That’s the WorldOMeters data; it’s consistent with the CNN report from several hours ago, saying there were 770 deaths Tuesday as of then. For a broader perspective, see this post; we’re still not seeing France/Switzerland/Belgium/Netherlands daily per capita death rates, much less Italy/Spain rates, or even UK rates (which also spiked yesterday) but they were a lot higher yesterday than before.
It’s possible this is a one-day spike, unlikely to be repeated, but that’s not the way the progression of death counts has gone so far.
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As the lockdowns across Europe began to bite, the U.S. Establishment began its ‘wobble’. The more elegant amongst élite circles pointed to a dangerous mis-match in timelines: The medical advice has been: ‘lockdown until the virus begins to subside’, but that advice encompassed too, the possibility of Covid-19 returning later in the year in a Phase Two, thus requiring further personal distancing.
Hands shot high in absolute horror amongst some business and Wall Street leaders: Could the U.S. economy sustain such a prospect? Might not a long shutdown inflict permanent damage? Would there even be an economy left – to resurrect – in the wake of ‘peak Coronavirus’?
The mis-match thesis then acquired a third strand: To immediate economic fears standing in contradistinction to longer term medical perspectives was added the third question: Are Americans culturally ‘built’ for lockdown (that is to say, will an individualistic, libertarian-minded – and armed society – acquiesce to being ordered to stay home over a long period)?
Not surprisingly, President Trump – with an advancing Election, and his colours pinned to the mast of sound economic management – hit on the formula that the ‘cure cannot be worse than the disease’: Let’s have the economy open by Easter (12 April – i.e. 15 days hence), he declared.
The issue of the virus is not manufactured, (though there are still many in the U.S., who regard it as an overblown scare), nor is the dilemma of the divergent timelines. Actually – a great deal hangs on how these timelines play out – our global economic and political prospects, no less.
Just about everyone and his dog now claims to have modelled Covid-19. But in truth, we still know very little on which to accurately predict the virus’ course. The ‘data’ is made unreliable: firstly, because not only does the virus have different mutations, but secondly, owing to it acting in two quite different modes: One is mild, or even asymptomatic (the 80%); and the second mode is serious (requiring hospitalisation) – and for a minority of the 20% – deadly.
But consequently, we simply do not know how much of the population is infected, or is still to be infected – precisely owing to its very mildness or, its asymptomatic characteristics amongst the 80 percent-ers. There hasn’t been enough testing – and anyway, given its mild or non-noticeable iteration, many people may have it, but don’t test.
So the data modelling is more ‘art’, than predictive, and therefore introduces economic uncertainty. The damage to the economy is obvious from the first, but the question least considered is the importance of the third strand: Is Trump right when he says that America ‘is not built for lockdown’?
He may be right, in one sense; but if he opts to prioritise a quick opening of the economy over the welfare of the American people, he may face incalculable consequences – should Covid-19 bite him in the backside: Either by mutating (as did the Spanish ‘flu in August 1918); or simply, by beginning a second phase through a resurgence of community infection later in the year.
Plainly, Trump is of the ‘fears are exaggerated’ school of thought, and seems poised to bet his Presidency on it. In this era, viral social media images of hospitals overwhelmed, and of patients fighting to breathe their last, unaided, and lying on the floor, jam-packed in corridors, or in converted gyms – can become politically toxic. The counter- response that the financial system is struggling for oxygen, under lockdown, too, may strike many people as a ‘little lacking’ in common humanity – perhaps?
The dilemma is cruel. And maybe the social timeline ‘strand’ has more substance, than is generally granted? Americans are libertarian in many ways (not least, in their determination to carry arms). This is reflected also, in their deliberate eschewing of a public health programme, and in the purposefully limited support provided to the hourly paid – who are laid off. It is the ethos of individualism, a work ethic and the consequence of a ‘libertarian’ constitution.
The St Louis Chair of the Fed has predicted 30% unemployment and 50% of the economy at standstill by the end of June. Is it sustainable to have these furloughed workers dying in the street, because they cannot afford America’s ‘boutique’ health-service for the wealthy? (we’ve seen videos of people unexpectedly falling down in the street, dying, as passers-by skirt the afflicted victim – from both China and Iran). Such videos would be inflammatory in the U.S.
