SMALL BUSINESS GRANT OPPORTUNITIES

• Restaurants Care Resilience Fund - $5,000, Applications open April 15, due May 7. SoCalGas will contribute $1 million in aid from its donor advised fund to help small restaurants with improvements, upgrades, employee retention and to manage debt, losses and rising costs. Funding for these grants is made possible by SoCalGas, PG&E, and SDG&E.
• Verizon Small Business Digital Ready – $10,000, Applications due May 12. A specific focus on helping diverse and under-resourced business owners. Small businesses can unlock the application for this round of grant funding by first registering on Verizon Small Business Digital Ready and completing at least two of the following, in any combination: courses, live coaching or community events.
• Economic Opportunity Grants – Up to $20,000, Applications due May 20. The Los Angeles County Department of Economic Opportunity will disburse more than $54 million in grants to small businesses, microbusinesses and non-profits. Register for a free info session on how to apply.

Cases (and a new variant): 

First cases of new subvariant are identified in L.A. County-Anecdotal reports link Arcturus to what has been a rare COVID-19 sympto m: pink eye. By Rong-Gong Lin II and Luke Money for the LA Times.

Los Angeles County has identified its first cases of an emerging Omicron coronavirus subvariant dubbed Arcturus, a strain global health authorities are watching closely as it has been linked to an upswing in cases in India.
Officially designated XBB.1.16, the subvariant also has attracted attention after anecdotal reports linking it to what has been a rare COVID-19 symptom: pink eye.

However, it remains unclear whether this symptom is more pronounced in Arcturus than earlier Omicron strains. The latest subvariant has not been shown to cause more severe illness.

It is possible, however, that Arcturus is even more infectious than the dominant coronavirus strain in the U.S., XBB.1.5. Though that probably isn’t enough to trigger another surge in cases, any uptick in transmission heightens the risk for vulnerable individuals — and, health officials say, reinforces the value of protective measures.

Because Arcturus is an Omicron subvariant, Ferrer said, it’s likely that current vaccines and therapeutic drugs will be effective on this strain.
Still, she said in an interview,

It’s now believed to be the second-most common coronavirus strain in circulation nationwide, accounting for an estimated 7.2% of cases, according to data from the U.S. Centers for Disease Control and Prevention. That’s up notably from its estimated share of 2.1% over the week ending April 1.

XBB.1.5, meanwhile, comprised an estimated 78% of new cases nationwide over the week ending Saturday.

For the southwestern U.S. — including California, Arizona, Nevada, Hawaii and the Pacific territories — Arcturus accounted for an estimated 9.8% of cases, up from an estimated 2.6% over the week ending April 1.

In India, authorities say Arcturus has begun replacing older versions of the coronavirus.

There have also been anecdotal reports of pink eye , or conjunctivitis, in coronavirus-infected people in India, particularly in children.

Before Arcturus, pink eye had been associated as a symptom in 1% to 3% of coronavirus cases, according to Chin-Hong and Ferrer.
If left untreated, pink eye can go beyond mere pain and itchiness to damage the cornea, Ferrer said.

Pink eye can be caused by other viruses and bacteria.

Coronavirus cases are relatively stable at lower levels in California. As of Thursday, there was no sign of an increase in coronavirus levels in L.A. County wastewater or in officially reported coronavirus cases.

For the most recent week, L.A. County reported 44 COVID-19 deaths.

In general, people at higher risk of dying are older and not up to date on their COVID-19 vaccinations and boosters, or haven’t been treated with anti-COVID drugs, experts say.

Just 42% of eligible L.A. County seniors have received the updated vaccine since it became available in September.

Though many believe the time of hospitals being overwhelmed by COVID-19 patients is over, any bump in cases could still lead to an increase in hospitalizations, underscoring the importance of staying up to date on vaccines (particularly for older people) and asking for therapeutic anti-COVID drugs such as Paxlovid and molnupiravir — which are free — should you become infected.

