In A State Of Constant Stimulation

As we approach the two-year anniversary of the initial governmental shutdown orders of 2020–and are still dealing with the various variants of COVID-19–some members of Congress are back to considering whether more “stimulus” efforts should be undertaken, and a two-year-old Change.org petition calling on the federal government to send out $2,000 monthly “stimulus” checks to all Americans has passed the 3 million signature mark.

The initiators of the petition contend that, even after two years of various “stimulus” payments, the $2,000 monthly checks are needed because of uncertainty about what could happen if the government orders a new round of closures, if schools require remote learning, or if other disruptive events occur. The article linked above quotes the initiators of the petition as saying that signers are trying to send a message: “‘We just need certainty. We need to have something we can plan on month after month.’”

In short, for some people what began as an effort to help individuals and businesses while the country dealt with the economic shock of the initial, purportedly short-term “flatten the curve” shutdowns, through “stimulus” checks, enhanced unemployment benefits, and readily available business loans, has morphed into a quest for guaranteed, federally funded monthly income that would apparently extend into the indefinite future. When you reach that point, it can’t reasonably be called a “stimulus” payment anymore–unless you accept that our economy now is in need to constant “stimulation,” like a Frankenstein’s monster that is forever being zapped with high-voltage electricity in order to keep going. And such a budget-busting monthly payment obviously would have significant inflationary effects and other long-term consequences for the economy generally and the labor market specifically.

An interesting point is that the primary stated reason for the requested monthly checks is the impact of governmental decisions, like closure orders and requirements for virtual schooling from home, on individuals and families. Perhaps the real lesson from the petition isn’t that some people would like to continue to get governmental checks–that’s really no surprise–it is that governmental entities need to think twice about consequences before issuing new sweeping and disruptive orders after two years of COVID edicts.

Kinks In The Supply Chain

We’ve been reading a lot about supply chain issues. Yesterday I had my first direct experience with the problem when I went to do grocery shopping for my holiday baking–as reflected in the above photo of yellow sprinkles and cream cheese.

Normally, I would buy Philadelphia Cream Cheese for my baking. It’s the brand that we had in the house when I was a kid, and I figure if it was good enough for Mom, it’s good enough for me. But yesterday our grocer had no original Philadelphia Cream Cheese. Instead, in the cream cheese cooler there was a little sign explaining that due to supply issues, they didn’t have some of the offerings you would normally find. There was a Philadelphia brand substitute, that promised one-third of the fat of normal cream cheese, but who wants to try a low-fat alternative in a Christmas cookie recipe? So I bought the Yoder’s cream cheese, which was only standard cream cheese that was available, and I am hoping that it measures up to Philadelphia standards.

The same thing was true in the baking aisle. To my surprise, there were no green and red sprinkles available, which are the sprinkles I typically buy for Christmas baking. The only sprinkles available were these yellow sprinkles, and the shelves for most of the other festive toppings, like chocolate sprinkles or tiny balls, were empty, too. So I opted for the yellow sprinkles, figuring yellow sprinkles are better than none at all.

I had similar experiences elsewhere in the store. It’s not like the shelves were barren; there was lots of stuff for sale. But if you were looking for specific things, like a particular brand of cream cheese, or flour, or sprinkles, you might encounter a void, and an explanatory sign, and have to find a substitute. It’s not what we are used to here in the land of plenty.

Of course, I can make do with yellow sprinkles, and a different brand of cream cheese or flour; Christmas cookies are not a life-or-death thing. But the little signs and the shortages made me wonder what else has been affected by the kinks in the supply chain–like necessary parts, or crucial medicines or ingredients for medicines, or other essential items and materials.

The supply chain problems are concerning. Let’s hope they get this issue figured out, and soon, so that we don’t experience some really significant disruptions.

A Spread-Out Shopping Season

“Black Friday” has come and gone, without a lot of the reports of shoppers pummeling each other or trampling security guards in a rush to get the special deals being offered on big-screen TVs or the hottest new toy. That’s because American shopping patterns appear to be changing, again and probably for good, and “Black Friday”–the day after Thanksgiving that had become the traditional madhouse start to the holiday shopping season–is becoming less of a focus.

