Back on April 20 we saw briefly the bizarre appearance of negative oil prices in certain markets. Today for the first time in many months Brent crude briefly topped $40 per barrel, although it fell back below that level (WTI is tending to be about $3 behind it, despite a single day recently when for the first time in years it nearly matched Brent crude at only 18 cents lower). However, it looks like the recent trend of global oil prices rising will continue some more, with prices likely to go above $40 and stay there.  How far beyond that I shall not forecast.  But this is a price level where many oil exporting nations can get out of immediate financial crisis, with many of them actually making money, if not as much as they would with still higher prices.

Ironies Of Minneapolis

So now we are all focused on the recent horrific murder in Minneapolis and now the subsequent events that are happening in many parts of the nation, with Minneapolis the epicenter.  This is serious, and I have an idea how it will end.  This has even distracted us from the usual pandemic and economic issues, which are historically serious.

But while all this has been going on, just in the past week or so our president has been engaging in a series of serious actions that will have long run serious consequences people are barely aware of if they are not undone.  It is almost as if he is just outright melting down his presidency and taking the nation with him, although we are too busy looking at the flames in Minneapolis to notice.

Here is a list without comment. The US will withdraw from the Open Skies  agreement, first proposed by President Eisenhower, that has 35 other signatories.  The administration claims the Russians are breaking the treaty, although the specific offenses publicized seem to have nothing to do with this treaty at all.  This follows Trump withdrawing us from the Intermediate Nuclear Forces Agreement, the Paris Climate Accord, the the TPP, and the Iran JCPOA nuclear deal that Iran was adhering to.  Today it was announced that the US will withdraw from the World Health Organization. The administration is proposing changing the status of Hong Kong in connection with the US as well as possibly forcing Chinese corporations to leave the New York stock exchange, not to mention that the daughter of the CEO of Huawei is about to be extradited to the US to be prosecuted for fraud in connection with violating US sanctions against Iran. Another round of EPA regulations are to be ended. Trump refuses to provide aid to the US Postal Service, which might go bankrupt later this year, with Trump declaring that voting by mail is a rigged fraud. He has also issued an executive order to allow the FTC to make social media subject to lawsuits by his conservative allies. And then also today it was announced that his official pandemic task force is now effectively not functional.

There  is more, but all that is more than quite enough.

Barkley Rosser

The relation between death and the pandemic economy is a fraught one that has become hotly debated, although with not much clear empirical evidence.  I note that recently over on Econbrowser Menzie Chinn has had a series of posts on this matter in various forms.  Obviously a big issue has been the claim by the anti-lockdown crowd that not reopening the economy quickly will lead to an increase in suicides by the increasingly large numbers of unemployed people out there.  There certainly have been many studies in the past showing a variety of bad social outcomes from high unemployment, including suicides, domestic abuse, drug abuse, depression, and more. There does seem to be some strong evidence of several of these notably higher domestic abuse and depression.

When it comes to suicide and death more broadly, the empirical picture is very murky.  Menzie in one of his recent posts reported on a regression he ran covering monthly data from 1998 to very recently that used dummies for months and then unemployment rates and suicides (in the US) and found the an unexpected “wrong sign” with lower suicides correlated with higher unemployment, although this was not a statistically significant result. He provides no explanation for why this odd result seems to be there, but it does show that this is not a simple matter.

Regarding current data on the main question, so far there does not seem to be any data showing a noticeable rise in suicides in the US since the pandemic, with only reports of some increases among medical personnel, who have suffered from overwork, stress, and even guilt, along with fear.  That we might be seeing that out of them is completely understandable.

So why might we not be seeing much increase in suicides so far despite all the things going on such as increased depression as well as unemployment and more that would suggest we might expect to see it?  Some have suggested a “wartime” effect: people are suffering, but they know others are as well and so rally around the flag to hang in there. This rally around the flag effect even worked for awhile to boost Trump’s polls for a few weeks in late March and early April until people saw how we was botching things, and now his polls are lower than they were before, even as those of some generally unpopular leaders in other hard hit nations like Italy, France, and Spain have seen their poll numbers continue to be noticeably higher than they were previously.

Just three items.

1) Today (or yesterday late?) AG William Barr appointed yet another Special Counsel to investigate “Obamagate!” John Bash of the Texas Western District of the DOJ. He has been assigned to investigate the various unmaskings of Michael Flynn that happened between the election of 2016 and Flynn’s interrogation by the FBI after Trump became president in January, 2017. The full absurdity of this is that even Barr in making this assignment recognized that there is nothing illegal about unmasking, not even anything improper.  Nevertheless, he thinks this particular set of unmaskings needs further investigation by the Department of Justice.

That would be Nouriel Roubini of NYU who got his moniker back during the Great Recession, which he called pretty well in 2006.  He did this clearly yesterday in an interview in The Intelligencer, although he has been pushing something like this for some time now, bringing in all sorts of things like climate change and more pandemics to reinforce this long run forecasr, although he thinks in a decade there may be a sufficient restrucuting of the economy to improve the situation.  While he mostly does not talk about what should or could be done in the US, he seems to improve of a German type economy where the unemployment rate has risen only 1% in comparison to the massive increase towards 20%  we have sseen in the US.  Of course, Germany has managed the coronavirus much better than has the US, but they also have their Kurtzarbeit labor system that tends to preserve employment better during downturns, not to mention a broader social safety net as part of its social market economy.  He says things might have been better if we had Bernie Sanders as president, but then notes that compared to Merkel in Germany and even Boris Johnson in UK, Sanders is a right winger.

