Monday, June 7, 2021

May Flower: Economic Environment

We are entering a boom period as the U.S. economy is projected to grow 7% this year with plenty of borrowing capacity because many consumers and businesses are sitting on cash from savings and stimulus during the pandemic. The key risks now are supply chain and labor shortages that will “take a little time to straighten out” -- or not:

"Ransomware just got real. This costly nuisance has been around for decades, but never before has it done such high-profile harm to the nation’s critical industries. Since early May, ransomware gangs have disabled a major fuel pipeline, shut down a key producer of the nation’s meat supply, and even affected the ferries that serve Nantucket and Martha’s Vineyard. The attacks showed how key sectors of the US economy can be crippled by a few lines of toxic computer code, planted by criminals thousands of miles away. Because our most vital utilities, like electricity, gas, and water, are also connected to the Internet, the next attack could be even more devastating....."

The ferries are still chugging along and as someone used to say, HOW CONVENIENT!


Better find yourself an island in the Caribbean (ugh) like this woman:

"Economics: Affluent Americans Rush to Retire in New ‘Life-Is-Short’ Mindset" by Alexandre Tanzi
and Michael Sasso Bloomberg News, April 30, 2021

After a year of early-morning Zoom calls, the specter of a deadly virus and soaring stock and real estate values, working American baby boomers who can afford it plan to get out while the getting’s good.

About 2.7 million Americans age 55 or older are contemplating retirement years earlier than they’d imagined because of the pandemic, government data show. They’re more likely to be White, a group that typically has a larger amount of accumulated wealth, and many cite robust retirement accounts and Covid-19 fatigue for their early exit, according to interviews with wealth managers and federal surveys.

Much like the U.S. economy’s so-called K-shaped recovery, the pandemic is treating the affluent differently, empowering them to leave corporate life early. Others who lost jobs had to delay retirement, or grew discouraged and retired before they were ready.

Early retirements, whether desired or forced, will deprive the labor market of some of its most productive workers and have an impact on the economic recovery that is still too early to evaluate. Federal Reserve Chairman Jerome Powell this week cited a “significant number" of people saying they've retired as one reason companies are reporting labor shortages, although it's unclear if they'll eventually rejoin the job market.

Melissa Marteney got tired of working more with less as the pandemic dragged on. She helped oversee state parks for the Massachusetts Department of Conservation and Recreation and was tasked with hiring hundreds of lifeguards and other seasonal workers each spring, but even as people flocked to parks to escape Covid-19 lockdowns, the state cut the seasonal administrative staff that helped her screen candidates.

She retired this year at 58, about five years earlier than expected. Her husband also retired from his job at a financial services firm, and now the couple plan to sail to the Caribbean over winters in their 42-foot sailboat. By exiting early, she’ll collect a smaller payout from her pensionbut the couple’s other retirement accounts have ballooned so much lately that “we’re going to be in the green until I’m 92.”

[It's not as nice as Tom Brady's, but.... he didn't have taxpayers pick up the tab, did he?]

“I've seen so many people who have decided to wait too long to retire — many of my colleagues or older family members — and they get one year of retirement and get sick and pass on,” she said. “I don't want that.”

The unprecedented surge in shares and home values during an economic crisis is easing the retirement path for those who have investments. Assets for Americans ages 55 to 69 rose by $4.2 trillion in 2020, including a $2.2 trillion increase in corporate equities and mutual fund shares and a $250 billion gain in the value of private businesses, according to data from the Federal Reserve. Real estate assets soared by almost $750 billion for this group. 

Concern that some or all of that wealth could evaporate has especially weighed on entrepreneurs who’ve been through the 2008 Great Recession. The number of business owners who say they plan to retire sooner than expected has doubled since since last August, according to a survey by financial services firm Wilmington Trust.

“Dealing with two major economic events in less than 15 years may have them wondering if it’s time to take money off the table, especially as they near retirement,” said Stuart Smith, a national director of business value strategies at Wilmington Trust.

The loss of older workers will hurt the labor market. Those workers have strong productivity, lower absenteeism and they can train and mentor newcomers, said Susan Weinstock, vice president of financial resilience programming at seniors advocacy group AARP in Washington, D.C. “Older workers are especially strong in soft skills — things that develop over time and are difficult to teach,” she said.

The situation could become particularly acute in health care. Almost a third of physicians are over 60, the nonprofit Physicians Foundation said in a November paper, warning that burnout threatens to exacerbate an existing shortage, especially among scarce specialists.

In Bethesda, Maryland, orthopedic surgeon Stephen Rockower, while not young at 69, retired earlier than planned last summer after the pandemic scared away many of his patients.

“I realized that whenever things did turn back around, I didn’t have it in me to fight to build the practice back up,” he said. “If I were 45 years old, I would have had to do this, but at 69 I said, ‘I don’t have to do this anymore.’”