What happens if ‘lockdown’ were extended, and the unemployed were to attack supermarkets for food they cannot afford; or because the supermarket shelves are empty (this has happened in Europe)? What would videos of the U.S. National Guard look like as they arrive, armed for war, to put down the ‘looters’? What happens if the rioters angry at their plight – and without money – use their right to bear weapons to fight against the National Guardsmen? Can the U.S. national fabric handle such strains? Might it not disintegrate?
Here, the U.S. differs from Europe. America has not, since the Civil War, had to experience the harsh circumstances in hospitals approximating to wartime, on its own soil.
So, is Trump right, then, to prioritise keeping the U.S. economy open? Well, firstly, the notion that bits of the economy can be opened where infection-rates are low, whilst other parts are locked down, seems odd: Covid-19 – we do know – is highly infectious. Those who show no symptoms – whether they are under 50 years, or under 40 years-old – would not preclude them from being silent ‘super-carriers’ of the disease. We have not heard there is a test for anti-bodies, which might signal that an individual enjoys immunity. But unless an area has no infections, putting even one carrier into a workplace, would be sufficient to trigger a localised community infection.
Perhaps then, Trump might be right that anything other than a short (and possibly ineffective) lockdown is not manageable in the U.S.: That it might tear apart an already polarised, armed and inegalitarian, social fabric. There is then, a substantial point here: How far, and for how long, can an U.S. or European society accept a ‘command’ or martial-law administration – before citizens rebel, and head to the beaches for summer? What then?
Is it possible that can Trump may emerge from these events as the ‘saviour of the U.S. economy’? Here, we touch on the key question of the adaptability of élites. Are the U.S. élite capable of true transformation of consciousness as circumstances alter? On the answer to this question will hang the geo-political future. It was the inability of the Soviet elites to give up on their corrupt and privileged status quo that led to the implosion of the USSR in 1987.
We are often told that Americans are great innovators and graspers of opportunity. But today, the U.S. élites are utterly intent on preserving a status quo – as the viability and even the reality of that status quo is being questioned by important insiders. For the élite majority, though, the mind-set is intransigent and adamant. The status quo suits them well. They do not wish to see to see it reformed or changed. They refuse to think differently.
Eventually, the coronavirus will subside; but what will America look like when it does? For the moment, the élites believe that America will look just as it did, in February, before the impact of the pandemic hit U.S. markets. So, we have had the Fed, the Bank of England, the Bank of Japan all doing the same thing, over and over again, hoping that the economy will snap-back to ‘normal’. But it isn’t working.
The Fed fears a collapse in credit (with due reason), but ‘normality’ is not returning from the rush of liquidity hosed across credit markets. In the 2008 crisis, the Fed responded with all sorts of easing. This time the Fed is throwing the ‘kitchen sink’ at markets, offering ‘facilities’ for almost every asset class. At the present rate of growth, the Fed balance sheet will be $6 Trillion in days – and reach a total equivalent to almost 50% of the U.S. GDP by June. Another, unimaginable chunk of debt.
The problem is that the Fed’s measures will fail as stimulus – because it is not a problem of demand shortfall, but of supply-shock – as the globe implements ‘shut-down’ in order to slow infection. But, with recession or depression looming, asset prices are collapsing. Bloomberg has noted that core tenets such as what constitutes a safe asset, or the expectation of returns over the next decade, are all being thrown out of the window – as Central Banks strive to avert a global recession: The latter have unleashed a money tsunami, unlike anything seen before, and the fear of inflation is rising, together with a sense that all the old metrics of what constitutes safe investments are gone for good.
Meanwhile the U.S. Congress has passed a $2 trillion bill to counter the effects of Covid-19. It was well received for a while in the U.S. markets, before they fell again. The bill may help keep a part of the big business status quo alive, for now, but the bottom line is that these spending bills – as Jim Rickards notes – “provide spending but they do not provide stimulus”. And all that spending – like that of the Fed – essentially will be helicopter money: i.e. monetised debt.
The essential dilemma is that the Central Bankers’ Holy Grail – stimulus – depends on consumers, who constitute 70% of the U.S. economy; and on whether they decide consume – and to what extent. And that will depend upon their psychology in the post-Covid-19 era, and not on what the Fed does, or does not, do now.
