Written by rjs, MarketWatch 666
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 especially policy, bailouts, and stimulus, plus 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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Watchdog urges Fed to extend more virus aid to states, small firms – The Federal Reserve isn’t moving quickly enough to get loans to cash-strapped small businesses and local governments struggling to cope with the coronavirus crisis, according to a panel created to monitor billions of dollars in aid approved in response to the pandemic. U.S. central bank programs have purchased only two loans – one to the state of Illinois through its municipal lending facility and a $12 million package through its Main Street lending program, which only became operational on July 6, the Congressional Oversight Commission said in a report released Monday. “Our initial reaction is that a purchase of one $12 million loan over a week and one half seems like a small amount, given the economic challenges facing some small and medium sized businesses,” the panel said in its third monthly report. In previous reports, the panel has said that Fed and Treasury Department relief efforts might be falling short in helping small business and state and local governments and found that only a small fraction of the money allocated for loans has been spent. In the new report, it said the Fed has lent only $13.6 billion of the $454 billion allocated for its programs, raising questions about whether the eligibility requirements need to be loosened. The commission was created at the insistence of congressional Democrats during negotiations that led to approval of the $2.2 trillion CARES Act stimulus package earlier this year. The new report comes as Congress begins negotiations over another round of stimulus, which Democrats say must include more money for states and local governments. President Trump met with top Republican lawmakers on Monday to iron out differences over a GOP-only proposal. Members have said the lack of a chairman has hampered the panel’s ability to establish a strategy for policing the $500 billion in bailout money. Joseph Dunford, a former chairman of the Joint Chiefs of Staff, withdrew from consideration for the post earlier this month. The oversight panel has four members: Democratic Rep. Donna Shalala of Florida; GOP Sen. Pat Toomey of Pennsylvania; Bharat Ramamurti, a former aide to Sen. Elizabeth Warren of Massachusetts; and GOP Rep. French Hill of Arkansas.
Q2 GDP Forecasts: Probably Around 35% Annual Rate Decline –GDP is reported at a seasonally adjusted annual rate (SAAR). So a 35% Q2 decline is around 10% decline from Q1 (SA). From Merrill Lynch: The advance 2Q GDP estimate comes out next Thursday and will reveal the depth of the recession. Real activity likely collapsed -36% qoq saar, translating into a peak-to-trough decline of -11.7%. … We forecast a contraction of -5.7% in 2020, followed by a 3.4% rebound 2021. [July 24 estimate] From the NY Fed Nowcasting Report The New York Fed Staff Nowcast stands at -14.3% for 2020:Q2 and 13.3% for 2020:Q3. [July 24 estimate] And from the Altanta Fed: GDPNow The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in thesecond quarter of 2020 is -34.7 percent on July 17, down from -34.5 percent on July 16. [July 17 estimate]
The economic recovery is reversing – The New York Fed’s Weekly Economic Index (WEI) is reversing course, showing real-time, high-frequency economic data is again turning negative after climbing back from April and May’s coronavirus-driven swoon. The index is one of many that show the economy is getting worse in a trend that could be picking up steam. The WEI represents the common component of 10 different daily and weekly series covering consumer behavior, the labor market and production. It is scaled to the four-quarter GDP growth rate and if it continues on its current trajectory would mean U.S. GDP is poised to sink by 7% in Q3 and decline year over year for the third straight quarter. In addition to the New York Fed’s index, real-time data trackers from Goldman Sachs, Jefferies and Oxford Economics have all turned from stalling to falling. The St. Louis Fed’s coincident employment index has turned lower, showing jobs growth has reversed. The number of employees returning to work at small- and medium-sized businesses declined by at least 5% from early June to mid-July, according to Homebase. TSA data showed the first weekly decline in people passing through checkpoints since April. “Economic data over the next few weeks will likely underscore the depth of the recession and provide a warning that a full recovery is still far from being achieved,” David Kelly, chief global strategist at JPMorgan Asset Management, says in a note to clients. While many investors are counting on stimulus from Congress as well as a renewed balance sheet expansion from the Fed if economic data continue to deteriorate, Kelly says this is akin to “pumping air into a leaky tire.” “Government spending will also likely drag on the economy as many state and local governments will be forced to cut payrolls to balance budgets in reaction to the deep recession and lack of sufficient federal government aid.” He anticipates real GDP will fall 7.5% year over year in the third quarter, with much slower future progress without the widespread distribution of a vaccine. “To state the obvious, economic uncertainty is extraordinarily high right now, even eclipsing levels at the worst of the financial crisis,” Kelly says. “It is the pandemic, rather than any lack of stimulus, that is holding the economy back.” “[I]n a pandemic economy, stimulus alone cannot trigger a full recovery.”
US Covid-19 surge could trigger a double-dip recession FT – The relentless rise in the number of new US Covid-19 infections, which is being followed by increased hospitalisation rates and fatalities in the worst affected states, suggests that Anthony Fauci of the White House coronavirus task force was justified when he recently described the deteriorating situation as a “perfect storm”.So far, the US policy response has been muted, certainly compared to nationwide lockdowns in other countries in March. And markets remain surprisingly relaxed, reportedly because investors are optimistic that an effective vaccine from the Oxford university or Moderna trials may be “within sight”. Those trials are highly encouraging. But even the most favourable outcome in vaccine development would come too late to save the US economy from the spread of the virus over the next three months. Unless public policy can control the rate of infections across the American sunbelt, there could be adverse consequences for any US economic recovery over the rest of this year. Consensus economic forecasts have not yet given much weight to this increasing risk, although the US Federal Reserve is increasingly worried. Fulcrum economists have developed a new model which tracks the epidemic on a state-by-state basis, based on the now-familiar SIRD model used by the Imperial College Covid-19 response team and other researchers.It suggests that the virus’s effective reproduction number, known as R, is now above the critical level of 1 in all but five of the US’s 50 states. Weighted by gross domestic product, this means that 95 per cent of the US economy is affected by a viral reproduction rate high enough to cause an exponential rise in the number of cases – unless something intervenes to prevent this. Other researchers have found similar results.This spread of R levels above 1 is the broadest it has been since the epidemic started. In March, absolute levels of R were higher in the north east, when the reproduction rate exceeded 3 for several weeks and infection numbers doubled every few days.In the current wave, the generally lower levels of R have slowed down the spread of the disease. Furthermore, the age distribution of the infected group is younger, and the case fatality rate within intensive care units has fallen as treatment has improved. As a result, there has been political resistance to full lockdowns in the most severely affected states. Unfortunately, international experience suggests that delayed lockdowns result in worse outcomes for cases and fatalities, at least in the short term.
R Is for Recession Unless We Can Go Below 1 – John Authers – The pandemic continues to be as divisive a subject as it is possible to imagine, and it might yet – as the economist Gavyn Davies says – inflict a double-dip recession on us all. The problem isn’t necessarily whether to issue official stay-at-home orders, or reopen schools, but that a failure to beat the coronavirus has a chilling effect on economic activity. Exhibit a) is the extraordinary difference in the return to restaurants in Germany (which appears to have the virus relatively under control) and the U.S. (which does not). This chart is from George Saravelos of Deutsche Bank AG: America isn’t going to reopen much more until the populace is convinced that the pandemic is under control. And the differences over fiscal policy currently roiling Congress could be critical because the number of people still on some form of assistance (normal jobless claims or the specific Covid relief introduced earlier this year) remains very high. This chart from High Frequency Economics illustrates the situation clearly: It therefore grows vital to bring the R number – the number of new people who each infected individual will infect on average – below the level of 1. Once this has been reached, the disease is no longer spreading. Unfortunately, Davies writes in the Financial Times, R is above 1 in 45 of the 50 U.S. states, which between them account for 95% of U.S. GDP. Unless this number reduces quickly, the likelihood is that the disease will become prevalent enough to change people’s behavior, whatever politicians do. But if we look across the Sun Belt states where the disease is rampant, the data give at least some cautious signs for optimism. The surge in cases looks as though it should pass without overwhelming hospital systems – although there is no reason for complacency. For evidence, I return to Arizona’s Covid dashboard, which includes lots of useful information that nevertheless has caused much confusion. We now know that deaths were in fact rising significantly at the point that this chart was published. So far, according to the official tally, 2,761 Arizonans have died of the pandemic, of whom 27% are aged 64 or less. Can the death rate also hit a level in the next week, as hospitalizations appear to have done, and then start to decline? This is naturally the most important human question. But the chances of returning economic activity and avoiding a double-dip recession could also depend on physicians’ attempts to keep people across the Sun Belt alive in the next few weeks, as well as on the ability to everyone to change their behavior in the way that is needed to bring R below 0.
Covid-19 Economic Realities Sinking in as Denialism Wanes, Desperation Rises – Yves Smith – Perhaps it was last week’s continuation of bad unemployment figures combined with the recognition that PPP employment-maintenance requires were rolling off and more layoffs are likely. Maybe it was Delta saying it was cancelling half the flights it had planned to add in August. Maybe it’s the severity of the coronavirus surges. Who knows what the trigger was, or whether it’s just the accumulation of evidence, but big businessmen, who are required to project optimism, are more and more sending downbeat messages about where the economy is going.It’s becoming clear that understanding where the economy is going now depends on understanding where Covid-19 is going. The evidence from the lockdowns was that activity and spending fell before governments intervened. And the contraction was most pronounced in wealthy neighborhoods, even though the blow fell on the less-well-off who commuted in to work there. Those who have the luxury of being able to curtail their activities are largely doing so. Look at big cities. Large companies are overwhelmingly continuing work at home where they can. Business travel is dead; business hotels in NYC like the Four Seasons, the Grand Hyatt, and the Hilton on 6th Avenues are closed. We thought the initial recovery would peter out and turn into at best stagnation and more likely further decay, on the assumption of entire sectors not participating much if at all in a rebound (live entertainment, business travel, tourism, elective surgeries, restaurants) plus Covid-19 being likely to rebound in the fall. With Covid-19 infections rising in nearly all states, the situation is even worse than we’d anticipated. Most of the issues we’ll discuss below are familiar to reader, but there’s value in putting them together and seeing where they lead. First to the disease, then to the economic implications.
20Y Treasury Prices At Record Low Yield Amid Relentless Demand For Duration – Two months after the first 20Y auction in 34 years priced at a yield of 1.22% amid surprisingly strong demand, moments ago the Treasury sold its third batch of the recently restarted 20Y Treasury in the form of a $17 billion reopening (19-years-10-months) of the original Cusip (SR0), which priced at a high yield of 1.059%, far below last month’s 1.314%, yet tailing modestly to the 1.050% When Issued. The auction metrics are as follows:
- Bid to Cover: 2.43x compared to 2.63x last month and below the 2.53x in the inaugural, May auction.
- Indirects: 67.0%, well above both June’s 61.6% and May’s 60.7%
- Directs: 11.8%, a bit drop from the 16.5% in June, and also below May’s 14.7%
- Dealers: 21.2%, almost unchanged from last month’s 21.9%.
One possible reason for the modest tail is that the curve has been rallying, with 10Y trading below 0.59%, just shy of all time lows, thus providing little opportunity for concession. Of course, since there is just one auction in recent history to compare today’s auction to, superficially the auction was quite strong, although one look at the curve shows that the 20Y is somewhat “kinky” on the curve.
The US Can Now Buy Canada- Treasury Cash Balance Hits A Record $1.812 Trillion – The Treasury cash balance has been surging ever since a flood of T-Bill issuance was unleashed at the start of Q2 to prefund the trillions in fiscal stimulus outlays that are needed to keep the US economy for collapsing, with the total amount of cash on (Steven Mnuchin’s) hand rising by a record $1.4 trillion, since April 1. On July 17, shortly after the tax deadline date, the Treasury cash balance hit a new all time high as the Treasury pocketed tens of billions via taxes, and it is now a record high $1.812 trillion. Putting this amount of cash in context it represents about $5,660 for every man, woman and child in the US (which many would say should be sent out directly to these people instead of provided to US corporations so they can repurchase stock), it is greater than the market cap of Apple even with the current insane meltup in the Nasdaq, and is greater than the GDP of the 10th largest nation in the world, Canada.. … which means that if Trump wanted to, he could buy all of Canada and not even have to LBO it, but instead pay cold, hard cash for it. Joking aside, the massive cash build up is likely a preamble to forgiving the roughly $500 billion in PPP grants which will be “repaid” down using Treasury cash. Yet even so, it would mean that the Treasury would still have about $1.3 trillion left over, which is curious as the Treasury’s own most recent quarterly projections ions anticipated “only” $800 billion in Treasury cash at the end of Q2. As such, the amount of excess cash means either that the US needs to issue far less debt in the current quarter than previously forecast (about $3 trillion), or the Treasury needs to find new and creative ways of delivering all this cash to Americans (ideally individuals rather than corporations this time).
GOP coronavirus proposal takes shape — Republicans are preparing to roll out their latest coronavirus relief proposal as soon as next week as Congress faces growing pressure to act amid a surge of new cases. Senate Majority Leader Mitch McConnell (R-Ky.) is planning to start briefing his caucus next week on the forthcoming Republican proposal, which he wants to use as a framework for negotiations with Democrats. “Once we go back into session next week, I’ll begin socializing … internalizing, if you will, discussions that I’ve had during this week off, with my members,” McConnell said during a stop in Kentucky on Tuesday. Asked what the Senate’s agenda will be, McConnell separately told WRVK, a Kentucky radio station, that “this new coronavirus package will be front and center. That will dominate our time … starting next week.” McConnell and other Republicans say the roughly $3 trillion bill passed by the House in late May is “dead on arrival” in the Senate. Republicans and the White House are spending the two-week recess drafting and discussing their own measure. Lawmakers will return to Washington on Monday, which will leave the House and Senate just a couple of weeks to work out a final deal. The Senate is scheduled to be in session until Aug. 7, setting a natural deadline for the upcoming talks. The House is set to leave on July 31, though House Speaker Nancy Pelosi (D-Calif.) said on Tuesday that she would “absolutely” delay the start of recess. Some key points of the GOP measure are already taking shape: The White House has signaled that it wants a price tag of roughly $1 trillion, while Senate Republicans have drawn a red line on including liability protections for hospitals, schools and businesses to help shield them from coronavirus-related lawsuits. Those protections are scheduled to be retroactive dating back to December 2019 through approximately December 2024, with exceptions for entities that were “grossly negligent” or engaged in intentional misconduct. “That will be in any bill that passes the Senate,” McConnell said on Tuesday. In addition to liability protections, the forthcoming Republican measure is expected to focus on getting kids back in schools for in-person classes starting in the fall, including helping cover associated costs. Sen. Lindsey Graham (R-S.C.) during a press conference in South Carolina said he wanted the next bill to help “absorb” costs for school districts. Sen. Lamar Alexander (R-Tenn.), the chairman of the Senate Health, Education, Labor and Pensions Committee, recently noted that by some estimates schools could need up to $75 billion, adding, “We should spend that money for schools and for colleges.” The president has threatened to cut off funding for schools that do not reopen for classes. Economic adviser Larry Kudlow, who has called resuming in-person classes a “very, very high priority,” added to Fox News that Trump “would be willing to consider additional funding for state and local governments if the schools do reopen.” Both Treasury Secretary Steven Mnuchin and McConnell have indicated support for another round of stimulus checks, though the GOP leader has signaled there will likely be a lower income ceiling of $40,000 per year.
GOP signals Trump’s payroll-tax cut in Republican coronavirus bill – for now – Top administration officials signaled on Monday night that a payroll-tax cut, a top priority for President Trump, is in the forthcoming Republican coronavirus aid proposal, at least for now. Asked if the payroll-tax cut had to be in the Republican bill, Treasury Secretary Steven Mnuchin told reporters “it’s in the bill.” “So we’ll see,” he added. “We look forward to meeting with everybody.” White House chief of staff Mark Meadows, asked about the payroll-tax cut, added that it “plans to be in it.” “I mean, that’s part of the proposal,” he added. The administration is pushing to include a payroll-tax cut in the fifth coronavirus aid package. Trump publicly pitched the idea during a meeting at the White House on Monday with Mnuchin, Meadows, House Minority Leader Kevin McCarthy (R-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.). “I think it’s a very important thing. …I think it’s an incentive for companies to hire their workers back. … A payroll-tax cut to me is very important,” he told reporters. McCarthy told reporters after the meeting that the payroll-tax cut would be in the forthcoming GOP bill. Talk of including the payroll-tax cut in the Republican proposal is largely fluid, with a GOP bill not yet released. Republicans and the White House are still negotiating among themselves. Mnuchin and Meadows are set to brief the Republican conference during a closed-door Tuesday lunch. They will also meet again with a smaller group of GOP senators and have their first meeting with Senate Minority Leader Charles Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.). Sen. John Thune (R-S.D.) said that he personally doesn’t support including the payroll-tax cut in the next coronavirus aid package, but floated that it could be in the initial version of the Republican bill. “I would say that it is a big priority, as you know, for the President. And so his advocates, Mnuchin and Meadows and others, I think will probably try and ensure that it’s at least included in the first draft,” Thune said, before laughing. “Let’s put it that way.” Asked if that meant it could come out later, Thune added that “there are a lot of Republicans who don’t like it for a lot of different reasons.”
GOP Stimulus Bill To Include Payroll Tax ‘Deferral’ And Direct Payments, Reduced Unemployment Boost – A new pandemic relief bill being drafted by Senate Republicans and the White House would include a payroll tax ‘deferral’, as well as another round of direct payments to individual Americans – potentially at the same $1,200 level as the previous stimulus in the Cares Act. According to the Washington Post, the payroll tax deferral is in lieu of an outright cut – which keeps down the technical cost of the overall bill, but could also be waived entirely by lawmakers at a later date.”It’s been proven to be successful and it’s a big saving for the people. It’s a tremendous saving and an incentive for companies to hire their workers back and to keep their workers,” Trump said of the payroll tax relief, following a Monday meeting in the Oval Office which included Senate Majority leader Mitch McConnell (R-KY), House Minority Leader Kevin McCarthy (R-CA) and Treasury Secretary Steven Mnuchin.”The payroll tax to me is very important,” Trump added of the 7.65% tax paid by employers and employees which funds Social Security and Medicare.Mnuchin, meanwhile, “confirmed Republicans plan to reduce the size of a $600-per-week enhanced unemployment benefit approved in March, which will begin running out for millions of Americans later this week,” according to the Post, which notes that Republicans have argued that many workers are making more thanks to the enhanced unemployment benefits than they were while employed.”We’re going to make sure that we don’t pay people more money to stay at home than go to work, we want to make sure that people who can go to work safely can do so,” said Mnuchin. “We’ll have tax credits that incentivize businesses to bring people back to work, will have tax credits for [personal protective equipment] for safe work environments.”On Tuesday, White House Chief of Staff Mark Meadows will be meeting with the full Senate GOP conference at their weekly policy lunch in order to review the proposal.According to McConnell, the legislation will contain liability protection for businesses, healthcare providers and others per the Post.”We don’t need an epidemic of lawsuits.” The GOP legislation will reportedly omit funds for cities and states which Democrats have requested, and will instead allow governors and local leaders to more easily tap into $150 billion which has already been reserved, according to the Post, citing two other people familiar with the talks.
Full liability release for businesses and hospitals – It’s necessary, Mitch McConnell and his colleagues say, because of a “flood” of frivolous lawsuits crushing businesses and threatening economic recovery. So it’s important to say this clearly and out loud: there is no crisis of COVID-19 litigation. It’s made-up, it doesn’t exist, it’s a ploy to get businesses out of paying for compliance. That’s entirely it.We have all the evidence we need on this. Hunton Andrews Kurth, a law firm, has been dutifully tracking COVID-19 complaints at its website for all to see. As of today, it shows 3,521 “complaints,” but the majority of those involve petitions for prisoner release and fights over insurance claims, as well as consumer and contract disputes. Under “labor and employment” there are a grand total of 302 cases, total, across the entire country.There are 616 “civil rights” claims, and while most of those are challenges to stay-at-home orders, a couple of those might be business-related. At least one high-profile workplace case, against Tyson and JBS meatpacking plants, is being contested under the Civil Rights Act. The claim is that the largely Black and Latino workforces were not protected due to racial discrimination, compared to the mostly white managers. But that’s a very particular situation. If you’re talking about the kind of cases that McConnell claims are “flooding” courts – “conditions of employment” cases alleging wrongful death, exposure to COVID-19, or a lack of personal protective equipment – there are 67 such cases. There are 33 wrongful death cases in the “Health/Medical” section but almost all of them have been filed against nursing homes. There are 6 malpractice cases, only one a COVID-19 misdiagnosis that resulted in death (three others are about nursing homes). There’s exactly one (1) miscellaneous wrongful death tort case outside the labor and health sections.
McConnell says next COVID-19 relief bill will include stimulus checks –Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that Republicans want to include a second round of stimulus checks and Paycheck Protection Program (PPP) funding as part of their forthcoming coronavirus proposal. “Speaking of building on what worked in the CARES Act, we want another round of direct payments, direct payments to help American families keep driving our national comeback,” McConnell said from the Senate floor. The March $2.2 trillion coronavirus package included a one-time $1,200 payment for Americans who make up to $75,000 per year. The amount of the direct payment was scaled down until it hit an income level of $99,000 per year where it was phased out altogether. McConnell, during his floor speech, did not provide details on who would qualify for the next round of stimulus checks. But traveling across Kentucky during the two-week July 4 recess, he repeatedly referenced individuals who make up to $40,000 per year, suggesting Republicans could place a lower income ceiling to qualify for the direct assistance in the next coronavirus bill. Republicans embracing the next round of checks is a stark turnaround from recent months, where several GOP senators said they were either opposed to or not convinced of the need for more checks. The Trump administration initially requested two rounds of checks as part of the March coronavirus bill. But GOP senators, at the time, rejected that and instead did a one-time check. The movement toward a second round of checks comes as the economy remains rocky as the country’s coronavirus cases continue to climb. Unemployment also remains stuck in the double digits. In addition to a second round of stimulus checks, McConnell said Republicans also supported a second tranche of PPP funding, which provides loans to businesses with fewer than 500 employees. There’s bipartisan support for another round, though a key group of negotiators are looking at tightening the qualifications for qualifying for the help. “With a majority of businesses expected to exhaust their initial paycheck protection funding this summer, we’ll also be proposing a targeted second round of PPP, with a special eye toward hard-hit businesses,” McConnell said.
