 We're back. I'm Jay Fidel. This is Think Tech, and we're talking about energy in America with Lou Plurisi, who was the CEO of E-Prank in Washington, an energy think tank. And we talk every a couple of weeks about what's happening in energy and the country and the world because it's all interconnected. I have found that. So Lou, today let's talk about American resilience. Let's talk about the ability of the country to come back after and in spite of and in the midst of a pandemic. Well, I think what we do is look at some of the recent data. As you know, when the Bureau of Labor Statistics issued its recent employment data, there was some criticism that Trump had fooled with the BLS data. If anyone knows anything about Washington, it's impossible. I mean, the president would even know who to call. Okay. It was, it was way off though. It was a huge percentage off. No, no, I think what happened is there was about 3 percentage points off. But this was the same error that occurred the month before. And it has to do with the category called other, you know, war. And we'll go through that a little bit here, but that's not the real story. The real story was when the data came out, it was much better than expectations. It wasn't that it was good. It was bad. It was really bad. It wasn't as bad as the market and everyone expected it to be. So let's take a look at the first picture and talk about that process. So the first picture shows the Bureau of Labor Statistics measures of unemployment between May, you know, the, between May, 2018 and May, 2020, right? And what you see here is of course this huge spike up to, I mean here on chart one, which is the unemployment rate seasonally adjusted and then the non, what we call the non payroll employment month over month change. Everyone, if you look at the table on the right, the, the month over month change, I think CNN and all the network said, it's really going to be bad. And when it was not bad, in fact, it was a slight uptick. The stock market went berserk. I mean, we're virtually back to where we were. And there's a lot of reasons for that. It may, and it may be kind of built on air. That's another issue. But I think that the fact that the unemployment rate is actually getting better when everyone expected to get worse was a very big deal. And it just shows a little bit about the resilience. But the sectors within that, and we're going to get into a little bit because Hawaii is kind of a picture of one sector, but still hurting quite a bit. So let's go to the next page, the next page, which is a little more interesting. This one is. So what, what, what interesting issue about unemployment is there are a lot of numbers out there. And you'll hear the people on CNBC or talk about you three, you four, you five, you six, the number that's reported in the press, the one we all talk about is the you three. And so that's why if you, what does that stand for? What does that stand for? Well, that is the total unemployed as a percent of the civilian labor force, right? Of those actively looking and seeking work. Right. Also, we have something called use six. If you look at the last one down, and that's the total unemployed plus all persons marginally attached to the labor force. So it includes part time people. You know, everybody who is doing something in the work place. And if you see from the data here, the unemployment rate was a fell from 14.7 to 13.3 and fell from 22.8 to 22.1. The debate over the BLS is that all those numbers should have been three points higher. But that's not as important as the fact that it came down. Okay. But I mean, you know, we don't know. I mean, you know, the problem I have, and you can sort of deal with this because it seems, you know, part of the whole conversation is that we're just, we're just beginning. It's like Fauci says, this is just starting. So, you know, we, we, we had this like cold shock going on. When, you know, it first happened and everybody decided everybody in the country, every government decided to close down. So all economic activity stopped and all these jobs went away. And, and, and of course, there's a tail on that. It keeps going away for a while. As he's business is fine. You know, but then, but then we have now we have a rise again and 21 states this morning are having a rise and then we're faced with this awful prospect of another shutdown. And the other shutdown. We're going to get another shutdown. We are not going to get another shutdown. I'd like to hear your thoughts on that. We're going to adjust and learn to live with this. And we're going to policy makers are now going to have to get off their rear ends, make some hard decisions and put people back to work. That's my view. It's well known. Okay. We need to talk about it because I, you know, I want to, I don't want to accept that, but I need to know your data and your analysis because the disease is a lot worse. I mean, the cure is a lot worse than the disease. There's no doubt in my mind. We have enough data now to know that the kids can go back to school. They're probably not even spreading the coronavirus that this is largely a disease that harms. Old people with serious comorbidities. I'm not saying it's not bad. It's bad. But the devastation we are doing to people's lives. And I'm going to get into this in a second because right now we're pumping a lot of money. Not everyone is getting money from the government, but a lot of people are getting money. So the pain is not as bad as it