Understanding Data from Q3 2021

How have things been going with the post-pandemic(?) economic recovery?  In this video, CNBC’s Rick Santelli looks at that question in relation to figures from Q3 2021 which showed a slight increase in economic growth (2%). According to the Commerce Department, while that is an escalation, unfortunately it is the lowest of the coronavirus recovery era yet which raises cause for concern.

US Economic Optimism

There was a jump in stocks this month with large investment firms reporting strong results.  October’s earnings reports managed to calm investors. Labor market and inflation numbers were good and provided optimism for those concerned with higher rate estimates.

There have been drops in unemployment too as fewer Americans are collecting benefits – the lowest for 19 months, dropping to less than 300,000. Indeed, according to chief U.S. economist at High Frequency Economics, Rubeela Farooqi:

“The data support the narrative that businesses are increasingly reluctant to let go of workers amid a severe supply shortage. But it is still not clear if the expected supply surge that failed to materialize in August and September will appear going forward.”

The fact that the coronavirus Delta variant’s impact on the economy is waning has also been helpful. While of course the pandemic and its repercussions are still very much a part of everyday life, the emergent panic has waned. 

That’s not to say that there is not a huge – and justified – concern about increasing costs, labor and supply chain issues. But at least the above news is giving optimistic hope for economists in some areas.

Economic Status: Biden’s First Quarter

How does the economy look after President Joe Biden’s first quarter?  There is some good and some not-so-good.  Here we take a look.

The Bureau of Economic Analysis  reported a slightly faster rate of growth seen by more consumer spending (notably going out to eat, traveling, etc.) inventory investment and exports, marking the second time the growth pace was revised higher in the quarter. 

Between April and June, GDP expanded at 6.7% which was a little higher than the earlier estimates of 6.5%.

The PCE Price Index  however was remained at a disappointing 6.5% which is the highest that it has been since the early 1980s.

According to Action Economics Chief Economist Mike Englund, expectations were not met which he believes is due to “supply chain disruptions, which actually become more severe in Q3.”

One of the problems currently plaguing America is scarce labor, thanks in part to the exodus of many workers across industries.

US Economic Job Creation

America’s job creation count has been in flux for a while now, probably in connection to the pandemic. In August the hoped-for and economic policymaker predicted job gain was 720,000.  But this figure fell substantially short at 250,000. September was equally (if not more) disappointing with a mere 194,000 jobs added to available options for the unemployed.  These numbers did not fare well for predictions of a strong economic bounce back.

But October is looking brighter.  According to a recent report from the Bureau of Labor Statistics, there has been a drop in unemployment from 5.2 to 4.8 percent.  The expectation was 5.1 percent so this should have been seen as good news. But not everyone felt that way.  Economic Research Director at Indeed, Nick Bunker said that

“This is quite a deflating report. The hope was that August was an anomaly but the fact is, the delta variant was still with us in September. One optimistic interpretation is that Covid-19 case counts are receding, so future months should be stronger. But the reality is that we are still in a pandemic.”

Another CNBC report explained that the 4.8 percent unemployment rate is actually the lowest that it has been since February 2020.  

America’s Economic Policy Makers Should ‘Use’ the Corona Crisis to their Advantage

The coronavirus pandemic has been tough on everything and the economy has been no exception. Economist and public policy analyst Joseph Stiglitz said that “we shouldn’t let a crisis go to waste.” Stiglitz – who once held the position of World Bank Chief Economist and Senior VP – said that the pandemic has shown us how the economic system is not working.  He spoke in particular about the market economy’s lack of resilience, the climate crisis and inequality.

While that seems like deep cause for concern, Stiglitz explained that given that these issues are related, they can be tackled simultaneously, suggesting that if America invests in green infrastructure, jobs will be created which will reduce inequality. If taxes are increased slightly those extra funds could be put toward what is necessary for “the common good.”

Indeed, Siglitz is not alone in these sentiments. A paper written by Nicolas Verbeek in Inquiries Journal argued that it truly can be viewed as “a unique opportunity for the existing global economic institutions – G20, WTO, IMF and World Bank – to make the necessary improvements that are needed to effectively address the global challenges of our time.”

Is America’s Economy Encountering a Growth Period? Depends Who You Ask

Earlier this year the American economy encountered some growth, which is good but not enough to be an encouraging sign.  From April 2021 to June 2021 the acceleration of US’s GDP was 6.6 percent according to the Bureau of Economic Analysis. While that may sound impressive, economists had hoped the figure would have been closer to 8.5%. but there again, the number was still the highest it had been since September of 2020, in the thick of the pandemic.

