The Viral Economy

[Smoove_B]

US Q1 GDP down 4.8%.

This is stunning: Nearly half of the Q1 decline in GDP can be attributed to healthcare, which is presumably delaying of elective procedures.

It's a strange reality that in the midst of a pandemic, we have a healthcare-led recession.

[LawBeefaroni]

It's the timing of the end of the quarter. Healthcare was the first to shut down otherwise viable business in early-mid March to open COVID capacity. Rest of business was late March/early April. That'll show up in Q2.

Consensus is expecting a 30-40% drop in GDP in Q2.

[Smoove_B]

Cross posted as this is really more focused on the longer term economic issues that might be coming our way (globally):

The first trend concerns deficits and their corollary risks: debts and defaults.
A second factor is the demographic time bomb in advanced economies.
A third issue is the growing risk of deflation.
A fourth (related) factor will be currency debasement.
A fifth issue is the broader digital disruption of the economy.
This points to the sixth major factor: de-globalization.
The backlash against democracy will reinforce this trend.
This points to an eighth factor: the geostrategic standoff between the U.S. and China.
A final risk that cannot be ignored is environmental disruption, which, as the COVID-19 crisis has shown, can wreak far more economic havoc than a financial crisis.

[Formix]

Cross posted as this is really more focused on the longer term economic issues that might be coming our way (globally):

The first trend concerns deficits and their corollary risks: debts and defaults.
A second factor is the demographic time bomb in advanced economies.
A third issue is the growing risk of deflation.
A fourth (related) factor will be currency debasement.
A fifth issue is the broader digital disruption of the economy.
This points to the sixth major factor: de-globalization.
The backlash against democracy will reinforce this trend.
This points to an eighth factor: the geostrategic standoff between the U.S. and China.
A final risk that cannot be ignored is environmental disruption, which, as the COVID-19 crisis has shown, can wreak far more economic havoc than a financial crisis.

I REALLY hope that most of this article is wrong. If not, it may be time to call Heinlein's Revolt in 2100 prescient.

[malchior]

US Q1 GDP down 4.8%.

This is stunning: Nearly half of the Q1 decline in GDP can be attributed to healthcare, which is presumably delaying of elective procedures.

It's a strange reality that in the midst of a pandemic, we have a healthcare-led recession.

FWIW he is interpreting that chart wrong. If his interpretation was right, then line 15 above it accounting for 110% of the GDP drop on its own!

[Smoove_B]

I REALLY hope that most of this article is wrong. If not, it may be time to call Heinlein's Revolt in 2100 prescient.

If you want to double down on the depression, you can review the Wikipedia page of the author. Spoiler: he knows things.

[Smoove_B]

FWIW he is interpreting that chart wrong. If his interpretation was right, then line 15 above it accounting for 110% of the GDP drop on its own!

If you want to tell the guy with a PhD in economics that he's wrong, I'm willing to listen to how it goes. But this is out of my wheelhouse.

[malchior]

FWIW he is interpreting that chart wrong. If his interpretation was right, then line 15 above it accounting for 110% of the GDP drop on its own!

If you want to tell the guy with a PhD in economics that he's wrong, I'm willing to listen to how it goes. But this is out of my wheelhouse.

Just look at line 15. It is pretty obvious. Actually 17 is included in 15. I didn't notice the indent but that just makes it wronger. It is half of that component.

[Smoove_B]

Just look at line 15. It is pretty obvious. Actually 17 is included in 15. I didn't notice the indent but that just makes it wronger. It is half of that component.

From the man himself:

GDP declined at an annualized rate of -4.8%. The decline in healthcare contributed -2.42 percentage points, or about half.

I'm pretty sure I've read that right.

[malchior]

Just look at line 15. It is pretty obvious. Actually 17 is included in 15. I didn't notice the indent but that just makes it wronger. It is half of that component.

From the man himself:

GDP declined at an annualized rate of -4.8%. The decline in healthcare contributed -2.42 percentage points, or about half.

I'm pretty sure I've read that right.

Ah I see. Those are sub-components and this is all totaled. I don't think it is particularly interesting though. You can also say it is only 1/3 of the decline in that sector and financial services helped the sector out.

[Formix]

I REALLY hope that most of this article is wrong. If not, it may be time to call Heinlein's Revolt in 2100 prescient.

If you want to double down on the depression, you can review the Wikipedia page of the author. Spoiler: he knows things.

