Lower jobless claims but still a slow economy

The overall trend is that first time claims for unemployment insurance had beaten the estimates calculated by Wall Street. From the week ending on Sept. 12 filings were 860,000 which beats the estimate of 8750,000 which was calculated by economists who surveyed the Dow Jones. Compared to earlier weeks calculations this is lower than the actual number of 893,000. The downshift in claims had a minimal impact on the markets as Wall Street opened at a slightly lower margin. The current biggest threat to the claims is the expected resurgence in COVID cases that would stall or even worse reverse the gains that have been seen in the economy recently. Adding on to the decline in first time claims, there has also been a decline continuing claims as they have fallen 916,000 to total of 12.63 million. Lastly the end of government assistance for unemployed workers could increase the problem in job market, the pace of claims though is continuing to fall which is a good indicator. The overall analysis is that the economy is still slow or stagnate in specific sectors but there are some bright spots that are emerging out of the woodwork. This being one of them, seeing a dip in first time claims is indicative that some Americans are getting back to work and do not need unemployment benefits no longer. The bigger question becomes will this trend be a consistent one moving forward, or will it spike again as feared?

https://www.cnbc.com/2020/09/17/weekly-jobless-claims.html

Tik-Tok Purchase and Trump's Education Reform

 https://www.bloomberg.com/news/articles/2020-09-20/trump-wants-5-billion-from-tiktok-deal-for-new-history-project

News regarding the purchase of Tik-Tok, a Chinese-based social media app, continues to intrigue. Recently, Trump announced that he approved the purchase of this app — from ByteDance Ltd. — by American corporations Oracle and Walmart. According to Trump, part of this agreement entails a contribution of $5 billion by these companies to an education fund aimed at educating American children on “the real history of our country” (Jacobs et al., 2020, para. 1). At a recent speech, Trump expressed disdain about an education platform called the 1619 Project, aimed at beginning the teaching of American history from when the first slaves were brought to America. Trump disavowed the 1619 Project, stating that an ideal education platform would teach children to love our country, history, and flag.

Trump’s desire to restructure the nature of American education calls into question values regarding the government’s role in public education. Ironically, as a Republican running on a laissez-faire platform (of limited government involvement) Trump's desired changes seem to evoke a controlling government, not characteristic of a market economy. As a politician who has vehemently opposed socialism, legislation enforcing a more ‘American’ form of education seems to impede on the public student’s right to, what many would believe is, a more objectively factual portrayal of American history — one that begins with the emergence of American slavery. 

As School Begins, Mothers Working Retail Jobs Feel Extra Burden

With schools open now, mothers and parents feel the burden of working jobs/retail jobs as their children taking part in remote learning require a lot of attention. It is not easy for children to understand how the internet works and how to get into their remote classes, so parents have to choose between that and their job hours, making it a serious dilemma. Looking at some examples, Mrs. Reveles (49) is a single mother and relied on her mother to help and assist with some of her (Ms. Reveles) daughter's needs. Her daughter is nine and needed help as her iPad froze during remote learning, and no one could help her other than her own mother as her grandmother isn't comfortable with technology. Ms. Reveles asked her employer CVS to see if they could lessen her work hours a little so that she could tend to her kid. In response, CVS said that they would work on accommodating her, but nothing was confirmed. 

 

Her and many other parents, especially women, have faced such issues as statistics show that women were three times more likely to leave work due to child-care & pandemic issues. The retail sector is one where hours are not flexible, and thus women working here are torn between parenting and work. The pandemic has affected women's employment massively, and to top, the FED has not offered much child-care relief to parents who work. The FED keeps working towards unemployment benefits, but companies are barely taking any stance towards helping parents who need to help children with online school. Some companies like Amazon have offered subsidized child care, which isn't that helpful as women especially have left their positions. Women working in other companies are also contemplating to leave their jobs. The major problem here is that some of these women are the sole financial support of their households, and thus it is hard for them to make ends meet and keep their children's education up to the mark. Overall, this is just one of the many problems this pandemic has brought forth, and we don't know what the future holds for us as COVID cases are still on the rise worldwide.

