Connect with us

Week Ahead: Dollar rally continues as US yields rise

The taperless tantrum could continue across financial markets now that it seems clear Fed Chair Powell won’t react until he sees disorderly market conditions or if financial conditions tighten further.  Positive economic, such as this past employment…

Published

on

The taperless tantrum could continue across financial markets now that it seems clear Fed Chair Powell won’t react until he sees disorderly market conditions or if financial conditions tighten further.  Positive economic, such as this past employment report might continue to fuel optimism about the economic outlook and that could raise expectations that the Fed will raise rates sooner.

How much stronger will the outlook get once Biden’s COVID relief bill passes?

Will the ECB increase its purchases under its PEPP program and focus their purchases over the near term?

Momentum from the OPEC+ shocker over output could cause oil prices to overheat

Country

US

Financial markets will have their hands full trying to balance the impact on another massive relief bill, an improving labor market, and a bond market selloff that appears to have no signs of slowing down.  The dollar has been running wild following the move in Treasuries and most signs are suggesting that move could continue.

Democrats are close to finalizing the terms of President Biden’s COVID relief bill, while some states are already reopening.  Pressure is on for Democrats to quickly deliver this relief bill and to quickly move onto infrastructure spending.  Texas will completely reopen on Wednesday and lift the mask mandate, which means more states will be right behind them.  Virus variants remain a short-term risk, but so far it is not slowing down the reopening theme for many states.

The Fed is fully prepared for a temporary jump in prices, but the bond market might use that as an excuse to drive bond yields higher and move forward Fed rate hike expectations.  On Wednesday, the February headline annual CPI reading is expected to increase from 1.4% to 1.7%.

EU

EU debt markets have tightened again this week but the noise from officials seems to indicate they are not comfortable with government bond yields rising. With Jerome Powell seemingly taking an opposite view, risks are rising that EUR/USD could fall next week. It is testing support at 1.1960 and targets 1.1800 initially, possibly 1.1600.  

On that note, the latest ECB rate decision on Thursday assumes greater importance. If the bond tantrum continues ECB officials may send a strong signal that the ECB will increase the pace of bond buying if necessary, to cap rate increases. Negative Euro.

UK

The UK budget was generally well received with the inevitable future tax rises expected to fall on the business sector. In the near term the government will keep the fiscal stimulus taps fully open until September. UK GDP and Industrial Production on Friday could surprise and be less worse than expected which will be supportive of equities and the Pound.

Sterling has fallen this week back into its rising 6-month channel. It is outperforming the Euro as BoE officials stay silent on rising Gilt yields. Only a fall through 1.3800 by GBP/USD suggests a deeper correction to 1.3500 could occur. The faster pace of vaccinations and a widening yield differential will keep EUR/GBP under pressure and it could fall through 0.8500 in the coming week.

Turkey

The Lira has continued falling versus the US Dollar and is acutely vulnerable to an EM inflation tantrum if US bond yields keep rising. Rising DM yields leave countries such as Turkey, with high inflation already, weak currency accounts and high levels of foreign currency denominated debts in a tenuous position.

If the US bond tantrum continues next week the Lira will come under sustained pressure and could fall towards 8.0000 if the EM trickle turns into a flood. In such a scenario the central bank will likely intervene to sell USD/TRL and if that doesn’t work, spring a surprise rate hike or reserve requirement increase on markets. That may staunch the losses but will only be a short-term fix.

Turkish Industrial Production on Friday will be subsumed by events elsewhere, notably the US.

China

The National People’s Congress has reinstated a GDP growth target of 6.0+% and ramped up spending in technology R&D to increase self-reliance. On the margins this has supported China stocks as markets suffer from the bond tantrum globally. More importantly, they have signaled an interest in joining ASEAN’s RCEP which was positive for Asian equities including China. Markets in the coming week though will be vulnerable to EM bond market developments, and rising oil prices threaten to crimp growth slightly.

Given the attention on inflation globally at the moment, China’s inflation release on Wednesday will be the week’s data highlight. A higher than expected print will be a negative for China equities in the currency climate.

The PBOC has kept the USD/CNY fixing almost unchanged around 6.4600 this week, despite signs of Dollar strength in the DM space. It raised the fix to 6.4900 today though and a move by USD/CNY above 6.5000 in response to the US bond-tantrum this week could set off a cascading sell-off of regional Asian currencies.

