The Top Line

• A survey of economic indicators for last week shows continued improvement in the outlook.

• As markets focused on the trajectory of COVID-19, progress on a vaccine continued with a candidate vaccine showing the safely triggered immune-response developers want to see.

• Improvements in technology and greater access to capital investment has propelled solar to the cheapest source of electricity in history.

• From the moon to Mars and beyond.

• Infographics

A Run Through the Numbers

Source: BEA

As economic recovery from COVID-19 continues, last week was filled with welcome news. Numbers beating expectations appeared in consumer spending and sentiment, personal income, manufacturing orders, and elsewhere.

Sources: MarketWatch, U.S. Census Bureau, U.S. Bureau of Economic Analysis(1) (2) (3), University of Michigan

*The Consumer Sentiment Index measures consumers’ attitudes and buying intentions, providing a gauge of prevailing business conditions and expectations for the months ahead.

**Durable goods are items that last three or more years and range from final goods like computers and home appliances to intermediate goods like semiconductors and motor vehicle parts.

***Core capital goods are items—excluding aircraft— that are used in goods manufacturing and services provision like buildings, machinery, and tools.

Speeding a Vaccine to Delivery

Source: World Economic Forum

When COVID-19 emerged from China and began its accelerated spread in March, leading to economic shutdowns, vaccine developers entered the race to develop a vaccine with American companies leading the charge (see above).

• Now, those efforts are moving closer to realizing a vaccine. AstraZeneca and Oxford University announced last week that their candidate vaccine successfully triggers the desired immune system response in all age groups.
• Additionally, their evidence shows that the vaccine does not trigger heightened adverse responses which bodes well for its successful use in the elderly and vulnerable populations most at risk of the effects of COVID-19.
• The positive news comes after the joint project was briefly paused in September for a standard safety review during which the FDA and other global health authorities deemed the vaccine safe for continued development and use in human trials.
• A review that exceeds global health standards by researchers at the University of Bristol reveals that the vaccine successfully carries out the instructions that the AstraZeneca-Oxford team genetically programmed into the vaccine to train the human body’s cells to fight off COVID-19 infection.
• Six vaccines are now approved for early or limited use. The time from initial research to production has been historic, compressing staged processes that usually take a decade into less than a year.
• These positive movements towards a successful vaccine are coupled with long-ongoing development of distribution networks and cold-chain transport to assure the safe, timely, and temperature-controlled delivery of the vaccine.

Myth vs. Fact

MYTH: Advocates of the Green New Deal often laud its job-creating potential. They contend that the jobs created by the government under the aegis of the Green New Deal, or other similar programs, would be productive, sustainable in the long-term, and high-paying.

FACT: Because jobs created by the government have no incentive to compete with their private-sector counterparts, they have a habit of suffering from inefficiency and low productivity growth. With the strides made in green-energy by the private sector (see section below), more productive utilization of workers and resources would be realized by private firms that have competition-incentives as compared to government, which has none. Additionally, government jobs usually have fixed wages that do not vary with changes in the economic cycle. This perversely creates unemployment by artificially elevating private sector wages, as the private sector must compete with the public sector for workers. This creates cost-disincentives to expanded hiring by private-sector firms, especially during downturns, lowering the economy’s overall employment of the available labor force during differing stages of the economic cycle.

It’s Getting Greener All the Time

The U.S. continues to lead in creating newer and better green-energy technologies. The power to do so comes from the innovation capabilities inherent in private markets and the financing vehicles available to fund forward-thinking.

• Recently, the International Energy Agency (IEA) published its World Energy Outlook 2020 report. Contained in its hundreds of pages is news that solar energy has become the cheapest source of electricity in history.
• This landmark finding was made possible by the environment of innovation and access to investment capital inherent in market-based systems. The IEA reports that the return-rate needed to successfully finance solar power projects has fallen to between 2.6 – 5% on the investment capital side.
• On the innovation side, solar panels are becoming more efficient as time passes. Currently, the average solar panel converts about 20% of the light that hits it into electricity. Production innovations may soon push that close to 50% in coming years.
• Meanwhile, a bipartisan group of Members of Congress have joined together to introduce legislation that provides for greater research, development, and testing of technologies that remove CO₂
• The relative emissions of CO₂ by the U.S. compared to the rest of the world has fallen dramatically, with China the leading polluter by producing over 10 billion metric tons of CO₂ in 2018 (see above).
• The U.S. absolute emissions of CO₂ have also fallen, from 6.13 billion tons of CO₂ in 2007, down to 5.13 billion metric tons in 2019.

Disruption of the Week

2019 Economic Impact of NASA (in $ thousands)

Partnerships with private industry, a renewed focus on manned missions, and a growing budget has helped propel NASA to a banner year.

• As part of the Trump Administration’s focus on space related initiatives, NASA has received a strong budget increase and a renewed mission focus on reestablishing a strong American presence in space.
• In a further step toward creating the economy of space, NASA recently announced it will be opening the International Space Station to private astronauts and earlier this year celebrated the successful launch of NASA astronauts on a commercially built spacecraft.
• On the mission and research side of things, NASA has been working on projects ranging from protecting Earth from potentially hazardous impacts (see: the asteroid that will fly by Earth on Nov. 2) to landing on and collecting samples from an asteroid 200 million miles away.
• In June, NASA also announced a partnership with a private company that will deploy rovers to the moon in search of ice, which may be spread across up to 15,000 square miles of the lunar surface.
• While 2020 may have not been the best year on planet Earth so far, thanks to the Administration’s focus on space, NASA is moving forward at a pace not seen since Apollo and helping us expand our knowledge of the final frontier.

Further Reading

• Often lost in the noise of politicians and commentators decrying income inequality and opportunity deficits for today’s youth is one key fact: they’re young. As is to be expected, when one grows older and gains the experience that increases potential and productivity, income rises, then falls as people enter retirement, relying on savings to meet expenses instead of income. Moreover, the young are becoming increasingly savvy about investing as technology increases access to participating in financial markets. Millennials currently hold $9.1 trillion in assets, 7% of America’s total wealth. That share is set to rise—along with their earning power—with 1% of the stock of wealth transitioning between generations every year. The means with which they invest that wealth and the ends to which they vote with those dollars has implications for their livelihoods and the economy as a whole. The Economist

Infographics