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This Week In The Economy: Rising COVID Cases, Code Red Climate Report, Senate Passes Infrastructure Bill, UK GDP Rebounds, Ominous US Inflation Data, Mexico Central Bank Hikes Rates

This Week In The Economy: Rising COVID Cases, Code Red Climate Report, Senate Passes Infrastructure Bill, UK GDP Rebounds, Ominous US Inflation Data, Mexico Central Bank Hikes Rates

This Week In The Economy: Rising COVID Cases, Code Red Climate Report, Senate Passes Infrastructure Bill, UK GDP Rebounds, Ominous US Inflation Data, Mexico Central Bank Hikes Rates

COVID-19 Cases, Deaths Continue To Rise

The number of COVID-19 cases, hospitalizations and deaths continue to rise across the United States, as the highly-infectious Delta variant runs rampant among the unvaccinated and, in recent weeks, has spread into the vaccinated sections of the population as well.

Jeff Zients, the White House’ COVID-19 Response Coordinator, noted during a press briefing this week that “in the past week, Florida has had more COVID cases than all 30 states with the lowest case rates combined. And Florida and Texas alone have accounted for nearly 40 percent of new hospitalizations across the country.”

The Biden administration is ramping up efforts to boost vaccination rates in rural parts of the country. This week it made millions in additional funding available to support hospitals and healthcare providers in those areas.

The Food and Drug Administration also authorized vaccine booster shots for “immunocompromised individuals” to provide extra protection from COVID-19. The authorizations apply to both the Moderna and Pfizer vaccines. It applies to recipients of organ transplants or those who are diagnosed with conditions that are considered to have an equivalent level of immunocompromise.

“This small, vulnerable group may benefit from a third dose of the Pfizer-BioNTech or Moderna Vaccines,” the FDA said in a statement, while also stressing that “other individuals who are fully vaccinated are adequately protected and do not need an additional dose of COVID-19 vaccine at this time.”

Speaking at the same press briefing as Zients, CDC Director Rochelle Walensky said her agency reported 132,384 new cases of COVID-19, with the seven-day average about 113,000 cases per day — an increase of nearly 24% from the prior seven-day average.

“The seven-day average of hospital admissions is at about 9,700 per day, an increase of about 31% from the prior seven-day period,” she said, “and the seven-day average of daily deaths has also increased to 452 per day, an increase of 22% from the prior seven-day period.”

“We continue to see cases, hospitalizations, and deaths increase across the country. And now, over 90 percent of counties in the United States are experiencing substantial or high transmission.” — CDC Director Rochelle Walensky

Walensky said the CDC is strengthening its guidance and recommending that all pregnant people or people thinking about becoming pregnant get vaccinated.

“We now have new data that reaffirm the safety of our vaccines for people who are pregnant, including those early in pregnancy and around the time of conception,” she said. The data showed no safety concerns for pregnant people who are vaccinated late in pregnancy or for their babies, Walensky added, and also no increase in the risk for miscarriage among people who received an mRNA COVID-19 vaccine before 20 weeks of pregnancy.

The CDC director noted that the number of pregnant people infected with COVID-19 has risen in the past several weeks. “The increased circulation of the highly contagious Delta variant, the general low vaccine uptake among pregnant people, and the increased risk of severe illness and pregnancy complications related to COVID-19 infection among pregnant people make vaccination for this population more urgent than ever,” she said.

Pharmaceutical company Moderna also announced the results of a study this week showing its COVID-19 vaccine protects against the variants six months after the second injection.

“The majority of individuals vaccinated with the Moderna COVID-19 vaccine maintained both binding and functional antibodies against SARS-CoV-2 variants for six months after the second dose,” Moderna said, although there were lower antibody levels against SARS-CoV-2 spike variants observed in the oldest individuals at Day 209 (through six months).

The CDC reported that as of August 12, 411,253,925 total doses of the COVID-19 vaccine have been distributed to states, compared to 403,047,945 last week. Of this week’s overall number, 353,859,894 shots have been administered. Of the doses administered, 196,505,543 Americans have received at least one shot (59.2% of the entire population), and 167,354,729 have been fully vaccinated (50.4%).

Worldwide, 4,620,176,209 doses have now been administered, but the global gap in terms of access to vaccines remains:

Globally, there have now been 205,611,601 confirmed cases of COVID-19, with 4,338,592 fatalities. The U.S. now has 36,951,384 confirmed cases, and there have been 630,532 fatalities.

India has 32,077,706 confirmed cases. Of that number, 387,954 are active and there have been 429,702 fatalities. The data shows close to 31% of India’s population has received at least one jab of the COVID-19 vaccine, and just over 8.9% are fully vaccinated.