India

A quiet data week with bank lending released on Friday. India’s markets will move to the nuances of the US bond market though in the coming week. With a fragile banking system, high debt levels and inflation, and a weak current account that will be pressured by the rise in oil prices, the Indian Rupee is one of Asia’s most vulnerable currencies to a taper-tantrum, along with Indonesia. Equity markets will not escape a rapid fall by the INR.

USD/INR is testing its 100-day moving average at 7.5900, having already fallen heavily in the past two weeks. A full-blown EM rout in the coming week could see USD/INR rise quickly to 8.0000 prompting central bank intervention.

Australia & New Zealand

Australian and New Zealand bond yields have also spiked, notably in Australia, in response to the hikes seen in the US. That has put downward pressure on both stock markets which is likely to continue into next week. Excellent Australian economic data over the past few days has been completely ignored, as have strong commodity prices, highlighting that bond market developments are the most important directional driver at the moment.

Reserve Bank of Australia Governor Lower speaks on Thursday with the data calendar of both countries second-tier. His remarks will be closely followed given developments and markets will be searching for any hint of more aggressive bond market intervention, or an acceptance of inflationary pressures. The speech gives Australian equities a strong binary outcome.

US Dollar strength has left both the AUD/USD and NZD/USD teetering on multi-month support today at .0.7700 and 0.7150 respectively. A weekly close below there this evening signals 200+ point moves lower for both in the coming week.

Japan

Heavy data week with Coincident Index, Current Account and GDP. the effects of high oil prices may show up in the data this week and will be a negative at the margins for equities. Japan has extended its Covid-19 state of emergency, another negative.

The Nikkei 225 has broken 4-month support  at 29,300 as equities globally retreat. With Japan investors amongst the most heavily invested and exuberant, the Nikkei is in danger of a material fall in the coming week if bond rates elsewhere continue moving higher. Even if they don’t, the technical picture remains very negative. The Nikkei can fall to 27,000 in quick time this coming week.

A widening US/Japan rate differential spurred USD/JPY to climb to 108.00. BoJ officials have expressed concern about potential rises in JGB yields, with the benchmark nudging the top of the BoJ yield control band. Assuming the BoJ caps rates and US ones continue to rise, USD/JPY can move higher to 110.00 in the week ahead.

Markets

Oil

The aftermath of the OPEC+ surprise decision not to raise output next month could support much higher crude prices.  The oil market is poised for a strong tightening of the market as OPEC+ supply will lag demand over the next few months.  The Saudi prince doesn’t seem to be worried about US shale and that means oversupply concerns for this year are gone. 

Saudi Arabia’s decision to restrain production and maintain the 1 million b/d voluntary production cut has become a ‘whatever it takes’ moment.  Brent went from overbought to it’s time to buy more.  Brent forecasts will be seeing massive upgrades over the next week.  The US is reopening the economy a lot faster due to COVID vaccine success and that will trigger a strong pickup in fuel demand over the next couple of months.

The enthusiasm in the energy market got another boost from a stronger-than-expected nonfarm payroll report that shows that Americans are closer to pre-pandemic behavior that will drive strong demand for crude.  WTI crude is over the $65 a barrel level and the momentum could be there for prices to target the $70 level next week.

Gold

Gold is still in the danger zone and if the dollar has a massive move over the next week or two, that could trigger a $100+ drop. Gold bulls are counting on the Fed to eventually push back over the rise in yields.  The Fed doesn’t meet until March 17th so with the blackout period upon us, the bond market might want to test the resolve of the Fed and that could drag gold down.

Bitcoin

Bitcoin has relatively been an easy trade over the past few months, rising on big-money demand and selling off when the broader markets have some panic-selling, but that could change now that regulatory fears are creeping back.

Many crypto-watchers are concerned over how the Biden administration will handle Trump’s anti-money laundering effort that would force to reveal identities of cryptocurrency holders.  If Treasury Secretary Yellen moves forward with the regulation to keep records on who owns cryptocurrencies, that would be a major blow to Bitcoin, possibly triggering an immediate 20% plunge.  The opposition is strong for this regulation and will likely be dragged over a lengthy evaluation process.

Biden’s SEC Chair pick Gary Gensler will also have a big impact on regulation, and he is still viewed as crypto-friendly, so probably not likely delivering a crushing blow that cripples the cryptocurrency market.

