Economic damage from the shutdown is becoming more obvious as more reporters spend time covering the destruction. Here are two articles each on the overall economic impact, specific impact on individuals, and concentrated impact on two cities:
GDP in Italy expected to shrink to the level it was 23 years ago
Airline CEOs expect it will take years for the airlines to recover
Additional 8 million Americans drop below the poverty level, joining the 55 million who were there before the pandemic
All 1,600 orchestras in the country have gone dark; their 160K musicians are unemployed
San Francisco has 14% vacancy rate in commercial office space
Impact on employment in New York City is more severe than the national average
In September 2020 the Financial Accounting Standard Board issued ASU 2020-07. Formal title for the document is Not-for-Profit Entities (Topic 958) – Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets.
Contributed nonfinancial assets means gifts-in-kind. The ASU does not apply to donated services or donated financial assets such as stocks and bonds.
ASU 2020-07 will only change the presentation of GIK on the statement of activity and require additional disclosures in the notes. It will not require any change to the valuation of donated pharmaceuticals (accountants call that recognition).
The number of new claims for unemployment for week ending 10/10/20 increased, which offset net declines of the preceding five weeks. New claims are 898K, a 53K increase over the revised tally for previous week of 845K.
Since 8/29/20 the new claims have been in the mid- to high 800 thousands. Change in the last six weeks, starting with 9/5/20 are +9K, -27K, +7K, -24K, -4K, +53K.
Keep in mind before the government induced shutdown of the economy new claims averaged about 220K per week so we are still running about four times the previous norm.
The number of continuing claims for unemployment is continuing to drop. I’m not sure why this is. Part is due to people going back to work. Part of it is people dropping off the state-level unemployment rolls after the 13 weeks of coverage.
There are consequences from the shutdown. Image courtesy of Adobe Stock.
The damage to health caused by the lockdown is becoming more visible. The damage has been there from the beginning of the shutdown; it is just becoming more obvious. A growing number of news articles are describing the deteriorating health outcomes. A growing number of reporters are noticing the devastation.
A few recent articles for your consideration:
‘Years of life lost’ caused by the shutdown is calculated in one analysis to be seven times the number of ‘years of life lost’ which are prevented by the shutdown
Frightening increase in suicide ideation by young adults
Mental health services pulled off line because of the shutdown
Seniors at one nursing home protest the shutdown and the loneliness it causes
Make a mental note that a large number of governors, state-level health officials, federal health officials, and county health officials are forcefully, willfully continuing the lockdowns.
Summarized below are a few of the recent articles pointing to expanding economic damage from the shutdown. Destruction in the movie business is noticeable in recent days:
Second largest movie chain in the US closes all its theaters
Wonder Woman director worried the entire theater industry may die
Disney restructures in order to increase focus toward direct-to-consumer distribution channel and away from theatrical release
Sales tax collections in San Francisco collapse
Passenger cruise ships are getting scrapped
10/5/20 – Wall Street Journal – Regal Cinemas Suspending Operations at All US Locations– The chain with the second largest number of theaters in the U.S. has closed all of its US theaters after having reopened only two months ago. Article does not indicate when any of the theaters will be reopened.
Article says release dates for a dozen movies have been postponed.
The number of new claims for unemployment for week ending 10/3/20 continues to decline a bit. Since 8/29/20 the new claims have been in the mid- to high 800 thousands. Change in the last five weeks, starting with 9/5/20 are +9K, -27K, +7K, -24K, -9K.
To again put this in context, before the government induced shutdown of the economy new claims averaged about 220K per week.
The number of continuing claims for unemployment is continuing to drop. I’m not sure why this is. Part is due to people going back to work.
Status of public education across the country two months into the new school year. Image courtesy of Adobe Stock.
Increasing numbers of reports describe the damage to education of our youth. Students of every age group being hurt by the lockdown. Impact on poor or disadvantaged or previously struggling students is even more severe.
I am heartbroken that the damage will continue for the near future. The compounding effect will be terrible.
9/28/20 – ProPublica – The Students Left Behind by Remote Learning – Keep in mind this article describing the devastating impact of the lockdown on students from disadvantaged families is from ProPublica, a far-left news organization and not from some wild eyed Libertarian organization that wants people to have the freedom to make their own decisions on absolutely every issue in their lives.
Article goes into great lengths describing the struggles experienced by one particular student who has been trying to learn in virtual classes. As a starting point, there’s a grand total of four hours online teaching per week. Four hours – one hour per day on Monday through Thursday. That is the only teaching time. For all his class subjects.
This is the first report I have seen on overall giving trends during the pandemic. Preliminary indications are giving was down in the first quarter but strong enough in the second quarter that year-to-date giving is up compared to prior year.
One of the frustrations I have experienced as an auditor is the statistical information made visible by the AICPA and publications from others is that the economic data mentioned routinely lags behind two or three quarters on the date it is published. Another trade association reports giving trends in the religious communities, but the survey information is provided late in the year for the prior calendar year.
The result is when I’m working on an audit or review several months later, the readily available economic data is from the start of the fiscal year I’m analyzing. Sometimes the data is for the prior fiscal year I’m considering. That doesn’t do me much good.
Long time ago I came across a comment that CPAs ought to start tracking key economic indicators on their own.
Enough time has passed that there is enough information to start analyzing the lockdowns. Preliminary info is not pretty. Image courtesy of Adobe Stock.
Indications are starting to emerge that the answer to the question may actually be no.
Previously mentioned one analysis which found a weak statistical correlation between weaker lockdown requirements and lower infection rate. The study found no correlation between the date that states started releasing the lockdown restrictions and subsequent infection rates.
The rate of infections accelerates rapidly and then hits an inflection point where the rate of infections either plateaus or the rate slows dramatically.
The following study suggests the lockdowns have no correlation to when the infection rates hit that transition point. In fact, the inflection point normally is reached before the lockdowns could have had any impact.
The number of new claims for unemployment for week ending 9/26/20 has been about the same over the last five weeks, in the mid- to high 800 thousands. Last big drop was the week of 8/29/20. To again put this in context, before the government induced shutdown of the economy new claims averaged about 220,000 per week.
Good news is the number of continuing claims for unemployment is continuing to drop, which means that more people are going back to work than loosing their job.
The devastating impact of the economic shutdown continues to be painfully obvious.
Starting this week that way the information is presented for this ongoing analysis will be in graphs.