Friday, November 26, 2021

Coronavirus dashboard for November 26: pessimistic and optimistic scenarios for the winter wave


 - by New Deal democrat

I hope all of you had a Happy Thanksgiving. Since I haven’t posted one in a bit, here is an update on the pandemic.

As an initial matter, in the last day or two there has been a mini-panic about a new strain out of South Africa called B.1.1.529 which may or may not get the designation Nu. 

While this *may* be a concern, I wouldn’t worry just yet. Here’s a link to an excellent thread from Carl Bergstrom, a bio-statistician who is one of my go-to expert reads.
 He writes that “*If* the turn-around is due to increased transmissibility, instead of other e.g. behavior factors, it's going to a rough winter,” but that while “the fraction of B.1.1.529 is increasing faster[, ] I think that is that is largely due to different denominators.” 

Bottom line: worth watching, but the rate of increase is based on a *very* low number of cases - perhaps less than 1,000 cases so far, as shown in the below graph also posted by Bergstrom:

The question of the season is how much of a winter wave the US will have. A number of writers have posited that the US is going to have a very bad outbreak just like the EU has had in the last month or so. 

That’s certainly possible.  If the US *were* to have a winter wave comparable to that of the EU, that would be at least a 5-fold increase from our recent low of 80,000 cases per day to over 400,000 per day. 

But I’m not so sure, mainly because unlike Europe, the US has had a recent very bad Delta wave that Europe mainly escaped. Since the UK did not escape Delta this summer (and has all but eliminated all its restrictions) it’s worthwhile to compare the two jurisdictions:

Cases in the UK have risen from about 50 to 68 per 100,000 in the past 45 days or so, while cases in the EU have risen from 10 to 60 per 100,000. While it would be wrong to simply project these trends forward, at least *so far* we can say that the UK has not had a wave anything like the EU (nor, for that matter, has Canada, with 75% of its population fully vaccinated, where cases have only risen from 5 to 7 cases per 100,000; or Israel, where cases in the past two months have dropped from over 100 to only 4 per 100,000 with 65% of its population fully vaccinated but a very aggressive booster shot campaign.

A look at the US by Census region since the beginning of the pandemic is very helpful in tracking climate effects as they affect patterns of infections, because it appears that a pattern has emerged:

Leaving aside the initial NYC-centered outbreak, where testing was very poor, we see that in both 2020 and 2021 the summer outbreaks started and were most intense in the South, then spread to the West, then the Northeast and finally the Midwest; and that the summer outbreaks were least intense in those last two regions.

By contrast, in both autumn going into winter 2020 and 2021, the outbreaks first started in the Midwest, then the Northeast, before spreading to the West and the South. Again, in the last two Census regions, in 2020 the outbreaks were the least intense - and the same is true this year *so far.*

Also, focusing on autumn 2020, the region which peaked first was the Midwest, right around Thanksgiving week. It is noteworthy that the Midwest outbreak last year was apparently seeded during the August motorcycle rally in South Dakota, and spread out from there, with the Dakotas being particularly hard hit. This year there was another rally, but as the below graph of the two Dakotas shows, infections hit peak in South Dakota in early September and have declined since:

This is certainly evidence that prior infections - and both Dakotas have had *confirmed* infections of over 18% and 20%, and probably double or more that in reality - appear to have a dampening effect on subsequent ones, even of Delta.

So, will the same pattern continue this autumn and winter, with the Midwest peaking now and other regions peaking two weeks after Christmas gatherings? A close-up of the 4 Census regions through Thanksgiving Day (so please ignore the last daily data entry, because it has everything to do with most States not bothering to report on the holiday) appears to suggest that this may be the case:

Most notably, there has been no increase in the Midwest since one week ago. There has only been a slight increase in the South in the past 45 days, and none in the West. This is *very* different from last year’s huge increases in all regions during November.

