Written by rjs, MarketWatch 666
The news posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. There are several ‘worst-in-years’ economic metrics, and a lot on the employment report plus some other Main Street economic impacts. I conclude with a handful of reports from other counties around the globe. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.
Please share this article – Go to very top of page, right hand side, for social media buttons.
Fed takes big step toward launch of Main Street Lending Program – The Federal Reserve Bank of Boston published a trove of new documents for lenders looking to participate in the upcoming Main Street Lending Program, in a sign the U.S. central bank will soon launch the highly anticipated loan program for small and midsize businesses. The Boston Fed published an updated set of frequently asked questions and loan participation agreement documents, as well as lender certifications and covenants for each of the three lending facilities that will be available through the program.The Federal Reserve announced the $600 billion Main Street Lending Program in April, saying the central bank would backstop coronavirus relief loans for middle-market firms with no more than 15,000 employees or $5 billion in annual revenue. Businesses that meet those qualifications and were in good financial condition before the COVID-19 outbreak would be eligible for loans of at least $500,000 through one of the three component facilities. The Fed will then buy either 95% or 85% of a loan to free up lenders’ balance sheets. Banks will ultimately choose whether to make loans through the program. The Fed’s new set of documents published Wednesday night could offer lenders more clarity and inform their decision on whether to participate. In the new documents, the Fed clarified that in most instances lenders do not have to verify a borrower’s certification of eligibility.Additionally, the Fed’s special-purpose vehicle that will purchase the loan participations is waiving its right to “special administrative priority” in the event of a borrower’s bankruptcy. The Fed is also holding an “Ask the Fed” webinar June 4 to provide lenders with more details about the Main Street Lending Program.The central bank has not announced when the program will officially be up and running, but Boston Fed President Eric Rosengren said Sunday that he expects businesses to begin receiving loans through the program within two weeks.
Williams Doesn’t See Fed’s Support of Economy Causing Inflation Surge – WSJ -Federal Reserve Bank of New York leader John Williams said he sees little risk of an inflation surge despite a wave of central bank support for the economy and financial system prompted by the coronavirus crisis. Mr. Williams said the Fed’s support actions, which have boosted its balance sheet to just over $7 trillion from $4.2 trillion in early March, are aimed at bridging the economy over the crisis and aren’t a form of outright stimulus.
Fed’s Beige Book: “Economic activity declined in all Districts – falling sharply in most” .. Fed’s Beige Book “This report was prepared at the Federal Reserve Bank of Kansas City based on information collected on or before May 18, 2020.” Economic activity declined in all Districts – falling sharply in most – reflecting disruptions associated with the COVID-19 pandemic. Consumer spending fell further as mandated closures of retail establishments remained largely in place during most of the survey period. Declines were especially severe in the leisure and hospitality sector, with very little activity at travel and tourism businesses. Auto sales were substantially lower than a year ago, although several Districts noted recent improvement. A majority of Districts reported sharp drops in manufacturing activity, and production was notably weak in auto, aerospace, and energy-related plants. Residential home sales plunged due in part to fewer new listings and to restrictions on home showings in many areas. Construction activity also fell as new projects failed to materialize in many Districts. Commercial real estate contacts mentioned that a large number of retail tenants had deferred or missed rent payments. Bankers reported strong demand for PPP loans. Agricultural conditions worsened, with several Districts reporting reduced production capacity at meat-processing plants due to closures and social distancing measures. Energy activity plummeted as firms announced oil well closures, which led to historically low levels of active drilling rigs. Although many contacts expressed hope that overall activity would pick-up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery.Employment continued to decrease in all Districts, including steep losses in most Districts, as social distancing and business closures affected employment at many firms. Securing PPP loans helped many businesses to limit or avoid layoffs, although employment continued to fall sharply in retail and in leisure and hospitality sectors.
U.S. Businesses See Few Signs of Recovery Through Mid-May – WSJ – U.S. businesses saw limited evidence of a recovery in recent weeks, with economic activity continuing to decline amid the coronavirus pandemic, the Federal Reserve said Wednesday. The labor market continued to deteriorate and consumer spending fell further as retailers and restaurants remained largely closed in most of the country through mid-May, the Fed said in its periodic report of anecdotes from businesses around the country known as the “beige book.” “Although many contacts expressed hope that overall activity would pick up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery,” the central bank said. The latest edition of the beige book contains information through May 18, some two months after nonessential businesses around the country shut down to help contain the spread of the novel coronavirus. The U.S. economy contracted 4.8% in the first quarter of 2020. With the coronavirus crisis continuing into the summer, economists are expecting an even steeper contraction in the second quarter. Leisure and hospitality continued to see the most severe effects of efforts to contain the pandemic. Travel-industry contacts in the Boston area reported that large conventions have been canceled through early fall, costing the hotel industry 200,000 room-nights as a result. A beach-area contact in New England reported a “stark increase in inquiries about bankruptcy procedures from small retailers.” The Fed’s contacts in commercial real estate, meanwhile, reported that large numbers of retail tenants had deferred or missed rent payments. Despite higher prices for some groceries such as meat and fresh fruit, the Fed said, pricing pressures were “steady to down modestly on balance.” Weak demand forced sellers to offer discounts for apparel, hotel rooms and airfare, while new safety protocols, personal protective equipment and social-distancing guidelines imposed new costs on firms. Still, there were a few signs of a nascent recovery in some areas. In the New York Fed’s district, which includes the virus’s U.S. epicenter, “business contacts tended to be less pessimistic than in the prior report about the near-term outlook, and those in the manufacturing, construction, real estate, and health services sectors expected modest improvement.” While consumer spending continued to decline overall, “there have been scattered reports of a nascent recovery in early May.” And in the Cleveland Fed’s district, some retailers started to bring back staff in limited numbers as businesses were allowed to reopen, while one staffing firm reported that his clients were starting to increase hours or bring back laid-off workers. Firms in several parts of the country reported concerns that generous unemployment benefits might make it more difficult to rehire workers. A federal stimulus law temporarily provides a weekly $600 federal supplement to normal unemployment insurance, which is allowing lower-wage workers who were laid off to earn more money than when they were working.
“Chicago Fed National Activity Index suggests economic growth fell substantially in April” — From the Chicago Fed: Chicago Fed National Activity Index suggests economic growth fell substantially in April: Led by declines in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to – 16.74 in April from – 4.97 in March. All four broad categories of indicators used to construct the index made negative contributions in April, and all four categories decreased from March. The index’s three-month moving average, CFNAI-MA3, decreased to – 7.22 in April from – 1.69 in March. Following a period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below – 0.70. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.This suggests economic activity was in a recession starting in March (using the three-month average).
Fed’s “National Activity Index” Crashes By Most In At Least 50 Years – Just another macro data point for so-called investors to ignore…US economic activity collapsed in April, according to the Chicago Fed. The national index, which draws on 85 economic indicators, crashed to a record low -16.74 in April versus -4.97 in March (and massively worse than the expected level of -3.50).
- 6 of the 85 monthly individual indicators made positive contributions
- 79 of the 85 monthly individual indicators made negative contributions
If that does not provide some context for the level of carnage imposed on the US economy, we do not know what does.
Q1 GDP Second Estimate: Real GDP at -5.0% -The Second Estimate for Q1 GDP, to one decimal, came in at -5.0% (-5.05% to two decimal places), a major drop from 2.1% (2.13% to two decimal places) for the Q4 Third Estimate. Investing.com had a consensus of -4.8%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: Real gross domestic product (GDP) decreased 5.0 percent in the first quarter of 2020, according to the “second” estimate released by the Bureau of Economic Analysis. The change was 0.2 percentage point lower than the “advance” estimate released in April. In the fourth quarter of 2019, real GDP increased 2.1 percent. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We’ve also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.18% average (arithmetic mean) and the 10-year moving average, currently at 2.12. Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The latest number puts us 15.2% below trend.
U.S. Economy Contracted 5% in the First Quarter as Coronavirus Hit – WSJ – The U.S. economy’s first-quarter contraction was slightly steeper than initially estimated, and a key measure of corporate profits weakened as the coronavirus and related shutdowns began to have an effect. Gross domestic product – the value of all goods and services produced across the economy – fell at a 5.0% annual rate in the first quarter, adjusted for seasonality and inflation, the Commerce Department said Thursday.. The revised number marked the largest quarterly rate of decline since the last recession. Most economists expect a bigger contraction in the second quarter, when lockdowns continued for weeks before states started slowly reopening their economies in May. The agency previously estimated the first-quarter contraction at a 4.8% annual rate. “First-quarter growth turned negative from just a two-week shutdown of the economy,” said Rubeela Farooqi, an economist at High Frequency Economics Ltd., in a note to clients. “The second quarter numbers will show a massive and unprecedented plunge in output, with weakness across sectors.” A bigger estimate of the drop in private inventory investment was the main reason for the weaker GDP reading, which was partly offset by small upward revisions to consumer spending and business investment. Private, nonfarm inventories subtracted 1.52 percentage points from the overall GDP. The Commerce Department’s initial estimate was for a 0.63 percentage-point drag from inventory investment. U.S. corporate profits fell sharply in early 2020 as the economy contracted, according to the government’s first broad estimate of profits at U.S. companies in the first quarter. Stay-at-home orders and lockdowns that shut businesses to combat the spread of the new coronavirus started in mid-March near the end of the first quarter. After-tax corporate profits without inventory valuation and capital consumption adjustments, a measure of profits from production that quarter, declined 15.9% in the first quarter from the prior quarter after rising 3.7% in the fourth quarter. Compared with a year earlier, profits were significantly lower in the first quarter, down 11.1%. Forecasting firm IHS Markit on Tuesday projected GDP would shrink at an annual rate of 39% in the second quarter, now in its ninth week. The Federal Reserve Bank of Atlanta’s GDPNow model most recently predicted a 41.9% annual rate of decline. The annualized rate overstates the severity of any drop in output because it assumes that one quarter’s pace continues for a year. Consumer spending accounts for more than two-thirds of total economic output, and Thursday’s report showed Americans’ outlays contracted in the January-to-March period, but by a slightly lesser amount than initially estimated. Personal-consumption expenditures fell at a 6.8% annual rate in the first quarter, revised from a previous estimate of a 7.6% decline. Business investment weakened in the first quarter, with fixed nonresidential investment falling at a 7.9% annual rate, an upward revision from an earlier estimate of an 8.6% contraction. Revised data showed net exports added 1.32 percentage points to GDP as imports declined faster than exports. That compared with an earlier estimate of 1.30 percentage points. Per-share earnings for S&P 500 companies fell 12.6% in the first quarter of 2020, compared with the first quarter of 2019, market-data firm Refinitiv said. Companies in the consumer discretionary and financial sectors were the hardest hit, followed by energy and industrial companies. Not all sectors were hard hit. Technology, health-care and consumer staples companies posted per-share earnings gains of more than 5%, Refinitiv said. Sales fell 1.4% for the index as a whole, led by financial and energy companies. Sales rose by 10.4% among health-care companies and by around 5% for real estate, consumer staples and communication services companies. Analysts expect second-quarter results to be worse, with per-share earnings declining about 43% over mid-2019 and sales falling about 12%, Refinitiv said. Analysts projected continued profit and sales declines during the second half before year-over-year gains resume early next year. Thursday’s report reinforced the view by many economists that the U.S. economy slid toward near-certain recession in the first quarter.
Q2 GDP Forecasts: Probably Around 40% Annual Rate Decline — GDP is reported at a seasonally adjusted annual rate (SAAR). So a 40% Q2 decline is around 9% decline from Q1 (SA). From Merrill Lynch: Better than expected capex data edged up 2Q GDP tracking to -39.7% qoq saar. [May 29 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at -35.5% for 2020:Q2. [May 29 estimate] And from the Altanta Fed: GDPNow: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -51.2 percent on May 29, down from -40.4 percent on May 28. [May 29 estimate]
-51.2%! Atlanta Fed Now Expects Staggering Collapse In Q2 GDP – Two months ago, St Louis Fed president James Bullard triggered a market plunge when he predicted that unemployment may soar to 30% and GDP plunge by an unprecedented 50%, vastly eclipsing the collapse observed during the Great Depression.Sure enough, moments ago the Atlanta Fed’s closely followed GDPNow tracker confirmed this worst case scenario, when the latest model estimate for real GDP growth in the second quarter of 2020 crashed to -51.2% on May 29, down from -40.4% on May 28, which would be the biggest drop on record. How did the US just lose 10% (annualized) in GDP growth in 1 day? Here is the explanation: After this morning’s Advance Economic Indicators report from the U.S. Census Bureau and personal income and outlays release from the U.S. Bureau of Economic Analysis, the nowcast of second-quarter real personal consumption expenditures growth decreased from -43.3 percent to -56.5 percent and the nowcast of the contribution of change in real net exports to second-quarter real GDP growth decreased from 2.07 percentage points to 0.73 percentage points. And this is what the AtlantaFed’s real-time GDP estimate for the current quarter looks like: For the sake of the US, those predicting a V-shaped recovery better be right.
In Coronavirus Fight, Uncertainty Emerges as the New Enemy – WSJ – When it comes to economic recovery, the coronavirus remains Public Enemy No. 1. But not far behind is an equally insidious force: uncertainty. In conversations with business leaders in recent days, it’s clear that simple uncertainty, as much as any particular policy or public-health imperative, is holding back the economy. Here are the kinds of questions they are asking: Are consumers ready to venture out in force even if they are free to do so? How does a big business navigate a patchwork of different state and local reopening plans and policies? How do we make mass transit safe enough for workers and consumers alike to return to normal life with confidence? Paul Romer, a Nobel Prize-winning economist, says simply: “Uncertainty is the overwhelming problem.” Public policies can help ease some of this uncertainty. The provision of far more tests than have been made available so far can help both buyer and seller feel more comfortable in engaging in the routine economic transitions that drive an economy. A shield against liability lawsuits, which Republican leaders in Congress have proposed, would make employers currently fearful of letting their employees engage in those typical transactions more willing to do so. Nobel Prize winner Paul Romer says any return to normal activity will depend a lot on public attitudes, which are hard to predict. The coronavirus itself, of course, remains the biggest issue. Mr. Romer notes that it creates two kinds of uncertainty that drag down economic activity. On the individual level, consumers and workers alike continue to ask the basic question: “Will I get sick?” At the macro level, Americans remain uncertain about the path the virus will take and the public policy decisions it still will demand. Should Americans plan for a smooth path down in its spread, or for a second and third spike before a vaccine is available? And when will that be? Yet, Mr. Romer notes that even if the virus were tamed, the return to normal activity will depend a lot on public attitudes, which are hard to predict. “Consider a thought experiment in which we are all immunized overnight,” removing uncertainty about the pandemic itself, Mr. Romer says in an email. “What might remain is the uncertainty of coordination: How quickly will everybody else resume normal activity? If I think that everyone else will resume activity slowly, it might make sense for me to resume my activities slowly. “But if I think that everyone will resume activity quickly, it might make sense for me to resume my activities quickly.” In other words, confidence is infectious, while fear can remain a drag.
White House Won’t Issue Economic Projections This Summer, Official Says – WSJ -The White House won’t issue updated economic projections this summer because of uncertainty caused by the coronavirus pandemic, according to a senior administration official. The official said the coronavirus has resulted in “fluctuating” economic data, and that White House projections wouldn’t provide a “meaningful snapshot” of the economy. The Washington Post first reported the decision. For decades, U.S. administrations have issued updated forecasts for data including growth, employment and inflation in the summer after issuing their budget proposals, usually in February. The official said the Trump administration didn’t issue such projections in 2017 because that year’s budget request wasn’t released until May, after Mr. Trump took office. President Trump and other administration officials have predicted that the severe slump caused by lockdowns imposed to prevent the spread of the virus would be followed quickly by a strong rebound as businesses reopen. Trump administration officials have predicted that the slump caused by coronavirus lockdowns would be followed quickly by a strong rebound. By the fall, “all the signs of economic recovery are going to be raging everywhere,” White House economic adviser Kevin Hassett said on CNN’s State of the Union on Sunday. The White House hasn’t released detailed economic analysis to support its predictions. The nonpartisan Congressional Budget Office expects gross domestic product to shrink 5.6% in the fourth quarter of 2020 from the same period last year. By the end of 2021, the economy will still be smaller than it was at the end of 2019, and the jobless rate – which stood at 14.7% last month – will remain above 8%, the CBO projects.Most economists surveyed by The Wall Street Journal this month said the economy will likely bottom out in May or June and that growth will remain below pre-pandemic levels for years.”It’s going to take a while for us to get back,” Federal Reserve Chairman Jerome Powell said in a May 17 interview on CBS News’s “60 Minutes.” The Fed plans to release updated economic projections following its June 9-10 policy meeting, Vice Chairman Richard Clarida said this week.
A Growing Wave of Bankruptcies Threatens U.S. Recovery – Pam Martens – The bankruptcy epidemic in the U.S. started last year, long before any COVID-19 pandemic had touched down. U.S. retailers ranked among the greatest casualties of 2019 with a total of 17 bankruptcies. Big names among the retail bankruptcies in 2019 included Gymboree on January 16; Charlotte Russe on February 3; Things Remembered on February 6; Payless ShoeSource on February 18; Charming Charlie on July 11; Barneys New York on August 6; and Forever 21 on September 29. Now, the retail shutdowns resulting from COVID-19 have simply accelerated what was already a growing trend of companies seeking relief from debts they cannot pay back. Some of the major bankruptcies this year mean permanent, not temporary, job losses. The 118-year old J.C. Penney Co. had 846 stores when it filed for bankruptcy on May 15 of this year. It said it plans to permanently close 242 of those stores. On May 19, Pier 1 Imports, which filed for bankruptcy in February, said it plans to liquidate all of its remaining 540 stores. Hundreds of store closings in malls spell escalating job losses and more pain in the commercial real estate market. According to Moody’s, shopping mall vacancies had already reached an historic high of 9.7 percent at the end of March. Distressed mall owners will, in turn, put stress on big Wall Street banks which will have to take more loan loss reserves on their exposure to commercial real estate. That, in turn, will mean that the big banks, which have an outsized presence in consumer and business lending, will start trimming credit card lines to consumers and credit lines to businesses. In fact, that process has already begun. That, in turn, will stunt consumer spending, which, unfortunately, represents two-thirds of U.S. GDP. Another major shopping mall retailer, J. Crew, filed bankruptcy on May 4. It has been slowly closing stores since 2018. It currently operates 182 J. Crew retail stores, as well as 140 Madewell stores. Due to its debt burden, analysts say it could be forced to close as many as half of its stores. Neiman Marcus, which filed for bankruptcy protection on May 7, had announced in March that it would close most of its off-price Last Call stores by early 2021. It has indicated it hopes to keep its 43 Neiman Marcus stores and two Bergdorf Goodman stores open. Other big name retail bankruptcies this year include Modell’s Sporting Goods on March 11; True Religion on April 13; Roots USA April 29; Aldo May 7; Stage Stores (owner of Bealls, Palais Royal, Peebles, Stage and Goody’s) on May 11. Just yesterday, discount retailer Tuesday Morning filed for bankruptcy protection with plans to permanently close about 230 of its 687 stores. But retailers are not the only companies piled high with debt that are increasingly turning to bankruptcy protection. Telecommunications company, Frontier Communications Corp., filed for bankruptcy protection on April 15. It had $17.5 billion in debt. With almost $19 billion of debt, the century-old Hertz rental car company filed for bankruptcy protection on Friday, May 22. In addition to Hertz, it operates Dollar and Thrifty car rentals. At the end of 2019, it had 38,000 workers. Earlier this year, it announced 10,000 layoffs. Hertz operates a fleet of 500,000 vehicles. It may begin selling off tens of thousands of those cars to raise cash, raising concerns that this could devastate prices in the used car market, potentially shuttering small used car businesses.
Something’s Wrong- A Debt-Financed Recession – The Fed’s debt-bridge policy is designed to improve the flow of credit to businesses to avoid a devastating credit crunch. Never before has one of the monetary policy solutions to combat recession been to extend credit to struggling, profit losing businesses. There is no precedent for record business borrowing during a recession. The scale of business failures during and after the economy exits recession will far exceed that of the Great Financial Recession. The traditional way for monetary policy to build a bridge from recession to recovery is through the lowering of official interest rates. In time, the reduction of interest rates triggers a refinancing cycle, lowering interest costs, and improving liquidity positions. The “reliquification” process enables firms (and individuals) to exit recession with stronger liquidity and lower debt burdens. With official interest rates relatively low the “reliquification” process was not a viable policy option to combat the abrupt contraction in the economy. So policymakers were forced to support the flow of credit to the economy by purchasing securities and provide direct financing to sectors where it is not otherwise available or too costly. So instead of contracting, which is the typical pattern during the recession, the flow of private credit has exploded to the upside. Since the start of 2020, commercial and industrial loans have increased over $750 billion to a record $3.1 trillion. That increase nearly matches the cumulative increase in corporate bank borrowing of the past 6 years. At the same time, US corporations have tapped the capital markets for hundreds of billions of new debt. Through early May corporations have issued nearly $300 billion in new debt, twice as much as the comparable period one year ago. An addition of $1 trillion of new liabilities over a few months is a big number in the best of times. Yet, record corporate borrowing during bad times increases the risk of business failures and defaults. Almost all business people agree that the current crisis marks an inflection point. The business world has changed and firms need to remake (i.e., downsize) their organizations to fit in the new normal. Companies will operate with a smaller footprint, but more debt. There is no precedent for record corporate borrowing during a recession. As a result, investors need to brace for an economy unlikely to resemble the one before, with an uneven and slow growth, and record corporate failures.
State and Local Budget Woes Create Drag for Economic Recovery Prospects – WSJ – The hit to U.S. state and local finances from the coronavirus pandemic could be a drag on the nation’s economic recovery for years to come, if the past is any guide. State and local government spending and employment levels didn’t fully recover from the 2007-09 recession until last fall, a decade after the downturn ended and only a few months before the coronavirus led to a new round of cuts. Economists, including Federal Reserve Chairman Jerome Powell, worry that today’s cuts could once again take a long time to heal and could slow the economic recovery. “We have the evidence of the global financial crisis and the years afterward where state and local government layoffs and lack of hiring did weigh on economic growth,” Mr. Powell told the Senate Banking Committee on Tuesday. The condition of state and local government finances affects the health of the broader economy because their spending amounts to almost 11% of gross domestic product, and they employ about one of every eight American workers, including teachers, police officers and firefighters. In April alone, those governments cut nearly 1 million positions, two thirds of which were in public schools and colleges, according to Labor Department figures. Governors and mayors have warned of more cuts to come. California, for instance, projects budget deficits of $13.4 billion for the fiscal year ending June 30 and $40.9 billion for next year. Across the country, states and cities are being squeezed by a combination of lost revenues and rising spending on services like unemployment insurance and health care. Unlike the federal government, they cannot run deficits, so the gap must be filled by spending cuts, tax increases or both. Moody’s Analytics estimates they will need to make $500 billion in cuts over the next two years due to the economic effects of the coronavirus. But the overall economic impact of those cuts would be considerably greater, according to Gabriel Chodorow-Reich, an economist at Harvard University. “When those workers are laid off, they have to cut back on spending, and when they cut back on spending that reduces the income of others in the economy,” he said. “That amplifies the initial cut.” Based on evidence from the last recession, Mr. Chodorow-Reich estimates that every dollar in cuts costs the overall economy $1.50 to $2. The principle also works in reverse, he said. Every additional dollar of spending adds $1.50 to $2 to the economy.
Coronavirus stimulus: Trump wants to send out more relief money — President Donald Trump and his advisors showed more support for a new round of coronavirus relief spending this week as economic damage from the pandemic mounts. The president on Thursday said, “I think we’re going to be helping people out” and “getting some money for them” as tens of millions of Americans lose paychecks and businesses struggle to survive with public health restrictions still in place in much of the country. He added that the U.S. could take “one more nice shot” at stimulus. Trump’s advisors have echoed his sentiment. On Friday morning, economic advisor Kevin Hassett told CNN that another round of aid is “pretty likely,” saying he believes “it’s coming sooner rather than later.” Treasury Secretary Steven Mnuchin said Thursday that he sees a “strong likelihood” the U.S. will need more stimulus. Support has mounted in the White House as Congress fails to strike a consensus on how to lift a U.S. economy collapsing under the weight of the pandemic. More than 38 million people have filed jobless claims since the crisis started, and second-quarter GDP is expected to plunge. Democrats have pushed for an immediate, sweeping plan to push more spending money to individuals, expand the social safety net during the crisis and make voting safer by expanding mail-in ballot access. he House passed a $3 trillion relief package last week.. After downplaying the need for more federal spending, the GOP-held Senate has started to open the door to a more narrow aid proposal. Senate Majority Leader Mitch McConnell told Trump this week that the next bill should not cost more than $1 trillion, according to Axios. The president has generally showed more comfort with free spending than his Republican allies in Congress. Policymakers will, of course, have to pin down a lot of details. Democrats have pushed for a second stimulus check to individuals of up to $1,200, and Trump appears to have embraced the idea. Congressional Republicans already backed direct payments once in March.
Kudlow Calls For “Back To Work Bonus” As Americans Prefer Sitting On Couch Rather Than Working — White House economic adviser Larry Kudlow on Tuesday told Fox News that the Trump administration is examining another round of stimulus for unemployed workers that will get them back to work. Kudlow calls it the “back to work bonus,” a move that will bring people from off the sidelines and back into the workplace as the economy restarts. A significant problem for the Trump administration has developed during the economic crash, unemployment benefits for some workers are now paying more than their old jobs did, which is set to delay the employment recovery. Thanks to the March CARES Act which boosted unemployment benefits by $600 per week, around half of all US workers stand to take in more money while laid off than they did before the pandemic – at least until that increase expires at the end of July.We noted last week that the CARES Act, which included a $1,200 stimulus check and an additional $600 weekly payment for the unemployed, has led to a labor shortage at one Arizona restaurant. Times Square Italian Restaurant owner Paullette Cano said with an “unemployment rate at almost 20%, you’d think we’d have a lot of applicants coming in, but we’re not.” Cano said the CARES Act and unemployment checks have resulted in many of her furloughed employees staying home. They collectively told her their pay from the government is much better than working at her restaurant. Moving on to the subject of China, Kudlow said that Trump is so “miffed” with the Chinese over the virus, that the trade deal is not longer his No. 1 focus concerning China – echoing comments that Trump himself made recently.Commenting on the market’s rally on Tuesday, Kudlow said Q3 could see one of the biggest jumps in US GDP growth in history, and that the market is rallying on signs that we’ve “hit bottom”, and that the worst of the economic disruption is behind us.Kudlow also said the administration would extend some assistance to US companies seeking to move parts of their supply chain back to the US from China.
U.S. small firms leave $150 billion in coronavirus stimulus untapped – (Reuters) – When the U.S. government first rolled out forgivable loans to small businesses in early April under the Paycheck Protection Program, loan officers at Bank of the West in Grapevine, Texas worked nights and weekends to process a tsunami of applications. But since those first few frantic weeks, demand has “just dried up,” said bank president Cindy Blankenship. On May 15 the bank stopped taking applications for PPP loans. Nationally the program remains active. But data from the Small Business Administration shows net weekly PPP lending has actually been negative since mid-May, as fewer firms applied for loans, and some borrowers returned funds. tmsnrt.rs/2ZuvQvc All told, the SBA says it had approved $512.2 billion in PPP loans as of May 21. That’s nearly $150 billion less than the $660 billion allocated to the program, which was designed to keep Americans on company payrolls and off unemployment assistance. Many of Bank of the West’s PPP borrowers haven’t touched their PPP loan deposits, which total $87 million, Blankenship says, partly because they are confused about the terms. “I think it’s a mixture of uncertainty and anxiety and fear, and the uncontrollable factor about employment and rehiring.” The money left unborrowed and unspent under the program – a flagship of Congress’ $2.9 trillion effort to cushion the economic crush of the coronavirus pandemic – represents a lost opportunity. Businesses were supposed to use it to retain workers, but may have been laying them off instead of tapping the money. Some 38.6 million people have filed for unemployment insurance since the crisis began, and the unemployment rate is expected to near or surpass the 25% record reached in the Great Depression. The SBA does not provide estimates of how many jobs have been protected by the 4.4 million loans made to date under the program. The agency did not respond to Reuters’ requests for comment.
