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Inflation, workforce participation and real wages: 3 key indicators for monitoring the economy in 2022

The US economy ended 2021 with a lot of uncertainty and serious problems, such as inflation. How will economists know if things are improving in 2022?

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Mirror mirror on the wall, who's the best economy of them all? PM Images/DigitalVision via Getty Images

The U.S. economy ended 2021 with a lot of uncertainty. Inflation surged to levels not seen since the 1980s – seriously eroding consumer purchasing power – while the highly contagious omicron variant forced many Americans to hunker down as case counts soared to record levels, reducing economic activity.

How will the economy fare in 2022? And given its size and complexity, how will we even know whether things are improving? To offer some clues, The Conversation U.S. recruited three economists to highlight one measurement tool they’ll be following closely in the new year and explain why it will help them – and you – better understand how the economy is doing.


Will inflation keep rising?

Veronika Dolar, Professor of Economics, SUNY Old Westbury

Americans, especially those on low incomes, have felt the pinch of higher prices in recent months. The price people pay for everything from fish to gasoline has soared, with the pace of change the highest it’s been in decades.

Inflation is a sustained, generalized increase in the prices of many goods and services in an economy. Inflation erodes consumers’ purchasing power and the value of their cash, in effect reducing their real incomes.

A modern economy has millions of goods and services whose prices are continually quivering in the breezes of supply and demand. How can all of these shifts be boiled down to a single inflation rate?

As with many problems in economic measurement, the conceptual answer is reasonably straightforward: Prices of a variety of goods and services are combined into a single price level or index, and the inflation rate is simply a measure of its change over some period.

Economists have many ways to measure inflation, from the ubiquitous consumer price index to the little-known gross domestic product deflator. Even the satirical publication The Onion has a guide. Each has its strengths and weaknesses.

I prefer the tool that journalists commonly use and you’ve almost certainly seen in recent weeks trumpeting the highest inflation rate in about 40 years: headline CPI, which rose 6.8% in November 2021 compared with a year earlier. This is the broadest version of the consumer price index.

Many economists and the Federal Reserve prefer what is known as core CPI, which excludes volatile food and energy prices. Because prices for food and fuel fluctuate frequently even as demand for them remains stable, policymakers argue excluding them makes it easier to figure out what’s really going on in the economy.

But this ignores two categories that absorb a significant share of most household budgets – especially among the less affluent. After all, people need food – up 6.1% over the past year – and energy – up 33.3% in 2021 – to survive. As such, it seems problematic to exclude them.

Economists like me will be watching the main consumer price index closely in 2022 to see if it stays elevated, continues to climb or finally begins to fall – which is what most economists forecast.

Not only will it tell us a lot about the state of the U.S. economy and how quickly the Fed may have to raise interest rates, but it will likely also be a major factor in who gains most in the midterm elections. Research has found that high inflation rates – and especially gas prices – are strongly correlated with disapproval in the president’s job performance.


Will Americans return to the workforce?

Marlon Williams, Assistant Professor of Economics, University of Dayton

The labor force participation rate is not one of the “big three” macroeconomic indicators – gross domestic product, inflation and the unemployment rate – that economists, financial markets and journalists slavishly follow. As a matter of fact, it might not even make the top 10. But it is one of the variables that I will be following especially closely in 2022.

The labor force participation rate is the percentage of the civilian population aged 16 and up who are either employed or are actively seeking a job. This measure gives us a sense of the share of working-age population who are making themselves available to work.

From the 1970s through the turn of the century, there was an almost uninterrupted increase in the labor force participation as more women joined the workforce. During that period, it rose from a low of roughly 60% to an all-time high of 67.3% in the first quarter of 2000.

From the early 2000s until the pandemic hit, the participation rate steadily declined and was about 63% at the end of 2019. It fell sharply in April 2020 as the U.S. began a period of lockdowns to try to contain the rapid spread of COVID-19, reaching a nearly 50-year low of 60.2% that month.

