Continuing claims

The thing that comes after initial claims

I wrote not too long ago about initial claims. The basic story was that initial claims jumped so high during the coronavirus outbreak that the chart broke. Then, the chart broke even more.

People filing for unemployment is a useful metric but there is another related metric that one might look for as well. That is, once people file for unemployment, how many people are still on unemployment? That’s where continuing claims comes in:

Just like initial claims, what jumps out about this chart is the severity of the current downturn. It isn’t quite as broken as initial claims but it is still pretty bad.

There is a some good news in this chart though. As of this past week, the number of people continuing to file for unemployment has dropped. While it dropped from about 25 million to 21 million and that is still really high, 4 million people are getting back to work and that is a positive for the economy.

So, the reopening experiment is underway. It will be interesting to see just how quickly people can get back to work after the extremely quick shutdown. As the sharp spike upwards shows, the economy can be turned off. Turning it back on? Well, that’ll be trickier.

The coronavirus death rate is falling

That’s (probably) good news

One simple way to estimate the mortality rate of COVID-19 is to divide total deaths by the number of confirmed cases. Here is what that has looked like over time:

I could go into all the reasons why this isn’t a perfect metric but just because it has flaws doesn’t mean it’s not useful. There is a lot of information in this time series.

Early on, the death rate was fairly low. That was the same case with SARS, which eventually rose to about a 10% mortality rate. So, the rise in the chart wasn’t a surprise. What is different here though is the current downtrend. That didn’t happen with SARS.

For simplicity of analysis, let’s assume that only one factor is driving the change in this time series (instead of real life where it is some complicated combination of many factors). For the ratio to fall, one of two things has to happen:

  1. The relative rate of deaths decreases

  2. The relative number of confirmed cases increases

That’s it. That’s math. There is a numerator and denominator. So, let’s consider each case.

If the relative rate of deaths is decreasing, it could potentially mean that we are getting better at treating this virus. That makes sense. Early on, doctors had only a vague sense of what things helped or not. Now, they know better - one example is having patients lay on their stomachs as opposed to their backs to get better oxygen intake. Take one tiny fix like that with a bunch of other little tips learned through trial and error and maybe it is enough to save a small portion of lives. Those individual lives add up!

On the less optimistic side of things, perhaps the number of deaths is now falling because the disease is spreading in countries that have less reporting transparency. While Europe and the United States aren’t perfect in their reporting of numbers, there may be other countries that are even more reluctant to release their true death rates. There is some evidence of this with the wide disparity of death rates amongst individual countries.

On the bottom of the ratio we have confirmed cases. This is definitely rising as the amount of testing worldwide has expanded. A lot of people that may not have gotten confirmed because they were not deathly ill are now being counted. I think back to January, February, and even early March in the United States. There were a lot of sick people and they couldn’t get tested! So, they didn’t count.

The less optimistic side of this one is that the virus outbreak is accelerating. Since death lags infection, the rise in cases relative to deaths may mean that there are just a lot more people getting sick now. The deaths could come later.

The truth of all this is that reality is some messy combination of all those things above and a bunch of other things not mentioned. I’m sure you can think of a few pet theories as well that are just as valid potential factors.

But, at the end of the day, I think a falling death rate is a good sign. While the drivers may not be all good, the upside to a falling death rate is more than the downsides here. At the very least, it signals a new chapter on this strange strange virus journey.

One thing I hate about finance articles

And it’s not just clickbait titles like this one

In the Fall of 2008, I entered college as a math and finance double major. It was a scary time for the economy but I think the fear and uncertainty helped motivate me to learn. And, one way I did that was by reading a ton of finance articles.

In the twelve years since, I’ve continued that habit. I would say I know more now than I did back then but in the world of finance, which can be so forward looking, I sometimes wonder if knowledge is even the right word. Maybe the right word is “experience.”

With that experience then, when I think back to one thing I wish I could have changed about how I consumed information through articles, it would be a way to have better continuity with financial information.