Exclusive: U.S. taxpayers’ virus relief went to firms that avoided U.S. taxes – (Reuters) – Last month Zagg Inc, a Utah-based company that makes mobile device accessories, received more than $9.4 million in cash from a U.S. government program that has provided emergency loans to millions of businesses hit by the coronavirus. The money was part of the $660 billion Paycheck Protection Program (PPP) – a linchpin of President Donald Trump’s economic rescue package, meant to save small firms convulsed by the pandemic and help them to keep workers on the payroll. Claimants certified the loans were necessary to support their business and received an average of $115,000 as of May 26, according to the Small Business Administration, which administers the program. Nasdaq-listed Zagg’s loan was more than 80 times that amount. That wasn’t the only help Zagg had from the government lately. Last year, the company received a $3.3 million tax refund and racked up U.S. tax credits worth $7 million, its public filings show. It made $6 million in profit for 2019, but paid no tax in the United States. Zagg has booked much of its profit through small companies in far-off Ireland and the Cayman Islands, its filings show. The company’s situation is one of several that reveal a previously unreported aspect of the government relief program: The fund is giving millions of dollars in American taxpayer money to a number of firms that have avoided paying U.S. tax, a Reuters examination found. In all, Reuters’ analysis of public data found around 110 publicly traded companies have each received $4 million or more in emergency aid from the program. Of those subject to taxes, 12 of the companies recently used offshore havens to cut their tax bills, the analysis found. All together, these 12 received more than $104 million in loans from U.S. taxpayers. Seven of them paid no U.S. tax at all for the past year. The program, which provides low-interest loans that are forgivable if companies use most of the money to pay employees, has been widely criticised for problems ranging from early bottlenecks that prevented small businesses from receiving money, to confusion that led millions of dollars to be handed out to relatively affluent firms. Zagg, which sells its accessories in stores, online and via TV, declined to comment on its tax affairs but said separately it needed the cash from the program to keep its team together. It said in its annual report that its 2019 tax credits were “primarily attributable to a change in our global tax structure with respect to intangible intellectual property.” Of the almost 110 recipients of $4 million or more, Reuters found some 46 paid no U.S. corporate tax for the last year. There are many reasons for this, not all to do with tax avoidance.
House passes bill giving firms more time to use PPP loans – The U.S. House of Representatives voted almost unanimously Thursday to give businesses more time to spend funds disbursed through Small Business Administration’s Paycheck Protection Program.House lawmakers voted 417-1 to advance the Paycheck Protection Program Flexibility Act, which triples the period to 24 weeks during which businesses can spend their PPP loan amounts. The legislation would also lower the threshold for how much of the funds must go toward payrolls, from 75% to 60%, in order for a PPP loan to be forgiven.”I think we can all agree the economic crisis brought on by Covid-19 has proven more severe and drawn out than many anticipated,” said Rep. Nydia Velazquez, D-N.Y., who chairs the House Small Business Committee. “The extended nature of the economic downturn has made it necessary to enact certain legislative reforms to the programs. … The new 60-40 ratio makes certain a business can remain open, weather the crisis, continue employing workers and keep serving their local communities.” The legislation comes after small businesses pushed to be able to use more PPP funds for purposes other than payroll. The National Federation of Independent Business urged lawmakers in a letter to pass the legislation.”These changes will allow more businesses to receive PPP loan forgiveness and have liquidity after the PPP ends,” said Kevin Kuhlman, vice president of federal government relations at the federation.The legislation is due to be considered as early as next week in the Senate, where the strong bipartisan support for the measure in the House may help its chances. The House recently passed a separate $3 trillion coronavirus relief package, but its chances to become law are less clear.
House Passes Bill Loosening Rules on PPP Small-Business Loans – WSJ – The House approved a bipartisan bill that would loosen requirements on hundreds of billions of dollars in small-business loans, responding to concerns from employers struggling to stay open during the coronavirus pandemic. The House bill reduces the level of Paycheck Protection Program funds that must be used for payroll to 60% from 75%. The bill also gives borrowers up to 24 weeks to use the funds, up from the eight set in the initial bill passed in March, and extends the deadline to rehire workers to Dec. 31. The bill passed 417-1 on Thursday, with many of the Democratic votes read into the record by their assigned proxy, taking advantage of a rule change this week that allows remote voting for the first time. Republicans have rejected proxy voting and have filed a lawsuit to block the practice. The bill now goes to the Senate, where lawmakers of both parties are hoping for quick action. House lawmakers say last-minute changes to the bill, such as setting the 60% level for payroll, were done to reach a bipartisan agreement in both chambers. That payroll level marked a compromise between keeping it in place at its current level and eliminating it entirely. “This is a bill to provide immediate flexibility and it’s needed, and if the Senate sits there and messes around and then have to wait and call it back and then weeks go by, then we’re stuck,” said Rep. Chip Roy (R., Texas), a lead sponsor of the bill. Senators backing it plan to push for a vote next week. The PPP changes are one area of bipartisan cooperation on Capitol Hill, amid deep divisions over unemployment benefits, state aid, liability shields for businesses and other issues in the next round of talks. “I’m hoping that the Senate can just take it up, maybe even on unanimous consent,” Sen. Angus King (I., Maine) said in an interview. A spokesman for Senate Minority Leader Chuck Schumer (D., N.Y.) said the senator will push for a vote next week as well. A spokesman for Majority Leader Mitch McConnell (R, Ky.) declined to comment. The Senate failed last week to reach a deal to extend the amount of time companies have to spend loans obtained through the program to 16 weeks. The House bill has support from several outside groups lobbying for changes to PPP, including the National Restaurant Association, U.S. Travel Association and the National Small Business Association. “We believe what we’ve compromised on here, in this chamber, will be sufficient to pass the Senate,” said Rep. Dean Phillips (D., Minn.), a lead sponsor of the bill. “This is what small businesses need, and if we don’t keep the businesses open, the jobs go away.” In a separate development, federal agencies said they would set aside an additional $6.8 billion of funds during PPP’s second round for community lenders that target underserved borrowers, as lawmakers consider broader changes to the program.
Senate Democrats pump brakes on new stimulus checks House Democrats looking to deliver another round of $1,200 relief checks to Americans are encountering skepticism from an unexpected source – fellow Democrats in the Senate. The $3 trillion House-passed measure is not only facing opposition from GOP senators, it’s also prompting Senate Democrats to raise concerns about what they see as a huge untargeted expenditure. Sen. Ben Cardin (D-Md.), a member of the Senate Finance Committee, said he wants the next round of coronavirus relief to be more focused on the households that have been hardest hit by the economic downturn brought on by the pandemic. “I’d like to take a look at all that aid we provided and get good economic information on the value for that, from the point of view of our economy but more importantly on fairness to people who are really hurt,” Cardin said when asked whether he would support another round of checks. Cardin said the direct payments made more sense in March when Congress wanted to get money out the door as quickly as possible. But now, as states are allowing businesses to reopen around the country, he says lawmakers should look at who will most need relief in the coming months. “We wanted to get money out quickly. We used the refund checks to do that, we used the PPP program to do that,” he said, referring to the Small Business Administration’s popular Paycheck Protection Program. “I think the next round we’ve got to be more targeted to those who are really in need. So I hope we can target this a little bit better to those who have been hit hard because of COVID-19,” he added. Sen. Ron Wyden (Ore.), the senior Democrat on the Finance Committee, earlier this month acknowledged there’s “a little bit of debate” over whether another round of checks should be included in the next relief bill. Senate Republicans have panned the $3 trillion HEROES Act, which the House passed on May 15, calling it a non-starter.
Check your junk mail – 4 million Americans are getting their stimulus payments as prepaid debit cards, not checks –Don’t throw away that junk mail – or you might throw away your stimulus payment. The U.S. Treasury Department and the Internal Revenue Service began sending out Economic Impact Payments as prepaid debit cards last week. So almost 4 million Americans still waiting for their cut of the $2.2 trillion CARES Act can expect to get their stimulus money in the form of an EIP Card, as opposed to a paper check.Problem is, these Visa cards are being issued by MetaBank (the Treasury’s financial agent) and delivered in plain envelopes from Money Network Cardholder Services – neither of which is a familiar name for most of us. So reports of people mistaking these for preapproved credit-card junk mail, or even a scam, have been popping up across the country. And, in some cases, people have even thrown away the debit cards containing their long-awaited stimulus money before they realized their mistake.
18 Million Jobs At Risk Of Permanent Loss: What Happens To Small Businesses When The Bailout Money Is Spent – We continue to worry – a lot – about how US small business will recover from the COVID Crisis, primarily because of this segment’s impact on the American labor market. According to the latest US Small Business Administration data (2016 calendar year):
- There are 30.7 million registered small businesses in the US, but the vast majority (24.8 million) have no employees. The important group for our purposes today is the 5.9 million small businesses that employ anywhere from 1 to 499 workers.
- Those 5.9 million firms have an aggregate payroll of 59.9 million people, 47.3% of the American labor force.
- Through May 16th (latest Treasury Dept data available), the Payroll Protection Program has made 4.3 million loans. This represents only 14% of total US small businesses.
On the one hand, it’s pretty impressive that the PPP has now gotten money to 73% of American small businesses that actually have a payroll; on the other, the program is only meant to be a short-term bridge loan/grant. The question now is what happens to American small business once the PPP money is spent, and that requires a deeper dive into the data. Almost two thirds (64%) of US small business employment is concentrated in just 6 types of companies and their contribution to total US employment varies widely:
- Health Care and Social Assistance: 8.8 million workers (45% of total US employment in this category)
- Accommodation and Food Service: 8.3 million (61%)
- Retail Trade: 5.6 million (35%)
- Construction: 5.2 million (82%)
- Professional, Scientific and Technical Services: 5.2 million (59%)
- Manufacturing: 5.1 million (44%)
Takeaway: in terms of overall US labor market trends, small business employment in these 6 sectors is responsible for 30% of American jobs, so these are the industries to watch in the coming months as the country reopens. #2: Small business employment in industries which 1) rely largely on face-to-face customer interaction but 2) are not heath care/assistance related and therefore must spend more time and money adopting new business practices and/or adapting to capacity limits:
- Accommodation and food service: 8.3 million workers
- Retail trade: 5.6 million
- Educational services: 1.6 million
- Real Estate and Rental and Leasing: 1.4 million
- Art, Entertainment and Recreation: 1.4 million
- Total: 18.3 million
Takeaway: we would argue that this 18 million worker cohort is at the most risk of permanent layoffs over the next 6 months. Some industries – education and real estate, for example – can more easily adapt to either remote operation or address health concerns with appropriate modifications. But it’s harder to see how small businesses in accommodation/food service, retail, and arts/entertainment will bounce back quickly; that’s 15 million workers. Assume 25% of those businesses fail and others have to cut back, and a 33% reduction in the workforce or 5 million jobs lost seems like a reasonable estimate.
GOP Wants Cuts to Social Security and Medicare in Next COVID Stimulus Package – A proposal by Sen. Mitt Romney to establish congressional committees with the specific goal of crafting legislative “solutions” for America’s federal trust fund programs has reportedly resurfaced in GOP talks over the next Covid-19 stimulus package, sparking alarm among progressive advocates who warn the Utah Republican’s bill is nothing but a stealth attack on Social Security and Medicare.Politico‘s Burgess Everett reported Wednesday that Romney’s TRUST Act, first introduced last October with the backing of a bipartisan group of senators, “is getting a positive reception from Senate Republicans” in coronavirus relief discussions, which are still in their early stages. The legislation, Everett noted, “could become part of the mix” for the next Covid-19 stimulus as Republicans once again claim to be concerned about the growing budget deficit.Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM), told Common Dreamsin an interview that he is not at all surprised to see Romney’s bill crop up again and said it should be diligently opposed.NCPSSM vocally condemned the TRUST Act when it was unveiled last year, warning that – if passed – the measure “would likely result in cuts to the earned benefits of seniors, people with disabilities, and survivors.”Richtman noted that in a House Ways and Means Social Security Subcommittee roundtable discussion this week, the idea of establishing commissions to study possible changes to Social Security – though not Romney’s bill specifically – was floated by GOP members, an indication that the New Deal-era program is very much on the minds, and potentially in the crosshairs, of Republican lawmakers.”Social Security is the piggy bank that Republicans seem to go to whenever it dawns on them that we’ve gotta do something about the debt,” Richtman said, “notwithstanding the fact that they passed a huge tax cut that added trillions to the debt and benefited mostly wealthy individuals and corporations.”Speaking to Politico this week, two Republican congressmen – Reps. Tom Reed (R-N.Y.) and Steve Womack (R-Ark.) – cited the coronavirus pandemic’s possible effects on Social Security to call for a commission to study the program and recommend reforms. Rep. John Larson (D-Conn.), meanwhile, is pushing for an expansion of benefits funded by lifting the payroll tax cap, which would make wealthier Americans pay more.”I don’t know when we’re going to decide to take up the issue,” said Womack. “I hope and I pray that it’s not when we have no other real options other than something draconian like big cuts.”
Republicans and corporate interests exploit coronavirus crisis to erase companies’ liability —EPI Blog -Senate Majority Leader Mitch McConnell (R-Ky.) and Senator John Cornyn (R-Texas) announced that they are working on legislation to give companies enhanced protections against lawsuits by employees and consumers who contract COVID-19 and claim that the business is responsible for their infection. Instead of advancing crucial worker protections and aid to state and local governments, Republicans and corporate advocacy organizations have made “liability shield” legislation the main priority for additional pandemic relief and recovery measures – claiming that it is necessary to remove liability from businesses in order to reopen the economy. To be clear, removing legal accountability from businesses would jeopardize the health and safety of workers and consumers and threaten the overall economic recovery. In the last several months, there have been many examples of businesses failing to provide workers with the necessary personal protective equipment to enable them to perform their jobs safely and effectively. Further,some workplaces have continued to operate when workers reported infection and have become epicenters of a local outbreak. Eliminating all legal liability for businesses will likely lead to more businesses acting irresponsibly and placing potential profits ahead of worker and consumer safety.Compounding this problem is the fact that policymakers have gutted federal budgets for worker protection enforcement over the last decade, as shown in Table 1.1 As the workforce has expanded, the number of inspectors available to ensure that businesses are operating in compliance with health and safety regulations have also declined. According to the Occupational Health and Safety Administration (OSHA), there is approximately one compliance officer for every 59,000 workers.Figure A shows worker protection agencies are responsible for far more workers than they were a decade ago.
China Proposes A Law Allowing Citizens To Sue US For Starting Coronavirus Pandemic – One month ago, the state of Missouri became the first in the nation to file a lawsuit against China over their role in the coronavirus pandemic. Also named in the suit were the Communist Party of China, the government of Wuhan City, and the Wuhan Institute of Virology, along with the Chinese Academy of Sciences. Filed in late April in the Eastern District of Missouri, Missouri Attorney General Eric Schmitt accused China of knowing that “COVID-19 was dangerous and capable of causing a pandemic, yet slowly acted, proverbially put their head in the sand, and/or covered it up in their own economic self-interest.”Yet in a world where China has likewise accused the US of creating the coronavirus, why where there no lawsuits seeking similar damages from the US? Well, there will be soon: according to the Post, China’s legislature has proposed drafting a sovereign immunity law that would allow Chinese citizens to pursue legal actions against the United States over the coronavirus pandemic.Citing China’s state-run media, the report said the Communist Party is seeking to amend an existing law that would allow legal action against “other countries.”The Chinese lawmaker leading the efforts, Ma Yide, told the Global Times that the law would “ensure Chinese citizens’ and companies’ rights to sue the Us over its blame game and cover-up of information during the pandemic.” Ma said one of the things Chinese citizens should be able to sue over is the claim from the Chinese Foreign Ministry that the US military brought the coronavirus to China.”Many believe that U.S. soldiers brought the epidemic to Wuhan. Others believe that the U.S. has hidden key information, which led to the global health crisis. Why can’t Chinese citizens and companies sue the U.S. government?” Ma told Chinese media. If the proposal should pass, Chinese residents could move ahead with lawsuits that are beginning to surface.
China Secures Brazilian Soy As Trade War Restart Appears Imminent – With a new round of trade war increasingly likely between the US and China, Beijing has been buying Brazilian soybeans in a sign the Asian nation may be looking to secure an alternative source of supplies. According to Bloomberg, the world’s top soybean importer purchased more than 10 cargoes in Brazil this week, despite higher prices. In a further sign that China appears to be distancing from the US, Bloomberg adds that while China bid for American soy on Tuesday, state-run buyers were absent from the market Wednesday, the people said.”Even with Brazilian soybeans being more expensive this autumn, China is securing this origin via what they see as the political risk in U.S. soybean/grain sales,” Chicago-based consultants AgResource said.Most of the soybeans Brazil sold to China were for August and September, with some deals stretching into October. This is a disappointment for US farmer, because AgResource said it “had expected that the U.S. would be able to garner Chinese demand from late August into early 2021.””The U.S. will still dominate China’s purchases in this time slot, but totals will be cut from prior expectations,” the consultants said.As a reminder, as part of the Phase 1 “trade deal”, China pledged to buy $36.5 billion in US agricultural goods this year, an increase of $12.5 billion over 2017 levels, before the start of the trade war. However due to the disruptions from the pandemic, not to mention the fact that China never intended to follow through with the trade deal, purchases have been running well behind; meanwhile the record plunge in Brazil’s currency has made its products more attractive. An escalation in tensions between Beijing and Washington could jeopardize outstanding U.S. soy cargoes to China. About 1.8 million tons of soybeans sales to China for the current marketing year and 1 million tons for the next year are yet to be shipped, according to the U.S. Department of Agriculture.
Trump imposes travel restrictions on Brazil – The White House on Sunday announced President Trump is restricting the entry of non-U.S. citizens traveling from Brazil as the Latin American country sees a surge in coronavirus cases. “Today, the President has taken decisive action to protect our country by suspending the entry of aliens who have been in Brazil during the 14-day period before seeking admittance to the United States,” White House spokeswoman Kayleigh McEnany said in a statement. “As of May 23, 2020, Brazil had 310,087 confirmed cases of COVID-19, which is the third highest number of confirmed cases in the world. Today’s action will help ensure foreign nationals who have been in Brazil do not become a source of additional infections in our country. These new restrictions do not apply to the flow of commerce between the United States and Brazil,” she added. Trump told reporters last week that his administration was considering suspending travel from Brazil, which has reported more than 22,500 deaths due to the coronavirus. The country now trails only the U.S. in the number of total cases after surpassing Russia on Friday. “We are considering it. We hope that we’re not going to have a problem,” Trump said during a Cabinet meeting Tuesday, pointing to concerns about Brazilians traveling to Florida. “Brazil has gone more or less herd,” he said, adding, “They’re having problems.” Mike Ryan, a top World Health Organization official, pointed to South America as a new hot spot for the pandemic at a press conference on Friday. “In a sense, South America has become a new epicenter for the disease. We have seen many South American countries with increasing numbers of cases,” Ryan said. “Clearly there is a concern across many of those countries, but clearly the most affected is Brazil at this point,” he added.
How Covid-19 is Creating a Social-Distancing Version of War – By retired U.S. Army major Danny Sjursen – Covid-19 may prove the death knell of American war as classically imagined. Future combat, even if broadly directed from Washington, may be only vaguely “American.” Few uniformed citizens may take part in it and even fewer die from it. During the prolonged endgame of wars that don’t really end, U.S. military fatalities will certainly continue to occur in occasional ones and twos – often in far-flung places where few Americans even realize their country is fighting (as with those four U.S. troops killed in an ambush in Niger in 2018 and the Army soldier and two private contractors killed in Kenya earlier this year). Such minuscule American losses will actually offer Washington more leeway to quietly ramp-up its drone attacks, air power, raiding, and killing, as has already happened in Somalia, with assumedly ever less oversight or attention at home. As in the Horn of Africa of late, the Pentagon won’t even have to bother to justify escalations in its war-making. Which raises a sort of “if a tree falls in the forest and no one is there … ” conundrum: if the U.S. is killing brown folks around the world, but hardly anyone notices, is the country still at war? Moving forward, policymakers and the public alike may treat war with the same degree of entitlement and abstraction as ordering items from Amazon (especially during a pandemic): Click a button, expect a package at the door posthaste, and pay scant thought to what that click-request set in motion or the sacrifice required to do the deed. Only in war, one thing at least stays constant: lots of someones get killed. The American people may leave their wars to unrepresentative professional “volunteers” led by an unchecked imperial presidency that increasingly outsources them to machines, mercenaries, and local militias. One thing is, however, guaranteed: some poor souls will be at the other end of those bombsights and rifle barrels. In contemporary battles, it’s already exceptionally rare that a uniformed American is on that receiving end. Almost midway through 2020, only eight U.S. service members have been killedby hostile fire in Iraq and Afghanistan combined. Yet many thousands of locals continue to die there. No one wants U.S. troops to die, but there’s something obscene – and morally troubling – about the staggering casualty disparity implicit in the developing twenty-first-century American way of war, the one that, in a Covid-19 world, is increasingly being fought in a socially-distanced way.
WHO Suspends Trial of Trump-Touted COVID-19 Treatment Hydroxychloroquine Due to Safety Concerns – Citing safety concerns, the World Health Organization (WHO) said Monday it was suspending its trial of hydroxychloroquine, an anti-malarial drug that has been championed by President Donald Trump as a treatment for the new coronavirus.The WHO decision followed the release of a Lancet study Friday that found that COVID-19 patients who took the drug were more likely to die or develop heart problems.”The steering committee met over the weekend, in the light of this uncertainty,” WHO chief scientist Soumya Swaminathan told NPR. “We decided we should be proactive, err on the side of caution and suspend enrollment temporarily into the hydroxychloroquine arm [of the Solidarity trial].”The WHO Solidarity Trial is an effort to test the effectiveness of potential COVID-19 treatments, including hydroxychloroquine, remdesivir and an HIV combination therapy, The Guardian reported. It involves 3,500 patients from 17 countries randomly assigned one of four experimental treatments, according to NPR.Unlike the WHO trial, the Lancet study was based on observation rather than a controlled experiment. However, the number of people in the study – 96,000 – raised concerns, Swaminathan explained to NPR.Of the 96,000 in the Lancet study, nearly 15,000 were given hydroxychloroquine or chloroquine, with or without an antibiotic, BBC News reported. The death rate for patients treated with hydroxychloroquine was double the control, at 18 percent compared to nine percent. The death rate for patients treated with chloroquine was 16.4 percent.In light of these findings, the Executive Group of the Solidarity Trial met Saturday and agreed to a temporary pause of WHO’s hydroxychloroquine trial, WHO Director-General Tedros Adhanom Ghebreyesus told reporters Monday.”The review will consider data collected so far in the Solidarity Trial and, in particular robust randomised available data, to adequately evaluate the potential benefits and harms from this drug,” he said.
Trump says the U.S. will cut ties with World Health Organization – President Donald Trump announced Friday that the United States will cut ties with the World Health Organization. “China has total control over the World Health Organization despite only paying $40 million per year compared to what the United States has been paying, which is approximately $450 million a year,” Trump said during a news conference in the White House Rose Garden. “The world needs answers from China on the virus. We must have transparency. Why is it that China shut off infected people from Wuhan to all other parts of China?” he added. “It didn’t go to Beijing, it went nowhere else, but they allowed them to freely travel throughout the world, including Europe and the United States.” Trump has repeatedly criticized the WHO’s response to the coronavirus, which has hit the U.S. worse than any other country, amid scrutiny of his own administration’s response to the pandemic. He has claimed the WHO is “China-centric” and blames the agency for advising against China travel bans early in the outbreak. “Fortunately, I was not convinced and suspended travel from China saving untold numbers of lives,” Trump said April 14. The agency has defended its initial response to the coronavirus pandemic, saying it gave world leaders enough time to intervene early in the outbreak. The agency declared Covid-19 a global health emergency on Jan. 30 when there were only 82 cases outside of China and zero deaths, WHO Director-General Tedros Adhanom Ghebreyesus said during a press conference on May 1. “Meaning, the world had enough time to intervene.” The WHO has also defended China, saying as far back as February that the country’s response to the virus was an improvement from past outbreaks such as SARS. Earlier this month, Trump threatened to permanently cut off U.S. funding of the WHO. In a letter, he said that if the WHO “does not commit to major substantive improvements within the next 30 days, I will make my temporary freeze of United States funding to the World Health Organization permanent and reconsider our membership in the organization.” On Friday, Trump said the WHO “failed to make the requested greatly needed reform” and the U.S. “will be today terminating our relationship with the World Health Organization and redirecting those funds to other worldwide and deserving urgent global public health needs.” The WHO’s funding runs in two-year budget cycles. For the 2018 and 2019 funding cycle, the U.S. paid a $237 million required assessment as well as $656 million in voluntary contributions, averaging $446 million a year and representing about 14.67% of its total budget, according to WHO spokesman Tarik Jasarevic. It’s unclear exactly what mechanism Trump intends to use to terminate WHO funding, much of which is appropriated by Congress. The president typically does not have the authority to unilaterally redirect congressional funding. Lawrence Gostin, a professor and faculty director of the O’Neill Institute for National and Global Health Law at Georgetown University, said in a tweet Friday that Trump’s move is “unlawful” because pulling funding requires Congress, which has already authorized funding. It’s also “dangerous” because “we’re in the middle of a pandemic,” he said. On May 20, WHO officials said they worried the agency’s emergency programs would suffer if the president permanently pulled U.S. funding from the international agency.
Pelosi calls Trump’s decision to withdraw US from WHO ‘an act of extraordinary senselessness’ – Speaker Nancy Pelosi (D-Calif.) panned President Trump’s decision to withdraw the U.S. from the World Health Organization (WHO), calling the move “senseless.” “The President’s withdrawal from @WHO as it leads the fight against COVID-19 is an act of extraordinary senselessness. Again and again, he blames others and refuses to take responsibility. Only with a coordinated global response will we defeat this virus,” Pelosi tweeted. The remark came after Trump announced that the U.S. is “terminating” its relationship with the WHO over its response to the novel coronavirus. Trump and several Republicans have accused the international health organization of being too trusting of data on the coronavirus from China, and the president said he would “redirect” funds promised to the WHO to assist other global health needs. “We have detailed the reforms that it must make and engaged with them directly, but they have refused to act,” Trump said. Friday’s announcement followed a decision in mid-April to suspend funding to the WHO, pending a review of the organization’s handling of the coronavirus. European Union asks US to reconsider decision to cut ties with WHO 5 things to know about US-China tensions over Hong Kong The United States contributes about $400 million annually to the WHO and is the body’s largest contributor. Public health experts have warned that a suspension of funds would severely damage the organization. “This senseless action will have significant, harmful repercussions now and far beyond this perilous moment, particularly as the WHO is leading worldwide vaccine development and drug trials to combat the pandemic,” The American Medical Association said in a statement. “COVID-19 affects us all and does not respect borders; defeating it requires the entire world working together,” the statement said.
Germany’s Merkel rejects Trump invite to attend G7 summit in Washington: Politico (Reuters) – German Chancellor Angela Merkel has refused to accept U.S. President Donald Trump’s invitation to attend an envisaged summit of the Group of Seven (G7) in the United States, Politico reported on Friday. “The federal chancellor thanks President Trump for his invitation to the G7 summit at the end of June in Washington. As of today, considering the overall pandemic situation, she cannot agree to her personal participation, to a journey to Washington,” the report quoted German government spokesman Steffen Seibert as saying. “She will of course continue to monitor the development of the pandemic.” Trump believes there would be “no greater example of reopening” than holding a G7 summit in the United States near the end of June, the White House said on Tuesday.
