No images? Click here 29 APRILEconomics of the pandemicAn unequal burdenCOVID-19 has sent economies around the world into freefall, but the pain isn’t being shared equally. New findings confirm what many suspected: low paid workers are suffering the most. Personal and household services are the business most likely to have been forced to close, not deemed as “essential services.” Since these industries employ a disproportionately large share of women, it is women workers who experiencing the most severe economic impacts of the pandemic. Contrast this with business services, which have much more scope for remote work arrangements, and it is clear that the pandemic has exacerbated inequality in the workforce . Data from the Australian Taxation Office shows that by 20 April 240,000 hospitality workers lost their jobs and a further 47,000 workers from recreation and arts industries were unemployed. In addition to the impacts on women, an Australian Bureau of Statistics survey reveals higher unemployment rates for those under 30 or over 70. These trends are even more bleak in the United States. The 22.8 million jobs generated after the Global Financial Crisis have been obliterated. Lower paid and lower skilled jobs that have been at risk of outsourcing and automation are under acute pressure. Even within in lower paid industrial sectors, it is the lowest paid jobs that are most at risk. Unlike the JobKeeper and JobSeeker programs in Australia, the stimulus payments in the United States do not deliver prolonged support to workers to get through the crisis. Without more targeted measures, the impact of the pandemic on inequality in the United States will grow, making an America that is already substantially more unequal than Australia even more so. To explore more about inequality and the pandemic, read the latest brief by Non-Resident Fellow David Uren when it is published on Friday. For a direct notification when it's published, please sign up for our research alerts HERE. NEWS WRAPEconomic aid becomes political football
It’s totally in our control to fix this. We should be spending US$100 billion on the testing. We should just get it going. It’s just not that hard. Nobel Prize-winning economist Paul Romer ANALYSISUS Q1 GDP will be bad, but will sound worse to Australians than it really isDr Stephen Kirchner On Wednesday, the US Bureau of Economic Analysis will release its advance estimate of US GDP for the three months ended in March. There are significant differences in presentation between US and Australian official data on economic activity that need to be kept in mind when seeking to understand the numbers coming out of the United States. Wednesday’s release is an advance estimate. The United States releases each quarter’s GDP number three times, with each release edging closer to the final estimate. The intent behind the staggered release is to improve the timeliness of the data, at some cost in initial accuracy. The median market economist is expecting a contraction of 3.8 per cent on an annualised basis following a 2.1 per cent expansion in the previous quarter. The St Louis Fed GDP nowcast points to a 15 per cent contraction. This sounds like a bigger contraction to an Australian audience than it actually is. Australia reports its GDP data as a quarter on quarter change. The United States, by contrast, assumes that the same quarterly growth rate applies over four quarters or a full year. In other words, the expected contraction of 3.8 per cent annualised is approximately four times larger than the headline measure that would be reported in Australia. This is still a bad outcome, but not as dramatic as it might sound to an Australian audience unfamiliar with US reporting conventions. In principle, any growth rate can be annualised, but it makes little sense to assume that each quarter of the year will grow at the same rate as the current quarter. This is especially so when measuring the economic impact of COVID-19, which is likely to have a highly variable impact depending on what suppression measures are in place in any given quarter. The Q1 GDP report will pick-up only the initial impact of the suppression measures that went into place towards the end of the quarter. The larger impact will be in the second quarter, for which the New York Fed nowcast is for a contraction of -7.8 per cent. COVID-19: BY THE NUMBERSUnemployment eclipses GFC levelsWeekly US reports of claims for unemployment benefits reveal trends not seen since the likes of the Great Depression. Claims have soared from the long-standing average of 215,000 per week to a monumental weekly average of 5.25 million since 21 March. Following the Global Financial Crisis, US unemployment rose to 10 per cent; on its current trajectory, unemployment during the COVID-19 crisis is expected to climb beyond the 16 per cent mark. As United States Studies Centre Non-Resident Fellow David Uren outlines in his forthcoming research brief "The unequal burden of the COVID-19 labour market collapse", the experience of past recessions is that while unemployment rises rapidly, it takes a substantially longer time to fall. To track the latest trends and numbers, visit our COVID-19 tracker HERE. VIRTUAL EVENTA conversation with John Berry, former US Ambassador to AustraliaThe United States has been the global epicentre of the COVID-19 pandemic for the past month. Many Australians live and work in New York, and so much of Australia’s deep commercial and financial ties with the United States run through New York. How are the thousands of businesses that operate between the United States and Australia faring in a period of closed borders? And looking beyond business, what is the role of the US-Australian alliance amid a global pandemic? To discuss these issues, please join us for a webinar event featuring Ambassador John Berry (ret.), President of the American Australian Association, in a conversation with US Studies Centre CEO Professor Simon Jackman. WHEN: UPCOMING PUBLICATIONSReports
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