Relevant and even prescient commentary on news, politics and the economy.

Not ageing well . . .

A month ago, when the public health community was warning about the dangers of premature opening and our reality show President was turning mask-wearing into a culture war issue, David Henderson and Jonathan Lipow decided to use precious space on the Wall Street Journal op ed page to publish an essay titled “The Data Are In: It’s Time for Major Reopening” (ungated at the link).  They argue that “populationwide lockdowns should end” and even suggest that social distancing has been harmful.  OK, then, I guess there’s no need to second-guess re-opening bars in Florida or Arizona.  And no need to worry about testing and contact tracing, despite the fact that one of the papers they cite to support their position recommends it.  And no need to tear our hair out worrying about masks.  It’s all good.

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Trump’s handling of the economy

Robert Kuttner on public approval of Trump’s handing of the economy:

As general support for Trump keeps sinking, there is one anomaly. According to this July 15 Wall Street Journal/NBC poll, which finds Biden leading Trump by 11 points, fully 54 percent of Americans approve of Trump’s handling of the economy.

Really? That would be the corona economy, the worst since the Great Depression, thanks substantially to Trump’s catastrophic policies. How can this possibly be?

I put the question to some leading pollsters and strategists. One person whom I greatly respect told me that in focus groups several people volunteered that they credited Trump personally for the supplemental unemployment checks and one-time $1,200 relief payments because his name was on the checks.

I suspect there is more going on here than Trump’s name on checks.  Part of what is going on is issue ownership.  Voters tend to trust Republicans more on the economy than Democrats.  This seems to be true even on budget deficits (seriously).  You can scan through some old polling data here.  Why this is the case is not entirely clear; perhaps it is because business is generally a Republican constituency and people equate the economy with business.  Another factor is likely Trump’s carefully crafted reputation as a “successful” “businessman”.  Voters tend to trust business people; they want government to be run more like a business, etc.  Remember Ross Perot.

Of course, these factors will only take Trump so far; his ratings on the economy are slipping along with his overall approval:

As recently as last month, even as Mr. Biden led the presidential race, a majority of voters said they trusted Mr. Trump more on economic matters. But a poll released Wednesday by Quinnipiac University showed Mr. Biden edging ahead on that question, 50 percent to 45 percent. Quinnipiac found that 53 percent of registered voters disapproved of Mr. Trump’s handling of the economy, and polls from CNBC and the Democratic firm Navigator Research found similar disapproval numbers.

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Opening schools

Important questions from my friend

Paula W……..

! Listen up world!

Betsy DeVos, we have a few questions for you:
• If a teacher tests positive for COVID-19 are they required to quarantine for 2-3 weeks? Is their sick leave covered, paid?
• If that teacher has 5 classes a day with 30 students each, do all 150 of those students need to then stay home and quarantine for 14 days?
• Do all 150 of those students now have to get tested? Who pays for those tests? Are they happening at school? How are the parents being notified? Does everyone in each of those kids’ families need to get tested? Who pays for that?
• What if someone who lives in the same house as a teacher tests positive? Does that teacher now need to take 14 days off of work to quarantine? Is that time off covered? Paid?
• Where is the district going to find a substitute teacher who will work in a classroom full of exposed, possibly infected students for substitute pay?

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June retail sales: some actual good news; the entirety of the pandemic decline has been reversed

June retail sales: some actual good news; the entirety of the pandemic decline has been reversed

Retail sales are the third report for June out of the four main coincident indicators that show whether the economy is in recession or expansion. And they were the third that grew again for the month. In fact, in real, inflation-adjusted terms they were higher than in February, the last month before the coronavirus pandemic hit:

They were also only 0.4% lower than their all-time high set last August.

 

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Suppose the Democrats win the Presidency and the Senate in 2020 . . .

Given the state of the race, people are starting to ask what this would mean for the future of progressive politics in America.

James Kwak is gloomy:

I think the policy solutions are obvious . . .

The problem, of course, is the politics—not just President Trump and the Republicans, but a Democratic Party controlled by its conservative wing, defined primarily by its insistence on fiscal responsibility, and terrified of doing anything that anyone might call socialist . . .

Julia Azari is more open to the possibility of a new political era:

An important feature of these orders are the social movements that energize the parties in power and help to define the issues. These movements tend to start their work creating a new political order well before the transition to a full reconstructive politics. The conservative movement that defined the Reagan years began to really gain influence during the Nixon years. The abolition movement helped shape the politics of Lincoln’s presidency. FDR was drawing on decades of Progressive movement thinking and action.