CNBC is reporting that while shopping on Black Friday increased over last year, when many retailers operated on reduced hours due to COVID, in-store shopping was down 28 percent from 2019’s pre-pandemic levels. There was even a decline in on-line shopping on Black Friday, with retailers ringing up $8.9 billion in sales compared to $9 billion in 2020. And shopping traffic on Thanksgiving itself, when some retailers opened their doors, was down 90.4 percent from 2019 levels.

Analysts cited by CNBC believes that shoppers are spreading out their holiday shopping more than ever before and identified two reasons for the trend and the related drop-off in Black Friday traffic: continuing concerns about COVID and worries about the supply chain. A survey conducted by the National Retail Federation supports the “spread out” hypothesis. It found that 61 percent of American began their holiday shopping before Thanksgiving.

There’s no doubt that some people are still quite worried about the virus, and media reports on supply chain issues and potential shortages have likely had an impact, too, but I think the reason for the shift away from Black Friday madness has two other causes as well. One is earlier than ever holiday-themed commercials and retailer special deals (and holiday programming on outlets like The Hallmark Channel) that have served to remind people that Christmas is coming, and the other is a more fundamental shift in how to shop. During the height of the COVID pandemic shutdowns, even the most hardened in-person shoppers learned that they could basically do all their shopping on-line. When you see a special deal on TV in the weeks before Thanksgiving that you think would make a good gift and your computer is at your elbow, why wait to make your purchase?

I think the new approach might be something like this: start your shopping on your computer before Thanksgiving, take stock of the status of your shopping list when the boxes start hitting your doorstep, and then venture out to the brick-and-mortar stores in the weeks between Thanksgiving and Christmas, when the Black Friday madness has petered out, to fill in the gaps, get the stocking stuffers, and take advantage of any last-minute sales. Whether that scenario is borne out or not, we know one thing: the American consumer is flexible and always willing to try a new approach.

The Upward Downward Spiral

The Labor Department reported earlier this week that the Consumer Price Index–which attempts to quantify prices of a broad swaths of goods and services in the American economy–increased 0.9 percent in October, resulting a 6.2 percent increase in the CPI since last year. That’s the highest annual increase in the CPI in more than 30 years, since December 1990. And the CPI increase measured in some metropolitan areas was even worse: the Atlanta Journal-Constitution reported, for example, that the CPI increase in that area was 7.9 percent, the highest increase in any city in the country.

It’s pretty clear that inflation is back as an area of significant economic concern. Just hearing that word sends a shudder of dread through those of us who lived through the high inflation period of the ’70s and early ’80s and the belt-tightening days when the Federal Reserve took draconian steps to halt the inflationary spiral and wring the constant price increases out of the economy.

The big question right now is just how persistent the inflationary spiral will be. The Federal Reserve says we’re in the midst of “transitory” price increases, but the most recent CPI data has increased market skepticism of that rosy outlook. The data showed price increases pretty much across the board, and not limited to more volatile areas that can react to temporary shortages, like fuel and food. Even if food and fuel prices are stripped out of the analysis, leaving only “core CPI” to be considered, prices are rising at a 4.6 percent annual clip, which is the highest “core CPI” rate since August 1991.

Even worse, the Labor Department reported that the CPI surge meant that real wages, after inflation, fell 0.5 percent from September to October. That’s a familiar scenario for those of us who lived through the country’s last big inflationary period, in which wage hikes and salary increases never quite seemed to catch up with the CPI. In those days, the upward spiral in prices put many people into a downward spiral in terms of their personal finances and debt situation and really hurt seniors and others living on fixed incomes.

Perhaps the Fed and Treasury officials who reassuringly contend that the inflation spike is temporary will turn out to be right–but what we’ve been reading about “supply chain” seems calculated to feed into more price increases, not less, and shortages that the law of supply and demand dictates will produce higher price tags as we head into the holidays. We need to do something about inflationary pressures and fix the supply chain problems before we find ourselves trapped in another upward-downward spiral.

Better Late Than Never

Every once in a while you read a news story that really surprises you, because it addresses something that you would have bet had been resolved long ago. I had that reaction when I read about the Federal Reserve Board’s recent decision to ban ownership of individual stocks and restrict trading activity by senior Fed officials.