TIKTOK TUSSLE shows the uneven ECONOMIC DECOUPLING increase between the U.S. & CHINA (BLOG 2)

 Just last month the craze over TikTok increased. But this is what President Trump thas taken this is a national security threat and Chinese companies ownership. On Saturday the President talked about a deal with Walmart and Oracle which included partnering up with TikTok in a new U.S. controlled company. The commerce team abruptly then announced on Friday that they would ban both Tiktok as well as WeChat another Chinese Application. But the Federal Judge later issued a temporary injunction which blocked the WeChat ban meaning that both of the Apps are still working in the U.S.

Chinas Foreign Ministry groused that is was a showcase of Washington's hideous agenda of robbery and economic bullying. The U.S. and China have not been on good terms either. the Chinese government put out a new global data in order to be able to outflank their rival's (U.S) Initiative. The Chinese Ambassador quit the his post in Beijing who preferred to help Trump in his reelection bid. 

Two of the largest economies in the world are fighting against each other and are drifting apart in ever situation be in technological or Industrial. Do you think it may lead to a nuclear war in the future if things get worse between the two countries.

https://www.washingtonpost.com/us-policy/2020/09/20/trump-china-tiktok-economic-decoupling/

Coronavirus recession ends for the rich but is far from over for lower-income communities

 The recession caused by the coronavirus is causing way more damage to lower income individuals. Upper class individuals were not affected as bad as lower income people. They were less likely to become unemployed and they were more likely to receive stimulus checks throughout the pandemic. Because of this many economists believe that the havoc that COVID has unleashed on Americans is primarily over for many groups of people, the wealthy white, and higher-educated people were the least likely to lose their jobs. Assets like stocks and real estate have also boomed which has increased the wealth of many high income individuals. Sectors like hospitality and leisure that took the most damage due to the coronavirus tend to hire women and people of color and tend to pay lower wages, but due to COVID and the restrictions that were imposed many women and people of color were laid off. Latino unemployment also ballooned to almost 19% but the unemployment rate for whites was only 14%.

Even With A Vaccine, The Economy Could Take Many Months To Return To Normal

    Once a vaccine is discovered we won’t necessarily be able to get back to normal right away. Economists are connecting the speed of recovery to the varying levels of immunity. “Even if the vast majority of the population become immune to the coronavirus tomorrow, leading economists think it could take six months or more before our economy is back to where it was before the pandemic hit. And if a smaller share of the population became immune, economists think returning to economic normalcy would likely take more than a year.” Some economists are being more optimistic than others. The optimistic ones are looking for consumers to take part in more spending. Consumers will be looking to take postponed vacations and go to more restaurants which would lead to a quick recovery in hospitality and tourism. The large pent up demand will be the changing factor. On the other hand, some think that consumers aren’t necessarily going on a spending spree and business investment is generally muted following a recession. They believe it is going to take time for the unemployed to find jobs because businesses will be focusing on recovering and then will work on scaling their way back up to where they were before. Even though there are contradicting viewpoints with future outcomes, the news is becoming more optimistic with overall GDP growth which is good news. 

Thomson-DeVeaux, Amelia, and Neil Paine. “Even With A Vaccine, The Economy Could Take Many Months To Return To Normal.” FiveThirtyEight, FiveThirtyEight, 25 Aug. 2020, fivethirtyeight.com/features/even-with-a-vaccine-the-economy-could-take-many-months-to-return-to-normal/.

The US economy needs more help. Congress is too divided to provide it

According to Goldman Sachs, small businesses are disappearing, unemployment claims remain high, state and local budgets are imploding. Still, Congress is likely to skip town this month without providing additional emergency aid to the economy. "At this point, a major stimulus package before the election looks like a long shot," Goldman Sachs.

For example, another 860,000 Americans filed for first-time unemployment benefits last week, retail sales growth slowed in August, more than half of the business that closed during the pandemic will never reopen, bankruptcy filings are increasing, including Brooks Brothers and California Pizza.

Valliere writes that: "Without a stimulus package, more small businesses will close, state and local governments will lay off thousands of workers, and evictions will increase."

