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. We cover the latest economic data, especially GDP, employment, and some other Main Street economic impacts. Coverage continues to increase this week on the push to open schools/colleges and the pushback. I conclude with a few reports from other countries 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.
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Shadow bank weaknesses forced Fed’s market rescue, Quarles says – A top Federal Reserve official is issuing a warning about fast-growing and largely unregulated shadow lenders: They were a big factor in why central banks had to save markets earlier this year, and much more needs to be done to assess the risks posed by the sector. The coronavirus crisis has exposed potential weaknesses tied to nonbank financial firms, including excessive leverage, interconnectedness and instances of assets freezing up that investors assumed were akin to cash, according to Federal Reserve Vice Chairman Randal Quarles. Such factors left central banks with no option other than intervening, he said, speaking in his capacity as chairman of the global Financial Stability Board. “While extraordinary central bank interventions calmed capital markets, which remained open and enabled firms to raise new and longer-term financing, such measures should not be required,” Quarles wrote in letter dated Tuesday to his counterparts at other central banks. It’s “more important than ever” to understand the possible threats of nonbanks, he added. In mid-March the Fed started rolling out emergency lending facilities focused on ultra-short-term credit markets that dried up as companies, banks and investors began hoarding cash. One of the quickest programs established was the Money Market Fund Liquidity Facility. It was crucial to restoring order because institutional investors began withdrawing rapidly from so-called prime money market funds, vehicles that invest partly in short-term company IOUs. Since the disruption, at least one big provider of institutional prime money funds, Fidelity Investments, announced it would shut down those funds and steer customers mainly into funds that invest exclusively in government-backed securities. Boston Fed President Eric Rosengren reacted by saying he hoped other fund providers would follow suit. In his letter, Quarles also warned of the risk of renewed turmoil to financial markets, notwithstanding the unprecedented support already provided by policy makers. “We may be seeing significant pricing disconnects between the market and economic fundamentals, which could result in sudden and sharp repricing,” Quarles wrote. “The impacts of these economic strains may be amplified in emerging markets, given the risks to their currency and debt markets from capital outflows.” After plummeting in March with the onset of the pandemic, the S&P 500 has rebounded sharply and is closing in on levels that prevailed at the start of this year. U.S. unemployment, in contrast, is more than three times higher than it was before the Covid-19 outbreak, and now stands at 11.1% Following the 2008 financial crisis, regulators and lawmakers imposed aggressive new limits on banks. But reforms such as the Dodd-Frank Act did little to boost oversight of nonbank firms that contributed to the meltdown. Agencies still have limited authority over investment funds, mortgage firms and insurers – even as such firms have stepped up their activity in financial markets. The FSB expects to conclude a review of the March turbulence by November, Quarles said. As international regulators get a better sense of the vulnerabilities, it’ll help them decide “where policy responses may be needed,” he said.
Fed, Treasury Disagreements Slowed Start of Main Street Lending Program – WSJ – Disagreements between leaders at the Federal Reserve and Treasury Department in recent months slowed the start of their flagship lending initiative for small and midsize businesses, according to current and former government officials. The differences centered on how to craft the loan terms of their $600 billion Main Street Lending Program to help support businesses through the early stages of the coronavirus pandemic. Fed officials generally favored easier terms that would increase the risk of the government losing money, while Treasury officials preferred a more conservative approach, people familiar with the process said. Treasury, which has put up $75 billion to cover losses, resisted recent changes to relax loan terms. The disagreements over relatively narrow design issues reflect broader philosophical differences over what the program is trying to accomplish and how much risk the government should take as a result. The upshot is that the program, announced in March, went through multiple revisions and opened for business this past week. As of Wednesday, it hadn’t purchased any loans. Some Fed officials privately have voiced frustration that painstaking negotiations wasted precious weeks in launching the program, according to people familiar with the matter. One of three loan products under the program almost didn’t materialize due to Treasury reservations. The nature of the compromises between the Fed and Treasury have only recently come into focus, pulling back the curtain on one of the most important partnerships in global economic policy-making. The terms of the program were first announced on April 9 and have been relaxed twice to include more potential borrowers and flexible repayments. The program began operating this month through the Federal Reserve Bank of Boston. “Would the program be exactly the way I would have designed it, or exactly the way someone else would have designed it? No, but we all need to work together, and we have worked together quite effectively,” said Boston Fed President Eric Rosengren in an interview. “Anytime you have a negotiation, there are going to be compromises that are made,” he said. “I expect that we’ll continue to have to make compromises.”
Fed opens Main Street Lending Program to nonprofits – The Federal Reserve has opened its Main Street Lending Program to nonprofit organizations, expanding the existing program intended to help businesses weather the coronavirus pandemic. The addition of two new credit facilities to the program will facilitate loans to organizations like educational institutions, hospitals and social service groups with at least 10 employees, the central bank said Friday. Nonprofit organizations will be able to obtain loans of at least $250,000 and up to $300 million. “Nonprofits provide vital services across the country and employ millions of Americans,” Federal Reserve Chair Jerome Powell said in a press release. “We have listened carefully and adapted our approach so that we can best support them in carrying out their vital mission during this extraordinary time.” When the Fed originally proposed opening up the $600 billion program to nonprofits on June 15, it only proposed offering loans to nonprofit organizations with at least 50 employees, but adjusted that threshold after receiving feedback. The Fed also relaxed some of the original eligibility criteria it had proposed for nonprofits, lowering the total amount of non-donation revenue a borrower had to have from 2017 to 2019 from 70% to 60% and cutting the required 2019 operating margin from 5% to 2%. To qualify for a loan through the program, nonprofit borrowers must have been in operation at least five years and have less than $3 billion in endowment. The other loan terms for nonprofit borrowers are the same as for the borrowers in the program’s other facilities. Like the other facilities in the Main Street program, the Nonprofit New Loan Facility and the Nonprofit Expanded Loan Facility will make loans available to eligible borrowers through third-party banks. The Fed, through the Main Street program, will then purchase a 95% stake in the loans.
Fed’s support for corporate debt has been a Wall Street bonanza – The Federal Reserve’s extraordinary effort to keep credit flowing to companies during the COVID-19 pandemic is also shunting money to banks’ bottom lines. Fees for underwriting blue-chip U.S. company bonds in the first half of the year essentially doubled to more than $7 billion, according to data compiled by Bloomberg, after the Fed set up an unprecedented series of programs to support corporate debt markets and slashed interest rates. U.S. companies have rushed to borrow, selling more than $1 trillion of high-grade notes in just a few months, and some of the proceeds have trickled down to banks. That boon underscores how the biggest banks’ roles as financial intermediaries can translate to billions of dollars of profits after borrowing floodgates open. When the firms start releasing their second quarter earnings on Tuesday, they’re broadly expected to post their worst results since the financial crisis as they set aside more money for bad loans. Gains from bond underwriting – and the resulting debt trading – are one of the few bright spots. That fee income might be enough to turn quarterly net losses into profit for some banks, said Gerard Cassidy, an equity research analyst at RBC Capital Markets. “The Fed’s unprecedented actions in monetary policy since the start of Covid-19 have benefited banks very well,” Cassidy said. The central bank’s efforts have helped banks in myriad ways. The Fed is buying bonds in the open market and if necessary directly from companies, which has helped slash yields on investment-grade corporate bonds to the lowest level on record. That’s spurring companies to borrow, which is lifting underwriting fees for both investment-grade and high-yield debt. When companies sell bonds, investors often sell older securities from the corporation and buy newer ones, so trading revenue rises too. On top of that, the Federal Reserve offered financing to banks that make loans under the Small Business Administration’s Paycheck Protection Program, making it easier for banks to earn fees from that program. Many didn’t even tap the Fed’s facility, because they’ve been flooded with customer deposits. Loans under that program are U.S. guaranteed, meaning the banks don’t have any risk of borrowers defaulting. “The PPP program has been a windfall for the banks at taxpayers’ expense, even if some are donating the fees to worthy causes,” The Fed is also taking steps including buying short-term corporate bonds known as commercial paper directly from companies. And as of last week, its Main Street Lending Program, aimed at small and midsized businesses, was fully up and running. The Fed will buy 95% of each loan made under the up-to-$600 billion program, which could generate around $5.5 billion of fees for banks if there’s full uptake, according to a Bloomberg analysis.
Beige Book: “Economic activity increased in almost all Districts, but remained well below where it was prior to the COVID-19 pandemic.” – Fed’s Beige Book “This report was prepared at the Federal Reserve Bank of Chicago based on information collected on or before July 6, 2020. ” Economic activity increased in almost all Districts, but remained well below where it was prior to the COVID-19 pandemic. Consumer spending picked up as many nonessential businesses were allowed to reopen. Retail sales rose in all Districts, led by a rebound in vehicle sales and sustained growth in the food and beverage and home improvement sectors. Leisure and hospitality spending improved, but was far below year-ago levels. Most Districts reported that manufacturing activity moved up, but from a very low level. Demand for professional and business services increased in most Districts, but was still weak. Transportation activity rose overall on higher truck and air cargo volumes. Construction remained subdued, but picked up in some Districts. Home sales increased moderately, but commercial real estate activity stayed at a low level. Financial conditions in the agriculture sector continued to be poor, while energy sector activity fell further because of limited demand and oversupply. Loan demand was flat outside of some Paycheck Protection Program (PPP) activity and increased residential mortgages. The PPP and loan deferrals by private lenders reportedly provided many firms with sufficient liquidity for the near term. Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications. …Employment increased on net in almost all Districts as many businesses reopened or ramped up activity. Districts highlighted gains in the retail and leisure and hospitality sectors. However, payrolls in all Districts were well below pre-pandemic levels. Job turnover rates remained high, with contacts across Districts reporting new layoffs. Contacts in nearly every District noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits. Many contacts who have been retaining workers with help from the PPP said that going forward, the strength of demand would determine whether they can avoid layoffs. CR Note: This information was on or before July 6th, and it appears activity has slowed recently.
An Improved GDP Outlook from Wall Street – The Wall Street Journal’s July survey results are out. The forecasted level of GDP is higher despite the deteriorating Covid-19 infection and fatality number. Figure 1: GDP, bn. Ch.2012$ SAAR (black), mean, from WSJ April survey (tan), May (green), June (red), and July survey (blue), all on log scale. Source: BEA, WSJ, various vintages, and author’s calculations.It’s still the case that recovery to 2019Q4 levels – the prior peak – is not attained by 2022Q1 according to the mean response. This prediction is broadly consistent with the IGM/538 survey, which has a modal response for catchup taking place in 2021H2 (see here.)Despite the worsening outlook, there are few seeing a “W” in output; and the optimistic are pretty optimistic. Figure 2: GDP in billions of Ch.2012$, SAAR, reported (black bold), WSJ July survey mean (blue), most “W” from Daniel Bachman at Deloitte (green), and one year most optimistic from Sean Snaith at University of Central Florida (red). Source: WSJ July survey, BEA, and author’s calculations.Daniel Bachmann is also the most pessimistic for the outlook over the next year (through 2022Q1).Here is a graph of fatalities through July 10, for the US as compared to other major economies.Source: FT, accessed 7/12/2020. Addendum: Note that contra Kudlow, most economists are not anticipating a “V” recovery …
Warnings Grow: “We Are in a Massive Economic Downturn” – Pam Martens – Yesterday, Federal Reserve Governor Lael Brainard gave a speech via webcast to the National Association for Business Economics. She warned, effectively, that the rosy spin coming out of the Trump administration needed to be weighed against the reality on the ground. Brainard raised the caution that credit downgrades on bonds and corporate defaults are occurring at “a faster pace than in the initial months of the Global Financial Crisis.” Brainard explained as follows: “In downside scenarios, there could be some persistent damage to the productive capacity of the economy from the loss of valuable employment relationships, depressed investment, and the destruction of intangible business capital. A wave of insolvencies is possible. As the Federal Reserve Board’s May Financial Stability Report highlighted, the nonfinancial business sector started the year with historically elevated levels of debt. Already this year, we have seen about $800 billion in downgrades of investment-grade debt and $55 billion in corporate defaults – a faster pace than in the initial months of the Global Financial Crisis. Several measures of default probabilities are somewhat elevated. It remains vitally important to make our emergency credit facilities as broadly accessible as we can in order to avoid the costly insolvencies of otherwise viable employers and the associated hardship from permanent layoffs.”The warnings coming out of yesterday’s House hearing on “Promoting Economic Recovery: Examining Capital Markets and Worker Protections in the COVID-19 Era,” raised similar concerns.Congressman Sean Casten of Illinois warned that “we are in a massive economic downturn,” adding this: “Every single entity in our society is getting their cash constrained. Individuals who are losing their jobs are having to dip into savings or their retirement account; small businesses are having to chew through all their working capital; states and municipalities are having to spend through all their rainy-day funds. And those of us who have the ability to deficit spend are doing so on a fairly significant basis right now. To put it mildly.“I mention that, because when this is all done, there’s gonna be a reckoning. Folks are gonna look out and say, in this moment, who stepped up and acted with ethics, to act with charity, and look out for those who were needy, and who decided to hoard their reserves. That is an ethical problem, it’s not a political problem. But as we saw after 2008, as we saw after the Great Depression, those ethical problems quickly become political problems. And we have to all think about that. We all have to be thinking about what we are doing in this moment to help those in need.”
Q2 GDP Forecasts: Probably Around 35% Annual Rate Decline –Important: GDP is reported at a seasonally adjusted annual rate (SAAR). So a 35% Q2 decline is around 10% decline from Q1 (SA). I’m just trying to make it clear the economy didn’t decline by one-third in Q2. Previously I just divided by 4 (an approximation) to show the quarter to quarter decline. The actually formula is (1-.35) ^ .25 – 1 = -0.102 (a 10.2% decline from Q1) From Merrill Lynch:2Q GDP tracking was unchanged at -36% qoq saar as the June surprise in retail sales was offset by negative May revisions. [July 17 estimate] From Goldman Sachs: Our Q2 GDP tracking estimate remained unchanged at -33% (qoq ar). We expect -29% in the initial vintage of the report, reflecting incomplete source data and non-response bias [July 16 estimate]From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at -14.3% for 2020:Q2 and 13.2% for 2020:Q3. [July 17 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 -34.7 percent on July 17, down from -34.5 percent on July 16. [July 17 estimate]
Foreigners Bought A Record Amount Of US Stocks In May, Sold Treasuries – The US Treasury’s report on International capital flows shows that, May saw record buying in US Stocks by foreigners… And sold Treasuries…
- Foreign net selling of Treasuries at $27.7b
- Foreign net buying of equities at $79.7b
- Foreign net buying of corporate debt at $13.6b
- Foreign net buying of agency debt at $2.4b
As an aside, it was central banks that were buying US Treasuries (+10) as private foreigners sold (-$37bn) as The Fed’s foreign-exchange swap lines were still in place during May, offering foreign central banks an alternative to selling Treasury holdings to meet dollar-funding needs and support their currencies.
Coronavirus Spending Pushes U.S. Budget Deficit to $3 Trillion for 12 Months Through June – WSJ – The U.S. budget deficit reached $3 trillion in the 12 months through June as stimulus spending soared and tax revenue plunged, putting the federal government on pace to register the largest annual deficit as a share of the economy since World War II. As a share of gross domestic product, the 12-month deficit came to 14% last month, compared with 10.1% in February 2010, when the U.S. was still recovering from the last recession. In June alone, the deficit widened to a monthly record of $864 billion, the Treasury Department said Monday – nearly as much as the gap for the entire previous fiscal year, which totaled $984 billion. The Congressional Budget Office has projected the annual deficit could total $3.7 trillion in the fiscal year that ends Sept. 30. But the gap could widen even further if Congress and the White House agree later this month on another round of emergency spending, which economists argue is vital to keep households and businesses afloat until the economy begins to recover. Congress has authorized $3.3 trillion in new spending since March to help combat the impact of coronavirus shutdowns, including stimulus checks to American households and emergency loans and grants to struggling businesses and state and local governments. The Trump administration has also delayed personal and corporate income-tax payments until July 15 in an effort to keep more cash in Americans’ wallets. “The good news is this means we’re getting fiscal relief out the door fast,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, a deficit watchdog group. “The bad news is that we’re having to borrow record amounts on top of so much unpaid-for spending and tax cuts that lawmakers approved in the past few years.” Widespread unemployment and business shutdowns have pushed down tax revenue while also boosting spending on safety net measures including unemployment insurance and nutrition assistance. A renewed surge of coronavirus cases across the South and West is forcing some states, including Texas, to reimpose social distancing measures, putting a quick economic recovery in doubt. Federal deficits typically widen in times of recession and narrow when the economy grows. This time, the deficit was already rising in the final years of the decadelong expansion that ended in February following the Trump administration’s sponsored tax cuts of 2017. Political support for taming deficits has faded in Washington in recent years, as persistent global demand for U.S. Treasury assets has kept borrowing costs near historic lows. Despite the surge in government borrowing, net interest costs fell 11% in the first nine months of the fiscal year, the Treasury said Monday. The dramatic rise in red ink has rankled some Republicans and White House officials, who have argued against another sweeping economic relief package and called instead for aid that is more narrowly targeted at the hardest hit-industries, in part due to concerns about the deficit.
‘People Are Going To Be Shocked’: Bannon Claims Wuhan Lab Employees Have Defected, Are Working With FBI –One day after a report that a respected Chinese virologist fled Hong Kong to accuse Beijing of a COVID cover-up, former Trump strategist Steve Bannon told the Daily Mail that scientists from the Wuhan Institute of Virology and other labs have defected to the West and are “turning over evidence” against the Chinese Communist Party (CCP) for their role in the COVID-19 pandemic which has claimed over 560,000 lives worldwide since last December. “People are going to be shocked,” Bannon told the Mail (“from a yacht off the East coast of America,” the Mail would like us to know).The 66-year-old then said that defectors are cooperating with intelligence agencies in America, Europe and the UK, which have been assembling evidence to challenge the CCP claim that the pandemic originated in a wet market – not in a lab home to scientists who have come under fire for manipulating bat coronavirus to be more transmissible to humans. “I think that they [spy agencies] have electronic intelligence, and that they have done a full inventory of who has provided access to that lab. I think they have very compelling evidence. And there have also been defectors,” he said. “People around these labs have been leaving China and Hong Kong since mid-February. [US intelligence] along with MI5 and MI6 are trying to build a very thorough legal case, which may take a long time. It’s not like James Bond.””The thing was built with French help, so don’t think that there aren’t some monitoring devices in there. I think what you are going to find out is that these guys were doing experiments which they weren’t fully authorized [for] or knew what they were doing and that somehow, either through an inadvertent mistake, or on a lab technician, one of these things got out,” Bannon continued. “It’s not that hard for these viruses to get out. That is why these labs are so dangerous.”
PPP data errors raise questions about effectiveness of stimulus– Herb Miller was baffled when he learned that the Trump administration reported that his one-man business in Hixson, Tenn., was approved for a coronavirus relief loan of as much as $5 million. The amount was $3,700, he said. “Something is screwed up there,” said Miller, who has been an accountant for almost five decades. A Bloomberg News analysis shows that the data for Paycheck Protection Program loans totaling more than $521 billion released on July 6 are riddled with anomalies. Although the maximum PPP loan for a one-person enterprise is $20,833, more than 75,000 loans listing one job retained have higher amounts – including 154 showing $1 million or more. The PPP was designed to keep employees of small businesses on payroll during the pandemic. Out of almost 4.9 million loans, the number of “jobs retained” is zero for 554,146 and blank for 324,122. Seven loans list negative job numbers. Conversely, almost a thousand entries show 500 jobs for loans under $150,000, which is mathematically doubtful given that the aid is based on 2.5 times a firm’s average monthly payroll. In 209 of those cases, it implies an average monthly salary of $4 or less per employee. Taken together, those figures call into question the job numbers in one out of every five PPP loans. The anomalies cast doubts about the accuracy of the data for the centerpiece of the $2.2 trillion relief package enacted in March, including whether it supported the 51.1 million jobs that the administration has touted. The PPP is already facing backlash for doling out millions of dollars to big-name law firms, Wall Street managers and companies with ties to President Trump and other politicians. Now critics say the data issues make it difficult to evaluate how well the program worked, especially because the names of borrowers were redacted for smaller loans that account for about 87% of the number of loans. “We are spending, as American taxpayers, upwards of half a trillion dollars to purportedly help small businesses stay afloat,” said Kyle Herrig, president of Accountable.US, a government-watchdog group that often criticizes the Trump administration. “We should know where the money went, how many jobs were saved, and right now with the data, we don’t have that ability to say with any certainty.” The reported number of jobs is based on information provided by applicants, according to a spokesperson for the Treasury Department, which runs the PPP with the Small Business Administration. While some borrowers may have erroneously omitted the jobs number, the total value of loans approved is consistent with supporting about 51 million jobs based on average small-business employee compensation, the spokesperson said. Under the program, borrowers file their applications through an approved lender. After the SBA issues a loan-guarantee number for banks to disburse funds, the lender and borrower can agree to a lower the amount, the spokesperson said. The SBA and Treasury didn’t explain how some million-dollar loans in the data are much higher than some borrowers said they applied for and received. Banks said the problem with the jobs data is that neither the PPP application nor the SBA’s electronic system that lenders use to submit applications required an input for “jobs retained.” The application had a box for “number of employees,” and some lenders said they submitted that number while others said they left it blank. Getting the jobs number right will matter even more when borrowers apply for loan forgiveness: The business owners will have to prove they maintained headcount and salaries to get their aid turned into a grant. If the SBA determines that a borrower is ineligible, the agency will direct the lender to deny loan forgiveness, the Treasury spokesperson said.
