Month: May 2021

Here's a mystery:

The UK and the United States are both doing well in the vaccination race. Europe started out slow but is beginning to catch up. Countries in Asia are . . .

Nowhere. The four I've highlighted are all rich countries, so it's not a matter of money. All of them currently have very low infection rates, but surely that doesn't make them think they're invulnerable? What's going on here?

This is the Queen Mary, docked at Long Beach harbor. The stacks have a wavering look to them, as if I shot this from a mile away with a 2000mm lens, but that's just an artifact of shooting through the front windshield of my car. For some reason, even though the street was empty, I was apparently too lazy to open the door and shoot the picture normally.

The news is covered with such a remarkable array of nonsense that I can't really find anything to write about. The war in Israel is a tragedy, but it will end the way their wars always end. Donald Trump still lost the 2020 election. The insurrection at the Capitol on 1/6 is still an insurrection. National economic indicators are slightly off for a tiny time period, and they're still meaningless for anyone not desperately trying to make a partisan point. The Colonial pipeline has been restored, and in a week or two no one will remember it. The CDC has finally said that vaccinated people can stop wearing masks in most places.

Anyway, I was roaming around looking for something off the beaten path, when I remembered this:

"Coincident Economic Activity" is an index of economic health for each state. It's composed of four difference measures, and I don't suppose it's especially any better than other indexes that do the same thing. However, it has the benefit of being a longtime series from the Philadelphia Fed, which means it has no ax to grind.

In this case, it shows how well states have recovered from the Great Recession and then how well they've recovered from the pandemic. Among the six large states on the chart, California did the best at recovering from the recession, while Georgia has done the best at recovering from the pandemic (in the sense of getting back to its pre-pandemic level). Overall, California and Florida showed the best performance both before and after the pandemic.

There's no special point to make here. It's just something to take your mind off the news for a few seconds.

UPDATE: I got curious about which states had shown the biggest drops in economic activity after the pandemic hit. Here's the data for all 50 states:

Arkansas dropped only 3.4%, while West Virginia was down 46%. This is a pretty astonishing range of results and I'm not sure what explains it. Here's a chart that shows how well each state has recovered from the pandemic (that is, their current level compared to January 2020):

Utah comes in the best, while West Virginia still has a long way to go.

Here’s the officially reported coronavirus death toll through May 12. The raw data from Johns Hopkins is here.

For those of you interested in a non-panicked look at inflation, the Cleveland Fed has been forecasting 10-year inflation expectations for the past forty years. Here's their entire time series:

These forecasts have been pretty accurate. Obviously there's a fair amount of noise in the data, and no forecast can account for recessions and pandemics ten years in the future, but generally speaking the Cleveland Fed forecasts are within about one percentage point of how things turn out ten years later. Right now they're forecasting future inflation at about 1.6%.

Other measures of inflation expectations, based on daily movements of Treasury rates, showed almost no movement today after the latest inflation figures were announced. Whatever the pundits are saying, the market doesn't seem to think today's figures meant much of anything at all. The 5/5 forward rate, for example, has been rising all year but dropped slightly today from 2.38% to 2.36%.

Bottom line: as with every other economic indicator, everyone should chill. Daily and monthly movements just don't mean anything, especially during a turbulent period like we're going through now. Over the next few months inflation will stabilize, the economy will grow, people will all get back to work, and everything will be fine.

This is a milkweed leaf beetle, photographed as it was scuttling across a path toward safety in the nearby greenery. It was searching, I assume, for a milkweed leaf to chew on. The blue sheen is very attractive, don't you think?

As expected, the headline inflation rate rose 4.2% in April. My best guess for the real rate of inflation, based on ignoring the artificial drop a year ago, is 266.832 ÷ 259, or about 3%:

For all you inflation worriers out there, 3% is still high too! But hardly unexpected. We've pumped enough money into the economy that everyone expects a temporary bout of elevated inflation. The only real disagreement is over how long this will last. Is it just for a few months, and therefore no big deal? Or is this a harbinger of high inflation for years to come?

My vote is on "temporary bout," but only time will tell.

After a month of stalling at about two deaths per million, our mortality rate dropped to 1.85 per million on Tuesday. This is a rolling 7-day average, so it's not just a single day's anomaly, and it comes right on schedule, about a month after our case rate started dropping. So cross your fingers and try to persuade any holdouts you know to get vaccinated. We might finally be on track to beat this thing.

Here’s the officially reported coronavirus death toll through May 11. The raw data from Johns Hopkins is here.

According to official figures, here is the size of the COVID-19 outbreak in India:

In no way am I trying to downplay the tragedy in India, but if these numbers are correct then India's outbreak is still only a fraction the size of the outbreak we went through just a few months ago—and it appears to be already peaking and starting to turn down.

Is this right? Or are the official figures nowhere close to the truth? Is the devastation in India really due to the size of its outbreak, or is it more about the inadequacy of its medical system?

The Wall Street Journal reports on the malware attack that shut down the Colonial pipeline late last week:

While ransomware has been a challenge for small businesses for years, a confluence of factors have emboldened attackers in the past year, culminating in the shutdown Friday of a critical gasoline pipeline to the U.S. East Coast. The pipeline’s operator, Colonial Pipeline Co., now says service could be offline until week’s end, threatening to raise prices at the pump for millions of Americans.

How soon we forget. The NotPetya malware attack happened four years ago and shut down operations at the Maersk shipping line for more than two weeks. Adam Banks, head of technology at Maersk, describes what happened:

Two years on, Banks is willing to outline the scale of the destruction he encountered as what later become known as the NotPetya malware took hold and the company’s operations ground to a halt. “All end-user devices, including 49,000 laptops and print capability, were destroyed,” he says. “All of our 1,200 applications were inaccessible and approximately 1,000 were destroyed. Data was preserved on back-ups but the applications themselves couldn’t be restored from those as they would immediately have been re-infected. Around 3,500 of our 6,200 servers were destroyed — and again they couldn’t be reinstalled.”

The cyber-attack also hit communications. All fixed line phones were inoperable due to the network damage and, because they'd been synchronized with Outlook, all contacts had been wiped from mobiles — severely hampering any kind of coordinated response.

....Banks is candid about the breadth of the impact: “There was 100% destruction of anything based on Microsoft that was attached to the network.”

Maersk was able to recover only thanks to a wild bit of good luck: an uninfected directory file from their office in Nigeria. Even at that, though, the effect on shipping was a hundred times greater than the Suez Canal blockage earlier this year, and the damage to Maersk clocked in at about $300 million.

The NotPetya attack also hit WPP, Merck, Rosneft, Saint-Gobain, DHL, Cadbury's, JNPT, FedEx, and others. Total damage has been estimated at around $10 billion.

Technically, NotPetya wasn't a ransomware attack because the payload had been altered so that the files it encrypted couldn't be decrypted at all by anyone. But that's a tiny difference. We've known for a long time just how destructive this stuff can be on both small companies and the largest of multinational corporations. Nothing that happened this year taught us anything new.