Pentagon charts its own course on COVID-19, risking Trump’s ire – The Pentagon is actively planning on living with the coronavirus well into 2021, putting it at risk of angering President Trump as he expresses confidence that the disease is on the wane. Defense officials have extended a freeze on troop movement, held ships in port and laid the framework for what the military will look like in an extended pause because of the COVID-19 pandemic. On Tuesday, a leaked Pentagon memo revealed that top Defense Department (DOD) officials are planning for the possibility that the military could be dealing with the virus beyond this year. The extended preparation cuts against White House messaging that the virus will recede in the coming months and that a vaccine could be available by the end of the year. “There is a disconnect,” said Mackenzie Eaglen, a former congressional adviser on defense now with the conservative American Enterprise Institute. “At the same time, if anyone can take safe cover behind ‘we’re the department of planning for all contingencies,’ they can because that is what they’re supposed to do, over-plan and over-prepare.” The situation is emblematic of the tough position the Pentagon has often been in during Trump’s presidency. Defense officials have frequently had to ensure they outwardly appear in line with the president’s wishes, while quietly navigate realities that might draw the president’s ire. It’s a phenomenon that has played out in everything from determining how to carry out Trump’s directive to remove troops from Syria, to implementing the president’s sudden edict to ban transgender service members, to offering options to respond to Iranian provocation. With the coronavirus, the Pentagon has been charting its own course for months. In late January, when only six people in the United States had been diagnosed with the illness and Trump was insisting the virus was under control, the Pentagon was releasing its first coronavirus-related guidance to its service members and personnel. At the end of February, as the president claimed coronavirus would “disappear,” the Pentagon had already canceled several military exercises, restricted movement overseas and ordered all ships that had visited Pacific countries to self-quarantine. In April, as Trump mused about reopening the country’s economy by Easter, Defense Secretary Mark Esper extended a military-wide travel ban to June 30. And even as the Pentagon chief earlier this month declared that the administration aimed to deliver millions of doses of a coronavirus vaccine by the end of the year, the leaked draft DOD guidance warned of the “real possibility” that an effective vaccine won’t be available until “at least the summer of 2021.”
Republicans 10 Times More Likely Than Democrats To Say COVID-19 Death Count Is Overstated- Gallup – The novel coronavirus pandemic provides a view into the deep partisan divisions that have persisted despite the unfolding national crisis. Two recent Gallup/Knight Foundation surveys find Americans’ understanding about the coronavirus is strongly shaped by partisan affiliation and news consumption habits, especially when basic facts are politicized. Specifically, while Democrats and independents increasingly see COVID-19 as more deadly than the seasonal flu, Republicans’ views have not changed. And while Democrats tend to think the death toll from COVID-19 is understated, Republicans believe it is exaggerated.The surveys were fielded March 17-29 and April 14-20, 2020, as part of Knight Foundation’s Trust, Media and Democracy initiative. There have been growing concerns over Americans getting false information about the coronavirus, especially as it relates to personal and public health. Generally, the Gallup/Knight surveys find that Americans are quite knowledgeable about coronavirus facts. For instance, 88% of Americans know the coronavirus can be spread by touching surfaces where virus droplets land and that the droplets can remain contagious for a few hours or up to several days. There is no difference in awareness about how the coronavirus spreads between Democrats (88%), Republicans (87%) and independents (87%), likely because this information has remained outside contentious political discourse. Yet, consensus on the basic facts crumbles when scientific knowledge is politicized. The gap in misperceptions over the lethality of the coronavirus is a case in point. While more Americans realized the coronavirus was deadlier than the seasonal flu in mid-April (67%) compared with late March (60%), this trend toward greater knowledge did not hold among Republicans. Beyond partisan affiliation and political ideology, news diet is a powerful predictor of how Americans view the lethality of the coronavirus. For example, the likelihood that a hypothetical politically moderate independent with a conservative news diet would incorrectly answer this question increased four percentage points between mid-March to mid-April, compared with decreases of seven points for the same individual with a mixed news diet and 19 points with a liberal news diet. For more information on how Gallup categorizes news diets, see the online appendix (PDF download). Two possible explanations exist for this enduring misperception. First, Republican respondents may know the correct answer but provide the incorrect answer to demonstrate their support for the Trump administration or because they just tend to view national conditions more positively when a Republican is president. In survey research, this is called expressive responding or partisan cheerleading. The other explanation is that debunking misinformation is difficult once believed. The results captured in these Gallup/Knight surveys cannot distinguish between the two possibilities, but the implication of either explanation underscores the power of partisanship and politics even as the public health emergency has unfolded.
The Finger on the Button -IN THE RECENT FLARE-UPS over when to end widespread shutdowns, you can detect a peculiar calculus: some lives seem more expendable than others. It’s the kind of concern that surfaced in the Obama years, when conservatives rallied behind Sarah Palin’s accusation that the Affordable Care Act would set up “death panels” to deny care to the elderly and the disabled. Back then, Iowa Republican Senator Chuck Grassley told a hometown crowd, “We should not have a government program that determines you’re gonna pull the plug on grandma.”Now concern over grandma is back, but some conservatives seem to have switched sides. Dan Patrick, the lieutenant governor of Texas, for example, created a stir back in March when he went on Tucker Carlson’s show on Fox News to make a plea for re-opening businesses, even if it meant older people might have to pay with their lives. Patrick, who is seventy, suggested it was a worthy trade-off:And you know, Tucker, no one reached out to me and said, “As a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren?” And if that’s the exchange, I’m all in.Others have presented the issue in actuarial terms, comparing the relative value of those young children and grandchildren with long lives ahead of them to those apparently living on borrowed time. Curiously, despite Lt. Gov. Patrick’s claimed willingness to volunteer as tribute, most who make this argument have not offered up their own grandmothers to the Covid-19 altar; it’s usually non-specific grandmas in some nursing home somewhere – a tragedy, to be sure, but also a statistic. As all fifty states move toward reopening businesses in the weeks ahead, the fact that doing so is not just an economic question but a moral one is getting short shrift. It is tempting to think of it as a classic trolley car dilemma: if we swerve one way and pretend the pandemic is over, more will die of the virus; if we swerve another way and allow unemployment to climb and businesses to go under, more will die of all the causes related to increased economic hardship. Yet There are no non-specific grandmas; there is only yours and mine. If we are honest with ourselves, the choice between them is no choice at all. Which is why, as we contend with the moral question of who should live and who should die as the country reopens, it’s a useful exercise to imagine whom we have in mind when we talk about lives lost for the sake of the economy.
Political Scientist Tom Ferguson on Big Money and Social Conflicts in the Covid-19 Era – Posted by Yves Smith – Below we’ve embedded an important, high-level presentation on the political reverberations of the Covid-19 crisis by Tom Ferguson, who is one of the top experts on money in politics. I wish we had a transcript, but it’s not as daunting as it looks. Ferguson’s remarks take only the first 45 minutes; the rest is Q&A. It’s worth your time because Ferguson looks at the official responses to the Covid-19 crisis and explains things that might seem nonsensical, above all, why so many governments are “reopening” even though polls pretty much everywhere say citizens want restrictions in place longer. Ferguson cuts into the problem by focusing on worker safety as the real dividing line.
Birx: ‘I’m very concerned when people go out and don’t maintain social distancing’ – White House coronavirus task force coordinator Deborah Birx said Sunday she is “very concerned” that some Americans who are venturing out for the Memorial Day holiday weekend are not maintaining social distancing. “I’m very concerned when people go out and don’t maintain social distancing,” Birx said on “Fox News Sunday.” “We know have excellent scientific evidence of how far droplets go when we speak or just simply talking to one another. We know it’s important for people to socially interact, but we also know it’s very important for people to have masks on when they speak … we have to maintain that six-feet difference.” “We know being outside does help, but that doesn’t change the fact that people need to be responsible and maintain that distance,” she added. Asked by host Chris Wallace about reports of people becoming combative about being asked to wear masks in public, Birx responded: “What we have said to people is there’s clear scientific evidence now … that a mask does prevent droplets from reaching others, and out of respect for each other, as Americans that care for each other, we need to be wearing masks in public when we cannot social distance.” “It’s really critically important, we have the scientific evidence of how important it is,” she added. Wallace went on to press Birx about President Trump’s stated reluctance to wear a mask in public, although the president was photographed wearing one at a Michigan auto plant last week. Birx responded that masks are most essential for situations where social distancing is impossible, and added that “I’m assuming that in a majority of cases, he’s able to maintain that distance.”
Fauci Warns About Hydroxychloroquine and In-Person Party Conventions – WSJ – Anthony Fauci, the government’s top infectious-disease expert, said hydroxychloroquine isn’t an effective treatment for Covid-19 and urged caution as Republicans and Democrats plan their conventions for later this summer.Dr. Fauci’s comments Wednesday about hydroxychloroquine echo the findings of recent studies and countered President Trump’s frequent efforts to tout the antimalarial drug as a promising treatment for Covid-19, the disease caused by the new coronavirus.”I’m not so sure it should be banned, but clearly the scientific data is really quite evident now about the lack of efficacy for it,” Dr. Fauci said during a CNN interview, when asked whether the U.S. should ban the drug for treating Covid-19, as France recently did.Dr. Fauci, the director of the National Institute of Allergy and Infectious Diseases, also warned of the risk of “adverse effects” from the drug for some patients with pre-existing heart conditions and other health problems.Mr. Trump said last week he was taking hydroxychloroquine as a preventive measure, despite a warning from the Food and Drug Administration last month that the drug is linked to serious heart problems and should be used only on hospitalized patients or as part of clinical trials.In the absence of approved treatments, doctors and hospitals began using hydroxychloroquine and a similar drug, chloroquine, in Covid-19 patients earlier this year, after several small studies outside the U.S. provided signs the drugs may help treat symptoms. In recent weeks, several observational studies have shown they may not provide benefit to patients and could even be harmful. On Friday, researchers analyzing data of about 96,000 hospitalized patients reported that the drugs didn’t help patients fight Covid-19, while raising the risk for heart problems and death. That study, funded by Brigham and Women’s Hospital in Boston, found that between 16.4% and 23.8% of the approximate 15,000 patients treated with the antimalarials – either alone or in combination with an antibiotic – died, depending on the regimen. In comparison, a little more than 9% of hospitalized patients who didn’t get an antimalarial died.
The COVID-19 shutdown will cost Americans millions of years of life – Our governmental COVID-19 mitigation policy of broad societal lockdown focuses on containing the spread of the disease at all costs, instead of “flattening the curve” and preventing hospital overcrowding. Although well-intentioned, the lockdown was imposed without consideration of its consequences beyond those directly from the pandemic. The policies have created the greatest global economic disruption in history, with trillions of dollars of lost economic output. These financial losses have been falsely portrayed as purely economic. To the contrary, using numerous National Institutes of Health Public Access publications, Centers for Disease Control and Prevention (CDC) and Bureau of Labor Statistics data, and various actuarial tables, we calculate that these policies will cause devastating non-economic consequences that will total millions of accumulated years of life lost in the United States, far beyond what the virus itself has caused. Pandemics have afflicted humankind throughout history.. The past century has witnessed three pandemics with at least 100,000 U.S. fatalities:[…] So far, the current pandemic has produced almost 100,000 U.S. deaths, but the reaction of a near-complete economic shutdown is unprecedented. The lost economic output in the U.S. alone is estimated to be 5 percent of GDP, or $1.1 trillion for every month of the economic shutdown. This lost income results in lost lives as the stresses of unemployment and providing basic needs increase the incidence of suicide, alcohol or drug abuse, and stress-induced illnesses. These effects are particularly severe on the lower-income populace, as they are more likely to lose their jobs, and mortality rates are much higher for lower-income individuals. Statistically, every $10 million to $24 million lost in U.S. incomes results in one additional death. One portion of this effect is through unemployment, which leads to an average increase in mortality of at least 60 percent. That translates into 7,200 lives lost per month among the 36 million newly unemployed Americans, over 40 percent of whom are not expected to regain their jobs. In addition, many small business owners are near financial collapse, creating lost wealth that results in mortality increases of 50 percent. With an average estimate of one additional lost life per $17 million income loss, that would translate to 65,000 lives lost in the U.S. for each month because of the economic shutdown. In addition to lives lost because of lost income, lives also are lost due to delayed or foregone health care imposed by the shutdown and the fear it creates among patients. From personal communications with neurosurgery colleagues, about half of their patients have not appeared for treatment of disease which, left untreated, risks brain hemorrhage, paralysis or death. Emergency stroke evaluations are down 40 percent. Of the 650,000 cancer patients receiving chemotherapy in the United States, an estimated half are missing their treatments. Of the 150,000 new cancer cases typically discovered each month in the U.S., most – as elsewhere in the world – are not being diagnosed, and two-thirds to three-fourths of routine cancer screenings are not happening because of shutdown policies and fear among the population.
How Many People Are Being Killed by the Lockdown? –Menzie Chinn – From the Washington Examiner, and op-ed, via AEI: Although lockdowns are preventing some deaths, they are undoubtedly increasing deaths by other causes. This virus is killing people not only by infecting millions but also by inducing a policy response that kills people.First, … Isolation kills in many ways. We don’t have data that the lockdowns are causing more suicides, but plenty of health experts believe they will. People struggling with drug addiction are finding it harder to get the treatment they need. This could cause relapses and eventually, death.It’s reasonable to worry about increases in drinking, and thus alcoholism and alcohol-related deaths. (Though, with less driving, we’ll have fewer DWIs.) … People are also missing out on crucial medical care because of the coronavirus. … Many treatments are simply not happening. The result is that ill people don’t get the healthcare they would be getting.All these points make sense, although the relevant question is whether the quantitative magnitude is significant. One way to get at this question is to look at excess mortality (which is an estimated figure) and compare against reported covid-19 fatalities. (a statistically reported figure, which is likely subject to undercounting). Using CDC data accessed a couple days ago, I find that most of the excess mortality is accounted for (in an accounting sense) by covid-19 fatalities.
Death And The Pandemic Economy –The relation between death and the pandemic economy is a fraught one that has become hotly debated, although with not much clear empirical evidence. I note that recently over on Econbrowser Menzie Chinn has had a series of posts on this matter in various forms. Obviously a big issue has been the claim by the anti-lockdown crowd that not reopening the economy quickly will lead to an increase in suicides by the increasingly large numbers of unemployed people out there. There certainly have been many studies in the past showing a variety of bad social outcomes from high unemployment, including suicides, domestic abuse, drug abuse, depression, and more. There does seem to be some strong evidence of several of these notably higher domestic abuse and depression.When it comes to suicide and death more broadly, the empirical picture is very murky. Menzie in one of his recent posts reported on a regression he ran covering monthly data from 1998 to very recently that used dummies for months and then unemployment rates and suicides (in the US) and found the an unexpected “wrong sign” with lower suicides correlated with higher unemployment, although this was not a statistically significant result. He provides no explanation for why this odd result seems to be there, but it does show that this is not a simple matter.Regarding current data on the main question, so far there does not seem to be any data showing a noticeable rise in suicides in the US since the pandemic, with only reports of some increases among medical personnel, who have suffered from overwork, stress, and even guilt, along with fear. That we might be seeing that out of them is completely understandable. So why might we not be seeing much increase in suicides so far despite all the things going on such as increased depression as well as unemployment and more that would suggest we might expect to see it? Some have suggested a “wartime” effect: people are suffering, but they know others are as well and so rally around the flag to hang in there. This rally around the flag effect even worked for awhile to boost Trump’s polls for a few weeks in late March and early April until people saw how we was botching things, and now his polls are lower than they were before, Another element, suggested to me by my medically connected daughters, not all that different from the above, is that people who are depressed feel “validated” because now others appreciate their condition. This is especially relevant for veterans suffering from PTSD and so on.
Stop expelling and separating immigrant children parents during COVID –The separation of children and families at the border was deemed unconstitutional with an executive order to stop back in June 2018. So why are children still at risk of the government separating them from their parents? Earlier this month, two Salvadoran sisters, 8 and 11 years old, came to the U.S. border seeking protection but were sent to Mexico under the Migrant Protection Protocols (MPP) program. They came back to the U.S. border again and were approved for reunification with their mother in Houston. But Immigration and Customs Enforcement (ICE) is currently moving to deport them back to a country where their lives are endangered, and where they have no adult to care for them.This is despite a federal judge’s ruling last month that the administration has violated the Flores settlement that mandates “safe and sanitary” conditions and to make “prompt and continuous efforts” to release children and reunify families in the U.S. while their immigration cases proceed. The government has turned their attention away from the protection of children at our border over the past few weeks due to the COVID-19 pandemic. Children have traumatic options when they come to our border. They can (1) be quickly expelled to countries with high rates of child trafficking and violence, where they may or may not have an adult to care for them; (2) kept in a U.S. sponsored shelter but then awoken at all hours and flown out of the country without the family being aware; (3) can be separated (even if infants or toddlers) if their parents relinquish custody; or (4) can remain indefinitely detained with their families during the pandemic, despite aruling that found insufficient measures to protect children and families in detention from COVID-19. All of these “options” are abusive to children. As a child/adolescent psychiatrist and humanitarian protection adviser, I’ve worked for over a decade with unaccompanied children and their families. The government is creating an allostatic load of stress that can accumulate and cause irreparable physical and mental health damage to children.
Thomson Reuters actively helping Trump administration target immigrants – Thomson Reuters – the Toronto, Canada-based parent company of the Reuters news agency – has been actively helping the Trump administration target immigrants for arrest, detention and deportation.The company’s contracts with Immigration and Customs Enforcement (ICE), which amount to over $70 million, have been public knowledge for a few years. However, the nature of its extensive involvement in aiding the implementation of President Donald Trump’s anti-immigrant policies has only been recently exposed.Far from just being a passive data broker, Thomson Reuters Special Services plays a critical role in helping ICE process information that could lead to arrests, detention and deportation.Documents obtained by immigrant rights groups including Mijente, #NoTechForICE and Documented reveal that the support provided by the company goes beyond what has been associated with other big tech firms. It includes not just “automation” but a network of “trained analysts” who process the data internally before supplying information to ICE.The extensive involvement has been exposed in the solicitation documents for the latest $4 million contract between Thomson Reuters Special Services and the Department of the Homeland Security. The contract stipulates that the company provide assistance to ICE’s Targeting Operations Division by building a “continuous monitoring and alert system” that gathers credit history, property information, employer records, real time jail bookings, phone numbers, addresses, etc. to facilitate and refine tracking and arrests of immigrants.Specifically, the company has been contracted to develop a “multi-tiered internal vetting system,” where ICE data is “analyzed internally by both automation and trained analysts” to “provide the best leads possible and to reduce the number of false positives forwarded to the [Targeting Operations Division].”Thomson Reuters also provides “risk mitigation services,” purportedly aimed at helping ICE track threats against their agents. In fact, these services have been generally used to target immigrant rights groups and others who protest against ICE’s activities.
Mexicans Are ‘Building A Wall’ To Keep American-COVID-Carriers Out – Government officials, healthcare workers, and residents in Mexican border cities are alleging new COVID-19 outbreaks are connected with infected people crossing the border from the US. Municipal and state officials in Matamoros, located on the southern region of the Rio Grande, directly across the border from Brownsville, Texas, in conjunction with Mexico’s National Guard established checkpoints over the weekend at three border crossings to screen US citizens, dual nationals, and locals, a move to mitigate the spread of the virus in the country. City official Jorge Mora Solaldine, told AP News only one person per car is permitted across the border, and they will have to prove essential business, such as work or medical care is being done, or risk rejection.At least 180 people were denied access at one border crossing into Mexico along the Brownsville stretch on Saturday. The municipality of Matamoros and other border towns in the area have reported an increase in COVID-19 cases. Along the San Diego – Tijuana border, Tijuana doctors told AP that a spike in cases is coming from dual nationals, residents, and some Americans who have crossed over: “There were a lot of people who emigrated here to Mexico,” Dr. Remedios Lozada, who leads government efforts in the Tijuana health district. “That was when we began facing a higher number of cases.”Residents in Nogales, Sonora, told AP, they constructed roadblocks to prevent people from Arizona heading into Mexico back in March because Mexican government officials were doing very little to screen people coming from the US. President Trump has routinely praised his border wall and claimed it had stopped the virus: “We’ll have 500 miles [of the Southern border fence] built by very early next year, some time, so, one of the reasons the numbers are so good. We will do everything in our power to keep the infection and those carrying the infection from entering our country. We have no choice. Whether it’s the virus that we’re talking about or many other public health threats. The Democrat policy of open borders is a direct threat to the health and well-being of all Americans. Now you see it with the coronavirus, you see it,” President Trump said at a campaign rally in Charleston, South Carolina, in late February. Though Mexican state governors along the border said thousands of new cases developed in late March, days after President Trump closed businesses and issued public health orders for all residents to stay-at-home in the US. Last month, Baja California Governor Jaime Bonilla said doctors were “dropping like flies” due to the lack of proper medical gear as cases begin to rise.Recently, the Trump administration extended strict border policies to limit inbound and outbound flow, citing the spread of the virus. All non-commercial, “non-essential” has been blocked for the time b eing.
Bots account for nearly half of Twitter accounts spreading coronavirus misinformation, researchers say — About half of the Twitter accounts pushing misinformation about COVID-19 and calling for “reopening America” may be bots, researchers at Carnegie Mellon University said Wednesday. The tweets appear to be aiming to sow division and increase polarization during the pandemic. “Conspiracy theories increase polarization in groups. It’s what many misinformation campaigns aim to do,” Kahtleen Carley, a computer science professor, said in a statement about the ongoing research. “People have real concerns about health and the economy, and people are preying on that to create divides.” She warned that the misinformation “will have a variety of real-world consequences, and play out in things like voting behavior and hostility towards ethnic groups.” Coronavirus: The Race To Respond Since January, the researchers have collected more than 200 million tweets discussing COVID-19 and coronavirus. They found that 82% of the top 50 influential retweets are bots, and 62% of the top 1,000 retweeters are bots, too. Bots have been spreading more than 100 types of inaccurate COVID-19 stories, such as information about unproven “cures.” But they have largely dominated the discussions about “reopening America” and ending stay-at-home orders – issues that have led to real-life protests in states nationwide. Some of the tweets about reopening also spread baseless conspiracy theories, such as hospitals being filled with mannequins, or a supposed link between coronavirus and 5G towers. The researchers said 66% of accounts discussing “reopening America” are possibly humans with bot assistants, and about 34% are definitely bots. Bots can usually be detected in accounts that were recently created and appear to be tweeting copy-and-pasted messages, or putting out a series of tweets that are timed to promote a certain topic. In addition, “Tweeting more frequently than is humanly possible or appearing to be in one country and then another a few hours later is indicative of a bot,” Carley said. The researchers have also started looking into posts on Facebook, YouTube and Reddit. Carley said the misinformation campaigns look like “a propaganda machine” and match “the Russian and Chinese playbooks,” but the research have not yet determined who is behind the bots. China and Russia have already been detected in spreading misinformation about the pandemic.
Trump: North Carolina governor must decide ‘within a week’ about GOP convention – President Trump on Tuesday said the governor of North Carolina must decide within a week whether the GOP can host its full convention in Charlotte as top Republican officials threaten to seek an alternative site otherwise. Trump and Republican officials have pressured Gov. Roy Cooper (D) in recent days to inform them whether he will allow a full-scale convention to take place in August amid concerns about the coronavirus pandemic. The president indicated during a Rose Garden event that Cooper had only a few days to decide. “We’re talking about a very short period of time,” Trump said. “It’s a massive expenditure, and we have to know. Yeah, I would say within a week, certainly, we’d have to know. Now if he can’t do it, if he feels he’s not going to do it, all he has to do is tell us, and then we’ll have to pick another location.” The president implied that Cooper’s actions may be politically motivated, suggesting Democratic governors “for political reasons don’t want to open up their states.” The governor has insisted that health experts will ultimately guide the decision of whether to allow the convention. Some state and local officials have expressed concerns that allowing thousands of guests to pack into an arena for the convention could lead to a spike in coronavirus cases.
Protestors Criticized For Looting Businesses Without Forming Private Equity Firm First – Calling for a more measured way to express opposition to police brutality, critics slammed demonstrators Thursday for recklessly looting businesses without forming a private equity firm first. “Look, we all have the right to protest, but that doesn’t mean you can just rush in and destroy any business without gathering a group of clandestine investors to purchase it at a severely reduced price and slowly bleed it to death,” said Facebook commenter Amy Mulrain, echoing the sentiments of detractors nationwide who blasted the demonstrators for not hiring a consultant group to take stock of a struggling company’s assets before plundering. “I understand that people are angry, but they shouldn’t just endanger businesses without even a thought to enriching themselves through leveraged buyouts and across-the-board terminations. It’s disgusting to put workers at risk by looting. You do it by chipping away at their health benefits and eventually laying them off. There’s a right way and wrong way to do this.” At press time, critics recommended that protestors hold law enforcement accountable by simply purchasing the Minneapolis police department from taxpayers.
How coronavirus could alter Fed’s thinking about stress tests – The Federal Reserve plans to publish regular stress test results next month based on banks’ pre-coronavirus condition, but a supplement to the annual assessment – focused on how institutions are handling the economic shocks from the pandemic – could get most of the attention, observers say.On top of releasing the standard results for the Dodd-Frank Act Stress Tests and Comprehensive Capital Analysis and Review, the Fed has said it will conduct “sensitivity analyses” to examine banks’ responses to COVID-19. The addendum will consist of “alternative scenarios and certain adjustments to portfolios to credibly reflect current economic and banking conditions.”A month out from the publication of the 2020 stress test results, it’s still a mystery how the sensitivity analyses will be used and whether banks’ performance in the additional exercises will be made public. Some have posited that the Fed could use the sensitivity analyses more than the standard DFAST and CCAR results to make decisions on whether individual banks can continue planning capital distributions. “It could be that the Fed could take the sensitivity analysis, and if they saw results that were especially concerning for them, use that as the basis of individual engagement with a financial institution around its capital plan, as opposed to formally incorporating it into CCAR,” said Jeremy Newell, a partner in the financial services group at Covington & Burling.This year’s DFAST and CCAR tests have prompted some questions about the relevance of the exercises, since the assessments will not reflect the current economic reality: a historically sharp downturn resulting from the pandemic. As is typically the case, the Fed said it is running this year’s tests for the 34 eligible banks with over $100 billion of assets based on their financial data from last year, before the coronavirus. Yet the Fed is adding the accompanying sensitivity analysis to better understand how banks are responding to financial pressures that may have been brought on by COVID-19.Fed Vice Chairman for Supervision Randal Quarles told the House Financial Services Committee this month that the planned sensitivity analyses would factor in several hypothetical economic outcomes related to both the pandemic and a subsequent recovery, including potential losses in different kinds of assets such as commercial real estate. The stress tests generally assess a bank’s ability to withstand simulated economic conditions, from baseline to severely adverse.
Goldman predicts bumpy recovery, says problem loans could rise in 2Q – A top Goldman Sachs executive said Wednesday that the economic recovery is likely to be bumpy and that problem loans may climb even higher than the firm projected at the end of March.The downbeat assessment came one day after JPMorgan Chase Chairman and CEO Jamie Dimon said that the U.S. government’s response to the coronavirus crisis could help fuel a rapid economic rebound. For its part, Goldman is projecting a 4% decline in gross domestic product this year, followed by a 6.5% increase in 2021.The Dow Jones Industrial Average has risen by more than 25% since late March, which suggests that investors are anticipating a strong recovery as shelter-in-place orders are lifted in most states. “I think obviously we’d all root for that,” Goldman President and Chief Operating Officer John Waldron said Wednesday at an industry conference. “But I think the risks ahead are that it doesn’t go quite that smoothly.”Goldman has responded to the economic fallout of the pandemic by boosting its loan-loss reserves and tightening its underwriting. Waldron said that Goldman’s credit provision, which leaped to $937 million in the first quarter from $224 million a year earlier, could climb higher in the second quarter, as the economic contraction has proved to be worse than the company modeled two months ago. In the consumer realm, Goldman reported $7 billion in outstanding loans at the end of the first quarter, which was unchanged from three months earlier. “This reflects us being careful and cognizant of the credit cycle we are operating in,” Waldron said Wednesday. “We continue to tighten our standards and manage our risk prudently.”In corporate lending, Goldman saw a sharp increase in loans outstanding during the first quarter, as did many banks, since companies were drawing on existing credit lines in an effort to preserve liquidity at the start of the crisis. Still, amid the sharp contraction in U.S. economic activity, Waldron said middle-market companies are getting squeezed, as they’ve been unable to tap government support or access the capital markets.A Federal Reserve loan program aimed at helping middle-market companies is expected to be up and running soon, though it is unclear how much use it will get. Goldman is less exposed to credit risk than most other banking companies, with loans comprising just 12% of the firm’s total assets.