Although the rate has recovered somewhat, it continues to flounder below 62% because of a combination of factors brought on or exacerbated by the pandemic, such as fear about returning to a physical workplace and pandemic-related benefits that made it more financially feasible to go without a job.

While economists don’t identify a specific participation rate as ideal, it’s generally believed that a sudden, sizable reduction in the rate presents significant challenges to the smooth functioning of an economy. That’s because it represents a rapid withdrawal of productive resources – workers – that can’t be easily or quickly offset. This is one cause of the recent surge in inflation, not to mention the supply chain problems the global economy is currently experiencing.

If the rate doesn’t rise to pre-pandemic levels in the coming year or two, that would dash hopes for a stronger economic recovery and would signal high inflation and supply chain shortages will be with us for some time to come.


Will real wages climb?

Melanie Long, Assistant Professor of Economics, The College of Wooster

As an economist who studies consumer finances, I spend a lot of time thinking about how much Americans spend. That is why I will be watching one number particularly closely in 2022: median usual weekly earnings.

In short, this data point tells us how much the typical worker – rather than the average one, which can be misleading – receives in pretax pay each week, adjusted for inflation. Anyone who manages a budget knows that how much you make is only half the story. Prices matter just as much. “Real” weekly earnings are adjusted based on the cost of consumer goods. Higher prices mean that families can afford to buy less with the same pay, so their real earnings would fall.

Unfortunately, this number is a bit delayed, coming several months after the release of the nominal data – which doesn’t factor in inflation. But accounting for prices is more important now than ever. The prices of everything from used cars to chicken are rising at the fastest rate in a decade. These increases will cut into families’ buying power and threaten to stall an already slow economic rebound.

Before the pandemic, real weekly earnings were on the rise as historically low unemployment rates forced companies to pay more to attract workers. In the second quarter of 2020, real earnings suddenly spiked – primarily because millions of low-wage workers lost their jobs because of lockdowns, and so their incomes weren’t being calculated in the figure. Earnings subsequently fell back to pre-pandemic levels as low-wage workers returned to work.

Now there are signs that wages could again be on the rise for some workers. For example, service workers have been quitting their jobs in droves, in part in search of better pay with other employers. Given the ongoing labor shortage, some companies seem to have had little choice but to raise wages.

One concern economists have about these wage hikes is that employers might react by raising prices further to help pay for them. This in turn could prompt workers to demand higher wages. Economists call this a “wage-price spiral,” which if allowed to spin out of control could lead to stagflation – slow growth, high inflation – or worse.

[Over 140,000 readers rely on The Conversation’s newsletters to understand the world. Sign up today.]

The direction that real earnings take in 2022 will have a major impact on families’ spending and the pace of economic growth. Consumer spending makes up nearly 70% of U.S. economic activity each year.

I will be watching this number carefully this year to see how the competing forces of increasing prices and rising wages ultimately shape the fragile pandemic economic recovery.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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Monkeypox cases are rising. Should we be worried?

The World Health Organization has said the current outbreak of monkeypox is the largest ever recorded outside sub-Saharan
The post Monkeypox cases are…

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The World Health Organization has said the current outbreak of monkeypox is the largest ever recorded outside sub-Saharan Africa, with cases rising above the 100-mark a few days ago and the UK top of the table with 56 as of yesterday.

Top of the list of concerns is how the virus – which does not spread easily between humans and requires skin-to-skin contact – is spreading so quickly in so many countries in Europe, the Americas and Australia where the disease is not endemic.

There is speculation that monkeypox may be being spread between sexual partners, even though it is not normally considered a sexually-transmitted infection. Thankfully, there have been no deaths reported so far, although the WHO notes monkeypox has a fatality rate of between 3% and 6%.

While health authorities are on alert, the WHO said it thinks the outbreak can be contained and that the overall risk to the population remains low. It also stressed there is no evidence that a viral mutation is responsible for the unusual pattern of infections.

Monkeypox is considered less likely to mutate quickly because it is a DNA virus rather than an RNA virus like influenza or COVID-19.

Several countries including Belgium and the UK are already advising a three-week quarantine period for anyone who contracts the virus and their close contacts.

