Economy
Help The Economy By Going Outside – Forbes
INDIA – 2020/07/04: In this Photo illustration a logo of Covaxin seen displayed on a smartphone with … [+]
SOPA Images/LightRocket via Getty Images
COVID-19 cases are growing fast in large parts of the US. The same folks who said the virus would just go away now say not to worry because fewer people are dying.
A lower mortality rate helps, but it’s still too high. The sheer number of sick people is straining hospital capacity some places. Viruses don’t care what anyone thinks; they just spread until something stops them.
The economy can’t recover if people fear infection everywhere they go. We need to balance public health and economic necessity.
Fortunately, scientists are learning how to reduce risk with fewer economic side effects.
The funny part: This knowledge isn’t all coming out of laboratories. It’s the result of unplanned, large-scale experiments on people who didn’t even know they were “test subjects.”
But whatever the source, we’d better pay attention. It offers a way out of this mess.
Photo: AFMC
Outdoor Conditions
Following the May 25 killing of George Floyd by Minneapolis police, large protests erupted around the country, featuring exactly the kind of crowds experts had called dangerous even with masks. More virus cases seemed likely.
We know the COVID-19 virus incubates for up to 14 days after exposure. So if the protests caused significant virus spread, it should be evident by now in Minnesota, where the initial protests occurred.
Here’s the data.
Chart:Worldometers.com
Minnesota’s average daily case count, which had been declining, turned slightly upward in mid-June, about three weeks after the protests began. These could be infections acquired at those events.
However, Minnesota’s case growth was still minor compared to Florida and Texas over the same period. Other places with large protests, like New York and Washington, DC, saw flat or declining infections.
That suggests the virus doesn’t spread easily outdoors if people take simple precautions, like wearing masks. Many protestors did and it seemed to help.
But the virus clearly is spreading. If the protests didn’t cause it, what did?
Hazardous Bar Tabs
The governors who let businesses begin reopening in May probably didn’t think of it as “research.” Nor did their citizens want to be guinea pigs. But that’s what happened.
State reopening guidelines tried to address what we know: Crowds are hazardous. Masks and distance are the best solutions. But that’s hard in places like restaurants and bars. You can’t eat or drink through a mask.
So states required those businesses to operate at reduced capacity and maintain separation between parties. This was supposed to get them back in operation while minimizing infection risk.
That was weeks ago. Millions of people have now eaten in sit-down restaurants, and the data doesn’t look good.
Photo: Twitter
JPMorgan Chase
JPM
, a large credit card issuer as well as an investment bank, analyzed spending data for its millions of customers. It shows the businesses where people used their cards. It also shows whether the card was physically present or the transaction occurred online.
They found a high correlation between “card-present” restaurant spending and higher COVID-19 cases in the same state three weeks later. More telling, the data showed fewer cases in places with higher grocery store spending (and, presumably, more meals at home).
As we always say, correlation isn’t causation. But this suggests a connection, at least.
Governors like Greg Abbott (R-TX) appear to see it. He recently ordered bars closed and kept restaurants at 50% capacity. We will know in a few weeks if it helps.
There’s also evidence air conditioning could be a factor, in part because it encourages people in hot climates to stay indoors where the virus thrives. That seems to fit the timing, too. Cases declined in the southern US during moderate spring weather, but are now rising as summer heats up.
It also raises a question for fall, when many schools and colleges plan to resume in-person, indoor classes. That may not be a good idea.
Photo: Pikist
Winter Is Coming
Let’s review what these accidental experiments revealed.
- Outdoor gatherings, even large ones, don’t necessarily spark virus outbreaks.
- Close, extended indoor gatherings without masks look like a problem.
No one thinks this virus will just “go away.” Life will be different until we get better treatments and/or a vaccine. But if these two points are correct, they offer some partial solutions.
For one, we might be able to resume some outdoor activities (concerts, sporting events) with a few modifications. Parks and beaches could be manageable risks if everyone will cooperate (which is hard, I know). This would help restore economic activity.
More broadly, spending our time outdoors this summer and fall might reduce the spread enough to make indoor life safer when winter arrives. It could have other benefits, too, as I described back in 2018 (see No Shoes, No Shirt, More Money).
On the downside, this is a serious blow to businesses that depend on indoor crowds—not just bars and restaurants but also airlines, casinos, and many retailers. Plus their employees and suppliers.
Some may be able to adapt, but not most. They will probably need additional government support to survive. That will be more feasible if we can stop throwing money in all directions and be more precise about who needs it.
The pandemic is still serious. That shouldn’t stop us from doing what we can to cushion the blow.
My partner John Mauldin predicts an unprecedented crisis that will lead to the biggest wipeout of wealth in history. Most investors are unaware of the pressure building right now. Learn more here.
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When Moscow resident Zoya, 62, was planning a trip to Italy to visit her daughter last August, she saw the perfect opportunity to buy the Apple Watch she had long dreamed of owning.
