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. 

White-collar job cuts are increasing.

The pandemic severely affected low-income jobs in mainstream industries such as hotels, restaurants, and retail however now we are noticing a similar trend spreading in high-income jobs. When corporate level layoffs increase it’s a pure indicator of the economic impact of a recession and tells us that there is a traditional recession happening beneath the surface of this public health crisis. The white-collar job cuts are increasing as we move further in this pandemic. Big insurance company Allstate announced that it would layoff about 3800 workers. ExxonMobil plans to layoff 1900 workers, mainly at the headquarters in Houston. Raytheon a major defense contractor plans to layoff 5000 workers, mostly corporate employees, and contract engineers. Similarly, people working with state and local governments are also at risk because of the reduced budgets. 

Economists argue that this is a secondary impact of the pandemic which will slow down the recovery process as layoffs ripple across different industries. Generally, in recessions, higher-wage workers are better off since they have stable jobs and savings. However, increasing layoffs in the white-collar sector during a recession can be very impactful because they spend the most. Are we moving towards a white-collar recession?

Money-Printing Slowdown Leaves Governments to Take Up Stimulus Slack

 As many of the world's largest central banks have reduced the frequency at which they are printing monies, government entities are taking the decision to increase their spending. Governments are working to prevent and minimize the havoc that would stem from the possibility of another shutdown. As European countries begin entering their second wave of shutdowns, and the United States prepares for its heavily anticipated presidential election, even small changes to economic policy is leaving economists, politicians and the alike in states of angst considering current social and political climates; hence the current trend of wanting to balance the money-printing slowdown with other fiscal stimuli. The Bank of China is said to have determined that they have sufficiently provided fiscal assistance and shows little signs of a willingness to do more. The European Central Bank, People's Bank of China and the Bank of England are said to be following a similar trend. This also includes the US Federal Reserve.

Europe's biggest asset manager is cited as saying that this slowdown will be a cause for concern for months to come and that it "may cause a sort of taper tantrum in markets and a possible re-pricing of inflation expectations." As a precaution, IMF experts are urging governments to “ensure fiscal support is not withdrawn too rapidly.”

For Retailers, a Halloween Shock: It’s Actually Happening

Sales of Halloween costumes and decorations have been stronger than what was expected with the pandemic. People are seeing this day as the last day for the kids to have fun outdoors before winter hits. “While Mr. Berman, like many other business owners, has welcomed the volume of Halloween sales given the uncertainty of the moment, he noted that before the pandemic, 2020 was poised to be a bonanza for the holiday and party industry.” Some business owners are saying people are dressing up and decorating the house much more leading to more sales than ever before in the history of their stores. “The National Retail Federation, an industry group, expected Halloween consumer spending to hit about $8 billion this year, a decline from $8.8 billion last year, as a result of fewer Halloween parties and haunted house visits and less trick-or-treating. But enthusiasm around costumes and decorations has persisted.” Halloween sales are higher than anyone could have ever expected, but It is nice to see strong sales considering this crazy year. 

Do you think that Halloween fun will get too chaotic and we will see a rapid increase in cases to come? Do you think a significant increase in cases will lead to a shutdown like in France? Increased sales will help our economy now, but do you see it coming back on us with a shutdown?

Maheshwari, Sapna, and Gillian Friedman. “Get Your Hand Sanitizer Costume. Halloween Is Still Happening.” The New York Times, The New York Times, 29 Oct. 2020, www.nytimes.com/2020/10/29/business/halloween-costumes-decorations-sales.html.

Jobless claim lower than expected

 The number of first-unemployment-benefit filers fell to the lowest level in the pandemic as it declined for a second straight week. The jobless claims came in at 751,000 which was down 40,000 from the last week. The initial speculated jobless claims for the week was presumed to be 778,000. This comes on the brink of  a ride in COVID infections as the assumed blowback would an increased in the jobless claims. To further on this trend the continuing jobless claims dropped 709,000 to 7.75 million. All of this data comes as law makers continue to delay the next round of stimulus for the economy. Maybe the election will have an impact on what is going to happen? 

 https://www.cnbc.com/2020/10/29/weekly-jobless-claims.html

Covid-19 Explodes the Myth That Women ‘Opt’ Out

 In August and September, more than a million people dropped out of the workforce. Eighty percent of them were women. Women have been losing jobs at a rate far higher than that of men throughout this recession, figures that can’t be entirely explained by industry effects. And it might get worse. One in 4 employed women (1 in 3 mothers) are considering quitting or dialing back at work, according to McKinsey — the first time in six years of research that they’ve found any difference in men’s and women’s interest in quitting.