The Federal Reserve, as the nation’s central bank, often takes action that can affect the securities markets–whether it includes decisions about interest rates, tightening or loosening the money supply, or buying or selling bonds to try to ensure market liquidity or shore up the balance sheets of large financial institutions. Anyone who follows the financial markets knows that daily market movements, up and down, are often attributed to reactions to what the Federal Reserve has done, or said. You would be hard pressed to find any federal agency that has a more direct effect on the financial markets.

The Fed found itself caught in a controversy recently when the news media reported that certain Fed officials were buying and selling stocks while the Fed was taking aggressive action to respond to the financial fallout from the COVID-19 pandemic. Two Fed regional presidents resigned after their trading practices during the pandemic were disclosed.

Under the new rules, senior Fed officials will not be able to own individual stocks, bonds, agency securities, or derivative contracts and will be restricted to holding interests in mutual funds, which they will have to sold for a year. (Mutual funds are viewed as more diversified assets and therefore are less likely to be directly responsive to potential actions taken by the Fed.) And no trading of any kind will be permitted during times of “heightened financial market stress.”

Given all of the regulations that are imposed on every facet of American life, it’s surprising that the restrictions announced by the Fed didn’t exist already. The new rules should remove any temptation or concern about self-interested decisions, but it is also interesting that the rules are self-imposed. It might not be a bad idea for Congress to take a deeper look at the issue, and consider whether there is a need for laws to regulate the securities ownership and trading activities of Federal Reserve officials.

Another COVID-Related Casualty

We’ll be tallying up and analyzing the consequences of COVID-19 for years to come. The pandemic has not only had a direct human toll, in terms of deaths, and hospitalizations, and illnesses, but also substantial indirect impacts — on businesses, on local economies, on social interaction, on children’s perceptions of the world, and countless other parts of our lives. This week Deer Isle felt one of those indirect impacts when the Island Nursing Home announced that it will be closing its doors in October after 40 years in business.

As has been the case with many of the human casualties, COVID was just one of the causes of the demise of the Island Nursing Home. As the article linked above indicates, the facility had been dealing for years with challenges in hiring qualified staff, attributable to a series of factors–a general shortage of qualified health care workers, its remote location on an island, “Maine winters,” and a lack of affordable housing in the area–and the COVID pandemic exacerbated the staffing shortage to the point that the facility can no longer provide care. And this isn’t the first time that the COVID virus has affected the facility, either; in 2020, there was an outbreak at the facility among both residents and staff.

The closure of the Island Nursing Home will have an impact on this community, by virtue of its position as a significant employer and because it will leave residents, and their families, with difficult decisions about where to go. Many of the residents are from this area, and the notion of moving away to unfamiliar surroundings is unsettling to them. And there will be challenges in finding places for the residents, because the staffing shortage experienced by the Island Nursing Home is also being felt by other facilities. That’s a real problem when a growing percentage of our population is aging and reaching the years when they are seriously looking at assisted living facilities.

The Dollar Table

Every morning I walk past an antiques store that sells all kinds of stuff, from ancient magazines to old-style crafts to lobster buoys. There’s always a table out front with items selling for a dollar. It’s a savvy bit of marketing by the proprietor. Passers by see the items, think that they’re only a dollar, wander over to take a look, pick the items up to examine them, and wonder whether they could find a use for, say, that tin camping percolator. Then they wander inside to see what additional treasures might be available.

The dollar table items must sell, because the items on the tabletop are ever changing. Eventually, every bit of household detritus seems to find a place on the table. It makes you realize how much stuff is found in an American house: sugar bowls, napkin holders, glassware, random plates, pots and pans, old bottles, ashtrays, and every other piece of bric a brac you can imagine.

But the undisputed lord of the dollar table is the coffee cup. The table always features at least a dozen, ranging in size from dainty to gargantuan. Single cups from what obviously once was a set, cups with branded logos, cups with lids to keep the coffee hot longer—they all testify to the U.S.A.’s love affair with java, and the dollar table allows them to be recycled to new users. It’s a small coffee-flavored undercurrent in the flow of the Stonington economy.