Senate GOP Weighs Short-Term Extension For Unemployment Aid While Lawmakers Fight Over Stimulus – With a $2.5 trillion gulf between Republican and Democratic stimulus packages – and ongoing negotiations between the White House and Senate GOP over issues such as a payroll tax cut favored by President Trump, chances of a successful negotiation happening anytime soon are fleeting at best – and will most likely continue beyond when the $600 weekly unemployment carved out under the Cares Act is set to lapse at the end of the month. Notably, the Republicans are aiming for a $1 trillion stimulus package, while Democrats have a $3.5 trillion price tag on theirs. In order to address what will undoubtedly be a protracted negotiation, lawmakers are considering a side-deal which would extend the unemployment bonus, according to Bloomberg.. While Republicans have criticized the $2,400 per month stipend as a disincentive to seek work, the plan to extend the benefits has drawn the support of GOP Senators, including Marco Rubio (R-FL), who acknowledged that lawmakers are considering the plan. That said, the size and scope of any extension is currently unknown. Both parties also support extending supplemental unemployment benefits. Some Republicans have floated the idea of structuring it so that unemployment insurance replaces 70% to 75% of previous wages rather than the flat $600 per week boost to state benefits in the last stimulus. But others, including Finance Committee Chairman Chuck Grassley of Iowa, have insisted that the solution has to be simple enough for the states to easily implement. Not in favor of the extension is House Majority Leader Steny Hoyer (D-MD), who said “I would prefer not to see a short-term extension,” adding that he wants “to give people the security they are not going to be let down and fall through the cracks in September and October.” Meanwhile, the White House has softened its tone regarding a mandatory payroll tax holiday, though on Tuesday Press Secretary Kayleigh McEnany said that President Trump is still in favor of the measures.
How Mitch McConnell’s Hostility to the Unemployment Supplement Puts Ordinary Americans’ Welfare at Risk — Although Army veteran and community volunteer Ken Merkel slashed his car insurance, quit his satellite TV service and canceled a life insurance policy, he still needs $600 in weekly federal unemployment payments to make ends meet.But this lifeline for Merkel and more than 30 million other unemployed workers is in jeopardy because Senate Republicans refuse to extend the benefits period and pass other legislation critically needed to battle the pandemic.Instead of safeguarding hard-working Americans who fell on hard times through no fault of their own, callous Majority Leader Mitch McConnell – the person who controls the Senate’s agenda – put them squarely in harm’s way. The Democratic-controlled House already passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act to combat the pandemic and help millions of average Americans avert financial calamity.The commonsense legislation would extend emergency federal unemployment benefits, due to expire at the end of July, through January. It would provide aid to local governments struggling to maintain essential public services because of COVID-19 budget crises, deliver another round of stimulus checks to hard-pressed families and ensure that those who lose their jobs continue to receive health insurance.The HEROES Act would finally force the U.S. Occupational Safety and Health Administration totake steps to protect workers from COVID-19 on the job. And it would allocate billions of dollars for COVID-19 testing and contact tracing, measures crucial for controlling the virus in hotspots like Alabama and McConnell’s home state of Kentucky.But more than two months after the House passed the HEROES Act, it languishes in the Senate. In refusing to bring the measure to a vote, McConnell flaunts both his disdain for average Americans and his indifference to the enormous damage that COVID-19 continues to inflict on the country each day.
Depleted Trump Economic Team Faces Major Test Over Extending Coronavirus Relief Efforts – WSJ – The White House’s freewheeling approach to policy-making faces a key test next week as negotiations begin with Congress over extending emergency economic relief measures during the coronavirus pandemic. The stakes are high. Economists say the next aid package will be critical in shaping the pace of recovery from the biggest economic crisis since the Great Depression. The Trump administration hasn’t publicly detailed its proposals. It has offered competing visions in recent months, at first over whether an additional package would be needed at all, and more recently over whether it should tilt more toward tax cuts and hiring incentives or toward providing more direct spending.President Trump has voiced support for both, but the administration has yet to reconcile how to do this while satisfying many congressional Republicans who want to hold down the cost of another bill.Moreover, the administration has seen heavy turnover since Congress passed a $2.2 trillion economic relief bill in March, further complicating efforts to forge consensus or provide leadership to congressional Republicans.As a result, political analysts say Senate Republicans, led by Sen. Mitch McConnell of Kentucky, are poised to play the larger role in negotiations with House Democrats on legislation that will shape the U.S. economic outlook in the crucial months before the November election.When Congress passed relief bills last spring, many policy makers expected the economy would be on its feet again by the summer. Since then, a wave of new Covid-19 cases threatens to stall the nascent recovery as dozens of states pause or reverse plans to reopen.The White House and lawmakers returning from recess next week are under pressure to pass another measure before departing for their August break, because expanded jobless benefits expire at the end of this month and the virus is spreading in more states. The White House’s negotiations are being led by Treasury Secretary Steven Mnuchin, who has a close working relationship with Trump adviser Larry Kudlow, director of the National Economic Council. Mark Meadows, Mr. Mnuchin, a former investment banker, has been the most public economic voice in the administration. He has a working relationship with both House Speaker Nancy Pelosi (D., Calif.) and Fed Chairman Jerome Powell. Some conservatives, however, see him as too eager to cut deals with Mrs. Pelosi.
GOP governors in hardest hit states split over COVID-19 response – The governors of the two largest Republican-run states are diverging in their responses to a massive surge in coronavirus cases. Florida Gov. Ron DeSantis, a major Trump ally in a key 2020 battleground, has consistently downplayed the severity of the outbreak even as it worsens in his state. Texas Gov. Greg Abbott, meanwhile, has started taking steps to address the spike in cases, though not on the same scale as many Democratic governors or even some fellow Republican ones. Their actions underscore the varying degrees to which GOP governors are willing to follow President Trump’s lead in the fight against COVID-19. DeSantis is a first-term governor who eked out a narrow victory in 2018 after being endorsed by Trump several times. Political observers believe that relationship has influenced his response to the outbreak. “Clearly, they’ve been joined together politically, and DeSantis owes the fact that he is governor today to President Trump,” said Aubrey Jewett, a political scientist at the University of Central Florida. On Friday, when Florida reported nearly 11,500 new cases and almost 9,000 people hospitalized, DeSantis said he thinks cases are stabilizing. Like Trump, DeSantis has largely been dismissive of the devastating impact of COVID-19 and at times antagonistic toward virus-related restrictions. He has refused to issue a statewide mask order, cut funding for disease treatment in prisons and eliminated the state’s entire online learning budget. His position on masks aligns him with Trump, who has declined to issue a nationwide mandate for facial coverings in public. Before last weekend, Trump had repeatedly declined to wear a mask in public, even as Republican lawmakers had urged him to set an example for the country. In Texas, another state where cases are surging, Abbott budged from some previous positions. He recently reversed his months-long opposition to masks, mandating them in certain counties. The mandate applies to most of the counties in the state, but some local sheriffs have said they will refuse to enforce it. “That’s not enough,” Obasi said. “You’ve seen mayors and you see judges begging to be able to do more but can’t because it would be more restrictive than state restrictions.” Houston’s mayor has been pleading for the authority to issue a two-week shutdown to slow the spread of the virus, but has been rebuffed by Abbott.
Thoughts on CARES II: Additional Disaster Relief – McBride – A month ago I outlined a few key items for additional disaster relief. Time is running short. This morning, the WaPo had an article on some proposals: GOP coronavirus bill likely to include payroll tax cut and tie school money to reopening plansThe emerging GOP coronavirus relief bill appears likely to embrace some of President Trump’s key priorities, despite opposition from within his own party, including a payroll tax cut, very little aid to state and local governments, and measures tying school funding to the reopening of classrooms.The proposed payroll tax deferral is inane (using a “deferral” as opposed to a cut is an accounting gimmick). This proposal targets money for people with a low marginal propensity to consume (MPC).Compare that to the current Federal Pandemic Unemployment Compensation (FPUC) that targets unemployed people with a high MPC, and helps them pay their bills (grocery, rent, mortgage, etc). Other people’s spending is our income, so during this crisis, we want to provide disaster relief to the people that are most impacted by the crisis (the unemployed), and those with a high MPC. A few suggestions:
First, we need to address the health crisis. This means additional money for hospitals, testing, trace-and-isolate programs, and personal protection equipment (PPE). Test results are taking far too long, and that isn’t useful. We need to significantly improve our testing (and turnaround). Also, it appears PPE is running low again for our healthcare workers. This puts these frontline workers at risk.
Second, we need to provide additional disaster relief to the unemployed. I discussed this last month, and this includes an extension of the Extension of Federal Pandemic Unemployment Compensation (FPUC), even if the amount is reduced. This is critical, or we will see a significant slump in spending in August, and a sharp increase in delinquencies (rents, mortgages, credit cards, etc). We will also need to extend the term of the Paycheck Protection Program (PPP). This program has kept many small businesses alive, and millions of employees employed. There will have to be additional disaster relief for these companies, or millions of people will be let go soon.
Third, we need to provide State government relief. It is time for a substantial state relief package. Without relief, the states and local governments will have to start laying off a significant number of employees. These are some key areas, and it seems very likely there will be a “CARES II” act. But it has to be sized and structured appropriately.
Lawmakers seek extension for tribes to spend stimulus money following Treasury delays – Lawmakers are stepping in to seek more time for tribal governments to spend coronavirus relief money after funding slated for Native American communities was delayed by the Treasury Department. A new bill, which has been introduced by bipartisan teams in both the House and Senate, would give tribal governments until December 30, 2022 to spend funds that would otherwise must be spent by the end of this year. “Tribal communities ravaged by the COVID-19 pandemic received federal resources and relief far too late – pitting them right up against fast approaching spending deadlines,” said Sen. Martin Heinrich (D-N.M.), one of the Senate sponsors, adding that the legislation “will allow tribal governments extra time to address the planning needs for these critical funds.” Tribes were allotted $8 billion in funds through the $2.2 trillion March CARES legislation. But the funding was repeatedly held up by Treasury Sec. Steven Mnuchin, who delayed releasing the funds as litigation proceeded over whether corporations affiliated with tribes should receive funds. So-called Alaska Native Corporations, which have vast land holdings and secure significant profits from timber and oil sales, had sued to receive some of the funding but were blocked by a May court ruling. Treasury began to release some of the funding in May, but it wasn’t until a June court decision by the same judge that Mnuchin was forced to release all of the funding. “The Secretary has now taken more than twice as much time as Congress directed to distribute all CARES Act funds,” U.S. District Judge Amit Mehta wrote at the time. “The 80 days they have waited, when Congress intended receipt of emergency funds in less than half that time, is long enough.”
Strip Clubs Being Left Bare By Paycheck Protection Program -Among everybody’s favorite “small businesses” that shut down due to the pandemic earlier this year were our fine country’s strip clubs. And like every other business in the “hospitality” industry, these clubs hoped the government’s Paycheck Protection Program (PPP) would help them stay afloat during the shutdown. But a little known provision in the Trump administration’s program that bans companies that “present live performances of a prurient sexual nature” from participating has stopped some clubs in their tracks. Several have sued and Federal judges have rebuked the SBA for excluding them, according to Reuters. It’s the latest in a growing list of criticisms of the program, which has been rife with waste, fraud and abuse since its inception. Meanwhile, some legitimate businesses in the hospitality industry, like gentleman’s clubs, can’t get access to funds. It’s still unclear if the SBA will even work with the clubs that have won court orders.Brad Shafer, an attorney who convinced a federal judge in the U.S. District Court for the Eastern District of Michigan to issue a ruling in May ordering the SBA to work with more than 50 strip clubs, said: “The ball is in the SBA’s court right now. We still don’t know the end of this story.” Reuters was able to find 36 organizations that represented “dozens” of strip clubs across the country that were approved for between $11.15 million and $27.95 million from the program. Some businesses had to wait until after the court’s decision to get their funding. John Meehan, who owns Cheerleaders strip clubs in New Jersey and Philadelphia, was denied by PNC for loans. He said: “I wasn’t complaining, but I was scratching my head.” A spokeswoman for PNC said she didn’t know why the loans were denied: “Under those guidelines, applicants were responsible for certifying that they met applicable SBA eligibility requirements, and lenders were not required to independently verify such eligibility.”
Not ageing well . . . A month ago, when the public health community was warning about the dangers of premature opening and our reality show President was turning mask-wearing into a culture war issue, David Henderson and Jonathan Lipow decided to use precious space on the Wall Street Journal op ed page to publish an essay titled “The Data Are In: It’s Time for Major Reopening” (ungated at the link). They argue that “populationwide lockdowns should end” and even suggest that social distancing has been harmful. OK, then, I guess there’s no need to second-guess re-opening bars in Florida or Arizona. And no need to worry about testing and contact tracing, despite the fact that one of the papers they cite to support their position recommends it. And no need to tear our hair out worrying about masks. It’s all good.
Trump administration expands assault on coronavirus testing – In an interview with Chris Wallace that aired Sunday on “Fox News Sunday,” US President Donald Trump continued his attacks on mass coronavirus testing in the United States. While claiming that countries in Europe “don’t test,” supposedly explaining the continent’s lower case count, Trump decried testing in the US for “really skew[ing] the numbers.” He asserted, “In a way we’re creating trouble.” The president also said that “many of those cases shouldn’t even be cases,” because “many of those cases are young people that would heal in a day.” Trump then added, “They have the sniffles and we put it down as a test.” Wallace was forced to correct Trump, stating that “Testing is up 37 percent. Cases are up 194 percent. It isn’t just that the testing has gone, the virus has spread. The positivity rate has increased.” Trump’s interview was broadcast as the number of cases in the US has already exceeded 3.8 million, more than any other country in the world, and as the number of deaths has soared to 143,000. Worldwide, there are now 14.6 million cases and 608,000 deaths. The majority of reported daily new cases and deaths are from the United States, Brazil, India, South Africa and Mexico. Florida continues to be the epicenter of the pandemic in the United States, having recorded more than 12,000 new cases yesterday and at least 87 deaths. California had the second highest number of new cases, 8,115, and 11 deaths. Ohio, which Governor Mike DeWine has touted as doing “very well,” had the second highest death toll yesterday, 40 people, along with more than 1,000 new cases. Texas ranked third in both metrics, with 7,389 new cases and 39 reported deaths. Even New York, which has been hailed as a success story in controlling the coronavirus after being the world epicenter in April, recorded 850 cases and 18 deaths. The state of Montana, which had two multi-day stretches of no new cases in May, now has one of the fastest-growing outbreaks in the country. Other states with large case counts or deaths rates – or both – include Georgia, Arizona, Louisiana, North Carolina and South Carolina. According to the coronavirus tracking website covidexitstrategy.org, 17 states in the American South and West have “uncontrolled spread” of the disease while only four across the country are “trending better” in regard to their outbreak. In the interview with Fox News, Trump also reiterated his demand that children attend school in the fall, regardless of their safety. “Young people have to go to school. There are problems when you don’t go to school, too.” He then again threatened to withhold federal money from states and school districts that don’t reopen. “There is going to be a funding problem. When they don’t open their schools, we’re not going to fund them.”
Trump implodes on ‘Fox News Sunday’ – Most of the time, you know when Donald Trump’s going to appear on Fox News. Because he tells you ahead of time. Trump’s the only politician today who’s his own publicist, alerting his 55 million Twitter followers whenever he’s going to show up on “Fox & Friends,” or with prime-time hosts Lou Dobbs, Sean Hannity, Tucker Carlson or Laura Ingraham. For him, even though he’s been president for 3 1/2 years, it’s still all about ratings, ratings, ratings. Trump notifies us when he’s going to be on Fox News most of the time. But not the last time. He didn’t tweet a peep about his appearance with Chris Wallace on “Fox News Sunday,” July 19. Why not? Because it was a total, unmitigated disaster. For the first time, Trump was not allowed to ramble, change the subject, exaggerate or repeat his oft-repeated lies. He tried, but Wallace challenged him, corrected him, fact-checked him and badgered him into answering the question – leaving Trump flustered, confused, angry, baffled and unable to substantiate any one of his standard big lies. On the coronavirus, for example, Trump again insisted the United States has done more testing and has a lower mortality rate than any other country – which Wallace showed is demonstrably not true. Trump also showed a stunning lack of knowledge about how bad things are and lack of concern for victims of the disease. He baffled public health officials by claiming that many cases amount to nothing more than a bad case of the “sniffles,” that will “heal in a day.” He again insisted that the “Chinese virus” would someday “disappear.” “I’ll be right, eventually,” he bragged, as if he were talking about the Astros winning another World Series “eventually” – showing no empathy for those who might die in the meantime. In fact, pressed by Wallace for his reaction to over 140,000 deaths from COVID-19 so far, the best Trump could offer was, “It is what it is.” On the Black Lives Matter movement, Trump doubled down in opposition. He again claimed, wrongly, that whites were as likely to be victims of police abuse as Blacks. He defended the Confederate flag, insisting it has nothing to do with racism. He vowed to block any attempt by the Pentagon to remove the names of Confederate generals from military bases in the South. “I don’t care what the military says,” Trump told Wallace. He also twice charged that former Vice President Joe Biden had publicly called for defunding the police, which Wallace again showed was not true. On 2020, Trump also revealed how out of touch he is with reality. He dismissed two recent polls showing him losing to Biden by double digits as “fake polls.” He claimed Biden was “not competent to be president,” insisting that “Joe doesn’t even know he’s alive.” And, like the wannabe dictator he is, Trump refused to say whether, were he to lose, he’d abide by the results of the election. “I have to see. Look, I have to see,” Trump told Wallace.
Undermining the CDC Puts Lives at Risk — Michael R. Bloomberg – In the midst of a devastating pandemic, President Donald Trump is destroying the CDC’s ability to discharge its most vital responsibility: to maintain active surveillance of diseases by gathering, analyzing and reporting data. Even by this president’s low standards, this is unconscionable. With Covid-19 surging out of control and health-care workers in many states struggling to keep up with the patient load, the president has authorized the Department of Health and Human Services to demand that hospitals change the way they report data to the federal government. Stop sending statistics on patient numbers, bed availability, ventilators and other key data to the Centers for Disease Control and Prevention, the agency said, and instead direct the information to HHS headquarters in Washington. Oh, and make this change within two days.Don’t mistake this new policy for a bureaucratic adjustment of no great significance, or just one more effort by the Trump administration to annoy its critics. It’s much worse than that. This change is so reckless – make no mistake: people will die as a result – it borders on criminality.It isn’t the first time that President Trump’s administration has sidelined the CDC, a public health institution that has been a model for the world. Administration officials have often questioned the agency’s guidance, including on mask-wearing and school reopening, and have gone so far as to accuse it of “undermining the president” in advising pregnant women of the risks of Covid-19. Robert Redfield, the current CDC director, has not conducted the kind of regular press briefings that, in a normal administration, give the public accurate information on disease outbreaks. On Friday, it blocked CDC officials from appearing at a House committee hearing on school reopenings. But this latest change is the most destructive so far. The CDC’s long-established National Healthcare Safety Network, the biggest and most-used infection-tracking system in the U.S., is trusted for the accuracy and completeness of its data. Until recently, it gathered the Covid-19 hospital statistics, analyzed them and reported back to the states twice a week. Now, the HHS has turned the job over to a Pittsburgh company, TeleTracking Technologies, which is to be paid more than $10 million, with no guarantee that the information will be made public.
Democrats Demand Trump Reverse Order Directing COVID-19 Data to HHS – Democratic lawmakers in the House and Senate are demanding that the Trump administration immediately reverse an order requiring hospitals to send Covid-19 patient information directly to a Health and Human Services database instead of the Centers for Disease Control and Prevention, a change that threw the data-collection process into chaos as states struggle to cope with soaring infections. NPR reported Friday that “hospital data in Kansas and Missouri is suddenly incomplete or missing” following the Trump administration’s directive, which took effect on July 15 to the dismay of experts and local officials who previously relied on the CDC system to track the coronavirus and allocate resources.”The Missouri Hospital Association reports that it no longer has access to the data it uses to guide statewide coronavirus planning, and the Kansas Hospital Association says its hospital data reports may be delayed,” according to NPR. “The absence of the data will make it harder for health and public officials, as well as the general public, to understand how the virus is spreading.”Led by Sen. Patty Murray (D-Wash.), 46 members of the Senate Democratic caucus sent a letter to Vice President Mike Pence and Coronavirus Task Force Coordinator Deborah Birx demanding that the White House reverse its decision to divert Covid-19 data from the CDC to an HHS database run by TeleTracking Technologies, a private contractor.”In the midst of a global pandemic, these changes pose serious challenges to the nation’s response by increasing the data management burden for hospitals, potentially delaying critical supply shipments, compromising access to key data for many states, and reducing transparency for the public,” the senators wrote. “The Trump administration’s mismanagement of the Covid-19 response and refusal to heed public health expertise continue to put the country in a dangerous position.”Nearly 70 House Democrats on Friday sent a letter to HHS Secretary Alex Azar urging the agency to reverse the new directive, which the Trump administration portrayed as an attempt to streamline the data-reporting process.”This is another unethical and irresponsible effort to hinder public access to data and remove transparency and accountability from the administration’s poor management of this pandemic,” the lawmakers wrote.
Pressed on Surging Covid-19 Cases and Test Shortages, Trump Says U.S. Is ‘Envy of the World’ – President Donald Trump claimed in a newly aired Fox News interview Sunday that the United States is the “envy of the world” when it comes to Covid-19 testing capacity, a boast that came as state and local leaders continue to raise alarm about widespread test shortages and delays as coronavirus infections surge nationwide.Pressed by Fox News’ Chris Wallace on rising Covid-19 infections, shortages of testing kits and personal protective equipment for frontline workers, and rapidly dwindling hospital capacity, Trump – who is attempting to block billions of dollars in new funds for testing and contact tracing – said he takes responsibility for how the U.S. has handled the pandemic but added that “some governors have done poorly.””They’re supposed to have supplies … I supplied everybody,” the president said. “Now we have somewhat of a surge in certain areas. In other areas we’re doing great. But we have a surge in certain areas. But you don’t hear people complaining about ventilators, we’ve got all the ventilators we could use, we’re supplying them to other countries.””We have more tests by far than any country in the world,” Trump said. When Wallace pointed out that the Covid-19 positivity rate is rising sharply even as more tests are conducted, Trump said dismissively: “Many of those cases are young people that would heal in a day. They have the sniffles and we put it down as a test.””Cases are up because we have the best testing in the world,” Trump said, once again falsely blaming the increase in testing for the growing number of positive coronavirus cases in the U.S., which now leads the world in confirmed infections. “No country has ever done what we’ve done in terms of testing. We are the envy of the world.”