The “Opt out myth” is the assumption that one reason, maybe even the main reason, you don’t see more women leading organizations or governments is that so many women “choose” to stay home. In reality, the number of women who give up their careers is small, and the choice is almost never truly a free one.

However, women do not “opt out” of the workforce, but now they are being forced to because of Covid-19. They are struggling to find caregivers while daycares, schools and home caregivers are not available during this time. So, are women still considered the person who should not work and stay home to take care of the house and kids? And will this get worse from now on with Covid-19?

https://www.bloomberg.com/amp/opinion/articles/2020-10-20/covid-19-explodes-the-myth-that-women-opt-out-of-the-workforce

The Future of Pennsylvania's Energy Sector

    During the campaign's of both President Donald Trump and Vice President Joe Biden, the energy industry, specifically fracking in states such as Pennsylvania have been a major area of contention. Donald Trump has claimed that Joe Biden will destroy the energy industry, banning fracking in Pennsylvania and pushing towards only renewable energy. The issue here is that in Western Pennsylvania, fracking makes up a large portion of the job market. Many in the industry compared it to the steel industry in the 19th and 20th centuries, everyone knew someone who worked in it. 

    Biden's plan is one in which new fracking will be limited, and a push for increased jobs in wind and solar energy. Those who agree with his principles argue that thousands of similar paying jobs to that of the fracking industry will open up. These will range from jobs requiring a high school diploma, to some upper level jobs requiring masters or bachelors degrees. Jim Spencer, a businessman who manages wind and solar farms in the area, predicts that they future will hold fracking alongside an increase in renewables. He recognizes the large scale employment that comes with building and managing the renewable farms. On the other hand though he thinks that for when the sun is not shining or the wind not blowing, natural gas can keep things running. Spencer is more so of the mindset that coal will be phased out, as both other options are cheaper.

    Trump and many of his Republican supporters are fearful of Biden's plan with the fracking industry. They are unsure whether to trust him and the Democrats, as they believe their policies will greatly reduce the scale of fracking. That means less jobs for them, lower wages, and a reason for mass exodus from the region. To them, the fracking industry has provided opportunity in a rural and otherwise unprosperous place. In the end it seems many Pennsylvanians are hedging their bets that there will be some sort of combination of renewables and fracking, regardless of the candidate.

https://www.wsj.com/articles/in-battleground-pennsylvania-fracking-and-renewables-compete-to-be-the-future-of-energy-11603979272

GDP Increases during Q3

 The US saw a increase in Gross Domestic Product of 33.1% during the third quarter. This comes after GDP decreased by 31.4% during quarter two. The gains are attributed to increased consumer spending, which increased by 1.4%, strong gains with business, residential investment increased, and increased exports. The gains in these areas come as states were able to ease up on the lockdown guidelines, allowing citizens return back to some normality. 

As strong as the GDP report was, there are still concerning figures that will likely inhibit economic performance in the next quarter. Since March there have been $22 million jobs lost, of which only half have been recovered. This leaves unemployment at 7.9%, a rate more than double its pre-pandemic level. Without the passage of another stimulus package, and a forecasted insurgence of COVID cases during the winter, it is unlikely to have the continued success that was seen in quarter 3. 

https://www.cnbc.com/2020/10/29/us-gdp-report-third-quarter-2020.html

U.S. consumer spending beats expectations in September

 According to a report from CNBC consumer spending increased by 1.4% in the month of September. Previously, in the month of August we saw an increase of consumer spending of 1%. These numbers were promising since consumer spending accounts for two thirds of economic activity. However, as COVID cases are beginning to surge again there is a high possibility of consumer spending decreasing in the fourth quarter. Personal income increase by 0.9% which exceeded the 0.4% expected increase. Due to everything going on I think consumer confidence will fall and as a result consumer spending will also fall in the following quarter.