Mnuchin says U.S. should weigh forgiving all ‘small’ PPP loans – The federal government should weigh forgiving all “small” loans provided under the Paycheck Protection Program during the coronavirus pandemic, U.S. Treasury Secretary Steven Mnuchin said. “We should consider forgiving all small loans, but would need fraud protection,” Mnuchin told the House Small Business Subcommittee on Friday. “We should consider forgiving all small loans, but would need fraud protection,” Treasury Secretary Steven Mnuchin told the House Small Business Subcommittee on Friday.Bloomberg The government has approved more than 4.9 million PPP loans totaling $518.1 billion, as of Thursday night. Mnuchin didn’t specify what he considers a “small” loan that could be forgiven. A coalition of almost 150 groups sent a letter July 9 to legislative leaders calling for all PPP loans of less than $150,000 to automatically become grants, instead of requiring those owners to complete the complicated loan-forgiveness process, saying it will save more than $7 billion and hours of paperwork. The PPP allows loans of as much as $10 million that can become grants if borrowers spend most of the proceeds on payroll costs. Recipients apply to have loans forgiven, and must show they maintained headcount and salaries, or the amount forgiven is reduced. Small-business advocates have complained that the application is too long and the process too complicated, especially for the smallest businesses.
US Catholic Church received at least $1.4 billion through “small business” loan program – An Associated Press (AP) analysis of the federal loan data grudginglyreleased by Treasury Secretary Steven Mnuchin last Monday revealed that one of largest recipients of government funds funneled through the fraudulent Paycheck Protection Program (PPP) is the US Roman Catholic Church, which received at least $1.4 billion.This staggering amount is a drastic undercount due to the fact that the US Small Business Administration declined to release information on loans approved for under $150,000.In addition to the Catholic Church, other religious organizations including Protestant churches, Muslim mosques and Jewish synagogues also helped themselves to government funds, violating the First Amendment’s establishment of the separation of church and state. This includes churches connected to President Donald Trump such as the City of Destiny in Florida and its pastor Paula White-Cain, which received a loan worth between $150,000 and $350,000 through the PPP. White-Cain serves as Trump’s personal pastor and as “White House faith adviser.”While the AP notes that Catholic dioceses, parishes, schools and other ministries received approval for at least 3,500 forgivable loans, the Diocesan Fiscal Management Conference, an organization of Catholic financial officers, surveyed their membership and found that roughly 9,000 Catholic entities received loans, nearly three times what the AP was able to uncover.Coupled with the variance in reporting limits, the AP speculated it is possible that the Church as whole may have received as much, or more, than $3.5 billion in loans, which can be converted into grants if a majority of the funds are shown to have been used to cover wages, rent and utilities. Prior to the passage of the CARES Act and with it the PPP, religious and faith-based organizations were not eligible to receive funding through the US Small Business Administration (SBA). However, after successful lobbying by groups connected to the Church spent at least $50,000, Congress helpfully slipped in a provision within the CARES Act which allowed religious organizations and other “nonprofits” the ability to siphon funds from the program.
DoJ Busts Texas Man Using Million Dollar PPP Loan To Trade Crypto – The Government Accountability Office (GAO) warned in June there was a “significant risk” of fraud for Paycheck Protection Program loans. GAO said, which oversees spending for the CARES Act, “a number of loans approved, the speed with which they were processed, and the limited safeguards, there is a significant risk that some fraudulent or inflated applications were approved.” The GAO said the Small Business Administration (SBA) had safeguards to deter fraudulent loans, but as we find out in mid-July, they weren’t good enough. Fortune reports a Texas man received almost $1 million in PPP loans to support 51 employees at his “Texas Barbecue” company to payout salaries during months of lockdowns. The only problem, Joshua Argires, who received $956,250, never had a BBQ company nor any employees, but received the money and deposited in Coinbase to trade cryptocurrency. On Tuesday, Argires was charged with wire fraud, bank fraud, and engaging in the unlawful monetary transactions by the Department of Justice (DoJ). The DoJ didn’t specify how they detected the fraud but suggest something was a miss when Argires noted on PPP forms he would pay 51 of his fictitious employees $90,000 per month. “Such a high average salary for a barbecue operation raises further suspicion,” the DoJ’s complaint said. Argires was involved in another PPP scam, that was with a fictitious business called Houston Landscaping. The DoJ said he was paid out $160,657 in PPP funds. There was no mention of what cryptocurrencies the Texas man bought or how frequently he was trading.
Pelosi says House won’t cave to Senate on worker COVID-19 protections – Speaker Nancy Pelosi (D-Calif.) on Thursday rejected the notion that Democrats would cave to Republican demands to scale back legal protections for workers who face the threat of COVID-19 on the job site. As Congress is eyeing a fifth round of coronavirus relief before the end of July, GOP leaders have pressed for a speedy reopening of the economy while insisting that businesses be protected from lawsuits by workers who get sick on the job. Pelosi suggested Thursday that that’s a non-starter. “Don’t say, ‘You all have to go back to work, even if it isn’t safe. And by the way, we’re removing all responsibility from the employer,'” Pelosi said during a press briefing in the Capitol. “I mean that’s – no.” In May, House Democrats passed a massive $3 trillion coronavirus relief package that included an expansion of worker protections under the Occupational Safety and Health Administration. Senate Republicans, who had rejected similar language in earlier rounds of pandemic aid, are pressing instead for liability protections for businesses reopening amid the surge in COVID-19 cases. Senate Majority Leader Mitch McConnell (R-Ky.) has deemed that provision a “red line” to bring Republicans on board the next package. Yet the environment has deteriorated rapidly since the last round of coronavirus relief was adopted in April, as dozens of states have experienced a spike in cases in recent weeks, leading hospitals to become overwhelmed and governors to close some of the same businesses they’d only recently reopened. Given the changing dynamics, Pelosi said Republicans will be forced to accept an emergency aid package much larger than the $1 trillion figure GOP leaders had floated just a few weeks ago. “Every day you see them opening up more,” Pelosi said. “We get overtures about, ‘Can this be in the bill? Can that be in the bill?’ – because they know there has to be a bill.”
Next Showdown in Congress: Protecting Workers vs. Protecting Employers in the Pandemic – – Jerri-Lynn Scofield Congressional leaders are squaring off over the next pandemic relief bill in a debate over whom Congress should step up to protect: front-line workers seeking more safeguards from the ravages of COVID-19 or beleaguered employers seeking relief from lawsuits. Democrats want to enact an emergency standard meant to bolster access to protective gear for health care and other workers and to bar employers from retaliating against them for airing safety concerns. Republicans seek immunity for employers from lawsuits related to the pandemic, an effort they say would give businesses the confidence to return to normal. The Senate is scheduled to reconvene later this month. The debate reflects a deepening schism between the major political parties, with Democrats focused on protecting lives and Republicans focused on protecting livelihoods. Democratic House Speaker Nancy Pelosi expressed frustration over efforts to pass an emergency worker-protection standard, which keeps running into GOP resistance. “They’re saying ‘Let’s give immunity – no liability – for employers,'” Pelosi said. “We’re saying the best protection for the employer is to protect the workers.” Nearly 98,000 health care workers have contracted the novel coronavirus, according to Centers for Disease Control and Prevention data that the agency acknowledges is an undercount. KHN and The Guardian have identified more than 780 who have died and have told the personal stories of 139 of them. In May, the House passed a $3 trillion relief bill that would require the Occupational Safety and Health Administration to put in place an emergency standard that would call on employers to create a plan based, in part, on CDC or OSHA guidance to protect workers from COVID-19. It would cover health care workers and also those “at occupational risk of exposure to COVID19.” The measure would allow workers to bring protective gear “if not provided by the employer.” Similar rules in place in California health care workers have come under fire for offering little added protection.In action, the new measure would allow OSHA inspectors to request to review an employers’ plan and hold them accountable for following it, said David Michaels, former U.S. assistant secretary of Labor and OSHA administrator, who has called for such a standard. Federal guidance is currently optional, not required. Senate Majority Leader Mitch McConnell has insisted that the next pandemic relief bill include immunity for employers against coronavirus-related lawsuits.”If we do another bill, it will have liability protections in it for doctors, for hospitals, for nurses, for businesses, for universities, for colleges,” McConnell said July 1. “Nobody knew how to deal with the coronavirus,” he said, and unless they’ve committed gross negligence or intentional harm, those parties should be protected from an “epidemic of lawsuits.” He has proposed a five-year period of immunity from December 2019 through 2024.
Trump- No New Coronavirus Stimulus Without Payroll Tax Cut – President Trump won’t sign a new coronavirus relief package unless Democrats agree to a payroll tax cut, according to Politico, citing three anonymous sources ‘close to the issue.’ Trump’s line in the sand was echoed this week by Vice President Mike Pence, who told House Republicans in a conference call this week that they should be rallying behind the idea, according to sources on the call.Senate GOP and House Democrats, however, aren’t fans of cutting the payroll tax – which suggests the next stimulus will be yet another showdown between both sides of the aisle, which are trillions of dollars apart in how they propose funding the package, as well has how the funds will be spent, according to the report.White House officials have also been talking to Senate GOP leaders about potential elements of a new Republican coronavirus relief bill to be unveiled next week, although there is no sign yet whether Majority Leader Mitch McConnell (R-Ky.) will include it in that package. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) has signaled he doesn’t like the idea, and House Democrats have called it a non-starter.Negotiations will start in earnest next week, when both chambers come back into session following a two-week recess. Speaker Nancy Pelosi (D-Calif.) suggested Thursday that she has been in touch with individual Senate Republicans in advance of the talks, but there’s no sign that she and McConnell have held any discussions. –PoliticoSo far, $3 trillion has already been spent to mitigate the economic fallout of the COVID-19 pandemic.House Democrats have already passed a bill for a second round of direct payments of up to $1,200 for individuals and $2,400 for joint filers. Senate Republicans appear amenable, though they want to limit distributions to those making $40,000 or less per year – or around 40% of Americans who lost their jobs in March.The Democratic plan, meanwhile, raise that cap to those making $75,000 per year or less.
Trump administration seeking to block funding for CDC, contact tracing and testing in new relief bill: report -The Trump administration is attempting to block billions of dollars for contact tracing, additional testing and other coronavirus mitigation efforts that would potentially be included in Congress’s next coronavirus relief package, officials involved in the negotiations told The Washington Post.According to the Post’s sources, the administration is also trying to block billions in funding for the Centers for Disease Control and Prevention (CDC) that GOP senators want to give the agency as it continues to battle COVID-19 on the front lines.The administration also wanted to take out billions of dollars that would go to the Pentagon and State Department to allow them to better combat the pandemic both domestically and internationally, the Post reports.While the talks were fluid, the officials said, the administration’s stance perturbed some GOP senators, who want the money to stay in the bill. Senate Majority Leader Mitch McConnell (R-Ky.) signaled this week that Senate Republicans’ version of a new COVID-19 relief package could be unveiled this coming week, as both the Senate and the House return to session. While House Democrats passed a relief package at the end of May, McConnell has made it clear that the bill would go nowhere in the Republican-controlled Senate. It doesn’t appear that the House Democrats and Senate Republicans are anywhere close to having an agreed upon package, and any friction between GOP senators and the White House would only widen the quagmire. The next potential coronavirus relief bill comes as the U.S. is struggling to fight off a resurgence of COVID-19. On Friday, the country reported nearly 76,000 new cases of the virus, a record, and added another 70,831 on Saturday, according to data compiled by The New York Times.
USDA food box program fails to deliver significant share of much needed aid – The United States Department of Agriculture’s (USDA) “Farmers to Families Food Box Program” has failed to deliver 15 percent of its promised deliveries to charities and food banks so far. Announced by President Donald Trump in April, the program allocated $3 billion to purchase food from farmers who had lost sales to large buyers during the pandemic and contracted companies to box and deliver it to people in need. The boxes are composed of fresh produce, meat and dairy, with enough food to feed a family of four for one week. The USDA anticipated the delivery of $1.2 billion worth food between May 15 and June 30. Instead, the program has delivered less than two-thirds of this amount, just $755.5 million, while being plagued by chronic issues. Many of the companies awarded contracts lacked proper experience and personnel to work in food distribution, and often failed to deliver boxes on time or at all. The San Antonio, Texas based CRE8AD8 (pronounced ‘create a date’), a high-end wedding and corporate event planner, was awarded a $39 million contract to deliver 750,000 boxes across seven states. The San Antonio Express-News reports that the company has only delivered a fraction of its promised boxes, a performance so dismal that it is one of 16 companies whose contracts were not renewed for the second round of the program (July 1 to August 31). The Houston Food Bank reported that only 15 of 87 truckloads were delivered. Even worse, the North Texas Food Bank in Plano, the Southeast Texas Food Bank in Beaumont, the West Texas Food Bank in Odessa, the Community Food Bank of Southern Arizona in Tucson and the Utah Food Bank in Salt Lake City all have reported that they received none of their expected deliveries from CRE8AD8. The USDA has not commented on whether the undelivered boxes will be provided later or if the money and food allocated has been lost. Even if all the food boxes had been delivered it would still have not been enough. The number of food insecure Americans was 37 million in 2019, prior to the economic collapse triggered by the coronavirus pandemic. The number of Americans lacking access to the necessary amount of nutrition has doubled since the onset of the pandemic according to the COVID Impact Survey. The total amount allocated for the Food Box Program between May 15 and August 31 is $2.67 billion. For this 78-day period the allocated funds amount to less than a dollar a day for each of the 37 million people already living with food insecurity.
Travel industry calls for targeted relief amid coronavirus pandemic The travel industry, represented by the U.S. Travel Association, on Friday called for further relief in the next coronavirus stimulus package after having been devastated by the pandemic. The association noted in a letter to congressional leadership and Treasury Secretary Steven Mnuchin that the travel industry has lost 51 percent of its workforce so far, which accounts for 38 percent of the total U.S. jobs lost as a result of the pandemic. “The industry is now on track to shrink by $1.2 trillion by the end of the year. It is clear there can be no economic recovery without a recovery in the travel industry,” Tori Emerson Barnes, U.S. Travel executive vice president of public affairs and policy, wrote. The association called for $10 billion in federal grants to promote safe and healthy travel practices and proposed that Congress should set aside $5 billion in any aid to state and local governments for areas impacted by a decline in travel. The association also suggested that Congress should provide an additional $5 billion in grants for tourism marketing over the next two years. The letter called for $13 billion in emergency assistance for U.S. airports, which are facing at least $23 billion in operating losses. The association also asked for changes to the Paycheck Protection Program (PPP) to include destination marketing organizations, which have not been eligible to apply for these loans, and liability protection for businesses. In a boon for the industry, Republicans have indicated that liability protections will be included in the next coronavirus relief package. Senate Majority Leader Mitch McConnell (R-Ky.) is planning to roll out the latest relief proposal next week. Additionally, the group calls for a temporary travel tax credit for individuals worth 50 percent of qualified travel expenses occurring in the U.S. through 2022; restoration of the food and entertainment business expense deduction; enhancements to the employee retention tax credit and more tax credits for events; cleaning and personal protective equipment; and a national strategy to expand COVID-19 testing.
Fauci urges state, local leaders to ‘be as forceful as possible’ on masks– Anthony Fauci urged state and local leaders on Friday to take strong action on face masks, calling their widespread use one of the most important steps needed to safely reopen the country. “I would urge the leaders – the local political and other leaders – in states and cities and towns to be as forceful as possible in getting your citizenry to wear masks,” Fauci, the nation’s top infectious disease expert, said in a live-streamed event hosted by the U.S. Chamber of Commerce. About half of all states now require masks in public spaces when social distancing isn’t possible following numerous studies that show face coverings can slow the spread of COVID-19. “Practically, when you’re living your life and trying to open up a country, you are going to come into contact with people, and for that reason we know that masks are really important and we should be using them, everyone,” added Fauci, a member of the White House coronavirus task force. While mounting evidence shows face coverings can slow the spread of the coronavirus, governors have until recently been slow to implement statewide mandates. The first states issued requirements in April. Three months later, half of the states still don’t have similar mandates, but most allow localities to set their own rules, and many have done so. In the past week, as COVID-19 cases surge in dozens of states, Republican governors in Alabama and Arkansas and Democrats in Colorado and Louisiana issued orders requiring masks in public when social distancing isn’t possible. Mandates in Montana and Mississippi also took effect this week in dozens of counties. Other governors have been strongly opposed to issuing statewide rules. Georgia Gov. Brian Kemp (R) has rejected calls to issue a statewide requirement and even issued an executive order blocking localities from implementing their own rules. On Thursday, he sued Atlanta Mayor Keisha Lance Bottoms (D), arguing her city’s mask measure violates his executive order. Iowa and Nebraska are the only other two states that don’t have statewide mask rules and also block localities from issuing their own requirements.
Fauci calls White House criticism of him bizarre, says ‘let’s stop this nonsense’ and fight coronavirus (Reuters) – U.S. infectious disease expert Anthony Fauci on Wednesday called the White House effort to discredit him “bizarre” and urged an end to the divisiveness over the country’s response to the coronavirus pandemic, saying “let’s stop this nonsense.” Fauci, who has become a popular and trusted figure during the coronavirus outbreak, came under criticism from President Donald Trump and some of his Republican allies as Fauci cautioned against reopening the U.S. economy too soon. The recent spike in coronavirus infections, primarily in states that were among the earliest to lift coronavirus restrictions, put Fauci on a collision course with the White House. “One of the things that’s part of the problem is the dynamics of the divisiveness that is going on now that it becomes difficult to engage in a dialogue of honest evaluation of what’s gone right and what’s gone wrong,” Fauci told The Atlantic in an interview. “We’ve got to own this, reset this and say OK, let’s stop this nonsense and figure out how can we get our control over this now.” The White House over the weekend distributed a list of statements Fauci made early in the pandemic that turned out to be wrong as understanding of the disease developed, according to media reports. Trump said this week he valued Fauci’s input but did not always agree with him.”You know, it is a bit bizarre. I don’t really fully understand it,” Fauci said in an interview with The Atlantic. He said he believed the people involved in releasing that list, which was misleading because it did not include the entirety of Fauci’s statements or other context, are really “taken aback by what a big mistake that was.” White House tensions with Fauci have risen with the decline of Trump’s popularity in opinion polls over the president’s handling of the outbreak.
Fauci admonishes those flouting coronavirus guidelines: ‘You’re part of the problem’ – Anthony Fauci, the nation’s top infectious disease expert, said during a Saturday interview with WebMD’s chief medical officer John Whyte that “young people are driving this new surge” in coronavirus cases by “not caring” if they get infected. Fauci said recent data shows the largest age group reporting new COVID-19 infections is at least 15 years younger than the demographic the nation saw a few months ago when New York case numbers peaked in early April. “They’re not going to get very sick. They know that. So what I think is happening is that, understandably, innocently, but not correctly, the younger individuals are saying, ‘Well, if I get infected, so the chances of it is that I won’t even have any symptoms, so who cares?’ That’s a big mistake,” Fauci said. COVID-19 infections in younger individuals with healthy immune systems are statistically more likely to display less severe symptoms than those found in older patients. Still, Fauci added that this is not a reason for younger generations to exercise less caution. “Because by allowing yourself to getting infected or not caring if you do get infected, you are propagating a pandemic,” he added. “Because it doesn’t end with you. You get infected and have no symptoms. The chances are you’re going to infect someone else, who will then infect someone else.” Fauci emphasized how careless behavior toward the virus in younger, healthier people could indirectly affect someone who is more prone to a severe infection, thereby creating more problems that counter the effort to curb the spread. “So somehow, we’ve got to keep getting that message across. And I don’t mean in the sense of blaming anybody,” Fauci said, adding, “these are people that are doing this innocently and inadvertently.”
CDC director says Trump, Pence should wear masks to set example – Centers for Disease Control and Prevention (CDC) Director Robert Redfield said Tuesday the president and vice president need to wear masks to set an example for the public. President Trump wore a mask in public for the first time over the weekend, nearly three months after the CDC issued guidance recommending the use of face coverings when social distancing isn’t possible. Trump has previously argued he doesn’t need to wear a mask because he is routinely tested for COVID-19. “Glad to see the president wear a mask this week and the vice president, and clearly in their situation they could easily justify that they don’t need to because of all the testing around them and they know they’re not infected,” Redfield said during a livestreamed interview with Howard Bauchner, editor-in-chief of the Journal of the American Medical Association. “But we need them to set the example, as you said, for other individuals,” he added. Public health experts have urged Trump to wear a mask, noting that it could go a long way in encouraging his supporters to do the same. Polls show mask-wearing has become a partisan issue, with Democrats much more likely than Republicans to wear masks. Trump wore a mask while visiting Walter Reed hospital over the weekend, acknowledging it is a good setting for doing so. According to a new poll released by the CDC on Tuesday, 76 percent of adults said they had worn a face covering when leaving their house within the past week. That lines up with other polls that have been conducted on the issue. However, that number needs to improve if the U.S. wants to get COVID-19 under control, Redfield said.