Trump Compares Coronavirus to ‘Sniffles’ as U.S. Death Toll Tops 140,000 -President Donald Trump continued to downplay the severity of the coronavirus pandemic one day after the U.S. death toll passed 140,000, according to a Reuters tally. “Many of those cases are young people that would heal in a day,” Trump said in an interview with Fox News Sunday, as NPR reported. “They have the sniffles, and we put it down as a test.” Also on Saturday, the global death toll rose past 600,000, Johns Hopkins University said, as The Associated Press reported. The world also broke its record for the most new cases reported in a day, with 259,848. The U.S. continues to lead the world in both deaths and cases. Out of more than 14.5 million cases worldwide, it is responsible for more than 3.7 million of them, according to Monday morning figures from Johns Hopkins University.Trump’s remarks came during a discussion of the rising U.S. caseload with Fox News host Chris Wallace,Business Insider explained.During the interview, Trump claimed that the rising case count was due to an increase in testing. “We go out into parking lots, and everything, everybody gets a test. We find, if we did half the testing – with all of that being said, I’m glad we did it, this is the right way to do it. I’m glad we did what we’re doing, but we have more tests by far than anywhere else in the world,” he said, as Business Insider reported. Wallace challenged that the rise in cases could not only be attributed to more tests – while testing has increased 37 percent, cases have increased 194 percent, he said. “it isn’t just that the testing has gone up but that the virus has spread, the positivity rate has increased, the virus is worse than it was,” Wallace pointed out. It was at this point that Trump said most of those cases were “sniffles” that would never have been uncovered if it weren’t for extensive testing. This isn’t the first time that Trump has diminished the seriousness of the new disease. In March, he told Fox’s Sean Hannity that people with mild cases could go to work and get better. This contradicted Centers for Disease Control and Prevention advice that anyone exhibiting symptoms should stay home and contact a doctor.
U.S. to pay Pfizer, BioNTech $1.95 billion for COVID-19 vaccine –(Reuters) – The U.S. government will pay nearly $2 billion to buy enough of a COVID-19 vaccine being developed by Pfizer Inc (PFE.N) and German biotech BioNTech SE (22UAy.F) to innoculate 50 million people if it proves to be safe and effective, the companies said on Wednesday. The contract for 100 million doses of the vaccine amounts to a $39 price tag for what is likely to be a two-dose course of treatment. The contract is the most the United States has agreed to spend on a vaccine, although previous deals with other vaccine makers were intended to also help pay for development costs. Pfizer and BioNTech will not receive any money from the government unless their vaccine succeeds in large clinical trials and can be successfully manufactured, according to a Pfizer spokeswoman. Under the agreement, the government would also have an option to procure an additional 500 million doses. Pfizer said the price for the additional doses would be negotiated separately if the U.S. orders them. The vaccine, if successful, will be made available to Americans at no cost, although their health insurance may be charged, the U.S. department of Health and Human Services (HHS) said. Pfizer Chief Executive Albert Bourla has said the company intends to make a profit on the vaccine. He has also said that spending its own money, rather than government money to develop the vaccine should help speed the process. Pfizer hopes to start its pivotal late-stage trial of the vaccine as early as next week, pending regulatory approvals, Chief Scientific Officer Mikael Dolsten said in an interview. “We’re already starting to the process of allocating vaccine vials to a variety of different clinical sites in the U.S. and elsewhere,” Dolsten said. “We’re looking at the map and getting good advice from the CDC. Where do we have the greatest incidence of COVID-19 disease?” Vaccine trials are more efficient if conducted in areas where high rates of active infection are prevelant.
California governor told he had to ask and thank Trump to get help with COVID-19 response: report –White House officials told California Gov. Gavin Newsom (D) he would need to personally appeal to President Trump and thank him if he wanted aid in obtaining coronavirus test swabs, according to The New York Times. The move was part of a deliberate decision by the Trump administration in mid-April when the White House, deciding the pandemic was on the downslope, decided it had given state governments all the aid they would need to handle any further outbreaks, the Times reported. Deborah Birx, the chief coordinator for the White House’s coronavirus task force, told officials on April 11 that while Boston and Chicago were nearing their peak, other hard-hit cities were on the other side of the crisis. Birx was consistently more optimistic than her colleague and friend Anthony Fauci, telling the task force the virus had hit its peak in mid-April and appearing open to the idea that some death and hospitalization counts could be inflated. Administration and state officials told the Times that Birx played a greater role than previously known in the White House’s public position that the virus was on the decline and that the models she used for the assessment did not properly capture how Trump’s eagerness to quickly return to normal would undermine social distancing measures. She frequently characterized the task ahead after she said the virus had peaked was “putting out the embers,” phrasing White House press secretary Kayleigh McEnany and the president would later adopt. The task force proceeded assuming the U.S.’ curve would reflect that of Italy, which turned out not to be the case. Moreover, the Times reported, the administration did not grasp that their assessment of the virus’s spread had been incorrect until early June, and internal fissures remain on how much they should acknowledge in public. Miami Mayor Francis Suarez (R), himself a survivor of the virus, told the Times the White House was far more focused on reopening businesses than developing contingency plans for cities and states in case of a resurgence. “It was all predicated on reduction, open, reduction, open more, reduction, open,” he told the Times. “There was never what happens if there is an increase after you reopen?”
Are Anti-Mask Masks Legal? – There is a new form of protests sweeping across the country as individuals put on anti-Mask masks to defy mandatory mask rules. The anti-masks are made of thin material, mesh or even crochet and are advertised as having no protective qualities for Covid-19. The question is whether they are legal. They appear to be so. A popular video shows a man wearing a mesh mask to a Tampa Walmart and saying “It was almost like not wearing a mask at all. Nobody cared. That’s because it’s not about safety. It’s all about compliance.” Most laws like Alabama‘s only refer to a “covering” not a mask with protective qualities: each person shall wear a mask or other facial covering that covers his or her nostrils and mouth at all times when within six feet of a person from another household in any of the following places: an indoor space open to the general public, a vehicle operated by a transportation service, or an outdoor public space where ten or more people. Maryland requires masks: each person shall wear a mask or other facial covering that covers his or her nostrils and mouth at all times when within six feet of a person from another household in any of the following places: an indoor space open to the general public, a vehicle operated by a transportation service, or an outdoor public space where ten or more people are gathered.” However, consider the definition of face coverings:“Face Covering” means a covering that fully covers a person’s nose and mouth, but is not a Medical-Grade Mask. The term “Face Covering” includes, without limitation, scarves and bandanas.”A mesh mask does cover the fact and, since scarves can be used, there is no effort to indicate a threshold protective level or dimension. There are vast differences between masks and stores are unlikely to want to police the sufficiency of masks, particularly if the states do not specify minimal standards. Even creative work on the noun “cover” does not help much. Oxford defines it as simply “a thing that is put over or on another thing.” A permeable material still covers the mouth and nose. It just does little else. Twitter is replete with such anti-masks with such disclaimers as “Stylish, breathable and don’t protect you from a darn thing! Masks required? No problem! Breath free while making a statement.”
‘Bizarre’ that face masks are a partisan issue, NIH chief says – It’s “bizarre” that mask-wearing has become a partisan issue in the U.S., and the “divide between different political perspectives” is making it harder to curb the coronavirus, the director of the National Institutes of Health said.Speaking Sunday on NBC News’ “Meet the Press,” NIH Director Dr. Francis Collins said he didn’t want anybody to think that wearing a mask is “something optional” as the nation attempts to tamp down the COVID-19 outbreak, which is running at record levels.”Imagine you were an alien coming to the planet Earth and looking around,” Collins said. “You would be totally astounded, puzzled, amazed. … How could it be that something as basic as a public health action, that we have very strong evidence can help, seems to attach to people’s political party?” Opinion polls have shown that many more Democrats than Republicans say masks should be worn in public places most or all of the time. Dr. Scott Gottlieb, former commissioner of the U.S. Food and Drug Administration, echoed the plea to wear face masks on CBS News’ “Face the Nation,” adding that it might be “wishful thinking” that everyone will mask up.”There’s a hardened percentage of the population that just feels that the masks are some infringement on their liberty,” Gottlieb said. The noncompliance makes it difficult to get the virus’ spread fully under control, he said.President Trump said in a “Fox News Sunday” interview that he wouldn’t issue a nationwide mask order as a matter of “freedom.”Collins said nobody at the White House has asked him to demote or fire Dr. Anthony Fauci, a once ubiquitous figure at coronavirus task force briefings who hasn’t spoken publicly at the White House since late April. The National Institute of Allergy and Infectious Diseases, which Fauci has led since 1984, is part of the Bethesda, Md.-based NIH.Trump, in his pre-taped comments on Fox, called Fauci a “little bit of an alarmist” but said the two men have a “great relationship.”
Trump says coronavirus will ‘get worse before it gets better’ – President Trump said Tuesday that the novel coronavirus outbreak in the United States would “get worse before it gets better” amid surges in cases in parts of the country. “It will probably, unfortunately, get worse before it gets better,” Trump, reading from prepared remarks, told reporters at a White House briefing Tuesday evening. “Something I don’t like saying about things, but that’s the way it is.” He went on to implore Americans to wear masks, practice physical distancing and wash their hands, and he urged young Americans to avoid bars. “We’re asking everybody that when you are not able to socially distance, wear a mask,” Trump said. “Whether you like the mask or not, they have an impact. They’ll have an effect, and we need everything we can get.” The remarks represented a notable shift in tone for the president. Until Tuesday, he had largely downplayed the rise in cases in states like Florida, Arizona, Texas and California, and for weeks he had declined to urge the use of face masks. The United States has repeatedly set daily records for new coronavirus cases, eclipsing 76,000 new cases on Friday. The country recorded more than 1,000 coronavirus deaths Tuesday, representing the first time since May it has surpassed that grim milestone. As of Tuesday afternoon, more than 141,000 people had died from COVID-19 in the U.S., according to Johns Hopkins University. During an interview that aired on “Fox News Sunday,” Trump falsely attributed the rise in cases to increased testing capacity and asserted that the U.S. would “put out the flames.” On Tuesday, Trump acknowledged a “concerning rise” in cases in the western and southern parts of the country while expressing optimism that the federal government and state leaders could meet the challenge. He said his administration is increasing supplies and personnel to states that have seen a surge in cases.
PANDEMIC: Trump says open schools, but FEMA keeps its closed — Monday, July 20, 2020 — The Federal Emergency Management Agency has scrapped plans to reopen its three world-renowned training academies for first responders next month and will keep the campuses closed until at least Oct. 1 because of the growing COVID-19 pandemic. FEMA postponed a scheduled Aug. 2 reopening of its training academies in Maryland and Alabama at the same time President Trump was pressuring public schools to open their campuses to students when classes resume next month.Trump has threatened to withhold federal education funds from school districts that keep their campuses closed and has said schools in some European countries have opened successfully.The FEMA academies, which have been closed since March, are staying shut because “FEMA’s top priority remains the health and safety of FEMA employees, instructors, students, and visitors on campus,” the agency said on its website last week.FEMA has not provided online classes to replace the courses that were taught at its campuses in Emmitsburg, Md., and Anniston, Ala.Although FEMA said the campuses would remain closed “through at least October 1,” a senior FEMA official said the closures could last until next year.The closures are generating concern among senior members of Congress and emergency management experts as federal agencies are predicting above-normal hurricane and wildfire seasons. “If FEMA is unable to restart its emergency response training programs in the near future, it will have ramifications for disasters this year and for years into the future,” said House Homeland Security Chair Bennie Thompson (D-Miss.) in a statement to E&E News. The academies train tens of thousands of emergency responders a year. Rank-and-file firefighters and paramedics get a week or two of basic-level training that can help them maintain a professional certification. Police commissioners and fire chiefs compete to enroll in the yearlong part-time National Emergency Management Executive Academy. The ongoing closure of the academics deprives emergency personnel of essential training, Manning said, and could influence the debate over opening public schools.
McCarthy introduces legislation to sanction foreign hackers targeting COVID-19 research -House Minority Leader Kevin McCarthy (R-Calif.) on Tuesday introduced legislation to sanction foreign hackers involved in attempts to target and steal research on COVID-19 vaccines and treatments. The Defend COVID Research from Hackers Act would allow the president to impose sanctions on foreign individuals engaging in hacking activity that compromises economic and national security or public health and freeze any American assets of these individuals. The bill also requires the secretary of State, in consultation with the director of national intelligence, to submit a report to Congress within 180 days of the bill’s passage on “the extent of known cyber-enabled activities or attempted cyber-enabled activities” around COVID-19. McCarthy said in a statement that Congress should take steps to protect American researchers working on a “Victory Vaccine” to combat COVID-19, vowing that the U.S. would share any vaccine it developed with the world. “We have seen that other nations – like China – use this virus to exploit other countries for political advantages,” McCarthy said. “We refuse to allow our innovation to be exploited by China, Russia, or any other hackers. We are going to protect the cure from falling into the wrong hands so that no one can use it as leverage for their own malicious ends.” He emphasized that “the stakes are too high for these significant cyber crimes to go unpunished. My legislation will hold these criminals accountable.” Rep. Mark Green (R-Tenn.) proposed the addition of the bill to the National Defense Authorization Act (NDAA) on the House floor Tuesday directly before the House was scheduled to vote on the overall legislation, arguing that foreign efforts to target COVID-19 research, particularly from Chinese actors, should not go unpunished. “Americans are dying, China is hacking and we in Congress must act,” Green said. “Hacking American intellectual property will not be tolerated, especially when it jeopardizes the lives of Americans. If we can’t agree on punishing those who hack the heroes fighting for a cure for COVID, I don’t know what we can agree on.”.
Looming Immigration Services Shutdown May Fuel Voter Suppression in 2020 – Alexis Goldstein -Trump’s ghoulish exploitation of the coronavirus pandemic to further his anti-immigrant policies has also manufactured a crisis at the federal agency responsible for green cards, citizenship, asylum and myriad other immigration matters. U.S. Citizenship and Immigration Services (USCIS) is about to run out of money, and if Congress doesn’t act, will furlough more than two-thirds of the USCIS workforce in August. Such a shutdown would further extend the “invisible wall” Trump created to suppress immigration of all kinds. In an election year in which Trump seems determined to use every tool of voter suppression possible, the shutdown of USCIS could mean hundreds of thousands of potential new voters may be denied the ballot. Trump’s policy changes pre-pandemic were already creating staggering wait times at USCIS, a problem that received congressional scrutiny. But coronavirus, combined with Trump’s exploitation of the crisis to shut down immigration even further, is not only exacerbating the backlog, but is also leading to a 50 percent decrease in fees beginning in March. This has left USCIS, which is almost entirely funded by fees paid by immigrants, in need of a $1.2 billion bailout. Without it, the agency says it will be forced to furlough nearly two-thirds of its entire staff (13,400 of 20,000 employees) on August 3. When Trump took office, USCIS had a surplus. Less than three years later, the agency finds itself in crisis. Observers of USCIS believe the funding crisis, although exacerbated by coronavirus, is due to mismanagement. Trump repeatedly raided USCIS to fund Immigration and Customs Enforcement (ICE): In 2019 and 2020 USCIS transferred $415.2 million total in revenue to ICE. Under Trump, USCIS enacted a slew of new policies and regulations that both suppress immigration and divert resources and money. For instance, changing regulations regarding who is considered a “public charge” to prevent people from becoming green card holders, suspending Deferred Action for Childhood Arrivals (DACA), and eliminating Temporary Protected Status (TPS) for hundreds of thousands of people unable to return to their country of nationality due to armed conflict or natural disaster. And the White House suspended the H-1B program – these are visas often employed by wealthy employers like Wall Street and tech firms to hire temporary workers. These visas can cost nearly $6,000 per worker, so the Trump administration’s changes to this program significantly cut into USCIS revenues.
Biden Proposes Ending the GILTI Loophole — Alex Parker covers an interesting and important tax policy issue: Former Vice President Joe Biden’s recent proposal to secure medical supply chains in the wake of the COVID-19 pandemic includes tweaks to the 2017 federal tax overhaul, reigniting the debate about whether its international provisions are pushing manufacturing facilities offshore … Former Vice President Joe Biden’s recent proposal to secure medical supply chains in the wake of the COVID-19 pandemic includes tweaks to the 2017 federal tax overhaul, reigniting the debate about whether its international provisions are pushing manufacturing facilities offshore … the TCJA exempted most foreign income from taxation as part of a shift toward a more territorial tax system, similar to those used in Europe and much of the world. But it also enacted new provisions, including the GILTI tax and the base erosion and anti-abuse tax, which lawmakers said would block companies from shifting U.S. income abroad. Many of the structures for tax avoidance that have drawn public scrutiny and outrage over the past decade have involved intangibles, which are relatively easy to move from jurisdiction to jurisdiction to chase the lowest tax rate. But the very attribute that makes them difficult to tax also makes them difficult to define. Rather than attempt to pinpoint the intangibles themselves, the TCJA instead targets unusually high returns on tangible assets. Under the GILTI provision, the total foreign income of a U.S. company, beyond a 10% return on its offshore depreciable tangible assets, is taxed at 10.5%. That rate is half of the overall corporate rate of 21%. As the bill was passed by Congress in 2017, Democrats and outside critics quickly noted that the GILTI tax could encourage companies to shift investments in tangible assets abroad. Because the GILTI tax kicks in only at a 10% return on foreign tangible property, the more valuable that property is, the smaller the ultimate GILTI tax bill will be. Even further, because GILTI is calculated at the global level, in most cases it would not matter where new tangible assets were located; as long as they were offshore, they would decrease the GILTI tax. A reduced rate on foreign-derived intangible income, or domestic income defined through a formula similar to GILTI, also creates a similar incentive, critics contend. If a company has tangible assets at home, it will have less income defined as FDII, and less of the tax benefit. The 2017 tax cut for rich people was written in secret by Republicans who had told us that it would somehow stop transfer pricing manipulation and would encourage onshoring. But when the details were released, a lot of economists including conservative economics were taken back by the complexity of the international provisions.
Biden Unveils $775 Billion Plan For Universal Child & Elder Care – Days after unveiling his ‘Green New Deal’ inspired infrastructure plan that will move the US to “100% green energy” by 2035 (much to the dismay of the energy industry, and taxpayers, who would probably rather see that money go to building bridges, airports and highways), the former Vice President is back with another expansionist, big-government plan to implement universal childcare across the US. Biden’s plan calls for shelling out $775 billion to boost child care and care for the elderly. We imagine Biden’s campaign advisors feel that such a promise might resonate with suburban parents anxious about school closures and the struggle to find child care while they work.The third plank of the Democratic nominee’s economic plan, it calls for universal preschool for three- and four-year-olds and would also eliminates the waiting list for home and community services under Medicaid while offering low-income and middle-class families a tax credit of as much as $8,000 to help pay for child care. If all that weren’t enough, the law increases pay for caregivers and educators.Amusingly, Biden’s “caring economy” plan, if enacted, would be financed by new taxes on the sales of commercial real estate, which would deal another blow to the already hard-hit CMBS market.Here’s more from BBG:Joe Biden on Tuesday unveiled a $775 billion plan to bolster child care and care for the elderly that would be financed by taxes on real estate investors with incomes of more than $400,000 as well increased tax compliance by high-income earners.The Biden campaign did not fully explain how the plan for a “caring economy” would be financed, but officials highlighted some tax breaks they would seek to eliminate to raise revenue.In particular, a senior campaign official said a Biden administration would take aim at so-called like-kind exchanges, which allow investors to defer paying taxes on the sale of commercial real estate if the capital gains are reinvested in another property. The official also said they would prevent investors from using real estate losses to lower their income tax bills.
Everybody that has a baby gets a million dollars,’ Kanye West says at 1st campaign rally – Kanye West kicked off his first presidential campaign event in North Charleston, South Carolina, Sunday evening, a day before the state’s deadline to file signatures as an independent candidate. The rapper appeared shortly after 5 p.m. at the Exquis Event Center rally with the numbers “2020” in his hair.West invited a couple of young women from the audience to speak on stage about issues that concerned them, such as education inequity and police brutality. He then launched into a speech that touched on a wide range of topics, from his battle with opioids to his business dealings with Adidas, before elaborating on his pro-life stance.He broke into tears talking about what he said was his father’s desire to abort him, and his wife having their first child “even when I didn’t want to.””I almost killed my daughter. I love my daughter. … God wants us to create,” said West, who has four children with Kim Kardashian West.”No more Plan B — Plan A,” he said, to a mixed response from the audience.West clarified that he thinks abortion should be legal, but that there should be more support for those who need it.”The maximum increase would be everybody that has a baby gets a million dollars or something in that range,” said West.
President Trump Cancels Jacksonville Component Of Republican National Convention – The Jacksonville, Fla., component of the Republican National Convention has been canceled, President Trump announced on Thursday, as cases of the coronavirus continue to spike across that state. “I looked at my team and I said the timing for this event is not right. It’s just not right with what’s been happening,” Trump said at the daily coronavirus briefing. “They said ‘Sir, we can make this work very easily.’ … I said there’s nothing more important in our country than keeping our people safe, whether it’s from the China virus or the radical left mob.” Delegates to the convention will still meet in Charlotte, N.C., to hold small, formal business meetings as planned, but Trump’s keynote Jacksonville speech will no longer take place. A Thursday Quinnipiac University opinion poll of Florida voters shows that 62% of respondents thought it would be unsafe to hold a convention in the state, compared with 34% who thought it could be managed safely.
Trump aims to bar undocumented immigrants from counting toward House representation – President Trump on Tuesday issued an order that blocks undocumented immigrants from being counted in the 2020 census for the purpose of allocating congressional representation. The order, which immediately prompted legal challenges, amounts to something of a workaround for Trump after the Supreme Court last year blocked the administration from adding a citizenship question to the decennial survey. The rationale for the memo rests on the argument that the president has final say over transmitting the final census report to Congress and that the Constitution does not explicitly define which persons must be included in determining apportionment. “The discretion delegated to the executive branch to determine who qualifies as an ‘inhabitant’ includes authority to exclude from the apportionment base aliens who are not in a lawful immigration status,” the order states. “Excluding these illegal aliens from the apportionment base is more consonant with the principles of representative democracy underpinning our system of Government. The order implicitly calls out California – a state represented overwhelmingly by Democrats in Congress – in making the argument for discounting undocumented immigrants, noting that “one State is home to more than 2.2 million illegal aliens.” “Including these illegal aliens in the population of the State for the purpose of apportionment could result in the allocation of two or three more congressional seats than would otherwise be allocated,” the order states. In a statement, Trump framed the memo as an effort to push back on “the radical left,” an indication he believes it will appeal to his base of supporters ahead of November’s election. “There used to be a time when you could proudly declare, ‘I am a citizen of the United States,'” Trump said. “But now, the radical left is trying to erase the existence of this concept and conceal the number of illegal aliens in our country. This is all part of a broader left-wing effort to erode the rights of Americans citizens, and I will not stand for it.”