U.S. Economy days before an election

On Tuesday, November 3rd either Donald Trump or Joe Biden will be elected for president of the United States. And the current state of the economy has been a contentious point for both candidates. Trump has been quoted as saying "we are rounding the corner" with this virus while Biden argues that the economy is struggling greatly. 

The truth; however, may be somewhere in the middle. Trump is correct when he boasts our 3rd quarter economic growth of over 33% which is a phenomenal figure in a vacuum. Though this can be heavily offset by the 31% decline we saw in the 2nd quarter.

Additionally, our economy has contracted 3.5% as a whole when compared to 2019. I believe it is unfair to blame Donald Trump entirely for the current state of the economy. There was so much uncertainty and panic during the first lockdown which could have affected these percentages. Still the entire U.S. government--not solely Trump--should share the blame. Our COVID response has been relatively weak when compared to other countries, and lawmakers from each side have used this as a political tool to siphon votes. It would be interesting to see how seriously politicians may have taken this virus if we were not in an election year.

 Many argue that we should not be "reopening" business at the moment and should take any means to control the transmission of coronavirus. It has become apparent that a shutdown is largely unpopular with voters, effectively ruling that out as an option. If our current economy is doing as poorly as it was in the 2nd quarter; this would almost guarantee a defeat for Trump.

Ultimately, the outcome of the election will be great news to some and horrible news to others. Our biggest concern should be working together to help the citizens. But I am afraid that the politicians from the losing party will do anything to ensure the failure of the president elect. Regardless if it is Trump or Biden.

https://www.marketwatch.com/story/heres-where-the-economy-stands-as-the-us-chooses-between-trump-and-biden-2020-10-31

Fed lowers minimum loan level for small business lending program

 In efforts to continue to help small and medium businesses get through the pandemic,  the Federal Reserve is reducing the minimum loan size down to $100,000 from $250,000. Along with this they have also decided to ease restrictions on companies that are participating in the Paycheck Protection Program. These decisions were in response to the growing concerns of an economic slow down in the winter due to both COVID and the current stalemate on future stimulus checks. 

As cases continue to grow around the world there has also been many talks of future possible shutdown in a number of countries. I think that by making these loans more accessible to these small business it could possibly help them survive another shutdown. 

Airlines will struggle long after passengers feel safe to fly again

 The current financial issues the airports are facing are due to the unfortunate global pandemic which ceased or halted travel for a while. It is predicted that this issue will continue on after the pandemic is over. With so many people having lost their jobs, the lack of business travel has especially hurt airlines financially. As well, there will most likely not be much business travel for years due to the fact that many companies have downsized, getting rid of employees. It is expected that business travel will go down by as much as 20% in the next couple of years because of this. This has caused US airlines to lose over $12 billion just in the second quarter. The airline industry has been placed in a crisis that it will take a very long time to recover from.

Historically it always takes a long time for business travel to recover after a recession so when do you think the airlines will recover the airlines ?

https://www.cnn.com/2020/10/27/economy/airlines-pandemic-recession-impact/index.html

Trump, Biden clash over climate, oil industry in final debate

The last presidential debate, which took place on September 22th, 2020, between former Vice President Joe Biden, who represents the democratic party, and the President of United States Donald Trump, representing the Republican party, raised many interesting points. The moderator Kristen Welker addressed many interesting questions towards both individuals, which got some very interesting responses. 

A major topic of discussion was climate change, where President Trump had a standard approach while Joe Biden presented some futuristic solutions. President Trump said he loves the environment, but he is unwilling to sacrifice businesses for the environment. One can agree here that business needs a priority in such a huge and influential economy, but perhaps there is more than what meets the eye. Joe Biden talked about he would slowly move to a climate-friendly economy, which would inevitably create many more jobs and improve the economy. Also, Joe Biden said, “Global warming is an existential threat to humanity, we have a moral obligation to deal with it, and we’re told by all the leading scientists in the world we don’t have much time.” (Bernstein) Joe Biden wanted to show that he as a candidate, understands the problem at hand and considers it his responsibility to improve. Joe Biden plans on making/promoting businesses that lessen the damage caused due to climate change. The President accused Joe Biden that he would get rid of hydraulic fracturing, which is used to extract natural gas from shale. Fracturing has shown many benefits but also has its downsides. Many environmentalists are against fracturing. Overall, President Trump's accusation here did have some basis to it. Joe Biden said he would ban it only on federal land in his defense. 