People who got the updated booster were roughly one-tenth as likely to die compared with unvaccinated L.A. County residents. Immunity from surviving a past infection alone doesn’t reliably provide the same kind of protection as vaccines.

Chin-Hong said he suspected the rise in the latest subvariant was a factor in federal officials moving this week to make another booster dose available to older and immunocompromised people.

L.A. County’s COVID-19 vaccination clinics began offering the additional updated doses Thursday.
Angelenos who need help accessing the updated vaccine, anti-COVID therapeutic drugs or other COVID-19 resources can call (833) 540-0473, seven days a week, from 8 a.m. and 8:30 p.m.

Vaccines: 

FDA clears another COVID-19 booster-Older or vulnerable people would be able to get an extra dose of bivalent vaccine this spring.
(From the Associated Press): U.S. regulators on Tuesday cleared another COVID-19 booster dose for older adults and people with weak immune systems so they can shore up protection this spring — while taking steps to make the vaccinations simpler for everyone else.
The Food and Drug Administration said anyone 65 or older can opt to roll up their sleeves again as long as it’s been at least four months since their first dose of the so-called bivalent vaccine that targets Omicron strains of the coronavirus.

And most people who are immune-compromised can choose another bivalent booster shot at least two months after their first dose, with additional doses in the future at the discretion of their physician.

For everyone else, regardless of whether it’s a first shot or a booster, the FDA also said the original versions of the Pfizer and Moderna vaccines are outdated and will no longer be used. Instead, anyone getting a Pfizer or Moderna shot will receive the newer Omicron-targeted version. For most people, if it’s their first-ever vaccine, just one dose of the bivalent vaccine will be enough. Anyone who’s gotten their original vaccinations but hasn’t yet had an Omicron-targeted booster can still get one, but the agency will decide over the summer whether younger, healthy people will eventually be offered a second bivalent booster.

The Pfizer and Moderna boosters contain protection against both the original version of the SARS-CoV-2 coronavirus and the Omicron strains known as BA.4 and BA.5. While newer Omicron cousins now are circulating, recent studies show the bivalent shots still are effective.
For many Americans, COVID-19 has become less of a health fear and more of an inconvenience, and masking, routine testing and other precautions have largely fallen by the wayside.

The FDA’s simplification also means changes for unvaccinated children. If their parents now want them vaccinated, tots under 5 may receive two doses of bivalent Moderna vaccine or three doses of the Pfizer-BioNTech bivalent vaccine. Those who already are 5 may get a single bivalent Pfizer shot or two Moderna doses. Children already fully or partially vaccinated with the original Pfizer or Moderna shots may get a bivalent vaccine, but how many doses will depend on their vaccination history, the FDA said.

The Economy:

From the Financial Times: China’s economy grows 4.5% in first quarter-China’s gross domestic product grew 4.5 per cent year on year in the first quarter, exceeding analysts’ expectations, as strong growth in exports and infrastructure investment as well as a rebound in property prices drove a recovery in the world’s second-largest economy.
Keep reading.

From the New York Times: How strong is the US economy? from David Leonhardt:

My colleagues David Brooks and Paul Krugman have engaged in a running debate for much of their time as Times Opinion columnists, and I often find their exchanges illuminating.

Their latest argument revolves around how strong the American economy really is. The Economist magazine sparked the debate with a recent cover story titled “Riding high: The lessons from America’s astonishing economic record.” Today, I’ll use the disagreement to pose two different questions — one that may challenge conservative readers of this newsletter and the other that may challenge liberal readers.

G.D.P. or life expectancy?
In David’s recent column, he endorsed The Economist’s sunny picture: “You can invent fables about how America is in economic decline. You can rail against ‘neoliberalism.’ But the American economy doesn’t care. It just keeps rolling on.”

The standard measure of a nation’s economic performance is per capita gross domestic product — the value of the economy’s output divided by the size of the population. Over the past three decades, the U.S. has widened its lead over Europe and Japan:

Source: World Bank | Data is adjusted for inflation. | By The New York Times
Today, the U.S. still accounts for almost 25 percent of global output, nearly the same share as in 1990, even as China’s share has soared.

