Economy

College Clusterfuck 2.0 – “It’s a Dystopian Hell” – Updated

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Update 09.05.20

What could be worse than being stuck at home with Mom and Dad for months on end isolated from friends, activities restricted?

Going back to Mom and Dad to be stuck at home for even longer because you got expelled from college AND telling them they just paid for a year of college and housing for nothing.

The students were part of a special one-semester program for first-year students and according to Globe, the prepaid $US 36,500 cost for the semester won’t be refunded. Students won’t be able to take courses from home but are eligible to return in the fall.

11 freshmen at Northeastern were dismissed for violating COVID-19 rules. Their $35,000 tuition won’t be reimbursed. — https://www.businessinsider.com.au/11-northeastern-students-dismissed-breaking-covid-19-rules-party-2020-9

jordanschachtel.substack.com — America’s college students are returning to campus for the Fall semester, and many are finding themselves in an environment that no longer resembles an academic institution, but something closer to a correctional facility for young adults. It’s not just a handful of schools that are pursuing extreme restrictions and punitive measures in the name of “stopping the spread” of the coronavirus, but something that has become a nationwide norm.

Tales from America’s COVID college campuses — https://muckrack.com/jordan-schachtel/articles

College campuses have transformed into some of the most restrictive environments in America.  After hearing about these conditions, I sent out a post on social media asking for testimonials from students, parents, and educators. The responses below are some of the many replies I received discussing what students are experiencing in colleges and universities that have allowed for students to return to campus.

Tales from America’s COVID college campuses — https://jordanschachtel.substack.com/p/tales-from-americas-covid-college

From what I can tell Jordan Schachtel is an investigative journalist. If you follow the link in the second quote above you’ll find a bevy of quotes from both students and parents on college life 2020 pandemic edition. What you’ll read is absolutely jaw dropping. A lot of prison analogies…

This is not going well nor will it end well. Online education will become the new operating model for higher education sooner rather than later. See my earlier rant Post Pandemic Changes in Consumer Behavior for Professor Galloway’s opinion. He says it’s simple math.

Funny to think how colleges and universities will succeed now that they all have to focus on education and teaching their students. Not sports. No longer modern day fiefoms that exist solely to enrich the clueless intellectual elites. My Dad always told me the purpose of college was to teach you how to think, not what to think. High time to get back to what a “higher” education should be.

The Implosion of Freelance Work

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I live in LA, and the article is really about people who work in entertainment/media — every tv show, commercial, music video and movie is the result of anywhere from a few dozen to hundreds of people who work for the run of the project, then move on to another project. It’s everything from the building trades – carpentry, electrical, rigging/framing – to business services — legal, accounting, HR – to tech heavy work – video/sound editing — and finally, a lot of musicians — people who write and play the music you hear. All of these people are employees of the production, not AB5 type gig workers.

It’s a lifestyle/career choice and not for everyone. People hustle, build relationships and are always on the lookout for the next gig. But the work has been steady for decades, and then very suddenly the whole sector shut down hard.

Los Angeles Hit Hard by Implosion of Freelance Work

 

The pandemic has only exacerbated tenuous financial conditions for many in the flexible workforce.  According to a survey of more than 1,100 U.S.-based respondents interested in flexible work, more than half (53%) of people are currently earning half or less of their pre-pandemic income. Approximately one-third (31%) of respondents have lost their entire income since the pandemic started. This survey was conducted by FlexJobs, fielded in partnership with Prudential (1), in late June 2020.

Demographic breakdown of the 1,100 U.S.-based respondents interested in flexible work. Gender: female (81%), Male (17%) Prefer not to identify (2%) Ages: 20-39 (29%), 40-59 (53%), 60+ (18%); Education: high school degree or equivalent (4%), some college but no degree (15%), associate or bachelor’s degree (48%), graduate degree (33%); Career level: entry-level (11%), experienced (56%), manager (21%), senior level or higher (12%). Household income: Less than less than $50,000 (35%), $50,000 to less than $75,000 (18%); $75,000 to less than $100,000 (17%), $100,000 to less than $150,000 (17%), $150,000+ (13%). 34% of respondents were unemployed and looking for work.

Survey Finds 53% Earning Half Or Less Of Their Pre-COVID-19 Income

As a former freelancer my heart goes out to all of the gig workers whose lives have been upended by the pandemic.  I transitioned back to the world of W-2 work quite some time ago and haven’t regretted the move.

Meanwhile in Georgia…

“I think quite honestly this week went real well other than a couple of virtual photos,” Gov. Brian Kemp said at a news conference with the U.S. surgeon general.

