Monday, June 22, 2020

Is The Possible V-Shaped Recovery Flattening As The Second Quarter Comes To An End?

Probably,  although it is unclear whether or not we are having a V-shaped recovery (see most recent post here). However, whatever it is, it looks like the revived spread of the coronavirus is probably slowing it somewhat.  New cases are up by 15% nationally from low point several weeks ago, and there are reports of businesses of various sorts closing, if not whole communities.

The pattern of the increase has various aspects:

1) It seems to be now more in red states than blue states, with the trend having been toward this since the early days of the pandemic when it first started in major Dem cities in major Dem states, such as Seattle, WA, the Bay Area of CA, and the New York metro area.  Of the states with the most rapid recent increase we have only three that are predominantly Dem: CA, OR, and NV, with one purplish, NC, and the rest GOP: SC, GA, FL, AL, MS, AR, OK, TX, AZ, UT.

2) While now it is predominantly rising in GOP states where governors have not strongly encouraged social distancing or mask wearing while rushing to fully reopen, and in some cases even banning local communities from requiring mask wearing in public places, although some of those are now backing off that, such as Abbott in Texas, if one looks at this at the county level it remains that Dem counties are still outnumbering GOP ones, although the trend is strong toward GOP ones, and the line on this one will probably be crossed soon (these designations are based on how they voted in presidential election in 2016). The obvious explanation for this apparent discrepancy is that in the red states cases tend to be increasing more in densely populated areas, which are more likely to be urban areas in Dem counties in those states, such as the Houston metro area in Texas.

3)  There is not a clear pattern of these either being spread across states or concentrated in particular areas.  Some states with increases scattered widely include the Carolinas, Florida, and Alabama.  Some where they are more isolated/concentrated in particular locales include the two largest on this list: California and Texas.

4) Certain sectors seem to be especially hit be reclosings, notably restaurants and bars as well as some sports facilities.

5) A possible offset to all this is that certain communities are still reopening, despite this new round of new cases.  An example is Washington, D.C., which just got going today with its second stage of reopening, following its suburbs in MD and VA that have already done so.

Barkley Rosser


ilsm said...

I do not see a "V", I see a sine wave bouncing around 'panic banners' on so called news outlets. The market is news cycle jittery, see last night: Navarro scares on China trade deal, Trump tweet reassures, futures yo-yo.

There are a lot of "virus" things to find in worldmeter data each day. New positive tests are less interesting than declines in morbidity in the US as well as going deeper into 'test scheme' changes since the horrid days the blue states in the NE endured in March and April. Looking at demographics of the deceased rather than reading or hearing of the "one offs" (outer tail cases) each night would be helpful.

I am hoping pandemic "panic banners" are muted until later in July when I can rebalance some cash into 'bottom feeding'.

Fred C. Dobbs said...

It depends on what 'recovery' means, of course.
Perhaps it's a cosine wave.

All it takes is some serious bad news, of which
there is plenty, to put the stock market into a tizzy.

Maybe in a few months, the extremely bad dream we've
been experiencing will be over, but we will still be
living with COVID-19 for a long stretch ahead.

Let's hope Dr Fauci is right and a vaccine will
appear soon, and is distributed to 8 billion
people expeditiously.

Anonymous said...

Analysts who have thought a V-shaped recovery most likely, at least provided the incidence of coronavirus infections was controlled, may have failed to notice the structural changes in the economy since the recession began.  Spending-saving patterns have changed, work structure has changed, supply structure has changed, shopping whether wholesale or retail has changed.  We are a lot less secure as a people than we were.

Repeated government compensations for sectors experiencing difficulty are needed, but we do not believe in such government adjustments.

Then too, the coronavirus is actually rampant.

I just do not imagine a simple picking up the pieces and V-shaped recovery will occur.

Anonymous said...

June 24, 2020



Cases   ( 2,440,171)
Deaths   ( 123,784)

Anonymous said...

January 15, 2020

Weekly Economic Index, * 2020

* Lewis-Mertens-Stock

The WEI is an index of real economic activity using timely and relevant high-frequency data. It represents the common component of ten different daily and weekly series covering consumer behavior, the
labor market, and production. The WEI is scaled to the four-quarter GDP growth rate; for example, if the WEI reads -2 percent and the current level of the WEI persists for an entire quarter, one would
expect, on average, GDP that quarter to be 2 percent lower than a year previously.

Anonymous said...

June 24, 2020

IMF projects global economy to contract by 4.9 pct in 2020

The International Monetary Fund (IMF) said on Wednesday it now expects global gross domestic product to shrink 4.9 percent this year, significantly more than the three percent drop predicted in April.

The coronavirus pandemic is causing wider and deeper damage to economic activity than first thought, the IMF said on Wednesday, prompting the institution to slash its 2020 global output forecasts further.

A recovery in 2021 also will be weaker, with global growth forecast at 5.4 percent for the year compared to 5.8 percent in the April forecast. The Fund said, however, that a major new outbreak in 2021 could shrink the year's growth to a barely perceptible 0.5 percent.

Although many economies have begun to reopen, the Fund said that the unique characteristics of lockdowns and social distancing have conspired to hit both investment and consumption.

"Thus, there is a broad-based aggregate demand shock, compounding near-term supply disruptions due to lockdowns," the IMF said in an update * of its World Economic Outlook forecast.

China, where businesses started reopening in April and new infections have been minimal, is the only major economy now expected to show positive growth in 2020, now forecast at 1.0 percent compared to 1.2 percent in the April forecast.

Advanced economies have been particularly hard-hit, with U.S. output now expected to shrink 8.0 percent and the euro zone 10.2 percent in 2020, both more than two percentage points worse than the April forecast, the IMF said.

Latin American economies, where infections are still rising, saw some of the largest downgrades, with Brazil's economy now expected to shrink 9.1 percent and Mexico's 10.5 percent and Argentina's 9.9 percent in 2020.

The IMF said that more policy actions from governments and central banks would be needed to support jobs and businesses to limit further damage and set the stage for recovery.


Anonymous said...

Paul Krugman @paulkrugman

Back on May 11 I wrote about how we could really mess up the economics of the pandemic 1/

How to Create a Pandemic Depression
Opening the economy too soon could backfire, badly.

4:34 PM · Jun 24, 2020

I laid out a story about how it could all go wrong and leave us with a long period of high unemployment 2/

Over the next few weeks, many red states abandon social-distancing policies, while many individuals, taking their cues from Trump and Fox News, begin behaving irresponsibly. This leads, briefly, to some rise in employment.

But fairly soon it becomes clear that Covid-19 is spiraling out of control. People retreat back into their homes, whatever Trump and Republican governors may say.

So we’re back where we started in economic terms, and in worse shape than ever in epidemiological terms. As a result, the period of double-digit unemployment, which might have lasted only a few months, goes on and on.

It sure looks as if that's what is happening, doesn't it? We had employment gains in May, but states that rushed to reopen seeing a surge in infections; early indications that the public is retreating into its homes even as governors hesitate 3/

It's looking like the nightmare scenario is coming to pass. And it wasn't "America" that wouldn't stay the course: the NY area has done what needed to be done. It's Trump and his allies who refused to get real 4/