Key Economic Events

Saturday, March 6

– The annual session of China’s National People’s Congress resumes in Beijing

Sunday, March 7

-No calendar events today.

Economic Data:

  • China foreign reserves

Monday, March 8

– BOE Governor Bailey discusses the economic outlook

Economic Data:

  • US wholesale inventories
  • Japan BoP, bank lending, bankruptcies, leading index
  • Germany Industrial production
  • Spain Industrial Production
  • Norway Industrial Production
  • Greece GDP

Tuesday, March 9

-The Organization for Economic Cooperation and Development posts its interim economic outlook.

Economic Data:

  • Mexico CPI
  • Hungary CPI
  • New Zealand manufacturing activity, ANZ business confidence,
  • Australia NAB business confidence/conditions
  • Japan GDP, cash earnings, household spending, money stock, machine tool orders
  • China money supply, new yuan loans, manpower survey
  • Eurozone GDP
  • South Africa GDP
  • Germany trade
  • Italy industrial production

Wednesday, March 10

– Reserve Bank of Australia Governor Philip Lowe gives a speech in Sydney.

– EIA crude oil inventory report

Economic Data:

  • Canada rate decision: Expected to keep interest rates steady at 0.25%
  • US CPI, monthly budget statement
  • China PPI, CPI
  • New Zealand REINZ house sales
  • Industrial production: France, Estonia, Slovenia
  • Australia Westpac consumer confidence
  • Russia CPI
  • Czech CPI
  • Norway CPI
  • Denmark CPI
  • Turkey unemployment

Thursday, March 11

-Bank of Canada Deputy Governor Schembri speaks

-Norway central bank Deputy Governor Bache gives a speech about digital central bank currency

-Swiss government updates economics forecasts.

-OPEC monthly Oil Market Report includes demand forecasts and production estimates.

Economic Data:

  • US initial jobless claims
  • ECB Rate Decision: Expected to keep interest rates unchanged
  • New Zealand food prices
  • Trade balance: Israel, Hungary
  • Japan PPI
  • Sweden unemployment
  • Current account: South Africa, Turkey
  • South Africa manufacturing production
  • Russia gold and forex reserve

Friday, March 12

Economic Data:

  • US University of Michigan consumer sentiment, PPI
  • Canada unemployment
  • New Zealand Manufacturing PMI
  • UK GDP, industrial production, trade
  • Hong Kong PPI, industrial production
  • Eurozone Industrial production
  • India Industrial Production
  • UK Industrial Production
  • Turkey Industrial Production
  • Mexico Industrial Production
  • German CPI
  • India CPI
  • Spain CPI
  • Russia Trade data
  • Spain retail sales

Sovereign Rating Updates:

– Austria (S&P)

– Norway (S&P)

– Portugal (S&P)

Read More

Continue Reading

Government

Mistakes Were Made

Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that…

Published

on

Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that a bit during these past few years, but, if there’s one thing they’re exceptionally good at, it’s taking responsibility for their mistakes. Seriously, when it comes to acknowledging one’s mistakes, and not rationalizing, or minimizing, or attempting to deny them, and any discomfort they may have allegedly caused, no one does it quite like the Germans.

Take this Covid mess, for example. Just last week, the German authorities confessed that they made a few minor mistakes during their management of the “Covid pandemic.” According to Karl Lauterbach, the Minister of Health, “we were sometimes too strict with the children and probably started easing the restrictions a little too late.” Horst Seehofer, the former Interior Minister, admitted that he would no longer agree to some of the Covid restrictions today, for example, nationwide nighttime curfews. “One must be very careful with calls for compulsory vaccination,” he added. Helge Braun, Head of the Chancellery and Minister for Special Affairs under Merkel, agreed that there had been “misjudgments,” for example, “overestimating the effectiveness of the vaccines.”

This display of the German authorities’ unwavering commitment to transparency and honesty, and the principle of personal honor that guides the German authorities in all their affairs, and that is deeply ingrained in the German character, was published in a piece called “The Divisive Virus” in Der Spiegel, and immediately widely disseminated by the rest of the German state and corporate media in a totally organic manner which did not in any way resemble one enormous Goebbelsian keyboard instrument pumping out official propaganda in perfect synchronization, or anything creepy and fascistic like that.