That did NOT make me any happier.

[malchior]

I REALLY hope that most of this article is wrong. If not, it may be time to call Heinlein's Revolt in 2100 prescient.

If you want to double down on the depression, you can review the Wikipedia page of the author. Spoiler: he knows things.

That did NOT make me any happier.

Roubini is a star in the field. That said Roubini is a persistent bear and does better when conditions are bad so this is more likely right than his rosy predictions. Sorry to throw more sand. He is in the same league as Krugman in economic circles. Both are well north of 50% on their economic predictions. Krugman is actually slightly more accurate if I remember correctly despite writing a weekly column.

[Alefroth]

I received a stimulus check today for my mother who died in 2018.

It's pay to the order of her name followed by DECD c/o my name. Does that make me the recipient?

edit: Nevermind, looks like that is just part of the address.

[LawBeefaroni]

[Alefroth]

Really flattened the curve.

[LawBeefaroni]

Granted it starts in 1965 but still. Puts it in perspective.



But it'll be a "V shaped recovery", right?

[malchior]

Official tallies of unemployment are going to be...distorted. For good reasons and not so good reasons.

[LawBeefaroni]

Hertz avoids bankruptcy with last-minute deal

Lenders granted Hertz Global Holdings Inc. an eleventh-hour reprieve from a potential bankruptcy, giving the struggling rental-car company more time to work out a rescue plan after it missed debt payments.

The forbearances and waivers give Hertz until May 22 to “develop a financing strategy and structure that better reflects the economic impact of the Covid-19 global pandemic,” the company said in a regulatory filing. Hertz shares, which had plummeted as much as 36% before the start of regular trading, were down 14% as of 3:23 p.m. Tuesday in New York.

Hmmmm.

[Holman]

YOU'RE IN THE JUNGLE BABY!!

[LawBeefaroni]

That Mnuchin wasted even 10 seconds typing that reply, and who knows how much time searching for his own name (he wasn't tagged), is evidence that this administration is purely ego driven. He shouldn't give a fuck what Axl Rose has to say and yet he gets into a twitter spat with him?

When 30M are unemployed he finds the time to ego tweet. Fuck him.

[ImLawBoy]

That Mnuchin wasted even 10 seconds typing that reply, and who knows how much time searching for his own name (he wasn't tagged), is evidence that this administration is purely ego driven. He shouldn't give a fuck what Axl Rose has to say and yet he gets into a twitter spat with him?

When 30M are unemployed he finds the time to ego tweet. Fuck him.

It actually took him longer than 10 seconds, as he originally tweeted his response with the Liberian flag (hence' Axl's reference in his response). He had to delete it and make a new response with the US flag.

[Smoove_B]

The Coming Disruption to College:

There’s a recognition that education — the value, the price, the product — has fundamentally shifted. The value of education has been substantially degraded. There’s the education certification and then there’s the experience part of college. The experience part of it is down to zero, and the education part has been dramatically reduced. You get a degree that, over time, will be reduced in value as we realize it’s not the same to be a graduate of a liberal-arts college if you never went to campus. You can see already how students and their parents are responding.

At universities, we’re having constant meetings, and we’ve all adopted this narrative of “This is unprecedented, and we’re in this together,” which is Latin for “We’re not lowering our prices, bitches.” Universities are still in a period of consensual hallucination with each saying, “We’re going to maintain these prices for what has become, overnight, a dramatically less compelling product offering.”

More to the point:

In fact, the coronavirus is forcing people to take a hard look at that $51,000 tuition they’re spending. Even wealthy people just can’t swallow the jagged pill of tuition if it doesn’t involve getting to send their kids away for four years. It’s like, “Wait, my kid’s going to be home most of the year? Staring at a computer screen?” There’s this horrific awakening being delivered via Zoom of just how substandard and overpriced education is at every level. I can’t tell you the number of people who have asked me, “Should my kid consider taking a gap year?”

As someone that is soon to be formerly employed by higher education, I can tell you they are scrambling right now to do anything and everything possible to justify opening campus in the Fall. They are delusional thinking September is going to be anything even close to normal, and yet they're still focused on getting those numbers up and trying to maintain registration levels. It's really disheartening to watch and reaffirming my belief that the primary mission of higher ed has moved far away from education and research.

[Isgrimnur]

Now factor in housing and dining halls.