might be, but it's bad. Or as it will be, Republicans said they're not going to fund another, another tranche of this. We don't have the money. We don't have the money to go back to school. We don't have the money to do that. We don't have the money to go back to school. There is no money. Maybe we can just run the printing presses. That'll be kind of interesting experiment. But we have no money. I'm going to show you what the deficit looks like. Even with, without doing anything else, except we're staying where we are now. So let's go to the next page. Right. And I think this is a, the Hawaiian Islands, I'm pretty sure. This must be on the TV every day, Hawaii, I don't know, but statewide, the change from the same month last year is 20%, right? So we now have statewide 120,000 people who have lost their jobs in Hawaii, right? And think about this, the unemployment rate over the last 12 months in the Hawaiian Islands was between 2.4 and 2.7%. The unemployment now rate is now in excess of 20%. Is there anybody in the government of Hawaii who thinks that's a sustainable strategy? Is that any part? That's not sustainable. And it is a remark, you know, it's like, you know, the percentage, the leverage, the change, the delta factor is so big that, you know, it's astounding. When these, when instead of trying to adjust to this disease, just shutting everything down, in my view, has been a huge, huge policy mistake. We are not getting the benefits out of it. Now you look at Hawaii, Hawaii's got an interesting problem. Nobody has the coronavirus in Hawaii. And your main principle that we have 600, 600 in some of our cases. It's nothing. That's probably the amount of people that broke their leg last month. I mean, it's just, it's nothing. Well, you know, the problem, the problem I see is that in the end, what is an economy? There's a million, million, billion parts to an economy. It's like there's some total of all human effort in a given jurisdiction or in a given sector or industry. And if Humpty falls apart for some reason, any reason, and you want to put Humpty back together again, you have a problem in figuring out where to start. What do you do to start the engine? Well, I mean, you have to count on entrepreneurs and traditional capitalist allocative, you know, processes to get people back to work. People are resourceful. They're gonna figure out what to do. They're gonna figure out how to open a restaurant and protect their patrons. They're gonna do a lot of different things. But if the government is telling them they can't do anything, they just have to sit tight. Well, that's when you really have problems. The government isn't saying that now. I suspect the government is gonna have to tone this a lot better. The government's gonna have to be more refined, more detailed, more helpful than it has been. Exactly. I think that this is very popular if you can get money from the government. But let's go to the next table and you can see why this is not a sustainable strategy. This shows the 2020 budget deficit is now currently projected for 2020, for the calendar year, right? Is gonna reach $4.2 trillion, right? And you can see that red line there. That is the legislative and economic effect, right? That is money. The government has gone out and borrowed, right? They borrowed through the Fed window, printing, whatever. And you can see here that if you go back to the historic congressional budget office baseline estimate, we probably would have come in about $990 or a trillion. We're gonna come in at $4.27 trillion dollars. Does that include that the money that's been printed? Well, on the accounting system, even if you print it, I mean, basically that counts the money. It actually, that is just the budget deficit on the accounts of the federal government. To the extent there's off accounting money from the Fed through actions in the bond market, you're right. That's not included. That's not included. It's not on their balance sheet. That's not part of the budget deficit. Well, I may be simplistic about this. And you and I have discussed it before in the context, for example, of World War II, where you can't fool around, you have to have the money to prosecute the war. And you don't look at the budget. You find the money, you print the money, you make the money, whatever you have to do. But this is somehow different because we're not in a war and it's hard to get your hand on exactly what's happening. And for a while, the government took the position that, well, we don't care what we're gonna get it. We're gonna spend it. And a few trillion here and there, we'll work it out later. We'll work it out later. And I say to myself, maybe I'm old fashioned about this, but you gotta pay it back. Don't you have to pay it back? So let's go to the next picture because that talks about that very issue, right? So we can see here that the pandemic is gonna push the national debt past the previous World War II peak. So you can see by 1946, we had 106% of debt compared. Our debt exceeded our total gross domestic product by 6%. Now, the interesting thing about that, we entered an era where we were one of the sole, one of the sole manufacturing, economic, largely untouched economic machines in the world. And we were able to produce so much well over the next 30 years that the deficit as a percentage, the deficit in absolute numbers might have continued to rise, but as a percentage of our gross domestic product, it began to fall dramatically. But our ability now