Germany, after all, is “an extremely democratic state,” with freedom of speech and the press and all that, not some kind of totalitarian country where the masses are inundated with official propaganda and critics of the government are dragged into criminal court and prosecuted on trumped-up “hate crime” charges.

OK, sure, in a non-democratic totalitarian system, such public “admissions of mistakes” — and the synchronized dissemination thereof by the media — would just be a part of the process of whitewashing the authorities’ fascistic behavior during some particularly totalitarian phase of transforming society into whatever totalitarian dystopia they were trying to transform it into (for example, a three-year-long “state of emergency,” which they declared to keep the masses terrorized and cooperative while they stripped them of their democratic rights, i.e., the ones they hadn’t already stripped them of, and conditioned them to mindlessly follow orders, and robotically repeat nonsensical official slogans, and vent their impotent hatred and fear at the new “Untermenschen” or “counter-revolutionaries”), but that is obviously not the case here.

No, this is definitely not the German authorities staging a public “accountability” spectacle in order to memory-hole what happened during 2020-2023 and enshrine the official narrative in history. There’s going to be a formal “Inquiry Commission” — conducted by the same German authorities that managed the “crisis” — which will get to the bottom of all the regrettable but completely understandable “mistakes” that were made in the heat of the heroic battle against The Divisive Virus!

OK, calm down, all you “conspiracy theorists,” “Covid deniers,” and “anti-vaxxers.” This isn’t going to be like the Nuremberg Trials. No one is going to get taken out and hanged. It’s about identifying and acknowledging mistakes, and learning from them, so that the authorities can manage everything better during the next “pandemic,” or “climate emergency,” or “terrorist attack,” or “insurrection,” or whatever.

For example, the Inquiry Commission will want to look into how the government accidentally declared a Nationwide State of Pandemic Emergency and revised the Infection Protection Act, suspending the German constitution and granting the government the power to rule by decree, on account of a respiratory virus that clearly posed no threat to society at large, and then unleashed police goon squads on the thousands of people who gathered outside the Reichstag to protest the revocation of their constitutional rights.

Once they do, I’m sure they’ll find that that “mistake” bears absolutely no resemblance to the Enabling Act of 1933, which suspended the German constitution and granted the government the power to rule by decree, after the Nazis declared a nationwide “state of emergency.”

Another thing the Commission will probably want to look into is how the German authorities accidentally banned any further demonstrations against their arbitrary decrees, and ordered the police to brutalize anyone participating in such “illegal demonstrations.”

And, while the Commission is inquiring into the possibly slightly inappropriate behavior of their law enforcement officials, they might want to also take a look at the behavior of their unofficial goon squads, like Antifa, which they accidentally encouraged to attack the “anti-vaxxers,” the “Covid deniers,” and anyone brandishing a copy of the German constitution.

Come to think of it, the Inquiry Commission might also want to look into how the German authorities, and the overwhelming majority of the state and corporate media, accidentally systematically fomented mass hatred of anyone who dared to question the government’s arbitrary and nonsensical decrees or who refused to submit to “vaccination,” and publicly demonized us as “Corona deniers,” “conspiracy theorists,” “anti-vaxxers,” “far-right anti-Semites,” etc., to the point where mainstream German celebrities like Sarah Bosetti were literally describing us as the inessential “appendix” in the body of the nation, quoting an infamous Nazi almost verbatim.

And then there’s the whole “vaccination” business. The Commission will certainly want to inquire into that. They will probably want to start their inquiry with Karl Lauterbach, and determine exactly how he accidentally lied to the public, over and over, and over again …

And whipped people up into a mass hysteria over “KILLER VARIANTS” …

And “LONG COVID BRAIN ATTACKS” …

And how “THE UNVACCINATED ARE HOLDING THE WHOLE COUNTRY HOSTAGE, SO WE NEED TO FORCIBLY VACCINATE EVERYONE!”

And so on. I could go on with this all day, but it will be much easier to just refer you, and the Commission, to this documentary film by Aya Velázquez. Non-German readers may want to skip to the second half, unless they’re interested in the German “Corona Expert Council” …

Look, the point is, everybody makes “mistakes,” especially during a “state of emergency,” or a war, or some other type of global “crisis.” At least we can always count on the Germans to step up and take responsibility for theirs, and not claim that they didn’t know what was happening, or that they were “just following orders,” or that “the science changed.”