Brazil remains in third place with 20,285,067 cases at time of writing — 567,150 active and 566,896 deaths. Russia remains in fourth place with 6,557,068 confirmed cases — 539,864 active and 168,864 deaths.

France is in fifth place with 6,398,983 cases , with 112,533 fatalities. The United Kingdom remains in sixth place with 6,179,506 cases and 130,701 fatalities.

Turkey is in seventh place with 6,018,485 cases — of that number 407,060 are active and 52,703 dead.

Argentina is in eighth place with 5,066,253 cases — 244,273 active and 108,569 deaths. Colombia is ninth with 4,856,595 confirmed cases, 58,283 active and 123,097 fatalities.

Spain remains in tenth place with 4,677,883 cases and 82,407 deaths.

United Nations Climate Change Report A ‘Code Red’ For Humanity

Record spikes in temperature and other extreme weather events have become a regular feature in the United States and around the world, a phenomenon that will mostly be irreversible, the United Nations warned in a report this week.

The report found that finds averaged over the next 20 years, global temperature is expected to reach or exceed 1.5° Celsius (34.7 Fahrenheit) of warming, and that unless there are “immediate, rapid and large-scale reductions in greenhouse gas emissions,” limiting warming to close to 1.5°C or even 2°C (35.6F) will be beyond reach.

“Today’s IPCC Working Group 1 Report is a code red for humanity. The alarm bells are deafening, and the evidence is irrefutable: greenhouse gas emissions from fossil fuel burning and deforestation are choking our planet and putting billions of people at immediate risk. Global heating is affecting every region on Earth, with many of the changes becoming irreversible,” UN Secretary-General António Guterres said in a statement.

With the world at “imminent risk” of breaching the internationally agreed threshold of 1.5 degrees Celsius, Guterres decisive action is need now.

“We are already at 1.2 degrees [Celsius] and rising. Warming has accelerated in recent decades. Every fraction of a degree counts. Greenhouse gas concentrations are at record levels. Extreme weather and climate disasters are increasing in frequency and intensity,” he warned. “Without deep carbon pollution cuts now, the 1.5-degree goal will fall quickly out of reach. This report must sound a death knell for coal and fossil fuels, before they destroy our planet.”

U.S. Senate Passes $1T Infrastructure Package, Outlines $3.5T Follow-Up

The U.S. Senate this week voted 69–31 in favor of the $1 trillion bipartisan bill to overhaul the nation’s infrastructure.

The Senate Democrats also published the outlines of the more partisan $3.5 trillion spending package, which is expected to be passed via budget reconciliation. It looks to make significant investments in other aspects of the American economy not related to broadband, roads, bridges, highways and water:

  • $726 billion in education and healthcare
  • $135 billion on food and other agriculture-related initiatives
  • $332 billion on affordable housing and other similar investments
  • $83 billion on science and technology
  • $198 billion for clean energy
  • $67 billion for environmental initiatives
  • $1 billion in tax credit and other relief efforts
  • $107 billion for immigration programs
  • $20.5 billion for programs to support the Native American population
  • $18 billion to upgrade the VA’s facilities
  • $25 billion towards small business lending

This massive spending package will be offset by:

  • Corporate and international tax reform
  • Raising taxes on Americans making over $400,000 a year
  • Boosting IRS tax enforcement
  • Health care savings
  • Imposing a fee on companies that import from countries labelled as a ‘Carbon Polluter’

The $1 trillion infrastructure package now heads to the House, where Speaker Nancy Pelosi has said she will not hold a vote until the Senate also passes the $3.5 trillion spending bill. However, a group of moderate House Democrats sent a letter to the Speaker threatening to withhold their votes on the budget resolution until the infrastructure bill passes the House and is signed into law.

On the Senate side, Senators Kyrsten Sinema (D-Arizona) and Joe Manchin (D-West Virginia) have both voiced concerns about the price tag of the spending bill, raising the possibility that it might have to be reduced to secure their votes.

U.S. Consumer Price Inflations Slows Somewhat But More In The Pipeline

U.S. consumer prices increased 0.5% in July after rising 0.9% in June, the Bureau of Labor Statistics reported this week. Over the last 12 months, the all items index increased 5.4%.

The consumer price indexes for shelter, food, energy, and new vehicles all increased in July and contributed to the monthly jump. The food index increased 0.7% in July as five of the major grocery store food group indexes rose, and the food away from home (restaurants and bars) index increased 0.8%.

Energy prices rose 1.6% in July, with gasoline prices up 2.4% and other energy component indexes also rising.