to grow our way out of this deficit by getting our economy to grow faster than our debt is very problematic in my view. Yeah, so why would you call it resilience? I don't see resilience. I see a lack of entrepreneurs. I see a lack of available capital. I see a lack of entrepreneurial tech development as well. The entrepreneurial problem is largely because the government is keeping people from going to work. We're going, so I'm going to, we're going to go and see what's happening. But as we've begun to ease up, you can see we can look at, let's look at two things. First, what is the stock market believe? And you can argue whether that's a good thing. So let's look at the next chart for a second. Here you can see the year-to-day performance of major U.S. stock indices as of May 28th. It's actually done better since May 28th. I don't have the very latest data, but you can see. The NASDAQ, which is high tech, is actually above where it was at the beginning of the year, not as high as above the beginning of the year. And the S&P and the Dow Jones are still lagging, but they've come a long way back. Now, is this real? Well, part of this reflects growing optimism of the high tech center, Zoom, and all this other stuff that the high tech community is doing well, some adjustments. But we still have terrible lagging indicators of tourism and manufacturing. We have a whole bunch of problems on supply chains. So the question of the market is, is this a sort of dead cat bounce or a sense that everyone is too optimistic? And we're going to still end up in another major decline in the market where we're gonna have to work our way out very slowly over a long period of time. Let's stay with the market for a minute. Let's stay with the market for a minute because that's just fascinating to me, fascinating. But we have all these troubles and we have troubles on the, they say the market is always gonna build in its optimism for the future. And its pessimism, it builds in both. Okay, and what we have here is a market that seems to be going up. Where did I see that Nasdaq was at some kind of all-time high, as you said. Yes, this is all the day, it's at all-time high. Yeah, it's unbelievable. 10,000 or something, quite remarkable. I mean, you would never, ever expect it in the direst circumstances that it would be so high. And the explanation for that in the paper where I saw it was that there's a lot of good technology going on and that's still, as you said, it's very robust. Also, there may be a disconnect from the, there's a heavy over-weighting in certain technology stocks that are worth a ton of money. Apple, Amazon, Microsoft, and that is not necessarily fully connected to the real economy in terms of employment, right? It's, and so, yeah, the stock market might be doing better because it's heavily weighted towards these high-tech firms that are a bigger, bigger part of the market, but it doesn't necessarily reflect a broad base of recovery across mainstream, right? Where the people work for a living. Yeah, and if you compare it to 1929 where the market crashed and stocks went all down, it was not immediate from there to the depression, took a couple of years, and in the process, a lot of these companies found they could not, they could not function, and they failed and everybody was out of work. I don't know if we're there yet, but I think we're heading in that direction. Well, we might- It's yet to play out. We don't really, but I agree with you. If we can't get the labor force out into the world going back to work, if we can't find a way to deal with this, I think there will be serious problems, but let's take a look at what's happening in the energy sector now in the last picture, okay? Because I think that tells us a little more balanced picture, so. So this shows you two kinds of data, the red line shows you what happened in these major categories, and one is total products, that's gasoline, distillate, diesel fuel, gasoline, jet fuel, and then the other ones are gasoline, jet fuel, and distillate. And you can see here that, for example, for, if you go to the top right gasoline, gasoline now is about, you know, six million barrels a day, but it's still 20% below what it was a year ago, but it's not 50% below what it was a year ago, okay? It's not great news, but it's not the bad news that we thought was gonna still be with us. If you look at jet fuel, jet fuel is now down 60% of what it was a year ago, but it's not down 80%, okay? And even distillate, distillate is now down about 25%, and what it was a year ago, but, you know, it held up generally through this whole thing. So the energy sector in the US, which is a reflection of what's happening in the economy, is starting to come back. The real question is, can we build on this? Can people have enough confidence? And to, I totally agree, Lou, you know, it's like there's two things working. One is operating on the assumption that the coronavirus will sort of hold, and people will be free, the government will be free to try to take affirmative steps and bring the economy back, you know, and work that baby. The other is, if the coronavirus gets worse, and remember, the economy is always based on public confidence, and people don't have public confidence, and they go into the cellar somewhere, then, you know, the numbers that we have today are they're paper thin, because then they will change dramatically if we go into a second shutdown is what I wanna say. I think part of this is what I call the