The U.S. remains a uniquely dynamic society in some important ways, home to top universities, a thriving venture-capital industry, a stable government (most of the time) and a population comfortable with risk taking. Apple, Google, Tesla and OpenAI are all American companies. So are Moderna and Pfizer, key developers of the mRNA Covid vaccines.

When it comes to economic innovation and productive might, no country can match the U.S.

As Paul notes, however, G.D.P. does not measure a typical person’s standard of living. Per capita G.D.P. is an average, and an average can be distorted by outliers. The U.S. is highly unequal, which means that the wealthy take home a larger share of output than in other countries.

Since 2000, per capita G.D.P. in the U.S. has risen 27 percent, but median household income has risen only 7 percent. Income for the top 0.1 percent of earners, by contrast, has jumped 41 percent.

When you look at broad measures of well-being, the U.S. stops looking so good. We have the lowest life expectancy of any high-income country, a relatively recent development. Americans have uniquely poor access to health insurance and paid parental leave. Surveys show that Americans are deeply dissatisfied with the country’s direction.

CNBC, describing the results of a survey it has been conducting since 2006, reported the following last week: “A record 69 percent of the public holds negative views about the economy both now and in the future, the highest percentage in the survey’s 17-year history.”

Paul put it this way in his most recent newsletter:

… it’s always important to bear in mind that G.D.P., at best, tells us how much a society can afford. It doesn’t tell us whether the money is well spent; high G.D.P. need not translate into a good quality of life. Individuals can be rich but miserable; so can countries.

And there are good reasons to believe that America is using its economic growth badly.

Conservatives sometimes respond to this data by trying to separate the economy from the rest of society. The former, they argue, is performing magnificently. The latter is beset by fraying social bonds and other ills.

But I think it’s a mistake to imagine that the economy is somehow distinct from living standards. The unequal American economy continues to churn out an impressive array of goods and services while also failing to deliver rapidly improving living standards. And polls suggest that most people aren’t fooled.

Voting with their feet
So is the solution simply more government intervention in the economy — following the model of Europe and U.S. states that are run by Democrats? Not quite. Consider these facts, from another recent column of David’s:

Between 2010 and 2020, the fastest-growing states were mostly red — places like Texas, Georgia, Florida, Tennessee and South Carolina. During the pandemic, that trend accelerated, and once again, most of the big population-gaining states are governed by Republicans.

If you go back farther, you see decade after decade of migration toward the more conservative South. The Brookings Institution demographer William Frey has noted that in 1920, the Northeast and the Midwest accounted for 60 percent of America’s population. A century later, the Sun Belt accounts for 62 percent of the nation’s population. These days we are mostly a Sun Belt nation.

I found some of the reader comments on that column to be jarring. They didn’t grapple with why so many Americans, including young families and immigrants, were moving to Republican-run states. These comments instead argued that blue America was better and red America was backward. “I, for one, will never live in a red state,” read the comment that has received the most endorsements from other readers. “Never have, never will.”

Evidently, growing numbers of Americans feel differently.

Red America offers less expensive housing partly because its zoning laws are less onerous. To over-generalize only somewhat, blue America believes in NIMBYism (“not in my backyard”), while red America is more comfortable with YIMBYism. Red America also reopened its schools more quickly during Covid, and long school closures appear to have been one of the biggest policy mistakes of the pandemic.

The full picture is nuanced. The same laissez-faire, anti-regulation, low-tax instincts that make housing relatively affordable in Houston, Tampa, Fla., and Greenville, S.C., also contribute to high American inequality and stagnant quality of life — because some regulations are more conducive to human flourishing than others. The U.S. simultaneously has too much government and too little.

That combination helps explain why our economy looks so good by some measures and so bad by others.