Let me give an easy example to explain. I write an article about something random - let’s say market valuation as measured by stocks divided by GDP. I show a chart and say, “wow look at that valuation it’s so high!” Then, the stock market crashes a few weeks later and the reader is stuck wondering what that chart looks like now.

If I don’t do a follow up article then how will you know what is happening now? If you are experienced like me you can go do your own grunt work and calculate the latest numbers yourself but if you are me as a Freshman in college learning up from down, how are you going to easily do that?

That’s one thing I hate about financial news. Literally, what I do every day I post a chart in my newsletter. I provide a snapshot and then move on. Since starting Endless Metrics, this annoyance has bothered me each day that I’ve written because it feels like I’m perpetuating something I dislike.

Now, if your wondering if this is some long-winded backstory about why I’m retiring from newsletter writing - don’t worry! Because it’s time for solutions.

Here’s what’s next. I love writing each day and will continue to do so. On top of that, I’m working on a very simple first version of a site that will host all these metrics that I talk about in live charts that update as new information is available.

I’m a huge believer in progressing things through daily habits and so my plan is to create the most simple first draft and publish it live. Then, with your input and feedback combined with small but frequent iteration, steadily improve the site and use the newsletter as a companion for the release of new metrics and analysis.

I hope to get the first version out very soon and, in the mean time, am open to any suggestions! Hopefully with this new approach, I can finally fix this one thing I’ve always hated. That way, those who are getting started on their journey now as I was back in 2008 can have at least one more advantage than I did - especially in times that (at least to me) seem more uncertain than anything I had to face.

Fifty years of population change

Looking at the top ten counties

Here are the top ten most populated counties in the United States along with a comparison to 1970:

To put my thoughts about each county in a list:

  1. Los Angeles county makes sense and dropped a little bit. I think there is a little more sprawl now into the surrounding areas.

  2. Wow. The Chicago area really fell off. That is an insane drop!

  3. Harris County makes sense - Houston is surprisingly (at least to me) one of the most populated cities in the county now.

  4. Maricopa - retirees.

  5. San Diego area growth seems to fit with all the complaints I hear about housing prices.

  6. Orange county seems like more sprawl.

  7. Miami-Dade is probably getting a lot of ex-New Yorkers…seems like a lot of finance deserters I know ended up there. Don’t blame ‘em!

  8. Dallas is still big and kept up with growth around the country. (Always enjoy my trips down there and people are surprisingly nice to us Yankees. Amazing barbeque.)

  9. Kings county aka Brooklyn is surprising given how expensive it is there. One would think less people means less demand. Perhaps people are fleeing because of prices and less density makes it increasingly attractive?

  10. Riverside county? I guess more Los Angeles sprawl? I can’t really speak to this one as an East Coaster.

One adventure I’ll never forget was taking a road trip from Philadelphia to Los Angeles and then going from San Diego to Vancouver. It’s unreal how big, diverse, and beautiful the U.S. is (and that little bit of Canada!). I definitely plan to do more county-based analysis because there is so much great nuance to these kinds of numbers. Stay tuned!

Velocity of Money

The speed of spending

Here is an interesting concept. Take GDP and divided it by M2. The result? A metric economists call the velocity of money:

The idea behind this metric is that you take the output for an economy and compare it to all the money in the economy. This gives a multiplier for an economy’s money stock. The higher the multiplier, the faster that money is moving around and being used.

The velocity of money is said to rise during periods of economic growth and inflation. Obviously, the relationship isn’t a perfect one because the velocity of money has fallen since the end of the 2007-2009 recession.

And now, the ratio is falling like crazy. With a huge print of new M2 into an economy that is in an economic free fall, this ratio is going to plummet.

It’s definitely concerning. Money gets made but doesn’t get spent around quickly - it feels almost like the lifeblood of the economy is drying up. But, at the end of the day, this is just one metric and not something to lose sleep over. Maybe, as they tend to say, this time is different?

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