If consumers get used – during lockdown – to doing without; to economising; they may well decide that increased savings and debt reduction, are the best ways to prepare for straitened times. 83% of U.S. businesses are small or medium sized companies. Some may survive and resume work, but others will not re-open after the lockdown. It will be a different atmosphere: a different economic era.
Of course, the élites want to go ‘back to normal’ as quickly as possible, but the ‘bottom line’ emerging from the Fed’s failure to staunch market paralysis is that that which the élites had thought to be ‘normal’ is proving not to have been normal at all. It is now apparent as having been a financialised bubble – and Covid-19 happens to have been the pin that popped it. This bubble was just the biggest, in a long line of Fed-blown bubbles (NASDAQ, sub-prime mortgages, etc.) – and now, the final ‘everything-bubble’ has burst. There’s nothing now left for the Fed to ‘bubble up’. It’s probably over.
Here’s the larger – global – point. Again, it revolves around psychology: Have these events been the ‘pin’ which also pops some sort of mass psychological bubble (a sealed Cartesian, mental retort)? Will public faith in the status quo crash, along with the financialised ‘everything-bubble’? Will a momentary flash of enlightenment to the house-of-cards reality that Americans had been living, cause them to start seeing their world afresh, and in its raw, hard reality? If so, the world order stands on the cusp of change.
For some time now, a general popular disquiet has been incubating. The question is whether, in the cold post-Covid-19 reality, Americans will begin to cease their acquiescence to – and their co-operation with – the status quo.
This might mean trouble as America and some European states try to manage the pandemic through invoking the necessity of a war-time command-governance. Will people accept such a command system, if they see its principal purpose being the return to a failed status quo ante?
Great seeing those of you who were willing to be seen, great having all of you (about 60 people total) on board, and many thanks to Michael, Will, and Orin for participating! I hope to have another of these soon—much hope you can join us again!
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The great American jurist St. George Tucker, writing at the beginning of the 19th century, called the right to armed self-defense “the true palladium of liberty” and “the first law of nature.” But California Gov. Gavin Newsom thinks that right, guaranteed by the Second Amendment, is optional.
After Newsom ordered “nonessential” businesses to close in response to the COVID-19 epidemic, he let local sheriffs decide whether that category included gun dealers. Newsom’s decision, which allowed Los Angeles County Sheriff Alex Villanueva to unilaterally ban the sale of firearms and ammunition, illustrates how readily politicians ignore constitutional rights in the very circumstances where they matter most.
Villanueva’s ban, which several gun rights groups challenged in a federal lawsuit last Friday, was inconsistent with recent guidance from the Department of Homeland Security as well as the Second Amendment. In an advisory published on Saturday, the department added firearm retailers to its definition of the “essential critical infrastructure workforce,” which Newsom explicitly exempted from his order.
On Monday, Villanueva, who describes himself as “a supporter of the Second Amendment” but nevertheless suggests that keeping guns for self-protection is irresponsible, rescinded his ban, citing the new federal guidelines. New Jersey Gov. Phil Murphy, whose business closure order initially covered gun stores, likewise recognized them as “essential” after seeing the federal advisory.
Pennsylvania Gov. Tom Wolf also deigned to allow firearm sales, but only after three members of the state Supreme Court said “it is incumbent upon the Governor to make some manner of allowance for our citizens to continue to exercise this constitutional right.” Notably, that rebuke came in a dissent from a March 22 decision summarily denying a challenge to Wolf’s violation of the Second Amendment.
The reversals by Murphy and Wolf, who are now allowing firearm sales by appointment and in compliance with social distancing rules, show that shutting down gun stores was never necessary to curtail transmission of COVID-19. But their reluctance to respect the Second Amendment and the Pennsylvania Supreme Court’s unwillingness to intervene do not bode well for civil liberties at a time when many people seem to think that fighting the pandemic trumps all other concerns.
To “save the nation” from COVID-19, Cornell law professor Michael Dorf argued two weeks ago, Congress should suspend the writ of habeas corpus, an ancient common-law right that allows people detained by the government to demand a justification. Yet the Constitution says “the privilege of the writ of habeas corpus shall not be suspended, unless when in cases of rebellion or invasion the public safety may require it.”