The increasing case numbers in the current monkeypox outbreak are certainly concerning,” commented Dr Charlotte Hammer, an expert in emerging infectious diseases based at the University of Cambridge in the UK.

“It is very unusual to see community transmission in Europe – previous monkeypox cases have been in returning travellers with limited ongoing spread. However, based on the number of cases that were already discovered across Europe and the UK in the previous days, it is not unexpected that additional cases are now being and will be found, especially with the contact tracing that is now happening.”

Vaccines and drugs are available

Meanwhile, attention is now being turned to other measures to control the outbreak, including the use of vaccines against smallpox – a related virus – in a ‘ring vaccination’ approach designed to control the spread among contacts.

Vaccines used during the smallpox eradication programme can provide around 85% protection against monkeypox, according to the WHO, which notes that one newer vaccine – Bavarian Nordic’s Jyneos – has been approved by the FDA for prevention against both viruses.

There’s also a licensed antiviral drug for monkeypox. SIGA Technologies’ oral drug Tpoxx (tecovirimat) is approved for smallpox, monkeypox and cowpox in Europe, and in the US and Canada for smallpox, although it can be used off-label for the other disease. The US FDA also approved a new intravenous form of the drug last week.

The WHO says there is no need for widespread vaccination, as other control measures like isolation of patients should be enough to curb the spread and in any case supplies of vaccines are limited.

Monkeypox causes symptoms similar to but milder than smallpox, typically beginning with fever, headache, muscle aches and exhaustion. It is transmitted to people from various wild animals, such as rodents and primates, and is usually a self-limited disease with symptoms lasting from two to four weeks.

In 2003, the US experienced an outbreak of monkeypox, which was the first time human monkeypox was reported outside of Africa. The Centers for Disease Control and Prevention (CDC) is making some Jyneos vaccine reserves available for close contact inoculations, including healthcare workers tending to patients.

The UK Health Security Agency (UKHSA) said yesterday it had identified 36 additional cases of monkeypox in England, and that vaccination of high-risk contacts of cases is already underway.

“A notable proportion of recent cases in the UK and Europe have been found in gay and bisexual men so we are particularly encouraging these men to be alert to the symptoms,” said the agency’s chief medical advisor Dr Susan Hopkins.

“Because the virus spreads through close contact, we are urging everyone to be aware of any unusual rashes or lesions and to contact a sexual health service if they have any symptoms.”

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What does good cybersecurity look like in 2022?

The pharma industry is becoming an increasingly hot commodity for cybercriminals. In recent years, digital adoption has accelerated
The post What does…

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The pharma industry is becoming an increasingly hot commodity for cybercriminals. In recent years, digital adoption has accelerated at a rapid pace, with companies racing to integrate cloud-based platforms and telehealth services to expand the delivery of modern healthcare. Combined with the sudden arrival of COVID-19, this perfect storm of events handed cybercriminals an opportunity to exploit weaknesses in fledging systems and processes.

Pharma companies hold masses of vital data sets, from classified intellectual property to proprietary information about drugs and clinical trial developments. The value of such data is not lost on cybercriminals. This was illustrated in 2021, amid growing awareness of the pharma industries’ efforts to develop and distribute COVID-19 vaccines. According to cybersecurity firm Critical Insights, the number of cybersecurity breaches in healthcare reached an all-time high in 2021, exposing an unprecedented amount of protected health information.

Cyber attacks can be highly damaging, both financially and to a company’s reputation. Therefore, it is essential that necessary steps are taken, both at a company and individual level, to understand and prevent the risk of cyber threats. But what does good cybersecurity actually look like? To help navigate the complex world of digital crime, Adarma’s threat consultant Mike Varley, KnowBe4 lead security awareness advocate Javvad Malik, CEO and founder of CyberSmart Jamie Akhtar, and senior engineer at Trend Micro Simon Walsh offer their insights into key trends and best practises for pharma companies.

Why is the healthcare industry a particular target for cyberattacks?

