More big businesses failing. Revised budget forecast for state of California shows even governments are going to have a hard time when the economy is frozen. Maybe it is time to restart the economy.

Even the state government in California may be starting to realize that putting the economy in a deep freezer for an extended and unknown period of time might have some adverse consequences.

Just a few of the business casualties over the last few days:

  • Neiman Marcus (bankruptcy filed)
  • Souplanation/Sweet Tomatoes restaurants (all 97 stores permanently closing)
  • Lord & Taylor (likely BK)
  • J. Crew (bankruptcy filed)
  • J. C. Penney (likely BK)

This discussion will be posted on several of my blogs.

California budget deficit

5/7/20 – ABC news – California doom: Staggering $54 billion budget deficit looms 

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3.2 million new claims for unemployment last week. Running out of negative words to describe the severity of job losses.

Unemployment by Sean MacEntee is licensed under CC BY 2.0

New unemployment claims for week ending 5/2/20 are 3,169,000, seasonally adjusted.

The tally of new claims is 33.48 million since the economy was put in an induced coma.

That means about 1 out of every 5 people in the civilian labor force back in February are out of a job today.

I’m running out of words to describe how horribly the economy has been hit. Seem to have exhausted the adjectives that apply. We have a terrible mess and it is going to take a long time to fully recover from the lost jobs and even longer to recover consumer and business confidence.

This discussion will be posted across several of my blogs.

Data:

Expectations from economists interviewed by the WSJ, or perhaps we should say their wild guesses, are the flood of new claims will taper off in May. Will likely be months before the new jobs exceed the new unemployment claims. Will likely be years before new jobs offset the tidal waves of job losses in March, April, and May.

Summary of new claims and running total

I have prepared a running tally of the new unemployment claims, which is shown below.

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California starts first few steps to start opening up the stalled economy.

Economic doors will start to open on Friday – Opening or closing? by Paolo Gamba is licensed under CC BY 2.0

Friday of this week, 5/8, California will take the first baby steps to revive the state’s economy. Some retail stores will be able to provide curb-side delivery of products.

I don’t quite know how many people will order clothes online in order to pick them up at a store’s curb, but that is a first step.

At least half the value of a bookstore is browsing the shelves to see what book you really have to read right but that you previously didn’t even know existed.

Well, it’s a baby step.

Several articles describe the beginning here in the state. First article describes that government officials better start opening up quick or they will find the everyone already has done so.

5/1/20 – Forbes – Apple Data Shows Shelter-In-Place Is Ending, Whether Governments Want It To Or Not – Apple and Foursquare are tracking data that show people are getting out more.

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Three states tighten the shutdown while others start to revive their economy.

Green line is the unemployment rate in every state of the country. Red line is the financial health of universities, restaurants, airlines, and every small business.  Sinkender roter und steigender grüner Pfeil symbolisieren das Auf und Ab des Aktienmarktes by Marco Verch is licensed under CC BY 2.0.

With extremely short notice, governors of Arizona and Tennessee extended the lockdown and economic shutdown in their states. California governor orders beaches closed in the county with lowest infection rate, leaving open beaches in county with three times higher rate.

Meanwhile, many other states are trying to allow their economies to re-start.

Arizona extends lockdown

4/29/20 – Fox 10 Phoenix – Gov. Doug Ducey extends Arizona’s stay-at-home order to May 15 – The shutdown and lock-in for Arizona was scheduled to expire in one day as the governor extended the economic catastrophe by 15 more days.

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Economic stats show rapid disintegration of economy. Collapse in physical and emotional health won’t be this easy to calculate.

The economic statistics are rolling out to show the initial impact of the shutdown of the economy.

The collateral effect the shutdown and isolation will have on deteriorating emotional and mental health along with increased mortality due to postponed or canceled medical treatment will take years to quantify.

New stats in last few days:

  • 3.8 million new unemployment claims this week
  • New unemployment claims in six weeks are now equal to 18% of the people who were working in February
  • CBO expects unemployment rate to average 11% for 2020
  • 4.8% annualized drop in GDP for first quarter

New claims for unemployment

4/30/20 – Department of Labor – Unemployment insurance weekly claims – Another 3,839,000 people filed an initial claim for unemployment in the week ending April 25.

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Massive hit to the aviation industry from the pandemic.

Pictures in February 2016 at Minneapolis airport. Photo by James Ulvog.

The entire aviation industry, including airlines, plane manufacturers, engine producers, and maintenance, will be devastated from the pandemic and shutting down the economy.