Trump Orders Hospitals to Stop Sending COVID-19 Data to CDC – Public health experts are warning that coronavirus statistics will soon be newly vulnerable to political manipulation after the Trump administration ordered hospitals to send Covid-19 patient data directly to a Department of Health and Human Services system rather than the Centers for Disease Control and Prevention, which usually receives the information and releases it to the public.The New York Times reported Tuesday that the HHS database now positioned to collect daily Covid-19 information from hospitals “is not open to the public, which could affect the work of scores of researchers, modelers, and health officials who rely on CDC data to make projections and crucial decisions.””Health and Human Services said that going forward, hospitals should report detailed information on a daily basis directly to the new centralized system, which is managed by TeleTracking, a health data firm with headquarters in Pittsburgh,” theTimes noted.The administration’s new directive came in the form of a document quietly posted online last week by HHS, an agency headed by former pharmaceutical executive and Trump appointee Alex Azar.”As of July 15, 2020, hospitals should no longer report the Covid-19 information in this document to the National Healthcare Safety Network site,” the directive states, referring to the CDC’s data-gathering system.Dr. Nicole Lurie, who served in former President Barack Obama’s HHS, told theTimes that “centralizing control of all data under the umbrella of an inherently political apparatus is dangerous and breeds distrust.””It appears to cut off the ability of agencies like CDC to do its basic job,” said Lurie. HHS spokesperson Michael Caputo confirmed in a statement to NBC News that the CDC will “no longer control” coronavirus data collection but said the agency will still participate in the process.
GOP senators sound alarm as coronavirus surges in home states – Senate Republicans are raising the alarm over the country’s rapidly growing number of coronavirus cases. The warnings come as President Trump has repeatedly linked the recent spike to an increase in testing, while also overselling his administration’s response and appearing optimistic about the odds of a quick vaccine or the disappearance of the virus altogether. But GOP senators – back in their home states, many of which are seeing increased case counts – are painting a more sobering picture with their on-the-ground view. Senate Majority Leader Mitch McConnell (R-Ky.) has crisscrossed Kentucky during the recess, telling constituents that the coronavirus will not “magically disappear” and stressing that wearing a mask should not be a political issue. “Regretfully, this is not over. There were some that hoped this would go away sooner than it has. And I think the straight talk here that everyone needs to understand is this is not going away,” McConnell said during one of the stops. “This is going to be with us for a while,” he added. “The coronavirus is not involved in American politics. It has its own way forward, and we need to act responsibly.” Sen. Lindsey Graham (R-S.C.) – who, like McConnell, is up for reelection – characterized the public health fallout from Memorial Day as a “disaster,” pointing to an increase in cases coupled with a decrease in hospital space and available protective equipment. “You can see the effects of what happens when you kind of let your foot off the gas,” he said. Graham, a close congressional ally of Trump, also called for individuals to wear a mask, wash their hands frequently and practice social distancing, comparing the coronavirus fight to a “war.” “All I can say is that if you believe wearing a mask is a sign of weakness, then you’re wrong,” he said. “Nobody is asking you to go to Afghanistan and get shot – just asking you to use common sense.”
Game show host retweeted by Trump deletes his account after announcing his son has coronavirus – Former game show host Chuck Woolery announced Wednesday his son has tested positive for COVID-19, just days after Woolery accused medical professionals and Democrats of lying about the virus in an effort to hurt the economy and President Trump’s reelection chances. Woolery, who hosted several popular game shows including “Love Connection” and “Wheel of Fortune” and who is a staunch supporter of the president’s, has since deleted his Twitter account following the announcement about his son. “To further clarify and add perspective, Covid-19 is real and it is here. My son tested positive for the virus, and I feel for of those suffering and especially for those who have lost loved ones,” Woolery tweeted before his account disappeared. The message comes after Woolery tweeted Monday denouncing “outrageous lies” being told about the coronavirus, comments that Trump retweeted to his more than 83 million followers. . “The most outrageous lies are the ones about Covid 19. Everyone is lying. The CDC, Media, Democrats, our Doctors, not all but most, that we are told to trust. I think it’s all about the election and keeping the economy from coming back, which is about the election. I’m sick of it,” Woolery wrote. CBS News correspondent Catherine Herridge asked Trump about the retweet in an interview on Tuesday. “You reposted a tweet yesterday saying that CDC and health officials are lying. You understand this is confusing for the public. So who do they believe? You, or the medical professionals like Dr. Fauci?” Herridge asked, referring to National Institute of Allergy and Infectious Diseases Director Anthony Fauci. “I didn’t make a comment,” Trump responded. “I reposted a tweet that a lot of people feel. But all I am doing is making a comment. I’m just putting somebody’s voice out there. There are many voices. There are many people that think we shouldn’t do this kind of testing, because all we do, it’s a trap.”
The IRS Is Paying Out 3% To 5% Compounded Daily Interest On Almost All Refunds Issued After April 15 This Year – In a world where interest doesn’t really exist anymore, the IRS will surprisingly be paying quite a bit of it on most refunds issued after April 15 this year.Even though the tax deadline was extended to July 15 this year, the IRS will be paying interest on any refunds issued after April 15, according to a decision made by the agency last week. It’s the result of a “quirk in the tax code” combined with the unusual step taken this year of extending the filing deadline, according to the WSJ. In other words, if you chose to wait on filing this year, you’re likely to be paid a penalty, instead of owing one. The agency hasn’t estimated how many people will receive interest but it has processed about 11 million refunds between mid-April and mid-June already. Just as the agency would charge for you holding onto your payments too long, it technically owes interest for holding on to people’s refunds too long.And the interest is sizeable: 5% compounded daily for Q2 and 3% compounded daily starting on July 1.
The Higher The Number Of Covid Cases, And The More Layoffs, The More Bullish It Is For Stocks –Earlier today, Rabobank’s Micheal Every laid out a big-picture case for why “we live in a pretty crazy world right now.” It’s safe to say that the market is not too far behind for two reasons: the higher the number of coronavirus cases, and the higher the unemployment the more bullish it is for stocks, and as even mainstream media such as Reuters now admits, we have the Fed to thank for this massive stock bubble. As the main pillar of its report, Reuters quotes Andrew Brenner, head of international fixed income at NatAlliance who said that “COVID-19 is now inversely related to the markets. The worse that COVID-19 gets, the better the markets do because the Fed will bring in stimulus. That is what has been driving markets.”This is precisely what we have been saying for the past month when looking at the Fed’s shrinking balance sheet, to wit:… for the stock market to move substantially from this point on – since the market is now fully disconnected from fundamentals and is simply a derivative of endogenous liquidity and fund flow – Powell will need to find another justification to expand the Fed’s QE aggressively, as discussed in “JPMorgan Spots A Big Problem For Stocks.” Something like – for example – a second wave of the coronavirus pandemic.And just like that both a virus cure and the virus itself are now bullish.But wait there’s more, because picking up on what Morgan Stanley said last week, when chief equity strategist Michael Wilson said that record layoffs are bullish because they mean even higher corporate profits (discussed extensively here) or as the bank puts it, massive layoffs mean “explosive operating leverage”…
On eve of bankruptcy, U.S. firms shower execs with bonuses –(Reuters) – Nearly a third of more than 40 large companies seeking U.S. bankruptcy protection during the coronavirus pandemic awarded bonuses to executives within a month of filing their cases, according to a Reuters analysis of securities filings and court records. Under a 2005 bankruptcy law, companies are banned, with few exceptions, from paying executives retention bonuses while in bankruptcy. But the firms seized on a loophole by granting payouts before filing. Six of the 14 companies that approved bonuses within a month of their filings cited business challenges executives faced during the pandemic in justifying the compensation. Even more firms paid bonuses in the half-year period before their bankruptcies. Thirty-two of the 45 companies Reuters examined approved or paid bonuses within six months of filing. Nearly half authorized payouts within two months. Eight companies, including J.C. Penney Co Inc and Hertz Global Holdings Inc, approved bonuses as few as five days before seeking bankruptcy protection. Hi-Crush Inc, a supplier of sand for oil-and-gas fracking, paid executive bonuses two days before its July 12 filing. J.C. Penney – forced to temporarily close its 846 department stores and furlough about 78,000 of its 85,000 employees as the pandemic spread – approved nearly $10 million in payouts just before its May 15 filing. On Wednesday, the company said it would permanently close 152 stores and lay off 1,000 employees. The company declined to comment for this story but said in an earlier statement that the bonuses aimed to retain a “talented management team” that had made progress on a turnaround before the pandemic. The other companies declined to comment or did not respond. In filings, many said economic turmoil had rendered traditional compensation plans obsolete or that executives getting bonuses had forfeited other compensation.
Bankers Make Billions From Fed Money Printing As Double-Dip Recession Fears Surge – The Federal Reserve’s stunning effort to keep credit flowing in the system during the virus pandemic and resulting lockdowns have been like striking gold for the biggest US banks, reported Bloomberg. Capital markets were frozen at the start of the pandemic, but as soon as the Fed set up an unprecedented series of programs to support corporate debt markets and cut interest rates, bankers were able to handsomely profit from trading and arranging debt deals for companies seeking cash. This powered JPMorgan Chase & Co. and Citigroup Inc.’s profitability despite rising loan-loss provisions and even resulted in Goldman Sachs Group Inc. smashing earnings expectations. “Goldman’s earnings this quarter were too good — almost indecent, in fact,” said Octavio Marenzi, CEO of capital markets consultancy Opimas. “The Fed has been able to engineer a huge bounce-back in the markets by injecting trillions of dollars, benefiting investment banks primarily. This will lead to calls for the government to do more to help Main Street rather than Wall Street.”A Fed-induced capital markets boon fueled with newly printed money and bailouts has raised concerns whether the central banks disproportionately helped Wall Street at the expense of small businesses going bust. While the average blue-collar American was forced into food bank lines and given lousy Trump stimulus checks, the fatest cats at Wall Street banks celebrated the Fed’s saving grace, as they collectively reported a $10 billion windfall, thanks to bond trading and debt deals. “The $10 billion figure is the gap between the $20.5 billion that the three banks generated from their fixed-income trading and debt underwriting units, and the $10.4 billion average quarter for those businesses over the last four years,” said Bloomberg. Citigroup’s investment bankers reported their best quarter in a decade, supported by debt underwriting. JPM traders locked in a massive $7.3 billion gain in fixed-income trading during the second quarter.
Dimon says economic outlook ‘much murkier’ as virus cases surge – The largest U.S. banks continue to brace themselves for more economic turmoil as the coronavirus pandemic again threatens to shut down much of the nation. Three of the biggest banks – JPMorgan Chase, Wells Fargo and Citigroup – socked away a collective $27.9 billion during the second quarter out of fear that consumer and commercial loan defaults could spike in the second half of this year. JPMorgan, the country’s biggest bank with $3.2 trillion of assets, stashed away a record $10.5 billion in the quarter while Wells more than doubled its provision from just three months earlier, to a record $9.4 billion. Piper Sandler analyst Jeffery Harte said that the reserves that banks set aside in the second quarter were “much bigger” than what investors and analysts had been expecting. The big question, he said, is do bank executives see bigger losses coming or are they playing it safe and hoping that most loans now in various stages of forbearance ultimately get repaid? “I think the thing that makes that question hard to answer is they don’t know what exactly to expect,” Harte said in an interview. Bankers seem to have grown less optimistic about an economic recovery in recent weeks as the number of COVID-19 cases has surged across much of the country. In California, which began to reopen in May, statewide restrictions on certain businesses were reinstated Monday as the numbers of cases and deaths continue to rise. On a call with investors and analysts Tuesday, JPMorgan Chairman and CEO Jamie Dimon said he anticipates a “much murkier economic environment going forward than [we] had in May or June.” Though he said that the bank is “prepared for the worst,” he acknowledged that no one can really predict how long the pandemic will wreak havoc on the U.S. and global economies. “This word ‘unprecedented’ rarely is used properly. This time it’s being used properly. It’s unprecedented what’s going on around the world. And obviously COVID itself is the main attribute,” he said. The New York City-based bank reported net income of $4.7 billion or $1.38 earnings per share, bolstered by the bank’s highest quarterly revenue on record for the commercial and investment bank business. Still, its overall profit fell 51% from the same period last year. The bank will maintain its dividend at 90 cents unless there’s a material change in the economy, Dimon said.
Abundance of deposits tests bankers – When it comes to deposits, banks may have too much of a good thing. Federal stimulus efforts, including the Paycheck Protection Program, have added billions of dollars in deposits to balance sheets, assuaging concerns that arose early in the coronavirus crisis that the banking industry could suffer from liquidity shortages. Deposits at Ally Financial, Citizens Financial Group, First Horizon National, F.N.B. Corp. and Regions Financial – banking companies that reported second-quarter results late Thursday and Friday morning – rose 10.2% on averge from a quarter earlier. But the influx creates other challenges for banks, requiring them to engage more with depositors and keep them in the fold until they can make the most of the funds. That could require patience and hands-on attention by bankers because many opportunities to boost profit will rely on an economic recovery and improved prospects for business customers. Depositors “are just going to hold onto the funds until they need it, but in general we’re trying to stay really close to our customers and deepen those relationships,” Bruce Van Saun, president and CEO of the $177 billion-asset Citizens, said in an interview. “You tend to remember how people treat you when you’re down and that creates lasting benefits.” Total deposits at Citizens increased by 8% from a quarter earlier to $143.5 billion. Executives credited the PPP, extended unemployment benefits and direct cash payments for the surge. Defensive line draw-downs by commercial clients were also a factor. Over time, Van Saun said he would like to offer fee-based advisory services to many of the Providence, R.I., company’s new clients, though it might take some time before those opportunities arise. “If you have a strong balance sheet, your business is performing well and you get ahead on the liquidity front, if you see a competitor struggling … you could go out and do an acquisition,” Van Saun said. “And we have M&A bankers to cover them and offer them ideas and potentially intermediate.” The $38 billion-asset F.N.B. wasted no time putting its deposits to work, though it focused largely on lowering funding costs. Deposits increased by 15% from a quarter earlier, to $3.6 billion, reflecting the PPP and the company’s efforts to bring in other new clients. Transaction deposits, which rose by 20%, made up 85% of the Pittsburgh company’s total deposits on June 30.
Energy lenders brace for more losses – Banks with exposure to oil and gas firms are bracing for issues with their clients’ credit quality. Though energy lenders set aside millions of dollars in the first quarter to cover looming losses, many provided assurances that they were well equipped to handle an oil slump. But conditions have worsened as fallout from the coronavirus pandemic has intensified. Oil prices briefly went into negative territory in April, and natural gas prices hit a 25-year low in June. The Texas Department of Banking said in late March that it had increased its monitoring of banks with particularly heavy exposure to the oil and gas sectors. Eighteen exploration-and-production companies filed for bankruptcy protection in the second quarter, marking the busiest quarter for such filings since 2016, according to the law firm Haynes and Boone. And collateral values have been declining. Bankers will be pressed about the adequacy of reserves during second-quarter calls, industry observers said. They should expect more questions to focus on mitigation efforts and a deeper dive into geography and energy subsectors, as well as banks’ plans to reduce the size of energy portfolios over the rest of this year. Exposure “will undoubtedly result in negative credit migration and ultimately drive further reserve builds and net charge-offs nearer-term,” the research team at Raymond James warned in a recent note to clients. Bankers are also steeling themselves for more targeted questions. “We know there’s stress … and there’s going to continue to be stress” in the energy portfolio, Barbara Godin, chief credit officer at the $134 billion-asset Regions Financial in Birmingham, Ala., said during a conference in June. The downturn “is going to shake some players out, so all eyes are on that portfolio.” “Lower for longer remains” is the mantra for energy prices, so producers must gird for a long and difficult recovery, researchers for Haynes and Boone said in a recent report. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months.” Some banks have taken a proactive approach by reducing their exposure. Huntington Bancshares in Columbus, Ohio, said in June that it had sold about $100 million of oil-and-gas loans as part of a plan to reduce the size of energy portfolio. Richard Pohle, chief credit officer at the $114 billion-asset Huntington, said the company expects net charge-offs to remain elevated despite the sales. While oil prices have rebounded from negative territory to reach about $40 a barrel, they are still well below the $60 mark from January. Moreover, current levels are “not a sufficient clearing price for many heavily leveraged” producers to boost earnings and pay their loans, the Haynes and Boone team said.
Wells Fargo posts first quarterly loss since 2008 – Wells Fargo’s shares slumped after the company reported its first quarterly loss since 2008 as loan-loss provisions soared with the bank expecting a more severe downturn from the coronavirus pandemic. The firm set aside a record $9.5 billion for credit losses, about $4 billion more than analysts had expected. Wells Fargo executives had warned they would earmark more for soured loans than the first quarter’s $4 billion as the pandemic continues to rage throughout the U.S. and weigh on companies and workers. BloombergThe San Francisco-based lender also cut its dividend to 10 cents a share from 51 cents. Wells Fargo said last month it would lower the payout after the Federal Reserve implemented a new rule tying dividends to earnings. The bank’s $2.4 billion loss in the second quarter was a stark turnaround from the near-record $6.2 billion in profit it posted a year ago. “We are extremely disappointed in both our second-quarter results and our intent to reduce our dividend,” CEO Charlie Scharf said in a news release Tuesday. “Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter.” The bank’s shares fell 3.6% to $24.50 at 8:31 a.m. in early New York trading. They had declined 53% this year through Monday. Wells Fargo’s results show how bad the bank predicts things could get following a surge in unemployment and nationwide stay-at-home orders in the second quarter. Soured-loan provisions are spiking across the industry for the second straight quarter. The dividend cut to 10 cents was worse than the 20 cents that Bloomberg’s Dividend Forecast team had projected. One analyst, Erika Najarian at Bank of America Corp., warned Monday that Wells Fargo could eventually cut its dividend to zero. Noninterest expenses rose to $14.6 billion from $13.4 billion a year ago. Costs in the second quarter were boosted by $1.2 billion that the firm attributed primarily to customer remediation tied to scandals in recent years. It also reported $382 million in personnel, occupancy and technology expenses tied to COVID-19. Wells Fargo is under pressure to dramatically reduce costs and is planning thousands of job cuts to start this year, Bloomberg reported last week. The move has the potential to set a bleak precedent for an industry that’s been largely resisting mass layoffs during the pandemic.
Bank of America joins rivals in setting aside billions for bad loans – Bank of America’s profit slid 52% in the second quarter as the company joined rivals in preparing for an onslaught of consumer defaults spurred by the pandemic’s economic fallout. Profit at the consumer banking unit plunged 98% when compared with the same quarter last year as the coronavirus shuttered much of the U.S. economy and caused tens of millions of Americans to lose their jobs. The Charlotte, N.C., company allocated $5.1 billion for loan losses in the second quarter, the most since 2010. BloombergCalling it “the most tumultuous period since the Great Depression,” Chairman and CEO Brian Moynihan said in a statement that “strong capital markets results provided an important counterbalance to the COVID-19-related impacts on our consumer business.” With its 4,300 branches across the country, Bank of America is often seen as a bellwether for the U.S. consumer. Government stimulus measures and bank forbearance have kept some individuals and businesses afloat, but the largest U.S. lenders used the first full quarter with the pandemic to prepare for coming pain. JPMorgan Chase, Wells Fargo and Citigroup set aside almost $28 billion of credit-loss provisions when they reported results earlier this week, citing a deteriorating outlook. Shares of Bank of America slipped 2% to $24.10 at 6:58 a.m. in early New York trading. They had declined 30% this year through Wednesday. The bank joined other Wall Street firms in profiting from volatility in financial markets resulting from the pandemic. Fixed-income trading revenue beat forecasts in the second quarter, rising 50% to $3.2 billion, while investment banking fees jumped 57% to a record $2.2 billion. Net interest income fell 11% to $10.8 billion in the second quarter. On a fully taxable-equivalent basis, the figure was $11 billion, falling short of the $11.2 billion average estimate of 11 analysts in a Bloomberg survey. In the consumer business, the bank said it had processed about 1.8 million payment deferrals this year, of which 1.7 million were still in place as of July 9.
BankThink: No bank should be paying dividends right now – In the midst of one of the fastest and deepest economic declines in U.S. history, the largest banks are expected to pay out about $14 billion in dividends in the third quarter, while remaining under a cap imposed by the Federal Reserve in response to the coronavirus pandemic. This comes after the same banks paid out about $17.5 billion in the second quarter, according to an analysis using Bloomberg data. While the Fed did somewhat restrict shareholder payouts in late June, it has already missed an opportunity to require banks to conserve more than $30 billion in capital that could have proved invaluable if any of its recent economic stress scenarios pan out. Both the economic scenarios and policy on dividend payouts were included in the results of the 2020 stress test of the 33 largest banks. The results were not rosy. The Fed forecast $433 billion in loan losses through March 2022, under a scenario designed before the coronavirus lockdown. But in a rough sensitivity analysis that took the coronavirus into account, projected losses ballooned to $560 billion in a V-shaped economic recovery scenario; $680 billion in a W-shaped scenario; and $700 billion in a U-shaped scenario. Those would be heavy losses compared to the banks’ aggregate $1.2 trillion of capital. In the worst case, a quarter of banks would be near or below their regulatory minimums, although the Fed did not say which banks or how close they would be. The Fed admitted that its sensitivity analysis was not as robust as its typical stress test. So it took an unusual additional step: it is calling on banks to reassess their capital needs and resubmit capital plans later this year. Those plans could result in further dividend restrictions. Still, amid the extraordinary uncertainty that the coronavirus lockdown has induced, suspending dividends would seem an easy way to conserve capital right now. This is exactly the kind of situation for which these forward-looking stress tests are designed, in order to prevent another collapse of the financial system. 3Banks and fintechs need each other more than ever The Fed’s rule normally prohibits banks from proposed capital distributions while it is reviewing capital plans. But the Fed hasn’t prohibited dividends this time. Note that banks’ capital ratios were already elevated by an average of about 30 basis points in the first quarter because regulators allowed them to delay the capital impact of the new expected credit loss accounting framework. Regulators reasonably justified that forbearance by the need to promote lending during a crisis. But allowing banks to deplete capital through dividend payments seems counter to that purpose.