Although neither of those circumstances applies, Dorf suggested that the spread of the COVID-19 virus from other countries to the United States could be construed as an invasion. While “no one knows” whether the courts would accept that interpretation, since “Congress has only ever suspended habeas in wartime,” Dorf said, “there is reason to think that the courts would dismiss a habeas case following nearly any congressional suspension.”
In a recent survey of 3,000 Americans, the University of Chicago’s Adam Chilton and three other law professors found bipartisan agreement that “now is the time to violate the Constitution,” as they put it. The survey asked whether the respondents would support various constitutionally dubious policy responses to the epidemic.
Sizable majorities of both Democrats and Republicans favored confining people to their homes, detaining sick people in government facilities, banning U.S. citizens from entering the country, government takeovers of businesses, conscription of health care workers, suspension of religious services, and even criminalizing the spread of “misinformation” about the virus. “Even when we explicitly told half of our sample that the policies may violate the Constitution,” Chilton et al. report, “the majority supported all eight of them,” including the speech restrictions.
“After the threat has subsided,” the law professors conclude, “Americans must recognize any constitutional violations for what they were, lest they become the new normal.” By then, it may be too late.
It’s Happening: Oil Producers Are Now Paying Clients As Wyoming Sour Price Turns Negative
When Goldman’s crude oil analysts wrote on Monday that “This Is The Largest Economic Shock Of Our Lifetimes“, they echoed something we said last week – nameley that the record surge in excess oil output amounting to a mindblowing 20 million barrels daily or roughly 20% of global demand…
… which is the result of the Saudi oil price war which has unleashed a record gusher in Saudi oil production, coupled with a historic crash in oil demand (which Goldman estimated at 26mmb/d), could send the price of landlocked crude oil negative: “this shock is extremely negative for oil prices and is sending landlocked crude prices into negative territory.”
We didn’t have long to wait, because while oil prices for virtually all grades have now collapsed to cash costs…
… Bloomberg points out that in a rather obscure corner of the American physical oil market, crude prices have now officially turned negative as “producers are actually paying consumers to take away the black stuff.”
The first crude stream to price below zero was Wyoming Asphalt Sour, a dense oil used mostly to produce paving bitumen. Energy trading giant Mercuria bid negative 19 cents per barrel in mid-March for the crude, effectively asking producers to pay for the luxury of getting rid of their output.
Echoing Goldman, Elisabeth Murphy, an analyst at consultant ESAI Energy said that “these are landlocked crude with just no buyers. In areas where storage is filling up quickly, prices could go negative. Shut-ins are likely to happen by then.”
While Brent and WTI are hovering just around $20 a barrel, in the world of physical oil where actual barrels change hands producers are getting much less according to Bloomberg as demand plunges due to the lockdown to contain the spread of the coronavirus.
Oil traders believe other crude streams are likely to see negative prices soon at the well-head as refiners reduce the amount of crude they process, leaving some landlocked crude without easy access to pipeline trapped. Goldman’s Jeffrey Currie explained this pricing divergence as follows:
Brent is a waterborne crude priced on an island in the North Sea, 500 meters from the water. In contrast, WTI is landlocked and 500 miles from the water. As I like to say, I would rather have a high-cost waterborne crude oil that can access a ship than a landlocked pipeline crude sitting behind thousands of miles of pipe, like the crude oils in the US, Russia and Canada.
As we noted last night, when we asked who would see zero dollar oil first, several grades in North America are already trading in single digit territory as the market tries to force some output to shut-in. Canadian Western Select, the benchmark price for the giant oil-sands industry in Canada, fell to $4 on Monday, while Midland Texas was last seen trading just around $10.
Southern Green Canyon in the Gulf of Mexico is worth $11.51 a barrel, Oklahoma Sour is changing hands at $5.75, Nebraska Intermediate at $8, while Wyoming Sweet prices at $3 a barrel, per Bloomberg.
While there is very little hope of a dramatic improvement in the situation, late on Tuesday, President Trump said the U.S. would meet with Saudi Arabia and Russia with the goal of halting the historic plunge in oil prices. Trump, speaking at the White House Tuesday, said he’s raised the issue with Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman.
“They’re going to get together and we’re all going to get together and we’re going to see what we can do,” he said. “The two countries are discussing it. And I am joining at the appropriate time, if need be.”
It’s unclear what if anything Trump “can do” in what is effectively a collusive war between the two nations meant to crush shale oil.
