Anticipating vaccine, forecast expects recovery to begin in spring 2021(anderson.ucla.edu)
anderson.ucla.edu
Anticipating vaccine, forecast expects recovery to begin in spring 2021
https://www.anderson.ucla.edu/news-and-events/press-releases/anticipating-vaccine-ucla-anderson-forecast-expects-recovery-to-begin-in-spring-21
64 comments
This seems far too optimistic on its face. Even if COVID were to disappear tomorrow, real economic damage has already occurred. That damage isn't going to disappear just because it stops getting worse. The people who lost their jobs aren't going to start buying flights and hotel reservations for their next vacation, or even start going back out to restaurants.
Odds are the stock market comes back, CARES put in a decent amount of backstops for things like the mortgage industry and other 'big' sectors do they'll have available capital as we come out of this to start doing things that make their stocks more attractive. Also generally speaking good odds that industries like airlines and such can successfully lobby for more bailouts. So I buy the S&P will be up and we'll just all be ignoring the total gutting of small businesses.
Plus if say you're a chain restaurant right now, the future probably looks bright. You had the credit to weather a year of takeout only. Meanwhile three of the four family restaurants nearby that you competed with are dead and gone.
Basically very few folks who trade on the S&P went out of business, but a lot of their competitors did. Sure you'll have an entire cohort of newly impoverished that can't spend, but a bunch of your competitors went away. Going to be one of those summers where my ETFs are going up at the same time the food pantry is seeing record usage.
Plus if say you're a chain restaurant right now, the future probably looks bright. You had the credit to weather a year of takeout only. Meanwhile three of the four family restaurants nearby that you competed with are dead and gone.
Basically very few folks who trade on the S&P went out of business, but a lot of their competitors did. Sure you'll have an entire cohort of newly impoverished that can't spend, but a bunch of your competitors went away. Going to be one of those summers where my ETFs are going up at the same time the food pantry is seeing record usage.
The stock market is at an all time high...
>The stock market is at an all time high...
More like the USD is at an all time low
More like the USD is at an all time low
Why is this downvoted? I think this is a reasonable way to think about it. Asset price inflation seems to be a real thing
Not all stocks. The market is heavily disproportionate to fewer stocks than before and shifted to different industries. Some which are still struggling. For example, RDS.B.
The economy has contracted substantially. This report projects growth from this lower base. That will leave an output gap between where we would have been sans pandemic (if growth had continued normally) and where we are. That effects you describe make up that output gap.
I still assert that the damage done limits the potential growth rate. It's going to be baby steps in the beginning.
The people who still have their jobs, but have had nothing to spend their money on for 8 months probably will.
Actually, the current dichotomy in the economy could mean the rebound does happen quite quickly.
Much of the country is, economically, doing great: they're still employed, they've been saving a ton of money because they're working from home, not traveling and not going out as much, and their home equity and stocks are doing great.
Much of the country is doing horribly: their industries have been decimated, they're unemployed and way behind on rent.
However, when a vaccine comes out, there will be huge pent up demand from the first group to go out and spend money, which will largely end up going to people in the second group. Small businesses have been killed but I think new businesses will open very quickly once the pandemic is over.
Much of the country is, economically, doing great: they're still employed, they've been saving a ton of money because they're working from home, not traveling and not going out as much, and their home equity and stocks are doing great.
Much of the country is doing horribly: their industries have been decimated, they're unemployed and way behind on rent.
However, when a vaccine comes out, there will be huge pent up demand from the first group to go out and spend money, which will largely end up going to people in the second group. Small businesses have been killed but I think new businesses will open very quickly once the pandemic is over.
It's kind of scary that the stock market just hit an all time high, and we're talking about an economic recovery next year. How is the (apparent) disconnect this large?
The pandemic has had two impacts on the economy:
1) A decline in consumption across the board due to loss of income and certainty for future;
2) A shift of consumption from the "traditional physical" businesses to virtual or remote or delivery businesses.
So the end result is that some niches of economy are harmed very much and some niches of economy are not suffering at all or even having a boom, as the change in habits is a very large impact.