The question comes to mind why isn't Congress doing something?

https://www.cnn.com/2020/09/18/business/stimulus-goldman-sachs-economy-gdp/index.html

Pandemic caused recession is largely over for the rich

 The recession created by the pandemic is largely over for Americans who are affluent. According to the article, the recession is largely over some groups like white and college educated Americans. The unemployment rate for minorities sky rocketed but has remained high where as the unemployment rate for whites has returned to lower rate. For the demographic that does not have a higher education degree the unemployment rate peaked at 21%. This is roughly three times more than what the unemployment rate for college educated Americans. To even further back the claim that the recession is over for these demographics, the top thirds of earners had there jobs fully recovered. Within the article they point out that Americans who did not lose their jobs are blind to the financial struggles that are plaguing the country currently. Overall a huge driving factor is that these groups were less likely to lose their jobs and their jobs rebounded quickly. These groups were also able save their stimulus money and financial assets such as stocks and real estate have improved heavily. 

https://www.cnbc.com/2020/09/20/coronavirus-recession-ends-for-rich-crisis-persists-for-others.html

Disputes in Congress slow down the US economic recovery process.

With less than two months until the election, the odds for another stimulus package indented to help small businesses and increase unemployment benefits are near to zero. After the last week's vote, it's highly unlikely that the Republican-backed stimulus plan would come into effect before the election. Negotiations between both parties ended in a deadlock as neither of them could agree on the size and makeup of another round of stimulus. However, on the other hand, the economy is still suffering. More small businesses are shutting down, first time unemployment’s claims remain relatively high and states and local budgets are collapsing.

Greg Valliere described the situation as … “The economy seems to be running out of steam in the last few weeks”. He backed his analysis by relating to the statement issued by The Fed Chairman that more stimulus is urgently needed from the Congress. For instance, retail sales growth declined in August, 860,000 more American filed for first-time unemployment claims last week. Yelp reported that more than the majority of restaurants that closed during the pandemic might never re-open. Since July large businesses filing for bankruptcies spiked 244%. Valliere fears that if the government fails to put out another stimulus package, more small businesses will close, unemployment would increase locally and increasing evictions as well. Similarly, The Fed Chairman has also insisted that another stimulus is necessary. He thinks that the initial response from the fiscal authorities was very effective and efficient and expects the government to do the same to keep up with the recovery speed. The chairman emphasized the fact that about 11 million jobs lost due to the pandemic are of those industries that suffered the most from the global crisis and without government aid it will be difficult for them to survive.

The question that comes into mind is why is Congress overlooking this problem and delaying it? Is it because Democrats are confident that the blue wave is coming, and they would rather wait until next year and give out a larger stimulus package?                    

https://www.cnn.com/2020/09/18/business/stimulus-goldman-sachs-economy-gdp/index.html

Low Rates to Continue

 The Federal Reserve met last week to discuss their policy moving forward. The two big notes from this meeting are that the Fed plans for keep interest rates low (between 0-0.25%) likely until 2023. The purpose of keeping rates low is to attempt to help raise inflation. The Fed announced about a month ago that they want to increase inflation and would be okay to see rates near 4%. By keeping rates low, the Fed is encouraging consumers to spend money as it is "cheap" to obtain through low rates. They are hoping to increase cash in circulation, increase consumer spending, and increase inflation. Another big thing to note is the lowered their forecasted unemployment to 7.6% instead of 9.3%. This shows belief the economy will return to pre-COVID levels at a quicker than originally expected pace.

https://www.cnbc.com/2020/09/16/fed-meeting-decision-interest-rates.html

Justice Ruth Bader Ginsburg

 On September 18th, 2020 Justice Ruth Bader Ginsburg died. She was appointed to the Supreme Court of Justice in 1993 by Bill Clinton. During her time as a Justice, she became a legal, cultural, and feminist icon. Ginsburg started the legal fight for women’s rights, writing the majority opinion in a 1996 case that opened doors for women's education. In United States v. Virginia, a 7-1 ruling determined that the Virginia Military Institute's (VMI) male-only admissions policy violated the Equal Protection Clause of the Fourteenth Amendment. 