4/27/20 – Wall Street Journal – ‘Welcome to Your Flight, Nathan.’ Traveling During a Pandemic Means Having the Plane to Yourself – My first, second, and third reaction was to chuckle when reading an article describing multiple commercial flights with only one passenger. The description of pilots making the standard welcoming announcement that greets the sole passenger by name is funny.

Then I shuddered in fear at the absolute devastation to the entire economy from most fights being almost empty. The financial destruction will require years of recovery.

Untold numbers of airline, ground transportation, hotel, restaurant, and food vendor companies are being shattered. Incalculable numbers of companies will not survive.

A lovely sight not many of us will get to see in the near future. Photo by James Ulvog.

Work that collapse back to the airplane manufacturers…

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Plans for California economy to slowly, gradually revive over the next year or more.

It will be months before you can visit one of these places in California. Image courtesy of Adobe Stock.

The California governor has laid out some general plans on how the state eventually will be taken off lockdown. There are four overall phases stretched over the next year or more. Highlights include:

  • Curb side pickup from retail stores will be allowed perhaps in weeks.
  • In-person worship services and getting a haircut will be allowed months from now.
  • Stay-at-home orders will not be lifted for a year or more.

Schools may start early, perhaps even in July. That will be conditioned upon schools having the ability to maintain safe distances between students.

This discussion will be posted on several of my blogs.

The graphic provided by the state describes the four stages:

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The shutdown will be relaxed, one way or another.

Time to use the other side of those signs. Image courtesy of Adobe Stock.

If the politicians don’t start relaxing the lockdown and letting people pay their rapidly accumulating bills, bunches of people are going to take the initiative and do so on their own.

I sense there is a limited time for those in power to start loosening the extreme restrictions or people are going to start ignoring parts of the rules.

At a deeper level, the concern I have is what’s referred to as the “social contract.” Government gets its authority from consent of the governed.

If a large number of people get to the point of concluding the rules in places like California and Virginia are unnecessarily severe and are causing more health, mental, social, and economic damage than they prevent, people will conclude our leaders have broken the contract.

If we get to that point, respect for law and respect for public officials will decline. That is not a good place to go.

 

Next two articles point out a small number of people who have already reached that conclusion:

4/20/20 – Daily Wire – “Social Shredding”: Defiant Residents Grab Shovels, Dirt Bikes After Cali Authorities Dump Tons of Sand In Skateparks For ‘Social Distancing’ – Officials in San Clemente California noticed teenagers were committing the grave sin of skating in the city’s skate park. Well, that is patently unacceptable, so the city dumped 37 tons of sand into the skate park in an effort to shut down the skating. Since the park is at the beach, sand was readily available.

Well, the city officials did not take into consideration the incredible level of creativity present in humans, especially Americans.

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It is time to end the physical, emotional, and financial destruction caused by the lockdown.

With the ongoing shutdown we are getting way out there onto dangerously thin ice. Image courtesy of Adobe Stock.

We are past the point where the damage caused by the lockdown is greater than the damage caused by the coronavirus.  The damage could start compounding.  Here are just a few of the recent articles making this point:

4/22/20 – The Hill – The data is in – stop the panic and end the total isolation – A medical doctor says it is time for our leaders to examine the evidence instead of hypothetical guesses and then carefully let the country start operating again. He cites five factors ignored by people who want to keep the country in ongoing lockdown:

Fact 1: The overwhelming majority of people do not have any significant risk of dying from COVID-19.

Fact 2: Protecting older, at-risk people eliminates hospital overcrowding.

Fact 3: Vital population immunity is prevented by total isolation policies, prolonging the problem.

Fact 4: People are dying because other medical care is not getting done due to hypothetical projections.

Fact 5: We have a clearly defined population at risk who can be protected with targeted measures.

Keep in mind California will probably be on lockdown until August and Virginia may be locked down until a vaccine is in use.

Two severe medical problems are being caused by and will be prolonged by the severe lockdown.

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Good news in some states for people who like to pay their rent and put food on the table. Bad news for California and Virginia.

A deep freezer, used for keeping large volumes of meat and vegetables frozen. That’s where the economies of California and Virginia are going to be stored for a long time. Image (but not commentary) courtesy of Adobe Stock

Many states are starting to open up their economy.

Virginia may be closed down tight for up to 24 more months.

California may not open up until August.

August.

There will be incalculable medical, emotional, and financial damage in California and Virginia from the lockdown. More on that momentarily.

This discussion will be posted on several of my blogs.