SBA issues guidance on PPP loan forgiveness – The Small Business Administration and Treasury Department quietly issued more guidance for the Paycheck Protection Program as legislators look to make more fixes to the emergency loan program.One of the interim final rules, issued late Friday night, focused on the requirements for having PPP loans forgiven. The other rule provided direction on lenders’ duties during the forgiveness period, along with the SBA process for reviewing loans.Banks will be required to issue decisions on borrowers’ forgiveness applications within 60 days after receiving them. The SBA said it would then pay the lenders within 90 days. The SBA stated that it has the right to review any loan, though it will evaluate them based on the “rules and guidance available at the time of the borrower’s PPP loan application.” The agency said it is preparing a separate rule to lay out an appeals process for borrowers.Lenders will lose the fees for any loans deemed to be ineligible, and the SBA said it could claw back already issued fees. The rules also outlined more qualifications for payroll expenses and established limits for how much loan forgiveness is available for owner-employees. Bankers seemed unimpressed with the latest guidance, which did not extend the amount of time borrowers have to use the funds beyond its current eight-week period. The rules also did not reduce the payroll requirement, which currently stands at 75% of PPP funds.”Just another Friday night where [SBA and Treasury] continue to muddy the … water to make it as complicated as possible to obtain forgiveness and bankers to manage it,” Brad Bolton, president and CEO of Community Spirit Bank in Red Bay, Ala., tweeted on Saturday.Several other bankers quickly agreed with Bolton’s assessment.
SBA designates $10 billion in Paycheck Protection loans for CDFIs – The Small Business Administration has set aside $10 billion in Paycheck Protection Program funds for community development financial institutions.The SBA and the Treasury Department said in a press release that the funds will ensure PPP loans reach low-income communities.”The forgivable loan program … is dedicated to providing emergency capital to sustain our nation’s small businesses, the drivers of our economy, and retain their employees,” SBA Administrator Jovita Carranza said. “CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time.” “We have received bipartisan support for dedicating these funds for CDFIs to ensure that traditionally underserved communities have every opportunity to emerge from the pandemic stronger than before,” Treasury Secretary Steven Mnuchin said.The $10 billion includes $3.2 billion in funds that CDFIs had already approved during the program’s second round. Overall, CDFIs have approved roughly $7 billion in PPP loans.
Dow Jones hits 25,000 as pandemic death toll reaches 100,000 – The trading floor of the New York Stock Exchange was reopened on Tuesday morning for the first time since March 23. Among those present to celebrate the ringing of the opening bell was New York Governor Andrew Cuomo, who abandoned the somber demeanor of his daily coronavirus updates and shared elbow bumps with Wall Street investors. For the next six-and-a-half hours, the financial community continued its celebration of the pandemic’s bull market. When the trading floor was closed down in March, the Dow Jones Industrial Average was down to 18,000. It has since risen approximately 40 percent. Flush with trillions of dollars of bailout money provided by the CARES Act, the Dow Jones Industrial Average rose yet another 530 points, an increase of 2.2 percent over its close last Friday. Within 15 minutes of the opening bell, President Trump tweeted an enthusiastic message. “Stock market up BIG, DOW crosses 25,000. S&P 500 over 3000. States should open up ASAP. The Transition to Greatness has started, ahead of schedule. There will be ups and downs, but next year will be one of the best ever!” In the world inhabited by the overwhelming majority of the population, the end of the Memorial Day weekend and the semi-official start of summer marks the beginning of the transition to a new season of death and extreme insecurity, uncertainty and real danger. In the number of fatalities, there will only be “ups.” By the time the summer of 2020 comes to an end, the number of Covid-19 victims will be above 200,000. Trump is a vicious liar and political criminal. He is too stupid to be a full-blown Hitler, and lacks the mass base of a genuine fascist movement. There is nothing genuinely popular about his program. Trump’s real constituency is the socially parasitic corporate-financial elite. He expresses, without embarrassment or restraint, its deepest sentiments: The Dow at 25,000 is far more important than coronavirus deaths at 100,000.
An Economy That Cannot Allow Stocks To Decline Is Too Fragile To Survive – Feast your eyes on the chart below of the Nasdaq 100 stock market Index, which is dominated by the six FAAMNG (rhymes with “famine”) stocks: Facebook, Apple, Amazon, Microsoft, Netflix and Google which now account for over 20% of the entire U.S. stock market’s capitalization. Notice that despite the global economy sliding into a debt-bust depression, the NDX is within kissing distance of new all-time highs. You’re joking, right? Sales and profits won’t slide as the depression steps on the neck of hundreds of millions of households? As you’ve probably heard by now, sales don’t matter, profits don’t matter, costs don’t matter, and indeed, nothing matters but the Fed has our back so buy stocks, never mind the valuations. In other words, the U.S. stock market has reached the spiritual level where the corporeal tangible world no longer matters: in a word, Nirvana, or Heaven if you prefer. If we set aside the satire and the absurd justifications of the financial punditry ( “we see a V-shaped recovery of profits in 2023, or was it in 2032? Never mind, doesn’t matter…”), we discern a reality that should worry us: America’s economy and financial system cannot allow the stock market to decline because any sustained drop will pop the debt-bubble and bring the entire rickety, rotten, corrupt structure down. Erecting $100 trillion of phantom capital on speculative bets and disconnected-from-reality valuations was always doomed: piling one layer of debt and speculative excess on top of another while the actual collateral supporting the first layer of debt didn’t actually change steadily increases the fragility of the entire pyramid. Now the system is too fragile and brittle to survive even a modest drop in the stock market. Since the Federal Reserve and other tools of the financial-political elites can’t increase the productivity of the underlying collateral of the economy, they’re forced to manipulate the one signaling device they can control, which is the stock market. And since they can’t actually improve the productivity or prospects of several thousand companies, they’ve poured their conjured trillions in six mega-stocks to drag the entire market higher. The more money they pour into the Big Tech Six, the greater the market capitalization of these companies and therefore the greater their influence in the stock indices: the Dow Jones Industrial Average, the S&P 500 and the Nasdaq / Nasdaq 100. It’s a self-reinforcing set-up: dump another trillion in the six mega-cap stocks and this pushes the entire market higher. The influence of the real world has been reduced to zero. Nirvana indeed. The problem is that any system this fragile and brittle cannot survive the slightest contact with reality. The system’s stability is an elaborate illusion maintained by the Big Con of the Federal Reserve: we can create as many trillions as we need to prop up the stock market. This is the hubris and arrogance of mortals claiming god-like powers. As the Fed and other central banks buy every over-valued financial asset in sight to prop up over-valued markets, eventually they will own the majority of the markets (as per the Japanese bond market). At some point there won’t be any assets left for private capital to own that actually earn a return. With interest rates at zero or lower, private capital has no way to earn a return–an outcome that collapses the entire rickety, rotten, corrupt structure anyway. Extreme concentrations of wealth and power, extreme speculative risk, extreme over-valuation, extreme central bank manipulation–all increase fragility and brittleness. America’s financial system is the classic tightly bound system with all the lines of dominoes intersecting each other: any one domino will take down the entire system because it’s all tightly connected and dependent on extremes of risk, speculation, debt and manipulation (stock buybacks being Exhibit #1). The Gods of Finance are chuckling as the Fed’s trillions push the system ever closer to collapse. No matter what the Fed does, no matter how many billions Apple borrows and throws into the putrid sewage of its endless stock buybacks, the market, the financial system and the economy that has become dependent on those speculative pyramids of debt are doomed to collapse for profoundly systemic reasons. The fragile ice shelf of speculative bets and debt clinging to the mountainside is making strange creaking sounds– will you listen or will you ignore it because the Fed has our back? The avalanche will catch everyone by surprise when it finally breaks, and the consequences will be non-linear and therefore disruptive in ways few anticipate. But in the meantime, please enjoy the cosmic joke of the Nasdaq 100 and Jay Powell’s deadpan comedy routine. But be careful that the joke doesn’t end up on you: an economy that cannot allow stocks to decline is too fragile to survive.
The World’s 25 Richest Billionaires Have Gained Nearly $255 Billion In Just Two Months – The super rich are a whole lot richer than they were two months ago. Twenty five of the wealthiest people on Forbes‘ list of the world’s billionaires are worth a whopping $255 billion more than when the U.S. stock market hit a mid-pandemic low on March 23. Together these 25 folks – Forbes looked at just those on the list with fortunes tied to public stocks – are worth nearly $1.5 trillion, which is about 16% of the total wealth held by the world’s billionaires. Facebook CEO Mark Zuckerberg is the biggest dollar gainer among this rarified group. Facebook shares surged nearly 60% over the past two months, hitting a record high on Friday May 22. Investors responded positively to the Wednesday debut of Shops, Facebook’s effort to host digital storefronts for small business owners. Zuckerberg, now worth $86.5 billion, has become the fourth-richest person in the world, up from the No. 7 richest on Forbes‘ 2020 list of the World’s Billionaires, published in early April. The 36-year-old is now richer than Warren Buffett, Inditex founder Amancio Ortega and Oracle cofounder Larry Ellison.The second-largest gainer in dollar terms is also the world’s richest man, Amazon founder and CEO Jeff Bezos. Shares of the ecommerce giant have continued on a tear amid increased demand since coronavirus shuttered physical retailers. Amazon stock is up 29% since March 23. As of the end of the day Friday, Bezos was worth $146.9 billion, up $30 billion and 26% since March 23. The biggest percentage gainer is Colin Zheng Huang, the founder of China’s second largest online marketplace (behind Alibaba), Pinduoduo. Boosted by the firm’s social shopping model, in which users share purchases with friends and family, and an aggressive campaign offering subsidized deals to consumers, Pinduoduo’s shares have nearly doubled since March 23, and Huang, its 40-year-old founder and CEO, has added $17.9 billion to his fortune; he’s now China’s third-richest person, worth $35.6 billion. Another notable gainer: Mukesh Ambani, who became Asia’s richest person in April after Facebook announced a $5.7 billion investment into Mumbai-based Reliance Jio, a telecom subsidiary of the sprawling conglomerate founded by Ambani’s late father. The company has since raised loads more, including $1.5 billion from private equity giant KKR on Friday and $750 million from investment firm Silver Lake earlier this month. All told, the firm has raked in $10 billion of fresh capital in less than one month. Ambani is now worth $52.7 billion, up nearly $20 billion since the market trough.
Companies ditch commercial paper to lock in longer-term debt FT -Commercial paper has lost its fizz. Dozens of blue-chip companies includingCoca-Cola and PepsiCo, which have long relied on the market to raise cash, are paying off tens of billions of dollars of borrowing in favour of new longer-term facilities.The withdrawal from the $1.1tn commercial paper market, typically used by companies to finance payroll, inventories and other short-term obligations, came swiftly after fears over coronavirus took hold.Along with the two beverage giants, pharmaceutical group Pfizer, theme park operator Walt Disney and cigarette maker Philip Morris International have issued longer-term debt to pay off commercial paper (CP) borrowing.In total, more than 40 companies have raised a combined $97bn in debt this year, in part to refinance CP, according to data provider Refinitiv. That marks a record high and comes close to surpassing the $105bn borrowed in all of 2008 and 2009 during the previous financial crisis.In turn, CP issued by companies outside the financial industry has dropped to its lowest level since 2016, figures from the US Federal Reserve showed last week. The move by corporate treasurers to secure other sources of funding was prompted byturmoil in the CP market in March, when some investors refused to lend for maturities longer than five days. Companies at first drew down credit lines with banks to bolster their cash reserves, and then began to issue longer-term bonds after a series of interventions from the Fed helped to stabilise credit markets. The Fed’s backstops included the CP market, where it launched a facility to lend to companies on a short-term basis. But advisers on Wall Street warned that another market downturn could cause funding to dry up once more.
U.S. Corporate Bond Sales Smash Record, Soaring Over $1 Trillion – It began with a rush in mid-March, when a pair of U.S. corporate giants, Exxon Mobil Corp. and Verizon Communications Inc., braved the financial turmoil created by the coronavirus pandemic and sold a combined $12 billion of bonds in a single day. Others quickly followed, emboldened by the unprecedented support provided by the Federal Reserve, and before long, deals were being rushed out at a clip never before seen in the history of U.S. bond markets. On Thursday, that boom reached an astonishing milestone: $1 trillion worth of investment-grade corporate debt sales had been brought to market in the first 149 days of the year. In 2019, a fairly typical year in the bond market, that figure wasn’t reached until November. For the Fed, the borrowing binge is precisely the reaction it was looking for when it announced two months ago that it would prop up companies ravaged by the pandemic by providing a $750 billion promise to buy corporate debt. The Fed has yet to purchase even one individual bond, having only started buying some corporate debt through exchange-traded funds two weeks ago. But from the moment policy makers signaled their intentions, the floodgates opened, rebooting deal activity that had gone dormant earlier in the month and sparking a massive market rebound across nearly all asset classes. For companies, the cash has been a crucial lifeline that could help many of them make it through the economic collapse that the virus triggered. Fittingly, it was a bond deal Thursday by the hotel chain Marriott International Inc., a company that has been devastated by the plunge in travel, that helped push the sales figure over the trillion-dollar mark. In a dramatic sign of just how high the stakes are — and how important it is for companies to maintain access to debt markets — there have been more corporate bankruptcies in May than in any other month since the Great Recession. All of this new debt creates a new set of risks, though. U.S. companies were already highly levered coming into the crisis and by helping them heap more debt onto their balance sheets, the Fed runs the risk of deepening the pain if many of them fail to survive the virus. The central bank also will also have to decide — in coming months or, perhaps, years — when and how to remove the support without sinking corporate borrowers into distress.
CFPB offers templates for banks, servicers to seek ‘no-action’ letters The Consumer Financial Protection Bureau took steps to help banks gain approval for offering small-dollar installment loans and to enable mortgage servicers to use an online platform for loss-mitigation efforts.The bureau released an approved template for banks to use in seeking a CFPB “no-action letter” – designed to allow companies to develop products without fear of supervisory action – to offer installment loans or lines of credit for amounts of up to $2,500. The template was requested by the Bank Policy Institute, a Washington trade group.The bureau’s action came two days after four federal regulatory agencies released new guidance on how banks and credit unions can offer small-dollar loans without raising regulatory concerns. The agency also approved a template requested by the Los Angeles-based Brace Software for servicers to seek “no action” approval to use the firm’s platform for homeowners applying online for loss mitigation. While the bureau does not endorse specific products or providers, the templates provide parameters that it has approved. Companies can use the templates to get speedy approval of their own no-action letters to receive a safe harbor from regulatory actions taken by the CFPB.Brace provides a white-label, digital loss mitigation platform that adheres to timelines set by the Real Estate Settlement Procedures Act and provisions of the Fair Debt Collection Practices Act.The Bank Policy Institute’s template envisions products structured either as small-dollar installment loans or open-end lines of credit that specifically exclude the risky features of payday loans such as high-cost fees and repeat rollovers that trap consumers in cycles of debt.The institute’s template explicitly excludes deposit advance loans and loans made in conjunction with payday lenders.Alex Horowitz, a senior research officer at the Pew Charitable Trusts’ consumer finance team, said small installment loans and lines of credit from banks “would create a much better option for the millions of households that today use high-cost loans outside the banking system.” Last year, the CFPB allowed trade groups and service providers to submit templates that provide specific guidelines or parameters for products and services. Banks and financial firms are expected to then apply to the bureau for a no-action letter using the templates.
Mortgage underwriting tightens as rates fall; HSBC mulls sale of U.S. unit – The European Banking Authority expects banks in the eurozone “to suffer a hit of up to euro 380 billion to their capital due to the economic disruption from coronavirus, but most should be able to absorb the losses, ” the Financial Times reported.”The starting position of the banks [was] very good at the end of last year [and] the measures put in place since the last crisis have held up,” EBA chairman Jose Manuel Campa said. “As a result of all that, the buffers are large and should be sufficient in the short term so we are not worried about [the banks’] short-term ability to lend to the economy and in the long term to have sufficient buffers to absorb the eventual losses.”Nevertheless, “they are also more exposed to small and medium-size companies and consumer credit, two areas that provide higher margins in a low-interest-rate environment but that are now hard-hit by the virus outbreak,” the Wall Street Journal said. “Not all will be able to weather a sharp fall in profitability as loans turn sour and the cost of raising funds rises.” “There could be weaker banks, including those that entered the crisis with existing idiosyncratic problems or those heavily exposed to the sectors more affected by the crisis, and whose capital ratios might not suffice to weather the upcoming challenges,” the EBA said. Interest rates may have fallen “to the lowest level on record,” but that’s not prompting a corresponding increase in mortgage lending, the Journal says. Rather, “mortgage availability has tightened sharply as lenders impose tougher income, credit-score and down-payment conditions and drop some loan types altogether, such as home-equity lines of credit.””The economic shock from the coronavirus pandemic explains some of this credit crunch. But the economic factors have been exacerbated by policy decisions in Washington, industry officials say. As part of its March relief bill, Congress let homeowners suspend mortgage payments for up to a year but provided no way to pay for this, potentially saddling lenders with the burden. Meanwhile, federal regulators make it hard for loans where borrowers might seek forbearance to get the backing of Fannie Mae and Freddie Mac, which guarantee nearly half of residential mortgages.” HSBC’s board “is set to deepen the biggest restructuring in the bank’s 155-year history after deciding that the coronavirus crisis requires more drastic measures. The bank’s U.S. business is under particular scrutiny, where HSBC has a small east-coast retail network alongside trading and transaction banking operations. These were shrunk by almost a third in February, but management is now debating whether the U.S. operation is viable at all.”
MBA Survey: “Share of Mortgage Loans in Forbearance Increases to 8.36%” of Portfolio Volume –Note: To put these numbers in perspective, the MBA notes “For the week of March 2, only 0.25% of all loans were in forbearance.” From the MBA: Share of Mortgage Loans in Forbearance Increases to 8.36%: The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 8.16% of servicers’ portfolio volume in the prior week to 8.36% as of May 17, 2020. According to MBA’s estimate, 4.2 million homeowners are now in forbearance plans….”Although job losses continue at extremely high rates, mortgage servicers are reporting only modest increases in the share of loans in forbearance as of May 17,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The decline in employment and income is hitting FHA and VA borrowers harder, leading to 11.6 percent of Ginnie Mae loans currently in forbearance.”Added Fratantoni, “Forbearance requests declined relative to the prior week, and while call volume picked up, servicers appear well staffed for this volume, as wait times and abandonment rates dropped.” This graph shows the weekly forbearance requests as a percent of servicer’s portfolio volume.The requests peaked in the week of March 30th to April 5th.The MBA notes: “Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the sixth consecutive week relative to the prior week: from 0.32% to 0.28%.”
Black Knight: Mortgage Forbearance Volumes Flatten, Total Roughly Steady at 4.76M – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. From Black Knight: Mortgage Forbearance Volumes Flatten, Total Roughly Steady at 4.76M The latest data from the McDash Flash Forbearance Tracker shows that forbearance volumes have essentially flattened, and in fact new inflows have slowed to a relative trickle. While the leveling off of active forbearance volumes is welcome news, the focus of industry participants – especially servicers and mortgage investors – is already shifting from pipeline growth to pipeline management. … As of May 26, 4.76 million homeowners are in forbearance plans, with a net increase of just 7,000 new forbearance plans since last week. That’s in comparison to a 325,000 net increase in the first week of May, and 1.4 million in the first week of April. CR Note: This is 9.0% of all mortgages. The delinquency rate in April increased sharply to 6.45%, but it would have been much higher if so many borrowers in forbearance hadn’t made their mortgage payments (unpaid loans in forbearance are counted as delinquent in the survey).
Mortgage Credit Tightens, Creating Drag on Any Economic Recovery – WSJ -With interest rates falling to the lowest level on record, this should be a banner time for households in search of a new mortgage. It isn’t. Mortgage availability has tightened sharply as lenders impose tougher income, credit-score and down-payment conditions and drop some loan types altogether, such as home-equity lines of credit.The economic shock from the coronavirus pandemic explains some of this credit crunch. But the economic factors have been exacerbated by policy decisions in Washington, industry officials say.As part of its March relief bill, Congress let homeowners suspend mortgage payments for up to a year but provided no way to pay for this, potentially saddling lenders with the burden.Meanwhile, federal regulators make it hard for loans where borrowers might seek forbearance to get the backing of Fannie Mae and Freddie Mac, which guarantee nearly half of residential mortgages. One indicator of the credit crunch is that the volume of mortgages being refinanced, which normally rises sharply when rates drop, is up only modestly since before the pandemic, according to Black Knight, a mortgage-data and technology firm.Another indicator is mortgage rates themselves: They are roughly a percentage point higher than they ordinarily would be given current Treasury-bond yields.A strained mortgage market threatens to make the economic recovery more difficult. Housing is often the most immediate way the Federal Reserve transmits lower interest rates to the economy, as homeowners refinance to free up cash and as home buying spurs construction and spending.Trouble began in March when pandemic-related shutdowns frightened investors, prompting them to dump nearly all types of financial assets, including mortgage-backed securities. As their prices fell, yields rose, rippling through to mortgage rates. The Fed responded by cutting its short-term interest rate target a full percentage point to near zero and, in the past two months, buying more than $1.5 trillion in Treasury securities and $650 billion in federally guaranteed mortgage-backed securities, easily eclipsing the pace of buying in 2008. Treasury-bond yields plummeted to below 1% for the first time on record.
New Home Sales at 623,000 Annual Rate in April – The Census Bureau reports New Home Sales in April were at a seasonally adjusted annual rate (SAAR) of 623 thousand.The previous three months were revised down. Sales of new single-family houses in April 2020 were at a seasonally adjusted annual rate of 623,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent above the revised March rate of 619,000, but is 6.2 percent below the April 2019 estimate of 664,000.” The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate. New Home Sales haven’t fallen as much as expected during the COVID crisis. The second graph shows New Home Months of Supply. The months of supply decreased in April to 6.3 months from 6.4 months in March. The all time record was 12.1 months of supply in January 2009. This is slightly above the normal range (less than 6 months supply is normal). “The seasonally-adjusted estimate of new houses for sale at the end of April was 325,000. This represents a supply of 6.3 months at the current sales rate.” Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973. The inventory of completed homes for sale is still somewhat low, and the combined total of completed and under construction is close to normal. The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).
Pending Home Sales Plummet 35% YoY – Biggest Drop Ever As Buyers Forfeit Deposits – Existing home sales collapsed but new home sales rebounded in April, which leaves pending home sales to break the tie and analysts expected a 17.3% MoM drop. However, pending home sales disappointed notably with a 21.8% MoM collapse, sending YoY sales crashing 34.6% – the most ever… Source: Bloomberg “The housing market is temporarily grappling with the coronavirus-induced shutdown,” which reduced listings and purchases, Lawrence Yun, NAR’s chief economist, said in a statement. So while all sorts of narratives about lower rates were puked out to defend new home sales outlier data, it seems pending home sales did not get the message… Every region crashed…
- Northeast fell 14.5%; Feb. rose 2.8%
- Midwest fell 22%; Feb. rose 4.2%
- South fell 19.5%; Feb. fell 0.2%
- West fell 26.8%; Feb. rose 5.1%
That is the lowest level of pending home sales since records began in 2001… March historically begins the annual peak U.S. selling season as warming weather spurs home searches and families with children prepare for moves during the school summer break. That’s been drastically curtailed in 2020 as the virus triggers the biggest economic contraction in decades, closing workplaces, schools and other activities. Pending home sales are leading indicators of housing activity, based on signed contracts to buy single-family homes, condos and co-ops, typically occurring one or two months before closings. As MacroGuru (@macroguru9) noted, “The reason this is significant is it takes 4-8 weeks to close the sale once the contract has been signed. So this huge drop would indicate buyers forfeiting the deposit and walking away as they think the loss on the purchase would be higher than the deposit itself!!!”
Hundreds of thousands of Americans face homelessness during pandemic as states begin lifting restrictions on evictions – With nearly 40 million officially unemployed in the United States, state and local governments are preparing to throw workers and their families out of their homes and into the street. Across the US, moratoriums on eviction proceedings and home foreclosures, set in place during the onset of the pandemic, have either been lifted or are set to expire early next month. Nationally, there has been a patchwork of temporary safeguards for renters and homeowners invoked as tens of millions of workers lost their jobs in the economic fallout caused by the coronavirus pandemic. Some states, such as South Dakota and Wyoming, never had any protections in place. Others, including Florida, Mississippi, California, and Illinois are set to allow evictions to resume in early June. Cities are spending millions on rent assistance, only to see funds quickly drained by overwhelming demand. According to NPR, a rental assistance program in Houston, Texas ran out of funding in 90 minutes. Texas paved the way for other states after it lifted bans on evictions in place since March. On May 19, Texas courts were opened for landlords to file eviction proceedings against tenants. A mixture of emergency orders from cities and counties protect renters in metropolitan areas such as Austin, El Paso, Dallas, and San Antonio, but Houston – the fourth largest city in the US – and Fort Worth have issued no additional protective measures. Accordingly, Fort Worth and Houston will now be among the first major metropolitan areas in the country that will see a sharp rise in evictions, despite significant job losses. According to state figures, more unemployment claims were filed in Harris County, which accounts for about 98 percent of the Houston metropolitan area, than Dallas County and Travis County combined: 184,281 claims in the Houston area, compared to 92,380 in Dallas and 42,623 in Austin. Many of the country’s largest cities are still under state moratoriums but have not passed local eviction measures. In Chicago, evictions have been halted until Illinois lifts its state of emergency, which is currently slated for the end of this week. In states like Florida, landlords have filed hundreds of eviction cases, waiting for the state’s moratorium to expire. In Hillsborough County alone, the home of Tampa, 250 cases have already piled up in courts waiting to be processed. Neighboring Pinellas County already has 190 cases pending. New York Governor Andrew Cuomo extended a moratorium for tenants and homeowners affected by the pandemic until August 20. For cases not related to COVID-19, evictions will resume June 20.
The New York Renters Who Can’t Pay May – Two rent payments ago, Donald Trump announced what he termed some “really positive things” for millions of people who were nervous about evictions during the economic shutdown. “Landlords are going to take it easy!” he said. This was not rhetoric: Trump International Hotel, in Washington, D.C., soon asked for rent relief from its own landlord, the federal government, which has yet to announce a decision on whether to grant it. (Evictions continued apace at the real-estate firm owned by Jared Kushner.) Despite the news, rent was still due on April 1st for most American renters, and nearly a third of them couldn’t pay. More were expected to fall off the books for May. “I have seven hundred and seventy-three dollars in my bank account,” Winsome Pendergrass, a Jamaican-born domestic worker, said at the end of last month. “My rent is nine hundred and fifty-eight dollars and sixty-five cents. I paid in April, but now I can’t. I call it Can’t-Pay May.” Pendergrass’ granddaughter is trying to turn missed rent payments into a movement. She belongs to New York Communities for Change, a group that has organized a rent strike among its five thousand members. “We try to encourage our members: Have a conversation with your landlord,” she said. “But many landlords are pushing papers under their doors saying, ‘Your responsibility is to pay.’ New York State has banned evictions until mid-June, and a bill proposed in the City Council seeks to extend the grace period to April, 2021, in the five boroughs, but renters will have to make up missed payments. Pendergrass and her group have called on Trump and Governor Andrew Cuomo to cancel rents and mortgages permanently for the duration of the stay-at-home order. Pendergrass was getting ready for a rent-strike meeting, held on Zoom, for renters across the city. Fifty-eight people attended the last meeting. This time, there were a hundred and eighty-eight. People shared their stories..(anecdotes follow)
Young People Are Rushing To Leave Big Cities In Favor Of Less Infected Suburbia – There’s no doubt that the long-lasting impact of the coronavirus pandemic will include a major shift in how consumers look at homebuying. In fact, have already reported here on Zero Hedge about how many are leaving the city in favor of life in the suburbs, since the virus has spread faster in city areas.Now, it looks as though the younger generation is following the cues of the older generation and doing the same. The effects could be pronounced, especially since the younger generation was responsible for the boom in many U.S. cities over the last decade. That includes people like Desiree Duff, who Bloomberg highlighted late last week. A former NYC bartender, she has left her apartment in Brooklyn to move back in with her parents in South Carolina. She is currently using unemployment to pay her part of the rent and says that she is stuck “rethinking” the appeal of living in the big city.She said: “Not knowing what my future there looks like does make me reconsider. Maybe after my lease is done I should move elsewhere, to a smaller city that was less infected, as much as that breaks my heart.” Her move is a microcosm of a larger shift for the younger generation, which is leaving apartments empty in cities across the U.S. Deniz Kahramaner, the founder of data-driven real estate brokerage Atlasa said: “The draw of the city is the social life, the dating scene, bars, restaurants, the ability to do fun things on the weekend. Without those attractions, it makes a lot of sense to just abandon ship and go back to your parents.”Charley Goss, government and community affairs manager at the San Francisco Apartment Association said: “It’s a really hard time for the renter, but it’s a really hard time for the housing provider, too.” Goss conducted a survey and found that 17% of landlords in the San Francisco area have had tenants break leases or give 30 day “move out” notices. Another example is Alexa Lewis, a 24 year old that was living in San Francisco when the city locked down. By the end of April, her roommates had left and she was all alone. She was stuck with a $4,900/month rent bill and no clue what to do. “There were a lot of calls with my family to talk out everything and ask for advice/cry,” she said. She was able to negotiate temporary concessions with her landlord.And the rental market is expected to stay soft even as the economy recovers. “People won’t need to be in a job center if they can work from home. I would expect to see less demand and that corresponds to lower rents,” Goss said. Rents are even expected to decline in places like New York City.