The Inflation Watch

The U.S. got some economic news yesterday that is designed to unsettle those of us with more than a few years under our belts. The Consumer Price Index rose 5.4 percent in June, year over year, which was higher than analyst expectations. It’s the highest year over year increase since 2008. And while economists expected some inflation—it’s hard to avoid when stimulus checks are being sent to millions and government spending has exploded—the magnitude of the increase shown by the June data was greater than the forecasts.

Inflation data can be broken down in many ways, because of course prices for all goods and services don’t rise at uniform rates. Some observers noted that the “core” inflation rate, which strips out more volatile food and energy costs, was 4.5 percent—the highest increase since November 1991. Others argue that the rates are being driven by increases in some sectors, like in the cost of used cars, that seem to be reflecting a short-term imbalance of supply and demand that will work itself out. And still others note that the energy sector, and the skyrocketing cost of fuel, will have a ripple effect that can be expected to drive further increases in other areas, like food and many consumer goods, where transportation costs are factored in to prices. Nobody quite knows what might be coming next month, or later this year.

If, like me, you lived through the ‘70s, news about growing inflation is like fingernails on a chalkboard. An inflationary cycle means your paychecks buy less, because pay increases never quite catch up to prices, and it means the money that you’ve carefully saved and invested is worth less—a result that punishes prudent and responsible behavior. Retirees and people on fixed incomes get crushed and find that their nest egg has become a lot smaller than they thought.

And we veterans of the ‘70s and early ‘80s also remember that the cure for inflation—high interest rates and tight monetary policy that consciously stifles economic growth and produces high unemployment rates—is no treat, either.

Economists will be watching to see if this price spike is transitory, or is the first sign that we are on the road to a bad long-term inflationary period. I’ll be watching, too, and hoping that our economy isn’t cycling back to the ‘70s mode.

Preventing Porch Piracy

Yesterday I went to the grocery store in Grandview to get some provisions. As I was going through the checkout line I noticed a large mustard yellow metal unit with the Amazon logo, shown in the picture above, tucked in a corner nearby.

I asked the checkout lady about it, and she explained that some people are now uncomfortable having Amazon deliver their orders directly to their houses or apartments and leaving the packages there. So, Amazon has addressed the problem by installing these metal locker units—similar to the kind you used to see at bus and train stations—at various points around town, like the Grandview Giant Eagle. Rather than having your order delivered to your home address, it gets delivered to one of these lockers, and the customer is emailed a code that allows them to open the locker unit containing their purchase and retrieve the item at their leisure.

Porch pirates are a real problem, and I’m guessing that some people also are having privacy issues with their purchases being displayed on their doorstep for all the world to see. The lockers try to address those issues. But’s kind of a strange, old-school fix, isn’t it? A big part of the idea of Amazon is convenience and getting things delivered right to your doorstep. With the locker option, you’ve got to get off your couch, go outside, drive somewhere, remember your code, and pick up your stuff.

I wonder how many people who try the locker option will ultimately think they might as well just go to that brick-and-mortar store in their town that sells the item, buy it directly, bring it home themselves, avoid the prying eyes of their neighbors and the porch piracy risk, and skip Amazon altogether?

First The Post, Now The Times

Richard continues to rack up some impressive clips. Earlier this month he had a piece published in the Washington Post about the controversy swirling around the Alamo, and now he has co-written, with Edgar Sandoval, a piece in the New York Times about the impact of SpaceX and its rocket launch site on the tiny community of Boca Chica, Texas, and towns like Brownsville that are in the vicinity. You can find a link to the Times article, entitled “A Serene Shore Resort, Except for the SpaceX ‘Ball of Fire,'” here.

Getting articles in two of the country’s leading newspapers is a terrific accomplishment. Congratulations, Richard!

And the article by Edgar and Richard in the Times raises an interesting and really difficult question: what is the price of progress for a community like Boca Chica, and how do you balance economic development and jobs creation against the impact it may have on individuals?

A Maine View On Immigration

The Working Waterfront is a local publication that covers Maine’s coastline and islands. The June 2021 issue carried an interesting story about immigration and its importance to the future of Maine’s economy, which includes both Maine-specific industries, like seafood harvesting and processing, forestry, tourism, and farming, as well industries found everywhere, like elder care and health care.