They left because the money is worth more down there:

"President Joe Biden’s economic plan is unlikely to create inflation pressure in the US because the boost to demand will be spread over a decade, said Treasury Secretary Janet Yellen. “I don’t believe that inflation will be an issue, but if it becomes an issue, we have tools to address it,” Yellen, the former Federal Reserve chair, said Sunday on NBC’s “Meet the Press.” “It’s spread out quite evenly over eight to 10 years. So, the boost to demand is moderate,” she said of the proposed spending. Yellen also said the US has the “fiscal space” to make investments in its economy, with interest rates low and likely to remain so, but over the long haul, budget deficits need to be “contained.” Another top Biden administration economic adviser said inflation now apparent in certain pockets of the economy is “transitory” as the nation exits the pandemic. Cecilia Rouse, chair of the White House Council of Economic Advisers, said supply chain issues and labor market shortages are “bumps along the way” to recovery....."

That comes as the US and other major economies rebound from the pandemic and prices for everything from copper to oil have skyrocketed, while, a key measure of consumer prices, known as the personal consumption expenditure price index, rose 2.3% in March from a year earlier, marking the largest jump since 2018 -- [which has] some experts worrying about inflation, including former US Treasury Secretary Lawrence Summers, who told Bloomberg Television on Friday that the Biden administration’s spending plans could overheat the economy, but Federal Reserve Chairman Jerome Powell shrugged off such concerns last week, telling reporters that the reopening of the economy may lead to a single episode of price increases, but not a long-running bout of inflation and Yellen focused on the US proposal for a global minimum corporate tax and efforts to clamp down on tax loopholes in the US.

What she calls “an important way of increasing tax compliance” and it will $ure $mell like $tate communi$m when intere$t rates go sky high, and be $ure to keep wearing a ma$k down there:

"Innovation Economy: A startup finds its footing during the pandemic" by Scott Kirsner Globe Correspondent, May 2, 2021

On the last day of March, Duncan Reece put on an N95 face mask and headed to downtown Boston to meet five colleagues. Their objective was to check out four offices to see if one might be right for their fast-growing startup, Cohere Health.

When the pandemic arrived a year before, Cohere had 16 employees and operated out of a shared office space in Downtown Crossing. By this March, Cohere, which focuses on smoothing out the process of getting “prior authorizations” for doctor’s appointments and medical procedures, had grown to 160 people ― all of them working remotely. The topic of needing some sort of office space by July or August had come up, leading to a hunt for what might be available to sublease downtown. For Reece, Cohere’s chief operating officer and cofounder, the day of the office visits marked the first time he’d met any of those five colleagues face-to-face.

The pandemic has affected every industry differently, but for many of Boston’s tech startups, it has been a period of continued growtheven as they figure out how to adapt to new ways of working. Last year was a record one for venture capital investing activity in Massachusetts, with more than $16 billion pouring into startups, according to the National Venture Capital Association. (Cohere collected $20 million of that funding, fueling its hiring spree), and Cohere may be an early indicator of the desire among some tech startups to once again have an office to work from.

[I will give you one gue$$ where the funding came from as the Great Re$et is literally a $elf-fulfilling prophecy]

Cohere was founded in August 2019, with the goal of “reducing a lot of the administrative burdens that can make health care ridiculous for doctors, patients, and the health care plans themselves,” in Reece’s words.

They would start with the prior-authorization process, which requires doctors to seek approvals from health insurers for additional types of treatments or consults. Sometimes that involves phone calls, faxes, or visiting a Web portal. Reece says doctors’ offices may need to use as many as 40 systems to submit these requests for authorizations from various insurers.

Cohere would set out to “solve the problem using modern technology,” Reece says, along with the health care plans being “willing to change how their processes work.” The goal was to launch a product by Jan. 1 of this year. Initial funding came from Flare Capital Partners, a Boston venture capital firm, along with Humana Inc., the giant Kentucky health insurer.

By early 2020, Cohere was focused on recruiting experienced people who had built technology companies in the health care sector, according to Kaleb Guion, employee number two. With the help of outside consultants, they’d built a prototype software system that they could show to customers to get feedback. Reece says that he was traveling at least 60 percent of the time, mainly to visit executives at Humana, which was committed to being an early user of the software, and to see doctors who would be part of a beta test in Knoxville, Tenn.

The idea, he says, was to “spend a lot of time with the folks who work in doctors’ offices, so we’d understand what they experience, and the challenges of patient care.” Often, Cohere staffers would drive the four hours between Louisville, Ky., where Humana is headquartered, and Knoxville.

In February 2020, the company held its first (and so far, only) off-site meeting. The featured speaker was Gary Gottlieb, Cohere’s chairman and the former chief executive of what was then known as Partners HealthCare. It was an early opportunity for recent hires, including chief product officer Gina Kim, to spend time together. Kim recalls playing the strategy board game “Settlers of Catan” as a group.