Oliver Williamson died yesterday at age 87, I do not know of what. He was famous as the main developer of New Institutional Economics, following the influence of Ronald Coase, which emphasizes the role of transactions costs in the formation and development of economic (and some other) institutions.  He received the Nobel Prize in 2009, along with Elinor Ostrom, but his influence was really quite vast for a man from a working class background, born in Superior, Wisconsin.

I checked, and although there may be another one ahead of him, as near as I can tell at his death only one other living economist had more Google Scholar citations. Andrei Shleifer has about 295,000 (h has a problem getting that trip to Stockholm because of his infamous corruption problem involving Russia), while Ollie had about 276,000.  The all time leader is Karl Marx at about 333,000.

A reason for this is that his work became enormously influential across other disciplines, especially management and law.  Indeed, he is one of the few individuals I know of (I know of only one other, Shyam Sunder at Yale) who was simultaneously in an economics department, a separate business school (I think the Management dept), and a law school, all of which he was at UC-Berkeley.  The only other person I know of who was in more departments was the late polymathic Nobel Prize winner, Herbert Simon, more on him below.

Here I am using what is the journalistic definition of a “recession,” also used in many nations although not officially in the US, where these things are determined ex post by an NBER committee.  Anyway, that “journalistic” definition is that there be two consecutive quarters of negative GDP growth.  Today in the Washington Post I saw a story on global carbon emissions, which are very closely correlated with GDP, if not perfectly. Anyway, it appears that global carbon emissions hit bottom on April 7 and have been slowly rising since then (not sure about US separately, although US somewhat behind most other nations on the covid curve and so on the economic impact as well). I note that April 7 is one week into the second quarter.

This means it is very likely that at the global level we shall see positive economic growth in the second quarter, basically rising since the end of the first week of the quarter, although due to reporting lags in many countries this will not show up as positive growth in the data until later, possibly by the end of the month. This growth is slow, but it is positive, definitely not a V.

So, assuming this slow growth continues,the world will have seen a massive shock in the first quarter, with most of that in a single month, March, the largest such short term shock in recorded history by far. But it looks that it may have hit bottom quite quickly, then to turn into a slow recovery shortly after the end of the first quarter.  First quarter is certainly going to be negative, but second looks very well like it might be positive, at least at the global level, hence, not technically quite a “recession” according to this journalistic definition.

I know, I should probably not waste everybody’s time commenting on this nonsense, but the push on it has been massive, with it seeming to influence a lot of people it should not, so I have decided some push back is called for, even if those who should see it do not.   I am partly triggered in this by getting defriended on Facebook yesterday by a generally intelligent libertarian academic economist I know who started massively linking to every crackpot pushing this nonsense, and when I pointed out some serious problems with all of it and declared the whole thing to be “insane,” I was told that my “TDS was showing” and was defriended.  As far as I am concerned, TDS is people who believe lunatic lies by Trump, showing as a result their own derangement.

As part of all this the Trump media push on this is massive. I am not sure it held for the whole Sunday-Saturday week, but  reportedly for at least a substantial portion of last week Fox News was spending more time on this story than on the pandemic, no distraction with this, of course.  And  this was not as in there might be two sides to it, at least not on Hannity where I have kept an eye on it.  He has been for quite some time pushing for investigations of how the Russia investigation started with a demand that people go to jail for it for a long time.  So he has been all u-rah-rah to Trump coming on to Fox News on Thursday morning with his completely off the wall claim that “This is the greatest political scandal in US history,” repeated several times, along with his demand that Senate committees drag lots of people in and that Obama, Biden (of course), Comey, and Brennan should all go to jail for 50 years, although he has not mentioned any actual crimes for which they should go to serve these long sentences that would effectively put them away for life. Both Sens. Grassley and Graham have jumped sort of to attention to promise hearings on all this, although the generally odious Graham did show some streak of sanity by saying he would not call Obama before his committee, perhaps aware that the guy is the most popular political figure in the country, warning “Be careful what you wish for,” although I did not see him ruling out dragging Biden in.

Dr. Anthony Fauci has testified before a Senate committee that he is worried that there may be a serious “Second Wave” of the current SARS-CoV-2 pandemic in the United States.  The basis for this fear is the experience over a century ago with the Spanish flu, still deadlier than the current pandemic.  It came in three full waves, and of those the second was easily substantially larger than the other two.  The lag between the first and second was several months, and as of now no nation that has had its first wave essentially get under control, has not had it under control for as long as that gap. So we are not yet in a position to see if this pandemic can or will imitate that former pandcmic.

Nevertheless, there is some evidence about the possibility of more immediate, less dramatic, second waves in the form of the number of new cases in a nation rising noticeably after having had a major decline from an initial peak.  We have now seen this in a number of nations, in a small number quite dramatically.  What is the current situation regarding this?

On May 11, the site endcoronavirus.org showed graphically the time path of  new cases per day for 99 nations.  This group divides these nations into three groups: “Winning” (32 nations) that have basically gotten their numbers well down, with a few exceptions; “Nearly There” (31 nations) that exhibit a variety of patterns, although nearly all currently below their peak by some; and “Need to Take Action” (36 nations), most of which simply are steadily moving up, although a small group have flattened (includes Moldova, Philippines, Poland, Romania, Sweden, and UK) or are slightly declining from a peak (including Ecuador, Finland, and US).