Plus, all this Covid stuff is ancient history, and, as Olaf, an editor at Der Spiegel, reminds us, it’s time to put the “The Divisive Pandemic” behind us …

… and click heels, and heil the New Normal Democracy!

Tyler Durden Sat, 03/16/2024 - 23:20

Read More

Continue Reading

Government

Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A…

Published

on

Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A Harvard Medical School professor who refused to get a COVID-19 vaccine has been terminated, according to documents reviewed by The Epoch Times.

Martin Kulldorff, epidemiologist and statistician, at his home in Ashford, Conn., on Feb. 11, 2022. (Samira Bouaou/The Epoch Times)

Martin Kulldorff, an epidemiologist, was fired by Mass General Brigham in November 2021 over noncompliance with the hospital’s COVID-19 vaccine mandate after his requests for exemptions from the mandate were denied, according to one document. Mr. Kulldorff was also placed on leave by Harvard Medical School (HMS) because his appointment as professor of medicine there “depends upon” holding a position at the hospital, another document stated.

Mr. Kulldorff asked HMS in late 2023 how he could return to his position and was told he was being fired.

You would need to hold an eligible appointment with a Harvard-affiliated institution for your HMS academic appointment to continue,” Dr. Grace Huang, dean for faculty affairs, told the epidemiologist and biostatistician.

She said the lack of an appointment, combined with college rules that cap leaves of absence at two years, meant he was being terminated.

Mr. Kulldorff disclosed the firing for the first time this month.

“While I can’t comment on the specifics due to employment confidentiality protections that preclude us from doing so, I can confirm that his employment agreement was terminated November 10, 2021,” a spokesperson for Brigham and Women’s Hospital told The Epoch Times via email.

Mass General Brigham granted just 234 exemption requests out of 2,402 received, according to court filings in an ongoing case that alleges discrimination.

The hospital said previously, “We received a number of exemption requests, and each request was carefully considered by a knowledgeable team of reviewers.

A lot of other people received exemptions, but I did not,” Mr. Kulldorff told The Epoch Times.

Mr. Kulldorff was originally hired by HMS but switched departments in 2015 to work at the Department of Medicine at Brigham and Women’s Hospital, which is part of Mass General Brigham and affiliated with HMS.

Harvard Medical School has affiliation agreements with several Boston hospitals which it neither owns nor operationally controls,” an HMS spokesperson told The Epoch Times in an email. “Hospital-based faculty, such as Mr. Kulldorff, are employed by one of the affiliates, not by HMS, and require an active hospital appointment to maintain an academic appointment at Harvard Medical School.”

HMS confirmed that some faculty, who are tenured or on the tenure track, do not require hospital appointments.

Natural Immunity

Before the COVID-19 vaccines became available, Mr. Kulldorff contracted COVID-19. He was hospitalized but eventually recovered.

That gave him a form of protection known as natural immunity. According to a number of studies, including papers from the U.S. Centers for Disease Control and Prevention, natural immunity is better than the protection bestowed by vaccines.

Other studies have found that people with natural immunity face a higher risk of problems after vaccination.

Mr. Kulldorff expressed his concerns about receiving a vaccine in his request for a medical exemption, pointing out a lack of data for vaccinating people who suffer from the same issue he does.

I already had superior infection-acquired immunity; and it was risky to vaccinate me without proper efficacy and safety studies on patients with my type of immune deficiency,” Mr. Kulldorff wrote in an essay.

In his request for a religious exemption, he highlighted an Israel study that was among the first to compare protection after infection to protection after vaccination. Researchers found that the vaccinated had less protection than the naturally immune.

“Having had COVID disease, I have stronger longer lasting immunity than those vaccinated (Gazit et al). Lacking scientific rationale, vaccine mandates are religious dogma, and I request a religious exemption from COVID vaccination,” he wrote.

Both requests were denied.

Mr. Kulldorff is still unvaccinated.

“I had COVID. I had it badly. So I have infection-acquired immunity. So I don’t need the vaccine,” he told The Epoch Times.

Dissenting Voice

Mr. Kulldorff has been a prominent dissenting voice during the COVID-19 pandemic, countering messaging from the government and many doctors that the COVID-19 vaccines were needed, regardless of prior infection.

He spoke out in an op-ed in April 2021, for instance, against requiring people to provide proof of vaccination to attend shows, go to school, and visit restaurants.