Georgia governor: School openings going well except photos of crowded hallways

3rd Cherokee County school closes due to new COVID-19 cases

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Aspen Market – Report July 2020 – the Great Urban Exodus

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unnamed
6 Bedrooms / 7 Full Baths / 2 Half Baths / 7,489 SF
$4,299,000 — EXTREMELY well priced at $575./sq ft
Extremely well priced relative to Aspen proper.  The most recent highest Sale in Aspen was $27,000,000 or $3090/sq ft for a 7-bedroom home on Willoughby Way built in 2015.
Aspen 072020

 

The real estate market is booming! Demand has reached unprecedented levels as people escape the big cities, take advantage of record low interest rates and opt to work remotely. This was the biggest July our market has ever seen by far with 42 closings in Aspen and Snowmass, a 100% increase compared to last July, and dollar volume increased 215%. July sales for Aspen and Snowmass combined are illustrated below.

The local realtor’s email contains tons more information and data on her real estate market.  Her email was forwarded to me from my project who lives and works in the Aspen area.  If I could get $3090/sq ft for my house I’d get $11,124,000!  (minus realtor commissions).

Time to reread Jane Jacobs’ Life and Death of American Cities.

 

Scary Charts 08.08.20 – Surge In Number of Americans Moving In With Older Family Members

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Screenshot_2020-08-08 Surge In Number of Americans Moving In With Older Family Members Amid Pandemic Fed Study

“The COVID-19 pandemic has profoundly affected the living arrangements of millions of Americans,” said Daniel Garcia and Andrew Paciorek, authors of the Aug. 7 study, which looks at the impact of the pandemic on living arrangements and household formation in the United States.

  Surge In Number of Americans Moving In With Older Family Members Amid Pandemic: Fed Study

 

A Surge in Small Business Bankruptcies is Underway

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Re-posted article from Straight Line Logic

More than 500 companies filed for bankruptcy under the small-business bankruptcy rules since February, according to the American Bankruptcy Institute. June was the top month for filings with 131 cases; many were filed in states hit hard by the pandemic like Florida, Texas, California, New York and Illinois.

  A Surge in Small Business Bankruptcies is Underway

Unfortunately this is the tip of the proverbial iceberg.

A lot of people are going to need a lot of help over the upcoming years.  Do what you can, in whatever capacity you have to help.  We have increased our donations to a local charity called The Hope Center and have started sending small sums to the Food Bank of Oklahoma.  Every little bit helps.

What Happens If Most Businesses & Consumers Tighten Their Belts at the Same Time?

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In April and May 2020, the Bank of Italy conducted a special survey of Italian households to collect data on the financial situation and expectations of households during the crisis linked to the COVID-19 pandemic. More than half of those surveyed said their household income had shrunk as a result of the measures adopted to contain the epidemic. The impact has been particularly severe on the self-employed. Over a third said they did not have enough liquid resources to cover essential household expenses for a period of three months. Households’ expectations regarding spending have also been affected by the economic situation: more than half of those interviewed believe that even when the epidemic is over, they will spend less on travel, holidays, restaurants, cinema and theatres than they did before the crisis.

The Bank of Italy

What Happens If Most Businesses & Consumers Tighten Their Belts at the Same Time?

Answer:

Not good.

 

Comparing Drivers of Pandemic Economic Decline 2020 – NBER

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The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries–symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020

I admit to having a short attention span.  My mind tends to wander a bit, sometimes a lot.  The reason for my cognitive wandering is usually a question which sends me down yet another path of discovery.  So here’s another post in my intermittent series on Post Pandemic Changes in Consumer Behavior

My July 4th weekend will be a quiet weekend.  I’ve downloaded the pdf of this working paper to read.  I’m hoping for some insights that I might have missed.

Carnival Cruises Posts 2Q $4.4 Billion Loss

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I’ve been on several cruises in my life.  As an excessive weight challenged individual cruises have always been problematic for me.  Too much food.  Too much alcohol.  The last opportunity to join relatives on a cruise was a few years ago.  I declined to participate.  I just don’t like cruises.

But I also don’t like witnessing businesses crash and burn.  Stunning number.

Source article link.

Cruising

Where Have All the Briskets Gone?

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The question now is how quickly the supply from the beef processors will stabilize to bring overall beef prices down and live cattle prices up. U.S. Secretary of Agriculture Sonny Perdue announced this week that he expected all the processing plants to be reopened soon. “I’d say probably a week to ten days we’ll be back up, fully back up,” Perdue said in a meeting with Trump and Iowa governor Kim Reynolds, but that may be overly optimistic. Even if the plants have reopened, they won’t likely be at full capacity. As David Anderson from Texas A&M says, “It doesn’t mean anybody’s going to show up,” referring to the workers. In an anonymous essay, an employee who says she works at a Tyson beef plant in Amarillo wrote: “I don’t feel critical. I don’t feel essential. I feel sacrificial.” Even if the workers are willing to return to the reopened plants, USDA inspectors are required for any plant to operate, and more than one hundred members of the already short-staffed inspector workforce have been infected.

Where Have All the Briskets Gone?

Texans are getting anxious about their BBQ.

Update 05.17.20

Meanwhile in Oklahoma…