Coronavirus will reshape our cities – we just don’t know how yet – Few residents of the world’s great metropolises would have thought much about plagues before this year. Outside China and east Asia – made vigilant by swine flu and Sars – the trauma of pandemics such as Spanish flu or typhoid has largely faded from popular memory. But our cities remember.An outbreak of yellow fever in Philadelphia in 1793 prompted administrators to take over the task of cleaning streets, clearing gutters and collecting rubbish. It worked, and governments across the US adopted the responsibility over the next decades. A misconception that the odour emanating from wastewater was responsible for diseases such as cholera prompted one of the world’s first modern underground sewer systems in London, and the development of wider, straighter and paved roads – which helped prevent water from stagnating.Cities have evolved over the centuries according to theories of how to fight disease, turning features such as public parks and sewers into “a mundane part of city thinking”, says Michele Acuto, a professor of global urban politics at the University of Melbourne.The legacy Covid-19 might leave on the world’s great cities is being hotly debated, although most specialists admit it is too early to know for sure. “It will depend in the end on how we analyse this virus: how is it spreading? How is it making people sick?” says Roger Keil, a professor of environmental studies at Toronto’s York University. “We don’t know the full answers, but once they become clearer, urban planners and other professionals will start to think as their predecessors did 100 years ago, as they laid sewer pipes and cleaned out parts of the city that were considered insalubrious.” The sanitary infrastructure that trails in the wake of Covid-19 may be digital, Acuto says, in the form of the surveillance technology used by cities such as Singapore and Seoul to retrace the steps of infected people and warn others who have crossed their path. Life in the megacities of the future will be less private than ever.
New York City will turn into shell of former self after coronavirus crisis -Imagine New York City five years from now with streets full of abandoned storefronts, closed eateries, and empty buildings. The cumulative effects of the coronavirus may be more overwhelming than the other challenges New York City has had to face during the past two generations, including the aftermath of 9/ 11. It is likely that the pandemic will simply accelerate the trend in the sharp decline of its population and livelihoods.New York City was already losing population before the outbreak due to economic factors and quality of life issues. Around 40,000 residents left between 2017 and 2018 alone. The coronavirus has fueled the population outflow. About 420,000 residents have fled New York City in the last few months. Even worse for its economy, the majority of those who left amid the pandemic are wealthy workers. Many of them went to low tax havens in the south, such as Texas, Florida, Georgia, and North Carolina.Eventually, it will not only be the 1 percent who leave. The unemployment rate in New York City has risen above 14 percent. Residents without a job or reduced hours will no longer have the income to keep paying sky high rents for tiny living quarters. Meanwhile, workers who have not been laid off or furloughed have been working remotely, a trend that may continue for years to come. Nearly 70 percent of those in finance and technology will consider relocating if working remotely becomes permanent.For many, that is already an option. Twitter and Facebook announced that employees will get to work from home on a permanent basis, a move that other technology giants are also weighing. Meanwhile, the conveniences of city living before the outbreak are no longer relevant. The coronavirus has exposed how easy telecommuting is, and residents may not feel safe riding the subway again for months or perhaps for years to come.Small luxuries like dining out may be off the table, even when restaurants are allowed to reopen. A wave of bars and restaurants have also closed for good in New York City. The pressure of fewer customers and knowing that laid off employees will receive the $600 per week unemployment “bonus” make the decision to move more of a no brainer than before. Several retail establishments were already struggling due to competing online business and exorbitant commercial rents. The coronavirus will push New York City to face a period of empty storefronts for the first time in decades.The mass of young people that moved to New York City for its culture and opportunities will see them dry up. Without all the restaurants, museums, and crowds of young people, the social scene and nightlife will certainly be subdued. The end result will be the Big Apple without its core. Minus the haute culture and thriving business sector, what is the advantage of deciding to stay in a potential germ factory like the five boroughs?Collapsing tax revenues from the decline in both business and residents will mean that many major programs and projects, from infrastructure to public safety and more, will be either bailed out by Uncle Sam or slashed by the government. This will likely not just be an issue for New York City. Similar factors will cause other urban centers to see similar flights.
Baby Boomers Panic Hoard “Covid Campers” To Escape Big Cities As Second Wave Threats Emerge – Americans are packing their bags, purchasing motor homes, and fleeing large cities as fears of a second coronavirus wave emerge. Bloomberg reports floor traffic at Mike Regan’s two RV dealerships near Austin, Texas, jumped 30% compared with last May. “Cooped-up Americans desperate to get out after months of lockdowns are dreaming of doing something – anything – that resembles a vacation. But a majority of them worry a second wave of the coronavirus is coming, and think politicians have pushed too fast to reopen. Unsurprisingly, when it comes to getting out of Dodge, the close-quarters of an airline cabin are a no-go,” said Bloomberg. Regan said, “the minute the campgrounds opened on May 1, and the governor turned everyone loose, our business went through the roof.” He said sales at his Crestview dealerships slumped 50% in April, though expected to be significantly higher this month.RV sales have been widely used as a recession marker (which is something we noted in August 2019): collapsing sales is the start of the downturn, and improving sales could suggest a trough and or upturn. However, as the economy dives into depression, not seen since the 1930s, RV sales are set to rise as the pandemic has frightened people away from crowded cities. Not mentioned in the report, another reason for increased RV sales could be due to 38 million people have lost their jobs in the last several months, some may not be able to make rent payments or afford their homes, have started to explore other options for cheaper living accommodations. Richard Curtin, a researcher at the University of Michigan who follows the RV industry, said the latest surge in RV buying shows consumers are still intact despite a “coronavirus recession.” However, he did not breakdown the sales in terms of demographics, which is likely to show baby boomers are the largest buyers – as the downturn has crushed millennials.
Hotels: Occupancy Rate Declined 50.2% Year-over-year, Slight Increase Week-over-week –From HotelNewsNow.com: STR: US hotel results for week ending 23 May STR data ending with 23 May showed another small rise from previous weeks in U.S. hotel performance. Year-over-year declines remained significant although not as severe as the levels recorded in April. 17-23 May 2020 (percentage change from comparable week in 2019):
Occupancy: 35.4% (-50.2%)
Average daily rate (ADR): US$80.92 (-39.7%)
Revenue per available room (RevPAR): US$28.67 (-69.9%)
“The steady climb in national occupancy continued, and to no surprise, the highest levels were recorded on Friday and Saturday ahead of Memorial Day,” said Jan Freitag, STR’s senior VP of lodging insights. “Occupancy gains continue to be led by popular leisure markets like the Florida Panhandle, Mobile, Myrtle Beach and Daytona Beach. We even saw a weekday-to-weekend ADR premium in higher occupancy markets.”What was also noticeable in the week’s data was the higher occupancy levels across all classes of hotels. Economy properties continued to lead, but we also saw the higher-priced end of the market up over 20%. Regardless, Upper Upscale occupancy continues to lag the broader industry as meeting demand is still not returning.”The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
Real Personal Income less Transfer Payments -In the Personal Income & Outlays report for April, the BEA noted that “Personal income increased $1.97 trillion (10.5 percent) in April”. This was due to a large increase in transfer payment. Transfer payments increased by $3 trillion in April. Unemployment insurance increased from $70 billion in March, to $430 billion in April. And “Other” (mostly the CARES Act) increased by $2,600 billion in April. Without the increase in transfer payments, Personal Income in April would have declined by about 6%. A key measure of the health of the economy (Used by NBER in recession dating) is Real Personal Income less Transfer payments. This graph shows real personal income less transfer payments since 1990. This measure of economic activity decreased 2.8% in March, compared to February, and another 6.3% in April (compared to March).
Consumer Spending Fell a Record 13.6% in April – WSJ – U.S. consumer spending fell by a record 13.6% in April during coronavirus lockdowns, but there are signs that purchasing is starting to pick up. The April decline was the steepest for records tracing back to 1959. Weak April spending adds to the evidence that the U.S. economy is in for a long, slow recovery. The coronavirus pandemic and related lockdowns wiped out a decade of job gains within a month.Personal income, which includes wages, interest and dividends, increased 10.5% in April, primarily reflecting a sharp rise in “government social benefits” through federal coronavirus stimulus programs.As states start to reopen businesses and Americans return to work, activity in some pockets of the economy appears to be perking up – or at least not deteriorating further – after hitting rock bottom in April. Camelia Kuhnen, finance professor at UNC-Kenan Flagler Business School, said that workers in industries hard hit by the coronavirus, like retail and tourism, will remain uncertain about the economic outlook for a while, even with states reopening their economies. “It’s going to probably lead these people to be very, very careful with spending their money,” Ms. Kuhnen said. Americans’ concerns about the path of the economy was a factor behind a sharp rise in the personal-saving rate in March. The saving rate, which is the difference between disposable income and spending, surged to 13.1% in March from 8% in February. Economic uncertainty may be holding back an auto sales recovery that began in early April. J.D. Power, the auto-industry research company, reports that by the last week of April, sales were down 38% from its pre-virus forecast – a big improvement from the 59% sales deficit in the last week of March. However, the pace of recovery has lost momentum in May, with sales still 25% lower than the forecast in the week ending May 24.
US Spending Crashes By Most Ever Despite $3 Trillion Government Handout-Driven Income Surge – After spending collapsed (and incomes dropped) in March, April was expected to see even worse but there was a surprise! While spending collapsed 13.6% MoM (the biggest drop on record), incomes soared 10.5% MoM (the biggest surge on record) as we assume that this reflects massive government transfer payments… And on a YoY basis, the shift is massive… an 11.7% surge in incomes and 3.1% slump in spending… The surge in incomes is entirely due to massive government transfer payments… Here is that percentage change put in absolute context… basically, the government has added $3 trillion in annualized income… from $3.348TN in March to $6.367TN in April (both annualized) As private and government wages collapsed… Consumer spending decreased in April, reflecting decreases in both goods and services. Within goods, the leading contributor to the decrease was spending on food and beverages data. Spending on prescription drugs also decreased. Within services, the leading contributor to the decrease was spending on health care, based primarily on employment, hours, and earnings data as well as credit card data. Other contributors to the decrease in services were spending on food services and accommodations. And finally, The Fed’s favorite inflation indicator – Core PCE Deflator – collapsed to 9 year lows… Charts Source: Bloomberg The surge in incomes and plunge in spending sent the savings rate to record highs…
Consumers Increasingly Expect Additional Government Support amid COVID-19 Pandemic – NY Fed – The New York Fed’s Center for Microeconomic Data released results today from its April 2020 SCE Public Policy Survey, which provides information on consumers’ expectations regarding future changes to a wide range of fiscal and social insurance policies and the potential impact of these changes on their households. These data have been collected every four months since October 2015 as part of our Survey of Consumer Expectations (SCE). Given the ongoing COVID-19 pandemic, households face significant uncertainty about their personal situations and the general economic environment when forming plans and making decisions. Tracking individuals’ subjective beliefs about future government policy changes is important for understanding and predicting their behavior in terms of spending and labor supply, which will be crucial in forecasting the economic recovery in the months ahead. The April SCE Public Policy Survey, which was fielded between April 2 and 30, shows large movements in consumers’ expectations regarding future changes in several assistance and social insurance programs as well as in taxes and fees. Starting with assistance programs, the chart below shows the average percent chance that respondents assign to an expansion over the next twelve months in affordable housing, federal student loan forgiveness, and the generosity of federal welfare benefits. All three series reached new highs in April, but the average likelihood of an increase in federal welfare benefits logged the biggest jump – around 20 percentage points – since December 2019. The large increases in the expected expansions for federal student loan forgiveness and welfare programs were broad-based across demographic groups. Interestingly, the change in expectations for a year-ahead expansion in affordable housing from December 2019 to April 2020 was much more muted for lower-income (less than $60,000) households at 4.9 percentage points, compared to higher-income households at 15.8 percentage points.
UMich Sentiment Disappoints As ‘Hope’ Hits 7-Year Lows –UMich sentiment was expected to have accelerated its rebound from preliminary May data, but it disappointed (despite surging stocks and reopenings).
- Headline UMich Sentiment up from 71.8 to 72.3 (but down from the 73.7 flash print and below the 74.0 expectations)
- Current Conditions up from 74.3 to 82.3 (but down from the 83.0 flash print and below the 84.0 expectations)
- Expectations “Hope” down from 70.1 to 65.9 (and down from the 67.7 flash print and below the 68.4 expectations)
Chart Source: Bloomberg This is the lowest level for expectations since Nov 2013.It should not be surprising that a growing number of consumers expected the economy to improve from its recent standstill, or that the majority still thought conditions would remain unfavorable in the year ahead. This has been a common occurrence in past cycles. The gap between judgements about economic growth and the current performance is likely to grow significantly when the 2nd quarter GDP is announced.Is it any wonder current conditions sentiment is rebounding – screw 40 million unemployed, the government just dumped $ 3 trillion in transfer payments for people to sit on their ass for a month or two?Federal payments distributed under the CARES Act are giving a jolt to consumers’ finances — though the bump may be temporary as some of the stimulus money includes one-time checks. And while the worst of the economic downturn may be over, Americans are expecting prolonged hardship, according to the report.The 50% of consumers who expected “bad financial times over the next five years” was the second-worst reading since Donald Trump became president, Richard Curtin, director of the survey, said in a statement.The question – as we noted previously, is what happens when the transfer payments run out and unemployment remains at depression levels?
COVID-19 Pandemic Fuels Bicycle Boom –As social distancing is the order of the day, riding a packed subway to get around is not exactly what the doctor prescribed. Add to that the need for people to stay active as gyms and sports centers across the nation are closed and, as Statista’s Felix Richter notes, you’ve got the perfect recipe for a bicycle boom, which is exactly what the industry has been seeing for the past two months. You will find more infographics at StatistaAccording to figures from the NPD Group’s retail tracking service, bicycle sales in the United States soared in March 2020, with some categories seeing growth rates of more than 100 percent compared to the previous year.“Consumers are looking for outdoor- and kid-friendly activities to better tolerate the challenges associated with stay-at-home orders, and cycling fits the bill well,” said Dirk Sorenson, sports industry analyst at NPD, adding that kids bikes and affordable adult leisure bikes were selling particularly well.Survey data from U.S. bike manufacturer Trek gives us an idea why cycling is so popular these days. 85 percent of Americans consider it safer than public transportation during the coronavirus outbreak, while 63 percent of respondents feel that it helps to relieve stress/anxiety associated with the pandemic.
Pandemic a boon for the bicycle as thousands snap them up (AP) – Joel Johnson first bought a multipurpose bike to avoid the germs on crowded buses and trains but then discovered a passion for pedaling around San Francisco, where some streets are now closed to traffic. Johnson, 25, is among thousands of cooped-up Americans snapping up new bicycles or dusting off decades-old bikes to stay fit, keep their sanity or have a safe alternative to public transportation. The pandemic is proving to be a boon for bike shops, which have seen a surge in demand, with people waiting in line at still-open shops and mechanics struggling to meet the demand.All around the country and the world, bicycles are selling out and officials are trying to take advantage of the growing momentum by expanding bike lanes during the pandemic or widening existing ones to make space for commuters on two wheels. “This just feels like two straight months of madness sales,” said Dale Ollison, a bike mechanic at Hank and Frank Bicycles, an Oakland, California, shop that is selling online and doing curbside pick-ups. Oakland was the first California city to launch a “slow streets” program in April and has closed 20 miles (32 kilometers) of city streets to cars to create a safer outdoor space for pedestrians and cyclists. San Francisco soon followed, closing sections of twelve streets in a city that already has a robust network of bike lanes. “A lot of folks are dusting off their bikes to get themselves and their families a bit of fresh air during all of this,” he said. “It’s the perfect tool for this time.”
For Economy, Worst of Coronavirus Shutdowns May Be Over – WSJ – Truck loads are growing again. Air travel and hotel bookings are up slightly. Mortgage applications are rising. And more people are applying to open new businesses.These are among some early signs the U.S. economy is, ever so slowly, creeping back to life.Plenty of data show the country was still mired in a severe downturn in April and May, with overall business activity falling and layoffs rising – though more slowly than in the early weeks of the coronavirus crisis. Current projections have the economy contracting by 6% to 7% this year and unemployment lingering in double-digit percentages for a while. But, for the first time since the pandemic forced widespread U.S. business closures in March, it appears conditions in some corners of the economy aren’t getting worse, and might even be improving. “If this is the only wave [of coronavirus], it looks like we’ve bottomed out and the normalization process has begun,” said Beth Ann Bovino, U.S. chief economist at S&P Global Ratings. Spending on hotels, restaurants, airlines and other industries hurt by social distancing remains low, but appears to be picking up. The number of travelers passing through Transportation Security Administration security screening checkpoints fell to 87,534 on April 14, 96% below the same day a year earlier. But by May 22, the figure had more than tripled to 348,673, although that is still down 88% from the same day a year earlier. Meanwhile, data from online restaurant-booking company OpenTable shows diners are beginning to return in several states. “We’re past the trough in terms of peak damage,” said Gregory Daco, chief U.S. economist at Oxford Economics, with high-frequency indicators showing “a burgeoning rebound in terms of how much people are spending.” “You can see that turn in the data, which is encouraging,” he said, “but you have to be cautious that we’re rebounding from extremely depressed levels.” The shipping industry illustrates the trend. The numbers remain low by historical standards but suggest the carriers have turned a corner. Truckstop.com, which measures demand in trucking’s spot market, says its weekly index has improved for four straight weeks and that available loads were up 27% in the week ended May 18. DAT Solutions LLC, which matches freight shipments to available trucks, says its index for available loads rose 22% the week ended May 10 from the previous week. Old Dominion Freight Line Inc., one of the largest truckers in the U.S., said its volumes fell sharply at the start of April, but Chief Executive Greg Gantt said in an earnings call that demand “has remained fairly steady since then.” “We’d like to think that the worst is behind us,”
Visualizing How US Consumers Are Spending Differently During COVID-19 – Consumer Spending in Charts – In 2019, nearly 70% of U.S. GDP was driven by personal consumption. However, as Visual Capitalist’s Iman Ghosh notes, in the first and second quarters of 2020, the COVID-19 pandemic has initiated a transformation of consumer spending trends as we know them.By leveraging new data from analytics platform 1010Data, today’s infographic dives into the credit and debit card spending of five million U.S. consumers over the past few months. Let’s see how their spending habits have evolved over that short timeframe: The above data on consumer spending, which comes from 1010Data and powered by AI platform Exabel, is broken into 18 different categories:
- General Merchandise & Grocery: Big Box, Pharmacy, Wholesale Club, Grocery
- Retail: Apparel, Office Supplies, Pet Supplies
- Restaurant: Casual dining, Fast casual, Fast food, Fine dining
- Food Delivery: Food delivery, Grocery Delivery, Meal/Snack kit
- Travel: Airline, Car rental, Cruise, Hotel
Nearly Half Of Small Business Owners Expect To Close Down Permanently – The economy was booming. The stock market was setting records. Then coronavirus came along and governments shut things down to minimize the pandemic. That led to massive layoffs and a nasty recession. But once states open up, things will spring back to life and the economy will go back to being great again. That’s the mainstream narrative. But it’s not based on reality.In truth, the economy was a Fed-induced bubble before the pandemic. The central bank has managed to reinflate the stock market bubble despite the economic destruction, but it is nothing but a Fed-induced sugar high. And the economy won’t likely rebound quickly, even after things open up.There are all kinds of reasons to doubt the quick economic recovery narrative. We’ve reported on the number of over-leveraged zombie companies, skyrocketing household debt, the battered labor market, and a potential cash-flow crisis even after the economy gets moving.Now we have another sign of long-term economic trouble. A survey conducted by financial services company Azlo found that nearly half of small business owners think they will eventually have to close their businesses for good.Forty-seven percent of the small business owners surveyed said they anticipate shutting down, and 41% said they are looking for full-time work elsewhere.This is on top of the small businesses that have already shut down and will never reopen.The survey also asked questions about the Paycheck Protection Program (PPP) instituted through the CARES Act. The results were less than stellar, as Newsweek reports.Less than half of participants – 38 percent – involved in Azlo’s recent survey applied for PPP loans. Of those who did apply, 37% said the program was slow to distribute funds and 20% described the process as ‘painful,’ the company reported.”It’s absurd to think the economy is going to come roaring back when nearly half of small business owners expect to shut down. Small businesses employ 58.9 million Americans, making up 47.5% of the country’s total employee workforce.
Summer Driving Season Starts Off With A Whimper… And A 30% Drop – It may be time to start shorting oil again.Memorial Day Weekend, which was closely watched by economists for signs of reopening “green shoots” and an acceleration in the US recovery, ended up being a huge dud. Because while beaches were mostly open and states across the country emerged from lockdowns, Bloomberg notes that demand for gasoline ended up falling over the Memorial Day holiday weekend, not only compared to a year prior but also to last week!While gasoline consumption was expected to jump to reflect the “pent up” traveling, gasoline demand actually fell 1.34% from Thursday to Monday of the holiday weekend compared to the week prior, Patrick DeHaan, an analyst at GasBuddy, said in a tweet Tuesday. Worse, consumption on Monday fell 0.5% from the week prior, and was a whopping 25% to 35% lower compared with the long weekend a year earlier.In short, if this is a sign of what to expect from gasoline consumption over the summer, it will be a very painful time for refiners and oil producers.BREAKING: GasBuddy gasoline demand data shows Monday gasoline demand -0.5% from the Monday prior. Thur-Mon demand is now -1.34% from same period a week ago. #gasoline #oil #OOTT pic.twitter.com/P2z9LoYRRy – Patrick De Haan â›½ï¸ (@GasBuddyGuy) May 26, 2020 According to Andy Lipow, president of Lipow Oil Associates LLC in Houston, that may have been because people kept their driving local, when in previous years they had traveled farther. But whatever the reason for the tentative unofficial start to the summer, the lackluster start to what is typically considered the season for peak American fuel demand shows how vulnerable the oil market remains as the fallout from the coronavirus crisis haunts economies according to Bloomberg.Meanwhile crude prices have surged 80% in May, after a historic collapse below zero in April, on supply cuts by major producers as well as optimism that consumption is recovering as lockdowns ease. That optimism may have been very much premature. “The public stayed closer to home and consumed less gasoline because they were going to recreational venues nearby rather than traveling long distances around the country,” Lipow said.
Summer Vacation Spending Is Expected To Plunge 66% This Year – Memorial Day weekend not only kicks off the start of summer but also, for many Americans, kicks off travel and vacation season. But this year will obviously be different, with millions stuck sheltering in place at home, due to the global coronavirus pandemic. As a result, travel spending for the weekend is expected to fall 66% to $4.2 billion, according to Bloomberg. Even though some areas are starting to see small upticks in traffic, tourism officials say that most travel won’t come until later in the season. Domestic air travel is expected to still be sparse and “almost everyone” who travels will be expected to drive. Additionally, seasonal hiring is also expected to plunge more than 75% from a year ago. The younger European workers that staff many U.S. resorts for the summer are expected to stay home. Visa processing for U.S. work and travel visas has “basically shut down everywhere” except for farmwork. Since the beginning of the pandemic, almost half of all leisure and hospitality employees have lost their jobs. Areas that are accessible by car are expected to be popular destinations this summer. That includes places like the Florida panhandle, the Carolina coasts, Oregon and Washington. Even parts of Wisconsin and Michigan are expected to be destinations for American road trips. Camping is another alternative that vacationers may try this year. Judson Gee’s, who has a vacation rental home in Wrightsville Beach, North Carolina, said: “People are absolutely dying to get out of their house and more comfortable to be outdoors than in crowded spots.” Just 32% of hotel rooms were occupied as of the week ending May 16. This is despite hotel bookings improving in recent weeks. As of May 14, more than 3,000 hotels remained closed. Federal Reserve Chairman Jerome Powell told Congress earlier this week: “It will take some time for the public to regain confidence and adapt to the new world and start traveling, taking vacations.”
Walmart Now Sells Used Clothing As Unemployment Nears Great Depression Levels -As the economy plunges into depression with tens of millions of people unemployed, Walmart is taking no chances on losing its customer base and announced this week, it will start selling used clothing, shoes, and accessories on its website. Walmart recognizes that consumers have been severely affected by coronavirus lockdowns, which has sparked depressionary unemployment levels, had to quickly find new ways to continue expanding sales while offering super low prices. It figured, a partnership with San Francisco-based Thredup, one of the largest online thrift stores in the country, could be that solution, where customers can buy pre-owned garments and shoes and accessories for up to 90% off. “We are excited to join forces with Walmart to power a sustainable, secondhand shopping experience unlike any other. From Calvin Klein and Nike to Coach and Michael Kors, this digital partnership enhances Walmart’s fashion offering with fresh brands at amazing prices that their customers will love,” said Jenn Volk, Director of Product Management at ThredUP. Walmart said customers can now shop at www.walmart.com/thredup to find over “750,000 pre-owned items across women’s and children’s clothing, accessories, footwear, and handbags.” In a severe economic downturn, there is no doubt that the second-hand merchandise market will erupt as people are too poor to buy new things. With 40 million Americans filing for unemployment benefits in ten weeks, we suspect a lot of people will be buying used items and shunning away from new stuff for several years as the downturn is expected to persist through 2021. Walmart gets it. The second-hand merchandise market is set to explode in the “greatest economy ever.”
No masks allowed: stores turn customers away in US culture war – In the last few weeks a spate of American stores have made headlines after putting up signs telling customers who wear masks they will be denied entry. On Thursday, Vice reported on a Kentucky convenience store that put up a sign reading: “NO Face Masks allowed in store. Lower your mask or go somewhere else. Stop listening to [Kentucky governor Andy] Beshear, he’s a dumbass.”Another sign was posted by a Californian construction store earlier this month encouraging hugs but not masks. In Illinois, a gas station employee who put up a similar sign has since defended herself, arguing that mask-wearing made it hard to differentiate between adults and children when selling booze and cigarettes.Anti-lockdown protesters have argued that it is anti-American for the government to curtail people’s freedoms in order to reduce deaths as a result of Covid-19. Meanwhile, store owners tell customers what they can and cannot wear before entering, and customers cough in the faces of workers in the name of freedom.”I work for Costco and I am asking this customer to put on a mask because that is company policy,” says a Costco employee in one video. “And I’m not doing it because I woke up in a free country,” replies the man filming him.”A warped freedom obsession is killing us,” said the writer Anand Giridharadas, in reference to those coughing in the faces of others in the name of freedom. It is, of course, a minority of people willfully misinterpreting what freedom means – freedom to choose, until the choice is one that they do not like; meanwhile, most Americans don’t want to return to business as usual during this pandemic.