And the key aspect that explains this apparent disconnect is that most of the "losers" of economy are not traded in the stock market and most of the "winners" are.
If your local cinema goes bankrupt and people switch to Netflix instead, the stock market cares only about the latter. If you buy less stuff in your local corner store and have Amazon deliveries instead, the stock market sees only the Amazon's growth in revenue and ignores the loss of revenue of the non-publicly-traded store. If a company rents less office space and instead invests in various services and software for remote work, the owner of that now-empty commercial space isn't publicly traded but the service/software providers are. Etc.
1) A decline in consumption across the board due to loss of income and certainty for future;
2) A shift of consumption from the "traditional physical" businesses to virtual or remote or delivery businesses.
So the end result is that some niches of economy are harmed very much and some niches of economy are not suffering at all or even having a boom, as the change in habits is a very large impact.
And the key aspect that explains this apparent disconnect is that most of the "losers" of economy are not traded in the stock market and most of the "winners" are.
If your local cinema goes bankrupt and people switch to Netflix instead, the stock market cares only about the latter. If you buy less stuff in your local corner store and have Amazon deliveries instead, the stock market sees only the Amazon's growth in revenue and ignores the loss of revenue of the non-publicly-traded store. If a company rents less office space and instead invests in various services and software for remote work, the owner of that now-empty commercial space isn't publicly traded but the service/software providers are. Etc.
Well, liquidity has to go somewhere. The total amount of money isn't shrinking, and is in fact only growing bigger.
It’s perfectly aligned. One prevailing theory is that stock prices reflect the value of all future earnings (dividends).
So stocks go up, not because a company is making more money today, but because people think it will make even more money in the future (than is already accounted for in today’s price).
So stocks go up, not because a company is making more money today, but because people think it will make even more money in the future (than is already accounted for in today’s price).
A) Stocks weight near term earnings higher than far future earnings. Both because of the time value of money, and less certainty of future performance.
B) Stock prices reflected the future earnings before anyone knew there was going to be a pandemic this year. Even if long term revenue is not effected, stock prices should drop to compensate for the loss in short term revenue
B) Stock prices reflected the future earnings before anyone knew there was going to be a pandemic this year. Even if long term revenue is not effected, stock prices should drop to compensate for the loss in short term revenue
A) Yes, and many stocks dipped then went back up. I guess I’m asking - what stock? Many of the tech companies saw no loss of short term earnings (rather a bump).
B) Yes, but future earnings per-pandemic may not match estimated future earnings now. Again, much of the DJIA growth has been driven by tech stocks and their future earning could certainly be better now, with the shift to technology to support WFH.
B) Yes, but future earnings per-pandemic may not match estimated future earnings now. Again, much of the DJIA growth has been driven by tech stocks and their future earning could certainly be better now, with the shift to technology to support WFH.
Interest rates are low and investors think the Fed will keep bailing them out so it’s all sunshine in the stock market.
Stock market isn't at an all time high: it just happens to be valued in a measuring unit (USD) which is hardly worth more than toilet paper.
The UCLA press release on the report: https://newsroom.ucla.edu/releases/ucla-anderson-forecast-be...
Seeking alpha disagrees: https://seekingalpha.com/article/4393503-roaring-20s-fundame...
Seeking alpha disagrees: https://seekingalpha.com/article/4393503-roaring-20s-fundame...
A few key points from the seeking alpha article that seem to not get the attention they deserve:
- “over the last decade, as the Federal Reserve and government have pumped more than $36 trillion into the economy”
- “for each dollar of economic growth since 2008, it required $12.67 of monetary stimulus”
- “during the last decade, economic ‘growth’ was a function of population growth“
- “over the last decade, as the Federal Reserve and government have pumped more than $36 trillion into the economy”
- “for each dollar of economic growth since 2008, it required $12.67 of monetary stimulus”
- “during the last decade, economic ‘growth’ was a function of population growth“
I usually ignore Seeking Alpha since it generally appears to be a blog for randos to spout their half-baked opinions but I think that's worth a read.
