Happy Christmas!

It may not seem like the perfect Christmas with everything that has been going on around us but we are still here and that is already something for which we can be grateful.

While families hopefully are able to celebrate together in their safe bubbles, there is no reason to go out. America has it all this year with predicted snowy Christmasy weather for all.  The eastern half of the country is due to get a white Christmas after all.  What else is important on Christmas than good health, mulled wine, comfy sweats and a glorious winter wonderland outside?

For those fortunate enough to still have jobs, where finances are okay, why not use some of that money to help those who have lost their jobs?  Many people have already done that like the Volunteers of America staff members who have been delivering gift bags with book-themed cupcakes to thank their volunteers who usually work at the Christmas Bureau book tables. Even though this year they could not do their work they were still recognized and commended.

The goal of fundraised money this year from the Christmas Bureau is $535,000.  The Madeleine Muths Memorial Fund put over $22,000 to this goal, Ibex Flooring LLC, $6,000 and GSI Outdoors $5,000.  There is still much more that is needed and every bit helps those more in need than ever before.

US Economic Performance

According to the IMF, it is anticipated that America’s economy is on track to fare better than that of Canada, Germany and Japan.  Predicted contraction rates are:

  • America: 4.4 percent
  • Japan: 5.3 percent
  • Germany: 6 percent
  • UAE: 6.6 percent
  • Canada: 7.1 percent
  • France: 9.8 percent
  • UK: 9.8 percent

It is thought that the “macroeconomic good fortune” of the United States can be attributed to Washington’s spring stimulus. Plus, America does not have to rely on exports for its growth since such sales only account for 12 percent of US GDP.  This is pretty low when you look at the 32 percent in Canada, 47 percent in Germany and 18 percent in Japan. According to Moody’s Analytics Mark Zandi the greater flexibility of America’s labor market helps as:

 “Americans are more willing to adopt new technologies, to move for a job, and [to] make big changes in how they live and work.”

This is good news for the US economy.

Investments in Society

Investments in ideas and startups is great.  But when the investments seek to benefit society at large, that is even better.  That is what American private investment firm Bain Capital is currently in the process of doing.

The firm – one of the largest multi-asset alternative investment entities in the world – has recently raised $800m in new capital in an attempt to support businesses that are working for the greater good.  The company’s impact investment section based in Boston – Bain Capital Double Impact – is focusing on the creation of environmental, governmental and societal benefits.

Approximately 12 portfolio firms have so far been backed under this program.

Resilience of Small Businesses

What to do when a pandemic has lasted nearly a year and there is little sign of it ending any time soon?  How should struggling businesses act to stay afloat but within the guidelines?  Shockingly perhaps, there are many small firms that are rising to the challenge and showing incredible resilience during this time.

The businesses that are still open are finding new and innovative ways to keep businesses going.  All the while dealing with kids at home and other additional responsibilities.  A lot of eateries are now realizing that takeouts are the best option.  Dining areas have had to remain closed but people still want to enjoy “eating out.”  This way they can do so in a coronavirus-legitimate way and support local businesses.

Many companies have Googled “how much does SEO cost” and are finding ways to make themselves more readily searched online. Since the majority of people are spending far more time online now than ever before, it makes sense that businesses are trying to stay up to date so that people can search for them and find them more easily online.

Educational institutes are figuring out ways to teach online since they are not able to teach on campus right now. The advantage of that is that students are able to access more educational opportunities since distance is no longer an issue.

Fashion and clothing companies have adapted by making masks.  Some make masks to match outfits, others create comic masks and still others make headcoverings and masks to go together.  There is so much that can be done.

Economic Indicators: A Time for Optimism?

According to recent data from the US Bureau of Economic Analysis, there was  an increase in GDP for the Third Quarter of 2020.  This number was 33.1 percent but should not be viewed in isolation since the Second Quarter encountered a 31.4 percent decline. This is indicative of a hopeful strong start to the V-shaped economic recovery.

Also in optimistic economic news, the unemployment numbers are dropping.  In fact, the numbers show that they are at the lowest since March, when the coronavirus pandemic began.    With a PMI (Purchasing Managers Index) number of 59.3 (and that being the 6th consecutive number over 50, 50 being deemed an expansive number), things are starting to look up.