The Left is Now the Right – – Taibbi – In August, 2005, Rolling Stone sent me to cover a freak show. In a small Pennsylvania town called Dover, residents contrived to insert a sentence about teaching “intelligent design” into the curriculum, and fought for its right to do so in an extravagantly-covered trial in the “big city” capital of Harrisburg. Dover’s school board president, Alan Bonsell, was a fundamentalist who believed God shaped man from dust. When a Christian attorney named Robert J. Muise tried to cross-examine the smooth-talking Superstars of Science who’d flown in from places like Brown and Harvard to denounce “intelligent design,” journos murdered their thesauruses looking for new words for “hayseed.” The chuckling press section felt like front row of a comedy club. Fifteen years later, America is a thousand Dovers, and the press response is silence. This time it’s not a few Podunk school boards under assault by junk science and crackpot theologies, but Princeton University, the New York Times, the Smithsonian, and a hundred other institutions. When the absurdity factor rocketed past Dover levels this week, the nation’s leading press organs barely commented, much less laughed. Doing so would have meant opening the floodgates on a story most everyone in media sees but no one is allowed to comment upon: that the political right and left in America have traded villainous cultural pathologies. Things we once despised about the right have been amplified a thousand-fold on the flip. Conservatives once tried to legislate what went on in your bedroom; now it’s the left that obsesses over sexual codicils, not just for the bedroom but everywhere. Right-wingers from time to time made headlines campaigning against everything from The Last Temptation of Christ to “Fuck the Police,” though we laughed at the idea that Ice Cube made cops literally unsafe, and it was understood an artist had to do something fairly ambitious, like piss on a crucifix in public, to get conservative protesters off their couches.Today Matt Yglesias signing a group letter with Noam Chomsky is considered threatening. Moreover a lot less than booking a Robert Mapplethorpe exhibit can get you in the soup – a headline, a retweet, even likes are costing people jobs. Imagine how many movies Milos Forman would have had to make if Jerry Falwell had been able to get people fired this easily. This is separate from the Democratic Party “moving right,” or in the case of issues like war, financial deregulation, and surveillance, having always been in lockstep with the right. This is about a change in the personality profile of the party’s most animated, engaged followers.
Executives Of Bankrupt Companies Made $131 Million In Bonuses This Year – While a wave of bankruptcies continues to wash over the country as a result of the pandemic (and just poorly run businesses), that hasn’t stopped the executives of some of the biggest trainwrecks in recent business history from collecting fat bonus checks, despite driving their respective companies into the ground. Among the higher profile names are companies like J.C. Penney, Chesapeake Energy and Hertz, who have all filed for bankruptcy protection this year.They have also all awarded their executives significant bonuses totaling $10 million, $25 million and $1.5 million respectively in the weeks – or sometimes days – leading up to their bankruptcies. And they’re not the only ones.Out of the 100 companies that have filed for bankruptcy since the Covid lockdowns began, Bloomberg estimates that 19 of these companies have committed to paying a total of $131 million in retention and performance bonuses. The companies claim the bonuses are to keep their management teams in order to lead their turnarounds. Yes, the very same management teams that led the companies to bankruptcy to begin with. And the bonuses are tough to claw back unless they are made after a company officially files for protection with the court. At a place like J.C. Penney, where thousands will lose their job, the company’s CEO stands to make $4.5 million in bonuses. Hertz doled out $1.5 million to its top three executives as part of $16.2 million in retention bonuses three days before it filed for bankruptcy. Frontier Communications issued bonuses in February, before filing for bankruptcy in April. Chesapeake said in May it intended to pay $25 million in bonuses to 21 executives while requiring others to take salary cuts. The CEO of Intelsat, who led the company to its bankruptcy and has been in charge since 2015, is lined up for a $6.9 million bonus. Ian Keas, a principal at Pearl Meyer, an executive-compensation consulting firm, said: “Board members want the people that know the business, know the assets of the company, know the nuances and facets of the business, and can leverage that understanding and knowledge to extract value going forward.” Julie Farb, director of the Center for Strategic Research at AFL-CIO, a federation of 55 labor unions, had a slightly different take on the bonuses: “We really find them offensive in light of the median worker pay, the reductions in benefits and layoffs due to store closings. It’s all made worse in the current Covid environment.”
Jeff Bezos is now personally worth more than Nike, McDonald’s, Costco, and almost 50% of the Dow – The world’s wealthiest man is worth more on paper than Nike’s entire $122 billion market capitalization. The sportswear titan made $39 billion in sales and had almost 77,000 employees and more than 1,100 retail stores worldwide last year. Bezos’s fortune also exceeds the $143 billion market cap of McDonald’s. The fast-food giant generated $21 billion in sales last year and had 205,000 employees and 39,000 restaurants globally.The Amazon chief is also richer than the $145 billion market cap of Costco. The mega-retailer racked up $153 billion in revenue last year from its 99 million Costco cardholders, and employed 254,000 people.The comparison of Bezos’ net worth to some of America’s biggest companies wasfirst made by Fortune.The spike in Amazon’s stock price, and therefore Bezos’ fortune, reflects the company’s gains during the coronavirus pandemic.More people are shopping on its website, watching movies and TV shows on Prime Video, and relying on its AWS cloud platform while stuck at home, and investors are betting Amazon can retain many of those new customers.As a result, Bezos is also now worth more than Oracle ($176 billion market cap), Salesforce ($172 billion), and IBM ($112 billion). His wealth is more than double the market caps of Starbucks ($88 billion) and Goldman Sachs ($73 billion), and more than triple the market caps of General Electric ($62 billion) and Target ($60 billion).The Amazon boss is worth more than 13 of the Dow 30 companies, and more than 85% of the stocks in the Nasdaq 100 and S&P 500. Only 30 companies across the three indexes have a higher market cap than Bezos’ net worth.
What Banks Tell Us About Covid-Era Business: ‘Everybody Is, Bluntly, Struggling’ – WSJ — Big banks expect the coronavirus recession to cut a wide swath through corporate America. When they reported second-quarter earnings this past week, big U.S. lenders said they don’t expect the U.S. economy to pull out of its slump soon. A protracted downturn, bank executives said, bodes poorly for all manner of American businesses, even those not directly affected by the travel bans and social-distancing measures put in place to curb the virus. From the first quarter to the second, the four biggest American banks nearly doubled the amount of money they set aside to cover soured corporate loans. It was different in the first quarter, when banks increased provisions for consumer loans far more. Even what looked like good news wasn’t really. Investment-banking revenue soared in the second quarter. But the gains didn’t come from advising CEOs on deals; rather, banks raked in fees helping companies stockpile cash to ride out the downturn. “Everybody is, bluntly, struggling,” . “The generic corporate client we talk to, who’s otherwise open and doing business, is almost without exception down from what they would have expected going into the year and down from where they were last year.” Banks have unrivaled visibility into the health of the U.S. consumers and businesses. In the second quarter, they saw some alarming things. One by one, bank executives warned that the worst of the coronavirus recession has yet to come. They said they no longer expect a quick snapback in economic activity or employment. “I don’t think anybody should leave any bank earnings call this quarter simply feeling like the worst is absolutely behind us and it’s a rosy path ahead,” Citigroup Inc. Chief Executive Michael Corbattold analysts Tuesday. “I don’t want to be pessimistic … I want to be a realist.” The four biggest American banks – JPMorgan Chase & Co., Citigroup, Bank of America Corp.and Wells Fargo & Co. – set aside $33 billion in the second quarter to cover loans that could go bad. Corporate lending accounted for $16.8 billion of it, up from $8.8 billion in the first quarter. JPMorgan, the biggest U.S. bank by assets, set aside $4.6 billion for commercial loan losses, up from $2.4 billion in the first quarter. It kept its consumer provision flat at $4.4 billion.
Why coins are scarce and what government, banks are doing about it – Federal regulators and financial industry representatives are expected to release a set of recommendations in the coming weeks about how to jump-start the circulation of coins, which has slowed to a crawl during the coronavirus pandemic, according to two participants in the discussions. Meanwhile, a number of banks – from JPMorgan Chase to community banks in Wisconsin and New York – have taken action on their own to address the shortage, including offering consumers bonuses for change brought in, stockpiling coins and strategically moving coins among branches. The Federal Reserve has held two four-hour meetings this month with a task force that includes officials from the U.S. Mint, banking organizations, coin aggregators, armored money carriers and retail trade groups to figure out how to get coins flowing again and cash registers restocked. The group is considering a public call for coin deposits and ways to fix hang-ups in the supply chain that have caused lags in coin orders, said Coinstar CEO Jim Gaherity and Carey Whaley, an executive at the Independent Community Bankers of America, whose organizations belong to the task force. When local economies closed to ward off the spread of the coronavirus, paper money and coins fell further out of favor as consumers used their debit and credit cards more often or made digital payments. There was early confusion over how easily the virus could be transmitted over paper currency and coins as banks closed branches at the start of the pandemic. The Centers for Disease Control and Prevention has urged retail employees to wash their hands after exchanging money. But a study published in the New England Journal of Medicine in April found evidence that the virus was more stable on plastic than copper, which is one of the main materials used to make U.S. coins. For shops and other small businesses that rely on physical money and coins to give out as change, the shortage has become another weight as they try to stay afloat through the pandemic. There are about $48 billion in coins circulating at any given time, said Matt Finn, chief economist at Old National Bank in Evansville, Ind. On top of a curtailment in production by the U.S. Mint at the onset of the COVID-19 pandemic, the public health emergency forced consumers to “abruptly change their consumption habits,” especially affecting coin-heavy services such as laundromats, public transportation and vending machines. The system – in which businesses collect coins and deposit them at banks, which send the money to the Federal Reserve, which then redistributes the change – was “severely disrupted” on both ends as businesses closed down and customers stopped going to the bank, Finn said. “The system got lumpy,” he said. “The coins didn’t go anywhere, and that’s precisely the problem – they didn’t go anywhere. Now the economy is reopening, but the coinage isn’t where it needs to be yet.”
ABA offers political lifeline on masks, and banks are relieved – Bankers are embracing the American Bankers Association’s public backing of mandatory mask-wearing in branches as the kind of political cover they need to enforce strict public health practices at branches. With coronavirus cases rising throughout the country, banks’ efforts to protect customer and employees’ health have clashed with opposition to mask-wearing. Differing guidelines across jurisdictions have forced banks to shift their approach back-and-forth. “It got to the point a few weeks ago where it was crazy, we were continually changing our policy for employees,” said Luanne Cundiff, president and CEO of the $384 billion-asset First State Bank of St. Charles, Mo., where two of the bank’s three primary markets are under mask – wearing orders. “Banks in different markets where [there are] different requirements were causing confusion,” she added. Cundiff expressed hope that the ABA’s recommendation will help establish consistent standards. “It was good for banks in our position – banks in different markets where it was causing confusion – that our association took the lead,” she said. “I think any kind of push to educate the general public and the workforce is a benefit to us all.” Laurie Stewart, president and CEO of the $738 million-asset Sound Financial Bancorp in Seattle, said employees have been wearing masks voluntarily since the Centers for Disease Control and Prevention recommended it in late April. “It was certainly mixed guidance in the beginning,” she said, adding that the ABA recommendation “has really solidified it.” Bank regulators have no formal mask-wearing policies, but acting Comptroller of the Currency Brian Brooks made waves when he said in June that masks in branches could lead to more bank robberies, even during a pandemic. While public health experts consider face masks an effective measure against spreading COVID-19, opposition to mask-wearing has intensified in some parts of the country. But after Target, Walmart, Kroger and most other major retailers adopted face mask rules this week following a spike in COVID-19 cases and deaths, the ABA urged financial institutions to follow suit. “I encourage you today to adopt and publicly pronounce a policy requiring all who enter your branches to wear a mask,” ABA President and CEO Rob Nichols said in a letter July 19 to bank CEOs. The Federal Deposit Insurance Corp., Federal Reserve and Office of the Comptroller of the Currency have left it up to individual banks to decide whether to require face masks be worn in bank branches.
Congress wants to extend PPP, lenders ready to move on – Bankers are largely ready to move on from the Paycheck Protection Program, even as lawmakers discuss extending the effort through the rest of the summer. Treasury Secretary Steven Mnuchin told the House Small Business Committee last week he was receptive to proposals to keep the PPP open past its scheduled Aug. 8 expiration, while suggesting that legislators add to the program’s $131 billion in remaining funds. Legislators are also working on a bill to grant small businesses access a new round of PPP funding if they have less than 300 workers and “substantial revenue loss,” Sen. Marco Rubio, R-Fla., tweeted on Tuesday morning. While bankers still support the program conceptually, they are less enthused about participating. For many, the time has come to focus on PPP loan forgiveness, assessing the status of deferrals and pursuing traditional lending opportunities. “None of the bankers I’ve talked to regret participating, but we’re worn out from borrowers asking when their loans will be forgiven,” said Robert Franko, president and CEO of the $2.2 billion-asset First Choice Bancorp in Cerritos, Calif. Though he still backs PPP, John Buhrmaster, president and CEO of 1st National Bank of Scotia in Scotia, N.Y., said the $492 million-asset bank’s lenders are “absolutely” fatigued from working their way through the program’s complexities. “This is a community service,” Buhrmaster added, pointing to the 1% interest rate cap for PPP loans. “With the amount of time and how we had to change the structure of our bank to produce these loans, it’s not a profitable business.” Banks receive fees for PPP originations, but they will be recognized over the life of the loans. The economics changed when recent legislation increased the amount of time borrowers have to spend PPP proceeds from eight weeks to 24 weeks. “Initially, those fees looked pretty good,” Buhrmaster said. “Now that it’s a 24-week program, the amortization of those fees is definitely not as attractive.” Lenders have originated less than 500,000 PPP loans since May 30, according to data from the Small Business Administration. Nonbanks, which represent about 15% of approved PPP lenders, have accounted for nearly a quarter of those loans. The program ran out of its initial $349 billion appropriation after just 13 days of operation. New loan originations resumed April 27, when Congress approved another $310 billion in funding. About 40% of the added funds remain nearly three months later.
Zions braces for loan charge-offs in industries hard hit by pandemic – Zions Bancorp. in Salt Lake City is anticipating charge-offs will rise through the end of the year driven by weaknesses in industries hit hard by the coronavirus pandemic. The $75 billion-asset company said that the volume of problem loans spiked in the second quarter and that about $4.2 billion of commercial loans, or 8.6% of its loan portfolio, are at risk of default. More than $1 billion of the problem credits are commercial real estate loans made to retailers and roughly $640 million are loans to the struggling hotel sector. Many borrowers in the technology, telecommunications and transportation sectors are also struggling to keep pace with payments, executives said. “We expect adverse credit migration, we expect charge-offs,” Chief Financial Officer Paul Burdiss said in an earnings call with analysts late Monday. Since they began reporting earnings last week, many banks have warned of more charge-offs to come and highlighted high levels of stress in sectors most affected by lockdowns and stay-at-home orders. Western Alliance Bancorp in Phoenix, for example, said that more than 90% of its loans to the hotel industry are in some form of deferral. Other lenders, including Regions Financial in Birmingham, Ala., and Hancock Whitney in Gulfport, Miss., pointed to energy lending as a particular area of weakness, as demand for oil and gas has plummeted during the pandemic. The $144 billion-asset Regions reported $85.8 million in gross losses on its energy book in the second quarter, more than it lost on that portfolio in 2018 and 2019 combined. The $31.7 billion-asset Hancock Whitney, meanwhile, recently sold nearly $500 million of energy loans as part of a broader effort to de-risk its portfolio. “We’re not thinking about selling off a portion of our portfolio to reduce the risk,” said President and Chief Operating Officer Scott MacLean. Hancock Whitney’s “exposures were pretty different than ours and they had a more regionalized portfolio as well.”
Commercial Mortgage Delinquencies Near Record Levels -Delinquency rates across commercial properties have shot up faster than at any other time.As thousands of restaurants, hotels, and local businesses in the U.S. struggle to stay open, delinquency rates across commercial mortgage-backed securities (CMBS) – fixed income investments backed by a pool of commercial mortgages – have tripled in three months to 10.32%.As Visual Capitalist’s Dorothy Neufeld notes, in just a few months, delinquency rates have already effectively reached their 2012 peaks. To put this in perspective, consider that it took well over two years for mortgage delinquency rates to reach the same historic levels in the aftermath of the housing crisis of 2009.The above chart draws data from Trepp and illustrates the recent shocks to the CMBS market, broken down by property type. While there is optimism in some areas of the market, accommodation mortgages have witnessed delinquency rates soar over 24%. Amid strict containment efforts in April, average revenues per room plummeted all the way to $16 per night – an 84% drop. Similarly, retail properties have been rattled. Almost one-fifth are in delinquencies. From January-June 2020, at least 15 major retailers have filed for bankruptcy and over $20 billion in CMBS loans have exposure to flailing chains such as JCPenney, Neiman Marcus, and Macy’s. On the other hand, industrial property types have remained stable, hovering close to their January levels. This is likely attributable in part to the fact that the rise in e-commerce sales have helped support warehouse operations. For multifamily and office buildings, Washington’s stimulus packages have helped renters to continue making payments thus far. Still, as the government considers ending stimulus packages in the near future, a lack of relief funding could spell trouble.
Does Congress have cure for what’s ailing CRE borrowers? – – Lawmakers are weighing a plan to help commercial real estate borrowers that are otherwise barred from accessing relief programs like the Paycheck Protection Program. The coronavirus pandemic has forced shopping malls to a standstill, cleared out hotels and shuttered offices. All of that spells trouble for commercial real estate. But despite calls for government relief, aiding the CRE sector is complicated by the fact that many borrowers cannot take on new debt as part of their lending terms. That makes loans issued through the PPP and the Federal Reserve’s Main Street Lending Program unavailable to them. Rep. Van Taylor, R-Texas, who sits on the House Financial Services Committee, has circulated a draft bill authorizing the Treasury Department to purchase preferred equity investments in CRE-related businesses, using funding from the Coronavirus Aid, Relief and Economic Security Act. The draft bill “is positive in that it doesn’t run afoul of the no-additional-debt covenants,” said Patrick Sargent, a partner in Alston & Bird’s finance group. “Plus, it would [provide] a return to the government … on its money.” Regulators and other administration officials implementing the CARES Act have struggled to figure out how best to address CRE loan defaults, with borrowers increasingly unable to service their debt without incoming revenue. In the PPP, even though aid recipients can ultimately write off the financial relief as a grant, the funds are initially disbursed as loans through third-party banks. “This is a problem we have not addressed yet,” Rep. Andy Barr, R-Ky., said of the struggles for the CRE sector at a June 30 hearing of the House Financial Services Committee. “I think we’re going to see, without intervention, a wave of foreclosures and defaults.” Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell told Barr that they had not yet figured out a way to set up an emergency lending facility for commercial real estate, and weren’t sure that extending debt to those borrowers would be in their best interest. “Debt doesn’t solve every problem,” Powell said. “You’ve got people who can’t currently service debt, you’ve got these inflexible arrangements, and so there’s a serious problem here that needs to get fixed and we’re racking our brains to see how it could be something we could do by lending.”
The Fed Rides to the Rescue of JPMorgan and Citi Again – This Time It’s Their Commercial Real Estate Mortgages – Pam Martens –Quietly, on July 13, the New York Fed published a list of asset-backed loans that it had approved for eligibility in one of its emergency lending programs, the Term Asset-Backed Securities Loan Facility, otherwise known as TALF. The New York Fed stuck a smattering of small business loans and one student loan product on the list. Everything else was securitized pools of mortgages on commercial real estate, much of it issued by JPMorgan and Citigroup. TALF was supposed to help the consumer by keeping interest rates down on consumer loans. It’s pretty tough to find a connection between the consumer and commercial real estate mortgages on hotels, shopping malls and office buildings.One thing notable about the New York Fed’s approved list is that the securitizations of these commercial mortgages by JPMorgan had occurred as far back as 2013 and in the case of Citigroup, as far back as 2015. Is it really the job of the Fed to bail out the banks from old deals that are now souring? You may be wondering if the commercial real estate mortgages had already been securitized and sold off to investors, how does this constitute a bailout of the banks by the Fed. It’s because the market value of those deals had been dramatically sagging until the Fed set up its bailout program, thus boosting the market value of those deals as well as similar mortgages still on the books of the banks.The purpose of TALF, according to the Fed, is to “help meet the credit needs of consumers and businesses by facilitating the issuance of asset-backed securities.” Note the word “issuance” in this sentence. Bailing out old deals that have already been issued does nothing to help new issuance, unless one considers the Fed distorting the market to be a help. According to its newly released transaction data for TALF, it has made a total of $252 million in loans thus far – the vast majority of which involved commercial real estate loans issued by the biggest Wall Street banks at some point over the past seven years. (To check out the transaction data, scroll down here to Term Asset-Backed Securities Loan Facility, click on the transaction data and use the tabs at the bottom of the spreadsheet.)
Democratic bills would bar GSEs from charging forbearance fees – A new proposed bill would prevent Fannie Mae and Freddie Mac from charging fees for acquiring loans put in forbearance because of the coronavirus pandemic. Sen. Bob Menendez, D-N.J., unveiled the Promoting Access to Credit for Homebuyers Act on Wednesday. The bill would require the two government-sponsored enterprises, as well as the Federal Housing Administration, to continue backing mortgages subject to forbearance plans without imposing additional restrictions or costs on borrowers or lenders. “We must ensure that homebuyers facing financial strain are not arbitrarily denied access to mortgage credit throughout this emergency,” Menendez said. “This bill will help remedy the Trump administration’s ongoing failure to support hard working families and consumers facing hardship and delivers critically needed stimulus to our economy.” A companion bill in the House to prohibit such fees has been introduced by Rep. Juan Vargas, D-Calif. The Coronavirus Aid, Relief, and Economic Security Act passed in March allowed a six-month forbearance period for homeowners with federally backed mortgages. They can then seek an additional six months of forbearance if they have been affected by the COVID-19 pandemic. The Federal Housing Finance Agency later announced that while Fannie and Freddie could buy loans already in forbearance, the GSEs would charge originators a loan-level pricing adjustment of 5% to 7%. The added cost was seen by many in the industry as too steep.