The bailouts seem to be removing some features, some better and some worse, of capitalism without giving any of the benefits of central planning. It will take decades to fully appreciate the effects I think.
As much as I really want to be a pessimist, I've been starting to wonder if a better outcome is possible. I think it was an article in the recent issue of the Economist which suggested that the disruption due to COVID-19 may actually cause long-term productivity gains by forcing inefficient processes to die. I am cautiously optimistic that this may be the case.
I'm not quite ready to enter the market yet. It is far too volatile and may see an overdue correction before or around the new year. I will probably get back in, albeit in a balanced fashion due to being 45, early next year. Yes, timing the market vs time in the market. I'm willing to take that chance.
The bailouts seem to be removing some features, some better and some worse, of capitalism without giving any of the benefits of central planning. It will take decades to fully appreciate the effects I think.
As much as I really want to be a pessimist, I've been starting to wonder if a better outcome is possible. I think it was an article in the recent issue of the Economist which suggested that the disruption due to COVID-19 may actually cause long-term productivity gains by forcing inefficient processes to die. I am cautiously optimistic that this may be the case.
I'm not quite ready to enter the market yet. It is far too volatile and may see an overdue correction before or around the new year. I will probably get back in, albeit in a balanced fashion due to being 45, early next year. Yes, timing the market vs time in the market. I'm willing to take that chance.
Seeking Alpha doesn't "disagree", they host literally every market view.
Tiny, OT complain.
As someone from a country/region where we basically have one long summer every day, it's a little bit confusing when articles like this mention seasons instead of months.
As someone from a country/region where we basically have one long summer every day, it's a little bit confusing when articles like this mention seasons instead of months.
I imagine it's also annoying for those in the Southern Hemisphere.
As an Australian it was annoying at first, but after reading enough international headlines it’s pretty much just automatic to replace spring with autumn, etc in international articles.
If the heading said “US Economic recovery” instead of just “recovery” it would remove several layers of ambiguity in that heading, including the one you mention.
I guess surviving on headines alone can be confusing
Which country is it?
I’m not sure why people try and forecast the future, it rarely works out except for dumb luck.
”It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these Credit Default Swap transactions.” - AIG (2007)
”It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these Credit Default Swap transactions.” - AIG (2007)
_“Prediction is very difficult, especially if it's about the future!”_ - Niels Bohr
> Feler expects the housing market to remain hot through at least 2023, with housing starts already at their highest levels since 2007.
I am skeptical of this. A lot of housing demand was pushed back during the first half of 2020. I don't think the pushed back demand was enough to last three years. Also there are many homeowners who are unable to service their mortgages now. Once assistance for these people expires, there will be a wave of foreclosures.
I think the latter half housing demand in 2020 was due to pent-up demand as well as extraordinary measures shoring up mortgage holders, thus preventing more supply coming onto the market. I don't see either trend continuing into 2023.
I am skeptical of this. A lot of housing demand was pushed back during the first half of 2020. I don't think the pushed back demand was enough to last three years. Also there are many homeowners who are unable to service their mortgages now. Once assistance for these people expires, there will be a wave of foreclosures.
I think the latter half housing demand in 2020 was due to pent-up demand as well as extraordinary measures shoring up mortgage holders, thus preventing more supply coming onto the market. I don't see either trend continuing into 2023.
Also all the dead people, they don't need houses anymore either.
Though increased immigration under the Biden administration.
If the wave of foreclosures is significant enough, there will be a wave of bailouts. Everyone gets a trophy now.
I hope the pandemic will finally be an eye-opener to many: millions upon millions lost jobs due to a purely non-economic reason, and nothing went broken.
Many if not most jobs people are doing today are bs jobs which society doesn't need at all. We have to find ways to end it, to find these people some useful application rather than making them do what they know makes no sense and only exists to keep money moving.
Many if not most jobs people are doing today are bs jobs which society doesn't need at all. We have to find ways to end it, to find these people some useful application rather than making them do what they know makes no sense and only exists to keep money moving.