Javvad Malik (JM): Historically cybercriminals were after money, so they often ignored healthcare providers. However, with increasing sophistication within the criminal economies and the ability to monetise data through ransomware, other means of extortion, or resale, healthcare providers have become an almost ideal target for criminals.

Simon Walsh (SW): Despite statements from would-be attackers to the contrary, the healthcare and pharma industries became prime targets during the COVID pandemic, particularly for ransomware operators, as we saw during the breach of the Irish Healthcare Service Executive in May 2021.

There are several reasons for this: they’re seen as easy targets because of their relative lack of security maturity; the COVID pandemic-induced strain they’re already under makes them more likely to pay the ransom; and the fact that the data they hold – patient records – is extremely valuable and opens additional paths to extortion.

Jamie Akhtar (JA): Many healthcare providers have weak or limited defences. These range from poor staff awareness of threats to creaking, outdated operating systems and tech, but whatever the reason, cybercriminals are aware that many healthcare providers make for easy pickings.

Mike Varley (MV): We can expect to see a rising number of ransomware attacks on the healthcare sector. Healthcare is recognised as national critical infrastructure, which makes it an attractive target to malicious foreign entities looking to create chaos and harm. Similarly, when human life is put at risk by an attack, organisations are more likely to pay up, so attackers often view these structures as a quick pay-day.

Where do you see the most mistakes being made in healthcare when it comes to addressing cyber threats?

JM: Perhaps the biggest mistakes or challenges healthcare faces when addressing cyber threats are having outdated or unpatched software running, being too quick to purchase or adopt internet-connected devices without demanding rigorous security testing, and, finally, the lack of security awareness and training amongst IT staff.

SW: Security maturity and the ability to successfully detect and withstand attacks comes from understanding cyber risk and building and developing a cyber security strategy around that understanding. This of course needs to be adopted and driven by the board and C-level executives and too often this is not the case, with a lack of understanding and investment resulting in a weakened security posture.

Over-reliance on security technology without adequate human oversight further weakens this posture. The Irish hospitals who successfully prevented the attack in May 2021 were those who not just detected stages of the attack but also understood what those detections meant and acted as a result.

Developing a human oversight function – for example a Security Operations Centre – in house is costly, difficult, and takes time. So, for many in the healthcare/pharma industry, the quickest route to success on this front is working with the correct partner who will provide that function.

JA: There are two areas in which most organisations, not just healthcare providers, could be doing better. Many aren’t doing the simple things that can thwart most cyber-attacks. For example, regularly updating software and operating systems, using strong passwords and MFA, developing clear policies for staff to follow, and ensuring security tools are configured properly.

On top of this, employee awareness of cyber threats just isn’t widespread enough. An organisation can have the best cybersecurity software around but, if an employee doesn’t know what a phishing email looks like and clicks a malicious link, it’ll be hacked just the same. The way to counter this is basic cybersecurity training. It doesn’t have to be comprehensive, just enough to help your people make informed choices.

“Perhaps the biggest mistakes or challenges healthcare faces when addressing cyber threats are having outdated or unpatched software running, being too quick to purchase or adopt internet-connected devices without demanding rigorous security testing, and, finally, the lack of security awareness and training amongst IT staff.”

 

What trends are you seeing in cybersecurity at the moment?

JA: The most worrying trend is the rise in supply chain attacks. Cybercriminals have worked out that the best way to target large enterprises with solid defences, is to attack a smaller, less well-defended supplier who can give them a backdoor in. As a result, we’re seeing more major attacks originate in this way.

Alongside this, phishing continues to be the single most common form of attack. Due to the general lack of awareness in the working population, many organisations are still struggling to contain the threat.

MV: Increasingly I think we will see healthcare sector organisations turning to managed security service providers who have the expertise, capability, and technology to deal with an increasingly complex and harmful cyber landscape.

The healthcare sector is expected to provide an elevated level of cyber protection and with a shortage of cyber talent and the prohibitive cost of establishing a Security Operations Centre internally, organisations will need a trusted security partner that can provide that level of proactive protection.

What advice would you give to companies looking to improve their cybersecurity policies, both on a company-wide scale and individual basis?

