Dr. Alvin P. Ang

Recent data coming out of the United States are suggesting strong economic recovery. They also point to a sustained one unlike those we have seen last year.  Foremost is the April jobs data generating about 9.3 million new postings, the most in more than two decades. This outpaced estimates by more than a million. The data suggest that firms are now prepared to hire more as the pandemic is showing signs of easing in the US. Normality is becoming clear as evidenced by the crowds in the NBA playoffs. As summer approaches, more outdoor activities and travel are expected to open and create demand more than it was a year ago, and possibly higher than before the pandemic struck. However, there is a puzzling outcome from the labor demand side—only 6.1 million jobs were filled! There are more than 3 million jobs that remained open. How can this be, with so much jobs available and so much people also remaining unemployed?

There have been concerns that rising inflation and the country remaining in recession will be leading to what is known as stagflation. Coined in the 70s during the oil shocks, stagflation is a confluence of rising prices, high unemployment and essentially an economy that is in recession.  Unlike the economic events of the Great Depression wherein the economy went into a tailspin of falling demand, output and prices, stagflation can put an economy into a dilemma of which policy levers to move.  As we are generally aware of, price increases are caused by both supply and demand conditions. In a recession economy where unemployment is high, demand tends to fall and retreats itself into essential consumption. This in turn will send signals to firms to decrease production.

Neda has proposed that the country be put into the more lenient quarantine level—modified general community quarantine—by March. This proposal makes a lot of sense considering that the country is limited in bringing back business and consumer confidence as result of the restrictions. As data of cross country performance in 2020 are now mostly out, we find that the long quarantine restrictions have weakened confidence significantly that the country’s economic decline was the deepest among the Asean 6 (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam). Secretary Ramon Lopez of the Department of Trade and Industry is in the right direction in saying that we are not recovering faster than our neighbors.

I was recently asked the question if you have P300 million today, will you buy a penthouse in Shangrila Fort or 2 houses in Ayala Alabang? Straight away I answered that if I have that money, I will buy neither of the two! I reasoned that the economy we are in today sharply projects a K direction. This is because the higher income members of society have not been able to spend as usual in the last 10 months and therefore generated a significant amount of savings. This “excess” savings, I believe, is fueling asset accumulation in stocks and real estate (including crypto currencies)—taking that slack and possibly the advantage as asset prices fell last year.  While individually this is good and secures good returns when the economy rebounds, this is blindsided.

Third week into the New Year, it maybe that some people are struggling to meet the resolutions they have made this year. The last time the Social Weather Station (SWS) reported on the fulfillment of resolutions was in 2019. About 10 percent of those who made resolutions were able to fulfill them.  In the same report, 67 percent of those surveyed no longer made any resolutions, so, effectively, the 10 percent came from the 33 percent who made some kind of resolution. The 67 percent who did not make resolutions were higher than the 53 percent in 2017. The survey does not have details on what kind of resolutions Filipinos make. In other platforms, we find that the most common resolution that people make has to do with losing weight, exercising or eating healthy. In a 2015 article, US News reported that 80 percent of those who made resolutions in January have given up by the middle of February or just six weeks after. The percentage is large and can more or less approximate the reasons why an increasing number of Filipinos are making less resolutions. It looks like a universal challenge in our modern society. However, as we are still in the middle of a pandemic and with most people still spending more time at home, it is possible for those who made resolutions this year to pull through a higher percentage.

Welcome 2021!  New year, new hope! These are what we usually hear when the year opens. When I was in elementary school, I do not like New Year’s Day. To me it was a sign that Christmas is about to end.  No more carols, no more holidays—in a few days we will be back to what is reality.  In the old school year, after the Christmas break is the exams for the third grading period or the mid-terms in college. This is the fact that we are facing these coming days—facing the exams of life and going back to reality. The Christmas season has somehow eased fears and anxiety brought by the pandemic. Although subdued and quieter than usual, the season helped bring up a bit of economic confidence. The data in the Google mobility report showed that the first week of December showed the closest return to the baseline mobility prior to the lockdowns. Indeed, Christmas have pulled the economy in the last weeks of 2020.

Oh, there’s no place like home for the holidays