Small-business bankruptcy program adds new risk to home equity loans – To their list of worries about how the coronavirus pandemic is affecting customers and their own bottom lines, bankers can now add this: a potential spike in home mortgage modifications tied to small-businesses bankruptcies. Many entrepreneurs opening a business for the first time will often use the equity in their homes as collateral on loans needed to buy equipment or hire workers. Last year, Congress made changes to the bankruptcy code that allowed borrowers to modify these second mortgages in the event their businesses fail, perhaps saving them from having to sell their homes to settle their debts. Protections were further expanded when the coronavirus relief package was passed in March. But while these changes provide a measure of relief to borrowers – particularly with bankruptcies expected to increase as the pandemic drags on – they can cause problems for banks and investors that hold the loans. That’s because interest rates are often lowered in the modification process, reducing a loan’s value. In one case involving a mortgage on a bed and breakfast in California, the owner proposed a plan in the new bankruptcy program that would have reduced the secured portion of the mortgage to the value of the property and would be paid down over a new 30-year term at 4.25% interest. The servicing company handling the loan had proposed selling the property to satisfy the owner’s debts, though the case has yet to be resolved. “It could be a headache in that a mortgage that a lender thought was not modifiable is now suddenly modifiable,” said Bonnie Pollack, a partner at Cullen and Dykman who represents lenders in these new bankruptcy cases. The new subchapter V of the Chapter 11 bankruptcy process was signed into law last year and became available in February. It provides small-business owners and individuals with business debt of up to a little more than $2.7 million with a streamlined path to restructuring. One of the advantages to subchapter V allows a residential property owner to have their mortgage modified to lower their monthly payments and ease some terms as long as the home loan was taken out to fund their business – often in the form of a cash-out home equity refinance, or collateral mortgage for business debt. The coronavirus relief package expands, until March 2021, the debt limit for subchapter V to $7.5 million, increasing the number of potential mortgages with terms once thought set in stone at risk of being eased. Banks have been combing through their portfolios searching for which mortgages might suddenly be modified in the new bankruptcy program. An exact number across the industry is hard to pin down, but a 2018 survey by the Federal Deposit Insurance Corp. shed some light on how often small-business owners use the equity in their homes to secure a loan.
The Government Is Walking Blind Into the Coronavirus Housing Crisis – Alexis Goldstein – A decade ago, the lack of a government database tracking foreclosures left policymakers reliant on data from the private actors that caused or exacerbated the crisis – like the Mortgage Bankers Association, a front group for the mortgage industry that lobbied heavily against state regulations; or the real estate information firm RealtyTrac, which stands to profit handsomely from a foreclosure crisis. As Sam Jewler and Chris Herwig documented in 2012, the lack of federal data led to wildly different estimates for the number of foreclosures. In Chicago, estimates for vacant properties ranged from around 5,000 (the official city count) to18,000 (as reported by The Chicago Tribune) to over 100,000 (as city housing activists attested).There is no official estimate for how many foreclosures there were in the last crisis. Journalist Laura Gottesdeiner, in her book A Dream Foreclosed: Black America and the Fight for a Place to Call Home, estimated that 10 million people were foreclosed on – a number roughly equivalent to the population of the state of Michigan. In 2009, the Congressional Oversight Panel noted that without accurate numbers, everyone was “flying blind.” The lack of data had consequences for policymakers, who were unable to do basic things, such as properly deploy resources to the hardest-hit areas or determine how many homeless families there were and where they went after they lost their homes. The absence of reliable information even led to massive problems for election “get out the vote” efforts, because voter files no longer had correct addresses. To address this problem, in 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated the creation of a database to track homeowners who were either late on their mortgage payments or in foreclosure. While there is a National Mortgage Database Program, the database’s sample size is woefully small: a mere 5 percent of all mortgage holders. The Consumer Financial Protection Bureau makes some anonymized data about mortgage delinquencies available, but it is also based on a 5 percent sample. Ten years since the passage of Dodd-Frank, the robust foreclosure database the law calls for is still nowhere to be found. As the saying goes, “You can’t manage what you can’t measure.”
MBA Survey: “Share of Mortgage Loans in Forbearance Decreases for Fifth Straight Week to 7.80%” 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 Fifth Straight Week to 7.80%The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 38 basis points from 8.18% of servicers’ portfolio volume in the prior week to 7.80% as of July 12, 2020. According to MBA’s estimate, 3.9 million homeowners are in forbearance plans….”The share of loans in forbearance dropped to its lowest level in over two months, driven by an increase in the pace of exits as more homeowners have been able to get back to work,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The decline in the forbearance share was broad based, with decreases for GSE, Ginnie Mae, and portfolio/PLS loans.”Added Fratantoni, “Almost half of borrowers remaining in forbearance are now in an extension of the original term, while the remainder are in their initial forbearance plan. The pace of new forbearance requests remains quite low compared to earlier in the crisis, but we are watching carefully for any increases due to either the pick-up in COVID-19 cases or the cessation of enhanced unemployment insurance benefits at the end of this month.” 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, and has been trending down for the last five weeks. The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained flat relative to the prior week at 0.13%. “
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Increased Slightly – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. From Forbearance Volumes See Slight Rise to 4,119,000The latest data from the McDash Flash Forbearance Tracker shows that there was minimal overall change in the number of active forbearance cases this week (+2K), bringing the total number of loans in active forbearance to 4,119,000. The slight rise was driven by a modest increase in forbearance plans among portfolio/private labeled securitization loans (+12k) and FHA/VA loans (+8k). The number of forbearances among GSE loans fell by 18k for the week. 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.
Black Knight: National Mortgage Delinquency Rate Decreased in June, “Serious Delinquencies Surge to 9-Year High” –Note: Loans in forbearance are counted as delinquent in this survey, but these loans are not reported as delinquent to the credit bureaus.From Black Knight: Mortgage Delinquencies Improve for the First Time Since January, While Serious Delinquencies Surge to 9-Year High
After rising from 3.2% in January to 7.8% in May, the national delinquency rate improved for the first time in five months, falling to 7.6% in June as the overall number of past-due mortgages declined by 98,000
Serious delinquencies – those 90 or more days past due – rose by more than 1.2 million as the initial wave of borrowers financially impacted by COVID-19 missed their third mortgage payment
At 1.87 million, the number of seriously delinquent mortgages is now at its highest level since early 2011
With federal foreclosure moratoriums still in place, active foreclosure inventory continues to dwindle; June’s 192,000 active foreclosures were the fewest on record, dating back to 2000
Prepayment activity hit its highest level in 16 years in June, fueled by record-low 30-year interest rates and surging refinance incentive
emphasis added
According to Black Knight’s First Look report for March, the percent of loans delinquent decreased 2.3% in June compared to May, and increased 104% year-over-year.The percent of loans in the foreclosure process decreased 4.2% in June and were down 27.1% over the last year. Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 7.59% in June, down from 7.76% in May.The percent of loans in the foreclosure process decreased in June to 0.36% from 0.38% in May.The number of delinquent properties, but not in foreclosure, is up 2,084,000 properties year-over-year, and the number of properties in the foreclosure process is down 67,000 properties year-over-year.
Lawler: Serious Delinquency Rate on FHA-Insured SF Loans Surged in June — Note that Lawler is discussing the sharp increase in serious delinquencies in June according to the Early Warning System. This means people have missed three payments (although many of these people are probably in forbearance programs.) While the FHA’s “official” monthly loan performance report for June is not yet available on its website, data from the FHA’s Early Warning System indicates that FHA’s Early Warning System indicate that the serious delinquency rate on FHA-insured single-family loans surged in June. Delinquency rates in the EWS do not match those in the official report, but the two delinquency rates tend to move together over time.
NMHC: Rent Payment Tracker Finds Decline in People Paying Rent as of July 20th –Without further disaster relief, there will a significant housing and financial issue. From the NMHC: NMHC Rent Payment Tracker Finds 91.3 Percent of Apartment Households Paid Rent as of July 20: The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 91.3 percent of apartment households made a full or partial rent payment by July 20 in its survey of 11.1 million units of professionally managed apartment units across the country.This is a 2.1-percentage point decrease from the share who paid rent through July 20, 2019 and compares to 92.2 percent that had paid by June 20, 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 extended unemployment benefits and other government support that have proven critical to keeping apartment residents in their homes expire in just a few days,” said Doug Bibby, NMHC President. “Lawmakers are currently negotiating, but Members of Congress and Trump administration leaders need to understand that unless comprehensive action is taken now to protect the tens of millions of Americans who live in an apartment home, they risk destabilizing the nation’s housing market, undermining the nascent economic recovery, and turning the ongoing health and economic crisis into a housing crisis.” CR Note: It appears fewer people are paying their rent compared to last year (down 2.1 percentage points from a year ago). In the previous surveys, over the last few months, people were paying their rents at about the same pace as last year. The disaster relief has been key to helping people pay their bills, especially the extra unemployment benefits and the PPP.
NMHC: “July Apartment Market Conditions Showed Continued Impact of COVID-19 Outbreak” – The National Multifamily Housing Council (NMHC) released their July report: July Apartment Market Conditions Showed Continued Impact of COVID-19 Outbreak Apartment market conditions weakened in the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for July 2020, as the industry continues to cope with the ongoing COVID-19 pandemic. The Market Tightness (19), Sales Volume (18) and Equity Financing (34) indexes all came in well below the breakeven level (50). However, in a positive sign, the index for Debt Financing (60) signaled improving conditions. ? “Recent spikes in COVID-19 cases have caused many areas of the U.S. to scale back or completely reverse their attempts at reopening their local economy. As a result, unemployment levels stand elevated in double digits as much of the nation’s business activity remains temporarily shuttered,” noted NMHC Chief Economist Mark Obrinsky. “Amidst this COVID economy, 71 percent of respondents reported looser market conditions this quarter compared to the prior three months, marking the second consecutive quarter of deteriorating conditions.” “The Federal Reserve has countered this economic malaise with aggressively accommodative monetary policy, resulting in historically low interest rates. This, in turn, has created favorable pricing for debt financing, leading more respondents than not (44% to 25%) in this round of the survey to report improving conditions for borrowing. Nevertheless, these improved financing conditions have been largely confined to stabilized multifamily assets, and underwriting standards remain fairly stringent.” … The Market Tightness Index increased from 12 to 19, indicating looser market conditions. The majority (71 percent) of respondents reported looser market conditions than three months prior, compared to 8 percent who reported tighter conditions. One in five respondents (21 percent) felt that conditions were no different from last quarter.
AIA: “Architecture billings remain in negative territory, begin to stabilize” -Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: Architecture billings remain in negative territory, begin to stabilize Demand for design services from architecture firms began to stabilize in June, following their peak declines in April, according to a new report today from The American Institute of Architects (AIA).AIA’s Architecture Billings Index (ABI) score for June was 40.0 compared to 32.0 in May. The May ABI score indicates that a significant share of architecture firms still saw their billings decline from May to June, however the share reporting declines slowed significantly. Index scores for new project inquiries and new design contracts also showed signs of stabilizing, posting scores of 49.3 and 44.0 respectively.”While business conditions remained soft at firms across the country, those with a multifamily residential specialization saw the most positive signs,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Unfortunately, conditions at firms with a commercial/industrial specialization are likely to remain weak for an extended period of time, until hospitality, office and retail facilities can fully reopen, and design demand for this space begins to increase.”
Regional averages [3 month average]: Midwest (36.8); West (36.8); South (35.9); Northeast (34.2)
Sector index breakdown: multi-family residential (44.7); institutional (38.9); mixed practice (35.3); commercial/industrial (30.1)
Hotels: Occupancy Rate Declined 39% Year-over-year -From HotelNewsNow.com: STR: US hotel results for week ending 18 July – U.S. hotel performance data for the week ending 18 July showed slightly higher occupancy and room rates from the previous week, according to STR.
12-18 July 2020 (percentage change from comparable week in 2019):
Occupancy: 47.5% (-38.9%)
Average daily rate (ADR): US$98.56 (-28.0%)
Revenue per available room (RevPAR): US$46.87 (-56.0%)
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The occupancy rate for the last five weeks was 43.9%, 46.2%, 45.6%, 45.9% and 47.5% The increases in occupancy have slowed and are well below the median for this week of 78%.
Executives reap millions in bonuses as US retail apocalypse escalates – The retail industry in the United States has been ravaged by an unending wave of closures, bankruptcies and liquidations since the depths of the Great Recession in 2008. The current social and economic crisis triggered by the COVID-19 pandemic threatens to accelerate this collapse, which has been dubbed the retail apocalypse. A record 9,302 store closures were announced last year and 2020 is on track to see three times as many closures. In April alone, 2.1 million jobs were lost in the retail sector making it one of the worst hit areas of the American economy. Yet amid this historic crisis, US firms have continued to shower executives with millions of dollars in bonuses while millions of retail workers were laid off. A Reuters analysis of securities filings and court records found that nearly a third of the more than 40 large companies filing for bankruptcy this year awarded bonuses to executives within a month of filing. Reuters analyzed financial documents and court records from 45 companies that filed for bankruptcy since March 11, the day COVID-19 was declared a pandemic by the World Health Organization. The companies reviewed either held publicly traded stock or debt or more than $50 million in liabilities. A total of fourteen companies issued bonuses within a month of filing and six cited challenges executives faced during the coronavirus pandemic to justify the handouts. Eight companies, including JCPenney and Hertz Global Holdings, dished out bonuses within as little as five days before filing for bankruptcy. Hi-Crush Inc., which supplies sand for fracking, did so two days before filing on July 12. A majority of the companies issued bonuses six months before their bankruptcies. Out of the 45 companies Reuters analyzed, 32 gave bonuses within a half year before filing. Almost half authorized bonuses within two months. JCPenney, which was forced to temporarily close 846 stores and furlough 78,000 out of 85,000 employees, issued almost $10 million in bonuses before its bankruptcy filing on May 15. On Wednesday, the company announced it would permanently close 242 stores. JCPenney claimed the exorbitant bonuses were aimed at retaining a “talented management team.” The annual pay of the company’s median employee, a part-time hourly worker, was $11,482 in 2019, Reuters noted. Neiman Marcus Group, which temporarily closed all of its 67 stores in March and furloughed more than 11,000 employees, paid out $4 million in bonuses to its Chairman and Chief Executive Geoffroy van Raemdonck in February, and an additional $4 million to other executives just weeks before it filed for bankruptcy. Meanwhile, Levi Strauss’s chief executive has issued a warning that the string of retail bankruptcies announced in the first half of 2020 is “just the tip of the iceberg.” Chip Bergh told the Financial Times “the list [of recent failures] is already pretty long and I expect it’s going to get longer.”
US Restaurant Recovery Stalls As Pandemic Reemerges – The virus pandemic is now surging in 37 U.S. states with caseloads rapidly increasing, and the resulting factor is a terrified consumer unwilling to shop at malls or eat at restaurants. Before we dive into restaurant data via OpenTable, Axios published a fantastic visualization of where changes in new COVID-19 cases are occurring in the U.S. The map shows cases are exploding across much of the country, jeopardizing the recovery as governors in many states are either pausing or reversing reopenings. Nationwide, new virus infections have increased 21% since last week – and before were up 24% from the prior week. The reemergence of the virus has had a profound impact on the recovery, due mainly to several factors: the first, governors pausing or reversing reopenings; second, the human psyche of a virus pandemic reemerging with no vaccine is forcing people to hunker down at home and consume less. OpenTable data of restaurants across the country shows the percentage of eateries taking reservations has plateaued in the last 20 days, coinciding with the latest virus surge. OpenTable found Arizona, California, Washington, D.C., Georgia, Illinois, Kansas, Louisana, Maryland, New Mexico, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennesee, Texas, Virginia, Washington, and Wisconsin, were states with restaurant reservations stalling in late June, or in some cases reversing through the first half of July.
Nearly 16,000 restaurants have permanently closed since the pandemic started, and even more closures are on the horizon – -60% of restaurant closures since March 1 have been permanent, according to a report Yelp released on Wednesday. Of the roughly 26,000 total restaurants that have closed in the last five months, 16,000 have been permanent, according to the report. The restaurant industry has been the hardest-hit by permanent closures compared to other industries since the start of the pandemic.California has seen the highest number of permanent closures, accounting for about 14.4% of all restaurants that have gone out of business, followed by Texas at 8.5% and New York at 8.4%, Justin Norman, vice president of data science at Yelp, told Business Insider in an email.”We anticipate states will roll back or delay reopening plans, which will inevitably impact the future success of businesses, possibly turning even more temporary closures into permanent ones,” Norman said in the email. “That said, we are seeing temporary closures reduce, which is a promising signal for many businesses.”But in general, the share of businesses that are closing their doors permanently is continuing to rise.Los Angeles and New York City have seen the highest total number of businesses permanently close – 5,700 and 4,400 businesses, respectively. However, both cities have a higher-than-average number of businesses overall, so that’s not too bad. States like Hawaii, Nevada, and California, which usually benefit from year-round tourism, have seen the highest closure rates proportional to their total number of businesses.
More than 3,300 Arkansas meatpacking workers infected with coronavirus – With the United States COVID-19 case count standing at 3.68 million cases, the meat industry in particular is being ravaged by the pandemic. Nine percent of meatpacking workers in 14 states have been diagnosed with COVID-19, according to the Centers for Disease Control and Prevention (CDC). For meatpackers in Arkansas, conditions are even worse. More than 3,300 throughout the state have been infected, according to the Arkansas Department of Health on Monday. At poultry giant Tyson, whose headquarters are located in Springdale, Arkansas, thirteen percent of the workforce has contracted the virus in northwestern Arkansas. Statewide, there were 158 poultry workers hospitalized as of last Friday, and 18 deaths. The overall total for the state is over 32,500 cases and 357 deaths. Although the largely rural state has barely 3 million inhabitants, it has the second-largest food processing workforce in the nation, according to the most recent figures from the Bureau of Labor Statistics. In addition to Tyson, Arkansas also hosts the world headquarters of Walmart, the world’s largest grocer. The meatpacking workforce, traditionally highly-exploited, includes a large number of immigrants in Arkansas and throughout the country. This vulnerable section of the working class has been especially hard hit. As of mid-June, nearly half the adult cases in Arkansas meatpacking facilities were among Hispanic workers in Benton and Washington counties. Another 19 percent of adult cases were among people with Marshall Islands ancestry. Since a 1986 “Compact of Free Association” with the US government, Tyson has had a major presence in the former US colony in the central Pacific Ocean. Some 4,300 to 6,000 Marshallese currently live in Washington County, primarily in Springdale. In northwest Arkansas, 40 percent of Hispanic cases and 28 percent of Marshallese cases were connected to poultry processing facilities. In addition to Tyson, active cases of coronavirus have been confirmed at more than a dozen poultry facilities across the state, including George’s, Pilgrim’s Pride, Cargill, Butterball and Simmons.
Small Businesses Brace for Prolonged Crisis, Short on Cash and Customers – WSJ – Small businesses such as restaurants, dog-care centers and manufacturers brought back staff beginning in mid-April, believing they could get back to business. Now, many are shutting down or slashing jobs again as local officials and consumers pull back and the pandemic shows no signs of abating. Beyond merely depressing sales, the crisis has uprooted the ways people work, learn, relax and consume. More than 142,000 people in the U.S. have died, and the continued spread of the virus means people’s habits have mostly not reverted – and questions remain over whether or when they ever will. More government support may help in the short run, but many business owners are facing make-or-break challenges. Many may not last. Businesses are entering this phase just as many are exhausting their rescue funds from the federal Paycheck Protection Program, a $670 billion coronavirus stimulus measure launched in April to offer loans to small firms. Senate Republicans are in discussions about new economic bailout measures. Aid could include reimbursements to workplaces for purchasing personal protective equipment, administering coronavirus tests and cleaning or remodeling facilities, as well as modifications to the PPP lending program. An agreement is expected within weeks. An estimated 1.85 million U.S. businesses closed their doors or temporarily suspended operations in the second quarter, according to Oxxford Information Technology Ltd. in Saratoga, N.Y., which tracks roughly 32 million U.S. businesses of all sizes using data from credit bureaus, surveys and government sources. Raymond Greenhill, Oxxford’s president, forecasts that total losses this year will be greater than in the last recession, when 20%, or roughly 4.5 million businesses, disappeared in just over a year. He added that some of the losses will be offset by new business formation. Mr. Greenhill said small firms are especially vulnerable now and will account for most of the losses. He said most lack the working capital to survive the downturn or to meet customer needs when the economy recovers. He added that it’s more difficult for young businesses and for other businesses that entered the year in weak financial shape to tap funding from banks and other sources.
World’s Largest Producer Of Small Gasoline Engines Files For Bankruptcy – Briggs & Stratton Corporation, the world’s largest manufacturer of small gasoline engines with headquarters in Wauwatosa, Wisconsin, filed petitions on Monday morning for a court-supervised voluntary reorganization under Chapter 11, along with plans to sell “all the company’s assets” to KPS Capital Partners. The Fortune 1000 manufacturer of gasoline engines was able to secure a $677.5 million in Debtor-In-Possession (DIP) financing to support operations through reorganization efforts. The Company also said it “entered into a definitive stock and asset purchase agreement with KPS.” To facilitate the sale process and address its debt obligations, the Company has filed petitions for a court-supervised voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company has also obtained $677.5 million in DIP financing, with $265 million committed by KPS and the remaining $412.5 from the Company’s existing group of ABL lenders. Following court approval, the DIP facility will ensure that the Company has sufficient liquidity to continue normal operations and to meet its financial obligations during the Chapter 11 process, including the timely payment of employee wages and health benefits, continued servicing of customer orders and shipments, and other obligations.This process will allow the Company to ensure the viability of its business while providing sufficient liquidity to fully support operations through the closing of the transaction. Briggs & Stratton believes this process will benefit its employees, customers, channel partners, and suppliers, and best positions the Company for long-term success. This filing does not include any of Briggs & Stratton’s international subsidiaries. – Briggs & Stratton’s press release states Todd Teske, Briggs & Stratton’s CEO, stated the Company faced “challenges” during the virus pandemic that made reorganization “necessary and appropriate” for the survivability of the Company. Briggs & Stratton is the world’s top engine designer and manufacturer for outdoor power equipment, with 85% of the small engines produced in the U.S. The pandemic and resulting virus-induced recession have been brutal for the Company, with declining engine sales, resulting in a reduction in the US workforce. Financial Times noted, in June, the Company had difficulty refinancing a $175 million bond that matured in September. Sources told FT the Company’s deteriorating position made it impossible to obtain refinancing funds in the bond market. Add Briggs & Stratton to the list of bankrupted companies as an avalanche of bankruptcies is expected in the second half of the year.