Good news

On the bright side, getting most attention for opening are:

  • Texas
  • Georgia

Other states are thawing because they also don’t want to bankrupt everyone, destroy all the hospitals, further tear down overall health levels, and permanently cripple their economy. List includes:

  • Alaska
  • Colorado
  • Minnesota
  • Montana
  • Mississippi
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Tennessee

And then there is Virginia and California.

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This shutdown is damaging our health, collapsing the economy, and shredding our freedoms. What will be the tally from ‘avoidable deaths?’

Will the Grim Reaper get more business from the coronavirus or the shutdown?

Every additional day of the shutdown is causing horrible damage. Not only is the economy suffering with record high unemployment, soon-to-be record high bankruptcies and shuttered businesses, but also there is now and will continue to be a decline in overall health. We will see increased mortality from other causes because of the shutdown. The damage to our freedoms is widespread and immeasurable.

Point made by the author of the column linked below puts it this way:

This is not a trade-off between lives and the economy. It’s a trade-off between lives and lives.

In a series of articles over the last week I attempted, in my own feeble way, to describe the wide ranging damage we are watching grow every day.

The question our governors and mayors urgently need to consider is whether we have already passed the point at which there will be more damage (including deaths) from the shutdown than from the coronavirus.

This post will be published on several of my blogs.

Trading off lives for lives

4/17/20 – Colorado Politics – Opinion/It’s time to shift tack – and contain the virus while reopening Colorado’s economy – Author was sounding the alarm on a pending medical disaster well before others realized there was a problem. That danger is now past.

He draws the analogy to a hurricane expected to make landfall at category 5 but deteriorated to a bad thunderstorm the morning it landed. In that analogy the cat 5 which was expected to land on the entire country only hit New York, New Orleans, and Detroit.

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More entries on the list of economic sectors devastated by the shutdown.

Image courtesy of Adobe Stock.

Hat tip to Behind the Black for the legwork identifying additional sectors of the economy that are collapsing. Large segments of the economy I haven’t mentioned before:

  • Home sales
  • Housing construction
  • Apartment rentals
  • Clothing production
  • Flower trade

Damage to these sectors won’t immediately heal the moment state governors decide they will allow the economy to come back to life out of its induced coma.

Home sales

4/21/20 – Fox Business – US home sales plunge 8.5% in March, and it may grow worse – Sales of existing homes dropped 8.5% in March. Article use the word “cratered.”

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More sectors of the economy being destroyed by shutdown of the economy.

Imagine all that frantic hustle and bustle of Denver airport back in 2018 dropping by 95%. Photo by James Ulvog.

I can barely type fast enough to keep up with the adverse impact on the economy or freedom. Can barely keep up with the news about entire sectors of the economy collapsing. Most recent sectors I’ve learned about:  airlines and the entire health care system. Since drafting this post last evening, learned about the destruction in the clean energy industry and saw some stats on the devastation in the restaurant sector.

This post will be printed on several of my blogs.

Airlines

4/20/20 – NewsMax – Big 3 US Airlines May Cut More Than 100,000 Jobs by Fall – At the moment passenger loads are frightening – article says domestic flights are averaging 10 passengers and international flights are averaging 24 people plus crew.

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A reminder of previous government pronouncements before they are pushed down the memory hole.

Image courtesy of Adobe Stock.

We can now see an extensive effort to re-write the story of the shutdown of the economy. Before that is accomplished it is necessary to put a number of factors on the table so they don’t disappear down George Orwell’s 1984 memory hole.

4/13/20 – American Institute for Economic Research – Liberation From Lockdown Now – Article discusses recent explanations and how we got to this point.

We need to remember this uncomfortable information before it is removed from the discussion.

I shall quote one paragraph from the article to keep the information alive before it is erased from the record. The early advice from the experts was:

“For a family sitting around the dinner table tonight,” said Dr. Nancy Messionnier, a spokesperson for the CDC on January 17; “this is not something that they generally need to worry about.”

Let’s not forget the next sentence:

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Magic of the price signal to change production levels.

Fourteen wells on one pad, located on the southeast side of Williston, N.D. Photo by James Ulvog.

The double black swan of COVID-19 pandemic from the demand side and Saudi Arabia flooding the market from the supply side is creating a sales problem and storage problem for the oil industry.

Regulators in Texas are thinking about about ordering a pro-rate reduction in production. In other words, they are considering giving each producer an order on how much to cut.

North Dakota has no such plans.

North Dakota is planning to rely on capitalism to rapidly adjust production.

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