JA: Above all, make them clear and easy to follow. Avoid technical jargon, where possible, as this will only disengage people. And, explain why the company has adopted the policies it has; your staff will find it much easier to follow them if they know why. Also, store them somewhere that’s easy to access from anywhere. There’s little use in a policy if it’s buried deep in a shared drive where nobody reads it.

MV: Cybersecurity policies should be informed by a threat-led approach. Regular threat modelling will highlight what threats you are facing and how adversaries are likely to target your organisation. With this information on areas of commonality, your security teams can focus on implementing layered security and monitoring.

Your policy should consider asset awareness. As basic as it sounds, it can be easy for a small handful of assets to fall under the radar within vast enterprises, which leads to out-of-date operating systems and software.

JM: Organisations should look to take a data-driven approach. That means, that in addition to following what is occurring externally in terms of attacks, they should look through a year or two worth of internal security logs to see what was the root cause of the incidents during this time period.

Once the root causes have been identified, they should be prioritised, and then controls be put in place to address those specific root causes. Those should inform the cybersecurity policies and tailor them to the specific risks the organisation is facing.

SW: For companies, start at the top and ensure that the board and C-level executives are capable of understanding and assessing risk. This will drive investment in cyber strategy and improve your chances of mitigating that risk. Human oversight of security-related activity in the organisation is also fundamental.

For individuals, heightened awareness and ongoing education are key. We all have a role to play in cyber-security as 100% reliance on technology is unfortunately never enough.

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CDC Now Recommends COVID Testing For All Domestic Air Travel, Including The Vaccinated

CDC Now Recommends COVID Testing For All Domestic Air Travel, Including The Vaccinated

Authored by Jack Phillips via The Epoch Times,

The…

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CDC Now Recommends COVID Testing For All Domestic Air Travel, Including The Vaccinated

Authored by Jack Phillips via The Epoch Times,

The Centers for Disease Control and Prevention (CDC) is recommending that all domestic travelers undergo COVID-19 testing before and after they travel - regardless of vaccination status.

In an update on the agency’s website, anyone traveling within the United States may want to consider “getting tested as close to the time of departure as possible,” and no more than three days before a flight. It previously only recommended testing for people who have not received COVID-19 vaccines or up-to-date booster shots.

The CDC update is also recommending that people take a test before or after a trip if they went to crowded spaces “while not wearing a well-fitting mask or respirator.”

In April, a Florida federal judge struck down the CDC mandate that required people to wear masks inside airports or on airplanes. Justice Department officials have signaled they will challenge the rule, implemented after President Joe Biden took office in early 2021, in court.

A spokesperson for the agency told AFAR Magazine on May 19 that “COVID-19 vaccines are effective at preventing severe disease and death,” but added, “since vaccines are not 100 percent effective at preventing infection, some people who are up to date can still get COVID-19.”

“People who are up to date with their COVID-19 vaccines may feel well and not have symptoms but still can be infected and spread the virus to others,” the spokesperson said.

In January of this year, the CDC also implemented a change to its international travel rule, requiring plane passengers aged 2 and older to show a negative COVID-19 test from no more than a day before boarding a flight or proof of recovery from COVID-19 within the previous 90 days. Foreign nationals have to show proof of COVID-19 vaccination as well.

Neither the CDC nor the White House has given any public indication of when the mandatory testing rule for international travelers will be relaxed. Travel groups have pushed for that rule to be removed for months now.

In a letter to the White House, a group representing more than 250 organizations called for an end to the rule, saying it’s only caused “slow economic recovery of the business and international travel sectors.”

After the federal judge’s order was handed down last month, the CDC issued a new recommendation that people inside airports and airplanes wear masks, despite nearly all major airliners having scrapped enforcement.

And during a news briefing last week, CDC Director Rochelle Walensky, who has been criticized for her agency’s messaging during the COVID-19 pandemic, said that people living in counties that the agency deems to have high COVID-19 transmission should wear masks in indoor settings.

Tyler Durden Mon, 05/23/2022 - 17:40

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