I agree with you on that many jobs are bullshit jobs. They just exists to get money, but it is something everyone could live without. Lots of things could get easily automated. I do not know, but people fear automation. Is it not the goal that people could work less? But if you work less, then you get paid less, so we need a way to give people money gained from automation, so everyone can enjoy their life without doing bullshit jobs.
It is never going to stop if people not doing bullshit jobs means they do not get money. We need a system for this. People should chill, lay back, let the automation tool do its job. People should not worry about not being able to do bullshit jobs for money. :/
It is never going to stop if people not doing bullshit jobs means they do not get money. We need a system for this. People should chill, lay back, let the automation tool do its job. People should not worry about not being able to do bullshit jobs for money. :/
Bullshit jobs are jobs that don't bring any benefit (except to the employee and through office politics, of course). You don't need to automate the role of a paper pusher - they don't have any role to begin with.
I did not mean to imply otherwise, just put them together as it came to mind. :) Most of these jobs probably do not need automation because their existence is based on bullshit to begin with.
Plenty went broken. People stayed inside, stopped going out to restaurants, stopped practicing their hobbies, stopped traveling to see family. Most people lost their jobs not just because the government ordered them fired, but because most people are currently going without a lot of the things that bring them joy that these workers support.
I don't think those people would agree that their jobs are bs. Or their customers. Many people like eating out at restaurants. If you don't, then that's your choice, but don't interpolate this to everyone.
Except that a lot of real value was lost. Many people didn't go on cruises cruises, or visit an amusement park, or go to a theater, or eat at a restaurant, or get a haircut.
We haven't noticed the loss of capacity to provide these services because there is a corresponding drop in demand. However, the drop in demand is due entirely to a temporary public health crisis. All else being equal, people much prefer to be able to take advantage of these services, and we are poorer as a society if they are not available.
[0] Although, in many cases, the decline could be seen before an official policy was implemented due to individual consumer concerns.
We haven't noticed the loss of capacity to provide these services because there is a corresponding drop in demand. However, the drop in demand is due entirely to a temporary public health crisis. All else being equal, people much prefer to be able to take advantage of these services, and we are poorer as a society if they are not available.
[0] Although, in many cases, the decline could be seen before an official policy was implemented due to individual consumer concerns.
Can you give an example of such jobs?
All I can think of are retail and hospitality employees whose jobs are normally very much useful. Cooks. Waitresses. Sales assistants. Tour guides. Bus drivers. To name a few.
All I can think of are retail and hospitality employees whose jobs are normally very much useful. Cooks. Waitresses. Sales assistants. Tour guides. Bus drivers. To name a few.
I think the people with BS jobs were the least likely to lose them in the pandemic.
All the paper pushers, software engineers (after years in the industry I can confidently say that many SE jobs are BS jobs - you may do something but that something is still BS) and useless managers just switched to WFH and tried to maintain a veneer of activity with BS Zoom meetings.
On the other hand plenty of cashiers, waiters, janitors... all lost their jobs.
I think a better sign that many jobs are BS jobs is that it seems many companies did not register a drop in productivity as a result of people working from home. Likely that these people weren't producing much value before.
All the paper pushers, software engineers (after years in the industry I can confidently say that many SE jobs are BS jobs - you may do something but that something is still BS) and useless managers just switched to WFH and tried to maintain a veneer of activity with BS Zoom meetings.
On the other hand plenty of cashiers, waiters, janitors... all lost their jobs.
I think a better sign that many jobs are BS jobs is that it seems many companies did not register a drop in productivity as a result of people working from home. Likely that these people weren't producing much value before.
Can anyone provide a few examples of BS jobs? Would the list include any jobs working for so-called tech companies?
This is such a bizarre and honestly offensive take. Jobs that went away were things like waiters, bartenders, event planners, theater performers, etc. These aren't BS jobs at all, and the stuff they enabled (going out to restaurants, seeing a live show, traveling) are things that were sorely missed by many.
On the contrary, I'm still employed, and it's much easier to argue I have a bullshit job. I don't want to go into too much detail but will just say my job only exists due to the absurd complexity of the US healthcare system.