Credit union joins list of lenders selling PPP originations – A Nevada credit union has joined the ranks of lenders that have opted to sell their Paycheck Protection Program loans. Greater Nevada Credit Union in Carson City has sold “substantially all” of its $556 million PPP portfolio to Fountainhead Commercial Capital in Lake Mary, Fla., Fountainhead CEO Chris Hurn said Monday in an interview. The $1.1 billion-asset Greater Nevada did not disclose sale terms. The loan sale follows decisions by several community banks to sell their PPP portfolios or outsource the forgiveness process. The $5.3 billion-asset Bryn Mawr Bank in Pennsylvania said on June 29 that it had sold the lion’s share of its $300 million portfolio to The Loan Source, another nonbank small-business lender; the price was not disclosed. The $1.2 billion-asset Northeast Bank in Portland, Maine, said on June 26 that it had struck a deal with The Loan Source to sell its $458 million portfolio for $9.8 million. While the $18 billion-asset Atlantic Union Bankshares in Richmond, Va., is not selling its $1.7 billion-asset portfolio, it hired an outside company to handle its forgiveness workload after determining that it could not spare the personnel to do the job in-house. Recent data from the Small Business Administration shows credit unions issued 196,000 PPP loans, with an average loan size of just under $50,000. Credit unions accounted for 4% of the nearly 5 million in PPP loans on the books through June 30. Greater Nevada, which was one of the most active credit union PPP lenders, is very active in Department of Agriculture loans. As its USDA business picked up, the credit union feared its staff might struggle to simultaneously navigate the PPP forgiveness process. “We made a choice from a resource-allocation perspective,” CEO Wally Murray said in an interview. Forgiveness “is definitely a manpower issue,” Hurn said. “We’re dealing with it ourselves. We’re trying to pivot more people back to our traditional lines of business, as we continue making Paycheck Protection loans.” Through Tuesday afternoon, Fountainhead had originated 1,976 PPP loans for $288.3 million.
FSOC to look more closely at secondary mortgage market – The Financial Stability Oversight Council is launching a review of the secondary mortgage market as part of the council’s recent shift to an activities-based approach to identifying systemic risks. The FSOC – created by the Dodd-Frank Act to monitor the financial system for looming risks and currently chaired by Treasury Secretary Steven Mnuchin – finalized a a new process in December that moved emphasis away from designating “systemically important” nonbanks for tougher regulation. Instead, the council focuses on potentially risky activities in a certain sector across multiple institutions, and if necessary coordinates with FSOC members and other agencies to implement actions to address such risk. The panel still retains authority to designate individual firms as “systemically important financial institutions,” which subjects them to bank-like supervision from the Federal Reserve Board. Little detail was provided about the secondary mortgage market review, but it likely includes a focus on Fannie Mae and Freddie Mac. Federal Housing Finance Agency Director Mark Calabria – an FSOC member – has previously called on the council to weigh designating Fannie and Freddie as SIFIs. “I applaud Secretary Mnuchin and the Financial Stability Oversight Council for initiating an activities-based review of the secondary mortgage market,” said Calabria in a statement Tuesday. “As demonstrated by the 2008 financial crisis and again by COVID-19, Fannie Mae and Freddie Mac must be well capitalized in order to support the mortgage market during a stressed environment.” A SIFI designation comes with enhanced supervision from the Federal Reserve and supplementary regulatory requirements like stress tests and higher capital standards. After it was formed by the Dodd-Frank, the FSOC designated four insurance giants as nonbank SIFIs, but all four have since been de-designated.
MBA Survey: “Share of Mortgage Loans in Forbearance Decreases for Fourth Straight Week to 8.18%” 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 Decreases for Fourth Straight Week to 8.18% The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 21 basis points from 8.39% of servicers’ portfolio volume in the prior week to 8.18% as of July 5, 2020. According to MBA’s estimate, 4.1 million homeowners are in forbearance plans….”The share of loans in forbearance continues to decrease, as more workers are brought back from temporary layoffs. However, our survey reveals a notable shift in the location of many FHA and VA loans, which have been bought out of Ginnie Mae pools – predominantly by bank servicers – and moved onto bank balance sheets,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “As a result, there was a sharp drop in the share of Ginnie Mae loans in forbearance, and an offsetting increase in the share of portfolio loans in forbearance. These buyouts enable servicers to stop advancing principal and interest payments, and to work with borrowers in the hope that they can begin paying again before they are re-securitized into Ginnie Mae pools.”Added Fratantoni, “Forty-three percent of loans in forbearance are now in an extension following their initial forbearance term, while more than 10 percent of borrowers entered into a deferral plan to exit forbearance – down from 16 percent the week prior. For those exiting forbearance over the next several months, we expect to see many of the borrowers with GSE loans to utilize the deferral option.” This graph shows the percent of portfolio in forbearance by investor type over time. Most of the increase was in late March and early April. The MBA notes: “Weekly forbearance requests as a percent of servicing portfolio volume (#) increased to 0.13 percent from 0.12 percent the previous week.”
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Decline, Lowest Since May – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. From Loans in Forbearance Decline for Third Consecutive Week to Lowest Rate Since May at 4.12M: The latest data from the McDash Flash Forbearance Tracker shows that forbearance starts fell by 4% from last week. The number of loans in active forbearance declined for the 3rd consecutive week, falling by 27k from the previous week to 4.12M as of July 14th. An estimated 7.77% of all mortgages are now in active forbearance, down from 7.82% last week, marking the lowest such forbearance rate since peaking in late May. Together, they represent nearly $900 billion in unpaid principal. This week’s decline was driven almost entirely by a decrease in GSE related forbearances, which fell by 35k over the past week. We also observed a 2,000-loan decline in forbearances among portfolio held and private labeled security mortgages. FHA/VA loans saw a slight increase in forbearance volumes of +10k over the past 7 days. CR Note: There will be another disaster relief package soon (aka CARES II), but we might see an increase in forbearance activity if the package isn’t available by early August.
PNC sees steep decline in forbearance requests. Will it last- Even as banks continue to set aside billions of dollars for pandemic-related loan losses, they can take some comfort in the fact that fewer and fewer of their borrowers are seeking forbearance on monthly mortgage, car and other consumer loan payments. PNC Financial Services Group said Wednesday that weekly loan modification requests have declined by 97% since mid-April, when much of the country was in lockdown. U.S. Bancorp, meanwhile, said Wednesday that about 70% of its borrowers who skipped a payment or two during the early stages of the coronavirus pandemic have resumed making payments. The surprising health of the consumer is emerging as a theme early in this bank earnings season. On Tuesday, JPMorgan Chase revealed that requests for payment deferrals have declined by about 95% since their April peak, while Citigroup said that clients who were granted forbearance on their debt obligations have continued to meet them. Still, bankers acknowledge that the consumers’ finances have been propped up by loan forbearance and government stimulus efforts and that many loans could fall into delinquency or even default if virus cases continue to surge and economic activity is once again halted. That explains why five of the nation’s seven largest banks – JPMorgan, Citi, Wells Fargo, U.S. Bank and PNC – set aside a combined $32.1 billion for potential loan losses in the quarter that ended June 30. “There’s more we don’t know than we do,” PNC Chairman and CEO William Demchak said Wednesday, echoing comments by JPMorgan Chairman and CEO Jamie Dimon and Citigroup CEO Michael Corbat a day earlier. “It is really unclear what the long-term damage is going to be to the economy and how long it’s going to take to grow back,” Demchak added. For now, PNC executives believe that the $459 billion-asset company has adequate reserves to cover future loan losses, and analysts at Keefe, Bruyette & Woods said in a note to clients Wednesday that, based on what it’s seeing in banks’ earnings reports, it believes loan-loss provisions at major banks have likely peaked. “The worst of reserve builds are likely behind us,” KBW said. The $459 billion-asset PNC set aside $2.5 billion for loan losses in the second quarter, more than double the $914 million in the first quarter.
30-Year Mortgage Rate Reaches Lowest Level Ever: 2.98% – WSJ – In a year of financial firsts, this one stands out: Mortgage rates have fallen below the 3% mark. The average rate on a 30-year fixed mortgage fell to 2.98%, mortgage-finance giant Freddie Mac FMCC -1.40% said Thursday, its lowest level in almost 50 years of record keeping. It is the third consecutive week and the seventh time this year that rates on America’s most popular home loan have hit a fresh low. The coronavirus pandemic has upended markets around the world, sending stocks on a wild ride and yields on U.S. government debt to record lows, but its effect on the 30-year mortgage is especially significant. Consider its history: In the early 1980s, it peaked above 18% after the Federal Reserve raised rates to fight runaway inflation. Below 3% is a “tremendous benchmark,” said Jeff Tucker, an economist at Zillow Group Inc. “It’s also an indication that we remain in a crisis here.” The average rate on the 30-year mortgage stood at 3.72% at the beginning of the year and 3.81% a year ago, according to Freddie Mac. Mortgage rates tend to move in the same direction as the yield on the 10-year Treasury note. Yields fall as prices rise when nervous investors buy up safe-haven assets like bonds when the economic forecast is darkening. The spread between the yield on the 10-year Treasury and rate on the 30-year mortgage has narrowed in recent weeks, largely because lenders had spare capacity to process applications after clearing a backlog of refinancings. Still, the larger-than-usual gap means there is room for rates to fall even farther, Mr. Tucker said. Not all mortgage rates have declined at the same pace. Interest rates on jumbo home loans, those too large to sell to Freddie Mac or Fannie Mae, have fallen to around 3.77% from 3.84% at the beginning of the year. From the middle of 2015 to this March, jumbo rates were consistently lower than or equal to the rates on so-called conforming loans, according to Bankrate.com. Earlier this year, some lenders placed new restrictions on these larger loans – in most markets, loans of more than $510,400 – after the investors who typically buy them soured on loans without government backing. Low mortgage rates typically boost home sales, but they did little to ease the pandemic’s impact on the housing market this spring. Existing-home sales fell 9.7% in May from the month prior and 17.8% in April, according to the National Association of Realtors. “On the surface, low rates look great,”. “But when you get into the details there are other factors affecting whether people are able to purchase homes.” A home purchase is out of the question for many of the millions of Americans who have lost their jobs in recent months. And fears that recurrent coronavirus outbreaks will lead to a protracted downturn could also keep some with the means to buy from committing to big purchases.
NMHC: Rent Payment Tracker Finds Decline in People Paying Rent in July -Without further disaster relief, there will a significant housing and financial issue.From the NMHC: NMHC Rent Payment Tracker Finds 87.6 Percent of Apartment Households Paid Rent as of July 13The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 87.6 percent of apartment households made a full or partial rent payment by July 13 in its survey of 11.4 million units of professionally managed apartment units across the country.This is a 2.5-percentage point decrease from the share who paid rent through July 13, 2019 and compares to 89.0 percent that had paid by June 13, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price. “The government support, including unemployment benefits, that has proven so important to so many apartment residents expires at the end of the month,” said Doug Bibby, NMHC President. “Lawmakers need to continue to protect the individuals and families that call an apartment home. If action isn’t taken now we risk making the nation’s housing affordability challenges far worse, rolling back the initial economic recovery and putting tens of millions at risk of greater health and financial distress.”
Eviction Looms for Millions of Americans Who Can’t Afford Rent – WSJ – Millions of Americans who have missed rent payments due to the coronavirus pandemic could be at risk of being evicted in the coming months unless government measures to protect them are extended, economists and housing experts say. Nearly 12 million adults live in households that missed their last rent payment, and 23 million have little or no confidence in their ability to make the next one, according to weekly Census Bureau data. About a third of the country’s renters are protected by an eviction moratorium that covers properties with federally insured mortgages. That expires July 25. Many renters are jobless and depend on supplemental weekly unemployment benefits of $600 that are due to end on July 31.A number of cities and states have broader protections that will remain in place longer. Boston has banned evictions from public housing through the end of the year. Pennsylvania recently extended its moratorium against evictions for nonpayment of rent until Aug. 31. The White House is negotiating with Republicans and Democrats in Congress to pass another round of economic relief during the last week of July. Treasury Secretary Steven Mnuchin has said supplemental jobless benefits have created a disincentive to return to work as the economy starts to reopen and should be reduced. House Democrats voted in May to expand the eviction moratorium to cover all residential dwellings and extend it by a year. The bill included an extension of enhanced jobless benefits and $100 billion in rental assistance. The office of Sen. Mike Crapo (R., Idaho), chairman of the Senate Committee on Banking, Housing and Urban Affairs, declined to comment on any GOP plan to keep people in their homes because negotiations are under way. Paying rent is a struggle for Americans whose jobs evaporated when government-imposed lockdowns closed businesses ranging from barber shops and restaurants to stores and fitness centers. More than 18 million people were receiving unemployment insurance during the last week of June.Should the federal government extend measures to protect renters and support incomes? Why or why not? Join the conversation below.“They all had jobs, and they had economically viable jobs, but we told them they couldn’t work – to protect us – and now we’re going to kick them out of their houses,” said Shamus Roller, executive director of the National Housing Law Project.Depending on the jurisdiction, landlords must give notice if they plan to evict tenants, often 30 days in advance. Housing experts say some landlords are willing to offer flexibility to tenants in financial distress, given the difficulty of f inding new tenants in a downturn, and about 1.5 million adults had their last rent payment deferred, according to census data. But such help isn’t always available.
“Tsunami” Of Evictions Could Make 28 Million Americans Homeless This Summer Alone – With the pandemic continuing to sink its claws into the United States, economic conditions have also failed to improve for millions of people. As a result, nearly one-third U.S. households – representing 32 percent – have still not made their full housing payments for the month of July, according to a survey from online rental platform Apartment List. And with public health experts warning people to continue to “Stay at Home,” the slogan is taking on a perverse new meaning as humanitarian disaster looms for some 28 million people in the U.S. who are facing eviction and homelessness in the immediate future.About 19 percent of those surveyed were unable to make any housing payment in the first week of the month, while 13 percent paid a portion of their rent or mortgage.The numbers represent the grim fact that for four months now, a “historically high” amount of U.S. households have been unable to pay their housing bill, either on time or in full. It also represents an increase from 30 percent in June and 31 percent in June.According to Apartment List, those most likely to miss their payments were younger, low-income, or renters. Other experts warn that Black and Latino families face the highest risk of eviction. They also may be entering the start of a rapid and vicious cycle, the report suggests.“Delayed payments in one month are a strong predictor for missed payments in the next,” Apartment List says. Indeed, 83 percent of households who paid the entirety of their May housing costs in a timely way did the same in June, but only 30 percent of households who were late in May did so in June.As the economic crisis continues to spiral unabated, tens of millions of Americans continue to survive on unemployment while their economic stimulus checks have long been gone.“The economic fallout from the pandemic does not appear on track for the quick V-shaped recovery that many had originally hoped for,” Apartment List notes. And with unemployment benefits expiring while eviction bans and moratoriums that deferred rent payments are being lifted by local governments, experts and advocates are warning that we could see a tsunami of mass evictions across the country that exceeds anything ever seen.
Millennial Renters Abandon Their Plans To Buy A Home – Many renters who were in the market to buy a home pre-Covid just threw in the towel. A lifestyle survey shows millennials top the list of those canceling home-buying plans.At the start of 2020, 11% of renters said they were ready and planning to buy a home this year, according to a recent survey conducted on RENTCafe.com. Conditions were looking up for Gen X renters, 15% of whom were making plans to buy a home this year, as well as for 14% of Older Millennials. However, the pandemic has obstructed the path to homeownership for 43% of renters ready to buy, our survey results revealedThe survey, which ran at the end of May 2020, asked 7,000 renters about their housing plans before and after the coronavirus hit. One in Ten Renters Were Ready to Buy a Home: 43% of prospective home buyers who said they changed their plans quoted economic uncertainty as the top reason for doing so, followed by loss of income as the second most cited reason. Given the unprecedented times we’re living in, even the few renters who were determined to make the commitment to buy a home this year are now getting cold feet. Moreover, as many as 50% of Older Millennials, the most likely demographic to become homeowners, were forced by the pandemic to let go of their dream.
Housing Starts increased to 1.186 Million Annual Rate in June From the Census Bureau: Permits, Starts and Completions– Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,186,000. This is 17.3 percent above the revised May estimate of 1,011,000, but is 4.0 percent below the June 2019 rate of 1,235,000. Single-family housing starts in June were at a rate of 831,000; this is 17.2 percent above the revised May figure of 709,000. The June rate for units in buildings with five units or more was 350,000. Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,241,000. This is 2.1 percent above the revised May rate of 1,216,000, but is 2.5 percent below the June 2019 rate of 1,273,000. Single-family authorizations in June were at a rate of 834,000; this is 11.8 percent above the revised May figure of 746,000. Authorizations of units in buildings with five units or more were at a rate of 368,000 in June. The first graph shows single and multi-family housing starts for the last several years.Multi-family starts (red, 2+ units) were up in June compared to May. Multi-family starts were down 4.1% year-over-year in June. Single-family starts (blue) increased in June, and were down 3.9% year-over-year. The second graph shows total and single unit starts since 1968.The second graph shows the huge collapse following the housing bubble, and then eventual recovery (but still historically low).Total housing starts in June were at expectations, and starts in May were revised up. Residential construction is considered an essential business, and held up better than some other sectors of the economy, but was still negatively impacted by COVID-19.
NAHB: Builder Confidence Increased to 72 in July — The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 72, up from 58 in June. Any number above 50 indicates that more builders view sales conditions as good than poor. From NAHB: Builder Confidence Rallies to Pre-Pandemic Level in July In a strong signal that the housing market is ready to lead a post-COVID economic recovery, builder confidence in the market for newly-built single-family homes jumped 14 points to 72 in July, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. The HMI now stands at the solid pre-pandemic reading in March before the outbreak affected much of the nation.”Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said NAHB Chairman Chuck Fowke. “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.””While the housing market is clearly rebounding, challenges exist,” said NAHB Chief Economist Robert Dietz. “Lumber prices are at a two-year high and builders are reporting rising costs for other building materials while lot and skilled labor availability issues persist. Nonetheless, the important story of the changing geography of housing demand is benefiting new construction. New home demand is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead. Flight to the suburbs is real.”
Leading Index for Commercial Real Estate Decreased Further in June — From Dodge Data Analytics: Dodge Momentum Index Loses Ground in June:The Dodge Momentum Index dropped 6.6% in June to 121.5 (2000=100) from the revised May reading of 130.1. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The institutional component of the Momentum Index fell 11.7% while the commercial component declined by 3.5%. The Momentum Index has shifted noticeably lower as the fallout from recession continues to hold its grip on the construction sector. The overall Momentum Index fell 13% in the second quarter from the first three months of the year, with the commercial component 14% lower and the institutional component down 11%. While the recession has ended and recovery underway, the return from one of the steepest downturns in U.S. history will be slow and fraught with risk. This holds true for the construction sector as well. While projects continue to enter planning, the slower pace suggests that recovery in the construction sector will be modest in coming months. This graph shows the Dodge Momentum Index since 2002. The index was at 121.5 in June, down from 130.1 in May. According to Dodge, this index leads “construction spending for nonresidential buildings by a full year”. This suggests a decline in Commercial Real Estate construction in 2020 and early 2021.
Hotels: Occupancy Rate Declined 38% Year-over-year From HotelNewsNow.com: STR: US hotel results for week ending 11 July: U.S. hotel performance data for the week ending 11 July showed mostly flat occupancy and lower room rates from the previous week, according to STR.
5-11 July 2020 (percentage change from comparable week in 2019):
Occupancy: 45.9% (-38.0%)
Average daily rate (ADR): US$97.33 (-26.8%)
Revenue per available room (RevPAR): US$44.67 (-54.6%)
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The occupancy rate for the last four weeks was 43.9%, 46.2%, 45.6% and 45.9%. Flattening out well below the median for this week of 75%. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels). Usually hotel occupancy starts to pick up seasonally in early June. So some of the recent pickup might be seasonal (summer travel). Note that summer occupancy usually peaks at the end of July or in early August.According to STR, the improvement appears related mostly to leisure travel as opposed to business travel.
More than 5,100 stores are closing in 2020 as the retail apocalypse drags on. Here’s the full list. -Retailers are expected to close more than 5,500 stores this year, following record-high rates of closings last year.More than 9,300 store closings were announced in the US in 2019, smashing the previous record of roughly 8,000 store closures in 2017, according to an analysis by Business Insider.The number of store closings this year could be even higher than previous records, according to estimates from the real estate firm Cushman & Wakefield. The firm estimated last year – prior to the coronavirus pandemic – that as many as 12,000 major chain stores could close in 2020. The pandemic is now putting even more stores in danger of closing, as retailers grapple with dramatic drops in sales in traffic.Retail companies have so far confirmed at least 5,500 stores slated for closure in 2020, according to a Business Insider analysis. Here’s a list of the stores expected to close this year.
Retail Sales increased 7.5% in June –On a monthly basis, retail sales increased 7.5 percent from May to June (seasonally adjusted), and sales were up 1.1 percent from June 2019. From the Census Bureau report: Advance estimates of U.S. retail and food services sales for June 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $524.3 billion, an increase of 7.5 percent from the previous month, and 1.1 percent above June 2019. Total sales for the April 2020 through June 2020 period were down 8.1 percent from the same period a year ago. The April 2020 to May 2020 percent change was revised from up 17.7 percent to up 18.2 percent. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).Retail sales ex-gasoline were up 7.0% in June. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 2.7% on a YoY basis.The increase in June was above expectations, and sales in April and May were revised up.