A look at the change in the one week average in cases nationwide for the past 13 months shows that the 7 day average in cases was increasing by almost 2 per 100,000 last November. By contrast, this year cases have increased on average only 0.5 cases per 100,000 per day:

Last winter cases only increased roughly another 25% between Thanksgiving and the early January peak. If that pattern were to repeat this year, this would take us to a peak of about 45 per 100,000, or about 120,000 cases per day - only half of the 250,000 per day at the peak last winter. That’s the optimistic scenario.

Since a 120,000 winter peak is, needless to say, much more preferable than a 500,000 peak, let’s hope that the US’s summer Delta wave does blunt infections during the winter, and the optimistic scenario is the one that pans out.

Wednesday, November 24, 2021

The consumer spending spree continued in October


 - by New Deal democrat

Real personal income and spending held up well throughout the pandemic, due to a vigorous government response. With special benefits ended, the question has been: will they hold up? This month, the answer was a definite “yes.”

In nominal terms, personal income increased 0.5% and spending rose 1.3%.

In real terms, personal income (blue in the graph below) declined -0.2%, but real personal spending increased 0.7%. Both are well above their pre-pandemic levels:

Since May, real income has declined -1.0%, while real spending has increased 1.9%.

Last month I noted that consumers in the aggregate appeared to have have gone through their cushion of saved pandemic assistance. The personal savings rate for October declined slightly from an upwardly revised September to 7.3%, below the 8.3% of February 2020 just before the pandemic hit, and about average for the 4 previous years:

Finally, real personal spending is basically the other side of the coin compared with real retail sales, since they cover the seller and buyer of consumer transactions, which is over 2/3’s of the entire economy. Here is a graph comparing the monthly %age change in each since July 2020:

Both of these have returned to basically normal levels m/m, as both increased a very good 0.7% in October.

There is some evidence that many people began their Christmas shopping early, in October this year (due to news reports of shortages of items for sale). Whether the big increase can be sustained is obviously a question.

New home sales for October continue slow upward trend


 - by New Deal democrat

New home sales, while very noisy and heavily revised, tend to lead all of the other housing indicators, even permits. The heavy revisions figure, well, heavily, into this morning’s report.

New home sales (blue in the graphs below) usually slightly lead the much less volatile single family home permits (red). The number of houses for sale (gold) lags consistently. Here is the long term view:

In October, new home sales rose less than 1% from a 5%+ downward revision to last month’s report. But August was revised higher. As the graph suggests, the net result is a moderate increase from the summer’s low.  Last month I wrote that the increase in new home sales would probably translate into an increase in single family permits, which did occur. Meanwhile, the number of houses for sale increased slightly to the highest level in 10 years, and is probably peaking:

Mortgage rates have fluctuated in a tight range for the past 5 months, so I expect the slow increase in new houses sold and under construction to continue.

Both of this morning’s reports on long leading indicators (housing and corporate profits) point towards a cooling of the economy next year, but no actual downturn.

Lowest new jobless claims in over half a century


 - by New Deal democrat

The first two of four data releases this morning were corporate profits for Q3 and jobless claims for last week.

Corporate profits, a long leading indicator, increased slightly in Q3 over Q2, by 1.9% or 4.2% depending on whether you include various inventory adjustments. Deflated by unit labor costs, they either increased by 0.3% or decreased by -0.1%. While they haven’t decreased significantly in any accounting, the big post-lockdown and stimulus fueled pandemic surge is over.

Initial claims declined a huge -71,000 this week to 199,000, its lowest reading since 1969, when the US population was half of what it is now! The 4 week average declined -21,000 to 252,250, the lowest since 1973 except for 2017 through February 2020:

Continuing claims also declined -60,000 to a new pandemic low of 2,049,000:

Only a few weeks in the late 1980s, plus 2 months in 1999, plus the last 4 years of the last expansion were below this number:

I am sure the super-low number of initial claims this week has a lot to do with Thanksgiving week seasonality, so I expect a rebound next week. Still, this is yet another sign of a Boom in labor strength that has not been seen since the late 1990s at least.