California to allow places of worship to reopen, in-store retail shopping to resume – California will allow houses of worship to open for in-person services at reduced capacity and let retailers open for in-store shopping, state officials announced Monday. Under guidelines announced by Gov. Gavin Newsom (D) on Monday, churches will be allowed to reopen with approval from county public health officials, but they will be required to keep attendance to either 25 percent capacity or a maximum of 100 attendees. State and county public health officials will collaborate to assess any increase in deaths or hospitalizations after three weeks of the loosened restrictions. The Bay Area, however, has yet to lift restrictions on meetings of people from multiple households, including worship services, according to The Mercury News. A spokesperson for the Contra Costa County Public Health Department told the newspaper the county will “continue to abide by the terms of its own shelter-in-place order, currently set to expire June 1.” President Trump said Friday he was designating all houses of worship nationwide as essential, claiming he would “override the governors” if they did not allow them to reopen. While several lawsuits have been filed challenging Newsom’s restrictions on in-person religious services, the state’s 9th Circuit Court of Appeals last week found in his favor against San Diego’s South Bay United Pentecostal Church, 2-
Durable goods orders in US tumbled 17.2% in April – Sales of long-lasting goods tumbled in April, as businesses cut investment in response to the global coronavirus pandemic. Orders for durable goods — products designed to last longer than three years such as washing machines, bulldozers and cars — fell 17.2% from a month earlier, the Commerce Department said Thursday. Economists surveyed by The Wall Street Journal expected a 17% drop in orders. Sales fell across major product categories. Excluding transportation products, which can be volatile, orders fell 7.4%. Excluding defense, orders dropped 16.2%. The drop followed a decline of 16.6% in March. So far this year orders have fallen 11.4% compared with a year earlier. Perhaps most ominous is a sharp decline in business investment, which could spell slower economic growth beyond the pandemic. A key measure of business spending — orders for nondefense capital goods, excluding aircraft — fell 5.8%. This year they’re down 1.3 compared to the same period last year. “While this recession didn’t start with a capital spending slump, the weakness in investment spending could take a long time to dissipate,” JPMorgan Funds chief global strategist David Kelly said in a note to clients this week. Several factors are restraining investment spending. The pandemic has disrupted supply chains, impairing factories’ ability to get key parts. Depressed oil prices have prompted energy companies to pull back on purchases of drilling equipment. The collapse of air travel has sapped airlines’ demand for new aircraft. Boeing Co. orders are down sharply. And more broadly, businesses are reluctant to invest in equipment, software and facilities given the uncertainty about how long lockdowns will last, whether the country will suffer a second virus outbreak, and how robust a recovery might be.
Headline Durable Goods Orders Down 17.2% in April, Better Than Expected – The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau’s summary on new orders: New orders for manufactured durable goods in December increased $5.7 billion or 2.4 percent to $245.5 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent November decrease. Excluding transportation, new orders decreased 0.1 percent. Excluding defense, new orders decreased 2.5 percent. Transportation equipment, up following three consecutive monthly decreases, drove the increase, $5.9 billion or 7.6 percent to $82.9 billion. Download full PDF The latest new orders number at -17.2% month-over-month (MoM) was better than the Investing.com -19.0% estimate. The series is down 29.3% year-over-year (YoY). If we exclude transportation, “core” durable goods was down 7.4% MoM, which was better than the Investing.comconsensus of -14.0%. The core measure is down 9.3% YoY. If we exclude both transportation and defense for an even more fundamental “core”, the latest number is down 4.7% MoM and down 8.4% YoY. Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 5.8% MoM and down 6.3% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We’ve also included a dotted line to show the relative size of Core Capex.
Dallas Fed: “Contraction Continues in Texas Manufacturing Sector” – From the Dallas Fed: Contraction Continues in Texas Manufacturing Sector, Though Severity Eases: Texas factory activity declined again in May, though at a slower pace than in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained negative but improved from -55.6 to -28.0, suggesting the contraction in output has eased somewhat since last month. Other measures of manufacturing activity pointed to a less-severe decline in May. The new orders index advanced 38 points to -30.6, its highest reading in three months, with more than 20 percent of manufacturers noting an increase in orders. Similarly, the growth rate of orders index pushed up more than 30 points to -30.8. The capacity utilization and shipments indexes also remained negative at -26.0 and -25.7, respectively, but were up from March and April. Perceptions of broader business conditions remained negative but were somewhat less pessimistic in May. The general business activity index moved up from -74.0 to -49.2. Similarly, the company outlook index moved up nearly 30 points to -34.6, though only 12 percent of manufacturers noted improved outlooks. The index measuring uncertainty regarding companies’ outlooks retreated notably to 28.3, though the positive reading still indicates increased uncertainty. Labor market measures indicated further employment declines and shorter workweeks this month. The employment index remained negative but rose from -22.0 to -11.5. Eight percent of firms noted net hiring, while 19 percent noted net layoffs. The hours worked index rose 18 points to -22.8, with the still-negative reading signaling reduced workweek length.
Richmond Fed: “Fifth District manufacturing remained soft in May” – From the Richmond Fed: Fifth District manufacturing remained soft in May Fifth District manufacturing remained soft in May, according to the most recent survey from the Richmond Fed. The composite index rose from a record low of 53 in April to 27 in May, remaining at its lowest level since 2009. All three components – shipments, new orders and employment – were above their April readings but still in contractionary territory. The index for local business conditions was also negative, but contacts expected conditions to improve in the next six months. Many survey participants reported decreases in employment and the average workweek in May. However, the indexes for wages and the availability of workers with the necessary skills were both close to 0. The last of the regional Fed surveys for May will be released tomorrow (Kansas City Fed).
Kansas City Fed: “Tenth District Manufacturing Activity Continued to Decline” in May – From the Kansas City Fed: Tenth District Manufacturing Activity Continued to Decline: Tenth District manufacturing activity continued to decline, but not as sharply compared to last month’s record low. Expectations for future activity rose, but remained slightly negative. Month-over-month price indexes remained negative again in May. Moving forward, District firms expected prices for finished goods to decline and prices for raw materials to increase in the next six months. The month-over-month composite index was -19 in May, up somewhat from the record low of -30 in April, and similar to -17 in March. This was the last of the regional Fed surveys for May. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
May Regional Fed Manufacturing Overview – Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country’s GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, “The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated.” The latest average of the five for May is -37.36, up from the previous month’s -58.36. It is well below its all-time high of 25.1, set in May 2004.
Philly Fed: State Coincident Indexes Decreased in All States in April — From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2020. Over the past three months, the indexes decreased in all 50 states, for a three-month diffusion index of -100. Additionally, in the past month, the indexes decreased in all 50 states, for a one-month diffusion index of -100. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index fell 13.7 percent over the past three months and 12.0 percent in April. These are coincident indexes constructed from state employment data. An explanation from the Philly Fed: Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the great recession, and all or mostly green during most of the recent expansion.The map is all red on a three month basis. And here is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).In all, zero states had increasing activity including states with minor increases. In March, only 9 states had increasing activity. A number of states had declining activity in January and February – prior to the COVID crisis.
Chicago PMI Plummets To 11 Year Low As Orders, Production Plunge — That wasn’t supposed to happen. Various other cherry-picked sentiment surveys have been soaring against expectations in recent days but Chicago PMI just plummeted to its lowest level since 2009, notably below expectations… Against expectations of a bounce back to 40.0 from 35.4, Chicago PMI tumbled to 32.3 in May…
- Prices paid rose and the direction reversed, signaling expansion
- New orders fell at a faster pace, signaling contraction
- Employment fell at a slower pace, signaling contraction
- Inventories rose and the direction reversed, signaling expansion
- Supplier deliveries rose at a slower pace, signaling expansion
- Production fell at a faster pace, signaling contraction
- Order backlogs fell at a faster pace, signaling contraction
Of course, this important sentiment signal will be shrugged off because stocks are higher this month.
Chicago PMI: May Levels Lowest Since 1982 – The Chicago Business Barometer, also known as the Chicago Purchasing Manager’s Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.The latest Chicago Purchasing Manager’s Index, or the Chicago Business Barometer, fell to 32.2 in May from 35.4 in April, which is in contraction territory. Values above 50.0 indicate expanding manufacturing activity.Here is an excerpt from the press release:The Chicago Business BarometerTM, produced with MNI, fell to 32.3 in May, hitting the lowest level since March 1982, as business confidence cooled further amid the Covid-19 crisis. Among the main five indicators, Order Backlogs and Supplier Deliveries saw the largest declines, while Employment edged marginally higher. [Source] Let’s take a look at the Chicago PMI since its inception.
Over 40 Million Jobless In 10 Weeks – Nobody Ever Imagined It Would Get This Bad So Fast – In the last week 2.123 million more Americans filed for unemployment benefits for the first time (versus the 2.10mm expected). That brings the ten-week total to 40.767 million, dramatically more than at any period in American history But continuing claims declined last week as it appears some of the reopenings are seeing people come off the dole… Source: Bloomberg And as we noted previously, what is most disturbing is that in the last ten weeks, almost twice as many Americans have filed for unemployment than jobs gained during the last decade since the end of the Great Recession… (22.13 million gained in a decade, 40.767 million lost in 10 weeks) Worse still, the final numbers will likely be worsened due to the bailout itself: as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31. A recent WSJ article noted that this has created incentives for some businesses to temporarily furlough their employees, knowing that they will be covered financially as the economy is shutdown. Meanwhile, those making below $50k will generally be made whole and possibly be better off on unemployment benefits. Additionally, families receiving food stamps can typically get a maximum benefit of $768, but through the increase in emergency benefits, the average five-person household can get an additional $240 monthly for buying food. But, hey, there’s good news… stocks are near record highs and Treasury Secretary Steven Mnuchin said he anticipates most of the economy will restart by the end of August. Finally, it is notable, we have lost XXX jobs for every confirmed US death from COVID-19 (100,442).
Dire predictions on US jobs are proving prescient – Back in late March, a time that seems an awful lot longer ago than the nine weeks it actually was, we recall viewing the St. Louis Federal Reserve’s predictions for the US jobs market in a state of shock. Using a self-described “back of the envelope” forecast based on jobs in at-risk industries, the St. Louis Fed, one of 12 regional branches of the US central bank,forecast a staggering 47m people would lose their jobs, taking unemployment to a terrifying 32.1 per cent during the second quarter. This was far worse than others, such as Morgan Stanley – who at the time also seemed relatively bearish – were forecasting, with the investment bank predicting that unemployment would hit 12.8 per cent. It appears, however, that the St. Louis Fed’s forecasts are proving rather more prescient. Initial claims for jobless insurance, published weekly, show that as of May 23, 40.8m workers had applied for unemployment support – a little lower than the 47m expected, but more than three times the figure Morgan Stanley’s estimates implied. We are still some way off knowing where the unemployment rate will peak – so far we only have the April data, which showed a record rise from 4.4 per cent to 14.7 per cent, so will have to wait and see what happens in May. However it’s worth emphasising that, whatever the figure is, it’s likely masking the true extent of the labour market’s troubles. As St Louis Fed president James Bullard pointed out on Thursday evening, lockdown policies will mean that the official unemployment rate will look lower than it would otherwise (our emphasis): If people say that they are not working and also say that they have not searched for a job in the last four weeks or are not available to work, they are categorized as out of the labor force rather than unemployed, and therefore not included in the unemployment rate. One caveat to this longstanding approach is that during a pandemic like COVID-19, people who recently lost their jobs due to state and local requirements to shelter in place or enforce physical distancing may not be looking for work in this environment, which would leave them out of the unemployment calculation. The labor force participation rate declined by 2.5 percentage points from March to April, which represented the largest monthly drop for this series on record. At the same time, the number of people counted as out of the labor force but wanting a job (though not seeking a job or not available to work) rose significantly, from about 5.5 million in March to 9.9 million in April.
Boeing cutting more than 12,000 U.S. jobs, thousands more planned – (Reuters) – Boeing Co (BA.N) said on Wednesday it was eliminating more than 12,000 U.S. jobs, including 6,770 involuntary layoffs, as the largest American planemaker restructures in the face of the coronavirus pandemic. Boeing also disclosed it plans “several thousand remaining layoffs” in coming months but did not say where those would take place. Boeing is slashing costs as a sharp drop in airplane demand during the pandemic worsened a crisis for the company whose 737 MAX jet was grounded last year after a second fatal crash. Boeing said it restarted 737 MAX production at a “low rate” at its Renton, Washington factory. Reuters reported in April that regulatory approval for the MAX was not expected until at least August.
Women suffering steeper job losses in COVID-19 economy – The economic devastation caused by the coronavirus has hit women particularly hard, a contrast to the 2009 downturn that was known as “the men’s recession.” The latest employment figures show that women, by a 10-point margin, have seen the majority of the job losses as large parts of the economy have shut down. The difference could have implications for the recovery and what policymakers need to do to ensure it’s not drawn out. One primary reason that women are seeing higher unemployment rates is that the pandemic and the lockdowns have hit sectors of the economy that disproportionately employ women. “This is a really atypical recession, in that we’ve proactively shut down major sectors of the economy and there’s a dropoff in demand that we’ve never seen before, both caused by the global health crisis,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center. Whereas the Great Recession that started in 2008 hit male-dominated industries such as construction and manufacturing first, the total lockdowns that characterized the past few months have been tougher on certain retail sectors. For example, women represent 73 percent of employees in clothing stores, 71 percent in gift, novelty, souvenir stores, and 75 percent of retail florists. In accommodation and food services, they have a slight edge at 53 percent employment representation, and also dominate beauty salons, nail salons and personal care services that social distancing has made prohibitive. But Elise Gould, a senior economist at the left-leaning Economic Policy Institute, said there’s more to the story. “Even in the male-dominated industries, women are losing their jobs at greater rates,” she said. For example, in February and March, women accounted for three-quarters of job losses in retail trade, even though they make up about half of the workforce. In professional and business services, where women account for just 46 percent of all employees, they lost 56 percent of the jobs. “I think that has to do with the occupations within the sectors,” Gould said. Women, she notes, are generally less likely to be well-represented in middle- and high-level positions, so they may be the first to go when the crunch hits. “Women have been less likely to be promoted into the positions that are more likely to be protected,” she added. More alarmingly, in some fields, women lost jobs even as male employment surged. For example, in the category of transportation and warehouses, which covers anything from train conductors to Amazon fulfillment center workers, women account for 26 percent of workers, but count for a seemingly impossible 146 percent of job losses. That’s because the field added male employees (46 percent of the jobs) to replace the women.
Summer Jobs Dry Up and Teens Face Highest Unemployment in Decades – WSJ -Young Americans are having little luck finding summer jobs. Coronavirus outbreaks throughout the country have dried up many of the traditional opportunities that high school and college-age students rely on each summer. Junior workers seeking seasonal employment are striking out so much that the April unemployment rate for teens aged 16 to 19 hit 32%, marking a high not seen since at least 1948, according to the Bureau of Labor Statistics. As more teens hit the job market in June and July, when school is generally out, that rate typically climbs higher. Teen unemployment had been steadily falling since the aftermath of the 2008 recession. Summer jobs had been rising in popularity, reflecting a healthy labor market. The pandemic swiftly put that trend in reverse. More than two million retail jobs disappeared in April as thousands of stores closed. Restaurant owners are grappling with how many people to hire back as states lift lockdown measures around the U.S. Social distancing guidelines from the Centers for Disease Control and Prevention have also curbed many summer activities that provided positions to younger workers as swimming pool lifeguards and golf-course caddies. Without a chance to earn money over the summer, young workers are missing out on thousands of dollars of extra income that could be used to help their families or put toward expenses such as tuition payments.While traditional temporary jobs for young workers are in short supply this summer, teens could find work in warehouses and distribution centers, said Traci Fiatte, head of nontechnical staffing at recruiting firm Randstad N.V.’s U.S. division. She said students looking for summer work should be flexible and willing to take roles other unemployed people may not want. “Be willing to take work that a mother of two can’t take,” she said. “Be flexible with overnight shifts, or doing delivery at the restaurant you used to work at.”
Tyson Pork Plant Closes After More Than 20% of Workers Test Positive for COVID-19 – A Tyson Foods pork plant in Storm Lake, Iowa announced it would close Thursday after more than 20 percent of its workforce tested positive for the new coronavirus. The closure comes about a month after President Donald Trump issued an executive order for meatprocessing plants to stay open despite virus outbreaks at several slaughterhouses. Those outbreaks led to the closure of around 20 plants in April, Reuters reported. Tyson Foods announced the closure late Thursday, hours after the Iowa Department of Public Health (IDPH) had confirmed 555 coronavirus cases at the plant out of a workforce of 2,517, the Des Moines Register reported. Storm Lake League of United Latin American Citizens of Iowa Vice President Mayra Lopez, who has friends and family among the plant’s many minority workers, said that she had heard of employees waiting up to a week for coronavirus test results.”By the time they get the results, it could be too late and they’ve passed it on to someone else,” she said. Tyson Foods said that the closure was due to a delay in testing results and the absence of employees due to quarantine. It said it would stop slaughtering and finish all processing over the next two days. The incident has added to concerns about employee safety in meatpacking plants forced to remain open despite the fact that crowded working conditions make social distancing difficult. Tyson said it implemented wide scale testing at the Storm Lake plant and required employees to wear masks, but theUnited Food and Commercial Workers International Union (UFCW) said that meat companies and the Trump administration could do more to protect workers, Reuters reported. More than 3,000 U.S. meatpacking workers have tested positive for COVID-19 and 44 have died, the union said.
Justice Department investigating meat price increases: report – The Departments of Justice (DOJ) is investigating the meatpacking industry over allegations that it is manipulating prices, leading to increases in beef prices during the coronavirus pandemic, Politico reported. The DOJ investigation will involve top U.S. beef processors, Tyson Foods, JBS, National Beef, and Cargill. Those companies control about 85 percent of the U.S. market.Agriculture Secretary Sonny Perdue told Politico that the Agriculture Department is also investigating beef prices. Coronavirus outbreaks have sparked closures and led to shortages at grocery stores and fast food chains. More than 11,000 cases of COVID-19 have been tied to Tyson Foods, Smithfield Foods and JBS plants and at last 63 workers have died. Sens. Josh Hawley (R-Mo.) and Tammy Baldwin (D-Wis.) asked the Federal Trade Commission (FTC) in April to open an antitrust investigation into the meatpacking industry and its potential to cause significant disruptions in the food supply chain.
More US grocery workers die from COVID-19 — Another grocery store worker died last week in Denver, Colorado, the second victim of coronavirus at the King Soopers supermarket chain. After news broke of the death of Randy Narvaez, who had been an employee of the company for more than 30 years, the local union and store officials revealed that 11 cases of COVID-19 have been found among other employees at the same outlet.Narvaez’s death came on the heels of an announcement by Kroger, the owners of King Soopers, that the company would be suspending “hazard pay” for workers – a $2 bonus added to employees’ hourly wage as compensation for working during the pandemic. Protests by workers led the company to replace the pay bump with one-time payments of between $200 and $400.The same day the suspension of “hero pay” took effect, Kroger, the Cincinnati-based supermarket giant, filed a shareholder statement that shows a combined $37 million paid to six executives in salaries, cash bonuses, stock awards and options, along with other compensation, in 2019. By revenue, Kroger is the largest supermarket chain in the US, with $121 billion in profits. The company operates nearly 3,000 stores nationwide and employs around 453,000 workers. Last year, its CEO, Rodney McMullen, received a 21 percent increase in compensation, taking his annual income from $11.7 million to over $14 million. The average hourly wage of a worker at Kroger – after decades of wage concessions by the United Food and Commercial Workers (UFCW) union – is $10.53 per hour or approximately $21,902 a year.Kroger is expecting profits to be higher in 2020, as disruptions to supply chains have caused shortages and inflated food costs. Kroger sales increased by 30 percent in March 2020 before the full impact of the public health shutdowns, according to the Bureau of Labor Statistics, and grocery prices increased by 2.6 percent.A story published yesterday in the Washington Post reported that at least 100 grocery workers nationwide have died from the virus since late March, and at least 5,500 others have tested positive for the coronavirus.
You Can Now Get Fired For Refusing To Wear A Mask At Work – Employers can mandate that employees have to wear face coverings, and those who don’t follow the rules could face termination with very little room for recourse. In fact, face coverings at work are one of the key components to many states’ reopening plans and since the CDC is recommending it, you can bet that shop owners who love to take their cues from government will make sure it is policy. The precaution of covering your face is a “term of employment” that, if broken, can justify discipline from an employer, according to Bloomberg Law. There are only limited reasons that could exempt an employee, including medical or religious reasons.Katherine Dudley Helms, an Ogletree Deakins attorney who represents employers said: “In essence, they’re saying ‘I really don’t want to work here. That really is like someone coming in and saying ‘I don’t like your rules.'”An employee would have to inform their employer about a respiratory illness or medical reason for not being able to wear a mask, in that case. That may trigger the Americans with Disabilities Act, which would accommodate the employee further. Those opposed to it for religious reasons would need to discuss accommodations with their employer in advance. “But all of these are limited exceptions to the employer’s basic right to devise and enforce nondiscriminatory work rules, including those pertaining to clothing,” Fordham University School of Law professor James Brudney said. It’s the same type of law that protects employers who mandate that employees cover their tattoos, or adhere to a dress code. An employer that “even-handedly” enforces the rules should be in a good legal position to defend disciplining an employee.
Census: Household Pulse Survey shows 48.5% of Households lost Income – From the Census Bureau: Measuring Household Experiences during the Coronavirus (COVID-19) Pandemic The U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey is designed to deploy quickly and efficiently, collecting data to measure household experiences during the Coronavirus (COVID-19) pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning. … Data collection for the Household Pulse Survey began on April 23, 2020. The Census Bureau will collect data for 90 days, and release data on a weekly basis. (For the first release, the Census Bureau anticipates it will take two weeks after the first week of data collection to prepare and weight the data; subsequent releases will then be made on a weekly basis.) This will be updated weekly, and the Census Bureau released the third week of survey results today. This survey asks about Loss in Employment Income, Expected Loss in Employment Income, Food Scarcity, Delayed Medical Care, Housing Insecurity and K-12 Educational Changes. This survey will be useful in tracking the “opening” of the economy. The data was collected between May 14 and May 19, 2020. 48.5% of households report loss in employment income.
Over 9 Million US Families Fear They Can’t Afford Food Next Month- Census Survey – A poll released by the U.S. Census Bureau this week revealed that at least nine million American households that include children are unsure whether they’ll be able to access enough food in the next four weeks and millions more are experiencing housing insecurity during the coronavirus pandemic. The bureau’s weekly Household Pulse Survey, taken between May 14 and 19, asked respondents about their loss of employment, food security, overall health, and other issues they are facing during the pandemic. According to the data, more than nine million households are “not at all confident” that they will be able to afford food in the next month, and more than 18 million are only “somewhat confident” about their food security. The Census also asked respondents whether they had experienced food insecurity prior to March 13, when President Donald Trump declared the pandemic a national emergency and schools across the country shut down. Just over two million people had “often” not had enough to eat before the pandemic forced state and local economies to shut down, which was followed by little economic relief for families from the federal government.Since the coronavirus outbreak began spreading across the country in March, food banks have reported skyrocketing numbers of Americans relying on their services, including many who had never before needed assistance accessing food.With 74% of U.S. families living paycheck-to-paycheck – including one in four households that earn at least $150,000 per year – the pandemic and the federal government’s reluctance to offer more than a one-time direct payment of $1,200 to most Americans plunged millions into desperate situations overnight.
Poll: 37% of unemployed Americans ran out of food in past month – Kate Maehr has never seen anything like it: lines stretching for blocks as people, many with children, inch forward to get boxes of food they hope will last until the next giveaway, until the next paycheck or until they can get government food assistance. “It’s just heartbreaking,” said Maehr, executive director of the Greater Chicago Food Depository. “They’re finding themselves in a set of circumstances where they have no income and they also have no food, and it happened in an instant.” The number of people seeking help from her organization and affiliated food pantries has surged 60% since the start of the coronavirus pandemic, which has shut down the nation’s economy and thrown tens of millions of people out of work. Across the country, worries about having enough to eat are adding to the anxiety of millions of people, according to a survey that found 37% of unemployed Americans ran out of food in the past month and 46% said they worried about running out. Even those who are working often struggle. Two in 10 working adults said that in the past 30 days, they ran out of food before they could earn enough money to buy more. One-quarter worried that would happen. Those results come from the second wave of the COVID Impact Survey, conducted by NORC at the University of Chicago for the Data Foundation. The survey aims to provide an ongoing assessment of the nation’s mental, physical and financial health during the pandemic. There is no parallel in U.S. history for the suddenness or severity of the economic collapse, which has cost more than 36 million jobs since the virus struck. The nationwide unemployment rate was 14.7% in April, the highest since the Great Depression. While many Americans believe they will be working in the coming months, unemployed Americans – those most likely to report running out of food – aren’t as optimistic. Overall, those who are still working are highly confident they will have a job in one month and in three months, with more than 8 in 10 saying it’s very likely. But among those who aren’t working because they are temporarily laid off, providing care during the pandemic or looking for work, just 28% say it is highly likely that they will be employed in 30 days and 46% say it’s highly likely they’ll be working in three months. Roughly another quarter say it’s somewhat likely in 30 days and 90 days.
“Perfect Storm” Of Auto Thefts Sweeps US During COVID Lockdowns – The link between high unemployment and crime has been realized in a new report that indicates police departments across the country have sounded the alarm on surging auto thefts. To refresh everyone’s memory, over 38.6 million people have filed for unemployment over a nine-week period, the number of job loss is unprecedented and considered depressionary. If you take a stroll down main street, it’s littered with commerical “for lease” signs and food banks, as tens of millions of people have fallen into instant poverty. Before we dish out the shocking crime statistics – the Denver Police Department (DPD) recently said it would be studying crime trends from the last recession to better forecast what could happen during the current economic crash. “We’re looking at the ebbs and flows that took place to try and anticipate where those challenges would come,” said DPD Chief Paul Pazen. “And more importantly, what are you doing about it?” Drilling down to specific types of crime, he said spikes in “aggravated assault,” “auto theft,” and “robberies” were seen in the last recession. A new Associated Press report reveals police data from major cities show auto thefts are surging across the country. The number of pilfered vehicles soared by a whopping 63% in New York City from January 1 through mid-May, compared with the same period last year. In Los Angeles, the number was 17% during the same period. Salt Lake City saw a 22% rise in car thefts. “And many other law enforcement agencies around the U.S. are reporting an increase in stolen cars and vehicle burglaries, even as violent crime has dropped dramatically nationwide in the coronavirus pandemic,” AP reported.
‘How Dare You Put Our Lives at Risk’: Pennsylvania Democrat Brian Sims Rips GOP Members for ‘Coverup’ of Positive COVID-19 Tests — Brian Sims, a Democratic representative in the Pennsylvania legislature, ranted in a Facebook Live video that went viral about the hypocrisy of Republican lawmakers who are pushing to reopen the state even though one of their members had a positive COVID-19 test. Sims, the first openly gay person elected to the Pennsylvania legislature, raged against the callousness of Republican members of the state House who control the legislature and demanded in-person committee meetings in Harrisburg to argue that businesses should reopen even though they knew they had been exposed to the virus. Sims notes that the Republicans did not let the Democrats know that they had been exposed to the virus, arguing that such a revelation would hurt their argument to reopen the state.The issue at hand is that Republicans have been arguing to reopen businesses in Pennsylvania and reopen the state legislature while knowing that Republican representative Andrew Lewis had tested positive for COVID-19. Lewis posted a Facebook Live video as well, saying that he did not share his diagnosis because he wanted to protect his family’s privacy and the people around him.”Out of respect for my family, and those who I may have exposed, I chose to keep my positive case private,” Lewis said in a statement, as NBC News reported.Lewis said he tested positive on May 20 and quickly informed health officials and the people he was in contact with when he was last at the capital on May 14.That did not sit well with Sims, who said he donated a kidney recently to one of his neighbors who was suffering renal failure.”I didn’t donate my kidney to save someone else’s life so I could die at the hands of Republicans who are being callous liars,” Sims said in his 12-minute tirade. He was particularly stung that the Republicans had kept the revelation of the diagnosis to only their members. “Every single day of this crisis this State Government Committee in Pennsylvania has met so that their members could line up one after one after one and explain that it was safe to go back to work,” said Sims. “During that time period they were testing positive. They were notifying one another.”And they didn’t notify us. I never ever, ever knew that the Republican leadership of this state would put so many of us at risk for partisanship to cover up a lie. And that lie is that we’re all safe from COVID.”
