Alameda County revises COVID-19 death toll down by 25%

According to the County of Alameda:

Using the older definition of COVID-19 deaths, a resident who had COVID-19 but died due to another cause, like a car accident, this person would be included in the total number of reported COVID-19 deaths for Alameda County. Under the updated definition of COVID-19 deaths, this person would not be included in the total because COVID-19 was not a contributing factor in the death.

With much discussion on public trust, it is possible to suspend judgement but still ask about the timing of this decision and announcement? The County states, “aligning with the State’s definition will require Alameda County to report as COVID-19 deaths only those people who died as a direct result of COVID-19.” Why wasn’t this a discussion during the highest period of impact during the pandemic? See the full press release here.

Consumer Price Index – Inflation as Expected

As expected, the CPI news release (April 2021) today shows significant inflation, as that has been the anecdote from almost everywhere. The surprise is just how much and how fast:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in April on a seasonally adjusted basis after rising 0.6 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.2 percent before seasonal adjustment. This is the largest 12-month increase since a 4.9-percent increase for the period ending September 2008.

Pent up and bottlenecked economy

The question is why this pace of increase or does this signal long-term problems. The most immediate causes relate to the re-opening of the economy. From MarketWatch:

The pace of inflation has surged after years of languishing at unusually low levels largely due to the rapid reopening of the U.S. economy.

Businesses can’t keep up in demand, a problem exacerbated by ongoing bottlenecks in the global trading system tied to the pandemic. Computer chips are especially in short supply and that’s held up production of new autos and other manufactured goods.

Americans are also rushing to dine out, travel or go far away for vacation, activities they shied away from during the pandemic. That’s also driving up prices at popular vacation resorts and other venues where people plan to congregate.

The first two reasons are pretty straightforward, but the third reason (pent up demand) is beyond question, even if this one is the most difficult to measure as it’s anecdotal and not enirely precise but we all observe it – everywhere is packed with people looking to get out and do something, anything. But the impacts are real and tangible as seen in the BLS data:

See full interactive (and drillable detail) here.

Optimism everywhere – as well as the expectation of inflationary pressures

A post in the Wall Street Journal last week reported pre-pandemic levels of consumer confidence and for good reason(s), “as more people received vaccinations, stimulus payments reached households and businesses more fully reopened.” Employment, stimulus, an opening economy, vaccinations – all very compelling and obvious drivers to an overall feel of things, as well as the continued disucssion of inflation and how this will shape policy choices in the mid to long-term.

The University of Michigan Surveys of Consumers shows a consistent trend (with the next update in two weeks):

The survey adds the following commentary on inflation the finds support for either direction with:

Each side in the current policy debate finds support in the consumer data. The recovery is far from complete as less than half of the fall in consumer sentiment has so far been recovered, and the current and prospective stimulus and infrastructure spending has the potential to spark a renewed inflationary psychology, although that will not occur immediately…

Inflationary psychology preceded actual inflation by about two years in the last bout in the 1970s. The key balance is not to underestimate the ultimate impact of those policies on jobs and inflation, and not to overestimate the ability of policies to bring any excesses to a painless soft-landing.

Similarly, in the May 1 Berkshire annual meeting Buffett noted on the one hand the last 20 plus years, “was not a highly inflationary period as a whole,” but what they are seeing is:

…very substantial inflation. It’s very interesting. We’re raising prices. People are raising prices to us, and it’s being accepted. Take home building. We’ve got nine home builders in addition to our manufactured housing operation, which is the largest in the country. So we really do a lot of housing. The costs are just up, up, up. Steel costs, just every day they’re they’re going up. And there hasn’t yet been because the wage stuff follows. The UAW writes a three-year contract, we got a three-year contract, but if you’re buying steel at General motors or someplace, you’re paying more every day. So it’s an economy really, it’s red hot. And we weren’t expecting it.

When asked in the Q & A his thoughts on the worry of “more inflation or that we will have a pretty dramatic fiscal monetary collision,” Buffett diplomatically answered, “we don’t know.”

What a difference a year makes

While the Fed continues its stimulus through low rates and bond buying, optimistic news continues as reflected in the following (and practically everywhere) which raises questions about the path forward:

Kelly, D. (2021, April 19). Economic Update. J.P. Morgan Asset Management. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/economic-update/ 
Khan, K. (2021, April 23). Goldman Sachs says U.S. economic growth is peaking. SeekingAlpha. https://seekingalpha.com/news/3685126-goldman-sachs-says-us-economic-growth-is-peaking
Cox, J. (2021, April 23). The Fed is unlikely to hint at policy changes next week, even with a stronger economy. CNBC. https://www.cnbc.com/2021/04/23/the-fed-is-unlikely-to-hint-at-policy-change-despite-stronger-economy.html
Tepper, T., & Curry, B. (2021, April 16). 2021 April FOMC Meeting Preview: The Fed Remains On Guard. Forbes Advisor. https://www.forbes.com/advisor/investing/fomc-meeting-federal-reserve/

Of course those articles that were suggesting no action yesterday were right per the concensus. But the question remains for economists and investors: how much good news (and at what rate of recovery) is too much? As quoted in Reuters, “we do feel that a higher inflation reading this year and in 2022 will prove to be not transitory, that the Fed will hit that 2% threshold and above, if not even higher, on a more sustained basis. So that’s where I think we would be on the side of disagreeing with Chairman Powell, that we think inflation is going to gain a toehold.”