Simply put, Biden’s party affiliation allows him to reject the politics of Trump, Reagan and the Republicans in between – but no matter who the Democrats nominated this year, that person was never going to actually be the engine for major political change. Rather, that groundwork has been in progress for many years. If Biden wins in November, he might be in a good position to be a reconstructive leader. He’s an odd candidate for such a position – he seems much less likely than Obama at first glance. The thing is that reconstructive politics is about more than the president.

I see arguments on both sides . . .

Beginning with the case for pessimism.  There are several reasons for doubting that a big Democratic win in November will signify the beginning of a long run shift in American politics to the left.

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Industrial production rebounds, but will manufacturing employment continue to do so?

Industrial production rebounds, but will manufacturing employment continue to do so?

 

Industrial production is the King of Coincident Indicators. The NBER almost always identifies month of the end, and frequently the beginning, of recessions based on the top and bottom of this statistic. This morning it was reported to have risen for the second month in a row in June. Let’s take a little deeper look.

First, here’s the graph of both overall (blue) and manufacturing (red) production since Trump was inaugurated in January 2017:

Both rose by a total of 5% or more until December 2018. In that month both peaked, and both have been in declines since then, first shallow, and then collapsing when the coronavirus hit in March. As of this morning’s report, overall production has regained about 1/3 of its loss since December 2018. Manufacturing has regained about 1/2 of its loss.

 

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The First Steps . . .

As posted by Anne:

Pope Francis

“All dictatorships, all of them, began like this, by adulterating communication, by putting communications in the hands of people without scruples, of governments without scruples.”

June 18, 2018 Morning Mass, Domus Sanctae Marthae, Pope Francis Dictatorships begin with taking over media to spread lies and handing it over to a firm, a business that slanders, tells lies, weakens democracy, and then the judges come to judge these weakened institutions, these destroyed, condemned people.

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More Likely Bad Economic Forecasting: This Time From OECD And CBO

More Likely Bad Economic Forecasting: This Time From OECD And CBO

That would be the quintessential establishment and boringly conventional Organization of Economic Cooperation and Development, the Paris-based “rich nations'” entity that grew out of the Marshall Plan and has a reputation for excellent data, and also the Congressional Budget Office, generally regarded as bipartisan and highly professional.

So I saw their forecasts of US economic performance in terms of GDP and unemployment rates for the end of this year, and I find both to be highly unlikely, probably way too pessimistic.  I get these from a column in today’s Washington Post by the often execrable Robert J. Samuelson, but here he is playing it straight and just reporting.  Indeed, the main thrust of his column is to note an apparent disjuncture between the hot stock market and the not-so-obviously hot economy, suggesting either the stock market is overvalued or the economy is being under forecast.  I suspect actually that both are true, although I am not going to attempt to forecast the stock market.

Anyway, RJS reports two forecasts coming out of the OECD, one “pessimistic” and one “more pessimistic” for the US.  The first is sort of a baseline one that assumes the coronavirus is gotten to be more or less under control. The second one assumes a second wave of the virus this fall.  The first forecast sees a GDP decline for 2020 of -7.3%  with an unemployment rate at the end of the year of 11.3%.  The second more pessimistic one has GDP declining -8.5% with a resulting end-of-year unemployment rate of 12.5%.

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A Framework for Coronavirus Policy

A Framework for Coronavirus Policy

There are two general ways to reduce the transmission of the virus.  One is “engineering”, changing the physical environment, the other is “social”, changing behavior to keep people distant from each other.  Under engineering, we can include not only physical partitions, UV lighting and ventilation, but also mask-wearing and other PPE.  I know, there is a very large behavioral component to masking, but I want to focus on the distancing aspect, so let’s put everything else in the engineering box.

Now for distancing.  Suppose we know instantaneously and with certainty everyone who is infected.  In that case, we can selectively quarantine them, and this will cut off transmission.  That is possible only in rare circumstances, such as a country that has fully eradicated the virus but has occasional external visitors.  If you have a reliable test you can identify anyone arriving with the disease and isolate them.  The rest of the population, known to be uninfected and unexposed, can move freely and congregate as they want.

A more realistic case is that you know with near certainty everyone who is infected, but only with a delay.  Then those who came into contact with them during their potential spreading period are also suspect and need to be isolated.  This is the idea behind contact tracing, which imposes distancing on a small subset of the population who may not be infected but leaves everyone else free to go on with their life.

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