California Church Asks US Supreme Court To Intervene In Lockdown Battle After Clinton, Obama Judges Strike Down – A California church and its bishop have asked the US Supreme Court to step in after the 9th Circuit Court of Appeals struck down their emergency application to reopen amid the coronavirus pandemic, in defiance of executive orders issued by Gov. Gavin Newsom.Lawyers for the South Bay United Pentecostal Church and Biship Arthur Hodges filed with the USSC after the 9th Circuit panel split 2-1, with Judges Barry Silverman and Jacqueline Nguyen – appointed by Clinton and Obama respectively – wrote in their Friday order “We’re dealing here with a highly contagious and often fatal disease for which there presently is no known cure,” adding “In the words of Justice Robert Jackson, if a ‘court does not temper its doctrinaire logic with a little practical wisdom, it will convert the constitutional Bill of Rights into a suicide pact.'”Apparently a fatality rate below 0.3% counts as ‘often fatal,’ and it would be a ‘suicide pact’ to allow people to worship freely while accepting the well-established risks of contracting COVID-19.The panel’s third judge, Trump appointee Daniel Collins, weighed in with an 18-page dissent arguing that Gov. Newsom’s orders intrude on religious freedom protected by the First Amendment, according to Politico.”I do not doubt the i mportance of the public health objectives that the State puts forth, but the State can accomplish those objectives without resorting to its current inflexible and over-broad ban on religious services,” wrote Collins, who noted that the Governor’s orders allow many workplaces to open, while religious gatherings remain banned even if they can meet social distancing requirements imposed on other permitted activities.
Total Chaos- Chicago Sees Deadliest Memorial Day Weekend In Years Despite Stay-At-Home Orders –Shockingly, or perhaps not so-, Chicago just witnessed its deadliest Memorial Day weekend since 2015 despite a coronavirus stay-at-home order. As one crime analyst observed, “They (gangs) are not particularly deterred by the risks of being out there,” as cited in ABC. “Of all the things they are likely to be worried about COVID is way down the list.” The long warm weather weekend (crimes tend to spike over hot weather holiday weekends) saw a total of 49 people shot from Friday afternoon through Monday evening. Ten among these were killed. Included were shootings that even occurred midday and at frequented intersections, including a 15-year old boy shot and left in critical condition after getting into an argument with the driver of an SUV on Saturday morning. In another instance, a teenage girl was grazed in the leg as shots range out nearby. Typically Chicago police hit the streets Memorial Day weekend with an extra 1,000 officers in addition to their regular patrol numbers. This after last weekend included 38 total shootings, including six people killed in gun violence throughout the city. “The violence throughout the city on Memorial Day weekend was nothing short of alarming,” new Chicago police Superintendent David Brown said Tuesday. It’s part of a broader national rise in violent crime observed, surprisingly enough, across three major US cities since the start of the year – and despite pandemic-induced local and state-wide lockdowns:According to Chicago police crime statistics posted online, between Jan. 1 and May 24, the nation’s third-largest city had 200 homicides, compared with 176 during the same period last year. The number of shootings climbed from 679 to 826. However, the number of criminal sexual assaults, burglaries and thefts all fell by double digits.The statistics largely mirror what police in Los Angeles and New York have reported. In both cities, the number of homicides has increased so far this year while the number of sexual assaults has fallen.
US juvenile detention centers record 474 COVID-19 cases – The Office of Juvenile Justice and Delinquency Prevention is the highest authority overseeing juvenile detention in the United States. It describes its mission as “Enhancing safety. Ensuring accountability. Empowering youth.” In reality, in the midst of a deadly pandemic, the facilities overseen by the authority, the majority of which are privately owned, are continuing the senseless brutalization of children and allowing them to be exposed to COVID-19 and a plethora of adjacent issues that risks seriously impacting their long-term health. According to prisonpolicy.org at least 48,000 individuals under the age of 18 are currently in correctional facilities. The vast majority of incarcerated youth are from a working-class background, with around two-thirds of offenders also relying on the child welfare system. Forty percent of youth who are incarcerated before their 18th birthday are in adult prisons by the age of 25. It is also the case that the poorest inmates are the most likely to re-offend.Mirroring conditions in adult prisons, COVID-19 has spread rapidly through juvenile detention centers. According to sentencingproject.org, as of May 22 there were 474 cases among detained youth across the US, and 561 confirmed cases among staff. These numbers are huge underestimations of the virus’s true spread. While some states, such as New Jersey, claim to have tested all of its detained youth, the majority of states have not even nominally promised to address the deadly consequences of the contagion of the virus through their populations of incarcerated minors. As the WSWS reported on May 13, as more becomes known about the disease, initial declarations that youth face no risk from infection were proven reckless and incorrect. The disease is linked to an inflammatory syndrome similar to Kawasaki disease and can cause sepsis among younger patients. At least five children in New York have died from these conditions following diagnosis with COVID-19. In a study of 48 children and young adults admitted to intensive care units in the US and Canada for COVID-19, 20 percent experienced organ failure. The study’s co-author, Rutgers professor Lawrence C. Kleinman, stated, “The idea that COVID-19 is sparing of young people is just false.” Two of the children featured in the study died. More than 500 of incarcerated children in the US are 12 years old or younger, while over 4,500 of under-18s locked up are actually incarcerated in adult facilities. Child inmates typically reside in large groups, with 60 percent of incarcerated youth in large facilities designed for over 50 inmates. This only increases the risk of infection from the virus. Two-thirds of youth incarcerations are “long-term,” meaning that individuals spend over a month at a facility, and nearly 10 percent are held for over a year. The turnover of young inmates, just like at regular prisons and jails, means these facilities act as vectors for the disease’s spread in the community.
Don’t abandon standardized testing in schools next year – rethink it –Not surprisingly, the nation’s 13,300 school districts have struggled to shift instruction for 50 million students from classrooms to bedrooms, dinner tables and homeless shelters. Many students aren’t learning much. In Los Angeles, a third of high school students weren’t logging onto the city’s online learning platform in April. Affluent Fairfax County spent a month readying a platform, only to shut it down twice amid a tsunami of problems. The nonprofit testing company NWEA predicts that between the closing of schools in mid-March and their reopening in the fall, the average student is going to lose roughly half of what they were expected to learn in math during the 2019-2020 school year and close to a third of what they would have learned in reading. To catch students up, schools will need to get a handle on exactly how far students have fallen behind, and that means testing. Education Secretary Betsy DeVos rightly waived this spring’s federally mandated statewide standardized testing, the first nationwide break in state testing in half a century. In response, some accountability advocates are calling on states to administer the 2020 tests this fall. That’s a bad idea. Weeks-long batteries of standardized tests used primarily to rate schools aren’t the way to welcome students – and teachers – back from difficult quarantine experiences. Moreover, state tests take too long to score to give schools the information they need.Instead, when schools reopen educators should turn to diagnostic measures of reading and math proficiency to help teachers identify individual students’ needs and gauge where to pick up instruction. These early-year assessments would be best kept short (30 minutes), connected closely to schools’ curriculum and eased into the school day one subject at a time. This kind of testing will be particularly valuable in targeting support for low-income students, whose lack of wifi access and other distance-learning supports are likely to expand already wide achievement gaps. In the spring, states should restart their annual assessments mandated by the federal Every Student Succeeds Act – but not count the results for schools or teachers. There’s a big political risk in restarting school accountability too quickly. Opponents of standardized testing – led by accountability-averse teachers’ unions and their progressive allies on the left, and conservatives opposed to what they consider an inappropriate federal role in testing on the right – have been waging a half-decade-long campaign to roll back state testing systems.
The solution to all this missed school? Bring back Grade 13 – By the end of this week, it will have been 10 weeks since students and teachers were last in class. That’s 50 teaching days. Minus the March break, it’s 45. Throw in a couple snow days and four or five strike action days from earlier on the calendar and we’re back up to 50. Then, add the five weeks remaining that were cancelled on Tuesday, and it’s 75 days – give or take – students will be missing when all is said and done. If that sounds like a lot, it is. The Ontario government mandates that 194 days is the minimum number required to complete an academic year. Yet, after all those reductions, kids this year will get only about 119. So what’s the solution? Bring back Grade 13. Just for a few years. Just long enough for the students in Grades 7 through 11 right now to have a real opportunity to get caught up and not be paying the price for something that was never their fault. Crazy? Maybe. But a lot less crazy than the current destined-for-failure plan. The answer now is to offer online courses, hope kids take advantage, give them report cards with the marks they had on March 13 and push them through to the next grade in the fall. This learning-at-home model that’s been cobbled together under fire is the best we have right now, but it’s hit and miss. Probably more miss than hit.”There are some classes where I had five of 22 kids logging in,” says St. Thomas More Secondary School Grade 12 guidance counsellor, Michele Vesprini. Chatting with other high school teachers, the anecdotal evidence is similar. Some students are working hard from home. Many have checked out and appear more than happy to take the grade they had on March 13 as their final mark. But what happens in the fall? We could let the stragglers who miss out on a third of their year’s education reap what they sow. If they stumble, it’s their own fault. The material was there for them if they’d been diligent enough to use it. If they choose not to, that’s on them. That’s tempting because it’s all true. But imagine class resuming and teachers now having to spend so much of their time bringing all those who are now hopelessly lost up to speed, leaving the hard workers twiddling their thumbs and wasting their time. Now they’re being penalized for being productive. That scenario offers no winners.So yes, we could try to fix things by failing these students and make them take their year over. Except educators don’t favour such things these days. We could let them fall through the cracks but that seems antithetical to everything the system is supposed to be about. We could make everyone take an exam at the end of June and require those who come up short to do their learning over the summer. Good luck with that. Or we could add the lost semester plus whatever catch-up time is needed – let’s round it off to a year – at the back end of high school. Grade 13.
Locked-Down Teens Stay Up All Night, Sleep All Day -While some schools require students to log on to live classes, many others are instead assigning work for students to complete on their own. With no daytime commitments, some teens prefer to stay up all night and sleep days.Some watch movies or chat with friends on similar schedules. Others do homework without their folks hovering.”I feel more relaxed, honestly,” said Zach Zimmerman, a high-school senior in Mansfield, Texas. That was in April, when he was in the habit of going to bed around 10 a.m. and waking up in the late afternoon. This month, Zach started taking an online college class that starts at 1 p.m., forcing him back to daylight hours. “When my college classes are over,” he said, “I’ll probably go back.” Some parents welcome the daytime peace and quiet. They say it isn’t worth arguing over bedtimes when teens are stuck at home and have no compelling reason to rise early. Gabrielle Powell, a 17-year-old in Escondido, Calif., spends her nights on Snapchat and video calls with friends. She plows through TV shows like “Tiger King: Murder, Mayhem and Madness” and “All American,” she said, and makes macaroni and cheese. Her post-dawn bedtime varies.She recently broke her routine for the Advanced Placement calculus exam, at the ungodly late 11 a.m. Gabrielle stayed awake the rest of the day before going to sleep, but she soon returned to the night shift. Cole Cancellieri’s dad, a middle-school science teacher, pieces together his son’s overnight activities.”It’s almost like being a crime scene investigator,” Mr. Cancellieri said. “I’ll find the wrappers from some snacks that he had, there will be dishes in the sink from what he ate. Sometimes he’ll leave the TV on to what he was watching … .It’s like having a raccoon that came through my house in the night.”
Students tested positive for COVID-19 after a drive-through graduation – Several high school students in Georgia tested positive for COVID-19 after participating in a drive-through graduation ceremony, school officials said in a letter to students’ families that was first reported by CNN. The Lovett School in Atlanta Georgia did not disclose how many students had tested positive for COVID-19 after their drive-through graduation, but described the number as “several” in the letter from Head of School Meredyth Cole and Head Nurse Shana Horan. “Unfortunately the infectious nature of the COVID-19 virus means that most communities will be touched at some point, and we recognize how hard separation and missed milestones have been on the emotional lives of our students,” they said in the letter. “Families of the students diagnosed with COVID-19 are working with the appropriate healthcare professionals and Departments of Health.” The Lovett School, which is an independent, coeducational day school that teaches students kindergarten through 12th grade, closed its campus in mid-March to help prevent the spread of the novel coronavirus, according to CNN. The school postponed its traditional graduation ceremony to late July, but on May 17 held a drive-through parade to celebrate graduating seniors, CNN affiliate WSB reported. According to the Atlanta Journal-Constitution, some students arrived in groups and were in close quarters with one another. AJC reported that the school announced several students had tested positive for the virus after initially sending an email to parents about one student who had tested positive for COVID-19. The student “was confined to his or her car while on campus,” but “later had company over for a graduation gathering, and then traveled out of town with friends,” school officials told AJC.
With support from the teacher unions, Trump demands the unsafe reopening of schools “ASAP” – In a late-night tweet on Sunday, US President Donald Trump declared, “Schools in our country should be opened ASAP. Much very good information now available. @SteveHiltonx @FoxNews” Trump was referencing a monologue earlier in the day by the extreme right-wing Fox News commentator Steve Hilton. Speaking on his program The Next Revolution, Hilton declared that “there won’t be a recovery” in the US “unless we reopen schools now.” He went on to describe temperature checks as “unscientific nonsense” and “totally pointless,” while calling social distancing rules “over-prescriptive” and “arbitrary.” Referencing Kari Stefansson, the CEO of Icelandic company deCODE genetics, Hilton added that children were not at risk and, moreover, were “less likely to transmit the disease to others than adults.” His first assertion has been tragically refuted by the emergence of the Kawasaki-like multi-organ inflammatory syndrome. The second is unproven and has been challenged by scientific studies. Nevertheless, the dangerous proposition is being used to justify the reopening of schools in many European countries. Trump seized on Hilton’s remarks because the reopening of schools is critical for big business to ramp up a return to work throughout the country, despite its immense dangers. Eighty-billion dollars a day are being funneled by the Federal Reserve into the paper assets of the financial elite; these dollars represent claims on value that must be made good through the labor of millions. While educators represent a substantial workforce in themselves (3.7 million teachers, 1.6 million college faculty, and at least 2 million support workers), tens of millions more cannot return to their workplaces without sending their children to school. The Democratic Party and presumptive presidential candidate Joe Biden concur. Biden recently went out of his way to attack Trump for “hampering” the return to work. The very first schools to reopen this month were under Montana’s Democratic Governor Steve Bullock. California’s Governor Gavin Newsom has suggested summer school may open in July. The president’s demand for the reopening of schools was also followed on Tuesday by a statement – different in tone, but analogous in message – from American Federation of Teachers (AFT) President Randi Weingarten. Opposing those who say that it is premature to reopen schools in the fall, Weingarten put a pseudo-scientific spin on it, suggesting “voluntary summer school” over the next few months would provide an “opportunity to test-drive best practices.” The union executive noted that “reopening schools is a key part of overall reopening,” while admitting that “absent a vaccine, no one knows what the future will bring.”
1 in 5 teachers unlikely to return if classrooms open this fall: poll –Classrooms across the country may look drastically different upon reopening, as nearly 1 in 5 teachers say they’re unlikely to return to the classroom if schools reopen in the fall, a new poll found.The concerning figure is even higher among teachers 55 and older, with one in four saying they don’t foresee themselves back in front of young minds in the coming months, according to a USA Today/Ipsos poll released Tuesday that polled 505 teachers from kindergarten through high school.”As our world has changed, almost everything we do has changed, including how we view and approach education,” Ipsos president Chris Young said.”Though Americans are optimistic about a return to in-person learning, there is angst among teachers, parents, and America at large about how to keep our schools safe if the virus isn’t fully contained.”In addition, 83 percent of teachers polled said they’re having more difficulty in their current jobs and two-thirds said they’ve been unable to work properly since starting to teach remotely.”For the first time … these last three months have felt like I’ve been doing a job, doing this to earn a paycheck,” Ohio high school teacher Andy Brown, 43, told the newspaper.”The engagement level with the students hasn’t been there, and that’s the reason I got into this career – the interaction and the engagement and the seeing and feeling their excitement.”Newer teachers reported having a tougher time with remote education than their more experienced counterparts – with 60 percent of those with less than five years on the job saying they weren’t trained well for their new reality, the poll found. A parallel poll of 403 parents of students from kindergarten through high school also found that 52 percent of parents felt teachers have struggled with remote learning.However, a “significant share” of both teachers and parents polled – about 40 percent – said they’re against returning to classrooms before a coronavirus vaccine is discovered, USA Today reports. And nearly one-third of parents, according to the poll, said they’re “very likely” to consider at-home options instead of sending their kids back to reopened classrooms.
University of Michigan president says no football in fall if students aren’t on campus – The president of the University of Michigan said the school will not have football or other sports in the fall if students are not brought back for on-campus classes. “If there is no on-campus instruction then there won’t be intercollegiate athletics, at least for Michigan,” Mark Schlissel, the president of the university, said in an interview with The Wall Street Journal published Sunday. He also warned that even if the team is able to play, they may do so at a stadium smaller than the Michigan Stadium, known as the “Big House,” which has a capacity of 107,601. “I can’t imagine a way to do that safely,” Schlissel told the Journal. Schlissel, the first physician-scientist to lead the university, told the newspaper he expects to make a call in coming weeks on what the upcoming school year will look like. Whatever decision is made for the fall will likely be the case for the entire academic year, he said. “What’s going to be different in January?” he said. Schlissel said he doesn’t want to “set false expectations,” noting that other more enthusiastic promises made from other institutions include fine print details that the openings are subject to approval by local officials. “They’re really not as declarative as they appear,” he told the Journal. Birx says ‘it’s difficult to tell’ if country will close again
Covid-19 Will Make Colleges Prove Their Worth – Cathy O’Neil – Colleges and students in the U.S. are engaged in a game of chicken as the fall semester approaches with no end in sight for the coronavirus crisis. The outcome could radically change the way Americans think about and value a higher education.On one side, institutions want students to sign up and pay tuition deposits, which are coming due. Most are pretending they can open like normal, with in-person classes. Some are keeping people largely in the dark about what the semester will look like. On the other, students and their families are wondering whether it’s worth shelling out tens of thousands of dollars for an experience that might be largely online. Many are delaying decisions, thinking it might be wiser to take a semester or a year off.For decades, U.S. colleges have existed in a highly unusual market, in which both cost and benefit are difficult to discern. As admissions officers will patiently explain, very few students actually pay full tuition, thanks to various kinds of financial aid — so there’s no clear price competition. On the value side, colleges are selling a nebulous package of (dubious) knowledge, status, social connections, economic opportunity and proliferating perks such as state-of-the-art swimming pools, gyms, dorms and cafeterias with sushi bars.Now, the pandemic is stripping much of that away. Dorms, gyms and dining halls have become nodes of contagion, and potential sources of legal liability. One of colleges’ greatest assets – faculty – will remain largely behind a Zoom screen, given that so many are in the most vulnerable agegroup, particularly at elite institutions such as Harvard. Forming social bonds with one’s classmates will be difficult if they’re staying at home or six feet distant. This leaves students and parents facing a much starker decision than usual. Whatever they were paying, the product has changed. Unless colleges make the deal a lot more attractive, many people will withhold their money. If they do pay up based on administrators’ overly optimistic promises, the outcome could be a huge legal mess as a bunch of angry parents try to get their money back.I’m guessing that in the short term, colleges will have to cut prices to sell a mostly online education. Some students will try to wait it out, hoping things will get back to normal. Others will get used to learning, making connections and getting jobs online. Which means that in the longer term, more people might reconsider the value of a four-year degree, complete with the exorbitant on-campus experience. College might never be the same.
Why Public Universities Can’t Take New Cuts: The Essential Charts – Should university officials be fatalistic about Covid-powered cuts to their core educational budgets? Or should they work 24/7 on their state governments to keep their current budgets whole?What about state governments? Should they cut higher ed yet again, as various governors are doing (New Jersey, Ohio), and as Gavin Newsom proposes in California?This post investigates the budget case for a zero-cuts policy. If your state’s public colleges and universities have an ample base budget, you can make some temporary cuts to their state funding. If they are already bare bones, further budget cuts will cut educational quality. There are lots of ways to use numbers as proxies for teaching and research quality. Most are bad. A pretty good one for teaching is instructional expenditures per student. To help state governments understand quality, departments could establish a set of minimum practices, then cost them out. Campuses could figure out what their budgets must be to meet these standards. But departments haven’t been invited to build the budget that would meet their needs. And the averages for instructional expenditure that have been used by my case study here, the University of California system, aren’t reliable.Instead, I’ll use historical budget trends as quality proxies. I do this for two reasons. First, the history of the state’s relationship to UC controls what the state thinks UC should have. This is a strained history and it still matters. Second, UC’s budget history expresses the idea that public universities could and should be as good as elite private universities. Public university students should be roughly equal to private university students. The same was to be true of their faculties.
Psychiatrists Wrote 86% More Prescriptions For Psychotropic Drugs During Lockdown Months — Psychiatrists wrote 86% more prescriptions for psychotropic drugs, including antidepressants, during the lockdown months of March and April compared to January and February, it has been revealed. “Prescriptions for anti-anxiety medications and sleep aids have risen during the pandemic, prompting doctors to warn about the possibility of long-term addiction abuse of the drugs,” reports the Wall Street Journal.According to Ginger, an organization that provides mental health services to companies, compared to January and February of this year, prescriptions for psychotropics, most of which were antidepressants, were up 86% for the months of March and April.The stress of unemployment, social isolation and health concerns are all cited by Americans who say the lockdown is having a serious impact on their mental health.Pharmacy group Express Scripts also revealed that prescriptions for anti-anxiety medications were up 34.1% between mid-February and mid-March, while prescriptions for antidepressants increased 18.6%.The numbers emphasize the significant mental health toll created by the lockdown which will reverberate for many years to come. As we highlighted yesterday, Doctors at John Muir Medical Center in Walnut Creek, California say they have recorded more deaths from suicide than coronavirus, with a year’s worth of suicides and suicide attempts being recorded in a 4 week period.
Employee Health Screening Apps Are Coming – Proceed With Caution – COVID-19 and the resultant business and economic freeze may very well prove to be the largest global event occurring in any of our lifetimes. The loss of lives, livelihoods, businesses and long term effects on mental health and culture are far from complete, yet already devastating. Now, employers grapple with the most significant decision they are likely to ever make: when to come back to work and how.Many employers will be lured into the siren song of safety above all else and succumb to a balancing act that tips heavily in favor of control and surveillance over individual liberty. I fully understand the impetus. Employers find themselves in a tricky Catch-22. They must do that which is reasonable to protect the health and safety of their workers without trampling on employee privacy, health or liberty. As the attorneys at Ropes & Gray LLP point out, “[e]mployers looking to introduce these apps may point to their duty under the Occupational Safety and Health Act (“OSHA”) to furnish to workers ’employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.'” But as Americans, we have far more individual liberty protection than people in the Asian countries that are months ahead of us and have already implemented sever state, local and employer controls. For example, “China has already introduced virtual health checks, contact tracing and digital QR codes to limit the movement of people. Antibody test results could easily be integrated into this system.” Beyond any employer’s legal analysis (which is undoubtedly important) the cultural differences in the United States should oblige employers to proceed with more than a modicum of caution. We have a vast network of federal, state, local and employment laws and regulations protecting our individual liberties. What’s more is that inherent and deep love for liberty embedded in our Constitution and our core as a people. American was founded on the concept that liberty outweighs security.
Fears of coronavirus second wave prompt flu push at U.S. pharmacies, drugmakers – (Reuters) – U.S. pharmacy chains are preparing a big push for flu vaccinations when the season kicks off in October, hoping to curb tens of thousands of serious cases that could coincide with a second wave of coronavirus infections. CVS Health Corp (CVS.N), one of the largest U.S. pharmacies, said it is working to ensure it has vaccine doses available for an anticipated surge in customers seeking shots to protect against seasonal influenza. Rival chain Rite Aid Corp (RAD.N) has ordered 40 percent more vaccine doses to meet the expected demand. Walmart Inc (WMT.N) and Walgreens Boots Alliance (WBA.O) said they also are expecting more Americans to seek these shots. Drugmakers are ramping up to meet the demand. Australian vaccine maker CSL Ltd’s (CSL.AX) Seqirus said demand from customers has increased by 10 percent. British-based GlaxoSmithKline (GLAX.NS) said it is ready to increase manufacturing as needed. Pharmacy shares rose in Tuesday trading, with CVS up 2.5% and Rite Aid and Walgreens up 4.5%. A Reuters/Ipsos poll of 4,428 adults conducted May 13-19 found that about 60 percent of U.S. adults plan to get the flu vaccine in the fall. Typically fewer than half of Americans get vaccinated. The U.S. Centers for Disease Control and Prevention (CDC) recommends the vaccine for everyone over age 6 months. Getting a flu shot does not protect against COVID-19, the respiratory disease caused by the novel coronavirus for which there are no approved vaccines. Public health officials have said vaccination against the flu will be critical to help prevent hospitals from becoming overwhelmed with flu and COVID-19 patients. “We’re in for a double-barreled assault this fall and winter with flu and COVID. Flu is the one you can do something about,”
Masks Sold by Former White House Official to Navajo Hospitals Don’t Meet FDA Standards The Indian Health Service acknowledged on Wednesday that 1 million respirator masks it purchased from a former Trump White House official do not meet Food and Drug Administration standards for “use in healthcare settings by health care providers.”The IHS statement calls into question why the agency purchased expensive medical gear that it now cannot use as intended. The masks were purchased as part of a frantic agency push to supply Navajo hospitals with desperately needed protective equipment in the midst of the coronavirus pandemic. ProPublica revealed last week that Zach Fuentes, President Donald Trump’s former deputy chief of staff, formed a company in early April and 11 days later won a $3 million contract with IHS to provide specialized respirator masks to the agency for use in Navajo hospitals. The contract was granted with limited competitive bidding. IHS said its Navajo office “has used every available avenue to purchase more supplies and keep up with the demand.”The masks provided by Fuentes “are not approved by the FDA or covered by an Emergency Use Authorization for use in healthcare settings by health care providers,” the agency said.In addition, some of the masks have packaging stating that the product is a “non-medical device.” “These masks will not be used in a clinical setting,” the agency said.. Contract data shows that IHS asked for KN95 respirator masks, a Chinese version of specialized N95 masks, which provide far greater protection from viruses than ordinary masks.On Wednesday, IHS told ProPublica the masks sold by Fuentes were made by four Chinese manufacturers and are registered in an FDA database, but have not met the regulator’s relaxed pandemic-era standards for Chinese-made masks.Fuentes charged the government $3.24 per mask, which is higher than the pre-pandemic rates for respirator masks and far higher than prices charged for masks that can’t be used in hospital settings.
New York governor exempts nursing home operators from criminal liability after taking millions from the industry – As the COVID-19 pandemic has spread around the world, among the most dangerous venues for its propagation have been nursing homes and elder care facilities. Numerous examples have come to light in which the response to the initial appearance of the disease at these facilities has been grossly inadequate, if not criminally negligent. It should have been obvious from the beginning to any objective observer that the prevailing conditions at even well run facilities – an elderly population, many with pre-existing health concerns, close quarters, repeated interactions between residents and staff – constitute ideal conditions for the virus to spread rapidly and to claim many lives. However, in case after case, it has been revealed that the necessary measures to protect both residents and staff from infection – such as frequent testing, isolation of infected individuals, the provision of proper personal protective equipment (PPE) for staff – were not implemented. Indeed, as the inevitable consequences of this inaction unfolded, corporate operators as well as responsible government officials took steps that actually worsened the situation. Furthermore, numerous examples have been revealed in which the developing crisis at such institutions was intentionally covered up, further delaying the implementation of corrective measures. In effect, nursing homes and elder care facilities became concentrated nodes of infection – disease vectors – from which the virus was propagated into the surrounding community. Driving this pathological situation is the reality that nursing homes and elder care facilities are either privately run for profit or government institutions operating on shoe-string budgets. In either case, the institutions’ administrators and responsible politicians were opposed to taking the steps needed to reduce the dangerous conditions that promoted the rapid spread of the disease. In a little-remarked provision of the recently adopted 2020-21 state budget, hospitals and nursing homes were shielded from liability for actions taken during the pandemic. It specifically states that top officials at hospital and nursing home companies “shall have immunity from any liability, civil or criminal, for any harm or damages alleged to have been sustained as a result of an act or omission in the course of arranging for or providing healthcare services” regarding COVID-19. The reckless and criminal behavior of responsible individuals, which have been a major factor in accelerating the pandemic, are thus held blameless. Cuomo himself bears part of the responsibility for the disastrous situation at nursing homes. In March, early in the spread of the disease, he issued an executive order prohibiting nursing homes from refusing the transfer of patients from hospitals even after they tested positive for the coronavirus. This was supposedly done to free up hospital beds. Cuomo now defends himself by stating that he was following federal guidelines at the time.