Tesla picks Texas site for second US vehicle assembly plant — Electric car maker Tesla Inc. has picked the Austin, Texas, area as the site for its largest auto assembly plant employing at least 5,000 workers. The new factory will build Tesla’s upcoming Cybertruck pickup and will be a second U.S. manufacturing site for the Model Y small SUV, largely for distribution to the East Coast. Tesla will build on a 2,100-acre (85-hectacre) site in Travis County near Austin and will get more than $60 million in tax breaks from the county and a local school district over the next decade. Work on the plant, which will be over 4 million square feet, is already underway, Tesla CEO Elon Musk said. He did not put a number on how many vehicles the facility would produce. “Long term, a lot,” Musk said. The company has pledged to invest $1.1 billion and said it will pay a minimum wage of $15 per hour to employees and provide health insurance, paid leave and other benefits. The area that’s home to the University of Texas at Austin and tech companies such as Dell Inc. was a candidate for the plant all along, but Tulsa, Oklahoma, emerged in mid-May as another possibility. Tesla doesn’t have a lot of time to get the factory running if it wants to meet target production dates. The company says on its website that the Cybertruck will be available starting late next year. Tesla has often missed promised production dates in the past. The new factory will be Tesla’s biggest so far, although it may not employ as many workers as the 10,000 at its factory in Fremont, California. The electric car maker has said it wants the new factory to be in the center of the country and closer to eastern markets.
iPhone Sales Stumble, Consumers Flock To Low-Cost Phones, Says Counterpoint – New estimates from Counterpoint Research published Monday (seen by Apple Insider) show US smartphone sales volume tumbled 25% YoY in 2Q20. Counterpoint said Apple iPhone sales in the US plunged 23% in the period, but volumes increased through the quarter, due mostly to the low-cost iPhone SE. Sales of iPhone SE were propelled through the quarter because of the reopening of retail stores and promotional deals at Walmart, Metro by T-Mobile, and Boost.”Apple volumes grew through the quarter and were especially helped by iPhone SE volumes. The device has been successful and selling above expectations in both postpaid and prepaid channels,” said Jeff Fieldhack, Counterpoint’s North American Research Director.We outlined in May, credit and debit card data showed some folks were using their stimulus checks to buy iPhones. Counterpoint doesn’t believe increasing iPhone SE sales volume would deter customers from purchasing new iPhones with 5G technology later this year. “Our checks show that iPhone SE sales are unlikely to be cannibalizing fall 5G iPhone sales. iPhone SE buyers are more pragmatic about price, less concerned with 5G, and the smaller display is not considered a hindrance,” Fieldhack stated.Fieldhack also said the low-cost iPhone is attracting Android users, and estimates at least 26% of iPhone SE users have switched from an Android device. As consumers gravitate to cheaper iPhones during the virus-induced recession, this doesn’t bode well for demand for +$1,000 iPhone with 5G network capabilities, expected to be debut in the coming months.
U.S. Airlines Face End of Business Travel as They Knew It – U.S. airlines hammered by the catastrophic loss of passengers during the pandemic are confronting a once-unthinkable scenario: that this crisis will obliterate much of the corporate flying they’ve relied on for decades to prop up profits. “It is likely that business travel will never return to pre-Covid levels,” said Adam Pilarski, senior vice president at Avitas, an aviation consultant. “It is one of those unfortunate cases where the industry will be permanently impaired and what we lost now is gone, never to come back.” At stake is the most lucrative part of the airline industry, driven by businesses that accepted — however grudgingly — the need to plop down a few thousand dollars for a last-minute ticket across the U.S. or over an ocean. While millions of customers fly rarely, road warriors are constantly in the air to close a deal, depose a witness or impress a client. Business travel makes up 60% to 70% of industry sales, according to estimates by the trade group Airlines for America. That’s under threat in the wake of an unprecedented collapse in passengers that started four months ago. Half the respondents in a survey of Fortune 500 CEOs said trips at their companies would never return to what they were before Covid-19, according to Fortune magazine. Even industry leaders such as Delta Air Lines Inc. Chief Executive Officer Ed Bastian are bowing to the inevitable. “I don’t think we’ll ever get back entirely to where we were in 2019 on the volume of business traffic,” Bastian said July 14 after the company reported an adjusted quarterly loss of $2.8 billion, a record. United Airlines Holdings Inc. discloses results Tuesday, followed by Southwest Airlines Co. and American Airlines Group Inc. on Thursday. Even after 18 to 24 months, business travel will remain at least 25% below pre-pandemic levels and may stay down by as much as half, said Bruno Despujol, a partner at consultant Oliver Wyman. Trips for internal purposes, which account for as much as 40% of business demand, is most likely to decline.
Boeing Is Running Out Of Space To Park Its Newly-Built 787 Dreamliners Which Nobody Wants To Buy – According to Bloomberg, Boeing is now also running out of space to stash newly-built 787 Dreamliners, as unsold jetliners are now crammed onto “every available patch of pavement on airfields near its factories in Washington and South Carolina.” Citing people familiar with the situation, Bloomberg writes that “dozens of the planes are sitting on the company’s premises” with Uresh Sheth, a closely followed blogger who meticulously tracks the Dreamliners rolling through Boeing’s factories, putting the total somewhere above 50. That’s more than double the number of jets typically awaiting customers along Boeing’s flight lines. According to Sheth, brand-new widebodies are lined up on a closed off runway at the airport that abuts Boeing’s hulking plant north of Seattle. In North Charleston, 787s are tucked around the delivery center and a paint hangar. The U.S. planemaker has even started sending aircraft to be stored in a desert lot in Victorville, California. Commercial aircraft storage at Mojave Airport. Boeing’s troubles with parked jets are nothing new: last year Boeing had so many 737 Maxes after their global ground when it emerged that Boeing had drastically cut corners to save on costs even if it meant risking people’s lives, that it commandeered an employee parking lot to store surplus aircraft. Now, as it finally starts to emerge from that crisis, another critical source of cash – the company’s marquee jet, the 787 Dreamliner – is under pressure but not do to airworthiness concerns but simply due to the global depression that commercial air traffic has found itself in. As Bloomberg notes, Boeing has relied on the wide-body jet, produced in record numbers, to help bankroll the $20 billion in costs it has rung up since the Max was banned from commercial flight in March 2019 following two fatal crashes. But as Covid-19 sapped consumer interest in long-range travel this year, “the tally of undelivered Dreamliners has stacked up and created a new financial drag as regulators move closer to clearing the 737’s return.” Boeing also faces a “capacity hangover” after pushing Dreamliner production to a 14-jet monthly pace last year — a record for wide-body aircraft — in a market that was already glutted with aircraft.
Recovery of Collapsed Airline Traffic in the US Backtracks – TSA checkpoint screenings, which track how many people enter into the security zones at US airports on a daily basis, were down -72.6% yesterday (Sunday) compared to Sunday in the same week last year, according to TSA data released this morning. This was a notch worse than Sunday last week (-71.7%). And this reversal has been playing out since early July. The seven-day moving average, which irons out the day-to-day volatility particularly around the Independence Day weekend, has edged down to -74.5%, right back where it was on July 2. The peak, so to speak – the smallest decline from the same period last year – was on July 8: The miserably slow recovery for airlines in terms of ticket sales, from near-zero in late March and early April to some level above near-zero started backtracking in late June. United Airlines andDelta Airlines both issued early warnings about this industry-wide phenomenon that was not supposed to happen in this recovery, but is now happening.Ticket sales today result in passenger traffic some days, weeks, or months later when these customers are actually walking into an airport to get on the plane. And those declining ticket sales that United had warned about with charts, using industry-wide data for all airlines and sales channels, is now translating gradually into declining passenger traffic into the security zones of US airports.Sure, this is summer travel season, when traffic is always up seasonally compared to lower-traffic seasons. This year too, there has been a seasonal uptick. But these are year-over-year comparisons that eliminate the seasonality of air travel.Both United and Delta cited the renewed outbreaks of Covid-19 as the primary cause for this reversal in the recovery – people not wanting to be in an airport with all the exposure this produces and not wanting to sit on a plane near people who might potentially be contagious. This is in addition to travel restrictions globally.Airlines, which are in an existential crisis given this collapse in revenues – Delta’s passenger revenues collapsed 94% in Q2 – have been promoting the theme that they’re working hard to make flying as safe as possible. That may be true, except that, after having slashed capacity to match the collapsed demand, they’re packing people like sardines into the few planes that are flying, which is not reassuring to everyone on these flights or to people contemplating to fly.
United Airlines Defers Plane Deliveries To Beyond 2022 As Air Travel Remains Muted – United Airlines Holdings Inc. said Wednesday morning, all new aircraft deliveries due in 2022 have been deferred as air travel for the next several years will remain depressed. The Chicago-based company also said 32,000 employees have volunteered for a temporary leave of absence. Earlier in the morning, United Airlines’ CEO Scott Kirby told CNBC that estimated sales would not recover in a V-shaped formation until there’s a proven vaccine for COVID-19. “Our guess is that revenue will get to about 50% of what it was in 2019 in a pre-vaccine world,” Kirby told CNBC. Once we get past a vaccine and it is widely distributed, we will quickly recover towards 100%, but our guess is we are going to plateau at 50% until we get to a vaccine.” On Tuesday, the airliner reported revenues of $1.48 billion in 2Q20, an 87% crash from $11.4 billion during the same time last year. It said capacity in 3Q would be down 65% compared with the same quarter a year ago.
Class 8 Orders ‘Dead Cat Bounce’ 2 Months After Hitting Their Lowest Level In 25 Years – Class 8 trucking orders – often seen as a gauge of how the U.S. production economy is faring, have been brutalized for almost all of 2020 so far due to the ongoing pandemic. But June’s data appears to suggest a slight respite in orders, despite crashing retail sales, even though we’re not quite certain that it’s going to carry into the second half of the year. Regardless, June is traditionally a tough month for Class 8 orders and the industry (and its analysts) are optimistic. Final Class 8 truck data for June has been released and retail sales were down 41% YoY to 17,055 units. Orders were up 23.2% for the month, marking a small bounce back for the industry. This comes after two incredible poor months that we highlighted (ZH Class 8 report April, ZH Class 8 report May) where orders hit their lowest level in 25 years. In May, new orders “recovered” slightly to a dismal 6,687 number before taking off this June. Regardless, Class 8 orders remain down 24.7% YTD, mostly as a result of a continued lagging economy and pressured supply chain due to the coronavirus pandemic. In the first half of 2020, 65,814 trucks were ordered, compared with 87,466 in the first half of 2019. Retail sales are also lagging YTD, still down 39%, according to data from JP Morgan. Builds have appears to make somewhat of a V-shape recovery, but were down 39% YoY in June and have fallen 70% in Q2. Builds remain down 52% year to date.
FreightWaves 3PL Summit: Why you should be worried about freight markets (with video) – There’s likely more coronavirus fallout to come in the freight markets. That was the takeaway from Jason Miller, associate professor at the Michigan State University Eli Broad College of Business, who spoke with FreightWaves founder Craig Fuller during the FreightWaves 3PL Summit. “From a carrier standpoint, it really comes down to what type of freight you’re hauling,” said Miller. “On the retail side I’m neutral to somewhat bullish in the near term – but that’s consumer retail. For industrial, I’m on the bearish side. If you’re a flatbed operator out in the Permian Basin, it’s not a good time right now. If you’re hauling for Home Depot or Kroger, it’s pretty smooth sailing at the moment.””I’m of the belief that we have a lot of artificial stimulus on the consumer side in the form of the $1,200 checks and the expanded unemployment benefits,” said Miller. “That’s going to be expiring soon. “Come August, if we’re not starting to see a lot more folks back onto the payrolls, do we start to see that consumer engine die down? “If we don’t start seeing unemployment numbers start to tick down very rapidly, I have a hard time seeing where the retail demand comes from.” On the industrial side, he warned, “We’re seeing a true global recession right now. I worry about what this is going to do to capital investment. For making companies want to hire back a large number of workers. “I’m concerned with railroads from a secular-trend standpoint,” explained Miller. “The big one is declining coal volumes. We’ve seen that over the past several years as we’ve switched to more and more natural gas.Coal used to be the bread and butter – where the railroads made a lot of their profit.”Also, on the industrial side, a lot of rail movements relate to oil and gas. That’s not helping [given weakness in oil and gas].“There has also been a switch with fracking sand. A decade ago, most of the fracking sand came from Missouri and Wisconsin and was trained to the Bakken and Permian Basin. That was obviously very expensive. So, oil companies switched over to more locally sourced fracking sand and we’ve seen rail get [negatively] affected.”
US Postal Service takes major step toward privatization – Management at the United States Postal Service (USPS) has taken a big step toward privatization with the July 10 release of an internal memo stating that mail deliveries would be delayed due to cost cutting and a subsequent directive prohibiting overtime and promising “more to come.” The first memo, titled “Pivoting to the Future,” declared, “Right now, we are at a critical juncture in our organization and must make immediate, lasting, and impactful changes in our operations and in our culture. This operational pivot is long overdue and today, we are talking about the first step in a journey we must take together, for the health and stability of the Postal Service. “The initial step in our pivot is targeted on transportation and the soaring costs we incur, due to late trips and extra trips, which costs the organization somewhere around $200 million in added expenses. “One aspect of these changes that may be difficult for employees is that – temporarily – we may see mail left behind or mail on the workroom floor or docks (in P&DCs), which is not typical.” COVID-19 and the economic devastation it sparked has further accelerated the crisis of USPS, with former CEO Megan J. Brennan telling Congress in late May that without support it would run out of cash to pay its over 600,000 employees by September. Brennan requested $75 billion in financial assistance from Congress. No assistance was given, however, and the USPS is surviving off of its remaining cash reserves and a $3 billion loan from the US Treasury, placing it further in debt. While the Postal Service decays, it is also under increased pressure from its competitors, namely Amazon and United Parcel Service (UPS), which have recorded record revenue and are under the process of expanding their logistics networks after increases in shipments have left them with surplus revenue. Just one example of Amazon’s growth has been the acquisition of 2,300 trucks to expand its delivery network. UPS has announced a $138 million expansion of its Atlanta facility. The move to cut workers’ overtime is part of the US capitalist class’s decades-long drive to dismantle USPS, a public entity that occupies a valuable portion of the logistics industry. According to its website, the USPS handles 48 percent of the world’s mail volume, generated $71.1 billion in revenue in 2019 and – if it was fully privatized – would be number 44 in the Fortune 500 list of the world’s largest companies. This is a massive source of profit that the financial oligarchy is attempting to take over completely. This was outlined clearly by President Donald Trump’s 2018 plan calling for the privatization of USPS either through the launch of an Initial Public Offering on the stock market, or sale to an existing company.
Weekly Initial Unemployment Claims increase to 1,416,000 – The DOL reported: In the week ending July 18, the advance figure for seasonally adjusted initial claims was 1,416,000, an increase of 109,000 from the previous week’s revised level. The previous week’s level was revised up by 7,000 from 1,300,000 to 1,307,000. The 4-week moving average was 1,360,250, a decrease of 16,500 from the previous week’s revised average. The previous week’s average was revised up by 1,750 from 1,375,000 to 1,376,750. The previous week was revised up. This does not include the 974,999 initial claims for Pandemic Unemployment Assistance (PUA). The following graph shows the 4-week moving average of weekly claims since 1971.
U.S. Jobless Claims Rose Last Week for First Time Since March -U.S. jobless claims rose last week for the first time since March, the clearest sign yet of a pause in the economic recovery as coronavirus cases surge in much of the country and force businesses to close their doors once again. Initial claims through regular state programs increased to 1.42 million in the week ended July 18, up 109,000 from the prior week, a Labor Department report showed Thursday; on a non-seasonally adjusted basis, claims declined. There were 16.2 million who filed for ongoing benefits through those programs in the period ended July 11, down from the prior week and less than forecast. Economists in a Bloomberg survey had forecast 1.3 million initial claims, little changed from the prior week, with projections as high as 1.55 million. The four-week average, a less-volatile figure, fell by the least since April. The jobless claims figures may reflect both renewed closings of businesses such as restaurants, as well as layoffs at other firms that have seen a sustained dropoff in revenue.
Comments on Weekly Unemployment Claims – 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 was July 12th through the 18th, and initial claims for that week were released today. 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. Continued claimsdecreased last week to 16,197,000 (SA) from 17,304,000 (SA) the previous week. Continued claims are down 8.7 million from the peak, suggesting a large number of people have returned to their jobs (as the employment report showed). However, continued claims NSA increased to 17,188,772 from 16,410,059 the previous week – and the seasonal adjustment may be off this year due to the pandemic.Continued claims are released with a one week lag, so continued claims for the reference week will be released next week. The decrease in continued claims does not suggest a sharp drop in July employment.The following graph shows regular initial unemployment claims (blue) and PUA claims (red) since early February. This was the 18th 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 are probably seeing some layoffs in states with more COVID cases. 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.”
Jobs Recovery Shows Signs of Slowing as Coronavirus Surges – WSJ -The U.S. labor-market recovery is losing momentum as a surge in coronavirus cases triggers heightened employer uncertainty and consumer caution.Job openings in July are down from last month across the U.S., and Google searches for “file for unemployment” are creeping up. Growth in worker hours is waning at small businesses after several weeks of gains. The labor-market slowdown is widespread across industries and states, showing the economic turmoil isn’t limited to states in the South and West that are seeing the greatest increases in illnesses.It also comes as Congress considers whether to extend $600 a week federal unemployment benefits that around 25 million workers are receiving through the end of July as part of a coronavirus relief package. Many economists say the benefits – totaling about $15 billion a week – have helped offset the impact of the pandemic on the economy. Critics say the funds, which pay many lower-wage workers more than if they were on the job, are discouraging people from returning to work.”This recent slowdown in the economy is being driven by the economic uncertainty associated with the growing outbreaks rather than just the direct impact of the outbreaks themselves,” said Daniel Zhao, economist at job site Glassdoor, adding that “uncertainty is hitting all players in the economy including businesses, workers and consumers.”Job postings declined in all 50 states and Washington, D.C., in the past two weeks, according to Glassdoor. Job-opening decreases were less steep in states with sharp rises in virus infections, including Florida, Texas and Arizona, possibly reflecting broader reopenings in those states. Growth in the number of employees working at small businesses has slowed in Sun Belt states, which saw the swiftest rise in virus cases in June, according to investment bank Jefferies LLC. Small-business hiring has also recently stalled in the Midwest and Northeast, where infections have been more contained, Jefferies added. Businesses were reopening and recalling workers in May and June, helping the U.S. economy recover 7.5 million jobs and consumer spending to rebound in those months, in part due to a rebound in hospitality and retail hiring. Economists expect growth to continue in July, but at a slower pace because of increased infections. Still, June employment was down by about 15 million jobs compared with February, the month before the pandemic hit, Labor Department data show. It isn’t clear how many of the job losses during the pandemic will become permanent. Economists say consumers need to feel confident the virus is contained before economic activity can return to levels seen before the pandemic. Business owners and industry representatives say the longer the shutdowns drag on, the harder it will be for companies to survive.
Joblessness remains at historic levels and there is no evidence UI is disincentivizing work: Congress must extend the extra $600 in UI benefits – EPI Blog by Heidi Shierholz – Last week 2.3 million workers applied for unemployment insurance (UI) benefits. This is the 18th week in a row that unemployment claims have been more than twice the worst week of the Great Recession. Many headlines this morning are saying there were 1.4 million UI claims last week, but that’s not the right number to use. For one, it ignores Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data for regular state UI, which is distorted right now because of the way the Department of Labor (DOL) does seasonal adjustments.Of the 2.3 million workers who applied for UI last week, 1.37 million applied for regular state unemployment insurance (not seasonally adjusted), and 975,000 applied for PUA.A disaster of Congress’s making is looming for those who have lost their livelihoods during the global pandemic and are now depending on UI to provide for their families. If Congress doesn’t act immediately, the across-the-board $600 increase in weekly unemployment benefits will expire at the end of this week. That would not just be cruel, it would be terrible economics. These benefits are supporting a huge amount of spending by people who would otherwise have to cut back dramatically. That spending is supporting more than 5 million jobs. If Congress kills the $600, they kill those jobs. This chart shows the number of jobs that will be lost in each state if the $600 is allowed to expire.
Census: Household Pulse Survey shows 26.4% Missed or Expect to Miss Rent or Mortgage Payment –First, from @ernietedeschi Employment in the @uscensusbureau Household Pulse Survey fell by -4.1 million last week alone.That’s a cumulative loss of -6.7 million jobs between the reference weeks used for the June & July monthly jobs report.Seasonality and survey noise may be factors here — the HPS is a new, experimental survey with limited history.However it also did an admirable job of predicting the strong employment growth in June.This graph is from Ernie Tedeschi (former US Treasury economist). CR Note on above graph: The Pulse Survey doesn’t align exactly with the BLS reference week. The release today is for July 9th – July 14th, and the release next week will be for the period July 16th – July 21th. The BLS reference week is the 12th – 18th.Also note on the question below 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) Pandemic The U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey is designed to deploy quickly and efficiently, collecting data to measure household experiences during the Coronavirus (COVID-19) pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning. … Data collection for the Household Pulse Survey began on April 23, 2020. The Census Bureau will collect data for 90 days, and release data on a weekly basis.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 9 and July 14, 2020. Definitions:
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 50.1% from 47% in the initial survey.
“Percentage of adults who expect someone in their household to have a loss in employment income in the next 4 weeks.”
35.1% of households expect a loss in income over the next 4 weeks. This is down from 38.8% in late April, but up from 31% four weeks ago..
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 increased slightly since March.
Delayed Medical Care: “Percentage of adults who delayed getting medical care because of the COVID-19 pandemic in the last 4 weeks.” 40.6% of households report they delayed medical care over the last 4 weeks. This increased slightly from last week.
Housing Insecurity: 26.4% 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.