The bottom line is that Maine is desperate for workers, and is looking to immigrants to fill the void. And when Mainers talk about “immigrants,” it’s not just people who come to Maine from other countries, they’ll gladly welcome people from other parts of the U.S. who might want to come here to work, too. The Working Waterfront article calls all of these people “New Mainers,” and estimates that the state will need at least 75,000 of them over the next ten years to keep Maine’s industries economically viable. That number will allow replacement of the 65,000 workers who will be hitting retirement age–according to the Census Bureau, Maine has the oldest population, per capita, in the U.S.— and adds in some additional workers to allow for growth.

The article reports that businesses have already begun to fill the worker void with New Mainers–primarily immigrants from overseas. One seafood processing firm reports that more than half of its 400 employees are New Mainers, with many of them hailing from the Congo, Angola, Vietnam, and Cambodia, while a lobster business includes employees from the Congo, Angola, Cambodia, and El Salvador. The businesses see these New Mainers as hard workers who are eager to succeed and enjoy their share of the American Dream, and the New Mainers see the Pine Tree State as a land of opportunity.

Immigration has been a hot-button issue for a long time, with a lot of attention focused on America’s southern border. But the immigration story is a complex one, and involves a lot more than a surge of desperate people wading across the Rio Grande and how we should deal with them. The reality is that America needs immigrants, and immigrants need America, and we need to figure out a way to allow people who want to work to get into our country, legally, and fill the employment voids in places like Maine. It’s pretty clear that New Mainers will be an important part of this state’s future.

Signs Of A Stonington Summer

In seasonal towns like Stonington, many businesses close for the winter. When spring comes, residents start to look for signs of when the businesses will reopen. The businesses reopening sends the welcome message that summer, when Stonington will (we hope) welcome happy and free-spending tourists back to the town, is just around the corner.

Because all of the businesses are locally owned, each one follows its own timetable, which means the town-wide reopening is really a gradual process. Some businesses have partially reopened, some have shown activity that suggests they are getting ready, and others remain dark and shuttered, with no signs of life yet.

I like to look for clues about where things stand during my walks around town. Sometimes the signs of reopening are literal signs, like the hand-lettered notice in the door of one of the shops shown below, and sometimes it is doing the things that get a space ready for business—like painting the gray wooden deck and putting up the signs and the bright red lobster at the Stonington Ice Cream Company stand, above. When the handwritten list of flavors goes up next to the order window, completing the last step in the reopening process, we’ll know that summer is really here.

Getting Out Into The Sunlight . . . And Moonlight

With vaccines becoming more widely available to all age ranges — Ohio is getting ready to open vaccine distribution to everyone over 16 by the end of this month, for example — people are hopeful that we may be inching back toward what we remember as pre-pandemic normalcy. But I think everyone also realizes that a big part of the “getting back to normal” process depends on people, and just how comfortable they feel about returning to the acts and practices that we took for granted before March 2020.

And here’s a key question: how comfortable will people be about being in a crowd, even if they are vaccinated and/or masked up?

On Gay Street, in downtown Columbus, we’ll begin to get a sense of the appetite for the pre-pandemic activities next month. The Gay Street District will hold its first “moonlight market” on April 10, from 6-11 p.m., and its first “sunlight market” on April 18, from 11 a.m. to 3 p.m. The markets give visitors a chance to do some shopping from street vendors who will set up along Gay Street and grab some food from the restaurants lining Gay Street. Part of the fun of the events is being in a bustling crowd while moving up and down the street. This year, organizers no doubt are wondering how many people — vendors and visitors alike — will show up.

The COVID-19 pandemic has hit everyone hard, but small businesses, street vendors, and street festivals have been particularly devastated. As we work on making our way back to “normal,” keep an eye on events like the Gay Street District markets. They are the kind of leading indicators that will tell you whether there is a pent-up demand on the part of cooped-up people to get out into the sunlight, and moonlight, or whether people are holding back because of lingering concerns that the coronavirus is still lurking out there, and that maybe it is wiser to just stay home — again.