Fed Chair Transcript: No Changes for Now

As somewhat expected, the transcript from the Fed Chair today indicated no expected change to rates or bond buying activity in the immediate future. This prompts questions from economists regarding how long this can last given the good news that continues to emerge. For instance:

Economists think a decision to taper is months away although a minority think the Fed might start discussing the issue in June. Fed officials have said they want to see “substantial further progress” in meeting their goals of full employment and 2% inflation before tapering.

The post goes one to cite the recurring themes of optimism, inflation and pandemic risks as potential drivers for a change in policy.

Chair Powell reiterated that, “the FOMC and I kept interest rates near zero and maintained our sizable asset purchases. These measures, along with our strong guidance on interest rates and on our balance sheet, will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete.” Again, no surprise, but he continues, “while the recovery has progressed more quickly than generally expected, it remains uneven and far from complete.” 

But one brief comment also describes some of the most felt implications of Federal and local policy decisions (and recovery):

The economic downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the hardest hit. In particular, the high level of joblessness has been especially severe for lower-wage workers in the service sector.

In conclusion, the Fed will:

Continue to increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward our maximum-employment and price-stability goals.

Which will in turn extend the trend of low interest rates, housing prices and asset inflation of all kinds.

Updated CDC Mask Guidelines

The CDC has updated its official guidelines (for April 27, 2021) on masks for those fully vaccinated (as well as a few for those who are not). The following are noted in the update:

  • Clarification that fully vaccinated workers no longer need to be restricted from work following an exposure as long as they are asymptomatic.
  • Fully vaccinated residents of non-healthcare congregate settings no longer need to quarantine following a known exposure.
  • Fully vaccinated asymptomatic people without an exposure may be exempted from routine screening testing, if feasible.

The good, better, best scenarios are shown in the partial infographic:

This is great news, but it was just four weeks prior that we read CDC Director Fears ‘Impending Doom’ and the CDC was still recommending the vaccinated to wear masks in public. I think most would not question the sincerity of such concerns or the excellent news of current progress – but what many have questioned for over a year: accuracy of what appear to be contradictory guidelines. Consider the following on the same page. A fully vaccinated people can:

  • Visit with other fully vaccinated people indoors without wearing masks or physical distancing
  • Visit with unvaccinated people (including children) from a single household who are at low risk for severe COVID-19 disease indoors without wearing masks or physical distancing
  • Refrain from testing following a known exposure, if asymptomatic, with some exceptions for specific settings
  • Refrain from quarantine following a known exposure if asymptomatic
  • Refrain from routine screening testing if asymptomatic and feasible

First 100 days after shelter-in-place – where are we now?

Today markes the 100th day since the shelter-in-place in the northern California Bay Area, with some interesting reflections in The San Francisico Chronicle on what happened – and going forward:

Wednesday will mark 100 days since shelter-in-place orders were issued on March 17. Experts believe the move prevented thousands of deaths and tens of thousands of infections. It kept hospitals from being overrun and gave cities and counties precious time to learn about this new virus and mount a defense against it.

But more than 500 Bay Area residents died of COVID-19 in that time. More than 18,000 tested positive. And the coronavirus that drove millions of people into isolation remains as sinister and unpredictable now as it was 100 days ago. What’s changed over the past three months is not the virus, but the way the Bay Area lives with it.

…No one in public health really expected [three weeks] would be enough time to suppress the virus and let life resume as normal — but few predicted that 14 weeks later there would be no end in sight to this pandemic.

What is most remarkable is that many experts believe “the world is going to be cozy with this virus for a long while…coronavirus is still here…it’s probably far more widespread now than it was in March,”  which certainly gives pause to the last three and a half months. It is further interesting to note that the shelter orders were self described as a “draconian strike,” with profound consequences:

But understanding that their decision would have profound repercussions was not the same as watching those effects play out, said Louise Rogers, chief of San Mateo County Health.

…I didn’t really have a full understanding of how deeply impacted so many people would be, and how much it would reveal some of the deep systemic issues that already exist in society – the inequalities and the disproportionate effects.

See the full post here.