Consumer Appetite for Cars, Homes Bolsters U.S. Economy – WSJ – Consumers have continued spending on big-ticket items such as vehicles and homes during the coronavirus pandemic, helping support the U.S. economy as it battles a surge in cases and renewed business shutdowns. Historically low interest rates are luring in auto and home buyers, many of whom have higher incomes and firmer job security than low-wage, service-sector workers hardest-hit during the recession, economists and industry experts say. “Looking at the car sales, looking at the retail activity, looking at the housing data, it has been pointing to a really bigger recovery story,” said James Knightley, an economist at ING Groep NV. “If you’ve got a job and feel pretty secure and you see your equity holdings rise in value, you’re probably still feeling pretty good.” Mr. Knightley said the big-ticket purchases could weaken if the rise in coronavirus infections and dialed-back state reopenings significantly dampen employment and consumers’ ability to spend. Incomes also could take a hit if the federal government doesn’t continue providing expanded unemployment benefits to the millions of people still out of work because of the crisis, he added. Analysts and economists are paying close attention to monthly retail sales numbers as a way to gauge how the economy may be recovering from the impact of the coronavirus pandemic. Photo: Kathy Willens/Associated Press. Congress is debating whether to extend an extra $600 a week in unemployment benefits provided by the federal stimulus enacted in the spring. The aid is scheduled to expire at the end of July. Solid spending on durable goods – typically more expensive products designed to last more than three years – differs from previous downturns, when consumers sharply pulled back on these larger purchases while continuing to spend at service-sector businesses, according to findings from a Harvard-based nonprofit research group. Spending on long-lasting, durable goods accounts for about 7% of gross domestic product. Outlays at service-sector businesses comprise a much larger share of economic output and were the hardest-hit businesses by the pandemic. Growth in services will need to rise much more for the U.S. to achieve a full economic recovery. In May, consumers increased their spending on services by 5.4%. A Commerce Department report due out Thursday on retail spending, which covers spending on autos but not houses, is expected to show a June increase of 5.2%, according to a Wall Street Journal survey of economists.
Unemployed Americans Spent More With $600 Weekly Boost Than Before Pandemic; That’s About To Go Away – At the end of this month, millions of unemployed Americans are set to lose their $600-per-week federal unemployment boost on top of their standard benefit. The program, part of the CARES Act, constituted a good portion of the $108.5 billion the US Treasury paid towards unemployment benefits in June. And according to a new study released Thursday, Americans who received enhanced unemployment benefits spent roughly 10% more than when they were working, according to Reuters. This of course makes sense, as some 63% of jobless workers making more on unemployment than when they were working.Researchers analyzed transactions for 61,000 households that received unemployment benefits between March and May. Spending dropped for all households as the virus spread and led to business shutdowns, but then rose when households began receiving jobless benefits, the study found.That contrasts with a typical recession, when households receiving unemployment benefits usually cut spending by 7% because regular jobless benefits amount to only a fraction of a person’s prior earnings, the research found. – Reuters “Some folks are getting unemployment benefits that are larger than what they were getting paid [at] their previous jobs. That really potentially creates some wealth disincentive effects,” said Harvard Economics professor Raj Chetty earlier this month at an event sponsored by the left-leaning Center on Budget and Policy Priorities.
Kroger Stops Giving Customers Change As Nationwide Coin Shortage Worsens – Due to an ongoing, and in some respect, a worsening nationwide coin shortage, The Kroger Company has stopped returning coins to cash-paying customers. At the same time, remainders can be donated to a charity or transferred to the customers’ loyalty cards, reported NewsChannel 5 Nashville WTVF. Kroger officials said, “at Kroger, we are implementing several creative solutions to minimize the impact to our customers…We know this is an inconvenience for our customers, and we appreciate their patience. The Treasury Department expects the shortage to diminish as more regions of the country reopen.” Dayton Daily News, a sister publication of The Atlanta Journal-Constitution, spoke with Kroger spokeswoman Erin Rolfes who said the Federal Reserve is experiencing a coin shortage. Last month, the Federal Reserve warned coin disruptions were coming due to the COVID-19 pandemic and shutdown of the economy. Here’s an excerpt of the warning: “The COVID-19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin.“In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly, and the U.S. Mint’s production of the coin also decreased due to measures put in place to protect its employees.”
U.S. June Consumer Prices Rose Sharply as Reopenings Prompted More Buying – WSJ – U.S. consumer prices rose sharply in June while states were broadening efforts to reopen, with costs snapping back for products and services that were hit hard by the coronavirus pandemic. The consumer-price index – which measures what Americans pay for everyday items including groceries, clothing and shelter – rose 0.6% in June, the Labor Department said Tuesday. The index had fallen in each of the previous three months, with particularly sharp declines during the earlier part of the pandemic in March and April. “June represented the beginning of a return to normal for prices, as most of the categories that had been depressed by the COVID lockdowns rebounded once the economy started to recover in earnest,” said Stephen Stanley, chief economist at Amherst Pierpont, in a note to clients, referring to the illness caused by the coronavirus. The longer trend showed inflationary pressures remained modest. Prices overall rose 0.6% in June from the same month in 2019, compared with a 0.1% year-over-year increase in May. So-called core prices, which exclude the often-volatile categories of food and energy, increased 1.2% over the year, unchanged from the increase the previous month. Apparel prices increased 1.7% in June, after three previous months of steep declines, as bricks-and-mortar retail stores reopened. Prices for medical-care services, airline fares and hotel stays all rose sharply over the month, reflecting greater activity in doctors’ offices and in the hard-hit travel and hospitality sectors. Gasoline prices, which rose 12.3% last month, also drove the gains and accounted for more than half of the monthly increase in overall prices, according to the Labor Department. Core prices rose 0.2% in June, compared with a 0.1% decline in May. Tuesday’s report also showed another strong increase in grocery prices, albeit at a lower level than in the previous two months. The cost of groceries rose 0.7% last month, after a 2.6% and 1% monthly rise in April and May, respectively. Grocery stores have seen strong demand, as consumers stayed home and restaurants limited capacity or closed in response to the pandemic. Prices for dining out also rose in June, by 0.5%, the biggest monthly gain so far in 2020. Gus Faucher, chief economist at PNC Financial Services, said the gain in overall prices last month should ease deflation fears stoked by a steep drop-off in consumer demand as the pandemic’s effects first rippled through the U.S. economy. Deflation is “one less thing to worry about and it’s indicative of the fact that demand has picked up and businesses have the ability to raise prices a little bit,” Mr. Faucher said. Still, the outlook for prices and the broader economic recovery is clouded by a recent jump in coronavirus cases, which has caused some states to reimplement restrictions. California, for instance, on Monday banned indoor activities at restaurants, bars, museums and movie theaters. “Obviously, if we see more widespread closures, that’s going to reduce demand for goods and services throughout the economy and that could lead to a return in price declines,” Mr. Faucher said, adding downward pressure on prices was likely to be isolated to specific industries and geographic areas.
Cleveland Fed: Key Measures Show Inflation Soft Year-over-year in June –The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning: According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.1% June. The 16% trimmed-mean Consumer Price Index rose 0.2% in June. “The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report”. Note: The Cleveland Fed released the median CPI details for June here. Motor fuel increased at a 290% annualized rate in June!This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.6%, the trimmed-mean CPI rose 2.3%, and the CPI less food and energy rose 1.2%. Core PCE is for May and increased 1.0% year-over-year. Inflation will not be a concern during the crisis.
A Pandemic and Surging Summer Heat Leave Thousands Struggling to Pay Utility Bills – Leticia Garcia cleans schools for a living and, with her hours sharply reduced, found herself at home with her two daughters. She cut their cell phone service to keep the water, gas and electricity on. “It’s a lot when your hours are reduced, but there are certain things you just can’t cut back on,” she said through a translator about her utility expenses. Garcia is among thousands of people across the country struggling to pay rising and accumulating utility bills as they deal with the ongoing economic fallout of Covid-19 during a summer forecast to be hotter than usual in much of the country. This week meteorologists are predicting temperatures over 100 degrees and widespread dry conditions for the middle of the country that could last into August. A blanket of heat is expected to stretch from California to parts of the Northeast that could ramp up electricity demand and strain the grid. It is a situation that energy policy experts fear will become increasingly common. Rising temperatures and extreme weather due to climate change are predicted to exacerbate energy insecurity and further the need for expanding energy assistance programs. The coronavirus will likely compound both discomfort and financial distress during the heatwave, as many public places where people typically seek air conditioning are closed to prevent the spread of the virus. Even in states that have imposed moratoriums on utility shut-offs during the pandemic, advocates fear the coronavirus could heighten energy insecurity. With pauses on utility shut-offs beginning to lapse in some states, advocates have begun calling for longer-term consumer protections. “We are seeing an unprecedented number of people asking for help,” said Denise Stepto, chief communications officer at Energy Outreach Colorado, a Denver-based nonprofit that helps residents afford their home energy. “It’s also a big issue for people who have recently fallen into unemployment, because they don’t know how to navigate this situation.”
Study Finds Up to 10% Permanent Drop in US Miles Driven — Working from home and online shopping have become the new normal and that will reduce driving in the U.S. by up to 270 billion miles a year, according to new study. The research conducted by consultant KPMG International finds the cocoon culture Covid-19 has created is not going away — even if a vaccine is made widely available — and that will have potentially dire consequences for the auto industry. For starters, the decline in commuting will remove 14 million cars from U.S. roads, KPMG forecasts. During the height of the pandemic in April, Americans sheltering at home drove 64% fewer miles, an unprecedented decline in travel. Those new habits will die hard, with KPMG predicting as much as a 10% permanent reduction in the nearly 3 trillion miles typically traveled every year and vehicle ownership declining to slightly less than two-cars per household. “People buy a car to get to and from work and because shopping is a very important part of their lives,” Gary Silberg, head of KPMG’s global automotive practice, said in an interview. “If two of the primary missions that the American public buys a car for are going to reduce in demand, we know that’s going to have an adverse impact on auto sales. It’s just like gravity.” The change in habits could result in roughly 1 million fewer sales of new cars and trucks annually, Silberg said. Americans have purchased more than 17 million cars, sport-utility vehicles and light trucks annually for the last five years. The National Automobile Dealers Association expects U.S. auto sales to plunge as low as 13 million this year due to the pandemic’s chill on the economy. As the industry works its way out of the hole created by the shutdown, the potential loss of 1 million sales a year will loom large. “People will fight very seriously for a million vehicles, especially if sales drop,” Silberg said. With fewer miles driven and fewer cars on the road, that also means dealers and mechanics will have less money coming in from repairs and other after-market services aimed at keeping cars running. “This is terrible news for the after-market, where a lot of profits are being made,” Silberg said. “Fewer cars driving fewer miles means less wear and tear. These will lead to profound changes.” The upside of these changes is that the market for delivery vehicles is booming thanks to the surge in online shopping. Automakers are already capitalizing on that shift, with Ford Motor Co. and Volkswagen AG joining forces to develop commercial, self-driving and electric vehicles, including delivery vans. Startups such as electric-truck maker Rivian Automotive also are getting in the growing commercial market, with a contract to provide 100,000 delivery vehicles to Amazon Inc.
U.S. Industrial Production Picked Up Again in June – WSJ -U.S. manufacturing increased in June for the second straight month, a sign of economic recovery in the weeks before the recent surge in coronavirus cases. Industrial production – a measure of output at factories, mines and utilities – rose a seasonally adjusted 5.4% in June from May, the Federal Reserve said Wednesday. That was a bigger increase than the 4% rise anticipated by economists surveyed by The Wall Street Journal. The index for May was unrevised at 1.4% while the index for April was revised down to a 12.7% drop from a 12.5% drop. As U.S. factories reopened in May and June, they helped drive a recovery from April’s record decline. Still, despite the recent gains, the index for the second quarter as a whole fell at an annual rate of 42.6%, the largest quarterly decrease since World War II. A separate Fed report said economic activity increased this summer, but remained well below levels seen before the pandemic. The Fed’s beige book, which compiles business anecdotes from around the country, said employers increased hiring across the country as many businesses reopened. Still, many companies reported new layoffs and said it was difficult to rehire workers given health and safety concerns, child-care needs and expanded unemployment benefits that exceed normal pay for some workers. Some businesses were concerned the pace of recovery wouldn’t continue if the coronavirus wasn’t contained. In the Cleveland Fed district, more firms cut worker pay, particularly for higher-salaried employees, than in the last beige book’s reporting window. The pace of economic recovery in St. Louis had slowed since mid-June. “One staffing contact reported small firms were ‘decimated,’ estimating that 5% of their small clients had filed for bankruptcy and expecting up to 25% to do so by the end of the year,” the report said
Industrial Production Increased 5.4 Percent in June; Still 10.8% Below Pre-Crisis Level –From the Fed: Industrial Production and Capacity Utilization Total industrial production rose 5.4 percent in June after increasing 1.4 percent in May; even so, it remained 10.9 percent below its pre-pandemic February level. For the second quarter as a whole, the index fell 42.6 percent at an annual rate, its largest quarterly decrease since the industrial sector retrenched after World War II. Manufacturing output climbed 7.2 percent in June, as all major industries posted increases. The largest gain – 105.0 percent – was registered by motor vehicles and parts, while factory production elsewhere rose 3.9 percent. Mining production fell 2.9 percent, and the output of utilities increased 4.2 percent. At 97.5 percent of its 2012 average, the level of total industrial production was 10.8 percent lower in June than it was a year earlier. Capacity utilization for the industrial sector increased 3.5 percentage points to 68.6 percent in June, a rate that is 11.2 percentage points below its long-run (1972 – 2019) average but 1.9 percentage points above its trough during the Great Recession. . This graph shows Capacity Utilization. This series is up slightly from the record low set last month, and still below the trough of the Great Recession (the series starts in 1967). Capacity utilization at 68.6% is 11.2% below the average from 1972 to 2017. Note: y-axis doesn’t start at zero to better show the change. Industrial ProductionThe second graph shows industrial production since 1967. Industrial production increased in June to 97.5. This is 10.8% below the February 2020 level. The change in industrial production was slightly above consensus expectations.
Cargo Declines at Port of Long Beach in June -The COVID-19 pandemic continued to drive down demand for goods in the second quarter of 2020, leading to an increase in canceled sailings and a decline in cargo containers shipped through the Port of Long Beach in June.Dockworkers and terminal operators moved 602,180 twenty-foot equivalent units (TEUs) last month, an 11.1% decline compared to June 2019. Imports shrank 9.3% to 300,714 TEUs and exports dropped 12.2% to 117,538 TEUs. Empty containers shipped overseas to Asia were down 13.1% to 183,928 TEUs.Economic uncertainty brought by decreased consumer spending and ongoing health concerns amid the COVID-19 epidemic contributed to a drop during the first half of 2020, with cargo shipments at 3,433,035 TEUs, 6.9% less than the same period last year.”Canceled sailings continued to rise at a rapid rate in the second quarter as ocean carriers adjusted their voyages to a decline in demand for imports during the national COVID-19 outbreak,” said Mario Cordero, Executive Director of the Port of Long Beach. “The economic challenges may persist for some time, but the Port of Long Beach continues to invest in infrastructure projects that will meet the needs of our customers.” The San Pedro Bay ports complex – Long Beach and L.A. combined – had 41 canceled sailings in the first half of 2019. This year it was 104 – 37 of which were destined for the Port of Long Beach.
LA area Port Traffic Down Year-over-year in June –Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average. On a rolling 12 month basis, inbound traffic was down 0.7% in June compared to the rolling 12 months ending in May. Outbound traffic was down 1.5% compared to the rolling 12 months ending the previous month.The 2nd graph is the monthly data (with a strong seasonal pattern for imports). Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year (January 25th in 2020). Because of the timing of the New Year, we would have expected traffic to decline in February without an impact from COVID-19, but bounce back in March and April. Imports were down 8% YoY in June, and exports were down 17% YoY. In general imports both imports and exports have turned down recently YoY.
Bar Harbor Closes its Port to Cruise Ships for 2020 – The town council for Bar Harbor, Maine has decided to ban further cruise ship calls through the end of 2020 due to the continued risk of COVID-19, extending a local moratorium that expired July 1. Large cruise operators have already shut down North American cruising through mid-September, so the order will have no effect on mega-vessels. However, one small-ship company – American Cruise Lines – had proposed to restart its operations and call in Bar Harbor beginning in July. American’s vessels are small enough that they are not covered by the U.S. Centers for Disease Control “no sail” order on large cruise ships, and the line has been hoping to restart its operations in New England. In a council meeting Tuesday night, the town’s leaders conveyed residents’ concerns about the resumption of cruise ship arrivals, and some suggested that the port calls could hurt public perception of Bar Harbor’s overall COVID-19 safety. “I don’t think the risk is worth the reward,” said Bar Harbor Councilor Matt Hochman, speaking to the Bangor Daily News. “I don’t think 2020 is the year for it.” American Cruise Lines’ success in carrying out a summer restart has been limited in other markets: it has suspended scheduled river cruises on the Mississippi for the month of July, and its Columbia River sailings have been deferred due to state-level restrictions. On Tuesday, American Cruise Lines also canceled its 2020 season in Southeast Alaska “because the recent spike in [coronavirus] cases around the country has renewed concerns and poses potential complications.” Town councils in the destination ports of Haines and Skagway previously voted against accepting a port call for the firm’s first Alaska sailing of the year. Likewise, the Alaska Municipal League – the association representing Alaska’s local governments – had recommended “a moratorium on small ship cruising until mutually agreed-upon protocols can be finalized between the industry and the communities.”
American Airlines warns 25,000 employees of potential job cuts amid pandemic – American Airlines warned employees on Wednesday that it could slash up to 25,000 jobs in the fall as the airline industry continues its financial tailspin amid the coronavirus pandemic. Under the CARES Act, U.S. airline companies received significant financial aid so that they could meet their payroll obligations through the summer. As a result, airlines are prohibited from firing or laying off any of their employees through the end of September. However, in its memo to employees, American Airlines signaled that cuts could begin Oct. 1. “Today, we will begin issuing Worker Adjustment and Retraining Notification (WARN) letters to our unions and represented team members in some states,” CEO Doug Parker and President Robert Isom wrote. “We hate taking this step, as we know the impact it has on our hardworking team members. From the time the CARES Act was signed in March, we had a stated goal of avoiding furloughs because we believed demand for air travel would steadily rebound by Oct. 1 as the impact of COVID-19 dissipated. That unfortunately has not been the case.” They added: “Our passenger revenues in June, while we believe are better than others in the industry, were more than 80% lower than June 2019. And with infection rates increasing and several states reestablishing quarantine restrictions, demand for air travel is slowing again.” In an effort to limit the number of furloughs that will take place come October, the pair of executives said that the company was introducing “enhanced leave and early-out programs.” Parker and Isom also noted proposed legislation in Congress that would extend the Payroll Support Program an additional six months. “As currently proposed, the effect of this legislation would be to delay any involuntary furloughs until March 31, 2021, at which point there would most certainly be more demand for air travel, and along with that demand, much less need for involuntary furloughs throughout the industry,” they explained. The memo also provided a breakdown of how different sub-sects of employees would be affected; the company’s flight attendants received the most WARN notices at 9,950 – 37 percent of the company’s flight attendants.
Weekly Initial Unemployment Claims decrease to 1,300,000 — The DOL reported: In the week ending July 11, the advance figure for seasonally adjusted initial claims was 1,300,000, a decrease of 10,000 from the previous week’s revised level. The previous week’s level was revised down by 4,000 from 1,314,000 to 1,310,000. The 4-week moving average was 1,375,000, a decrease of 60,000 from the previous week’s revised average. The previous week’s average was revised down by 2,250 from 1,437,250 to 1,435,000. The previous week was revised down. This does not include the 928,488 initial claims for Pandemic Unemployment Assistance (PUA).The following graph shows the 4-week moving average of weekly claims since 1971.
Comments on Weekly Unemployment Claims – Bill McBride – On a monthly basis, most analysts focus on initial unemployment claims for the BLS reference week of the employment report. For July, the BLS reference week will be July 12th through the 18th, and initial claims for that week will be released next week, on Thursday, July 23rd. Note that a couple of states have not released Pandemic Unemployment Assistance (PUA) claims this week, so the number of PUA claims is too low. However, there may also be processing delays that are impacting the numbers.Note: The seasonal adjustment is likely off this year due to the pandemic. If we look at initial claims Not Seasonally Adjusted (NSA), claims increased sharply this week to 1,503,892 from 1,395,081 the previous week. That could be more representative of what is actually happening. However, continued claims are down 7.6 million from the peak, suggesting a large number of people have returned to their jobs (as the employment report showed). The following graph shows regular initial unemployment claims (blue) and PUA claims (red) since early February. This was the 17th consecutive week with extraordinarily high initial claims. It is possible that we are starting to see some layoffs associated with the end of some early Payroll Protection Plan (PPP) participants. We should start seeing layoffs associated with the rising COVID cases and hospitalization in some states (like Arizona, California, Florida and Texas). With bar and restaurant closings in some areas, we will probably see more initial claims in those states this week, and that will show up in the report in the coming weeks. Note that these states don’t have to lockdown to see a decline in economic activity. As Merrill Lynch economists noted: “Most of the slowdown occurred due to voluntary social distancing rather than lockdown policies.”