Now that Ruth Bader Ginsburg has died it leaves a vacancy in the Supreme Court and has caused major political turmoil. Ginsburg’s death gives Republican’s a chance to have a 6-3 majority as Trump has the right of appointment. However, this has also brought up the question of if an appointment right now will be too close to the election. In 2016, Senate Majority Leader Mitch McConnel refused for nearly a year to allow any consideration of President Barack Obama’s Supreme Court nominee, so will he do the same now that we are a little over a month away from election day? No, quite the opposite, McConnel will try immediately to push through a Trump nominee so as to ensure a conservative justice to take over Ginsburg’s liberal position, even if Trump were to lose his reelection bid. Asked what he would do in circumstances such as these, McConnel said “Oh, we’d fill it.” In class we talk about government involvement and the amount of power each individual has, but should government officials be able to do one thing for one president, as not allowing Obama’s nominee to go through and then a different thing for another president? So should President Trump make the nomination before the election day? Or should it be put off until after the election?

https://www.npr.org/2020/09/18/100306972/justice-ruth-bader-ginsburg-champion-of-gender-equality-dies-at-87?utm_source=dlvr.it&utm_medium=twitter

Recovery will Differ from State to State

 As more people go back to work, and the economy slowly tries to heal, many states have been hit harder than others. For instance, unemployment numbers in the Northeast and West have been much higher than their counterparts in the South and Midwest. This is likely the case for a number of reasons. One being that many states in the South and Midwest opened up earlier and to a greater extent than states in the Northeast or West. Additionally, overall public sentiment in those areas toward the virus was much less than areas such as New York or California. Another issue in the Northeast and West comes with population density. Many large cities and tightly packed states make up the regions, and with the virus there has been a push to leave the areas. For example, thousands of people have moved from New York City in an effort to get away from the dangers of the virus and because they simply can no longer afford it. As people disperse, demand has dropped significantly.

 States that rely heavily on tourism have also been hit much harder than states that do not. Hawaii and Rhode Island businesses make the majority of their money from flocks of tourists coming to their beaches each year. With coronavirus, the numbers have been reduced dramatically, and the scale of operation has been cut back. Many businesses simply cannot afford to keep as many people employed, leading to higher unemployment levels in these areas. As we move closer to a new year, many state economies may shift their means of production in order to survive. Population hubs such as cities may see hits to their workforce as people look to find less crowded places to live. Many states will be hit harder than others due to a plethora of reasons, though only time will tell which ones are able to recover.

https://www.wsj.com/articles/jobless-rates-in-northeast-west-are-highest-in-nation-11600447829

Psychological scars from covid-19 could depress economic growth for decades to come

 The notion that a pandemic such as the one we are currently living in might cause long-run economic damage is not a new one. However, there is much speculation as to what will be impacted most after the dust settles from COVID-19. Since the depression, macroeconomist have understood that severe economic downturns might tip the economy into a "liquidity trap", in which interest fall to zero and monetary policy struggles to stimulate the market. Furthermore, there are also concerns that without any fiscal stimulus, the economy may be stuck in a slump. There is also a chance that all the uncertainty at the moment may lead to "hysteresis" in the job market and have a long term negative effect on the unemployment rate. Even when the demand recovers in the labour market, people will have been out of work for so long that their skills and motivation begin to fade away and jobs will become harder to find. 

Problems such as these could scar the economy as the pandemic leaves us. Yet, there is something that seems to be concerning economist just as much.  Research suggest that traumatic economic episodes can exert a drag on growth simply by altering people's beliefs about the future. For example, Ulrike Malmendier of the University of California, Berkeley, and Leslie Sheng Shen of the Federal Reserve have studied consumption patterns in the aftermath of downturns. They concluded that periods of economic hardship and spells of unemployment tend to depress people's consumption for some time, even after controlling income and all other variables. Not only that, but consumers also tend to purchase lower-quality or discounted items. Moreover, young people are especially effected, which can potentially prolong the economic struggles. 

Lastly, in one recent study of 19 pandemics going back to the 14th century, concluded that outbreaks like this depress real rates of return for decades. The study found that rates decline, on average, for about 20 years, and do not return to the previous level for 40 years. This effect could be reflective of the human toll exacted by past pandemics, which shrank the workforce and reduced the return on new capital investment. But they study also reckoned that an increase in savings by wary households could have a depressing effect.