SMALL BUSINESS GRANT OPPORTUNITIES

• Restaurants Care Resilience Fund - $5,000, Applications open April 15, due May 7. SoCalGas will contribute $1 million in aid from its donor advised fund to help small restaurants with improvements, upgrades, employee retention and to manage debt, losses and rising costs. Funding for these grants is made possible by SoCalGas, PG&E, and SDG&E
• Verizon Small Business Digital Ready – $10,000, Applications due May 12. A specific focus on helping diverse and under-resourced business owners. Small businesses can unlock the application for this round of grant funding by first registering on Verizon Small Business Digital Ready and completing at least two of the following, in any combination: courses, live coaching or community events.
• Economic Opportunity Grants – Up to $20,000, Applications due May 20. The Los Angeles County Department of Economic Opportunity will disburse more than $54 million in grants to small businesses, microbusinesses and non-profits. Register for a free info session on how to apply.

The Economy: From the Financial Times: US inflation eased last month to its lowest level in nearly two years but an uptick in core prices will keep pressure on the Federal Reserve to press ahead with another interest rate increase in May.

The IMF has warned of a “hard landing” for the global economy if persistently troublesome inflation keeps interest rates higher for longer and amplifies financial risks.

From the New York Times: Inflation has come down from its historic highs, though not far enough to stop plaguing the economy just yet.

That’s the takeaway from data released yesterday. First, the good news: Prices rose at their slowest pace in nearly two years, having climbed 5 percent in the 12 months that ended in March. The increase is still higher than the 2 percent annual rate that policymakers seek to keep the economy humming — but is down from a peak of 9 percent last summer.

The bad news is that other measures — particularly indicators that exclude food and energy prices, which are known as core inflation — tell a more mixed story. In the chart below, you can see that core inflation is more stable than overall inflation and, for that reason, is less prone to misinterpretation.

The mixed news suggests that the Fed’s recent moves have worked to tame inflation, but that more action is needed to get price increases down to sustainable levels. Today’s newsletter will break down the data and what the Fed might do next.

Mixed picture: There is an underlying story behind the numbers, starting a few years ago. Flush with money from Covid relief legislation and stuck at home during the pandemic, Americans bought more things they could use in their homes. So prices for goods — physical stuff like furniture and appliances — increased sharply over 2021.

As the economy has recovered from the Covid shock and people have started to go out again, consumer demand is shifting to services — things you pay people to do, like make food for you at a restaurant or fly you across the country. Prices are rising accordingly, particularly across airlines, transportation and restaurants, as you can see in this chart:

Source: Bureau of Labor Statistics | Chart shows percent change in prices between March 2022 and March 2023. | By The New York Times
That trend is what policymakers are looking at now. It suggests consumer demand is still too high — first chasing limited goods and now chasing limited services, leading to increases in prices.

There are some good signs for the prospect that inflation will fall further. The flood of cash that people got from the government during the pandemic is drying up, reducing consumer demand. The supply chain has largely untangled itself from the snarls of the earlier Covid days. The shock to oil and gas prices from Russia’s invasion of Ukraine has eased. The Federal Reserve, in an effort to further restrain demand, has increased interest rates to make borrowing money more expensive.

But there are also some potentially bad signs. American consumers are still spending a lot, taking advantage of higher wages and savings accumulated during the pandemic. The cartel of oil-producing countries, OPEC, is cutting its production to try to raise prices. The longer inflation persists, the more likely it is to become ingrained in the economy — making it more difficult to bring down further. “It’s not that inflation is going to take back off and spike again, but that we might not be able to fully stamp out what remains of it,” Jeanna said.

What’s next? Going forward, policymakers will probably try to take a balanced approach to match the mixed story. The Federal Reserve is likely to take more measured steps than it did last year. The central bank regularly increased rates by half a point or more for much of 2022, but it adopted a smaller quarter-point increase last month and is widely expected to repeat that step at its next meeting in May.