BLS: June Unemployment rates down in 42 states; 3 States at New Record Highs –From the BLS: Regional and State Employment and Unemployment Summary: Unemployment rates were lower in June in 42 states, higher in 5 states, and stable in 3 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Forty-nine states and the District had jobless rate increases from a year earlier, while one state had no change. The national unemployment rate declined by 2.2 percentage points over the month to 11.1 percent but was 7.4 points higher than in June 2019….Massachusetts had the highest unemployment rate in June, 17.4 percent, followed by New Jersey, 16.6 percent, and New York, 15.7 percent. The rates in these three states set new series highs. (All state series begin in 1976.) Kentucky had the lowest unemployment rate, 4.3 percent.This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 1976. Currently 20 states are above 10% unemployment rate. Four states are above 15%. Note that the three states setting new highs were still in lockdown (the states that were hit hard by the virus early). State UnemploymentThe second graph compares the unemployment rate in two lockdown states (New York and New Jersey), and two early open states (Florida and Texas). It seems likely the recent surge in COVID-19 cases in Florida and Texas will lead to higher unemployment rates in those states.
Covid-19 Bankruptcies Bleeding Out Jobs, Economic Capacity -Yves Smith – Even though quite a few American are confessing to having Covid-19 fatigue, there’s no escaping the ongoing damage to the economy, like bleeding out of a major artery. Commercial tenants, particularly of retail space and office space, are either not paying or are pushing their landlords to give a major rent reduction. Upscale business hotels remain closed in major cities. I am told there are lots of moving vans in New York City, and they aren’t for move ins. Restaurants are trying to figure out how to get by. Operators that depended on corporate activity, be it shops and food vendors catering to office cube dwellers commuting or retailers in airports, are thinning out their locations and their staffing.And mind you, that was the state of play as states were partly or significantly though reopening, when there was hope the economy would haltingly get back to something approaching the old normal. But now, thirty-two states reported an increase of 10% or more Covid-19 cases in the last week. Even though the death rates so far aren’t correspondingly high, experts warn that with the lag between infection and mortality, that it’s too early to rule out a follow-on death spike.What has kept the bottom from dropping out of the economy is the emergency response. Yes, way too much was in the way of zombie futures, as in allowing already heavily leveraged companies to have more access to debt. And the subsidies to households, both directly, through the $600 a week unemployment insurance supplement, which resulted in five out of six making more than when they were employed, the payroll protection plan, which kept others from being furloughed, and the $1200 per person payouts all helped preserve incomes. As a result, even though residential mortgage delinquencies are elevated, they aren’t at the post financial crisis level, when 9 million mortgages went into foreclosure.1 From HousingWire: The U.S. mortgage delinquency rate rose to 7.76% in May as Americans struggled to pay their bills during the worst public health crisis in more than a century.The rate rose from 6.45% in April and was 3.39% in March, the month when states began issuing stay-at-home orders to try to stem the spread of COVID-19, according to the report on Monday. Black Knight counts loan in forbearances – meaning they have an agreement with the servicer to suspend payments – as being delinquent, as does Mortgage Bankers Association.Measured as a number, rather than a percentage, there were 4.12 million mortgages in the U.S. that had payments more than 30 days overdue in May, Black Knight said.Last week there were 4.6 million homeowners with mortgages in forbearance, down 57,000 from the prior week, according to Black Knight.
Census: Household Pulse Survey shows 34.9% of Households Expect Loss in Income First, from @ernietedeschi Employment in the @uscensusbureau Household Pulse Survey fell another -1.3 million last week alone. It’s now fallen -2.6 million cumulatively over the past 3 weeks.Seasonality & survey noise may be factors, but the HPS did an excellent job of anticipating the June jobs report.This graph is from Ernie Tedeschi (former US Treasury economist). The question on lost income is always since March 13, 2020 – so this percentage will not decline – but might increase.From the Census Bureau: Measuring Household Experiences during the Coronavirus (COVID-19) PandemicThe 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.This will be updated weekly, and the Census Bureau released the recent 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. The data was collected between July 2 and July 7, 2020.
Loss in employment income: “Percentage of adults in households where someone had a loss in employment income since March 13, 2020.” This number is since March 13, and has increased to 49.9% from 47% in the initial survey.
Expected Loss in Employment Income: – 34.9% of households expect a loss in income over the next 4 weeks. This is down from 38.8% in late April, but up from 32% two weeks ago. This might suggest the job gains stalled after the data was collected for the June employment report.
Food Scarcity: Percentage of adults in households where there was either sometimes or often not enough to eat in the last 7 days. 10.8% of households report food scarcity. This has been increasing slightly.
Delayed Medical Care: “Percentage of adults who delayed getting medical care because of the COVID-19 pandemic in the last 4 weeks.” 40.1% of households report they delayed medical care over the last 4 weeks. This has declined slightly.
Housing Insecurity: 25.3% of households reported they missed last month’s rent or mortgage payment (or little confidence in making this month’s payment). This has increased from a low of 22.1% in the survey of June 4th – June 9th..
K-12 Educational Changes: Essentially all households with children are reporting were not being taught in a normal format.
Workers on unemployment stunned as Arizona abruptly cuts off payments Multiple workers receiving unemployment payments through the state of Arizona were stunned on Saturday to learn that their unemployment payment accounts, accessible via debit cards provided by Bank of America, had been closed without warning, withdrawing funds from their accounts and cutting off their access to much needed funds. The rescinding of payments by the Arizona Department of Economic Security (DES) has affected workers who live out of state but had been employed in Arizona. The agency has not confirmed how many workers had their accounts closed over the weekend. In response to worried and now destitute workers calls for answers, the DES said on Twitter “As part of its increased fraud detection efforts, DES closed accounts with suspicious account information and activity located out of state. The majority of claims identified are believed to be fraudulent.” Closed in this instance means that all the funds that were already received and still in workers’ bank accounts had been clawed back by the state. While the state claims fraud is rampant in the system, it is notoriously difficult to obtain unemployment in Arizona in the first place, with many workers having to wait for payments for two months. Furthermore, payments are capped at a meager $240 dollars a week, which is less than half what someone would make working for minimum wage in Arizona. The legality of what the state is doing is questionable at best. The DES’s claim that the majority of claims that they closed are “believed to be fraudulent” has not been backed up by any evidence. Given the massive loss of jobs during the pandemic this could be a matter of life or death for many workers.
Pennsylvania tightens coronavirus restrictions on businesses as cases climb – Pennsylvania Gov. Tom Wolf (D) tightened restrictions on businesses Wednesday as the number of new coronavirus cases climbs in the state. Wolf’s new orders, which will take effect Thursday, reduced capacity for indoor dining to 25 percent. Bars can be open for sit-down meals at tables, also at 25 percent capacity, but bar service will be prohibited. Indoor gatherings are also capped at 25 people, and outdoor gatherings are capped at 250 people under the new order. The governor is also requiring all businesses to operate by teleworking if possible. Wolf warned that COVID-19 cases could surpass the peak the state hit in April if further action is not taken. “During the past week, we have seen an unsettling climb in new COVID-19 cases,” Wolf said in a statement. “When we hit our peak on April 9, we had nearly two thousand new cases that day with other days’ cases hovering around 1,000. Medical experts looking at the trajectory we are on now are projecting that this new surge could soon eclipse the April peak. With our rapid case increases we need to act again now.” Pennsylvania reported 994 new coronavirus cases Wednesday, bringing the state’s total to 97,665, according to state data.
California Walks Back Reopening as Coronavirus Cases and Hospitalizations Surge – California is reversing its reopening plans amidst a surge in coronavirus cases and hospitalizations. Gov. Gavin Newsom announced Monday that businesses like restaurants, wineries, movie theaters, cardrooms, zoos and museums must no longer welcome people inside and bars must close altogether, NPR reported. In addition, gyms, places of worship, hair and nail salons, malls and non-essential offices must close in 29 counties representing 80 percent of the state’s population, the Los Angeles Times reported. “We’re going back into modification mode of our original stay at home order,” Newsom said, as The New York Times reported. “This continues to be a deadly disease.”
CA is now closing indoor operations STATEWIDE for:
-Movie theaters, family entertainment
Bars must close ALL operations.
The news comes as coronavirus infections have been rising in about 40 of 50 U.S. states, according toReuters. California has emerged as one of the epicenters of the U.S. outbreak, along with Arizona, Florida and Texas. As of Sunday, California has been averaging more than 8,000 new cases a day, more than two times its daily average last month, The New York Times reported. In total California has seen 331,626 cases, the second highest caseload in the nation, according to New York Times figures. More than 7,000 Californians have died of the new disease. California began its reopening process in early May and saw cases begin to rise in June, mostly due to a surge in Los Angeles County, NPR reported. Newsom first responded by requiring face masks in public from June 18 and then by shuttering bars and other indoor venues in 19 counties July 1. Newsom said his decision Monday was informed by a rise in hospitalizations, people in intensive care units (ICUs) and the rate of positive test results. Over the last two weeks, the number of people hospitalized has increased 27.8 percent while the number of people in the ICU has increased 19.9 percent, state hospitals said Monday.”We’re seeing an increase in the spread of the virus, so that’s why it’s incumbent upon all of us to recognize soberly that COVID-19 is not going away any time soon until there is a vaccine or an effective therapy,” Newsom said Monday, as the Los Angeles Times reported. Counties currently subject to increased restrictions include some of the state’s most populous.
Public’s disconnect from COVID-19 reality worries experts – The United States is being ravaged by a deadly pandemic that is growing exponentially, overwhelming health care systems and costing thousands of lives, to say nothing of an economic recession that threatens to plague the nation for years to come. But the American public seems to be over the pandemic, eager to get kids back in schools, ready to hit the bar scene and hungry for Major League Baseball to play its abbreviated season. The startling divergence between the brutal reality of the SARS-CoV-2 virus and the fantasy land of a forthcoming return to normalcy has public health experts depressed and anxious about what is to come. The worst is not behind us, they say, by any stretch of the imagination. “It’s an absolute disconnect between our perceived reality and our actual reality,” said Craig Spencer, a New York City emergency room doctor who directs global health in emergency medicine at New York Presbyterian/Columbia University Medical Center. “To look at the COVID case count and the surge in cases and to think that we can have these discussions as we have uncontrolled spread, to think we can have some national strategy for reopening schools when we don’t even have one for reopening the country, it’s just crazy.” The number of dead from the virus in the United States alone, almost 136,000, is roughly equal to the populations of Charleston, S.C., or Gainesville, Fla. If everyone in America who had been infected lived in the same city, that city would be the third-largest in the country, behind only New York and Los Angeles. More people in the United States have tested positive for the coronavirus than live in the state of Utah. By the weekend, there are likely to be more confirmed coronavirus cases than there are residents of Connecticut. There are signs that the outbreak is getting worse, not better. The 10 days with the highest number of new coronavirus infections in the United States have come in the past 11 days. Case counts, hospitalizations and even deaths are on the rise across the nation, not only in Southern states that were slow to embrace lockdowns in March and April. California, the first state to completely lock down, has reported more than 54,000 new cases over both of the last two weeks. Nevada, about one-thirteenth the size of California, reported 5,200 new cases last week. States where early lockdowns helped limit the initial peak like Pennsylvania, Illinois and Ohio are all seeing case counts grow and hospital beds fill up. Only two states – Maine and New Jersey – have seen their case counts decline for two consecutive weeks. “We are nearing the point where pretty much most of the gains we had achieved have been lost,” said Christine Petersen, an epidemiologist at the University of Iowa. “All of us are hoping we magically get our acts together and we can look like Europe in two months. But all the data shows we are not doing that right now.”
Walmart Will Require All Customers To Wear Masks Starting July 20 – Following in the footsteps of CostCo, Best Buy and Starbucks, moments ago Walmart – the world’s largest retailer – became the latest national chain to require all customers to wear masks. “As the number of confirmed cases has spiked in communities across the country recently, so too have the number and types of face covering mandates being implemented,” Walmart said in a news release Wednesday. About 65% of its more than 5,000 stores, including its Sam’s Club locations, are located in areas where there is government mandate on face coverings. “To help bring consistency across stores and clubs, we will require all shoppers to wear a face covering starting Monday, July 20. This will give us time to inform customers and members of the changes, post signage and train associates on the new protocols.” The change will be enforced on July 20, and comes even as there is federal mandate to wear a mask exists, however the Centers for Disease Control and Prevention says everyone “should wear a cloth face cover when they have to go out in public” adding that “face coverings are meant to protect other people.” Most major retailers and grocers initially hesitated to enact their own mask mandates for customers during the pandemic, partly over fears of antagonizing shoppers who refuse to wear them, they have also been reluctant to put their employees in the position of enforcing mask requirements. But sentiment has changed in recent weeks as more than 3.3 million people have now tested positive for the coronavirus nationwide. Cases are climbing in much of the country and many cities and states are reimposing restrictions to contain new outbreaks, including mask requirements in public settings. Industry groups and unions have also stepped up their calls around mask requirements for customers. Last week, the Retail Leaders Industry Association, an industry trade group, called on the nation’s governors to pass statewide mandates requiring citizens to wear masks in public. The United Food and Commercial Workers’ Union also urged government officials and business leaders to require masks for customers in an advertisement over the weekend. Starbucks said last week that it will require customers to wear facial coverings or masks in all 9,000 of its company-owned US stores beginning Wednesday. Best Buy also announced Tuesday that it will also require all shoppers coming into its approximately 1,000 stores to wear face masks. Costco began requiring its members to wear masks in stores beginning in May.
Philly-Area Charters Collect $30 Million+ in PPP Funding -Charters in the Philadelphia area received more than $30 million in Paycheck Protection Program funds, while public schools in Philadelphia continue to be systematically underfunded. The big winner in the PPP sweepstakes is the for-profit Chester Community Charter School, owned by a major Republican donor and billionaire. One of the largest loans, between $5 million and $10 million, went to Chester Community Charter School (CCCS), which is operated by a for-profit management company owned by wealthy Republican donor Vahan Gureghian.The loan was received by Archway Charter School of Chester, Inc., which is the nonprofit name for CCCS under which it files its 990 tax form. The CCCS charter already received more than $2.5 million from the CARES Act, intended for public schools. So CCCS, which aims for a complete takeover and privatization of its district, is funded both as a “public school” and a small business.
Parents Are Paying $50,000 To Reserve Spots At NYC Private Schools Even Though Kids May Never Attend – Parents in New York City are locking up spots at elite private schools for their kids by paying deposits of up to $50,000 – even though children may never wind up attending.One mom highlighted by Bloomberg paid more than $50,000 per child to reserve NYC private schools for her kids while at the same time enrolling them in public school out west, where the family is staying during the Covid outbreak. She is hoping her kids can use Zoom to attend classes in the interim, if the family doesn’t re-locate back to the city.This is a growing trend in the world of NYC private schools. With many families having fled the city, they are on the hook to make a decision about whether to lock up schooling for their kids for the fall. The spots at private school can be tough to get and are coveted within the city, so many parents have taken the “safe” route of paying for schooling they may not ever use. Schools are also coming up with ways to try and ensure they stay funded regardless of volatility with enrollment. Fanning Hearon, head of school at Palm Beach Day Academy in Florida, where many New York families applied, said: “A lot of people are just hedging their bets.” Hearon said 3 students were confirmed on Wednesday while at the same time 2 others dropped enrollment.Grace Church School in New York’s Greenwich Village is charging $53,330 for tuition and about 4% of families said they won’t be coming back this year despite putting down $6,000 deposits. At Avenues: The World School, parents can take a year break by paying about 15% of tuition, or about $8,500. The Horace Mann School in the Bronx says that if students want to stay enrolled, they need to be back this year, or they will be forced to reapply next year. The Trinity School has seen no one pull out yet. The Dalton School on the Upper East Side says it’ll be doing fully remote classes for students who want it. Private schools usually require a deposit by Februrary or March the year prior to enrollment. This year, that deadline has been moved to summer for many schools as parents continue to create logistical volatility for those running the schools. Roxana Reid, an admissions consultant, said: “Schools don’t even know if they’re officially going to be coming back.”
UTLA Recommends Keeping LA Schools Closed – Amid COVID-19 infections and deaths surging to record highs, Trump’s threats to open schools prematurely, and a groundbreaking research paper that outlines necessary conditions for safely reopening schools, the UTLA Board of Directors and Bargaining Team are calling on LAUSD to keep school campuses closed when the semester begins on Aug. 18. “It is time to take a stand against Trump’s dangerous, anti-science agenda that puts the lives of our members, our students, and our families at risk,” said UTLA President Cecily Myart-Cruz. “We all want to physically open schools and be back with our students, but lives hang in the balance. Safety has to be the priority. We need to get this right for our communities.” UTLA is also engaging all members in a poll on Friday, July 10, to find out where they stand on re-opening campuses. UTLA will notify members and the media the results of the poll Friday night. Even before the spike in infections and Trump’s reckless talk, there were serious issues with starting the year on school campuses. The state and federal governments have not provided the additional resources or funds needed for increased health and safety measures and there is not enough time for the district to put together the detailed, rigorous plans for a safe return to campus. According to UTLA’s research paper, there is a jarringly disparate rate of COVID-19 infection, severe illness, and death among Black, Indigenous and People of Color (BIPOC) working communities, where structural racism and economic inequality mean people live with economic and social factors that increase risk of illness and death. In these communities, people are more likely to have “essential” jobs, insufficient health care, higher levels of pre-existing health conditions, and live in crowded housing. Because of the forces of structural racism, Blacks, Latinx, and Pacific Islanders in Los Angeles County are dying of COVID-19 at twice the rate of white residents.
LAUSD Campuses To Remain Closed in Fall, Despite Trump Push to Reopen – Amid spiking coronavirus cases, Los Angeles Unified School District campuses will remain closed when classes resume next month, Superintendent Austin Beutner said Monday, defying President Donald Trump’s demand that students return to in-person instruction.Beutner said the “health and safety of all in the school community is not something we can compromise.”The decision comes days after the union representing the district’s teachers announced results of a poll showing that 83% of instructors opposed returning to in-person classes. Despite the announcement, the LA County Public Health Department later during a news conference released a roadmap to what schools may look like when they do reopen.Some of the guidelines include:
- Students wearing masks, except when eating or having nap time.
- Students wash hands frequently.
- Recess and other physical activities were to be limited.
Dr. Barbara Ferrer said that the guidelines were not an invitation to reopen for in-person classes, but rather a helpful guide, and schools would reopen based on guidance from the state.The LAUSD on Monday issued a joint statement with the San Diego Unified School District, which also announced it will start the school year with online-only courses. In the statement, the districts acknowledged that schools have successfully reopened in some parts of the world, but said the conditions are different locally.”One fact is clear — those countries that have managed to safely reopen schools have done so with declining infection rates and on-demand testing available. California has neither,” according to the statement. “The skyrocketing infection rates of the past few weeks make it clear the pandemic is not under control.”
Education board in California’s Orange County votes to reopen schools without requiring masks -The county Board of Education in Orange County, Calif., on Monday voted to approve school reopening recommendations that do not require masks for students or social distancing in schools.In a 4-1 vote, the board approved recommendations that include frequent hand-washing, daily temperature checks and nightly disinfection of facilities and vehicles, but did not include mandatory masks for students, the Los Angeles Times reported.”K-12 children represent the lowest-risk cohort for Covid-19. Because of that fact, social distancing of children and reduced census classrooms is not necessary and therefore not recommended,” the board’s recommendations reads. “Requiring children to wear masks during school is not only difficult – if not impossible to implement – but not based on science. It may even be harmful and is therefore not recommended.”Although children are at lower risk of hospitalization from the virus, people at any age with underlying conditions are at higher risk for the virus. About 6 million children in the U.S. have asthma, according to the Centers for Disease Control and Prevention.The board gave individual districts broad discretion in their reopening plans. “Though it is important that we reopen our schools, some parents and some employees may reasonably question their own fitness for a fall return,” the recommendations state. “We understand that multigenerational families, for instance, or families in which children or adults live with maladies that make them more vulnerable might feel safe at home. It’s important that school districts accommodate these choices to the best of their ability.”Los Angeles’s and San Diego’s school districts have announced they will not reopen in the fall. Although Orange County shifted leftward in the 2016 and 2018 elections, it was for decades known as one of the most conservative parts of the state and has been an epicenter of opposition to mask mandates in California, according to the newspaper.Nichole Quick, the county’s chief health officer, resigned in June, citing death threats after she issued an order requiring masks in public, The Orange County Register reported.
California governor says Orange County can’t reopen schools days after vote to reopen – California Gov. Gavin Newsom (D) on Friday announced that some schools in the state will remain online-only in the fall rather than reopening to in-person classes.Schools that are in counties currently on the state’s coronavirus watch listdo not meet Newsom’s criteria to reopen. That means that as of Friday, 80 percent of the state’s schools cannot reopen in the fall.Those counties include Orange County, where the education board just this week approved reopening without masks or social distancing. Masks are also required for teachers and students in third grade and above in schools that reopen, according to Newsom. Additional requirements include physical distancing, symptom checks, hand-washing stations and increased sanitation.Newsom clarified that the new guidance is a “mandate” for both public and private schools in the state. Newsom’s announcement standardizes guidance for the state after two large school districts – Los Angeles and San Diego – already announced they would not reopen for in-person learning in the fall.Schools in counties that are not on the list are not required to reopen, according to the San Francisco Chronicle.Newsom noted he hopes that counties will “fall off” the monitoring list in order to allow them to reopen schools.”Our default is in-person, but we have to do it in a safe way,” he said.