Visitors from 31 states now required to quarantine when visiting New York, New Jersey, Connecticut –New York, New Jersey and Connecticut are now requiring visitors from 31 states to quarantine for 14 days in an effort to combat the growing number of coronavirus cases in the country.The metro area announced Tuesday that 10 additional states would be added to the travel advisory that mandates the quarantine: Alaska, Delaware, Indiana, Maryland, Missouri, Montana, Nebraska, North Dakota, Virginia and Washington. Minnesota was removed from last week’s list.New York’s travel advisory has been expanded to 31 states. If you’re traveling to NY from the following states you must self-quarantine for 14 days: AK, AL, AR, AZ, CA, DE, FL, GA, IA, ID, IN, KS, LA, MD, MO, MS, MT, NC, ND, NE, NM, NV, OH, OK, SC, TN, TX, UT, VA, WA, WI. – Andrew Cuomo (@NYGovCuomo) July 21, 2020The travel advisory list includes states that have more than 10 per 100,000 residents testing positive for the virus or more than 10 percent of tests coming back positive, on aseven-day rolling average. Last week, 22 states made the list.New York, New Jersey and Connecticut announced the travel advisory late last month, initially adding Alabama, Arkansas, Florida, North Carolina, South Carolina, Washington, Utah and Texas. Certain states, like Delaware and Washington, were removed and then re-added to the list as their numbers evolved over the weeks. The new travel restrictions come as New York attempts to protect itself from further serious outbreaks across the country after the tri-state area was the U.S.’s initial epicenter for COVID-19 earlier this year.
PSC extends utility shutoff moratorium; more than 71,000 households had faced disconnection – Citing public health concerns amid a rising number of coronavirus infections, Wisconsin regulators reinstated a moratorium on utility shutoffs Thursday, granting a temporary reprieve to tens of thousands of households.With a 2-1 vote Thursday, the Public Service Commission suspended disconnection of services for residential customers until Sept. 1. A previous shutoff moratorium had been scheduled to expire Friday. Chairwoman Rebecca Valcq cited the 44,847 confirmed cases of COVID-19reported by the Department of Health Services on Wednesday – more than double the number on June 11 when the commission voted to lift a moratorium put in place at the outset of the pandemic. “What I’m concerned about is when we disconnect people in the summer months one of the first things we advise them is go seek shelter somewhere else,” Valcq said. “That flies in the face of all direction we’re getting from public health officials.” According to data compiled by the PSC, more than 71,000 households were at risk of losing electricity, gas or water service beginning Saturday. Of those households, about 17,500 faced loss of water service.
‘No mask, no entry. Is that clear enough? That seems pretty clear, right?’ WaPo. We tried our best to be polite about it. I’d frame it to customers like they were doing us this big favor: “Would you please consider wearing a mask?” “May we offer you a free mask?” “We sure do appreciate your cooperation.” I’ll never understand what’s so hard about putting on a mask for a few minutes. It’s common sense. It’s a requirement now in North Carolina. But this is a conservative place, and there are only 900 people in this town. We try hard to get along. We’re a small general store, and we didn’t want to end up in one of those viral videos with people spitting or screaming about their civil rights. We put a sign outside – an appeal to kindness. “If you wear a mask, it shows how much you care about us.” We found out how much they cared. It became clear real quick. I’m 63. I’m a lifetime asthmatic. I’d watch customers pull into the parking lot without their faces covered, and my whole body would start to tense up. Our store is on the Intracoastal Waterway, and people from all over the world dock in the harbor and come in here for supplies. It’s a big petri dish. I put a shield up over my register, and a few hours into my shift it was covered with spittle. We’d have 20 or 30 people walk by the sign and come in without a mask. I’d try to get their attention and point to the sign. It was a lot of: “You’re infringing on my rights. This is a free country, and I’m here to shop, so who’s going to stop me?” Then the local sheriff went on Facebook and said he wasn’t going to enforce the state requirement because he didn’t want to be the “mask police.” So now what? I have customers who are breaking the law and putting my life at risk, and what am I supposed to do? I’m a freaking retail clerk. I ring up beer and boat supplies for 10 bucks an hour. I don’t want to deal with this. If I didn’t need the money, I’d be home working in my garden or visiting my grandkids. I don’t come into the store every morning looking to make some big moral stand, but when I see something that’s wrong, I can’t let it slide. I cannot shut up. I get stuck on things. That’s my biggest downfall or my biggest asset. So, fine. I’ll be your mask police. What choice do I have? I talked to my co-worker, and we decided to hang another sign on the wall. “Thanks for wearing a mask. It’s the most patriotic thing you can do.”That didn’t stop them, so we kept adding more. “Please be kind to us.” “We’re here for you seven days a week, and we didn’t create this situation.” “Masks are required for anyone entering the store.” Maybe some people took it as a challenge. I don’t know. But it kept on escalating. Most of our customers are supportive and respectful about it – maybe 90, 95 percent. But on weekends, we get dozens of people from Charlotte or Raleigh who come to visit their boats. Those places are virus hot spots, and they come here to have a good time and maybe they’re drinking. Some of them would see our signs, open the front door, and just yell: “F— masks. F— you.” Or they would walk in, refuse to wear a mask and then dump their merchandise all over the counter. I had a guy come in with no mask and a pistol on his hip and stare me down.
The “Strike for Black Lives” protest stunt – – On Monday, various US trade unions, including the United Food and Commercial Workers (UFCW), the Teamsters and the Service Employees International Union (SEIU), organized what they called a “Strike for Black Lives.” According to the event’s website, it demanded “justice for Black communities, that elected officials use their authority to rewrite the rules so that Black people can thrive [and] that corporations dismantle racism, white supremacy and economic exploitation.” Several Democratic Party-aligned groups also took part in organizing the event. The so-called strike was a political fraud. Its purpose was to promote the Democratic Party’s attempt to divert and disorient popular opposition by injecting racial communalism into the broad multi-racial movement against police brutality. It was also aimed at covering for the role of the unions and the Democrats in endangering the lives of workers by forcing them to remain on the job during the coronavirus pandemic. The “Strike for Black Lives” was not a real strike. It consisted for the most part in brief demonstrations held outside normal working hours, or, in some cases, during lunch breaks. Despite the nationwide character of the event, which involved the participation of unions that collectively have millions of members, only a few thousand people took part, according to the unions. The event was fully supported by big business. Short-term rental giant Airbnb even offered its employees time off to participate. It was promoted by the corporate press. All of the major national newspapers provided significant coverage. These same outlets, led by the New York Times, have spent months attempting to condition public opinion to accept a premature return to work under conditions where the COVID-19 pandemic has not been contained and no serious measures have been taken by corporations to protect their workers from the deadly disease. All of these media outlets are complicit in the explosive rise in infections and deaths that have resulted – and were certain to result – from the back-to-work campaign dictated by big business and carried out by Democratic governors and mayors as well as the Trump White House. Unsurprisingly, these same publications have ignored genuine strikes that have broken out in recent months in auto, meatpacking and other industries in defiance of joint union-management attempts to keep workers on the line during the pandemic. The demonstrations that did take place served as a backdrop for speeches by Democratic Party politicians. In New York City, at a protest of a few hundred people, the unions turned over the microphone to Senate Minority Leader Charles Schumer, known as the “senator from Wall Street,” who played a leading role in the passage of the CARES Act. That piece of legislation authorized a multitrillion-dollar bailout of the banks and corporations and sent stock prices soaring. Former presidential candidates Kamala Harris and Elizabeth Warren tweeted their support.
GOP discusses tying K-12 funding to in-person classes -Senate Republicans are proposing tying half of K-12 funds in the next coronavirus package to schools holding in-person classes. Sen. Roy Blunt (R-Mo.), who has been among a group of key negotiators on the education provisions in the forthcoming GOP bill, said Republicans are proposing $70 billion for K-12 schools. “I think on K-12 we’re moving forward with half of the money available to all schools, and the other half available to schools that are having more of an in-person effort because they’re going to have more expenses,” Blunt said. Asked if the administration was supportive of that, Blunt added “that’s what we’ve proposed to them. … We had a good discussion on it.” Senate Majority Leader Mitch McConnell (R-Ky.) said earlier Tuesday that the forthcoming Republican bill will provide $105 billion for schools. “This country wants its kids back in the classroom this fall learning, exploring, making friends. Their education depends on it. … This majority is preparing legislation that will send $105 billion so that educators have the resources they need to safely reopen,” McConnell said from the Senate floor. Blunt, speaking to reporters after a closed-door caucus lunch, broke that down as $70 billion for K-12, $30 billion for higher education and another $5 billion that governors could spend on either. How to fund schools, and what restrictions to place on the money, has been a running point of debate as Congress prepares to negotiate the next coronavirus aid package.
Pence ‘wouldn’t hesitate’ to send his kids back to school despite coronavirus |- Vice President Pence said Tuesday that, if they were still school-aged, he “wouldn’t hesitate” to send his kids back to in-person classes despite rising numbers of coronavirus cases. “We know to open up America again we need to open up America’s schools, but it’s also right on the facts,” Pence said during a press briefing in South Carolina. The vice president said the overall risk for children contracting COVID-19 is low, adding there are “real costs” to students not being in schools this fall. The second lady, Karen Pence, is a part-time teacher at a Christian elementary school in Virginia and was present during Tuesday’s meeting to bring her perspective on how teaching might work when some classrooms resume sessions this fall. Instead of teaching in her own class, the second lady, who specializes in art therapy, said she would wheel a cart “from room to room” to keep children separated and safer. “They have their own supplies. I don’t set out supplies this year,” Karen Pence said. “So there are ways that we can make it safe for our kids.”
Missouri governor says children infected with COVID-19 will “get over it” — The campaign to reopen schools across the US, spearheaded by the Trump administration and supported by the entire political establishment, is provoking widespread opposition among educators, parents and young people. Missouri Governor Mike Parson, a Republican and ally of Donald Trump, declared in a radio interview on Friday, “These kids have got to get back to school. They’re at the lowest risk possible. And if they do get COVID-19, which they will, and they will when they go to school, they’re not going to the hospitals. They’re not going to have to sit in doctors’ offices. They’re going to go home and they’re going to get over it.” This statement expresses the callous indifference of the entire ruling class to the suffering that the pandemic has inflicted on the working class. The ruling elite is engaged in a homicidal class war whose central focus is forcing workers back on the job under conditions of an out-of-control pandemic and no protection for workers against COVID-19. The reopening of the schools, which the corporate elite and the politicians know will lead to mass infections and deaths, is central to the back-to-work drive. The pandemic is rapidly spreading in Missouri, with a daily average of 854 new confirmed cases over the past week, up from 238 only a month ago. Across the US, cases and deaths are rising rapidly, with over 60,000 new cases and nearly 1,000 deaths each day for the past week. Contrary to Parson’s claims, the most recent data (July 15) from the Centers for Disease Control and Prevention (CDC) documents 188 deaths of youth under 25 attributable to COVID-19, including 31 deaths of children under the age of 15. While children have the lowest infection and death rates for any age group, this is in part due to the global wave of school closures that began in mid-March, as well as a lack of testing for this age group. The families that have lost children under the horrific circumstances of the pandemic will never be the same. Prior data from CDC indicates that the case fatality rate for children is roughly 0.02 percent, meaning that with a full reopening of schools, potentially thousands of children could die. Parson said nothing about the dangers posed to children’s parents when they come home infected, or the potential for orphaning hundreds of thousands of children across the country. He also ignored the dangers posed to teachers forced to be in the classroom, roughly a quarter of whom fall under the categories most at-risk of dying from COVID-19.
Trump and DeVos’s Plan to Reopen Schools Hides a Sinister Agenda –Parents of 51 million school-age children in the U.S. are facing an agonizing choice – whether to risk exposing their children to the coronavirus in public school classrooms this fall, or to sacrifice their children’s intellectual, social and emotional development by keeping them home for “online learning” via the web, which even before the pandemic was judged not very effective.To make the choice even more difficult, President Trump and his education secretary, billionaire Betsy DeVos, have threatened towithhold federal funds from any school that does not open its classrooms fully in the fall. Both Trump and DeVos insist face-to-face teaching is perfectly safe, which health scientists say is not true.Trump and DeVos are adamant. On “Fox News Sunday” on July 12, DeVos said, “There’s nothing in the data that suggests that kids being in school is in any way dangerous.” Trump’s spokesperson, press secretary Kayleigh McEnany, said on July 16 that “science should not stand in the way” of school reopening because “science is on our side,” showing it is “perfectly safe” to fully open all classrooms in the fall. Science does not support claims of perfect safety. Schools are likelyhigh-contact zones. Most schools cannot presently afford regular disinfection; many students and their parents may object to mandatory masks (38 percent of U.S. adults don’t wear masks when they leave the house); certainly not all kids will remain six feet apart. COVID-19 candefinitely infect some children, some of whom can pass it on to their families, teachers, school staff and other children. Bloomberg Newsreports that, in Florida, about a third of all children tested have been positive for COVID-19; in California it’s 8.4 percent; Mississippi, 9.4 percent; Arizona and Washington state, 11 percent. According to theKaiser Family Foundation, 3.3 million seniors age 65 and older – prime candidates for serious illness – live with a school-age child. Furthermore, another Kaiser study concluded that one-quarter of all teachers (1.47 million people) are in danger of developing serious illness if infected with coronavirus. Almost everyone agrees that children sorely need the many benefits of school attendance – food and friendships, books and basketball courts, time away from family, and a safe place to spend it, plus stimulating interactions as they learn reading, writing and arithmetic. Furthermore, 27 million working parents need their children cared for safely during the week. To reopen safely, schools need more money and more space. Doubling the distance between students will require twice the space. Part-time online learning will require access to broadband, and laptops or tablets for everyone. According to a recent survey, only 24 percent of teachers report that all their students have access to a tablet or laptop for school work. In addition, everyone will need masks, and schools will require frequent, thorough cleaning. The Washington Post reports that Congress is currently negotiating a bill that might give schools another $50 billion to $100 billion – still far below the amount needed to make schools safe. Plus, the Post says, Trump and DeVos are angling to give the money only to schools that open fully. They want to punish schools that open only part-time.
Florida teachers union files lawsuit against state over school reopening order – – The Florida Education Association, the state’s largest teachers union, said Monday it’s filing a lawsuit against Gov. Ron DeSantis and the state over their push to reopen Florida’s schools as COVID-19 cases rise. The FEA lawsuit is one of at least two to have been filed against the state’s plans to reopen schools. Both are asking a judge to intervene and stop schools from reopening in just a few weeks. The union is calling on DeSantis, Education Commissioner Richard Corcoran, the Florida State Board of Education, and Miami-Dade County Mayor Carlos Gimenez to “stop the reckless and unsafe reopening of public school campuses as coronavirus infections surge statewide.” DOWNLOAD: FEA lawsuit (pdf) The FEA also launched a petition that says the state’s students must not return to school until steps are taken to reduce the rate of community spread of COVID-19. “We cannot be reckless with children’s lives,” said Fedrick Ingram, FEA president. His attorney did not mince words. “The first 21 pages of our lawsuit are a chronicle of horrors,” said Kendall Coffey. Coffey’s goal is to stop schools from reopening in August, and teachers say it’s the only safe thing to do. “I, of course, want to go back to teaching but it needs to be safe. There’s no way children can sit in their seat for six hours and wear a mask,” said Stefani Brown Miller, a teacher in Broward County. The FEA lawsuit argues the state’s directive that schools reopen five days a week is unconstitutional, putting students, teachers and their families at risk of contracting COVID-19.
Until Teachers Feel Safe, Widespread In-Person K-12 Schooling May Prove Impossible in U.S. –Safely resuming in-person instruction at U.S. public schools is important for theacademic, physical, emotional and social well-being of children and their families. It’s also a key factor for the nation’s economic recovery.But in mid-July, despite considerable pressure from the Trump administration, many school systems around the nation had announced that they didn’t yet believe that anything close to resembling a traditional schedule would be feasible before the 2020-21 school year starts. Many school districts, including those in Los Angeles, San Diego and Houston, three of the nation’s largest, were planning to be fully online.Others, such as those serving New York City and Clinton, Mississippi, currently plan to follow hybrid approaches that combine distance learning and in-person learning. The goal in those cases is to reduce the spread of coronavirus by keeping students several feet apart from each other at all times and the only way to do that is to have fewer children in school at any given time.Some states, including Florida, are trying to demand that local school systems at least offer families a chance for in-person daily instruction. But it’s unlikely that all schools schools in those states will have on-site instruction, especially in COVID-19 hotspots.Pressure from teachers has contributed to decisions to refrain from holding classes in person everywhere from Southern California to Northern Virginia. In June, a survey of the members of the American Federation of Teachers, a union with 1.6 million members, found that only 21% of K-12 teachers preferred to resume school on a traditional schedule. Another 42% supported a hybrid approach combining in-person and distance learning and 29% wanted to continue with distance learning exclusively and the rest didn’t express a preference.Fully 62% of the teachers responding to the survey expressed concerns over school safety tied to the COVID-19 pandemic. More than 1 in 4 of the nation’s 3.7 million public school teachers are 50 years old or older. That means they have a high risk of getting severe symptoms if they contract COVID-19. Countless other teachers live with someone who is in a high-risk category due to their age or have underlying conditions that put them at a greater risk should they get sick.
TIME: What the U.S. Can Learn from 3 Countries About Reopening – Diane Ravitch – TIME Magazine just published a story about school reopening in Denmark, South Korea, and Israel, with lessons for the U.S.
- Lesson #1 from Denmark: Get the virus under control before reopening schools. Unlike Denmark, the United States is bungling that, and the virus is spreading in the south and west. Perhaps states that have taken the necessary steps and flattened the curve can begin to reopen, with caution.
- Lesson #2 from South Korea: Prepare to delay reopening if cases spike. Older students returned to school fumirst.
- Lesson #3 from Israel: Infections increase when schools don’t take every safety precaution. Expect to close down again if you don’t follow the protocols of masks, social distancing and other precautions.
The necessary health and safety protocols require extra funding. No extra funding is available. Trump threatened to cut federal funds from schools that don’t open fully even without the small classes, masks, PPE, extra nurses, etc. He wants the schools open without regard to the health or safety of teachers and students.
- So rule 1: take the measures necessary to contain the pandemic. The United States is not doing that.
- Rule 2: if schools open, fund the steps necessary to make them safe. The United States is not doing that.
- Rule 3: prepare for a new surge in infections if public officials ignore rules 1 and 2.
Virginia’s largest school district reverses on reopening to in-person classes — Scott Braband, superintendent for Fairfax Public Schools, has recommended that Virginia’s largest school district start the school year with virtual classes, as school districts around the country feel mounting pressure from the Trump administration to return to in-person instruction in the fall. Braband’s recommendations came Tuesday afternoon as district’s school board convened to discuss how to approach the new school year amid the coronavirus pandemic.”The COVID-19 pandemic looks much different than it did even three weeks ago,” Brabrand said, according to The Washington Post. “Now we are experiencing a surge of COVID-19 across the country, and it will impact us here in Fairfax County. The numbers do not lie.”BREAKING: Fairfax County Schools superintendent will recommend beginning the school year with all-virtual learning. Had previously planned to have some students in school two days a week. pic.twitter.com/Ek7Uku7bZ8 The new recommendations are a change of heart for Braband who had initially planned on having students in the classroom at least twice a week while using virtual learning the rest of the time. This kind of hybrid system has been floated by schools districts across the country, but has drawn pushback from Education Secretary Betsy DeVos, who has said that such proposals were unacceptable and that school districts should have in-person instruction full-time.President Trump and his administration have taken a hardline stance on the issue, with Trump recently threatening to withhold funding from school districts that don’t commit to in-person learning this fall. Trump has also knocked guidance for schools released by the Centers for Disease Control and Prevention, saying that the suggested measures were too costly and extreme.Loudoun County Superintendent Eric Williams was slated to make similar recommendations for his Northern Virginia district Tuesday afternoon, according to the Post. Also on Tuesday, Montgomery County Public Schools announced that it would be exclusively using virtual learning for the first semester.
Maskless protesters pack Utah County Commission meeting set to discuss masks in schools — A crowd of maskless protesters packed into a Utah County Commission meeting on Wednesday to speak out against a state requirement for students to wear masks when school returns. Dozens of demonstrators came out in Provo, Utah, to protest Gov. Gary Herbert’s (R) mandate on masks in schools, arguing that they should have the right to decide whether their children or students wear face coverings in the three school districts in the county. Tanner Ainge, the chair of the all-Republican commission, delayed the meeting shortly after it started, citing that the crowd was not following public health guidelines, according to a video. “This is the exact opposite of what we need to be doing,” Ainge said, prompting the protesters to boo. “We are supposed to be physically distancing, wearing masks.” Ainge left the meeting, but the two other members of the commission stayed to listen to more than 30 people who lined up to talk, The Salt Lake Tribune reported. Several parents expressed worries about children with disabilities being required to wear masks and the difficulty of enforcing the rule on playgrounds and in lunchrooms, The Washington Post reported. Ahead of the meeting, commissioner Bill Lee had voiced his opposition to the state rules and added a proposal to request state officials implement a “compassionate exemption” for the mandate, allowing parents and teachers the authority to decide whether they were necessary, the Tribune reported. Lee encouraged people to meet to “peacefully express their concerns” about the mask requirement outside the county government center before the official meeting. About 150 people came out, according to the Tribune. Ainge told the Post that the matter of mask mandates in schools “has no business being on agenda.” “The county has nothing to do with this,” he said. “It would be like the school board deciding how much money to give to the sheriff’s department.”
Michigan judge denies release of teenage girl who was jailed after not doing homework – A 15-year-old Black girl who has been incarcerated in Michigan since mid-May after she failed to do her online schoolwork won’t be returning home, a judge decided Monday, in a case that has stoked outrage that it is emblematic of systemic racism and the criminalization of Black children. Oakland County Judge Mary Ellen Brennan determined that the girl has been benefiting from a residential treatment program at a juvenile detention center, but is not yet ready to be with her mother. Brennan, the presiding judge of the court’s Family Division, scheduled another hearing for September, NBC affiliate WDIV reported. The girl, who is being identified only by her middle name, Grace, was the subject of a report published last week by ProPublica Illinois, with politicians and community activists expressing outrage over her incarceration. During a three-hour proceeding, Brennan told Grace that it was in her best interest to stay in the program after all of the progress she had been making. “Give yourself a chance to follow through and finish something,” Brennan said, according to the Detroit News. “The right thing is for you and your mom to be separated for right now.” Grace, however, told the judge that she wanted to go home: “I miss my mom. I can control myself. I can be obedient.” After the hearing, an attorney for the family, Jonathan Biernat, confirmed that Grace had been making strides, but the “fight for her release” is ongoing. He was unavailable for further comment later Monday.