fallacy of the static analysis. We know a lot more, so basically there's kinds of two people in the world. If you're a communist or a socialist, you're pessimistic. The world's coming to an end, and there's nothing I can do about it, and everything's just going to, we're all going to die, right? And if you're a capitalist, you don't see the world that way. You say, well, you know, we'll figure this out, we'll adapt, we're smart, we're entrepreneurial, we got a lot of bright people in this country, we'll adjust to it. And in fact, if you read carefully all the medical, all the medical kinds of advancements taking place, even without a vaccine, our ability to treat this disease is getting better and better. Performance levels are rising dramatically. We have a much better sense of who's vulnerable and who's not. And so my position on this is when you look at the devastation of the economy, and you look that somehow as we loosen up, things are getting better, then it's up to the governments to say, look, we need to keep pushing the envelope in better treatments, in advancing the vaccine and telling people how they can adapt to it. I'll tell you where I get stuck on that. I wouldn't believe that because we went through this already and it was a question of credibility. The administration said, no problem, it's no problem. Don't worry about a thing. And then it was a problem. And then the administration said, well, we're behind that. I mean, that's behind us. And now we're going to reopen. But there was no reason to reopen. There was no reason, whatever, to reopen. And everyone was confused. Everyone bit that bait. We reopened without fixing the health problem. And now look what happened. It's not a surprise. This is competence at the state level. Florida has had relatively few nursing home deaths. Florida has, in terms of deaths per million, if you pull up realdomenia, a very good performance. And that's because DeSantis and Maxwell, his head wouldn't send any infected patients back to the nursing homes. Cuomo sent them all back. So there's a lot of competence at the state level. Hawaii, I think is a very interesting case because you virtually don't have coronavirus in Hawaii. You have some cases, but the number of deaths you have is probably close to the number of people that fell off of rock or something. I don't know. It's like 17 deaths in Hawaii. But don't you think we ought to put every effort through the health care problem before we start working on opening the economy at risk? I mean, if we could figure out the health care problem, really get it under control. It's not under control. You'll have to agree with me. I think there are risks. We've got to get it under control before we go to step two. And that was the mistake here. And the same thing with all the reopening without really taking care of the health care issues. So is it a surprise that in those meatbacking plans and all kinds of other businesses, we have a huge number of new infections? We need to solve the infection problem. And then, let's go for it. Let's make a thing reopening. Okay, by the time we solve this infection problem is a very tough thing. By the time we save it, we're all going to be living in caves because we'll have no money, no food. And everybody will be walking, and Bezos will have all the remaining money. It's really not an answer. I totally agree that we're times of the essence. And I think we all have to move very quickly on this. And you know, fortunately, as we as a country, we have not moved quickly on this. And we have had disagreements and controversies and blame game. If we had been crisp, if for example you had been president, or for that matter, if you were running the CDC, we wouldn't be having this conversation. I suspect this one is a tough problem for the US. We have a public health service which is largely run by the states. I mean, the CDC could have done a better job on their testing early on, but I think it's time to turn people loose a lot more. There's certain provisions we can do. Why? Have we solved this? You suggested that we're doing better, but have we solved it? Have we solved the AIDS problem? No, but we've learned a deal. Well, the AIDS is nowhere near a threat to world civilization that this is. I'm not sure. This is not. How she said this was the most complex, most threatening epidemic he'd ever seen. Look, the total deaths in 1954, the Asian flu that hit America in night, was about 150,000. We only had 170 million people at the time. So it would be as if we had 340,000 deaths instead of 100. That would be the equivalent now. We didn't shut the economy down. We didn't shut the economy down for COVID. We have never shut the economy down for an infectious disease. We've isolated parts of the country. We've isolated people. We've adapted to it, but we've never done something that's unprecedented in American history. And we need to get better at it. I couldn't agree more. The Koreans, the Japanese, and the Singaporeans were much better at it, but they've gone through the bird flu and all the previous Ebola and SARS. They had the experience. I believe we'll be better at it next time. Well, the price of liberty is eternal vigilance. And the only way we can be able to deal with this on a long-term basis is if we develop systems to contain it regularly as part of our new normal. We're going to have to do that. I'm not sure that we've done that. For example, the task force isn't meeting. Fauci is not being consulted. What is the