COVID Births, Whirlpool, and Nicaraguan Gold

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Today's charts:

1. The post-COVID baby boost

2. Whirlpool’s operations in Latin America

3. Is Joe Biden getting more serious about Nicaraguan sanctions?

Make sure you check out the comment of the week at the bottom!

Babies 👶🏼

Fertility rates — aka how many babies the average woman has — have been declining for decades. Data from the US showed, to the concern of many, that the downward trend accelerated during 2020.

But research by Martha Bailey, Janet Currie, and Hannes Schwandt, who looked at the data more closely (and kindly shared it with Latinometrics), explains the why behind the drop. Their work also revealed a surprising COVID aftermath in 2021.

During the pandemic, there was a drop in childbirths by Chinese women as the US shut down Chinese travel in early 2020. A few months later, as the Mexican border closed, a decline was seen in Latin American women's childbirths.

Keep in mind the 9-month pregnancy period; it tells us that this disruption was very likely due to women not being physically present in the US to give birth to their pre-conceived children.

What's most surprising about the data the Economists presented is what starts happening in 2021. Latin American women (and also US-born women, to a lesser extent), for the first time in 15 years, reversed the trend of declining births.

By December 2021, the researchers observed an 11% positive deviation from the 2015-19 trend by Latin American women, proposing stimulus checks and increased remote work as potential explanations for the bump. What does this imply? Under the right conditions, many women are eager to become mothers.

Unbelievably for people in the Western Hemisphere, China continues to struggle with lockdowns; thus, births by Chinese women in the US are still well below the 2015-19 trendline.

Appliances Industry ⏲

Whirlpool started over 100 years ago when an insurance salesman from Michigan acquired a manual washing machine patent and worked with his uncle to add a motor to it. In 2006, it became the world's largest home appliance maker after acquiring Maytag.

Before that happened, the company expanded aggressively to international markets, and Latin America was no exception. Through acquisitions of national brands like Brazil's Brasmotor and Multibras, constant innovation, and new product lines, Whirlpool secured dominance over the region and grew 13x in 15 years (from 96 to its 2011 peak).

Since its peak, the company has faced various challenges that have been eating away at its yearly revenues. In 2013, it faced severe currency devaluations in Venezuela and Argentina that triggered a ~30% markup on its products. Four years later, spokespersons cited lower-priced competitors for its declining sales. Then in 2018, the Trump administration engaged in a global trade war that inflated the price of its raw materials.

Last year, however, the company reported the first revenue growth in a while, largely thanks to consumers stuck at home deciding to invest more in their kitchens and washers. This year's quarterly data indicates the boost was short-lived. Nevertheless, Whirlpool opened a $52M factory last month in Buenos Aires and announced a $120M investment for one in Ramos Arizpe, Mexico last year. The moves mark Whirlpool's continued faith in the region as a vital production hub — 90% of the production from the Mexican factory will go to the US and Canada.

Gold Exports ⚱️

The US has found a new way to inflict pain on Nicaragua's president, Daniel Ortega, and his increasingly authoritarian regime — gold sanctions. Even though Nicaragua is not one of the top gold producers in the world, its economy is highly dependent on its trade with the US. Just how dependent? OEC data shows that its gold exports to the US represented 13% of Nicaragua's entire export value in 2020.

And it doesn't end there. Last year, the country reached a new record high of 348K ounces of gold exported, hoping to double that in the next five years. Meanwhile, the sanctions are unlikely to have a noticeable effect on the US economy since they only represented 0.03% of all US imports in 2020.

Why is Ortega in trouble with the US? The list of his sins is long:

• He used to rob banks

• His stepdaughter alleges he sexually abused her

• He forcibly rose to power, starting in 1979 with the Sandinista Revolution

• His police force and paramilitary groups have killed hundreds of civilians during numerous protests, often using ‘weapons of war’

• Since 2006, he's been holding to his presidential office for dear life with corrupt and violent tactics, including the illegitimate arrest of five incumbents in a single day last year

The last three points have prompted US sanctions to Nicaragua on and off since 1979 under Ronald Reagan. President Trump signed the Nicaragua Human Rights and Anticorruption Act, which opposed the country's loans from international financial institutions.

President Joe Biden signed the newest executive order late last month, which allows the US to ban companies from trading gold with Nicaragua. It remains to be seen to what extent it will use that power and how quickly Nicaragua could find other buyers for its gold. More importantly: what will it take to take out Ortega’s bloody regime? The US could potentially come with many more sanctions, since it accounts for 58% of Nicaragua’s entire export value.

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