Officially, Apple does not sell its products in Russia.
The California-based tech giant was one of the first companies to announce it would exit the country in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine on February 24, 2022.
But the week before her trip, Zoya made a surprise discovery while browsing Yandex.Market, one of several Russian answers to Amazon, where she regularly shops.
Not only was the Apple Watch available for sale on the website, it was cheaper than in Italy.
Zoya bought the watch without a moment’s delay.
The serial code on the watch that was delivered to her home confirmed that it was manufactured by Apple in 2022 and intended for sale in the United States.
“In the store, they explained to me that these are genuine Apple products entering Russia through parallel imports,” Zoya, who asked to be only referred to by her first name, told Al Jazeera.
“I thought it was much easier to buy online than searching for a store in an unfamiliar country.”
Nearly 1,400 companies, including many of the most internationally recognisable brands, have since February 2022 announced that they would cease or dial back their operations in Russia in protest of Moscow’s military aggression against Ukraine.
But two years after the invasion, many of these companies’ products are still widely sold in Russia, in many cases in violation of Western-led sanctions, a months-long investigation by Al Jazeera has found.
Aided by the Russian government’s legalisation of parallel imports, Russian businesses have established a network of alternative supply chains to import restricted goods through third countries.
The companies that make the products have been either unwilling or unable to clamp down on these unofficial distribution networks.
The ‘poor borrower’ narrative rules in media coverage of the Bank of Canada and high interest rates, and that’s appropriate.
A lot of people have been financially slammed by the rate hikes of the past couple of years, which have made it much more expensive to carry a mortgage, lines of credit and other borrowing. The latest from the Bank of Canada suggests rate cuts will come as soon as this summer, which on the whole would be a welcome development. It’s not just borrowers who need relief – the boarder economy has slowed to a crawl because of high borrowing costs.
But high rates are also a big win for some people. Specifically, those who have little or no debt and who have a significant amount of money sitting in savings products and guaranteed investment certificates. The country’s most well-off people, in other words.
Lower rates will mean diminished returns for savers and less interest paid by borrowers. It’s a stretch to say lower rates will improve financial inequality, but they do add a little more fairness to our financial system.
Wealth inequality is often presented as the chasm between well-off people able to pay for houses, vehicles, trips and high-end restaurant meals and those who are driving record use of food banks and living in tent cities. High interest rates and inflation have given us more nuance in wealth inequality. People fortunate enough to have bought houses in recent years are staggering as they try to manage mortgage payments that have risen by hundreds of dollars a month. You can see their struggles in rising numbers of late payments and debt defaults.
Rates are expected to fall in a measured, gradual way, which means their impact on financial inequality won’t be an instant gamechanger. But if the Bank of Canada cuts 0.25 of a percentage point off the overnight rate in June and again in July, many borrowers will start noticing how much less interest they’re paying, and savers will find themselves earning less.
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Rob’s personal finance reading list
A look at two strategies for paying off debt – the debt avalanche and the debt snowball. I’ll go with the avalanche.
How not to ruin your kitchen countertop
Anyone who has renovated a kitchen lately knows how expensive stone countertops can be. Look after yours by protecting it from a few common kitchen items.
What you need to know about stock market corrections
A helpful explanation of stock market corrections. It seems an opportune time to look at corrections, given how volatile stocks have been lately. Like scouts, investors should always be prepared.
Food inflation requires more careful grocery shopping. Here’s a roundup of food products – cookies, snacks, ice cream – that don’t taste as good as they used to. Food companies have always adjusted their recipes from time to time. Is this happening more because of inflation’s impact on raw material prices? A U.S. list – most products are available are familiar to Canadians, too.
Ask Rob
Q: I have Tangerine children’s accounts for my kids. Can you suggest a better alternative?
A: The rate on the Tangerine children’s account is 0.8 per cent, which actually compares well to the big banks and their comparable accounts. For kids aged 13 and up, check out something new called the JA Money Card.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A comprehensive guide on how to build a good credit score.
In the social sphere
Social Media: An offbeat way of fighting high food costs
Watch: Is now the hardest time ever to buy a home?
Money-Free Zone: Singer-songwriter Maggie Rogers has a new album called Don’t Forget Me and it’s generating some buzz because it’s a great listen. Smooth vocals and a laid back countryish vibe that hits a faster pace on one of my favourite cuts, Drunk.
More PF from The Globe
– He keeps ‘a few thousand in crisp new bills’ at home – is that a good idea?
– The pension pivot: Employers recognizing that workers need help with debt as much as retirement
– Her bond ETF is ‘a dud and not promising at all’ – should she sell?
– Despite high fees, Canadians remain perplexingly loyal to mutual funds. Here’s why
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
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- 📈 Investing: Canada’s top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer’s guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
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