The Easy Part Of The Economic Recovery Might Be Over

“The economy is certainly improving: The August report shows that the labor force participation rate increased a bit and millions more furloughed workers returned to their jobs.

But there are a bunch of clues in this month’s report that the growth we’re seeing now isn’t as robust as it looks, and that it probably isn’t sustainable without a dramatic change in public health conditions:

A significant chunk of the jobs gained in August were added thanks to a once-in-a-decade phenomenon that has nothing to do with the current recession — a slew of temporary hiring for the U.S. Census.

Private-sector job growth is slowing overall, and the industries that were hit hardest by the pandemic — like leisure and hospitality — appear to be stalling out well below their pre-pandemic peak.

Getting people back to work will likely be harder and harder in the coming months, because a growing share of unemployed people have lost their jobs permanently.

The recovery is arriving faster for some groups than others — which means that workers of color, in particular, are still suffering much higher levels of unemployment than white workers.”

A Big Chunk Of People Of Color And White People With Degrees Are Behind Trump

“The overarching story of recent American elections is that 1) voters of color, who have long been Democratic-leaning, are a growing share of the electorate; 2) white voters with college degrees are increasingly shifting to the Democrats; and 3) white voters without degrees are aligning more with the GOP. But those trends, because they get so much focus, can warp our understanding of the electorate as it exists right now. Demographics are not yet destiny in American elections — millions of people don’t align with the party their race and ethnicity or education would predict. Case in point: In 2016, more than a third of President Trump’s support nationally came from non-Hispanic white Americans with college degrees (26 percent) and Asian, Black and Hispanic voters (12 percent), according to Pew Research Center data. On the flip side, about a quarter of Hillary Clinton’s supporters were non-Hispanic white Americans without degrees.

White Americans without degrees aren’t as likely to vote for Trump as in 2016, according to polls — which partly explains why Biden leads in national polls and key swing states like Pennsylvania. But a big reason Trump could still win the Electoral College, despite the poor marks Americans give him for his handling of COVID-19 and his job performance overall, is that the Black, Hispanic and college-educated white voters who backed him in 2016 are largely still with him, particularly in key swing states.

In other words, while Trump is a radical departure from previous GOP candidates in terms of personal style and his frequent racist comments, voters haven’t radically changed their voting patterns amid his rise in U.S. politics — the Americans who voted for Mitt Romney in 2012 overwhelmingly backed Trump in 2016 (about 90 percent) and those who backed Trump in 2016 are overwhelmingly behind him in 2020 (about 94 percent).”

The Latest On Republican Efforts To Make It Harder To Vote

“the most surprising aspect of the voting process is what we have laid out here: One party seems to be systemically making it harder to vote and taking other steps that undermine the integrity of the electoral process. The big question is whether these tactics will work, either by keeping anti-Trump ballots from being cast or counted, or by throwing the election results (whatever they end up being) into doubt.”

If the US had Canada’s Covid-19 death rate, 100,000 more Americans would likely be alive today

“the US accounts for about 4 percent of the world’s population but 22 percent of its confirmed Covid-19 deaths. So how many lives would be saved if those numbers were even? Leonhardt calculated: “about 145,000.”

Columnist Ross Douthat took issue with that approach. Arguing that “the patterns for Covid-19 fatalities often look more region-specific than country-specific,” he compared the US to a slew of countries in the Western Hemisphere, particularly in Latin America and parts of Europe. By that toll, the US doesn’t seem to do so badly, with a death rate close to that of Brazil, France, Mexico, and the United Kingdom.

But Douthat’s list, despite calling for a regional comparison, doesn’t include Canada, arguably the country most similar to the US in the Western Hemisphere and one that’s done a much better job fighting the coronavirus than the US.

So that got me wondering: What would a more comprehensive comparison look like? What would the US death toll be like if the country had the same rate of Covid-19 deaths as some other wealthy nations, accounting for population differences?”

“peer-country death tolls really don’t look like ours. The US is doing about seven times worse than the median developed country, ranking in the bottom 20 percent for Covid-19 deaths among wealthy nations. Tens of thousands of lives have been lost as a result.”

“a lot of this is on Trump. As cases climbed in the US, the president abdicated problems with testing to local, state, and private actors; pushed states to reopen way too early to supposedly “LIBERATE” their economies; spoke negatively about masks while refusing to wear one himself; and backed unproven and even dangerous approaches to treating Covid-19, including injecting bleach. Each of these failures compounded and led to the current US death toll — and local and state governments, as hard as some tried, simply don’t have the resources to fight a pandemic on their own.
Compare that to Australian Prime Minister Scott Morrison, German Chancellor Angela Merkel, or Canadian Prime Minister Justin Trudeau. These are leaders all over the political spectrum, but they took the pandemic seriously — building up testing, advocating for mask-wearing, encouraging social distancing, or all of the above. And their countries are much better off.

There’s still time for things to go a different way. Maybe the US will somehow get its act together, avoiding another wave of infections and deaths. Maybe other developed countries will see massive second waves similar to America’s. (Spain and France, after relaxing social distancing and going easy on masking, already are.)