Trump’s intervention comes as April shapes up to be a calamitous month for the oil market. Saudi Arabia plans to boost its supply to a record 12.3 million barrels a day, up from about 9.7 million in February. At the same time, fuel consumption is poised to plummet by 15 million to 22 million barrels as coronavirus-related lockdowns halt transit in much of the world.
There is another problem: oil demand has been so battered by government lockdowns to stop the spread of the coronavirus that any conceivable oil production cut agreement between the U.S., Canada, Russia and OPEC members would still fall well short of what’s needed to shore up the market, Goldman calculated. In fact, assuming roughly 20 million in excess supply currently, the only thing that could balance the oil market is nothing short of both Saudi Arabia and Russia halting all output together. And that will never happen.
Finally, below we put the “long history” of oil prices in context:
Harvard Acceptance Rates Rise As Most Ivy League Schools Become Less Selective
Ivy League schools, known for being the most selective colleges in the nation, became a little less selective this year.
Names like Harvard, Dartmouth and Penn have all posted increased acceptance rates for classes that will begin this fall, according to a new report from the Wall Street Journal.
Harvard admitted 4.9% of the 40,248 people who applied last year compared to its 4.6% acceptance rate the year prior. Dartmouth this year accepted 8.8% of applicants, up from 7.9% last year. Columbia admitted 6.1% of applicants this year, which was up from 5.3% the year prior, as applications dropped by almost 2,500 and the school simultaneously accepted 220 more students.
Yale also saw its acceptance rate move higher, to 6.5% from 6.2%. And Penn’s acceptance rate went from 7.7% to 8.1%.
Colleges, including Ivy League names, have hit an unprecedentedly challenging landscape with the ongoing pandemic shaking up enrollment projections for each university. It is still unknown what the state of the nation will be by the time fall courses are set to begin: will students be allowed on campus? Will residence halls be open? Will foreign students even be allowed to travel to the U.S.?
Some schools pulled extra candidates from their waitlist or “deny” groups in order to make sure they could enroll a full class. Reed College in Oregon saw its acceptance rate surge by 3% and Franklin & Marshall accepted 32% of applicants, which is up 2%.
Cornell said it wasn’t even going to issue public statements about its admission figures any longer. Jonathan Burdick, vice president for enrollment at Cornell said: “While metrics such as application numbers and admissions rates are an area of focus for many as they review annual activity in higher education, Cornell’s thorough and holistic review processes mean that no one applicant’s chances can be guided by ‘averages’.”
Brown and Princeton both bucked the trend with Brown dropping its admission rate to 6.9% from 7.1% and Princeton dropping its admission rate to 5.6% from 5.8%.
But at least for now, it looks as though the once exclusive Ivy League isn’t so “exclusive” anymore…
Great seeing those of you who were willing to be seen, great having all of you (about 60 people total) on board, and many thanks to Michael, Will, and Orin for participating! I hope to have another of these soon—much hope you can join us again!
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The great American jurist St. George Tucker, writing at the beginning of the 19th century, called the right to armed self-defense “the true palladium of liberty” and “the first law of nature.” But California Gov. Gavin Newsom thinks that right, guaranteed by the Second Amendment, is optional.
After Newsom ordered “nonessential” businesses to close in response to the COVID-19 epidemic, he let local sheriffs decide whether that category included gun dealers. Newsom’s decision, which allowed Los Angeles County Sheriff Alex Villanueva to unilaterally ban the sale of firearms and ammunition, illustrates how readily politicians ignore constitutional rights in the very circumstances where they matter most.
Villanueva’s ban, which several gun rights groups challenged in a federal lawsuit last Friday, was inconsistent with recent guidance from the Department of Homeland Security as well as the Second Amendment. In an advisory published on Saturday, the department added firearm retailers to its definition of the “essential critical infrastructure workforce,” which Newsom explicitly exempted from his order.
On Monday, Villanueva, who describes himself as “a supporter of the Second Amendment” but nevertheless suggests that keeping guns for self-protection is irresponsible, rescinded his ban, citing the new federal guidelines. New Jersey Gov. Phil Murphy, whose business closure order initially covered gun stores, likewise recognized them as “essential” after seeing the federal advisory.