There is still much more to be done.  Many believe the stimulus packages are inadequate and that until there is a vaccine against the coronavirus and industries across the board have the capacity to resume business activities, the tragic economic problems will remain. But these figures are encouraging.

Auction Theory Culminates in America’s Nobel Prize Win

Two economists from Stanford University were the recipients of this year’s Nobel Prize in Economic Sciences.  Scientists Paul R. Milgrom and Robert B. Wilson received the prize for the “improvements [they had made] to auction theory and [the] invention of new auction formats.”  Furthermore, their work has – and will be – beneficial to buyers, sellers and taxpayers globally.

These auction formats can be used for both goods and services which are hard to sell in any of the conventional avenues.  Two examples of this are radio frequencies and the volume of minerals in a specified area.

Finally We’re Saving Money!

With all the negative economic and financial consequences and hardships of the coronavirus pandemic worldwide, shockingly Americans seem to be saving money.  Not all Americans of course (those who are out of work are having a terrible time of it) but many others are, quite simply because a lot of expenses are down.

The Northwestern Mutual research that has been published has shown that on average, from this time last year, there has been a 10% spike in personal savings.  In 2019 the average savings figure was $59,737  and today it is $65,900. None of this money relates to retirement.

Furthermore, according to FRED Economic Data, the average amount people are saving escalated to nearly 40% in April.  Since then it has been around 20% each month but that is compared to an approximate rate of 7.5% before the pandemic hit.

With approximately 37% of respondents reporting to be “feeling financially secure” these numbers are historically very impressive.

Economic Recovery? Are We Getting There?

During the first coronavirus wave in the spring, approximately 22 million Americans had no work.  While a couple of months after that saw somewhat of an economic rehabilitation (thanks to record low interest rates and stimulus money) with the second wave things are plummeting further than the initial pandemic attack.  According to High Frequency Economics Chief US Economist Rubeela Faroqi said:

“The layoffs are an additional headwind in an already weak labor market. As long as the virus isn’t contained, this is going to be an ongoing phenomenon.”

Businesses are being forced to reduce costs as demand for services in many industries is weakening. Consumer spending on goods on the other hand is increasing. People are eating and drinking more (short-term) and appliances (longer-term). Personal spending has increased (by about a percentage) and consumer confidence readings has expanded a little too. Between June and August there was a 2.1 percent jump in residential construction employment.

Still, there are way too many Americans still filing for unemployment.  According to the Jobs Report put out by the US Labor Department, what was witnessed in September in labor market gain, is now beginning to dwindle with only an additional 661,000 jobs added in the  month.  August for example, saw an additional 1.5 million jobs.

Personal income fell in August and the growth in consumer spending was slower than it had been.

So it seems like the messages we are receiving are not straightforward at all and coming to any conclusion regarding the economic recovery is hard to measure.

America’s Global Relations in the Time of COVID-19

America’s international relationships are always fluctuating.  But perhaps now more than ever due to the impacts on globalization from COVID-19.  China – until now has had very strong relationships with America, albeit strained.  But what impact has COVID-19 had on that and will have on that for the future.  In a recent Economic Times article, Deputy Secretary of State Stephen Biegun said:

“For a very long time, there had been a desire to extend to China special privileges and benefits, and even the benefit of the doubt among them, to bring China into a more modern and prosperous future. Twenty years ago when that initiative was launched in earnest with China’s entry into the World Trade Organization, the bet by most policymakers was that eventually, the weight of the institutions that China was joining would slowly redirect the Chinese political system and Chinese interests to a point where China would become much more invested in a rules-based order.”

And what about the rest of Asia?  Japan has had diplomatic ties with the western giant since the late 1950s.  But now – even without adding coronavirus to the mix – there is the departure of Prime Minister Shinzo Abe.  According to an official statement, Abe has: “made the U.S.-Japan alliance, and our overall relationship, the strongest it has ever been.”

For close to 10 years, Abe has been a staunch friend of America.  Once that partnership is gone, and give the issues China is now facing with America, this could severely impact the entire east-west alliance.  

In addition, over the years America has become more dependent on Asian relations, especially Chinese ones, most notably in pharmaceutical and other related-health industries.  But the pandemic is negatively effecting that now.