist economy that leans heavily on government aid. The author recounts a recent encounter with a restaurant owner who explained the effects the government’s loan has had on the restaurant industry. This restaurant owner, who Millman met because she was doubling as a waitress, explained that the government assistance deterred restaurant employees from coming to work. Although working, while still receiving government assistance, would increase employee’s pay, the risk of coronavirus infection from waiting tables dissuaded employees from coming to work. Additionally, because fewer customers are visiting restaurants, a limited supply of tables minimizes money from tips. However, even if the current government payouts are sufficient to keep workers at home, this solution is not sustainable. Because the government’s rationale behind their financial support for small business employees was to “freeze” the economy temporarily, while medical experts figured out how to solve the pandemic, it is clear this process cannot work much longer. With the death tolls of coronavirus rising, and no end to the pandemic in sight, the government cannot afford to offer this level of assistance forever.

The struggle to contain the virus, while helping usher employees back to work illustrates not only an economic dilemma, but a moral one. Millman captures this point succinctly: “On what basis can the government ever legitimately say: wait tables or you won't eat?” Because the government wants to ensure workers are being taken care of financially, it will likely continue to spend on their behalf. However, this approach undermines the root of capitalism — that a free market, without government assistance will naturally produce the goods and services society desires. Unfortunately, because of the moral concerns of forcing employees to go back to work, a capitalist model is insufficient to correct the economic pains of the coronavirus. Of course, restricting government assistance is not the remedy either, as this form of financial relief is the only backbone many Americans have. Yet, because such a solution cannot last forever, the government’s policy and financial guidance must be meticulously guided, understanding the weight each piece of fiscal policy carries in the pandemic. 

Coronavirus and Rent

    Since mid-March, COVID-19 has shook the whole world. In the U.S., the virus caused nationwide fear/worry, countless job losses, and lockdowns of all non-essential business. This has lead to an economic growth rate of -5.9% and an unemployment rate of about 10%. The US gov't implemented some aide to citizens such as the CARES act which included a flat $1200 tax credit for individuals.

    Yet many Americans were late or even completely missed out on rent payments from April to August. And with the expiration of eviction protection under the CARES act, a potential 40 million renters can be removed from their residence in the coming months. Although we will incur a great cost, I firmly believe the US gov't should extend protections to renters and/or provide another round of stimulus checks to assist the working class. Most of whom were hit more severely by this pandemic.

    I would love to hear any thoughts you all have on how we can handle this crisis.

https://www.nbcnews.com/think/opinion/coronavirus-rent-freezes-are-ending-wave-evictions-will-sweep-america-ncna1230916