March 13, 2020, was the last day of working from the office for Cohere’s 16 employees. Like many other companies, Cohere figured out how to keep making progress in the remote-work era.

Reece says that while COVID-19 has been “terrible for the world, one thing that has benefitted us” was being able to hire people laid off from other technology companies such as TripAdvisor, Zipcar, and Haven, the failed health care startup formed by Amazon, Berkshire Hathaway, and JPMorgan Chase. “In a typical environment, it would’ve been hard to hire as many people as we did” over the course of 2020, he says.


By Jan. 1, Cohere had managed to launch its product in a dozen states — twice as many as expected. By February, Cohere processed more than 100,000 prior-authorization requests. In April, the company raised an additional $36 million, a funding round led by Boston-based Polaris Partners.

The company also surveyed employees about their desire to work in an office again, including how many days a week they might want to come in. A committee was formed. “Personally, I’ll probably come in three days a week,” says Reece, who lives in East Cambridge. Having an office, he says, “will help us ‘show’ who we are to customers, partners,” and prospective employees. The plan is to design the space “to promote collaboration between remote and in-person staff.”

“I really want to see people,” says Kim, who says she has barely left her house in Waltham over the past year. Google’s videoconferencing software is fine, she says, and you can try to make small talk within the constraints of scheduled 30-minute meetings, but “sometimes it is nice to grab a beer with somebody.”

Reece says the company is close to signing a lease for a new office in Boston, starting July 1. “It’s hard to plan for, and it’s stressful, too,” he says. Cohere will likely rent enough space for 100 workers, but perhaps only half that will use the space initially.

The company’s culture has taken shape primarily via Zoom — though employees have occasionally planned outdoor activities like bike rides. Reece says, “We’ve had some folks say, ‘I’m worried about going back to the office. What’s that going to do to the culture?’ ”

Michael Greeley, a board member and early investor in Cohere, says in an e-mail that over much of the company’s lifespan, employees, executives, and board members have been “groping through this ‘new abnormal’ together. It will be fascinating to see everyone return to an office and meet formally for the first time — even though they have been working intensely together.”

This will leave you inCoherent:

"Federal health officials’ new, more relaxed recommendations on masks have all but eclipsed another major change in guidance from the government: Fully vaccinated Americans can largely skip getting tested for the coronavirus. The Centers for Disease Control and Prevention said last week that most people who have received the full course of shots and have no COVID-19 symptoms don’t need to be screened for the virus, even if exposed to someone infected. The change represents a new phase in the epidemic after nearly a year in which testing was the primary weapon against the virus. Vaccines are now central to the response and have driven down hospitalizations and deaths dramatically. Experts say the CDC guidance reflects a new reality in which nearly half of Americans have received at least one shot and close to 40% are fully vaccinated. While vaccinated people can still catch the virus, they face little risk of serious illness from it, and positive test results can lead to what many experts now say are unnecessary worry and interruptions at work, home and school, such as quarantines and shutdowns. Other health specialists say the CDC’s abrupt changes on the need for masks and testing have sent the message that COVID-19 is no longer a major threat, even as the U.S. reports daily case counts of nearly 30,000....."

Then why the incessant insistence on blanket inoculations when at this point we really should be asking ourselves whether the benefits of testing outweigh the costs,” according to Dr. A. David Paltiel of Yale’s School of Public Health, who championed widespread testing at colleges last year as baseball officials are now discussing whether to drop or reduce testing of people who have no symptoms, but widespread attempts to waive testing for vaccinated people could face the same dilemma seen with the CDC’s new guidelines on masks: There’s no easy way to determine who has been vaccinated and who hasn’t. Employers can legally require vaccinations for most workers, though few have tested that power, since the vaccines don’t yet have full regulatory approval. Even asking employees to disclose their vaccination status is viewed as intrusive by many employment-law specialists, but for now, testing appears to be continuing unchanged in places that adopted the practice, from offices to meatpacking plants to sports teams, and pork producer Smithfield Foods said it continues to conduct a combination of mandatory and optional testing for employees, depending on conditions at work sites while Amazon said it will still offer regular, voluntary testing and the NBA has indicated it plans to keep its testing system in place for now after having been been praised for using rigorous testing to create COVID-19-free “bubbles” around players, coaches and staff while on a national level, the supply of COVID-19 tests now vastly surpasses demand because “the vaccines overperformed, which is the best news possible, so now you can begin to peel back some of these other layers of mitigation like mask use and screening as the pre$$ starts squealing like a stuck hog over the 17,900 US deaths per year caused by air pollution from farms, according to research in the Proceedings of the National Academy of Sciences, with animal agriculture is the deadliest emitter, responsible for 80 percent of deaths from pollution related to food production as the "food system has really flown under the radar" based on conclusions from modeling and estimates(!!).

Something stinks, all right, and it isn't the hog feces!