Yes, some of President Trump’s criticism of the democratic party had a premise, but Joe Biden perhaps gave concrete examples as to what the issue at hand is and how to deal with it. Do you guys think climate change is an important topic of discussion especially in the presidential debate? If yes, then which candidate presented a more apt front/view regarding climate change. 

 

References:

Bernstein, Sharon. “Trump, Biden Clash over Climate, Oil Industry in Final Debate.” Reuters, Thomson Reuters, 23 Oct. 2020, www.reuters.com/article/usa-election-debate- climate-change/trump-biden-clash-over-climate-oil-industry-in-final-debate- idUSKBN2780HW.

France is latest nation to return to lockdown amid COVID surge

Starting this week France will go back into a nationwide lockdown to try to contain the COVID-19. The new measures stated which will come into force on Friday and will last until December 1, that people have to stay in their homes except to buy essential goods, seek medical attention, or use their daily one-hour allocation of exercise. In the beginning, the lockdown was effective at containing the virus, but it started spreading again after relaxing the rules.

France has reported 523 new deaths from coronavirus during the last 24 hours, the highest daily toll when the virus was at its most severe. “France’s death toll is more than 35,000 and is the seventh highest in the world” according to Reuters News Agency data.

Earlier this month, Macron announced a nighttime curfew in Paris and other big cities, but now officials have recognized that this measure had proved not enough to bring down infection rates, and therefore calling for more severe response.

https://www.aljazeera.com/economy/2020/10/28/france-becomes-latest-nation-to-return-to-covid-19-lockdown

DC Delaying Stimulus and Fed Running Out of Ways?

 As we know, representatives within Washington have delayed the fiscal help to citizens further. However, there are bigger problems with this delay other than you and I not getting government aid. The Fed actually seems to be relying on the stimulus to be passed. What is interesting is that economists such as Mark Zandi stated that "(The Fed) just doesn't have much room to maneuver with regard to monetary policy".

While no chairman of the Fed will actually state this outlaid, economists are starting to believe the Fed is running out of "weapons in their arsenal". There are still some left such as adopting yield curve control through bond purchases, right? Well, these bond yields are at historic lows and even Fed officials are skeptical about the impact of yield curve control. 

If the fed were to run out of options to help the economy during this time and COVID continues to go uncontrolled, what would this mean for our economic system? Could we see a potential "fail" like the Great Depression or will we continue to operate efficiently?

https://www.cnbc.com/2020/10/28/the-fed-.html

Californians vote on the future of Uber

     On November 3rd, Californians will vote on a ballot initiative, proposition 22, that will shape the future of ride-hailing firms and gig-economy platforms such as Uber. The issue at hand is whether or not Uber's freelance drivers, couriers and other gig workers should be considered employees. This means that those who are working for the company would be entitled to benefits such as unemployment insurance and sick leave. Proposition 22 is a stab at balancing workers protection with the gig industry's flexible working hours that ensure customers never wait long amounts of time for a ride or a meal. 

    Uber created the template for the gig economy by matching real time demand with real time supply. Initially, riders and drivers both benefited from this as Uber and its competitors such as Lyft subsidized rides in an effort to gain market share. However, in recent times companies like the ones mentioned have begun to cut cost, especially last year after they went public. Moreover, Uber's average"take rate", the % it keeps from ride fare, has gone up 6% from 2017. This means that drivers lose out on potential earnings. 