The Rich in China Got Richer Thanks to Covid-19 –Everyone was not adversely impacted by Covid-19, especially in China. A Tweet Thread by Michael Pettis explains.
- During my Sunday seminar a student made a presentation with preliminary data on how Covid-19 has affected the wealth and the income of different households in China, ranked by income. I sort of expected a broadly linear relationship in which the rich and very rich would have…
- …been unaffected or slightly worse off, the middle worse off, and the poor a lot worse off. According to her data, however, the rich and very rich were actually better off in terms of both income and wealth (the latter, we think, mainly because they owned “better” real…
- …estate), while the middle were worse off in both, and the poor were much worse off (in wealth mainly, we think, because of a depletion in savings). I expected Covid-19 to worsen income inequality, but I was surprised both by the extent to which it did and by the fact that…
- …the wealthy actually continued advancing while only the middle and the poor were worse off – at least according to preliminary data. What happened in China won’t necessarily happen elsewhere, but, still, I suspect we will see similar patterns in other countries affected by…
- …Covid-19. The net economic effect of the pandemic, in other words, is likely to be a very substantial transfer of wealth up the income scale. It seems to me that any fiscal or monetary response that doesn’t take this into consideration is likely to be ineffective and maybe…
- …even harmful (if it worsens income inequality).
The US will see similar things but not to the same degree.
April travelers to Japan dropped 99.9% from year earlier to 2,900 – The Japan Times –An estimated 2,900 foreign travelers visited Japan in April, down 99.9 percent from a year earlier, amid the global coronavirus pandemic, according to the latest government data.It is the first time that the monthly figure, which was released Wednesday, has slipped below the 10,000 mark since 1964, when the Japan Tourism Agency began compiling such statistics. The percentage decrease was also the largest ever.The previous low for monthly foreign visitors was 17,543, recorded in February 1964.The figure fell in April for the seventh consecutive month since October, when a significant drop in visitors from South Korea and a devastating typhoon halted the trend of increasing numbers of visitors from overseas.Bilateral ties between Tokyo and Seoul have soured over the issue of wartime labor during Japan’s colonial rule of the Korean Peninsula between 1910 and 1945.The government is seeking to boost domestic tourism by subsidizing a portion of travel expenses once the coronavirus outbreak is brought under control.The Yen1.35 trillion ($12.5 billion) program could start in July if novel coronavirus infections subside soon, Hiroshi Tabata, chief of the agency, told a news conference Wednesday.As travel restrictions have been put in place globally, the number of Japanese nationals who left the country in April plunged 99.8 percent from a year earlier to 3,900, according to the data from the agency.Japan expanded its travel restrictions in early April, bringing the number of countries from which foreign nationals were barred from entry to about 70, including all parts of China and South Korea, as well as the United States and most of Europe.The number of visitors from China fell to 200 in April from 726,132 from a year earlier, and those from South Korea dropped to 300 from 566,624, according to the data.
Japan cautiously lifts last of virus emergency controls The first phase of Japan’s battle against the novel coronavirus ended Monday as the government rescinded the state of emergency in Hokkaido and the Tokyo metropolitan area, tiptoeing its way into a new reality still riddled with uncertainty. After consulting with an advisory panel composed of infectious disease experts, the government lifted the declaration in Hokkaido, Tokyo, Saitama, Chiba and Kanagawa prefectures, removing the last of the restrictions. It had already cleared the declaration in 39 prefectures on May 14 and three prefectures in the Kansai region – Osaka, Hyogo and Kyoto – last Thursday, earlier than their scheduled conclusion on May 31. The government’s decision to lift the declaration early highlights its strong desire to revive the nation’s faltering economy as soon as possible. Overall, the country has managed to keep the death toll relatively low compared to other countries and bring down the number of new coronavirus patients to government-set thresholds for reopening. In a news conference Monday evening, Prime Minister Shinzo Abe touted the country’s ability to flatten the curve and lift the emergency declaration in about a month and a half – without compulsory lockdown measures seen in the United States and Europe,pointing out that the number of patients in hospitals has decreased to below 2,000. “I made a judgment that the country as a whole had met the strict standard to lift the state of emergency compared to other countries,” Abe said.
Poor Countries Weigh Easing Lockdowns as Coronavirus Cases Continue to Rise – WSJ -Car factories are starting back up in Brazil and Mexico. Train service is restarting across much of India. Mining companies are reopening in Peru.The world’s largest developing nations are following recent steps by the U.S. and Europe to ease restrictions aimed at slowing the growth of the coronavirus pandemic in order to spare further pain to their battered economies.There is, however, a crucial difference: Poorer countries are starting to reopen while new infections and deaths are growing, rather than slowing. Health experts say the timing risks an explosive rise in cases and deaths in crowded slums across the developing world.”The number of people who could eventually die in places like Brazil and the rest of South America could far exceed what we’re seeing in the U.S.,” said Peter Hotez, dean of the National School of Tropical Medicine at the Baylor College of Medicine. Already, daily death tolls are surging across the developing world, and in some cases now rival the worst days of the pandemic in Europe. Brazil has joined the U.S. as the only countries where more than 1,000 people are regularly dying each day from the pandemic. Mexico now ranks third in the tally of daily deaths behind the U.S. and Brazil and ahead of the U.K. When scenes of Italy’s overcrowded hospitals in late March were beamed around the world, startled governments in poorer countries began to worry about their own ill-prepared hospitals and ordered stay-at-home measures and other steps to slow the spread of the new coronavirus. The steps, which for many nations came at an earlier stage in the epidemic than in Europe or the U.S., allowed some governments to shore up their capacity to treat the ill and test for the virus and slowed the spread of the highly contagious pathogen.That persuaded some, including presidents from Brazil to Mexico to Tanzania, that pandemic fears were overblown. In late April, Mexico’s president said his country had tamed the virus.The U.S. Centers for Disease Control and Prevention says economies shouldn’t start to reopen until there is a decline in overall cases or positive tests over a 14-day period. European countries and most of the U.S. showed sustained declines before reopening.Across swaths of the developing world, however, containment measures haven’t reversed the epidemic’s course, but merely slowed the pace of growth. And as countries prepare to open up, the virus has grown to a point where it threatens to overwhelm their populations.Still, governments argue that many of their people, especially the estimated 1.6 billion across the world who toil in the informal sector, are suffering more from containment measures than from the virus itself. Hundreds of millions of people have lost their jobs and poverty rates across the world are soaring.
How Pandemics Leave the Poor Even Farther Behind – IMF Blog — The COVID-19 crisis is now widely seen as the greatest economic calamity since the Great Depression. In January, the IMF expected global income to grow 3 percent; it is now forecast to fall 3 percent, much worse than during the Great Recession of 2008-09. Behind this dire statistic is an even grimmer possibility: if past pandemics are any guide, the toll on poorer and vulnerable segments of society will be several times worse. Indeed, a recent poll of top economists found that the vast majority felt the COVID-19 pandemic will worsen inequality, in part through its disproportionate impact on low-skilled workers. Our evidence supports concerns about the adverse distributional impacts of pandemics. We find that major epidemics in this century have raised income inequality and hurt employment prospects of those with only a basic education while scarcely affecting employment of people with advanced degrees. We focus on five major events – SARS (2003), H1N1 (2009), MERS (2012), Ebola (2014) and Zika (2016) – and trace out their distributional effects in the five years following each event. On average, the Gini coefficient – a commonly-used measure of inequality – has increased steadily in the aftermath of these events. Our measure of the Gini is based on net incomes, that is market incomes after taxes and transfers. Our results show that inequality increases despite the efforts of governments to redistribute incomes from the rich to the poor to mitigate the effects of pandemics. After five years, the net Gini has gone up by nearly 1.5 percent, which is a large impact given that this measure moves slowly over time. Such long-lasting effects of pandemics occur due to job loss and other shocks to income (e.g. lower remittances) and diminished employment prospects. Our results show that pandemics have had vastly disparate impact on the employment of people with different levels of educational attainment, one indicator of skill levels. The disparity is stark: relative to population, the employment of those with advanced levels of education is scarcely affected, whereas the employment of those with only basic levels of education falls sharply, by more than 5 percent at the end of five years.While the pandemic is having an adverse effect on almost everyone in society, policies need to pay specific attention to preventing long-term damage (or “scarring”) to the livelihoods of the least advantaged in society. Without strenuous and targeted attempts, we are again likely to see an increase in inequality, which was already “one of the most complex and vexing challenges in the global economy,” in the words of the IMF’s Managing Director.
Western Economies See Biggest Slump Since Financial Crisis – WSJ – The world’s developed economies saw the largest fall in output since the global financial crisis in the first three months of the year, as governments began to impose lockdowns designed to limit the spread of the novel coronavirus. As sharp as those declines were, they are likely to be eclipsed by the falls in activity recorded in the three months through June, although economies are expected to start to recover in the second half of the year. The Organization for Economic Cooperation and Development said the combined gross domestic product of its 37 members was 1.8% lower in the first quarter than in the final three months of 2019, the largest fall since the 2.3% decline recorded in the first three months of 2009 during the height of the financial crash. Among the Group of Seven largest developed economies, France saw the largest drop in economic output, followed by Italy. Japan saw the smallest economic contraction, followed by the U.S. The size of the economic contractions experienced in the first quarter reflects the duration and severity of the lockdowns imposed by governments. But momentum also mattered: The U.S. was growing more rapidly than its European counterparts before the coronavirus struck. With lockdowns continuing through April and largely in place in the first half of May, economists expect the second quarter to see a bigger decline in GDP than that recorded in the wake of the global financial crisis. Surveys of purchasing managers showed private-sector activity in the U.S., Europe and Japan fell for the third-straight month in May. But U.S. and global business activity and labor markets suffered a little less in May than in prior months, offering signs that damage to the global economy from the coronavirus pandemic is easing but will require significant time to repair. The OECD will release new forecasts for global growth on June 10. Earlier this month, the United Nations said it expects the global economy to contract by 3.2% this year, led by a 5% drop in the output of developed countries and a 0.7% decline in the output of developing countries, which typically grow more rapidly. The U.N. estimated that output lost this year and next as a result of the pandemic and government efforts to control it will amount to $8.5 trillion, equivalent to gains made in the previous four years. “The pandemic has paralyzed large parts of the global economy, sharply restricting economic activities, increasing uncertainties and unleashing a recession unseen since the Great Depression,” the U.N. said.
Steep Drop in Trade Flows Shows Pitfalls of Cross-Border Supply Chains – Global trade flows tumbled in the first quarter, a preview of what could be the largest contraction in international commerce in decades, as the coronavirus pandemic causes policy makers and multinationals to reconsider globe-spanning supply chains that have become a defining feature of the world economy. A Dutch body considered an authority in world trade, CPB Netherlands Bureau for Economic Policy Analysis, said flows of goods across borders were 1.4% lower in March than a month earlier, bringing the decline in the first quarter to 2.5%. That was the largest drop since the global financial crisis. “We expect a strong decline in trade in April and May,” CPB said. “Leading indicators point to a stronger decline in global trade in the coming months.” Few expect exports and imports to rebound strongly as restrictions intended to limit the spread of the coronavirus are lifted. Instead, many expect a rollback in intricate cross-border supply chains. The World Trade Organization’s economists estimate that flows will fall by between 13% and 32% during 2020 as a whole. A decline of a third would be equivalent to the collapse associated with the Great Depression – but concentrated in one year rather than spread over three. But the sudden halt in trade has exposed how interdependent countries are in sourcing and manufacturing everything from cars to ventilators to smartphones. Individual countries have become nodes in vast supply chains whose vulnerability became clear when the pandemic sliced them apart. As a result, the coronavirus – along with previous tensions between China and the U.S. over trade and technology – is forcing multinationals and policy makers to consider ways to bring production closer to home, safeguard the production of essential goods and reduce their reliance on China as a manufacturing base.
Global Ad Spending Plunges As Hopes For V-shaped Recovery Fade – As economic paralysis continues, global advertisement spending is set to collapse this year due to the COVID-19 pandemic, according to WARC, an international marketing intelligence firm. WARC tracks 96 markets worldwide, expects ad dollars to decline by 8.1% ($49.6 billion) to $563 billion this year. The forecast was initially an expansion of 7.1% for 2020, but those figures were quickly revised for a post-corona world. The report said traditional media ” will fare far worse than online,” with ad spending set to plunge $51.4 billion (-16.3%) this year. Much of the declines are seen across cinema (-31.6%), out of home (-21.7%), magazines (-21.5%), newspapers (-19.5%), radio (-16.2%) and TV (-13.8%). The good news, online advertising will see a slight expansion (+.06%). Coronavirus lockdowns have wrecked households in both hemispheres. High unemployment plagues nearly every economy, along with plunging cash flows for businesses, who have now been forced to trim expenses and pull back on ad spending. One of the hardest-hit areas for estimated ad spending this year is the travel and tourism industry, with an expected decline of 31.2%. Spending will likely remain depressed for several years as consumers avoid airplanes, cruise ships, hotels, casinos, etc., for fears of contracting the virus. The slump in advertising has yet to surpass the record decline seen in 2009 when the global ad market contracted by 12.7%. The report notes an election year in the US could cushion ad spending. James McDonald, WARC’s head of data content, said: “We note three distinct phases to the current downturn: firstly, an immediate demand-side induced paralysis for sectors such as travel, leisure, and retail, combined with supply-side constraints for CPG brands. Second, the recessionary tailwind will exert extreme pressure on the financial services sector as well as the consumer, whose disposable income is now heavily diminished.”
Russia’s right-wing opposition tries to gain from COVID-19 crisis The COVID-19 pandemic has unleashed a political crisis inside Russia, as the Kremlin struggles to bring the outbreak under control and address its economic fallout. With the situation exacerbated by a simultaneous steep drop in global oil prices, the Ministry of Economic Development revealed yesterday that it anticipates a decline in gross domestic product by as much as 7.5 percent this year. President Vladimir Putin’s poll numbers have fallen to historically low levels, as social anger mounts over the conditions facing the country’s health care workers, official efforts to cover up the scale of the death toll, and the government’s failure to take any meaningful action to shield the population from the impact of mass layoffs and falling real incomes. Following the approach taken in every major country, the Kremlin “reopened” the economy more than a week ago in a reckless effort to force people back to work, even as the country’s coronavirus cases approach 380,000, the third-most diagnosed cases on the planet. The Kremlin announced earlier this week that it will hold postponed Victory Day celebrations, which were to take place May 9 in Moscow, on June 24. The parade, which at the very least will bring thousands of soldiers to the capital city – the center of Russia’s COVID-19 outbreak – threatens a new surge in the pandemic. The government is willing to risk this, as well as the possibility of another postponement, because it needs the display of state authority, nationalist hoopla, and feeling of shared sacrifice that the commemoration of the victory over Nazi Germany in World War II generates, as a counter to the political tensions developing because of the pandemic. As Russia’s government tries to shore up its position, Alexei Navalny, the leading spokesperson of the liberal opposition and a self-styled “anticorruption” politician, is working to capitalize on mass discontent and steer it in a right-wing direction. Through his social media accounts and the Navalny Live program – a YouTube forum where he discusses political issues – he works to present himself as a platform through which health care workers can air their grievances and specialists can challenge official data on the pandemic. According to a late April poll by the Levada Center, Navalny’s popularity, while still low, is rising. In Moscow, he has more support than Prime Minister Mikhail Mishustin and the far-right head of the Liberal Democratic Party, Vladimir Zhirinovsky. In the country as a whole, he has a higher rating than Moscow’s mayor, Sergei Sobyanin, who has been promoted in the media as the city’s champion in the battle against COVID-19.
Cultural resources wiped out by COVID-19 crisis: 13 percent of museums worldwide may never reopen – A pair of recently released reports by the United Nations Educational, Scientific and Cultural Organization (UNESCO) and the International Council of Museums (ICOM) reveal the irrevocable global damage to cultural institutions caused by the months-long COVID-19 shutdown of 85,000 museums. Some 95 percent of the world’s museums are currently closed. According to a survey conducted by the ICOM, some 13 percent, or more than 11,000 institutions, may remain closed after the pandemic recedes. “The closures will particularly affect those regions where museums are recent and few and where structures are still fragile: in African, Asian and the Arab countries 24, 27 and 39 percent respectively fear that museums may close.” In addition, 82.6 percent of the ICOM’s respondents “anticipate that museum programmes will have to be reduced” and 29.8 percent “expect that the number of staff will have to be reduced.” The ICOM describes the situation for tens of thousands of freelance museum professionals as “alarming.” The survey found that 16.1 percent of the respondents said they were temporarily laid off, and 22.6 percent did not have their contracts renewed. The report observes that the “freelance sector is very fragile,” with 56.4 percent of the free-lance respondents indicating they would have to suspend the payment of their own salary as a result of the current crisis, while 39.4 percent said their firms would reduce staff. The neglect, indifference and incompetence of capitalist governments worldwide have produced this disastrous situation. As long as the banks and corporations were rescued with trillions in public money and the wealth of the billionaires protected, every other sphere of life could wither and die, as far as the financial elite was concerned. The ICOM and UNESCO reports underscore the irrational, piecemeal, backward and highly unequal way in which the arts, no less than health care, education and other vital services, are funded, or rather systematically underfunded, particularly in the United States.
Reopened schools close across France as coronavirus found among students and staff – Two weeks after the reopening of schools and ending of lock-down restrictions came into force in France on May 11, schools are being forced to close again after students and teachers have tested positive for coronavirus. The closure of schools only underscores the criminal indifference and recklessness of the reopening policy pursued by the Macron administration with the backing of the trade unions and the political establishment, in line with other governments across Europe and America. There is no official record provided on the number of French schools that have closed since they reopened on May 11. On May 18, Education Minister Jean-Michel Blanquer admitted that 70 schools had either closed or postponed reopenings after a student or staff member tested positive. As symptoms most commonly do not appear until several days after a patient becomes contagious, an untold number of other staff and students were placed at risk of infection as a consequence. After admitting to the large number of schools that had closed, Blanquer blithely declared that this was “inevitable,” and that “the fact that a school has had to close should not be a concern,” since the first cases in the wake of the reopening would have to have been contracted prior to the reopening of schools. However, this only makes clear the danger that the schools will become a major propagator of the virus as the impact of ending lockdowns on the spread of the virus begins to be felt. After elementary schools and kindergartens had reopened on May 11, secondary schools opened for students in years 7 and 8 on May 18, and the two higher-year levels will return at the beginning of June. Since Blanquer’s statements, there have been no further statistics provided by the government, but limited news reports in the week since indicate that many more schools have been forced to close, including three secondary schools in their first week back. On Sunday the Francois-Mitterand secondary college in Fenouillet, near Toulouse, announced on its website that it would close until June 2 to allow for a cleaning of the premises after a staff member tested positive. Health authorities are conducting tests on their contacts. In the central city of Tours, the Jean-Philippe Rameau secondary school close after a student in the seventh grade tested positive. The school’s announcement stated, “After an investigation by the Regional Health Service and the school medical staff and while waiting for the outcome of tests of teaching staff, school management … and students who were alongside the student who tested positive, the department council and the academic directors in l’Indre-et-Loire are taking the decision to close the school.” The closure is effective from May 25 to June 1. Last week, in the same city, a primary school had been closed after a student in grade 5 tested positive, after having shared a classroom with four other students and a teacher on May 14 and 15. All classes at the school have been stopped while the building is being disinfected.
Exclusive: big pharma rejected EU plan to fast-track vaccines in 2017 — The world’s largest pharmaceutical companies rejected an EU proposal three years ago to work on fast-tracking vaccines for pathogens like coronavirus to allow them to be developed before an outbreak, the Guardian can reveal. The plan to speed up the development and approval of vaccines was put forward by European commission representatives sitting on the Innovative Medicines Initiative (IMI) – a public-private partnership whose function is to back cutting-edge research in Europe – but it was rejected by industry partners on the body. The commission’s argument had been that the research could “facilitate the development and regulatory approval of vaccines against priority pathogens, to the extent possible before an actual outbreak occurs”. The pharmaceutical companies on the IMI, however, did not take up the idea. The revelation is contained in a report published by the Corporate Europe Observatory (CEO), a Brussels-based research centre, examining decisions made by the IMI, which has a budget of euro 5bn (Pound Sterling4.5bn), made up of EU funding and in-kind contributions from private and other bodies. The IMI’s governing board is made up of commission officials and representatives of the European Federation of Pharmaceutical Industries (EFPIA), whose members include some of the biggest names in the sector, among them GlaxoSmithKline, Novartis, Pfizer, Lilly and Johnson & Johnson. A global lack of preparedness for the coronavirus pandemic has already led to accusations in recent weeks that the pharmaceutical industry has failed to prioritise treatments for infectious diseases because they are less profitable than chronic medical conditions. The world’s 20 largest pharmaceutical companies undertook around 400 new research projects in the past year, according to Bloomberg Intelligence. Around half were focused on treating cancer, compared with 65 on infectious diseases. There are eight potential vaccines for coronavirus in clinical trials, but there is no guarantee of success. One of the most promising, being developed at Oxford University, is said to have only a 50% chance of being approved for use. The CEO report says that rather than “compensating for market failures” by speeding up the development of innovative medicines, as per its remit, the IMI has been “more about business-as-usual market priorities”. The report’s authors cite a comment posted on the EFPIA’s website, since removed, selling the advantages of the initiative to big pharma as offering “tremendous cost savings, as the IMI projects replicate work that individual companies would have had to do anyway”. The European commission’s “biopreparedness” funding proposal in 2017 would have involved refining computer simulations, known as in silico modelling, and improved analysis of animal testing models to give regulators greater confidence in approving vaccines.
Censortech strikes again — Izabella Kaminska -We suggested a few weeks ago that “censortech” had spun out of control, with platforms starting to flag even mainstream dissent of the government-imposed lockdown strategy as problematic and in need of suppression.Well, it seems, the faceless mandarins governing what does and does not make the grade on social media sites were only getting started.News comes our way on Wednesday that a clip of an Institute of Ideas virtual panel featuring The Spectator’s Toby Young — who happens to be the general secretary of the “Free Speech Union” — has been removed from YouTube* for daring to question lockdown strategy.We appreciate that the views of Toby Young are not everyone’s cup of tea. But until recently we lived in a society that had the capacity to process opposing view points and make its own mind up about them. Those who don’t like the views of The Spectator don’t have to buy The Spectator. And if the majority of people agree — perhaps because those views really are too distasteful for any collective to absorb — the market will silence the miscreants by imminently making the publication fail. The People’sTube told Young they had taken the clip down because of an investigation triggered by a single complaint, with the social media platform concluding the clip violated its community standards. We’ve watched the panel and the decision is very hard to rationalise. The only justifiable case against the clip, which was only showing Toby Young’s comments, is that it was decontextualised from the counter-arguments expressed in the wider panel. His key argument, by the way, is that the strongest case against lockdown isn’t the economic case but rather the civil liberties case and the bad precedent it can set. But if decontextualisation is to be considered a thought crime worthy of deletion from the web, must not every media outlet shutter itself immediately? If you watch the clip, which Young has now posted on Bitchute, you will — we think — agree that the views being expressed could not really be considered extreme in any way.Which requires us to be blunt. What’s happening here is literally the sort of thing we, the free press, are used to bemoaning in authoritarian states elsewhere.We seem to have forgotten that a society that does not permit the questioning of government policy or consensus cannot be classified as a free society. By that measure it is not a liberal society either.
DIY: Virus lockdown forces Brits to become own dentists – When Dominic Price’s dentist told him in late March to replace a lost filling himself, the Briton was left in disbelief. “But this is the situation were in,” Price acknowledged, one of many in the UK forced to play dentist during the pandemic as the country’s surgeries shuttered. That is set to change when they reopen early next month but, for many, the damage has already been done. “Two days into the lockdown and I was chewing one of the children’s sweets… and suddenly felt a hard bit in my mouth and I think I pretty instantly knew,” Price recalled. His tooth implant had gone, and he was quickly on the phone to his dentist. “I thought they might have some sort of system running, but my suspicions were confirmed and there (was) no way they can see anyone.” Instead, Price learnt that emergency dental services were restricted to those needing an extraction and he was told to go online and buy a kit to fill the cavity temporarily himself. “I couldn’t quite believe the dentist was saying you need to do your own dentistry,” he admitted. When the kit arrived at Price’s home in Salisbury in southern England, his wife Susie sprang into action. “It is easy to use and it’s not too scary or anything,” she said. “But it does say on the back, ‘go to your dentist within 48 hours of using this’ and that’s just not an option at the moment.”
Coronavirus: What’s the future for the office? — Before the coronavirus pandemic, the office was where millions of us spent about a third of our time.However, since the lockdown, almost half the UK’s workforce say they have been working from home – and some companies have hinted it could become the future.”The notion of putting 7,000 people in a building may be a thing of the past,” said the boss of Barclays, while Morgan Stanley’s chief said the bank will have “much less real estate”. Businessman Sir Martin Sorrell said he’d rather invest the Pound Sterling35m he spends on expensive offices in people instead. The game is up for the office as we know it, suggests Bruce Daisley, who is the author of The Joy of Work.”Unfortunately, we might get misty-eyed about it but I think the office in the form it used to be is probably now a thing of the past,” he told BBC Radio 4’s Today programme. “I was chatting to someone who works at a major media outlet last week, and he said we used to have 1,400 people coming into this office every day. For the last eight weeks we’ve had 30 people and the product hasn’t changed. “He said anyone who thinks things are going to go back to the way things were is bananas.”Many of us have already discovered some of the perks and problems of working from home. Some are obvious – no commute; less chance to socialise with colleagues. But others go to the heart of our identity.”I think we should all howl at what we’re losing,” says Lucy Kellaway, who has written both fiction and non-fiction books about offices. “I think the most important thing about the office is it gives some sort of meaning to what we do. Most of what we do at our laptops – let’s face it – is pretty much meaningless. “The best way of thinking there’s some point to it is having other people who are sitting all round you doing the same thing.”
The Convergence Of Brexit And COVID-19 -Little has been made of Brexit since the UK ceremoniously left the EU on January 31st and entered into a transition period. Amidst the coronavirus outbreak, multiple rounds of negotiations on the future trading relationship have taken place, with round three having culminated earlier this month. Rounds one and two yielded no tangible progress. The third instalment was a similar story.Britain’s chief negotiator, David Frost, confirmed as much after talks concluded:The major obstacle is the EU’s insistence on including a set of novel and unbalanced proposals on the so-called “level playing field” which would bind this country to EU law or standards, or determine our domestic legal regimes, in a way that is unprecedented in Free Trade Agreements and not envisaged in the Political Declaration. As soon as the EU recognises that we will not conclude an agreement on that basis, we will be able to make progress.Frost labelled the EU’s position as an ‘ideological approach‘, one that must change by the time the fourth round of talks begin on June 1st.The EU’s lead negotiator, Michel Barnier, countered Frost’s perspective by declaring that ‘without a level playing field there will b e no economic and trade partnership agreement.’ To make progress in this negotiation – if it is still the United Kingdom’s intention to strike a deal with the EU – the United Kingdom will have to be more realistic; it will have to overcome this incomprehension and, no doubt, it will have to change strategy. In the public eye negotiations are deadlocked. Both sides are insisting that the other must change course with just six months of the transition period remaining. As part of the withdrawal agreement, Britain has the option of requesting an extension to the transition, but must do so by the end of June. Failure to do so will mean that if a new trading relationship is not ratified by the end of the year, the UK and EU will trade on World Trade Organisation terms come the start of 2021, a consequence of which will be higher tariffs. But extending the transition is not as straightforward as just asking for more time. When the withdrawal agreement became law, the government also wrote into legislation that the transition could not be extended beyond this year. To go back on this, Boris Johnson’s administration would have to repeal a law that they themselves devised and put into place. As Britain was preoccupied with Covid-19 lockdown measures, IMF Managing Director Kristalina Georgieva (who supported ratification of the withdrawal agreement) took the opportunity to effectively recommend that the transition period be extended if the UK and EU fail to agree terms in the short term.
.
include(“/home/aleta/public_html/files/ad_openx.htm”); ?>