Don't Lose the Thread. The Economy Is Experiencing an Epic Collapse of Demand.

[SoonerPride]

Despite it all — a nation on edge, with an untamed pandemic and convulsive protests over police brutality — for the first time in three months there is a scent of economic optimism in the air.

Employers added millions of jobs to their payrolls in May, and the jobless rate fell, a big surprise to forecasters who expected further losses. Businesses are reopening, and the rate of coronavirus deaths has edged down. The Trump administration has begun pointing to what are likely to be impressive growth numbers as the economy starts to pull out of its deep hole.

All of that is good news, and far better than the alternative of a continuing collapse in economic activity. But it also creates a risk: distraction and complacency.

You can already sense in the public debate over the economy that people are starting to lose the thread — viewing the slight rebound from epic collapse as a sign that a crisis has been averted. That certainly is the kind of optimism evident in the stock market, which is now down a mere 1.1 percent for the year.

More. Much more here

https://www.nytimes.com/2020/06/06/upshot/coronavirus-economic-crisis.html?referringSource=articleShare

You should read this. Really.

[samsingh]

1. kick

[Grasswire2]

2. without having read the article yet, I note that...

....the jobs numbers were skewed through trickery, and the market seems to have zero resemblance to anything but a giant casino with no tether to anything but wishes and dreams.

[SoonerPride]

4. I notice that bad news doesn't move the market but good news makes it rally like crazy

Nice game if you never lose.

Bad news (mass deaths, 40,000,000 unemployed) is ignored and positive news (possible virus vaccine news, positive jobs numbers) cause the market to soar.

Sure seems like all the free Fed money is just propping it up and if /when that stops the whole market will collapse.

In reality the Dow should be at about 17,500.

[dickthegrouch]

8. Alan Greenspan called 8000 irrational exuberance

Nothing has changed since then in the fundamentals of the economy. Except most of the checks and balances and the enforcement of the law have been removed

[Rstrstx]

21. "The market can stay irrational longer than you can stay solvent"

A. Gary Shilling, often attributed to John Keynes

[uponit7771]

16. +1, ... and most of the rallies are after hours huge leg ups, nothing organic at all

[GP6971]

3. K & R n/t

[MustLoveBeagles]

5. Bookmarked

[Newest Reality]

6. The article was okay...

It was okay, but to me, it was another example of mainstream "soft" journalism and served the same purpose it was trying to point out in the first place.

I don't think it was researched carefully enough to be fully reliable and it had a rather optimistic bias which tells you where I am at with this.

[alwaysinasnit]

7. There will still be waves of covid-19 cases which will distrupt any short-term economic

up-ticks. Good read.

[Demsrule86]

9. None of that is true. The unemployment was not correct and unemployment went up actually.

Also, there is no demand. Our unemployment rate is 16 % with the error fixed and probably really 20.

[uponit7771]

17. +1, worse that "error" is the 3rd in a row and continuing claims went up not down

[BamaRefugee]

10. When the $600 funs out on unemployment, and courts allow evictions again, we're going to see the

truth about the whole mess.
I say this as someone who works in the justice system, and pent up demand for evictions is about to blow up. Courts scheduled to reopen June 22 in Los Angeles. All these unemployed people aren't going to be able to pay rent very very soon.

[IronLionZion]

11. People aren't buying as much stuff

because life sucks, staying home, feeling frustrated, might as well save money.

I thought there would be murder hornets. Not actual murder.

[smirkymonkey]

12. Kicking for later reading

[Nevilledog]

13. Although this is a joke, it's really kinda true

New monthly budget: Gas $0 Entertainment $0 Clothes $0 Groceries $2,799.

[SergeStorms]

14. Prices in the supermarkets have risen dramatically.

At least that's what I've noticed. Baked goods are up, beef is almost unaffordable, prepared foods are out of sight....feeding a family must be a nightmare. I live alone, but I find myself comparison shopping like never before.

[Nevilledog]

18. You just know there's price gouging going on for some items.

[LisaM]

15. I'm not buying anything except groceries.

I did order a couple of books, but I don't like shopping online, I am not going anywhere, I can't buy clothes unless I try them on, and I can't go to the movies or a show.

I am also not traveling. I would be in Austin right now if all had gone according to plan and probably spent $1000 or so on hotels and food (that doesn't include airfare) and I would have gone to see my family at Easter. I have gotten takeout once, bought some coffee and a growler to support local places, but overall my spending has plummeted.

[Warpy]

19. Kind of missing the point, IMO

Demand is going to drop because too many workers weren't being paid enough to save for a crisis, not even a short, 2 month crisis. They are going to be playing catch up on rent, utilities, Cobra payments, and everything else, leaving them with reduced food budgets. Those shiny new goods out on the shelves are just going to gather dust for a while, too many people simply can't afford them. That's the workers who still have jobs and those who weren't badly injured by this disease. That measly $1500 might have paid one month's rent, but it didn't go any farther than that.

There is also going to be a great deal of absenteeism at work because this virus is not done spreading, no matter what Big Dummy tells it to do.

I suppose this article is a decent effort by the NYT but they're still buying into the fallacy that economies work from the top down. They don't.

[DallasNE]

20. The Employment Numbers Are Not Designed To Be Exact

You just need them to be prepared in the exact same manner every month. That way the trend lines are meaningful. The last 3 months they have not been prepared in the exact same manner so they are both highly misleading and rosy. BLS actually does 2 different surveys that they consolidate plus there is the data from the States on initial jobless claims.

Over the last 3 months there have been 41 million people file initial jobless claims. In May the total unemployed was listed as 21 million. Some of these people would have found jobs, been called back to work etc. but not 20 million of them. Not even close. Most of them probably didn't send out a recent resume and so they would count as neither employed or unemployed - only not looking for work. The nature of the "mischaracterization" error has further mischief. For instance, they would have been wrongly counted as employed as well as properly added to the payrolls as new jobs if they were called back to their jobs meaning they are double counted. They would be part of the mystery 20 million as well. And nothing makes the numbers more rosy than double counting people.

Until they can get the mischaracterization error fixed the numbers will not be very meaningful. For it to happen once is forgivable, for it to happen twice is a problem and for it to happen 3 times is unforgivable. But the employment numbers are driven by demand so we need to pay special attention to the GDP numbers as they come out. I suspect they have taken a pounding and that will hamper any quick rebound of the economy. This will take some time to shake out.