[gameoverman]

If I was a college student right now one of things I'd be worried about, and this is optimistically thinking, is what will future potential employers think of my education? They'll certainly know I was in college during the pandemic, which means online classes. Are employers expected to shrug and say "Meh, the applicants all are like this so it doesn't matter" or will they turn up their noses at a whole generation of college students? Will their diplomas come with asterisks?

[Smoove_B]

It gets even crazier. Many (most?) of the colleges offered Pass / No Credit options for all grades this semester on a course-level selection. Meaning, students have the ability to designate any course as P/NC depending on the grade earned. However, I've already seen guidance from graduate schools (namely those involved in health professions) saying to NOT take a "P" designation as it will be interpreted to be a C. What's happening is students are using the P/NC designation to boost their GPA - so if they earned a B, they're taking a "P" grade instead - only taking an A if they earned it. It also reinforces just how broken the grading / GPA mentality is in higher education.

To get back to your observation, I think there are absolutely courses and likely degrees that can be completed fully online. How programs that need labs, focus on fine-art, presentations or require some type of other hands-on methodology for degree credits, I have no idea what they're going to do.

I think the bigger answer is that colleges are going to need to come to terms with the fact that college really isn't (and shouldn't be) for everyone. I strongly suspect a significant number of people are going to drop out or put a degree on hold and figure out maybe they didn't need it in the short term at all. Maybe they'll come back; maybe they won't.

[RunningMn9]

If I was a college student right now one of things I'd be worried about, and this is optimistically thinking, is what will future potential employers think of my education? They'll certainly know I was in college during the pandemic, which means online classes. Are employers expected to shrug and say "Meh, the applicants all are like this so it doesn't matter" or will they turn up their noses at a whole generation of college students? Will their diplomas come with asterisks?

If it helps, that's how folks in my industry look at at college diplomas now. It doesn't matter what the piece of paper says, they are still showing up completely unprepared.

[Blackhawk]

As the parent of a teen who finished high school four days ago, this thread is discouraging, especially since there doesn't seem to be a solution to the problem.

[Smoove_B]

So much depends on what your son wants to learn and how well he's able to function as an online student. If he's able to bang out the general education courses (history, composition, math, etc...) he might find that being fully online works better as those courses tend to be large (at least at a university level). As an added bonus, colleges are going to be doing everything they can to entice students - like magically finding financial aid for them if they waffle on price of tuition. They're not going to advertise it broadly, but if there's genuine interest in attending a specific program/school and price is the holding someone back, I'm pretty confident obstacles will be lowered.

It's definitely an interesting time right now. There are opportunities for sure, but so much depends on the person.

[malchior]

I do a fair amount of "out of college" hiring. The consulting world generally has a model where we get cheaper out of school talent who are assumed to be 'empty vessels' and raise them to be functioning adults. They bill cheap and do all the shit work. I'm in a tech niche (cybersecurity) so our model diverges a little. Usually, we try to get kids into an internship pipeline...which this year is *cancelled* for good reasons. Anyway since we are niche I'm looking for people with solid BS degrees. Cybersecurity, Math, Computer Science, etc. And unprepared is expected in our model. Even the kids who come out of school with a BS in Cybersecurity are usually not well prepared except for a few programs where they come out very well prepared. They also happen to be schools with strong science/tech. Think John Hopkins or Carnegie Mellon. Those kids get snatched up quickly.

Unless you're out of a top school I don't even bother with a BA though exceptions abound. One of our best new hires is a Harvard BA English grad and branched out solidly into technical project management. It happens. Still, the online thing doesn't necessarily water it down a ton for me though we will have to see how schools respond. We try before we buy so if we start seeing a rough patch...well we'll know. I don't think anyone can predict it other than it is going to a cluster f financially. Many schools are carrying tons of debt from big construction they did pre-2008...and well that bill is coming due. I was at one of the college in NJ at that time and I was building out a dorm or apartment complex a year generally. There used to be a crappy pillow per student metric that they were shooting for at my former employer. And it was all floated on 30 year paper. That ain't great.

[malchior]

The solution no one asked for. A bipartisan tax credit to retrain skills. So the plan is to give people a tax credit meaning...money next year...to get job training at a school you can't visit...to ready themselves for non-existent jobs. Also...this is not a skills crisis. It isn't like there isn't a place for this in the big picture but this is sort of like worrying about excising a wart when you've lost a leg.