Broken Windows And Gutter Masks

As we inch closer to reopening America and trying to get back to the way things were before the Great Shutdown, here’s a thought for hopeful business owners, bar proprietors, and restauranteurs: remember the “broken windows” theory.

As long-time readers of this blog know, “broken windows” theory holds that the physical surroundings communicate important messages to people about social order. If you see a broken window in your neighborhood, and after a few weeks it becomes apparent that no one is going to fix that window, you get the message that your neighborhood isn’t as orderly as it once was, and it causes concern about personal safety and appropriate behavior. The same message is conveyed by the appearance of graffiti on buildings, and increased litter on the streets. All suggest a breakdown in the established social compact that will make people jittery.

The COVID-19 pandemic has presented broken windows theory on a national scale. Everything changed abruptly about a year ago. Many businesses closed during the initial shutdown, and some of them never reopened. There were fewer people on the streets, and many of those who were out were obviously fearful. Neighborhoods started to look more trashy because people who might otherwise pick things up and throw them away were afraid that loose trash and debris might be vectors for transmission of the disease. And all of those bleak visual cues have a compounding, reinforcing effect.

I was in downtown Columbus yesterday, and I thought about “broken windows” theory as I passed yet another gross, discarded facial mask in a gutter in front of a business. I think those gutter masks send a pretty unmistakable message that things still aren’t back to normal or even close to normal — because if they were, the business owner or a cleaning crew obviously would pick up that mask, and any other litter on the sidewalk. If I were a business owner trying to get the wheels of commerce to really turn again, I would go on mask patrol and make sure that the area around my establishment was free of dirty masks and other negative visual cues that might cause people to refrain from entering.

There are still a lot of nervous people out there. Many of them want the world to get back to normal, but they’ve been cautioned and conditioned to avoid risk. Filthy facemasks in the gutter subconsciously communicate that the risk is still out there.

The Great Unmasking

We all remember how the COVID pandemic started, as cases climbed and state and local governments closed businesses, put restrictions on activities, and imposed mask mandates. Now we’ll see how the pandemic will end — and how long that process will take.

On Tuesday, Texas Governor Greg Abbott issued an order, to take effect next Wednesday, that will end the state’s mask mandate and allow all businesses of any type to open at 100 percent capacity. The press release from the Governor’s office, linked above, recognizes that “COVID-19 has not disappeared,” but notes that more than 5 million Texans have been vaccinated and about a million vaccinations are being administered each week, and concludes that state mandates are no longer needed and reopening Texas “100 percent” is necessary to “restore livelihoods and normalcy for Texans.” Under the Governor’s approach, Texans, and Texas businesses, will decide for themselves what practices they will follow.

Abbott’s decision has been strongly criticized. President Biden called it a “big mistake” that was the product of “Neanderthal thinking,” for example, and the CDC Director says “now is not the time to release all restrictions” because the next month or two will be “pivotal” in determining the course of the pandemic. And Texas businesses are taking different approaches to mask issues in view of the order, with some lifting restrictions and others still requiring employees and customers to mask up. Some businesses note that the Governor’s order puts them and their employees in an awkward position: if they decide to continue to require masks from customers because the CDC thinks that is the right course, they are putting their employees in a position of enforcing the requirement–and increasing the risk of confrontations with customers who refuse to do so.

One of the more interesting consequences of this pandemic has been the spectrum of risk tolerance we are seeing from businesses and our friends and colleagues. Some people have been out and about for months, traveling and dining out, others have stayed at home and are continuing to avoid any public places, and still others occupy every permutation in between. I think we’ll see a similar range of actions from state authorities, guided by the specific economic and health conditions in their states. Is an abrupt, total lifting of requirements the best course, or a gradual easing of restrictions, or keeping all mandates in place until it is crystal clear that there is no longer any risk whatsoever of a COVID resurgence? And do public health authorities really have the ability to give conclusive advice on when the pandemic, and the risks, have ended?

When you were a kid and scraped your knee in a childhood mishap, you put on a Band-Aid. After the Band-Aid did its work, you had to make a decision on how to remove it: rip it off, tug it off gradually, or do something in between. Texas’ Governor has taken the “rip it off” approach. Now we’ll see how that works out.