But for now, the US has suffered a much worse Covid-19 outbreak and death toll than all but a handful of its developed peers. It’s a predictable, preventable catastrophe.”

Trump loves sanctioning foreign countries — but he’s terrible at it

“Change the Iranian regime’s behavior? Sanctions. Dismantle North Korea’s nuclear arsenal? Sanctions. Depose Venezuela’s dictator? You guessed it: Sanctions.

That indiscriminate wielding of America’s economic might — in a strategy his administration labels “maximum pressure” — is a trademark of Trump’s foreign policy. No president, in the minds of experts I spoke with, has relied so heavily on sanctions to solve intractable problems.

But at the same time, experts I spoke to said no president has failed so clearly to grasp the nature of financial warfare and how to deploy it effectively.

“I’ve never seen a president use sanctions as much or as clumsily,” said David Baldwin, an international economics expert at Princeton University. “He’s like a bull in a china shop.””

“Trump has little to show for his efforts. Iran’s leadership remains in power and is no closer to reaching a new diplomatic pact with the US over its nuclear program. North Korea’s nuclear and missile arsenals have grown in numbers and strength. And Venezuela’s president, Nicolás Maduro, still shows no sign of letting control of the country slip through his clenched fist.

That’s not to say Trump didn’t inflict economic harm on foreign countries, leaders, and individuals in his first term. US sanctions are directly responsible for deepening financial crises in all three nations, exacerbating woes caused by local mismanagement, corruption, and coronavirus outbreaks.

But that devastation has hurt millions of people in those countries much more than it has helped the Trump administration achieve its goals, making it easier for regimes to blame the US — and not themselves — for the pain.

The fundamental problem with Trump’s approach: He believes sanctions will get him what he wants, but he demands too much in return for their removal, or undermines them through weak enforcement and ever-shifting policies.”

“US sanctions can be very effective — and debilitating — but they work best when a president understands their limitations, how to make them stick, and when to coordinate them with other countries.

Otherwise, the nation those measures may end up isolating most is America”

What’s really going on with the economy

“Six months ago, public health experts were arguing that if the United States set up robust surveillance testing, contact tracing, case isolation, and rigorous mask usage, a version of economic normalcy could return without incurring grave risks to human life. Looking across the globe, this seems to be correct — many countries have achieved much better outcomes in terms of less loss of life without incurring any clear economic cost relative to the United States.

At the same time, the view (once widespread among economists) that failing to control the outbreak would necessarily have dire economic consequences looks like it may have been overstated. While the US public health situation looks terrible in an international context, the economy is going okay.”

“Had the country spent May and June pursuing a strategy to suppress the virus, we might have been able to reopen most things in July and August and enjoyed a strong economic rebound without too much danger to public health. That didn’t happen. But despite the lost opportunity to contain the virus, the economy did rebound sharply once restrictions began to lift. The CARES Act not only met urgent humanitarian needs during the period of maximum business closures, it also led the economy to behave like a bouncy ball: Even as economic activity collapsed, household finances did not, so when it became easier to go out and spend money, people did — and rapid economic growth ensued.”

“we’ve gotten back only half the jobs lost earlier in the pandemic, and the 8.4 percent unemployment rate is still awfully high.

But the current job growth really is fast.”

“One boring technical problem is that people who are on temporary furlough from their jobs are supposed to report themselves as unemployed if a Bureau of Labor Statistics surveyor calls. But many people in this situation, not being experts on labor market statistics, are evidently not doing this. So the real unemployment rate is higher than the official one.

A more serious conceptual issue is that ideally, it would be useful to distinguish between people who are unemployed because they work at a movie theater in a city that won’t let movie theaters open and people who’ve actually lost their jobs on a permanent basis.”

” the improvement in the labor market situation has largely been the result of furloughed workers going back on the job. But while temporary furloughs continue to be a factor in the economy, Furman writes, “Even if individuals on temporary layoff returned to work very quickly, the United States would still have a recessionary level of unemployment for some time to come.””

” if you’re still unemployed, you’re out of luck. And if you’re a low-wage worker, you’re probably gaining nothing from the stock market, you’re taking a big risk with your health every time you report to the job, and the elevated pool of unemployed workers means you have little leverage to bargain for better pay and working conditions.”

“Even worse, as Ford School economist Justin Wolfers points out, the inflation rate has shifted in unusual ways that are unfavorable to low-income people: “People are buying more of the essentials, like groceries, forcing their prices up. And they’re buying fewer airline tickets and less gasoline and clothing, pushing those prices down.”

For white-collar workers with comfortable incomes, the rising price of food is offset by reduced spending on travel and dining out, and in many cases, office workers are no longer burning gas by commuting. But for lower-income workers who always dedicated a larger share of their income to groceries, this is just bad news.”

“The other factor impacting Americans unevenly is the closure of schools in many jurisdictions. For older kids, online learning is a drag. For younger kids, it’s a huge drag on parents’ attention — especially for mothers — or a new source of expense as more affluent parents hire nannies to assist with visual learning. And for younger kids whose parents have to work outside the house and can’t afford child care, it’s an educational disaster.”