    How much these drivers earn per hour as been a hot topic. Nonetheless, they currently receive zero benefits from their work. This may not come as a concern to drivers who Uber on the side, however, critics of the company have stated that a majority of those who work for Uber do it full time. The state of California also shared these concerns, and consequently passed a law called AB5 which redefines independent contractors as those who are free from the control and direction of the hirer. Gig firms have argued that they can comply with AB5, but on October 22nd an appeals court ruled that they probably cannot, pending a full trial next year. It is important to note that compliance with AB5 would force these firms to entirely restructure their business models. Uber also stated that it would have to let go of 76% of its drivers, with the rest only working during peak hours. Ride fares for Uber are also estimated to rise anywhere from 25% - 111%. Uber's opponents disagree with their future forecast and have countered with the claim that AB5 would only raise the firm's cost per driver by a third while preserving flexibility and protecting vulnerable workers. 

    This is where proposition 22 enters the picture. It would essentially scrap AB5's narrow definition of independent contractors, while providing workers with some benefits, including net earnings of at least 120% of the hourly minimum wage and health-care stipends. This could pave the way for portable benefits, something that prominent economists, such as Alan Krueger have advocated for. Critics have said that prop 22 is lopsided, while backers have said that if it is not passed, it could be the end of gig-work as we know it.

Do you believe that prop 22 will get passed? If not do you think that the consequences to the gig-economy will be as severe as stated?

https://www.economist.com/business/2020/10/27/californians-vote-on-the-future-of-uber

What would a Biden presidency mean for the US economy?

Economists say that Joe Biden proposes the most expansive tax and spending policies and regulations in modern US history. Prior to the 2016 US election, Donald Trump made a host of grandiose promises about the transformative impact his policies would have on the US economy. Tens of millions of jobs would be created. GDP would grow at rates not seen in decades. However, the record has not exactly lived up to that, which may be blamed on the pandemic or just bad policies.

Biden's manifesto proposes:

• A major increase in infrastructure and clean energy spending, certainly more than is currently planned or proposed by Donald Trump

• More spending on education, healthcare and the social safety net

• A hike in corporate profit taxes, reversing the steep cuts made by Trump in 2017

• An increase in personal income taxes, mainly hitting the well-off

In total, analysts at the credit rating agency Moody’s estimate Biden’s plans add up to $4tn of additional spending in the three years to 2024 and $1.4tn of additional taxes over that same period. But there’s more to economic policy than tax and spending. Biden’s pledge to decarbonise the US economy by 2050 implies more regulation of polluting US industries. His more liberal approach to immigration suggests a reversal of Donald Trump’s restrictive executive orders in this area. His stance on healthcare hints at restrictions on drug pricing and Biden supports a gradual doubling of the federal minimum wage, which hasn’t been lifted since 2009. While Biden has promised a tough line on China, it’s generally expected that he would halt Donald Trump’s protectionist trade wars of the past four years.

Will a Biden presidency affect the economy positively or negatively?

https://www.independent.co.uk/news/world/americas/us-election-2020/biden-economy-jobs-gdp-spending-2020-election-trump-b1256958.html

GDP Report next week will show record breaking growth

 https://www.cnbc.com/2020/10/20/the-gdp-report-next-week-will-likely-show-record-breaking-economic-growth-but-it-may-not-help-trump.html

On Thursday next week the U.S. will announce the GDP growth for the previous quarter and it is expected to show some record breaking growth. Now, obviously, this growth can be misconstrued with the current economic climate. The U.S. is going to experience serious growth because of the down turn that we experienced in the past 8 months. The timing of this news may be good for President Trump as it will come just a few days before election day, but this growth shouldn't necessarily be attributed to Trump's presidency. The growth is really just a product of the recession that the country experienced. 

The reason that this news may not necessarily help Trump in the polls is because the presence of mail-in ballots and early voting. In addition to this the Federal Reserve is forecasting that we are going to have a major drop in GDP this year. It will be interesting to see the if there is any change in the polls after the information is announced. 

With the projected increase in GDP, there is an increase in the economic conditions in the next six months. This is interesting because we are beginning to have a "relapse" when it comes to the COVID-19 pandemic and it seems that the potential for a shutdown or partial shutdown is becoming more and more possible. It seems as if the outlook of the economy is dependent on if there is a vaccine within the next six months. 