Pennsylvania Gov. Tom Wolf also deigned to allow firearm sales, but only after three members of the state Supreme Court said “it is incumbent upon the Governor to make some manner of allowance for our citizens to continue to exercise this constitutional right.” Notably, that rebuke came in a dissent from a March 22 decision summarily denying a challenge to Wolf’s violation of the Second Amendment.
The reversals by Murphy and Wolf, who are now allowing firearm sales by appointment and in compliance with social distancing rules, show that shutting down gun stores was never necessary to curtail transmission of COVID-19. But their reluctance to respect the Second Amendment and the Pennsylvania Supreme Court’s unwillingness to intervene do not bode well for civil liberties at a time when many people seem to think that fighting the pandemic trumps all other concerns.
To “save the nation” from COVID-19, Cornell law professor Michael Dorf argued two weeks ago, Congress should suspend the writ of habeas corpus, an ancient common-law right that allows people detained by the government to demand a justification. Yet the Constitution says “the privilege of the writ of habeas corpus shall not be suspended, unless when in cases of rebellion or invasion the public safety may require it.”
Although neither of those circumstances applies, Dorf suggested that the spread of the COVID-19 virus from other countries to the United States could be construed as an invasion. While “no one knows” whether the courts would accept that interpretation, since “Congress has only ever suspended habeas in wartime,” Dorf said, “there is reason to think that the courts would dismiss a habeas case following nearly any congressional suspension.”
In a recent survey of 3,000 Americans, the University of Chicago’s Adam Chilton and three other law professors found bipartisan agreement that “now is the time to violate the Constitution,” as they put it. The survey asked whether the respondents would support various constitutionally dubious policy responses to the epidemic.
Sizable majorities of both Democrats and Republicans favored confining people to their homes, detaining sick people in government facilities, banning U.S. citizens from entering the country, government takeovers of businesses, conscription of health care workers, suspension of religious services, and even criminalizing the spread of “misinformation” about the virus. “Even when we explicitly told half of our sample that the policies may violate the Constitution,” Chilton et al. report, “the majority supported all eight of them,” including the speech restrictions.
“After the threat has subsided,” the law professors conclude, “Americans must recognize any constitutional violations for what they were, lest they become the new normal.” By then, it may be too late.
The coronavirus crisis has turned many Americans into amateur data scientists who are studying health data and statistics on a daily basis.
Are the rates of infections rising? Are they rising but accelerating or decelerating? Are the infections rising because of viral spread or because of more testing? How many people are dying each day? Does the data indicate that the virus is dangerous for only old people or young people as well? In many ways solving this crisis hinges on our mastery of data analytics, a subject we specialize in.
By now, the data is clear that coronavirus is dangerous for people of all ages, but it’s particularly lethal for older individuals.
In this article, the team at MastersofBusinessAnalytics.com was compelled to review just how many Americans are over the age of 65 in various places across the country. While this data analysis doesn’t show us how to solve the problem, it can show us just how large the devastation could be.
Across the country, there are over 51 million Americans that are over the age of 65, comprising 16% of the population. Maine and Florida lead the nation with the highest proportion of their population being over the age of 65. Alaska and Utah are the states with the lowest rates of elderly people. Among the largest hundred cities in America, Scottsdale, AZ and Honolulu, HI have the populations with the highest percentage of older Americans.
* * *
It’s important to note that coronavirus is serious for all individuals, not just the elderly. The disease can be debilitating and sometimes deadly, even if you’re healthy. Even if you’re “asymptomatic” (meaning you have contracted coronavirus and might not know it because you show no symptoms) you could spread it to someone else who could experience very adverse consequences and possible death.
This is to say, it’s important to show the number of people across America that are above 65 years old because they are the most at risk, but that does not absolve younger people from the risks or responsibilities.
The chart below shows that states that have the highest percentage of their population aged 65 and above:
Across the country, Maine and Florida have the highest percentages of their populations that are over the age of 65 and the highest risk group for the virus. Alaska and Utah have the lowest rates of eldery population, with under 12% of their population being under the age of 65 years old.
But just how many older Americans are at risk in each state? While the prior chart looked at the percentage of the population that was over 65, the next chart shows the number of people in each state that are over 65 (in millions).