government doing? It's laying it off on the states and the states are having, you know. And so my problem is, I don't think we're attending to job one before we get to job two. If you could tell me that we really were attending to job one, I would say absolutely right. And we have to move in tandem both jobs, but we're not attending to the first thing. But the problem is both outcomes are bad. That's the thing no one understands. The coronavirus is a bad outcome, not being as effective in treating it as we might have been or could have been. That's a bad outcome. But also keeping the economies locked down, that's a really bad outcome. Are they locked down now? I think in many, many- I know we're opening up in some places. There's still some places that are not. I think we're slowly opening up and this reflects it in the market. A lot of some states are still highly constrained in what they can do. A lot of small businesses are still struggling. What I get is 21 states are having an upsurge in the virus. And those 21 states have all been slack, if you will, in terms of distancing and precautions. And furthermore, a lot of those states are actually Republican states where the polls show the Republicans do not care about this as much as the Democrats. Well, of course, the Democrats, they figured well, someone will just write them a check. They don't have to worry about it, right? Is that what it is? Yeah, pretty sure. What's going on is Newsom and New York, and I don't know, maybe Hawaii, they're waiting for a bailout. They're hoping Biden will be elected. He'll just send them a big check and they can stay home for a whole another year. Oh, I don't think that's fair, Lou. That's what I think is going on. There's not going to be a bailout. We don't have the money for the bailout. No, I don't think there's going to be a bailout, but we could have governmental action that would be useful. And I watched the television and I see ads from the CDC and the ads are telling me to wash my hands. And I'm saying I know so much more than that. The national data on daily new cases shows a continued but slow decline. The total corona deaths are no longer growing. They're also declining. If you look at it since the peak on May 9th, daily deaths in the U.S. continue to decline. Well, I know that in the rural areas of the country where they haven't really cared much about distancing, it's increasing dramatically. And in those 21 states, it's increasing as we speak. So I'm not comforted by that trend that you described. You're right, but I would say of the 115,000 deaths, 30,000 are New York, 12,000 New Jersey, Illinois, Massachusetts, California, Pennsylvania, Michigan, the rest are pretty low, Connecticut. You're talking about the sum total of all of them from the beginning. I'm talking about the resurgence that's happening like this week. As I said, the total number still shows a decline. If you go to World Ometers, the total number of new cases and the total deaths are declining. Maybe not declining as fast as they should, but they are declining. So tell me what's gonna happen here. In fact, okay, I grant you there's a certain amount of resilience in the country. This is the land of entrepreneurship. As you said, we've established ourselves and we certainly still have the cultural strain among us to build and rebuild an economy, although it's gonna be very challenging in the circumstances. What do you think is actually gonna happen here? And how much of it depends on the election? Because that's right in the center. It's been politicized and the election has been intertwined, if you will, with coronavirus and with the reopening. So what's gonna happen? Who's gonna win the election? I think this issue is beyond the federal level, okay? All the big fight on the federal level is gonna be about money. The states have control now and they're learning what they're gonna make the choices and their own populations are gonna decide that. And so I don't really think the feds are gonna be about money and research. We'll continue to put a lot of money into research. But I mean, this is something we ought to come back to from time to time. And, you know, see- Would you buy into the market now? I believe that one should have a diversified portfolio and ride these up and down. That's what I do make. And you should rebalance as appropriate. I don't think I'm smart enough to know what's gonna happen to my life. That's what Charles Schwab says too. I'm with Charles Schwab. I'm not smart enough. You know, we live in a, you know, it's the strangest time. I'm not falling with the crash and it's still crashed, okay? Well, you know, it's like every day there's another surprise and every day suggests another direction in another vector. And I really can't say that I'm optimistic. On the other hand, you know, I think I agree with you in the sense that the country does have some kind of resilience there. And it has to find that resilience. It has to tap that resilience, encourage that resilience and pave the way for that resilience, not stand in the way. At what we're seeing, even though there's a lot of dark clouds, we're seeing some resilience emerging now. So I'm going to leave it there till next time. Why do I feel that everything could change between now and next time? Exactly, exactly. Thank you, Lou. It's great to talk to you. All right, thank you, Chad. Great, great. Listen, I have to run to another meeting in China. Okay, all right, well. Aloha. Aloha, see you next time.