There is a risk that the Fed does too little and inflation persists, as happened in 2021. But there is also a risk that the Fed goes too far and does unnecessary damage to the economy, as this newsletter has explained before. A strong economy can lead to faster price increases. But a weak economy can put a lot of people out of work. Policymakers are trying to find a sweet spot between those two extremes.

The latest inflation data suggests that the country is getting there — that an end to rapidly rising prices is perhaps becoming visible now. But the data is not clear enough to rule out a mirage.

And, from the New York Times' Peter Coy: There are two rival explanations for why banks are doing less lending. The one you hear most is that there’s an emerging credit crunch: Banks are tightening their lending standards and turning people down for credit. That would be bad. The other possibility, though, which could be worse, is that the banks have money but people don’t want it.

Most likely, there’s some of each going on. First, take a look at the data. Loans and leases on the books of commercial banks in the United States jumped briefly early in the pandemic. But in the two weeks through March 29 of this year, the latest with available data from the Federal Reserve, loans and leases fell by $105 billion, or nearly 1 percent. That was the biggest two-week decline in dollar terms since the data series began in 1973 and the biggest in percentage terms since 2009, during the global financial crisis.

Banks have lost $590 billion in deposits since the end of January, a drop of more than 3 percent. Money that left the banks is going into money market mutual funds, which are stashing it at the Federal Reserve, a “financial black hole,” as far as lending is concerned, as Paul Ashworth of Capital Economics wrote in a client note that I cited on Monday.

“People are for the first time in some time using the ‘c’ words: credit crunch,” Anirban Basu, the chief economist at Associated Builders and Contractors, a trade association, told The Times in an article published Monday. The Federal Reserve Bank of New York’s Survey of Consumer Expectations found that the share of consumer respondents indicating that credit was harder to get than a year ago rose to 58.2 percent in March, the highest proportion recorded since the survey’s creation in 2013.

If you stop and think, though, a credit crunch, as bad as it is, at least indicates that there’s an appetite for borrowing that’s not being sated. When you really have to start worrying is when people don’t want to borrow because they see bad times ahead. In that situation, monetary policy becomes less effective; lowering the interest rate to induce borrowing is as useless as pushing on a string, as economists like to say.

Unfortunately, there are signs that the observable dip in loans and leases is at least partly due to weak demand. A New York Fed survey in February found that the application rate for any type of credit over the preceding 12 months declined to its lowest point since October 2020. It probably wasn’t because applicants fear being turned down. In fact, the reported overall rejection rate for credit applicants decreased to 17.3 percent from 18.8 percent in October 2022, the bank said.

That’s consumers. As for small businesses, which, unlike big companies, rely a lot on bank loans, only 2 percent of owners reported in March that all their borrowing needs were not satisfied, according to the National Federation of Independent Business; 29 percent of N.F.I.B. members who were randomly chosen for the monthly survey reported that all their credit needs were met, and 59 percent said they were not interested in a loan. Only 2 percent were planning an expansion, the least since March 2009. “That is a major ‘yikes!’” David Rosenberg, the president of Rosenberg Research & Associates, a forecaster, wrote to clients on Wednesday.

The Federal Reserve, determined to return inflation to its target of 2 percent annually, is putting a low priority on making more credit available to ease lending conditions. But even if it did change its stripes and chose to prioritize growth, it would have a hard time getting much done if the problem has become at least partly a lack of demand for loans.

Fiscal policy — government spending and tax cuts — is more effective in reviving weak demand. But since the start of 2021, fiscal policy has gone from stimulative to contractionary, according to a calculation by the Brookings Institution’s Hutchins Center. And Republicans in Congress are aiming to cut spending drastically, not raise it.

The bottom line is that a recession in the United States appears inevitable. It may already have begun, Julian Brigden, a founder and the president of the macroeconomic research firm Macro Intelligence 2 Partners, told me Tuesday. If not, the U.S. economy is likely to fall into recession in the third quarter of this year, he predicted. “This was essentially preordained” by the Fed’s large and rapid interest rate increases, he said.