'Selfish and reckless.' More than 700 economists strongly oppose Trump's reelection

According to the CNN’s article, there are more than 700 economists, 7 of those include Nobel Prize Winners, who are opposed to Donald Trump’s reelection. This does not come as a surprise as Trump has faced a lot of opposition and suffered from backlash after making economic decisions many times. The argument presented by these economists in a letter, is that Trump’s behavior during his first term is “selfish and reckless” and therefore, Americans should not allow him to perpetuate it for another 4 years.


They highlighted in particular his economic response during the COVID-19 pandemic which they believed “endangered economic recovery” as well as Public Health. More importantly, these economists pointed out the damage caused in the public sector and in the United States relations with foreign trade partners, which they claim are direct results of Trump’s incompetence and economic proposals which did not effectively foster economic growth. We are now less than two weeks away from the November 3rd election, and this released letter might change some people’s opinion or maybe confirm others’ positions.


So what do you think of these economist assessments of Trump’s economic policies and behaviors during his first term? What are your predictions of what would happen to the U.S. economy if president Trump were to get elected for a second term?



https://www.cnn.com/2020/10/22/economy/economists-oppose-trump-election/index.html

Lawsuit against Google

 Antitrust laws are simply laws put in place to prevent monopolies. These laws according to the Merriam-Webster dictionary define them as "consisting of laws to protect trade and commerce from unlawful restraints and monopolies or unfair business practices"

In the past, these laws have been used against huge corporations such as Microsoft and their "Internet Explorer" web browser. Since every Windows computer came with the browser pre-installed, the Justice Department argued it had an unfair advantage over other web browsers and won the case against Microsoft. This judgment helped many other companies including Google founded a year later. 

Now the time for Google to face that same fate seems near. On Tuesday, 20th October the Department of Justice filed a lawsuit against Google accusing it of engaging in anticompetitive practices similar to those of Microsoft. The lawsuit goes into detail about partnerships among others that have made Google accountable for 80% of search queries on the internet, in the USA. 

Integellencer writes " the DOJ argues that the company takes the windfall profits that it reaps from its dominance of search advertising and invests them in paying mobile-phone manufacturers, carriers, and web browsers to make Google their preset search engine — which only increases Google’s search dominance and thus its ability to further lock out competitors through similar business arrangements. The suit also takes issue with Google’s practice of making its search app undeletable on its own Android operating system. Taken together, the government argues that these deals erect insurmountable barriers to competing search engines, leaving Google with the power to dictate terms to advertisers and consumers."

Google on the other hand argues that “people use Google because they choose to — not because they’re forced to or because they can’t find alternatives.” 

It is only a matter of time until we see the court’s verdict and the effects of this verdict brings on tech companies. 

Source: https://nymag.com/intelligencer/2020/10/doj-google-antitrust-lawsuit-explained.html

Coronavirus and the Housing Market

 https://www.economist.com/finance-and-economics/2020/09/30/why-despite-the-coronavirus-pandemic-house-prices-continue-to-rise

Counter to the performance of the housing market in the last recession, the housing market in 2020 has not mirrored these same downturns. In the second quarter of this year, housing prices in middle and high-income countries have increased: rising at an annual rate of 5%. Domestically, prices in medium-sized houses have increased more than in any time prior to the ‘07-’09 recession. These increases can be explained by monetary and fiscal policy, as well as buyers’ consumption preferences. Internationally, central banks have cut policy rates by two percent this year and Americans can take out a 30-year fixed mortgage at an annual rate almost a percentage lower than at the beginning of the year. Historically, decreasing interest rates, as experienced now, have directly correlated to increased housing prices. However, this increased tendency to lend has not affected everyone equally, as those with lower incomes are not receiving large loans. Fiscally, governments have instituted a host of bailout bills, intending to maintain the income of average consumers. In G7 countries, household disposable income was roughly $100 billion higher than before Covid-19, despite the rise in unemployment. Various countries have instituted policies to preserve incomes, such as Netherlands’ banning of foreclosures and Japanese banks’ deferral of principal repayments on mortgages. Finally, buyers’ preferences have appeared to lead to an increased desire to increase the size of their home. While housing markets in big American cities are not doing well, reports do not indicate Americans are fleeing cities to move to suburban areas. In fact, housing prices in urban and suburban areas have increased at the same rate. People are likely looking for larger houses in areas they already live in, rather than seeing to purchase larger houses elsewhere — possibly due to the fact that homes are becoming both residential and office spaces.