Bill Adams, a senior economist at PNC Financial Services Group said:

“Business inventories are way too low. It is hard to overstate how screwed up global supply chains are. Delivery delays and shortages have made it extremely difficult for businesses to maintain inventories and prevented an even faster economic rebound.”

While there is definitely cause for optimism with economic recovery, The Economist Intelligence Unit’s global economist Matthew Sherwood points out that it is still not as strong as it should be.

In addition, due to the coronavirus Delta variant, fear has returned and that has impacted the recovery.  While July saw the lowest unemployment figure in America since the pandemic began, this month has shown people going back to their home spaces to work and companies less inclined to continue the hiring boom. 

It seems therefore that it is very much a case of two steps forward and one step back which a) make it difficult to estimate for the future and b) has to result in an increase in caution.

Mozes Victor Konig on Diamond Evaluation

When it comes to diamond evaluation, there is a lot of advice and tips both on and offline.  Books such as The Diamond Handbook by Renee Newman and Gems: Their Sources, Description and Identification by Michael O’Donoghue are definitely recommended.  But to really understand and analyze a diamond, gem expert Mozes Victor Konig believes more is needed.

“The way I initially got into it,” reports Mozes Victor Konig, “was actually by some YouTube videos on the subject I stumbled upon.  Much as books are great guides, to really get to the crux of the matter and see hands on how something is done, videos really help.”

Also, Konig believes, having a “feel” for the precious stone is important.  “You can read all the books in the world on diamonds and watch a ton of tutorials, but if you’re not somehow in tune with diamonds and have a love for them, it’ll be much harder to get an accurate evaluation,” he explained.

Some people are so in tune with diamonds that even the most subtle difference in color strikes them and that can make a huge difference in value.  While you can have two diamonds with almost identical clarity and weight, a slight distinction in color can really affect value. But that takes time to figure out as well as the right lighting. That is probably the main reason that fluorescence can only be identified in approximately  35 percent of gem diamonds. 

Overall though it just takes practice and love as Konig and others have found.  Just keep looking, keep being aware of unique attributes and keep falling in love with diamonds.  After all, they are a girl’s best friend!

US Economic Growth

With the pandemic raging around the world, America’s economy – like all the others internationally – has gone through a lot.  Now that the world is sort of entering into some kind of ‘new normal’ even with the pandemic, it is important to look at what kind of growth (or lack thereof) there has been with it.

There is actually some good news on this front. In Q2 2021 there was an 6.5 percent growth which has put the economy past the level it was at before the coronavirus hit.  Indeed GDP (according to the latest report from the Commerce Department) expanded in that quarter from its already solid 6.3 percent annual growth rate from Q1 2021.

Still, this was significantly lower than what the economists had hoped for which was over 8 percent but at least there is movement and the fact is, supply chains had been clogged because of the economy’s rapid reopening.

In other good news consumer spending jumped significantly for the second consecutive quarter.  Figures were: spending on goods (11.6 percent increase), spending on services (12 percent increase).  There was a jump in annual rate for the second quarter for businesses for 8 percent which increased the GDP by 1.1 percent.

According to a Wells Fargo senior economist, Sam Bullard:

“Consumers have plenty of income and wealth ammunition to support consumer spending, while business inventories remain lean and restocking efforts are poised to support business investment and overall GDP growth substantially in the second half of the year,”

So really, the economy is in a better state than it was at Q4 2019.

US Economic Growth: Here Today, Gone Tomorrow?

While America’s economy witnessed significant growth in Q2 2021, it seems that this will not be long-lasting. Given that the economy is kind of going back to some kind of post-pandemic “normal,” there could be a drop in economic growth.  According to Moody’s Chief Economist Mark Zandi:

“Growth has peaked, the economy will slow a bit in the second half of this year, then much more noticeably in the first half of 2022 as fiscal support fades. The contours of growth are going to be shaped largely by fiscal policy over the next 18 months. The tailwind just blows less strongly, and may stop altogether by this time next year.”

In 2011 America’s share of worldwide GDP was at a low of 21 percent.  In 2020 this number increased to 25 percent.  In real dollar terms, at the beginning of 2010 average incomes were recorded for Americans at more than 25 percent higher than their European counterparts. By the end of 2020 that figure had jumped to 60 percent.

Confidence in SMEs increased along with the United States’ share of global stock markets (from 42 percent in 2010 to 58 percent in 2020). The dollar gained almost unprecedented dominance, placing America in a leading global position.

However, just over a decade ago America owed the world a total of $2.5tn (the same as 17 percent of US GDP).  By early 2020 this had increased to over 50 percent of GDP at $10tn. That figure currently stands at $14tn and (GDP) 67 per cent, creating cause for concern.