Cuomo unveils plan for school reopenings in New York – New York Gov. Andrew Cuomo (D) released a plan Monday for schools to reopen based on the regional level of coronavirus infection rates. “Everyone wants to reopen the schools. I want to reopen the schools, everybody wants to reopen the schools,” Cuomo said during a briefing. “It’s not, do we reopen or not. You reopen if it’s safe to reopen. How do you know it’s safe? You look at the data.” Schools will reopen if a region is in the state’s phase four of reopening and if the daily infection rate remains below 5 percent over a 14-day average by the first week of August, the governor said. Schools will close if the regional infection rate is greater than 9 percent during a seven-day average. “We’re not going to use our children as a litmus test and we’re not going to put our children in a place where their health is in danger,” Cuomo said. “It’s that simple, common sense and intelligence can still determine what we do even in this crazy environment. We’re not going to use our children as guinea pigs.” The New York State Education Department released guidance for schools and districts to follow as they plan to reopen, whether for in-person or remote learning or a combination of the two, but is leaving decisions on plans to make up to the districts. All districts and schools are required to create and submit to reopening plans at the school level to the state education department by July 31. The State Department lists guidance for facilities, which may pose one of the largest hurdles as schools look to bring students back in the fall. The education department’s guidance states schools may expand their physical footprint or change the way they use space to help promote social distancing. The state also calls for schools to continue to “meet or exceed ventilation requirements” and may want to consult with design professionals to increase ventilation and filtration. The state guidance also says districts will be required to perform regular school bus disinfection and train school bus staff regarding social distancing on the bus, at stops and at unloading times. To help with chronic absenteeism, the state guidance said schools should use “a variety of creative methods to reach out to students and families who have not engaged in distance learning.”
South Carolina governor urges schools to open for in-person classes – South Carolina Gov. Henry McMaster (R) is urging schools to reopen after Labor Day as coronavirus cases continue to increase across the state. McMaster said Wednesday that each district will be required to submit a reopening plan that gives families an option to send children to school for five days a week. “We must give parents the choice. This is the only thing that we’re asking these districts to do today, is to give the parents the choice,” McMaster said at a briefing. “If the parent wants to send their child back to school they should be able to do so, and to do so with confidence,” he added. “If the parents want to keep the child at home, they should be able to do that and to do it with confidence.” McMaster said he has asked the state Superintendent of Education Molly Spearman not to approve any district’s plan that doesn’t give parents the choice to send children to school for in-person instruction. Spearman, a Republican, was absent from McMaster’s press conference Wednesday, but the governor said she had been invited, according to The State. Spearman reportedly issued a statement at the same time as McMaster’s briefing that said reopening decisions should be made by local officials and that parents should have a choice between in-person and virtual instruction. In her statement, she also said that state can’t “turn a blind eye” to health risks the virus poses to adults and children, according to The State.
Texas officials offer schools option to hold online-only classes until November – Texas officials on Friday announced that schools can continue online-only learning until November as the state sees climbing cases of the novel coronavirus. AP reports that the changes were announced just hours before Texas set another daily record for COVID-19 deaths, 174, as well as more than 10,000 new cases of the virus as the state sees a growing outbreak. Previously, state officials had given districts the option of remote learning for three weeks and then having in-person classes. Most schools will also require masks and social distancing when they reopen. Gov. Greg Abbott (R) tweeted after the announcement that “the health [and] safety of students, teachers [and] parents is the top priority.”The decision comes as President Trump and Education Secretary Betsy DeVos have pushed for schools to return to in-person learning in the fall, even threatening to withhold federal funding from those that don’t return full-time. But the subject has been at the center of debate and sparked backlash from parents and teachers who worry about the virus spreading among children. While health officials say children often experience less severe coronavirus symptoms or are even asymptomatic carriers, many are concerned they will bring the virus home to parents or spread it to their teachers and the vulnerable. A number of other states have made similar decisions in recent weeks. California announced on Friday that about 80 percent of its population was on a “watch list” that would not be allowed to reopen schools for in-person learning until they could demonstrate back-to-back weeks of coronavirus cases being on the decline. When schools do reopen, they will require masks and social distancing.
Texas exempts religious private schools from reopening guidelines – Texas Attorney General Ken Paxton (R) said Friday that private schools are exempt from having to follow local health restrictions regarding school openings. Paxton said in an open letter to religious private institutions that forcing such schools to comply with local reopening guidelines would be unconstitutional. “Under the Governor’s orders, local governments are prohibited from closing religious institutions or dictating mitigation strategies to those institutions,” Paxton wrote. “Local governments are similarly prohibited from issuing blanket orders closing religious private schools. Because a local order closing a religious private school or institution is inconsistent with the Governor’s order, any local order is invalid to the extent it purports to do so. “Moreover, local public health orders attempting to restrict the provision of religious instruction through religious private schools violate the United States and Texas Constitutions and the Texas Religious Freedom Restoration Act,” he added. Texas’s Religious Freedom Restoration Act mandates that the government must show a “compelling interest” in regulations that “substantially burden” the free exercise of religion and that rules are applied in the least restrictive way possible. Thus, as protected by the First Amendment and Texas law, religious private schools may continue to determine when it is safe for their communities to resume in-person instruction free from any government mandate or interference. Religious private schools therefore need not comply with local public health orders to the contrary,” Paxton concluded. The letter comes as Texas and the nation grapple with how and when to safely open schools amid an alarming spike in coronavirus cases. Texas in particular has seen a sharper rise in cases than many other states, with the federal government sending military medics to the Lone Star State to grapple with the mushrooming outbreak. Texas reported roughly 10,000 new cases Thursday for the third day in a row.
Haphazard plans to reopen US schools spur growing opposition among educators – Opposition among educators, parents and students is mounting across the US against the push by the Trump administration and the ruling elite to rapidly reopen schools – a move which coincides directly with the homicidal drive by the ruling class to force workers back on the job amid the deepening COVID-19 pandemic. In recent weeks, Americans have witnessed the pandemic worsen throughout the country as a result of the measures pushed through by state governors to lift restrictions and reopen state economies. The number of new COVID-19 cases surpassed 65,000 on Monday and Tuesday, while last Friday saw a single-day record for new cases at 71,787. Throughout the US, public school districts are rushing to implement plans for reopening in the fall. Plans range from fully in-person learning, fully online, or blended models with both in-person and online instruction. The two largest school districts in California, Los Angeles Unified School District (LAUSD) and San Diego Unified School District (SDUSD), released a joint statement Monday announcing they will begin their school years fully online. LAUSD will begin classes August 18 while SDUSD will begin August 31. LAUSD and SDUSD serve a combined 20 percent of the 6 million public school students throughout California. The move to a fully online format was announced as a temporary measure, with the joint statement noting, “both districts will continue planning for a return to in-person learning during the 2020-21 academic year, as soon as public health conditions allow.”
Biden rolls out school reopening plan amid coronavirus pandemic – Former Vice President Joe Biden rolled out his plan to safely reopen schools amid the coronavirus pandemic on Friday as the debate over the issue rages across the country. “If I’m elected president, our students and educators are going to have all the tools and resources they need to succeed, to get us through COVID-19, to build the strong, resilient schools we need so that every child has a chance to succeed in the 21st century,” Biden said in a video announcing his blueprint. Biden’s plan states that in order for schools to reopen, the virus must be under control in the U.S. The campaign said that this involves an increase in nationwide testing and contact tracing as well as a stable supply chain to ensure the production of personal protective equipment (PPE). Additionally, Biden said that older and high-risk individuals should be protected and small businesses should be provided with the resources to open safely. The campaign’s blueprint also calls for national safety guidelines that states and localities can follow during the reopening process. Biden said under his administration, emergency funding would be provided to public schools and child care providers. The plan also takes virtual learning into consideration, calling on the Department of Education to assist students with disabilities or a lack of remote learning resources. The campaign said a Biden administration would also address the “COVID-19 education equity gap,” through working with health, education and community experts on the issue. The development comes as President Trump faces nationwide backlash from Democrats, health professionals and education leaders on pushing ahead with reopening schools by the fall. The president referred to the Centers for Disease Control and Prevention’s (CDC) school reopening guidelines as “very tough & expensive” earlier this month and threatened to withhold funding from schools that delay reopening.
Teacher-centric is good, but student-centric is better – “Providing a World-Class Education in Every ZIP Code” is the title of Joe Biden‘s education task force policy recommendations, released last week. Given his long record of support for high-quality public schools, there’s no reason to doubt the presumptive Democratic presidential nominee’s sincerity. As president, surely, he’d wave a magic wand and instantly make every American child’s school a great one, if he could. But the “unity” task force left out some important voices. It included both presidents of the two largest teachers’ unions, as well as several vocal critics of public charter schools. Excluded from the task force was any representative of the 3.3 million mostly Black and brown families who depend on charter schools for equitable access to quality education. In fact, no Black education stakeholders, other than Rep. Marcia Fudge (D-Ohio), were given a seat at this particularly important table – a puzzling omission against the backdrop of current events, not to mention the Obama-Biden administration’s strong backing of charters. Given its makeup, it’s no surprise that the task force report trots out the oft-refuted canard that charter schools “undermine” traditional schools. The National Education Association (NEA) used identical language in a2017 policy statement pledging “forceful support” for limiting charter schools. “The growth of charters has undermined local public schools and communities, without producing any overall increase in student learning and growth,” the NEA claimed. That’s demonstrably false, as PPI and other research organizations have copiously documented. Moreover, you can’t have a more equitable system without giving parents some degree of choice in the schools that their children attend. Many Black parents – including charter school parents and those on charter school waiting lists – balk at the idea that they should be forced to send their kids to the traditional district school closest to their home, regardless of whether or not it’s doing a good job of educating their kids. Far from failing to produce “any overall increase in student learning and growth,” when urban charter school students go head-to-head with students in their own cities, charter schools frequently, and significantly,outperform their traditional-school counterparts. When the pandemic closed schools, for example, many charters were providing students with a full day of distance learning in under a week, while over the course of the shutdown, many traditional districts couldn’t locate all of their students, or teach them. New York City’s Success Academy, which has closed the minority achievement gap, took just three school days to open remote classrooms. Compare that to the Fairfax Public Schools, which admits its “disastrous” failure, for weeks, to launch distance learning for 189,000 students. While many charter schools responded to the pandemic like swift boats, many districts more resembled ocean liners. That’s why the demand for charter schools is growing. In Washington D.C. alone, almost 11,000 students are wait-listed for charter schools. The more charter schools grow, the more teachers they need. Most charter schools are not unionized, so teachers’ unions see them as an existential threat that must be “forcefully” limited.
White House blocks CDC director from testifying before House panel on reopening schools – The Trump administration is rebuffing House Democrats’ effort to hear testimony from Centers for Disease Control and Prevention (CDC) Director Robert Redfield on safely reopening schools during the coronavirus pandemic. House Education and Labor Committee Chairman Bobby Scott (D-Va.) sent Redfield a letter last week asking him or a CDC designee to testify at a hearing on how K-12 public schools can reopen for in-person classroom instruction this fall. But on Friday, Scott said his panel had been informed that the Trump administration would not allow CDC testimony at the hearing planned for next week. “It is alarming that the Trump administration is preventing the CDC from appearing before the committee at a time when its expertise and guidance is so critical to the health and safety of students, parents, and educators. This lack of transparency does a great disservice to the many communities across the country facing difficult decisions about reopening schools this fall,” Scott said in a statement. A senior administration official said that Redfield has already testified before Congress at least four times in the last few months. The White House has been limiting congressional testimony from top officials leading the nation’s response to the coronavirus pandemic, maintaining that they should be focused as much as possible on planning and implementing the federal government’s actions to contain the virus. The White House offered a similar rationale in May for preventing Anthony Fauci, the nation’s top infectious disease expert, from testifying before a House Appropriations subcommittee about the government’s response to the pandemic. A White House spokesman said at the time that it would be “counterproductive” for officials involved in the pandemic response to testify at congressional hearings, but that the administration would work with Congress to make them available “at the appropriate time.”
Nearly 1 in 4 US teachers at greater risk of becoming seriously ill if infected with coronavirus –About one in four teachers in the U.S. are at greater risk of becoming seriously ill if they get infected with the new coronavirus, according to a report released Friday by the Kaiser Family Foundation. The foundation, a nonpartisan organization that focuses on national health care issues, looked at a series of factors identified by the Centers of Disease Control which could indicate that a person could be “more likely than others to become severely ill,” when they are exposed to the virus. They include several underlying health conditions – such as diabetes, chronic obstructive pulmonary disease, heart disease, moderate or severe asthma, having a body mass index of greater than 40, or having a compromised immune system due to, for example, treatment for cancer – as well as being age 65 and older. The analysis found that about 1.47 million teachers and instructors in the country – nearly 24% of the entire workforce – have a condition that will put them at higher risk of serious illness from coronavirus. According to the CDC, that means that “they may require hospitalization, intensive care, or a ventilator to help them breathe, or they may even die.” The report comes as educators around the nation contemplate on the best solutions to regain some type of normalcy in the classroom, as many areas of the country experience record-breaking COVID-19 surges.
Teachers in same Arizona classroom all get coronavirus, 1 dies – Three Arizona summer-school teachers who followed the recommended safety protocols for the coronavirus while in the same classroom contracted the contagion – and one of them died, reports say.”It just feels like a bad dream that I can’t wake up from,” Jesse Byrd, the husband of beloved late first-grade instructor Kimberley Chavez Lopez Byrd, 61,told the Arizona Republic.His wife had previously retired, only to miss the classroom so much that she eventually returned to the job as a first-grade teacher in the Hayden-Winkelman Unified School District in Gila County.In June, Kimberley and two other teachers – Angela Skillings and Jena Martinez-Inzunza – got together in one classroom to conduct classes for a group of kindergartners and first- and second-graders, who watched the educators online as they performed fun nature-inspired experiments such as using Cheetos to demonstrate bee pollination.The women said they wore masks and gloves, socially distanced and used hand sanitizer to keep themselves safe, CNN reported.“We were very careful,” Skillings told the Republic.Kimberley – who suffered from diabetes, lupus and asthma – was the first to test positive for the virus, and by June 26, less than two weeks after she became a confirmed case, she was dead.The two other teachers tested positive soon after Kimberley did and said they are still suffering from complications.Arizona is among a slew of US states suffering from a recent surge in the virus.The state reported 2,537 new cases of the contagion Sunday, for a current total of 122,467 – more than a third of which occurred just so far this month, according to statistics from Arizona’s Health Department.
Arizona teachers call on governor to postpone in-person classes until at least October: ‘Remote learning won’t kill us but COVID can’ – Arizona teachers are calling for in-person classes to be postponed until at least October, saying, “Remote learning won’t kill us but COVID can.” “We don’t want any children to get this from us, because as a teacher, I don’t want to go to any of their funerals,” third-grade teacher Stacy Brosius, 47, told Reuters, adding that she is also not ready to send her own three children back to school. Brosius, among other educators in Arizona, are petitioning for Gov. Doug Ducey (R) to push the start of in-person classes to October following the death of a colleague who died from COVID-19 after teaching summer school. Teachers are planning a significant automobile strike on July 22. They will circle the capitol and governor’s office to protest the state’s current plans to resume in-person classes at the beginning of the school year while also demanding better funding for the education system. “This is a core piece of what our educators come together for, which is to demand that schools are properly funded,” said Joe Thomas, president of the Arizona Education Association (AEA.) “Until we can see that, we are not ready to come back to schools.” The teachers’ concern comes as Arizona experiences rising case numbers and the school system prepares to welcome back 1.1 million public school students and 20,000 teachers. The state’s 7-day average of new cases rose dramatically over the past two months, going from an average of 500 cases per week to over 3,000 in July, Reuters reported. Texas officials offer schools option to hold online-only classes… Sunday shows preview: Trump, lawmakers weigh in on COVID-19, masks… Despite reports from the Arizona Department of Public Health revealing hospital ICU capacity nearing 90 percent this week, Ducey said Thursday he would not be swayed by politics, adding that he would be comfortable sending his children back to in-person classes. “Our kids are going to be learning in the fall. We are going to do our best to conduct the most positive educational year that we can,” Ducey said.
U.S. Coronavirus Cases Hit Another Daily Record as State GOP Officials Target Mask Orders – WSJ – Plans laid out by California and Texas suggest many children in each state will start the school year virtually, as coronavirus cases rose to another daily record and measures to slow the spread of the virus continued to meet political resistance.Confirmed infections in the U.S. neared 3.6 million, as the country posted a single-day record of more than 77,000 new cases.World-wide, a single-day record of 249,800 new infections was tallied Thursday, according to data compiled by Johns Hopkins University, exceeding the previous high of around 230,000 set a day earlier. Global deaths neared 600,000, and the U.S. death toll rose to more than 138,900.In California, where coronavirus cases have risen more than 20% over the past week, Gov. Gavin Newsom on Friday said schools could reopen for in-person classes only in counties that have been off the state’s Covid-19 watch list for two weeks. At least 32 of the state’s 58 counties, which account for the state’s most populous areas, are on the watch list. California, the most populous state in the nation, is home to more than 6 million school children. Counties still on the watch list will resume distance learning, and districts will be required to provide devices and connectivity for every child. In schools that are opening their doors, staff members and any students in third grade or above are required to wear masks, while those in second grade or below are encouraged to wear them.Recognizing that the virus is continuing to spread throughout California, the Democratic governor outlined criteria for closing reopened schools, starting with sending home individual classrooms. Schools will shut down if more than 5% of the campus tests positive. Districts will be closed if 25% of their schools are closed within a 14-day period. State and local leaders across the country have pushed back school start dates and delayed returning to in-person learning, saying it’s too dangerous to have children in classrooms as the virus continues to rage across the U.S.President Trump has demanded that school districts reopen or risk losing federal funding. His administration has tied the reopening of schools to economic recovery, saying keeping schools closed presents a challenge to working parents.On Friday, the Texas Education Agency updated its guidance for reopening schools, saying districts could offer online learning for up to eight weeks in the fall. The announcement came after the agency said last week that daily in-person learning would be available for parents who want their children to attend.Health officials in Dallas County on Thursday ordered schools there not to reopen for in-person instruction until after Labor Day. Houston Independent School District, the largest in the state, has already said it would delay opening and offer only online learning for the first six weeks. Concerns over in-person learning from teachers and parents alike have grown as Texas has charted a sharp rise in new Covid-19 cases and subsequent hospitalizations. Friday’s guidance in the nation’s second most-populous state does allow students who don’t have access to the internet or devices to come in for in-person learning. But Republican Gov. Greg Abbott said Friday that the state would use $200 million in Cares Act funding to purchase e-learning devices and home internet solutions.
Colleges Spend Millions to Prepare to Reopen Amid Coronavirus – WSJ –As colleges around the country map out plans to reopen their campuses in the fall, they have embarked on some unique and pricey shopping expeditions: sourcing miles of plexiglass, hundreds of thousands of face masks and, in the case of the University of Central Florida, trying to get in an order for 1,200 hand-sanitizer stations before neighboring theme parks could buy them all up. Costs for protective gear, cleaning supplies and labor for employees to take students’ temperatures and conduct hourly wipe-downs of doorknobs are already running into the millions of dollars. The added expenses come as many schools face severe budget crunches due to lower enrollment and tuition revenue, refunded housing fees from the spring and costs tied to shifting online. Even well-resourced schools are trying to fundraise to stock up on supplies. Reopening college campuses is contingent on approval from local health officials, who in some states haven’t yet signed off on campus-based instruction. Still, many schools remain hopeful and are pushing ahead with planning, with some already bringing student-athletes back for voluntary workouts. In Florida, one of the first states to reopen for business during the coronavirus pandemic, the University of Central Florida in Orlando will issue one reusable, washable face covering each to all students, faculty and staff – about 100,000 items. The school ordered another 250,000 disposable masks for visitors and those who forget their face coverings. The bill for masks was $309,000. The school, which had 69,500 students last year and expects about 30% of classes to be taught face-to-face this fall, spent another $491,000 on 1,200 touchless hand-sanitizer dispensers, 600 stations for disinfecting-wipe dispensers and many thousands of refills. One challenge is that officials don’t know how soon they will have to reorder supplies and if the products will be available when needed. “We have no historical trending to know how far those will go,” said Vice President and Chief Operating Officer Misty Shepherd. Other big-ticket items for Central Florida include $500,000 to upgrade ventilation systems with ultraviolet lighting that can help kill bacteria. It will spend $600,000 to retrofit doors with motion-sensor technology or foot-operated openers and to install $54-apiece plexiglass panels in the welcome center, student advising office and other high-traffic areas where social distancing isn’t really possible.The school is also budgeting an extra $3 million for labor and materials costs tied to increased cleaning of common areas, elevator buttons, door handles and bathrooms.
Top Democrat calls for oversight of Trump’s demand for review of universities’ tax-exempt status – House Ways and Means Committee Chairman Richard Neal (D-Mass.) on Wednesday called for a review of President Trump’s demand that the Treasury Department examine the tax-exempt status of universities and school systems. In letters to the IRS and the Treasury inspectors general, Neal said that under the federal tax code, it’s unlawful for the president to request that the IRS investigate specific taxpayers. “Under Section 7217 of the Internal Revenue Code, it is unlawful for the President, the Vice President, and other Executive Branch employees to ‘request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer,'” Neal wrote. In a pair of tweets on Friday, Trump directed the Treasury to reevaluate schools’ tax exemptions. The tweets came as Trump has been trying to pressure schools to hold in-person classes in the fall, thought they made no mention of the coronavirus. Neal’s letters included images of Trump’s tweets. He asked the IRS and the inspectors general for the Treasury Department to provide information about whether anyone at Treasury and the IRS has taken steps to comply with Trump’s comments, and about what is being done to ensure that the agencies don’t comply with the president’s directive.