It will be interesting to see how housing prices change as we get further into the pandemic. If fiscal stimulus ceases, it is possible that consumers will be less willing to purchase houses, as they will lose disposable income. Additionally, the expected market volatility brought by the upcoming election will also likely create uncertainty regarding the housing market. If the pandemic worsens an increased demand for housing may not match the limited supply of construction. However, as the author declares: “It may take more than the deepest downturn since the Depression to shake the housing market’s foundations.”

Federal Budget Deficit Skyrockets to Record High of $3.1 Trillion

https://www.wsj.com/articles/u-s-budget-gap-tripled-to-record-3-1-trillion-in-fiscal-year-2020-treasury-says-11602871210

Workers move towards more flexible hours

 Since the invention of the clock and time zones, laborers have been compensated from their work based on the hours of work rather than level of production. This has created an incentive and desire to work as many hours as possible to gain more money. Previously, there was a system dubbed "putting out" which paid workers based on their output. Yet the clock completely usurped this system and gave way to set shifts and schedules that still persist today.

 There has been a slight transition since the pandemic hit. Flexible working existed well before the pandemic. But it only offered employees the ability to choose when in the day they worked their allotted hours. Now, companies are allowing more and more employees to work from home and are allowing them to focus on tasks rather than working for a set 40 hours a week. 

A growing trend for millennials is the abolition of the 40 hour work week. Advances in machinery, increased wealth, and literacy has allowed companies to be more efficient which could ultimately eliminate the need for workers to stay and essentially "take up time".

Do you believe America is trending towards a more production based wage system or will they stick with the hours as a basis of measurement?

https://www.economist.com/business/2020/10/17/countering-the-tyranny-of-the-clock

Coronavirus Pandemic Putting Damper on Holiday Shopping Season

The article talks about that the coronavirus pandemic and how it is creating novel hurdles for Americans’ spending this holiday season, posing potential challenges for an economy that leans heavily on their willingness to consume, which we will observe during the holiday season how people will spend this year compared to last year. Likewise, the households will face the prospect of Halloween without treaters, Thanksgiving without family travels, Black Friday without crowds, and a December without parties and in-person gift-giving. 

According to the National Retail Federation, the holiday the sale which usually extends over November and December represents roughly 20% of annual U.S. retail sales each year, and retail spending accounts for about 25% of consumer spending in a typical year.

Several economists are predicting little growth or none whatsoever this year compared with 2019. US chief economist Joe Brusuelas expects retail sales to increase just 0.5% this holiday season, partly because Congress has not passed a new stimulus package. On the other side, Sucharita Kodali, a retail industry analyst at Forrester Research Inc. expects retail spending this holiday season to be flat compared with 2019, She predicts online sales will grow 20% to 25%, the sharp decrease in foot traffic at brick-and-mortar stores are expected to keep overall spending in check this November and December.

The question, which is that given the coronavirus constraints, will there be much Halloween spending this year compared to last year?

https://www.wsj.com/articles/coronavirus-pandemic-putting-damper-on-holiday-shopping-season-11603029601

What Happens if Roe v. Wade is Overturned?

 The almost-certain confirmation of Amy Coney Barrett to the Supreme Court has increased the chances that Roe v. Wade will be weakened or overturned. If that were to happen, abortion access would decline in large regions of the country, a new data analysis shows. Legal abortion access would be unchanged in more than half of states, but it would effectively end for those living in much of the American South and Midwest, especially those who are poor, according to the analysis. 

