UCLA Anderson Forecast senior economist David the UCLA Anderson Forecast revised its outlook for the U.S. economy downward because of the expected impact of COVID-19, which was then still being referred to as an epidemic. Two weeks later, as the economy began shutting down because of the pandemic, the Forecast released the first revision in its 68-year history to assert that the U.S. economy was already in recession.
Now, in its second quarterly forecast of 2020, the Forecast team states that the global health crisis has “morphed into a Depression-like crisis” and that it does not expect the national economy to return to its 2019 fourth-quarter peak until 2023.… U.S. employment will not recover until “well past 2022…. “Simply put, despite the Paycheck Protection Program, too many small businesses will fail and millions of jobs in restaurants and personal service firms will disappear in the short run. We believe that even with the availability of a vaccine, it will take time for consumers to return to normal.…”
…Here’s the troubling part: “The projections and analyses in this year’s
report do not reflect the potential effects of the Covid-19 pandemic on
the Social Security program,” the Trustees stated in the annual report.
Social Security’s plight has been obvious for decades and the longer Washington procrastinates, the more difficult the solutions. The Trust Fund Trustees state that ensuring solvency over the next 75 years would require a 3.1- percentage point rise in the 12.4% current payroll tax that is split between employees and employers. Even less politically attractive would be an immediate 19% across-the-board cut in benefits. Waiting for the Trust Fund money to run out in 2035 would require a 4.1-percentage-point rise in the combined payroll tax or a 25% cut in benefits, the Trustees calculate.
If self-funded Social Security benefits are an entitlement that is no longer affordable, so too are state pension fund benefits. Decades of lush retiree benefits, overly-optimistic investment return assumptions, insufficiency pension fund contributions and lengthening retiree life spans have resulted in the liabilities of public pension funds exceeding assets by $1.2 trillion in 2018, according to the latest data and Pew Charitable Trusts. The pandemic will surely worsen the mismatch.
Comment by tonytran2015: Any game can go on as long as there are players. Same reasoning applies to any bubble market.
Public debt is normally nothing to fear, especially if it is financed within the country itself (but even foreign loans can be beneficent for the economy if invested in the right way). Some members of society hold bonds and earn interest on them, while others pay taxes that ultimately pay the interest on the debt. The debt is not a net burden for society as a whole since the debt ‘cancels’ itself out between the two groups. If the state issues bonds at a low-interest rate, unemployment can be reduced without necessarily resulting in strong inflationary pressure. And the inter-generational burden is also not a real burden since — if used in a suitable way — the debt, through its effects on investments and employment, actually makes future generations net winners. There can, of course, be unwanted negative distributional side effects for the future generation, but that is mostly a minor problem since when our children and grandchildren ‘repay’ the public debt these payments will be made to our children and grandchildren.
Comment by tonytran2015: Can Solar Energy survive without government subsidies and unfair practice ?
According to a judgment on a related application
before the Federal Circuit Court in Brisbane, Ms Oldfield worked for the
company for 19 months as both a human resource officer and manager.
The judgment notes that during her time at the company, she formed the view that One Stop Warehouse “underpaid its staff and did not pay penalty
rates or overtime rates, nor did it pay the basic award rate of pay”.
Ms Oldfield, according to her statement of claim, reported her conclusions to company management “in an effort to have the matters of concern to her rectified”.
She further claimed the workplace “was visited by inspectors from the Department of Work Health and Safety and it was found to be non-compliant in a number of respects”.
Ms Oldfield said she was “obstructed” by a person involved in the management of the company from rectifying these problems, told she was “unstable”, she did not fit the “culture” of the business, and had core duties and responsibilities taken away from her.
…“Recessions don’t usually result in personal income soaring, but this one has thanks to government support around the world” Deutsche Bank’s Jim Reid writes
However, as discussed extensively last month in “‘Look Out Below’: Why The Economy Is About To Fly Off A Fiscal Cliff“, the US soon faces a potential “benefits cliff” and this could be one of the defining events for global markets this summer. The $600 per week in Federal Pandemic Unemployment Compensation (FPUC) is set to expire at the end of July, while the Pandemic Emergency Unemployment Compensation (PEUC) and Pandemic Unemployment Assistance (PUA) will also expire at the end of this year.
Though Wall Street economists expect Congress to pass further stimulus in late July to address these cliffs, the two parties remain far apart on the contours of the next phase of federal support. On a per capita basis, claimants have received roughly $788/week ($41k annualised) on average, well above the usual amount of roughly $300 in a normal labor environment ($15-$16k annualised).
Introduction – monetary transmission problems
Between different schools of economics there is much confusion over the link between changes in the quantity of money and prices, exposed afresh by the collapse in GDP due to COVID-19 and the aggressive monetary response from the authorities to contain the economic consequences.
Neo-Keynesians appear to understand the link exists, but for them inflation is always of prices which can be managed by adjusting monetary policy subsequently.
Monetarists follow a mechanical quantity theory leading to a relatively straightforward relationship between changes in the quantity of money and of prices after a time lag of a year or so. The principal difference with the neo-Keynesians is in the timing: monetarists see monetary inflation occurring long before the price effect, and neo-Keynesians in charge of central bank monetary policy assume rising prices can be controlled subsequently by varying interest rates.
The Austrian school, which is banished from these proceedings, explains that inflation is of money and nothing else, and the effect on the general price level is determined by a combination of changes in the money quantity and of consumers’ relative preferences for holding money relative to goods.
By Pam Martens and Russ Martens of Wall Street on Parade.
The first thing you need to know about Citibank and its parent, Citigroup, is that they have an extensive rap sheet. (See here). The second thing you need to know is that Citigroup is a serial predator that perpetually promises its regulators that it’s going to reform, but never does.
The third thing you need to know is that Citigroup has made a sap out of the Federal Reserve – not once, but twice. During the last financial crisis of 2007 to 2010, Citigroup somehow induced the Fed to secretly give it $2.5 trillion cumulatively in below-market rate loans for 2-1/2 years to prop up its sinking carcass. Citi got the cheap loans (often at below one-half of one percent) and then went right on charging its struggling credit card customers high double-digit interest rates.
14 reported an increase in prices that they had paid in June, listed in order:
- Accommodation & Food Services;
- Real Estate, Rental & Leasing;
- Health Care & Social Assistance;
- Public Administration;
- Wholesale Trade;
- Professional, Scientific & Technical Services;
- Other Services;
Covid-19 Humor: Why do Australian people stock up toilet paper on the news of lockdown ?
They worry that America also enters similar lockdown and American Federal Reserve Banks may rescue rich Amrrican corporations by printing about 5.3 trillions of American dollars. That will certainly use up a lot of paper and there may be no paper left for Australian industry.
- In March, restaurants had the highest numbers of business closures
listed on the app compared to other industries, and the rate of closure
has remained high. Of the businesses that closed, 17% are
restaurants, and 53% of those restaurant closures are indicated as
permanent on Yelp. Retail, however, is the hardest hit overall.