The idea that everybody needs to be vaccinated is as scientifically baseless as the idea that nobody does. Covid vaccines are essential for older, high-risk people and their caretakers and advisable for many others. But those who’ve been infected are already immune,” he wrote at the time.

Mr. Kulldorff later co-authored the Great Barrington Declaration, which called for focused protection of people at high risk while removing restrictions for younger, healthy people.

Harsh restrictions such as school closures “will cause irreparable damage” if not lifted, the declaration stated.

The declaration drew criticism from Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, and Dr. Rochelle Walensky, who became the head of the CDC, among others.

In a competing document, Dr. Walensky and others said that “relying upon immunity from natural infections for COVID-19 is flawed” and that “uncontrolled transmission in younger people risks significant morbidity(3) and mortality across the whole population.”

“Those who are pushing these vaccine mandates and vaccine passports—vaccine fanatics, I would call them—to me they have done much more damage during this one year than the anti-vaxxers have done in two decades,” Mr. Kulldorff later said in an EpochTV interview. “I would even say that these vaccine fanatics, they are the biggest anti-vaxxers that we have right now. They’re doing so much more damage to vaccine confidence than anybody else.

Surveys indicate that people have less trust now in the CDC and other health institutions than before the pandemic, and data from the CDC and elsewhere show that fewer people are receiving the new COVID-19 vaccines and other shots.

Support

The disclosure that Mr. Kulldorff was fired drew criticism of Harvard and support for Mr. Kulldorff.

The termination “is a massive and incomprehensible injustice,” Dr. Aaron Kheriaty, an ethics expert who was fired from the University of California–Irvine School of Medicine for not getting a COVID-19 vaccine because he had natural immunity, said on X.

The academy is full of people who declined vaccines—mostly with dubious exemptions—and yet Harvard fires the one professor who happens to speak out against government policies.” Dr. Vinay Prasad, an epidemiologist at the University of California–San Francisco, wrote in a blog post. “It looks like Harvard has weaponized its policies and selectively enforces them.”

A petition to reinstate Mr. Kulldorff has garnered more than 1,800 signatures.

Some other doctors said the decision to let Mr. Kulldorff go was correct.

“Actions have consequence,” Dr. Alastair McAlpine, a Canadian doctor, wrote on X. He said Mr. Kulldorff had “publicly undermine[d] public health.”

Tyler Durden Sat, 03/16/2024 - 21:00

Read More

Continue Reading

Uncategorized

Correcting the Washington Post’s 11 Charts That Are Supposed to Tell Us How the Economy Changed Since Covid

The Washington Post made some serious errors or omissions in its 11 charts that are supposed to tell us how Covid changed the economy. Wages Starting with…

Published

on

The Washington Post made some serious errors or omissions in its 11 charts that are supposed to tell us how Covid changed the economy.

Wages

Starting with its second chart, the article gives us an index of average weekly wages since 2019. The index shows a big jump in 2020, which then falls off in 2021 and 2022, before rising again in 2023.

It tells readers:

“Many Americans got large pay increases after the pandemic, when employers were having to one-up each other to find and keep workers. For a while, those wage gains were wiped out by decade-high inflation: Workers were getting larger paychecks, but it wasn’t enough to keep up with rising prices.”

That actually is not what its chart shows. The big rise in average weekly wages at the start of the pandemic was not the result of workers getting pay increases, it was the result of low-paid workers in sectors like hotels and restaurants losing their jobs.

The number of people employed in the low-paying leisure and hospitality sector fell by more than 8 million at the start of the pandemic. Even at the start of 2021 it was still down by over 4 million.

Laying off low-paid workers raises average wages in the same way that getting the short people to leave raises the average height of the people in the room. The Washington Post might try to tell us that the remaining people grew taller, but that is not what happened.

The other problem with this chart is that it is giving us weekly wages. The length of the average workweek jumped at the start of the pandemic as employers decided to work the workers they had longer hours rather than hire more workers. In January of 2021 the average workweek was 34.9 hours, compared to 34.4 hours in 2019 and 34.3 hours in February.

This increase in hours, by itself, would raise weekly pay by 2.0 percent. As hours returned to normal in 2022, this measure would misleadingly imply that wages were falling.

It is also worth noting that the fastest wage gains since the pandemic have been at the bottom end of the wage distribution and the Black/white wage gap has fallen to its lowest level on record.