Excluding food and energy prices, the CPI was up 0.3% in July after increasing 0.9% in June. Along with shelter and new vehicles, the prices for recreation, for medical care, and for personal care increased in July. Used cars prices also increased in July, but the 0.2% rise was much smaller than in recent months. Airline ticket prices also fell slightly.

Other data released this week indicates more price increases for consumers might be in the pipeline.

The BLS reported that wholesale prices (what businesses pay for inputs used to make goods or provide services) increased 1% in July. They rose 1% in June and 0.8% in May. The index jumped 7.8% for the 12 months ended in July, the largest advance since 12-month data were first calculated in November 2010.

Nearly three-fourths of the July increase was driven by a surge in prices for services (+1.1%, the largest one-month increase since data were first calculated in December 2009), while wholesale prices for goods rose 0.6%.

Prices excluding foods, energy, and trade services moved up 0.9% in July, the largest advance since climbing 1% in January. For the 12 months ended in July, producer prices less foods, energy, and trade services rose 6.1%, the largest increase since 12-month data were first calculated in August 2014.

U.S. Jobless Claims Fall, Job Openings At Record Levels In June

The U.S. Labor Department reported this week that first-time applications for state unemployment assistance was 375,000 last week — a decrease of 12,000 from the previous week’s level.

For the week ending August 7, there were 104,572 initial claims for the federally-funded ‘Pandemic Unemployment Assistance’, up 10,145 from the prior week.

The number of Americans who continue to receive state unemployment support during the week ending July 31 was 2,866,000, a decrease of 114,000 from the previous week’s level. This is the lowest level for insured unemployment since March 14, 2020 when it was 1,770,000.

In a separate release, the Bureau of Labor Statistics reported that U.S. job openings soared to a record-high of 10.1 million on the last business day of June. Hires rose to 6.7 million, while total separations edged up to 5.6 million.

Within separations, the quits rate increased to 2.7% — underscoring workers’ confidence in their ability to find another job. The layoffs and discharges rate was unchanged at 0.9%, matching the series low and showing how desperate employers are to hold on to the employees they have.

The job openings rate rose to 6.5%, compared to the hires rate of 4.6%. Job openings increased in several industries, with the largest increases in professional and business services (+227,000); retail trade (+133,000); and accommodation and food services (+121,000). The number of job openings increased in the South region.

Hires increased in retail trade (+291,000); state and local government education (+94,000); and durable goods manufacturing (+36,000). The number of hires increased in the South and Midwest regions.

UK Economic Activity Rebounds In June — Buoyed By Vaccinations, Reopening

UK gross domestic product is estimated to have increased by 4.8% in Quarter 2 2021 following the easing of COVID-19 restrictions, the Office of National Statistics reported this week.

The largest contributors to this increase were from wholesale and retail trade, accommodation and food service activities, and education. However, the level of GDP is now 4.4% below where it was pre-pandemic at Quarter 4 2019.

On a monthly basis, UK GDP is estimated to have grown for a fifth consecutive month in June by 1.0%, but remains 2.2% below its pre-pandemic level (February 2020).

  • Services continued to be the main contributor to GDP’s recovery in June 2021, growing by 1.5% in June following a revised 0.7% growth in May.
  • Health activities contributed the most to services output as hospital visits increased in June, while the hospitality sector benefitted from its first full month of indoor dining since coronavirus restrictions were eased on 17 May.
  • Food and beverage services activities was again the main contributor to the growth in consumer-facing services, growing by 10.1% in June.
  • Production output fell by 0.7% in June 2021, as planned temporary closures for maintenance of oil field production sites once again hit output.
  • Construction contracted for a third consecutive month, with output down by 1.3% in June 2021 and now 0.3% below its pre-pandemic level (February 2020).

Mexico Central Bank Raises Interest Rates On Inflation Concerns

The Bank of Mexico’s Governing Board announced an increase in borrowing costs this week, raising interest rates in response to concerns about rising inflation.

“Although the shocks that have increased inflation are expected to be transitory, due to their variety, magnitude, and the extended horizon over which they have affected it, they may pose risks to the price formation process,” the officials noted in their statement.

“For this reason, it was deemed necessary to strengthen the monetary policy stance in order to avoid adverse effects on inflation expectations and enable an orderly adjustment of relative prices and the convergence of inflation to the 3% target,” the group said. The central bank increased its target interest rate by 25 basis points to 4.5%.

Looking ahead, it said the Governing Board will assess the factors that have an incidence on inflation, “on its foreseen trajectory within the forecast horizon, and on its expectations.”

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