“he Treasury Department stages bond auctions of various kinds from time to time to finance the federal deficit, and on August 20 it held an auction for what’s known as the 30-year Treasury Inflation-Protected Security. This is a bond that pays interest for 30 years. But rather than a flat interest rate, it promises to pay the owner the rate of inflation plus some interest — hence “inflation-protected.”

The price that emerged from the auction was negative 0.272 percentage points.

The buyers of these bonds, in other words, are guaranteeing themselves financial losses. It sounds weird, but negative interest rates have been popping up from time to time in various places for years now”

” it’s clear that there is some level of economic hardship out there, and it’s equally clear that addressing the hardship is extremely affordable. Reasonable people can disagree about what, exactly, would be best to spend money on — or what taxes would be best to cut — but it seems pretty clear that a big increase in the deficit is extremely affordable. So as long as we could find even slightly worthwhile uses of the money, we’d be better off.”

Abe plan for land-attack counterpunch could mark major military shift for Japan

“Months before he announced his resignation, Prime Minister Shinzo Abe set in motion a policy change that could for the first time allow Japan’s military to plan for strikes on land targets in China and other parts of Asia.

Japan’s Self Defence Forces are geared toward stopping attackers in the air and the sea. The policy change would direct the military to create a doctrine for targeting enemy sites on land – a mission that would require the purchase of long-range weapons such as cruise missiles.

If adopted by the next government, the policy would mark one of the most significant shifts in Japan’s military stance since the end of World War Two. It reflects Abe’s longstanding push for a more robust military and Tokyo’s deepening concern about Chinese influence in the region.

The Japanese government is worried by China’s increased military activity around disputed East China Sea islets.”

Give everybody the internet

“According to the Federal Communications Commission (FCC), 21 million Americans don’t have access to quality broadband internet, though some estimates suggest that number is much higher, even double. Millions of people simply can’t access broadband because the infrastructure isn’t in place. Then there’s the question of cost — just because a wire runs by someone’s house doesn’t mean they can use it. In 2019, Pew Research found that half of non-broadband users still say they don’t subscribe to the service because it’s too expensive, and nearly one in five households earning $30,000 or less aren’t online. A $60-a-month internet option, about the national average, is only available if you have that $60.

Now the coronavirus pandemic has put into stark relief how crucial it is to have the internet — and how costly it is to be without it. For millions of kids, it means access to an education. For many workers, it means doing their jobs. For patients, it means talking to a doctor. It’s how we access government services, look for work, find our homes, and stay connected in our day-to-day lives.”

“Broadband internet in the United States is not great. It is too slow, too expensive, and it is not everywhere, even in urban areas. Major telecommunications providers have been accused of “digital redlining” in cities such as Cleveland, Detroit, and Dallas, and discriminating against low-income and minority communities. Even where there is a decent internet connection, there’s often only one option for a provider, and customers are left to whatever the whims of that provider are.
The issue is, in part, that much of the country’s internet infrastructure has been left in the hands of the private sector, an atypical scenario relative to other services that require vast infrastructure.

The way it works is that there are fiber optic trunk lines across the US, and from there, other cables branch out. Fiber is fast and pretty much limitless in capacity, but it is also expensive to install — especially in the last mile, the final bit of connection to a business or home. Most people get broadband through coaxial cable networks for that last mile, while others go through DSL that runs on copper phone lines. The former is slow, the latter slower. The US lags behind countries such as South Korea, Japan, and Switzerland when it comes to typical download speeds.”

“For private telecom companies building out broadband, that means making decisions about where to expand based on their bottom lines. Getting the internet to small communities or communities that are unlikely or unable to purchases their services may not be worth the upfront investment. The competitive incentive isn’t there.”

“Telecommunications companies and ISPs are natural monopolies, which means that high infrastructure costs and other barriers to entry give early entrants a big advantage over potential competitors. It costs money to install cable systems, and once one company does it, another one doesn’t want to do it again, nor does the company that made all the investment want to share. Many Republicans and Democrats have taken a lax attitude toward the telecom industry, allowing companies to get big and powerful — the Telecommunications Act of 1996 allowed for an enormous amount of consolidation in the industry. On top of that, at the local level, many municipalities have signed franchise agreements with ISPs to wire up their areas, further locking in monopolies with little negotiating power.

“If you leave these guys to their own devices, they will divide up markets, consolidate, and charge as much as they possibly can,””

“The government has given private companies billions of dollars to try to fund broadband projects, especially on the rural front, but not all of that money has been well spent. Funds have gone to operating costs for existing telecom providers instead of capital costs to build infrastructure outright. Sometimes, companies don’t wind up building out the networks they promise.”

“More than 20 states have laws that ban or put up roadblocks to municipal broadband projects that might allow cities to provide alternatives and compete. The telecom lobby fought hard for these provisions. In deep blue California, a bill to expand broadband access there recently died in the state assembly.”