On the contrary, I'm still employed, and it's much easier to argue I have a bullshit job. I don't want to go into too much detail but will just say my job only exists due to the absurd complexity of the US healthcare system.
Keeping money moving is the name of the game. Each dollar transferred represents at least 10x in value trickled throughout supply chains, so they're eventually providing value from a reflexive standpoint.
This is a terrible take.
Yes, the system didn’t “break”, but that’s because most gov’t used debt to backstop the pain and in the case of the US, printed more currency.
Both of those measures come with a price and you can’t keep it up for long.
Yes, the system didn’t “break”, but that’s because most gov’t used debt to backstop the pain and in the case of the US, printed more currency.
Both of those measures come with a price and you can’t keep it up for long.
The only job that really matters is acquiring food as it is needed for survival. The rest comes from people wanting to entertain themselves one or the other way.
Maybe instead of telling people what jobs are needed you'll let them to decide?
Maybe instead of telling people what jobs are needed you'll let them to decide?
There is a huge chasm between absolutely necessary for society not to fall apart and "bs." A lot of laid off people do is worthwhile/nice-to-have/useful.
And a lot of necessary things are being skipped for a limited time--like schooling--that are unsustainable in the long term. You can skip an oil change, but that doesn't mean your ICE car doesn't need one.
And a lot of necessary things are being skipped for a limited time--like schooling--that are unsustainable in the long term. You can skip an oil change, but that doesn't mean your ICE car doesn't need one.
Perhaps things will come roaring back in the USA quickly – the linked article is very American-centric. But considering that some European governments have been hinting that COVID restrictions will last throughout 2021, since it will take all of next year to vaccinate a large enough portion of the population to stem infections, are there any grounds for claiming a worldwide economic recovery before 2022?
Germany plans to have 7.5 million doses by April, and each person needs two. That means we'll only get 10% of the population vaccinated. I suspect many countries will have it even worse.
This article is wildly optimistic.
This article is wildly optimistic.
I suspect they will only need to vaccinate the most vulnerable before things start opening up again. Once hospitalisation rates fall restrictions will get lifted.
Vaccinating just the vulnerable isn't enough for some countries, they want full herd immunity. For example, the Polish minister of health gave a press conference last week in which he said that restrictions cannot be lifted until half of the country's population has been vaccinated, and he expects that to take all of 2021. I suspect that he was only saying out loud what other EU countries have been tacitly planning for.
Once hospitalisation rates fall the press will be all over them if they don't open up. Most of Western Europe has been struggling to get people to comply as it is.
Last spring I might have agreed, but mass resistance to restrictions never materialized. Protests have never attracted more than a fringe of conspiracy theorists etc. As for the press, the media in Poland is nearly wholly controlled by the government, and so will not necessarily challenge the minister of health. Then there are countries like Finland where politics is consensus-based, and so is the press, so once all parties have broadly agreed on restrictions, it is unseemly to raise objections.
Apparently politicians in many EU countries have decided that they are politically vulnerable if they open up, not if they simply keep the status quo of restrictions going.
As for "struggling to get people to comply", actually EU countries have been quite effective in ensuring that restaurants and theatres ordered to close stay closed. There are some countries elsewhere on earth where business owners have been able to bribe the authorities to look the other way, but that doesn't happen in EU countries.
Apparently politicians in many EU countries have decided that they are politically vulnerable if they open up, not if they simply keep the status quo of restrictions going.
As for "struggling to get people to comply", actually EU countries have been quite effective in ensuring that restaurants and theatres ordered to close stay closed. There are some countries elsewhere on earth where business owners have been able to bribe the authorities to look the other way, but that doesn't happen in EU countries.
"begin"? Sure.
Lifestyle restrictions have another 9-12 months.
What once started as "two weeks" will turn into almost TWO YEARS.
Lifestyle restrictions have another 9-12 months.
What once started as "two weeks" will turn into almost TWO YEARS.
Any specific reason you think so?
Part of it will be the Biden admin. rolling back Trump's trade wars. They've weighed on the economy.