Nearly 60 universities file brief backing challenge to ICE rule on foreign students – Nearly 60 public and private universities are supporting a lawsuit seeking to block the Trump administration from stripping foreign students of visas at colleges that opt against in-person classes this fall due to the coronavirus pandemic. Harvard University and MIT filed the lawsuit last week in federal court in Boston after Immigration and Customs Enforcement (ICE) announced that international students would need to leave the U.S. if their schools moved classes exclusively online. The universities are asking for a temporary restraining order and permanent injunction against the policy. Fifty-nine colleges filed an amicus brief in court on Sunday backing Harvard and MIT’s legal action. The schools – based in 24 states and Washington, D.C. – have a combined 213,00 international students enrolled, according to the brief. The schools include Georgetown, Stanford, Arizona State University and Yale.”A fundamental principle of administrative law is that the government must provide a reasoned explanation for its actions and consider all important aspects of a problem before imposing burdens on regulated parties,” the brief sates. “The July 6 Directive fails this basic requirement.”The universities also argued that college leaders relied on federal guidance allowing international students to remain in the country while taking online classes in preparation for the fall term. In March, ICE officials said that international students would be granted an exemption from attending in-person classes throughout the duration of the public health emergency. “The emergency persists, yet the government’s policy has suddenly and drastically changed, throwing [schools’] preparations into disarray and causing significant harm and turmoil,” the universities said. ICE’s announcement earlier this month on student visas came as the Trump administration ramped up its push to reopen schools this fall. Trump and Education Secretary Betsy DeVos have been vocal about the need for schools to offer in-person classes, producing concerns from some about whether teachers have the equipment necessary to do it in a safe fashion. In their lawsuit, Harvard and MIT alleged that ICE’s decision was designed to “force universities to reopen in-person classes.” The legal action came just two days after Harvard announced that it would offer all of its classes online for the next school year. The university has said that it will allow “those who must be on campus to progress academically” to return in the fall.
Western colleges sue over ICE foreign student policy – A group of twenty colleges and universities in the western U.S. sued the Trump administration on Monday over a rule change that would force out international students who are attending classes online due to the coronavirus pandemic. The latest of an increasing number of legal challenges to the new policy comes from schools including the University of Oregon, Stanford University, Arizona State University and Seattle University. They argued that the sudden reversal of Immigration and Customs Enforcement’s (ICE) policy on foreign student visas is unlawful and gave little warning to schools and students. “Schools that had spent months carefully planning for their Fall semester are suddenly faced with a need to completely redesign their academic programming for the Fall, or risk having their F-1 students expelled from the country for failing to attend in-person courses,” reads the lawsuit filed in Oregon’s federal district court. In March, as the government scrambled to prepare for the public health crisis, ICE offered a reprieve to student visa holders, who are normally required to attend in-person classes to remain in the country. ICE reversed itself with little warning last week, saying that any student visa holders in the U.S. would have to leave the country if their schools would be holding classes entirely online. Lawsuits quickly followed, including from Harvard and MIT, California’s public colleges and a coalition of 17 states. The Justice Department (DOJ) responded to the Harvard-MIT lawsuit on Monday, arguing against a restraining order against the policy. The administration contends that they exercised their lawful discretion to change their policies regarding student visas. “The July 6 policy announcement is nothing more than a reminder that students must depart should they violate the terms of their nonimmigrant student visa,” the DOJ wrote in a court brief.
Trump administration rescinds foreign students rule – The Trump administration on Tuesday rescinded a policy that would have stripped visas from international students whose courses move exclusively online amid the coronavirus pandemic. The move comes after the policy announcement last week sparked a flurry of litigation, beginning with a suit brought by Harvard University and the Massachusetts Institute of Technology (MIT), followed by California’s public colleges and later a coalition of 17 states, among other challenges. Judge Allison Burroughs, a federal district judge in Boston who was expected to preside over oral arguments in the Harvard-MIT case, made the surprise announcement at the beginning of the court proceedings Tuesday. “I have been informed by the parties that they have come to a resolution,” Burroughs said, adding, “They will return to the status quo.” The latest development cancels a move U.S. Immigration and Customs Enforcement (ICE) announced last week that international students whose courses move entirely online would be required to depart the country or transfer schools and reinstates an earlier plan to grant exemptions to student visa holders. In March, as the government scrambled to prepare for the public health crisis, ICE offered a reprieve to student visa holders, who are normally required to attend in-person classes to remain in the country. ICE reversed itself with little warning last week, saying that any student visa holders in the U.S. would have to leave the country if their schools held classes entirely online. The Harvard-MIT suit asked a federal court in Boston for a temporary restraining order and permanent injunction against the administration’s new policy. Their lawsuit alleged that ICE’s decision appeared designed to “force universities to reopen in-person classes,” thereby increasing the risk of exposure to the coronavirus while scrambling carefully laid plans to conduct courses online and upending foreign students’ lives. The universities accused the administration of committing several violations of a federal law known as the Administrative Procedure Act (APA), which concerns how certain decisionmaking power resides with federal agencies. At issue was whether ICE’s new policy was legally justified or if it was “arbitrary and capricious” and thus illegal under the act. The lawsuit leaned heavily on the Supreme Court’s decision last month to block the administration’s plan to end the Obama-era Deferred Action for Childhood Arrivals program. In that case, a majority of the justices found that the government did not provide adequate justification for the policy decisions as required under the APA. The rescission announced Tuesday marked yet another stunning twist in the Trump administration’s approach to student visas amid the pandemic. As of Monday, the administration maintained it had exercised its lawful discretion to change its policies regarding student visas.
Trump Admin Exempts European, But Not Chinese, Students From Coronavirus Travel Restrictions – Following in the foosteps of a report from earlier thisweek, that the White House would rescind its decision to deny student visas to students who won’t be studying on campus full time this fall, Reuters reports that foreign students coming from Europe will be exempt from a travel ban the United States imposed because of the coronavirus pandemic, the U.S. State Department told congressional offices on Thursday. The State Department also told lawmakers that it would offer exemptions for some au pairs and family members of visa holders in the United States, according to a memo sent to lawmakers and seen by Reuters. The decision is part of the administration’s effort to gradually reopen international travel following months of sweeping restrictions due to the coronavirus pandemic. In March, President Trump banned travelers from most European countries as COVID-19 cases soared in the region before the disease took hold in the United States. Meanwhile, even though the European Union began to allow non-essential travel from a limited number of countries last month, travelers from the United States remain banned due to the recent spike in coronavirus cases. The U.S. decision to allow European students comes days after the Trump administration agreed to drop a policy that would have forced tens of thousands of international students to leave the United States if their classes went entirely online; the reversal came amid legal challenges by major universities and pressure from business and tech companies. China, Brazil and Iran face similar travel bans, but students from those nations were not included in the U.S. exemptions. Students in European countries who already have visas to study in the United States are exempt from the ban, according to the memo. The State Department also said spouses and children of certain foreign workers coming to the United States could qualify for exemptions, including the spouses of skilled workers with H-1B visas.
Coronavirus Tests Role of Higher Education as Recession Buffer – WSJ – In past recessions, the U.S. higher education system has served as a buffer of sorts by absorbing unemployed workers. The peculiarities of the coronavirus-induced recession present obstacles to colleges playing a similar role this time around, some economists say. For one, it is unclear how many colleges and universities will reopen or to what extent, or how many people will decide to enroll. Many laid-off workers might lack access to high-speed internet to take online courses. It is also unclear how long unemployment will remain elevated, and whether students will acquire the skills they need in the post-Covid job market. Workers who lose jobs in a recession often suffer consequences that reverberate for years, through lost wages and delays in career advancement, research shows. Enrolling in college and graduate school can help mitigate or overcome that damage, as newly acquired skills give workers greater earning potential. And a better educated labor force benefits the economy, boosting productivity and growth potential. “When there are few jobs and the economy’s not doing well, that’s the best time to go back and get a college degree,” said Adam Looney, a nonresident senior fellow at the Brookings Institution who served in the Obama administration’s Treasury Department. A 2005 paper in the Journal of Econometrics found that spending one year in community college increased the long-term earnings of displaced workers by an average of about 9% for men and 13% for women. The paper analyzed workers who had spent significant time with their employer or industry, were permanently laid off in the early 1990s and later found work. During the 2007-2009 recession and subsequent recovery, the Obama administration made higher education a central theme of its strategy to heal the economy. Officials believed the strategy would lift growth in the long term also providing a short-term boost as students spent money on tuition and living expenses. The ability of workers to learn new skills could be crucial if unemployment remains elevated for a long time. While the jobless rate fell to 11.1% in June from 14.7% in April as parts of the economy started to reopen, 17.8 million workers remained unemployed, Labor Department data show. Another 8.2 million were out of the labor force entirely even though they wanted to work.
Analysis finds 5.5M have lost health insurance amid pandemic – Nearly 5.5 million people who lost their jobs between February and May of this year also lost their health insurance, according to a new analysis released Tuesday. The analysis from Families USA, a consumer health care advocacy organization, finds that the COVID-19 pandemic and the resulting economic crisis have caused the greatest health insurance losses in American history. Nearly half of the coverage losses occurred in five states: California, Texas, Florida, New York and North Carolina. “Families in America are losing comprehensive health insurance in record numbers,” the authors of the analysis wrote. “This creates particularly serious dangers during a grave public health crisis and deep economic downturn.” Coverage losses are likely steep because about half of Americans get health coverage through their jobs. However, the 5.4 million people who are estimated to have also lost their health insurance doesn’t count family members who might also have been on those plans. The Kaiser Family Foundation estimates that as of May 2, nearly 27 million people could have lost employer-sponsored insurance, including family members. The coverage losses are particularly troubling during a pandemic, when individuals might contract COVID-19 and need testing or treatment that is typically costly without insurance. Most people who become uninsured will be eligible to sign up for Medicaid or if they lost job-based coverage, they will qualify for a special enrollment period on ObamaCare’s healthcare.gov marketplace. The Trump administration has also vowed to reimburse hospitals for the treatment of uninsured COVID-19 patients, but it is not clear how successful that program has been. It’s also unclear how aware individuals are of these options, particularly if they are dealing with other stresses caused by the pandemic, including sickness of themselves or friends and family, job loss or working from home while caring for children, or other difficulties.
Millions of Americans Have Lost Health Insurance During COVID-19 –Accessibility to quality health care has dropped for millions of Americans who lost their health insurance due to unemployment. New research has found that 5.4 million Americans were dropped from their insurance between February and May of this year. In that three-month stretch more Americans lost their coverage than have lost coverage in any entire year, according to The New York Times. The report was compiled by the advocacy group Families USA, which looked at COVID-19’s impact on workers under 65. It noted that recent increases in the number of uninsured adults are 39 percent higher than any annual increase ever recorded. The highest previous increase took place over the one-year period from 2008 to 2009, when 3.9 million non-elderly adults became uninsured, according to a Families USA statement. In that time frame, at least 22 million Americans lost their jobs or left the workforce. The public health crisis also has stripped roughly 16 million workers and their families from employer-provided health plans, according to the Economic Policy Institute, as The Independent reported. However, some of those unemployed were able to join a family member’s plan or buy private health insurance.As Slate noted, health coverage has long been treated as a luxury, linked to certain kinds of white-collar employment. Now, the coronavirus has made health coverage an amenity fewer can afford.”We knew these numbers would be big,” said Stan Dorn, who directs the group’s National Center for Coverage Innovation and who wrote the study, as The New York Times reported. “This is the worst economic downturn since World War II. It dwarfs the Great Recession. So it’s not surprising that we would also see the worst increase in the uninsured.” As The New York Times reported, the nonpartisan Kaiser Family Foundation has estimated that 27 million Americans have lost coverage in the pandemic. That study took into account family members of the insured. Another analysis, published Monday by the Urban Institute and the Robert Wood Johnson Foundation, projected that by the end of 2020, 10.1 million people will no longer have employer-sponsored health insurance or coverage due to job loss during the pandemic.
Coronavirus Shows the Dangers of Letting Market Forces Govern Health and Social Care – In March, 10,000 NHS staff signed a letter to UK prime minister Boris Johnson demanding better protection against COVID-19. Nurses and doctors wanted to treat patients without fear of infecting them and to minimise their own risk of falling ill. But they lacked the proper protective equipment. The problem they described was rooted in changes made long before the arrival of the coronavirus. The NHS’s reduced capacity for dealing with the pandemic – including a lack of PPE – has been the result of years of allowing financial considerations to dictate the quality of care. Back in 2017, the government rejected advice that the NHS should stockpile protective equipment in case of a potential influenza pandemic. The reason? An economic assessment found it would be too expensive. Such failings are representative of the long-running trend, beginning in the 1980s, of letting the logic of the market dictate how health and social care systems are run, both in Britain and abroad. It has left many systems without the capacity to withstand a crisis of the scale we’re currently seeing. The US’s private healthcare system epitomises the failure of letting the market govern care services. The country spends 17% of its GDP – or US$3.6 trillion (Pound Sterling2.8 billion) – on health, more than any other nation. Despite this, almost 30 million Americans (9% of the entire US population) remain uninsured because their employer does not offer health benefits or they cannot afford their own insurance. These are mostly working-age adults in families with low incomes.The inaccessibility of health services to those who need them has contributed to the US having the highest number of COVID-19 fatalities in the world (together with one of the highest death rates per 1 million population). Yet, even while the pandemic spreads, some of its poorest hospitals and other healthcare institutions have had to put much-needed staff on leave. Having to compete in a ruthless market environment, they cannot afford to pay them.The pandemic has also exposed failings in care homes. Prompted by the rising costs of elderly care and users’ expectations for personalised services, both the UK and Sweden introduced a market-based system of care in the 1980s. The idea was that encouraging competition among multiple providers would deliver more cost-effective and responsive services and empower consumers by letting them choose among them.
China’s Imports and Exports Rebound as Coronavirus Fades in World’s Second-Largest Economy – WSJ – Chinese imports from the U.S. rose for the first time since the new coronavirus emerged earlier this year, showcasing Beijing’s post-pandemic purchasing power even as political tension between the world’s two largest economies continues to rise. China’s appetite for meat and other agricultural goods helped Chinese imports of U.S. goods to jump by 11.3% in June from a year earlier, after a 13.5% drop in May, data from Beijing’s General Administration of Customs showed Tuesday. The Chinese buying helped to narrow Washington’s trade deficit with Beijing from a year earlier, though Chinese exports to the U.S. also improved, rising 1.4% in June from a year earlier after a 1.3% decline in May. Even so, the momentum in China’s foreign trade could slow in the coming months amid uncertainties surrounding the coronavirus fight and its toll on the global economy, as well as the U.S.-China trade tensions, Li Kuiwen, a customs spokesman, said Tuesday. For Chinese trade with the world at large, Beijing’s June trade figures showed increases in both total imports and exports compared with a year earlier, reflecting improving demand at home and abroad, as China and some of its trading partners brought the pandemic largely under control. China’s imports from the rest of the world climbed 2.7% in June from a year earlier, Chinese customs officials said Tuesday, reversing a 16.7% slump in May and coming in much stronger than an expected drop of 10%, according to economists polled earlier by The Wall Street Journal. Exports, meantime, edged up 0.5% in June from a year earlier, versus a 3.3% decline in May, customs data showed. June’s exports were also higher than economists’ median forecast for a 4.3% year-over-year decline. Detailed data on traded commodities and countries of origin won’t be available until later this month, but Tuesday’s data showed China significantly ramped up its purchases of agricultural products from its global trading partners in the first half of the year. In the first six months of 2020, China imported 2.12 million metric tons of pork, 1 million tons of beef and 45 million tons of soybeans from its trading partners, which represented increases of 140%, 42.9% and 17.9%, respectively, from the same period a year earlier. Its overseas purchases of iron ore, crude oil, coal and natural gas also increased by volume in the first six months as commodity prices tumbled. Also helping lift China’s exports were increased global demand for electronic products, as more people in the U.S. and Europe shifted to working from home during the pandemic, said Betty Wang, an economist with ANZ. The easing of lockdowns in some places also raised demand for Chinese goods, she added.
Oxfam Warns 12,000 Could Die Per Day From Hunger Due to Pandemic – Oxfam International warned Thursday that up to 12,000 people could die each day by the end of the year as a result of hunger linked to the coronavirus pandemic – a daily death toll surpassing the daily mortality rate from Covid-19 itself.April saw the highest global daily mortality rate for Covid-19 thus far with just over 10,000 deaths per day. Oxfam’s warning comes in a new report entitled The Hunger Virus, which the humanitarian group says “shines a light on a food system that has trapped millions of people in hunger on a planet that produces more than enough food for everyone” and that has enabled global food and beverage giants to lavish billions on shareholders since the coronavirus crisis erupted. Kadidia Diallo, a female milk producer in Burkina Faso quoted in the report, puts the crisis in stark terms. “We are totally dependent on the sale of milk, and with the closure of the market we can’t sell the milk anymore,” she said. “If we don’t sell milk, we don’t eat.” The publication says the hunger crisis is set to deepen in already existing “hunger hotspots” like Yemen, Democratic Republic of Congo (DRC), Afghanistan, and Syria. In those locations, the pandemic “has added fuel to the fire of an already growing hunger crisis.” But millions of people in other countries are poised to be “tipped over the edge” as the virus rages, with nations including Brazil and India likely to emerge as new hunger hotspots.”Covid-19 is the last straw for millions of people already struggling with the impacts of conflict, climate change, inequality, and a broken food system that has impoverished millions of food producers and workers,” Oxfam interim executive director Chema Vera said in a statement. “Meanwhile, those at the top are continuing to make a profit: eight of the biggest food and drink companies paid out over $18 billion to shareholders since January even as the pandemic was spreading across the globe – 10 times more than the U.N. says is needed to stop people going hungry.”
Caribbean countries are selling citizenship for as low as $100,000 – here’s how the ultra-wealthy are cashing in to avoid pandemic travel restrictions – Caribbean island countries have long offered passports to wealthy foreigners in exchange for a – sometimes steep – monetary investment, but facing a cash crunch and a surge in interest, there are deals to be had. Through December 1, the island nation Saint Kitts and Nevis is selling a four-person family package for $150,000 – down from $190,000, in exchange for a minimum real-estate purchase of $200,000 that must be held for at least seven years. The Caribbean country’s passport ranks roughly in line with Mexico’s, according to the world Passport Index. And, perhaps more intriguing for Americans currently barred from Europe, the passport’s good for visa-less travel to the European Union and the UK, among others. “In these days of Covid, when tourism is not happening, we have to find ways to create revenue to sustain our economy,” Les Khan, CEO of Saint Kitts and Nevis Citizenship Investment Unit, told Bloomberg News. Other island nations in the region – including Saint Lucia, Antigua & Barbuda, Grenada, and Dominica – all offer similar programs, some at a new discount, as they hope to cash in on the increased interest ,too. According to Henley & Partners, a London-based passport broker and “identity management” firm, there’s been a 42% uptick in citizenship applications. What’s more, the US currently has a 1.5 million-passport backlog in its processing queue because of the pandemic. Anyone hoping for easier travel to the United States, however, can expect to pay a lot more. Malta, whose passport power ranks just under Italy, Canada, and Norway in terms of travel, will sell you citizenship that includes EU and US travel – though there are more strings attached. The Mediterranean island nation has long been a hotspot for the world’s ultra wealthy.
ECB Leaves Monetary Stimulus Unchanged as It Assesses Pandemic’s Economic Pain – European Central Bank President Christine Lagarde said the eurozone economy is rebounding strongly but faces a highly uncertain outlook, as the bank left its large monetary stimulus unchanged. At a news conference, Ms. Lagarde indicated that the ECB would continue to provide strong support for the region’s governments, businesses and households as they emerge from lengthy lockdowns. She urged European Union leaders meeting this weekend to thrash out a deal on a controversial multibillion euro recovery fund that could remove some of the crisis-fighting burden from the ECB. Europe was hit early and hard by the coronavirus pandemic, but muscular intervention by governments and the ECB have so far helped to curb infection rates and support consumer spending and growth. The ECB alone unveiled around $3 trillion of stimulus measures in recent months, putting its crisis response on par with the Federal Reserve’s. “We are in a good place at the moment,” Ms. Lagarde told reporters, pointing to a significant economic rebound in May and June from April’s low, as governments across Europe eased lockdown measures. Still, she warned that job and income losses, together with exceptionally high uncertainty, would weigh on consumer spending and business investment. The rise in infections in the U.S. is a major concern, she said. The ECB said in a statement Thursday that it would continue to purchase euro 1.35 trillion ($1.54 trillion) of government and corporate debt through June 2021 under its Pandemic Emergency Purchase Program, or PEPP. The bank also left its key interest rate unchanged at minus 0.5%. A key challenge for Ms. Lagarde, a former International Monetary Fund managing director and French finance minister, is to steer the region’s economy out of its deepest crisis in decades, just as a faster rebound in Northern Europe triggers calls for an early end to easy money. Europe’s recovery is expected to be uneven, tilted toward the richer North, and it depends heavily on costly government support and a rebound in exports. The latter seems unlikely as key trading partners like the U.S. continue to struggle with surging coronavirus infections. The economies of Italy, France and Spain are expected to shrink around 11% this year, roughly twice as much as Germany’s, the European Commission, the EU’s executive arm, wrote in a report this month. Italy’s public debt is expected to rise above 150% of economic output this year, more than double the level in Germany, according to the International Monetary Fund.