*Four senators introduce a bill to create a $4,000 tax credit for workers who lost their jobs due to the coronavirus pandemic to put toward skills training.

*The legislation introduced by Sens. Amy Klobuchar, Ben Sasse, Cory Booker and Tim Scott would apply to training such as apprenticeships, certificates and two- and four-year programs.

*Democrats and Republicans have been divided on how to proceed in responding to the economic crisis created by the pandemic.

[Holman]

It gets even crazier. Many (most?) of the colleges offered Pass / No Credit options for all grades this semester on a course-level selection. Meaning, students have the ability to designate any course as P/NC depending on the grade earned. However, I've already seen guidance from graduate schools (namely those involved in health professions) saying to NOT take a "P" designation as it will be interpreted to be a C. What's happening is students are using the P/NC designation to boost their GPA - so if they earned a B, they're taking a "P" grade instead - only taking an A if they earned it. It also reinforces just how broken the grading / GPA mentality is in higher education.

My university offered the universal Pass/Fail option this semester, and student behavior was strange.

I was teaching 50 freshman in their second required writing courses, and I had six students opt for Pass/Fail grading. Three of them were strong students who would have earned an A- (or even an A) if I'd been allowed to give it, and the others were good enough to have earned a B. My C and D students didn't take the option, nor did my solitary F (who could have squeaked by with a Pass with a little strategy).

The story here is probably that there are several kinds of students, and the ones who care about high grades are walking an anxiety tightrope that other just don't care about.

[Daveman]

Our stimulus payment arrived today... in the form of a debit card? No sign of tRump's signature anywhere.

I dismissed the piece of mail as junk as the return address simply said "Money Network Cardholder Services"... no mention of Treasury, IRS, etc. A quick search online shows news came out a few days ago that for many it will be a card vs. a check.

Briefly scanning over things it seems there are fees if you withdraw cash from certain ATMs and such. I wonder who's looking to profit from this?

I'll be calling our bank to see if/how we can simply deposit this into a savings account as we'd planned.

[Isgrimnur]

MNCS. They want someone to pay, and that’s either fees to you or interchange from the merchants.

[LawBeefaroni]

Pay your taxes with it.

[Isgrimnur]

My employer uses FiServ as the platform for our mortgage services.

[Ralph-Wiggum]

I got the letter with Trump’s signature this week. Of course it was completely pointless since the stimulus check had been deposited in my account weeks ago. But maybe there’s a way to use his signature for a curse....

[malchior]

The jobs number came in and they were amazingly good but still horrible overall. Still Trump is bouncing off the walls because he only cares about himself. Anyway, nothing new there. Still some prominent economists like Krugman said the numbers were very surprising.

He said they could be true but he also wondered if BLS was manipulated. It sucks that we have to openly wonder this. My guess is that this reflects people coming off furlough or the PPP loans causing rehires. It is a little surprising because some states are still behind processing the original unemployment claims. In any case, it will be heavily politicized so I take anything on economics reporting now with heaping, heaping, heaping, heaping piles of salt. Expect to either see the GOP say that no new economic aid is necessary which will blow back on them or double down on it. It won't be because it is good for the American worker. That's for damn sure.

[noxiousdog]

He said it's possible, but unlikely. "This being the Trump era, you can't completely discount the possibility that they've gotten to the BLS, but it's much more likely that the models used to produce these numbers — they aren't really raw data — have gone haywire in a time of pandemic."

[malchior]

Right and a lot of other people are looking at this going, huh? It doesn't square with reality in any way but it could be a substitution effect. I lost my full time job. UI hasn't come through yet. I'm driving for Uber now. They get counted because maybe BLS loosened the standards. It's hard to tell. I think it's bullshit or wrong personally because its such a dramatic swing. Some improvement? Sure. Things were re-organizing and partially re-opening. However, a huge jump in employment? It's peculiar to say the least. We'll need to see that sustained before we should believe it.

Edit: Another idea just occurred to me. This could be a correction from an overshoot on the previous surveys too but not seen or reported that way.

Edit2: Here's a good insight. The bottom line is there is so much churn here that the data collection is potentially all borked up. In totally natural, unscary ways even.

[Octavious]

All I know is this bails him out a ton for this week and that makes me annoyed and this always seems to happen for him. If anyone has a deal with the devil it's this ahole.