In California there are approximately 5.7 million people over the age of 65, followed by Florida with 4.4 million and Texas with 3.6 million. In New York, the state with currently the most known coronavirus infections, has the fourth highest population of people over the age of 65. All in all, 18 of the 50 states have more than a million people over the age of 65 that would be extremely high risk for complications due to coronavirus.
Next, let’s look at the cities with the highest percentage of inhabitants over the age of 65:
Scottsdale, AZ, an attractive retirement destination, has the highest percentage of people over the age of 65 by a significant margin. Scottsdale is followed by Honolulu, HI and Hialeah, FL, two warm locations favored by retirees. Larger cities like Miami and San Francisco also make the top ten cities with a percentage of older Americans.
On the other hand, Irving, TX has the lowest percentage of people under the age of 65, with just 7.4% of the population being in this high risk group. Santa Ana, CA and Austin, TX round out the bottom three cities with the lowest percentage of people under 65 years of age.
Lastly, let’s look at which cities have the most people over the age of 65 living there:
New York City has the most inhabitants over 65+ years old by a huge margin. Almost 1.2 million New Yorkers are over the age of 65, more than twice as many as the second place city, Los Angeles. New York City currently has the highest know number of coronavirus infections in America by a large margin and may soon exceed the total in Wuhan, China.
* * *
In discussions about how to solve the coronavirus economics crisis, some people have suggested that high risk elderly people just need to avoid the virus or that only a small number of people are really at risk. While this sentiment is misguided on a number of different levels, it overlooks the sheer quantity of Americans that are at risk simply because of their age. In states like Florida and Maine and cities like Scottsdale, it would mean risking the health and lives of an enormous part of the population.
Economic data is likely to become increasingly unreliable as a result of the coronavirus lockdown. We know the global economy will be bad. We will not know, with much accuracy, just how bad.
Annualizing data is absurd in the current climate. What happens in the second quarter is not going to be repeated for the rest of the year. Time to stop annualizing numbers.
Most economic data is survey based. Industrial production, some unemployment numbers, inflation numbers, GDP and the various sentiment opinion polls need people to fill in surveys. If you are filling in survey forms in a lockdown you are likely to be an unusual person, and possibly not representative.
Social media spreads fear and affects sentiment. Sentiment affects answers to surveys. Data, like consumer price inflation, includes restaurant prices, but restaurants are closed. What happens when you survey something that is not there?
Online spending is likely to have increased in lockdowns. Online spending may stay higher after the lockdowns end. It may not be properly captured in official data.
Some data items are more reliable than others. Investors need to be careful about putting economic numbers into investment models, however. Garbage in means garbage out.
The global economy is going to have a very bad few months. Fear of the coronavirus has changed consumer behavior. Government policy aims to cut GDP growth in most major economies. But we may not really know what is actually going on in these economies. The quality of economic data is going to be affected by shutdowns. So where are the problems?
Annualizing
One problem is the US habit of “annualizing” its data. A few other economies also do this. This is never a great idea in normal times. It is an absurd thing to do now.
Annualization works by saying that what happens in one quarter will keep on happening, exactly the same way, for a year. Economic activity in the second quarter is going to be badly hit by shutdowns. No one imagines that this will be repeated for a whole year. US GDP might drop 7.5% in the second quarter. No sensible economist thinks that US GDP will drop 30% over the next year, but that is how annualization reports it.
The sensible approach is to ignore annualized numbers. Focusing on the quarterly changes is quite bad enough. There is no need to sensationalize the data.
Surveying a shutdown
Nearly all data is survey-based. That is obvious for things like sentiment opinion polls. But US unemployment is also a survey. The unemployment rate is categorized in the “household survey” part of the data. Across the world, industrial production is a survey. Retail sales numbers are surveys. Inflation data are surveys, normally weighted using the results of different surveys. GDP is a mass of surveys put together.
One of the reasons data quality has fallen in recent years is that fewer people fill in surveys. Those that do are less likely to answer all the questions. Surveys are a nuisance to do. In the age of email you can barely leave a shop or hotel without being asked to do a survey. People are fed up of answering questions.
In the current crisis, even fewer people are likely to want to fill in a survey. A business owner is not likely to want to answer detailed questions on retail sales in an economic lockdown. Anyone who does take the time to fill in a survey in the middle of this uncertainty is going to be “unusual”. Right now you probably do not want the opinion of anyone who wants to give you their opinion.