Saving Rates

The third chart shows the saving rate since 2019. It shows a big spike at the start of the pandemic, as people stopped spending on things like restaurants and travel and they got pandemic checks from the government. It then falls sharply in 2022 and is lower in the most recent quarters than in 2019.

The piece tells readers:

“But as the world reopened — and people resumed spending on dining out, travel, concerts and other things that were previously off-limits — savings rates have leveled off. Americans are also increasingly dip into rainy-day funds to pay more for necessities, including groceries, housing, education and health care. In fact, Americans are now generally saving less of their incomes than they were before the pandemic.

This is an incomplete picture due to a somewhat technical issue. As I explained in a blogpost a few months ago, there is an unusually large gap between GDP as measured on the output side and GDP measured on the income side. In principle, these two numbers should be the same, but they never come out exactly equal.

In recent quarters, the gap has been 2.5 percent of GDP. This is extraordinarily large, but it also is unusual in that the output side is higher than the income side, the opposite of the standard pattern over the last quarter century.

It is standard for economists to assume that the true number for GDP is somewhere between the two measures. If we make that assumption about the data for 2023, it would imply that income is somewhat higher than the data now show and consumption somewhat lower.

In that story, as I showed in the blogpost, the saving rate for 2023 would be 6.8 percent of disposable income, roughly the same as the average for the three years before the pandemic. This would mean that people are not dipping into their rainy-day funds as the Post tells us. They are spending pretty much as they did before the pandemic.

 

Credit Card Debt

The next graph shows that credit card debt is rising again, after sinking in the pandemic. The piece tells readers:

“But now, debt loads are swinging higher again as families try to keep up with rising prices. Total household debt reached a record $17.5 trillion at the end of 2023, according to the Federal Reserve Bank of New York. And, in a worrisome sign for the economy, delinquency rates on mortgages, car loans and credit cards are all rising, too.”

There are several points worth noting here. Credit card debt is rising, but measured relative to income it is still below where it was before the pandemic. It was 6.7 percent of disposable income at the end of 2019, compared to 6.5 percent at the end of last year.

The second point is that a major reason for the recent surge in credit card debt is that people are no longer refinancing mortgages. There was a massive surge in mortgage refinancing with the low interest rates in 2020-2021.

Many of the people who refinanced took additional money out, taking advantage of the increased equity in their home. This channel of credit was cut off when mortgage rates jumped in 2022 and virtually ended mortgage refinancing. This means that to a large extent the surge in credit card borrowing is simply a shift from mortgage debt to credit card debt.

The point about total household debt hitting a record can be said in most months. Except in the period immediately following the collapse of the housing bubble, total debt is almost always rising.

And the rise in delinquencies simply reflects the fact that they had been at very low levels in 2021 and 2022. For the most part, delinquency rates are just getting back to their pre-pandemic levels, which were historically low.  

 

Grocery Prices and Gas Prices

The next two charts show the patterns in grocery prices and gas prices since the pandemic. It would have been worth mentioning that every major economy in the world saw similar run-ups in prices in these two areas. In other words, there was nothing specific to U.S. policy that led to a surge in inflation here.

 

The Missing Charts

There are several areas where it would have been interesting to see charts which the Post did not include. It would have been useful to have a chart on job quitters, the number of people who voluntarily quit their jobs during the pandemic. In the tight labor markets of 2021 and 2022 the number of workers who left jobs they didn’t like soared to record levels, as shown below.

 

The vast majority of these workers took other jobs that they liked better. This likely explains another item that could appear as a graph, the record level of job satisfaction.

In a similar vein there has been an explosion in the number of people who work from home at least part-time. This has increased by more than 17 million during the pandemic. These workers are saving themselves thousands of dollars a year on commuting costs and related expenses, as well as hundreds of hours spent commuting.

Finally, there has been an explosion in the use of telemedicine since the pandemic. At the peak, nearly one in four visits with a health care professional was a remote consultation. This saved many people with serious health issues the time and inconvenience associated with a trip to a hospital or doctor’s office. The increased use of telemedicine is likely to be a lasting gain from the pandemic.

 

The World Has Changed

The pandemic will likely have a lasting impact on the economy and society. The Washington Post’s charts captured part of this story, but in some cases misrepr

The post Correcting the Washington Post’s 11 Charts That Are Supposed to Tell Us How the Economy Changed Since Covid appeared first on Center for Economic and Policy Research.

Read More

Continue Reading

Trending