Because abortion will only be allowed in certain states this causes inequality in abortion access. Women will have to travel to clinics, possibly pay for hospital stays, and leave from work. This could mean that about 100,000 fewer abortions in the United States which could result in many more children in the foster care system or more people needing help from the government to take care of their children. So, my question is will the overturning of Roe v. Wade cause the economy to worsen?

https://www.nytimes.com/interactive/2020/10/15/upshot/what-happens-if-roe-is-overturned.html?smtyp=cur&smid=tw-nytimes

Working From Home Might be the New Normal

In response to the initial wave of the Coronavirus, the amount of people working from home increased dramatically. New innovations in technology allowed the at home worker to be more productive than in the past, we even see this in our own lives, via zoom. This increased productivity is why many companies are planning to keep many workers in their homes, even after we eventually find our way of the pandemic. 

One of the companies listed in this group was Facebook. Mark Zuckerberg said that as many as 50% Facebook employees could be working remotely within the next five to ten years. As of June, Facebook employed over 52,000 people globally. That means that over 25,000 employees will be working from their homes, significantly reducing the amount of physical capital needed for onsite offices.

Do you think in areas of jobs where physical labor isn't needed, that working from home will become the new normal? Personally, I believe that this will be the case. As working from home adds overall efficiency and utility of resources in the economy. 

https://www.cnn.com/2020/10/18/business/virtual-work-offices-pandemic/index.html

US election 2020: The young people struggling in the 2020 economy

The pandemic has had a huge impact on the young people in the US.S it is getting worse with the election being there. 

Joshua Boyer, a 30-year-old, was living his American dream. He planned to launch his social work career and start a family with his Fiancee in a few years and buy a new house. Since his graduation, he remains without a job for 5 months even though he has applied for about 300 openings. he had a similar experience in 2008 when he graduated from high school in the midst of a global financial crisis. At that time, he entered the military to escape the desolate prospects that were ready to face him in the labor market. His only concern was that this would be another year where the world will face another lost generation.

A'Naiya Davis, a 23-year-old, worked in the minimum wage retail positions after she graduated from college in 2018. She finally ended up moving out from her parent's home as she had landed a role as a content specialist but ended up losing it in June during the Pandemic cuts. Even though she got another job in September the intervening months made her take money out from her savings. She talks about how she would have really liked to live without a roommate or even buy a new home, but now all those things feel out of reach since the pandemic has cut her off.

Do you think we will face the same situations after graduating?

https://www.bbc.com/news/election-us-2020-54471388

Shoppers Came Back To Department Stores In September, Lifting Retail Sales

In September, shoppers' spending on clothes and cars had increased. Also, so has the amount spent at departmental stores. U.S retail spending has gone up by 1.9% compared to August which has given a boost of confidence even though signs have indicated a slowing down in economic recovery. All types of stores had an increase in spending with the exception of electronic stores. Clothing as well as departmental stores saw the biggest boost which is good for them because these stores have faced major financial losses during spring. Over the summer retail spending has improved so much to even surpass the pre-pandemic levels. However, there was a sense of worry in July/August as this growth had severely slowed down. This slowing-down has also affected job growth, and women have abandoned jobs/ left the workforce. People are still relying on unemployment benefits. As holiday season approaches will shoppers continue this way and spend a lot like they always do or will the pandemic affect their budgets and net spending. The retail industry will be tested during these end of year sales and economists say that the amount spent will be divided between those badly affected during the pandemic and those who were well off during these times. Only time will tell what the retail industry is going to look like in the next few months.

https://www.npr.org/sections/coronavirus-live-updates/2020/10/16/919330560/shoppers-went-back-to-department-stores-in-september

$600 Stimulus Checks Increased Savings

 According to "anonymized bank data" the recent $600 weekly unemployment benefit the government handed out was very beneficial to American saving. Moreover, it helped pay workers more than enough to make up for lost wages and enabled spending during unusual times. Not only that, but workers were starting to save more as well. However, when the weekly money stopped the same workers had to blow through the savings in just under four months. The reasoning is that households have to make a choice between stopping everyday purchases or stop paying mortgages and student loans. This is causing a dilemma and a terrible choice for "the macro economy. My question would be do you think that the governments unusual generosity should have been enough or do you believe that the government needs to lend out more money? Furthermore, should the lent money be equal across all jobs or should your usual wage depict the amount of money you should receive?

https://www.nytimes.com/2020/10/16/upshot/stimulus-checks-unemployment.html