Businesses that are very busy (like food shops) will not answer government data surveys. Businesses that have shut down (like restaurants) will not answer government data surveys. There is a risk that data is based on a smaller and less representative sample of answers in an economic lockdown.
What if there isn’t anything to survey?
Measuring inflation is a problem in a shutdown. In the UK, restaurants and hotels are over 11% of the consumer price index. But restaurants are closed. What do you do about their prices? It seems pointless including the restaurant meals in consumer price inflation. People have stopped spending on various leisure activities and travel. (Unless people cancelled their subscription they will still spend on gym membership). If people are not spending, should the prices be counted?
In the United States medical care services are over 7% of the consumer price basket. A small sample of treatments are used to represent medical costs. But the medical care people used to pay for is no longer being bought. Medical care is focused on dealing with consequences of the coronavirus. So what is being paid for is now different. This will not be properly reflected in the prices.
Overall the demand shock of phase one should be disinflationary. It is unlikely to be measured properly. Producer prices may be more accurate than consumer prices. Producer prices are not affected by retail stores, or bars and restaurants closing. But some factories are closing (e.g. the auto sector). Gradually producer prices will also try to measure something that is not there.
Natural disasters, strikes and similar events sometimes mean that there is nothing to survey in part of an economy. However, this is often limited to a part of the country (for instance, US hurricanes). Alternatively only a relatively small sector is closed, as with as strike. Estimates can be made for the effect of the lost data. These estimates are often published alongside the numbers. The problem currently is that economies are shutting down nationally. Entire industries are closing. It is not going to be easy to adjust for that.
The rise of online
Economic lockdowns have increased online spending. People are shopping for the things that they need online. This is very evident in online food sales. People are also going online for gaming or films while stuck at home. This is a structural change in the way people consume. The move to online spending may continue after the lockdown. Once people start online spending, they may be more reluctant to go back to shopping in stores. However, economic data can be slow to recognize such structural breaks. Consumer spending may be under reported if the surge in importance of online spending is not properly captured. It is worth noting that consumption data generally registers the time of sale, not the time of delivery. The sale is recorded, even if there is a delay in the customer receiving their purchase.
Some larger firms are under pressure to close online sales. This is because large numbers of people work together to supply goods in large firms. For smaller firms this is less of a problem. But the fact that smaller firms may find online sales easier may also make such sales harder to capture in economic data. Some firms may also have problems finding supply. This will give an uneven change to online sales. That may also create problems with measurement. If the firms questioned are not representative of the whole sector, the data will not be correct.
There has been some evidence of under-reporting online activity in China. Online services are not generally reported in the economic data. There is also evidence that internet activity grew faster during the recent lockdown than officially reported online retail sales.
What can we look at?
What data can be relied upon in the lockdown period? As a general rule, data that avoids surveys or sentiment will be more reliable US initial jobless claims could be more reliable than US unemployment. Initial jobless claims require people to actually register. Many European unemployment numbers are based on people who file a claim. This will be reliable.
Data, like bank lending, should also be reliable. This has to be supplied for regulatory reasons, and is not done by a survey.
Investors are turning to data sources like electricity use to estimate what is happening to economies. This data needs to be used carefully. People working from home will still contribute to GDP, but electricity consumption will fall. Countries with a lot of manufacturing will tend to have larger drops in electricity use than countries that are more service sector focused, even if GDP falls equally in both places. Industries like steel use a lot of power relative to the amount of GDP they produce.
Similarly, measures of traffic or pollution in cities are only approximate measures of economic activity. Where people are able to work from home they will add to GDP without travelling. Again, the ability to work effectively from home will differ depending on what makes up an economy. A worker making cars will find it difficult to work from home. Economists often work from home.
The challenge
Investors will have to realize that we do not know what is going on during the worst phases of the coronavirus crisis. The quality of economic data is going to be lower. Whole sections of data cannot be captured properly. Data is likely to be revised a lot. The fashion for “big data” also needs to be treated with care. In a period of structural upheaval, economic relationships change.
The UK Office of National Statistics has already warned of reduced quality and reduced detail in some of its data. It has also highlighted the possibility of suspending some data publication.
For a few months, investors need to be very careful about using economic data in investment models. If the data is wrong, models will be wrong. Remember the computing adage—garbage in, garbage out.