CPS could lose $10M to private schools, district says in lawsuit against Betsy DeVos over coronavirus funding – – Chicago Public Schools has joined a federal lawsuit with 12 other states, cities and districts against U.S. Education Secretary Betsy DeVos over her insistence that public school districts share more of their federal coronavirus relief funding with private schools. The complaint centers around more than $13 billion earmarked for schools in the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, which Congress passed in late March. The legislation calls for states and school districts to receive money based on how much Title I funding they’re allotted to serve low-income students, the lawsuit says. But DeVos, the complaint argues, has instructed funding to be distributed based on a school’s total number of students, which would divert money from public schools serving children from low-income families to wealthier private schools. CPS’ CARES Act allotment is $205 million of the $569.5 million earmarked for Illinois. Officials estimate CPS would lose about $10 million if DeVos’ distribution guidelines stand. The district said in a statement Monday that shifting millions to private schools would be a misallocation of taxpayer dollars at a time when public school students need it most. “The devastation of the COVID-19 pandemic has disproportionately impacted low-income students of color and the Trump Administration is turning its back on these students in favor of wealthy private institutions by siphoning public funds away from the students who Congress intended to support,” the district said. Department of Education Press Secretary Angela Morabito said in a statement that “this pandemic affected all students, and the CARES Act requires that funding should be used to help all students.”
After Cruise Ships and Nursing Homes, Will Universities Be the Next COVID-19 Tinderboxes? -The fall semester has yet to begin, but student athletes training for the season can already be found on college campuses across the U.S. And so can COVID-19.Since the start of July there have been at least two outbreaks among student athletes, coaches, and staff – with 37 infected at the University of North Carolina (UNC) Chapel Hill and 22 at Boise State. Clusters of infection have been traced to college town bars popular with students.A common misconception is that young people with COVID-19 don’t die and therefore college re-openings pose little risk. Sadly, this isn’t the case. COVID-19 deaths in the young are rare, but they happen. Universities across the U.S. are mourning the loss of students in the lead-up to the school year, includingJoshua Bush, a 30-year old nursing student at the University of South Carolina,Trevor Syphus Lee, a 27-year old senior at Utah Valley University, and Juan Garcia, a 21-year old Penn State undergraduate.One might imagine that the rapid, uncontained spread of a serious and poorly understood disease which is already killing students would cause universities all across America to put their re-opening plans on hold. Unfortunately, that’s not the case.The Chronicle of Higher Education compiled a database of the fall reopening plans of over 1,000 colleges and universities and found that 60% are “going to open for business and bring all of their students back.” Given how much is still unknown about the virus and especially its long-term effects on those infected, this could be the largest-scale uncontrolled public health experiment America has ever undertaken, with students, staff, faculty, parents, and communities as the unwitting test subjects. No other nation has reopened schools and universities with the level of rampant community transmission we see in the U.S. today, or with so little coordination or guidance as to protective measures.The rush to re-open is driven by the very reasonable conviction that universities and colleges ought to provide their students face-to-face classroom teaching and a residential “campus experience.” There is more to college than the transmission of knowledge, and online learning has significant disadvantages. But during a pandemic, both classrooms and presumably campus residential settings present risks universities are not equipped to handle.
University of Akron announces plan to eliminate 178 professors, staff and contract professionals – The University of Akron’s Board of Trustees unanimously voted last Wednesday to eliminate 178 positions from the university, which is based in Northeast Ohio, in response to an expected decline in enrollment and continued budget shortfall. Out of the planned layoffs, 96 are full-time professors and members of the American Association of University Professors (AAUP) and 82 are staff and contract professionals. The AAUP agreed to the layoffs as part of new labor agreement with the university. Management and the union are putting pressure on professors and other staff to accept the job-cutting deal in a vote, which must be completed by August 3. In a statement released Friday night, University of Akron President Gary Miller threatened that failure to ratify the agreement would result in “legal battles” and “cause many, many more faculty to lose their jobs than were achieved through the recent board action.” The planned layoffs are the most recent attempt by the university to overcome its ongoing budget shortfall, which has worsened due to uncertainties caused by the ongoing COVID-19 pandemic. In 2018, the trustees voted to terminate 19 percent of the university’s degree tracks, roughly 80 programs, in a cost cutting measure. Between 2010 and 2019, the number of faculty positions was cut by 18 percent. In May, the university announced plans to eliminate six out of its 11 colleges. In late May, the AAUP announced that the university administration was attempting to invoke two clauses in their contract dealing with “unforeseen, uncontrolled and catastrophic circumstances” and “exigent circumstances.” In a statement, the AAUP explained that the administration was claiming that these clauses allow the university to suddenly fire faculty “without regard to tenure status, rank or the other criteria” and could seek to change agreements in the contract such as faculty pay, increase healthcare premiums, and eliminate healthcare benefits for dependents of retirees and furloughs. If the union is successful in pushing through the plan to lay off professors, it would amount to giving the administration what it was asking for in May. The cuts would result in a 23 percent decline in the number of full-time unionized faculty since the start of the pandemic. Prior to the trustees vote on Wednesday, 21 full-time faculty resigned or retired. AAUP officials have also clarified that the recent names slated for layoffs were selected without protections for tenured or high-ranking faculty. The university currently employs about 570 full-time professors.
Despite withdrawal of ICE ruling, international students in the US remain at risk – On July 14, the Trump administration withdrew a July 6 ruling by Immigration and Customs Enforcement (ICE) requiring 900,000 international students to take at least one in-person class this fall – even as many universities move fully online in response to coronavirus pandemic – putting tens of thousands at risk of detention and deportation. The ruling was revoked before initial arguments were set to be heard in a lawsuit brought against the Trump administration by Harvard and the Massachusetts Institute of Technology, which was supported by tens of other colleges. Separate lawsuits had also been filed against the ruling by a number of California universities and a coalition of seventeen states. Despite the Trump administration’s withdrawal of the order that would have threatened the residency status of 900,000 F-1 visa holders, international students’ right to study in the US remains precarious. The revocation was little more than a tactical retreat in the ongoing war against all immigrants waged by the Trump administration with the crucial support of the Democratic Party. Far from representing any principled recognition of the rights of students, the revocation of the order is only the latest in a string of increasingly unstable vacillations from a ruling class wracked by crisis. In contrast, the Socialist Equality Party, which fights for the interests of the international working class and young people, insists on the right of every individual, regardless of the circumstances of their birth, to high quality education and to work, to study and live in any country they please with full citizenship rights. The extent to which the Democratic Party has responded to the ruling has been limited by what they perceive to be the interests of US imperialism. Rather than asserting the democratic rights of the students themselves, the Democrats cited the contribution made by international students to the US economy, their role in critical American research projects and the ties this education fosters to the foreign government officials, many of whom attended college in the US. Unless students break decisively with the Democratic Party and its pseudo-left agents, they will become pawns in the factional disputes amongst the American ruling class. As soon as the Democrats determine international students no longer suit American imperialism’s geopolitical interests, any pretense of their defense will be dropped forthwith.
Are American Colleges and Universities the Next Covid Casualties? – Long before Donald Trump or Covid 19, the eerie resemblance of American higher education to the old Habsburg Empire was hard to miss. At the top a handful of vintage institutions continued to glitter. They exercised a magnetic attraction on the rest of the world that even intellectual disasters on the scale of the economics discipline before the 2008 financial crisis hardly dented. But most every institution below the royals was at least fraying around the edges. Long before the pandemic hit, many showed clear signs of distress.The root of that distress is not hard to identify: It is the pressures arising from the decline of the American middle class and the soaring income inequalities of the New Gilded Age. While a few US colleges have lineages stretching back centuries, they and their less venerable competitors dramatically reconfigured themselves during the long boom that followed World War II. Historically rapid economic growth along with major government funding initiatives, such as the GI Bill, post-Sputnik spending on defense and R&D; and Lyndon Johnson’s Great Society fueled a vast expansion of the whole system. With college degrees the passport to well-paid, stable employment, going to college became the default expectation of middle-class students and parents and the aspiration of many less affluent households. State supported institutions bulked up, but so did most private colleges and universities. Research institutions, private liberal arts colleges, professional schools, state colleges and universities, and junior colleges nearly all added students and faculty. Many also transformed themselves into conglomerates, branching out into wholly new lines of activity and adding layers of administrators. The fateful fork in the road came in the nineteen seventies, as economic growth slowed and became far more variable. The declines, along with major campaigns for lower taxes, squeezed both federal and state finances. With direct aid from governments constrained, and advances in biotechnology promising high returns, both Democrats and Republicans encouraged colleges and universities to privatize research performed on their campuses and to spin off products to private industry.[i]
Southeast Asia budget airline boom turns sour for planemakers, lessors – (Reuters) – Southeast Asian low-cost carriers, a key growth engine for planemakers and leasing companies for a decade before the pandemic, are faltering financially as demand plunges, raising questions over whether they can replace and double their fleets. Auditors for Malaysia’s AirAsia Group Bhd (AIRA.KL) and Vietnam’s VietJet Aviation JSC VJC.HM are concerned about cashflows and funding, while Indonesia’s Lion Air has put the brakes on a planned flotation. Even before the pandemic, bankers and leasing bosses were worried about whether aircraft ordered during a decade-long buying frenzy by Southeast Asian carriers would end up being delivered. The carriers, which have offshoots in multiple countries, have 938 planes on order and lease most of their existing fleets of 476 planes, according to Aviation Week data. To be sure, budget airlines with large domestic operations are well-placed for a post-pandemic recovery, despite having less financial support than state-owned rivals. Their lower cost structure helps reduce the rate at which they burn cash and gives them the flexibility to benefit first from any recovery, analysts say. But with borders shut and economic growth stunted, a return to the low-cost international travel needed for them to afford all of the planes they have on order looks increasingly doubtful – a worrying sign for the companies that make and lease aircraft. “One area that I’m concerned about generally is just those low-cost carriers who ordered too many aircraft,” “I think there will still be work to be done on those during the third quarter,” he said, referring to negotiations over current lease contracts.
To battle Covid-19, India needs to be transparent about its mortality data – Even as coronavirus cases in India surged past the one-million mark, another key metric is showing a surprising downward trend. On Monday, India’s case fatality ratio – the proportion of deaths to Covid-19 cases – dipped below 2.5%. At 2.49%, India’s CFR is significantly below the global average of 4.2%. It is also lower than the corresponding figure for the United States (3.88%) and Brazil (3.81%), the only two other countries in the world to have a higher coronavirus caseload than India. Taken at face value, this might point to some conditions that, luckily, favour India. Speaking toThe Hindu, virologist Dr Shahid Jameel points to India’s young population as well as the possibility that South Asians have higher innate immunity than Western populations due to possible factors such as exposure to other infections. However, at the moment, these are only theories: experts caution that we are still to know the exact medical reason for this low CFR is (if there is one at all). And, as a result, India’s policies cannot be based on it. To add to this, before simply accepting these fatality numbers in the first place, a number of factors engender caution. For one, even in normal times, data collection on mortality is abysmal in India: only about 77% of deaths are registered and only 22% of those are medically certified, data from the Registrar General of India shows. As Covid-19 overwhelms health systems in India, and lockdowns disrupt public services and transport, there are fears that many deaths are not being counted. Then, there are specific concerns about Covid-19 deaths. Several cities have seen funerals with Covid-19 protocols outstrip the number of confirmed coronavirus deaths, raising concerns that suspected Covid-19 cases not being counted in the official data. Many public health experts fear local governments may have intentionally suppressed numbers of Covid-19 cases to protect their images. The BMJ reported that the city of Vadodara had attributed the deaths of nearly three-fourths of people who had the coronavirus to co-morbidities – or other underlying health conditions – ignoring World Health Organisation guidelines on the matter. To make things worse, India’s local governments are not publishing the overall mortality data they collect. This is bad at all times – but especially given that there are strong indicators that coronavirus-specific mortality is not being captured well. With poor recording of coronavirus-specific mortality, even developed countries are tracking trends in overall mortality to watch for excess deaths, which might lead them to detect coronavirus outbreaks.
Indian Farmers Are Staring at Suicide as Modi Government Looks the Other Way –I am Shankar Darekar, a 47-year-old farmer from Vimchur, a remote rural village in India’s Maharashtra province. The coronavirus pandemic, which erupted in India in early March, has spelled doom for us. It was the harvest season. I cultivate grapes on five acres of land bequeathed to me by my forefathers. Grapes are an expensive cash crop, requiring a whopping investment of up to $3,000 per acre of cultivation. There are no yields for the first three years. Every year in March, I sell part of the crop to merchants in Kolkata, in India’s eastern province of West Bengal, from where it is sent to Bangladesh. The remainder is sent to Delhi and Punjab, for export to our western neighbours. When Prime Minister Narendra Modi announced the lockdown from midnight of 24 March, he gave India’s 1.3 billion citizens barely four hours’ notice. It was a cruel joke that had a huge effect on millions of farmers.By that time, I had dispatched 100 quintals [10 tonnes] of grapes to Bangladesh, but 350 quintals were still on vines in the fields. I thought of the debt I had incurred. If the grapes rotted, my life would be ruined. Some of us got together, called farmers’ bodies and made hurried representations to the government. To our dismay, our appeals fell on deaf ears.The Modi government, which had arranged special jets to fly back the rich who were stranded abroad, was unwilling to run the railways for a few more days to transport our crops. We tried to organise trucks on our own, but provincial borders were sealed. Permits were not granted despite pleas to the government.Over a week was wasted in this flustering uncertainty. By the time we zeroed in on some local merchants, the sugar level of the grapes had risen. The buyers fixed abysmally low rates, but we could not negotiate. I sold 225 quintals of grapes for one-fifth of the price I would usually get.But more than 125 quintals of grapes had ripened and could not be sold. Someone suggested that raisin makers might be interested in buying it. The buyer gave us 23 rupees per kilogram of raisins. The maths was numbing. I sold the grapes at a measly four rupees [0.05 US cents] per kilogram. This was looting. It coincided with fervent displays of nationalism at the whim of the prime minister. One evening, Modi asked people to gather on their balconies or nearby open spaces and cheer healthcare workers by banging pots. On another occasion, he wanted them to switch off their lights at 9pm and light diyas [earthen pots] and candles. The rich obeyed merrily, and they even set off firecrackers. They said they were patriots. Their self-applauding made for pulsating prime-time TV, while our livelihoods were squeezed out of us and we had to save every penny.
Global Hunger Is Increasing, New UN Report Finds – According to a new United Nations report, global rates of hunger and malnutrition are on the rise. The report estimates that in 2019, 690 million people – 8.9% of the world’s population – were undernourished. It predicts that this number will exceed 840 million by 2030. If you also include the number of people who the U.N. describes as food insecure, meaning that they have trouble getting access to food, over 2 billion people worldwide are in trouble. This includes people in wealthy, middle-income and low-income countries.The report further confirms that women are more likely to face moderate to severe food insecurity than men, and that little progress has been achieved on this front in the past several years. Overall, its findings warn that eradicating hunger by 2030 – one of the U.N.’s main Sustainable Development Goals – looks increasingly unlikely.COVID-19 has only made matters worse: The report estimates that the unfolding pandemic and its accompanying economic recession will push an additional 83 million to 132 million people into undernourishment. But based on our work serving as independent experts to the U.N. on hunger, access to food and malnutrition, under the mandate of the Special Rapporteur on the Right to Food, it’s clear to us that the virus is only accelerating existing trends. It is not driving the rising numbers of hungry and food-insecure people.Experts have debated for years how best to measure hunger and malnutrition. In the past, the U.N. focused almost exclusively on calories – an approach that researchers and advocacy groups criticized as too narrow.This year’s report takes a more thoughtful approach that focuses on access to healthy diets. One thing it found is that when governments primarily focused on making sure people had enough calories, they did so by supporting large transnational corporations and by making fatty, sweet and highly-processed foods cheap and accessible. This perspective raises some important issues about the global political economy of food. As the new report points out, people who live at the current global poverty level of US$1.90 per day cannot feasibly secure access to a healthy diet, even under the most optimistic scenarios.
When the U.S. sneezes, the world catches a cold. What happens when it has severe COVID-19? (Reuters) – During a blue-sky moment in 2018 near the end of a decade-long economic expansion, it was the United States that helped pull the world along as the extra cash from tax cuts and government spending flowed through domestic and global markets. But if it was U.S. policy that pushed the world higher then, it is U.S. policy that threatens to pull the world under now as the country’s troubled response to the coronavirus pandemic emerges as a chief risk to any sustained global recovery. Officials from Mexico to Japan are already on edge. Exports have taken a hit in Germany, and Canada looks south warily knowing that any further hit to U.S. growth will undoubtedly spill over. “Globally there will be difficult months and years ahead and it is of particular concern that the number of COVID-19 cases is still rising,” the International Monetary Fund said in a review of the U.S. economy that cited “social unrest” due to rising poverty as one of the risks to economic growth. “The risk ahead is that a large share of the U.S. population will have to contend with an important deterioration of living standards and significant economic hardship for several years. This, in turn, can further weaken demand and exacerbate longer-term headwinds to growth.” It was a clinical description of a grim set of facts: After the U.S. government committed roughly $3 trillion to support the economy through a round of restrictions on activity imposed to curb the virus in April and May, the disease is surging in the United States to record levels just as those support programs are due to expire. More than 3.6 million people have been infected and 140,000 killed. Daily growth in cases has tripled to more than 70,000 since mid-May, and the 7-day moving average of deaths, after falling steadily from April to July, has turned higher. Meanwhile the country has fractured over issues like mask-wearing that in other parts of the world were adopted readily as a matter of common courtesy. With some key states like Texas and California now reimposing restrictions, analysts have already noted a possible plateau to the U.S. recovery with the country still 13.3 million jobs shy of the number in February.
Economic Recovery Is Under Way but Fighting Flare-Ups Is Key – WSJ – The global economy suffered a severe contraction in the three months through June, and it is becoming clear that the strength of its recovery will depend on authorities’ success in dousing continued pandemic flare-ups. Countries’ freshest economic-growth figures, to be released in coming weeks, are likely to show the global economy entered a recession in the first half of this year and shrank in the second quarter at the fastest peacetime rate since modern records began after the Great Depression. The global economic recovery has begun, but there are mixed signals about its health and staying power. Some sectors have sprung back to life more decisively than expected, and they include retailing and manufacturing. The flip side is it appears that, until a vaccine becomes widely available, surges in coronavirus infections will repeatedly have a damping effect on activity. The European Commission estimates the eurozone’s gross domestic product in the three months through June was 13.6% lower than in the first three months of the year, when output dropped 3.6% – then the largest decline since records began in 1995. In the U.S., the Federal Reserve Bank of Atlanta on July 9 estimated that U.S. GDP declined 10.3% in the second quarter compared with the first quarter. If that were to prove accurate, the drop would be four times larger than that seen in the worst quarter for the economy after the 2008 financial crisis. Recent figures from other parts of the world also point to large declines in GDP during the second quarter. Singapore this past Tuesday said its economy shrank by 12% in the second quarter. However, recent figures indicate that the global decline in activity largely ended in April, with May and June seeing pickups. In the U.K., which is one of a handful of countries to release monthly figures for GDP, the economy grew by 1.8% in May from April. China is two months ahead of most other major economies, having initiated its lockdown in late January and lifted many of those restrictions in April. The country Thursday reported that its economy grew in the second quarter and at a faster pace than expected, an outcome that other countries would be happy to see in the third quarter. Other measures point in the same direction. The eurozone has recorded increases of 17.8% in retail sales and 12.4% in industrial production for May. U.S. retail sales rose 18.2% in May and 7.5% in June, the Commerce Department reported Thursday. But recent weeks have raised fresh questions about the strength of the rebound. In particular, signs abound of a loss of economic momentum in the U.S. as rising infections across several U.S. states prompt authorities to impose new restrictions, businesses to scale back and consumers to turn more cautious in some parts of the country.
World Recovery Running On Fumes As Virus Pandemic Reemerges – The resurgence of the virus pandemic is at risk of derailing the global economic recovery. Goldman Sach’s latest Coronavirus Global Activity Tracker, published each Wednesday to track the impact of the virus outbreak on economic activity on a per-country basis, shows mobility, industrial activity, consumer activity, labor market, and travel trends are stalling in major economies. The note first points out mobility data in Croatia, Israel, Australia, Japan, and Hong Kong, has likely peaked after surging for a couple of months due to, in some of these countries, surging virus cases. On a weekly percentage change basis, all countries, except for Croatia, have seen mobility trends in late June turn lower. Goldman’s industrial activity trackers were stable in China and the US, at 4% YoY and -11% YoY, respectively. China’s industrial revival post-pandemic lockdowns has been more robust than the US. There is no V-shaped recovery here. Goldman’s industrial activity trackers also show activity levels around 90% of pre-corona levels in June across G4 countries. Rebounds in BRICs have been much softer than developed economies.
Never waste a crisis – COVID-19, climate change and monetary policy – by Isabel Schnabel, Bank of International Settlements. – The coronavirus (COVID-19) pandemic constitutes an unprecedented shock across many dimensions. The lockdown has led to the temporary closing-down of many production sites. Global air and road travel have come to a virtual standstill. The effects have been so large and so disruptive that total carbon dioxide (CO2) emissions in 2020 will be about 4 to 7% lower than estimated before the crisis. In the past 120 years, there has never been an event that had such a dramatic impact on global CO2 emissions. Yet, studies show that even the substantial restrictions in production and mobility that were necessary to contain the spread of the virus would not be sufficient to limit the global temperature increase to the 1.5 degrees Celsius above pre-industrial levels, as aspired under the 2015 Paris Agreement. In order to meet that goal, according to the United Nations, global emissions would need to drop by 7.6% each year between 2020 and 2030. Given the economic and social hardship associated with this year’s reduction, such a drop is hardly feasible by simply reducing economic activity. The pandemic is therefore a stark reminder that preventing climate change from inflicting permanent harm on the global economy requires a fundamental structural change to our economy, inducing systematic changes in the way energy is generated and consumed.
Even If Joe Biden Wins in a Blowout, the ‘Global Economy’ Is Not Coming Back – Marshall Auerback – COVID-19 has not only presented the global economy with its greatest public health challenge in over a century, but also likely killed off the notion of America’s “unipolar moment” for good. That doesn’t mean full-on autarky or isolationism but, rather, enlightened selfishness, which allows for some limited cooperation. Donald Trump’s ongoing threats to impose additional tariffs on a range of EU exports are exacerbating this trend as the old post-World War II ties between the two regions continue to fray. Even the possibility of a Biden administration is unlikely to presage a reversion to the status quo ante. Regionalization and multipolarity will be the order of the day going forward. Many will regard these developments as chiefly driven by geopolitical prerogatives. But over time, the driving engine of the process will be a combination of maturing technologies that are rewriting the laws of profitability in manufacturing and production for advanced economies. The various capacities that enabled a far-flung global supply chain and sent the economies of Asia into hyperdrive over the past 40 years have continued to mature. The rise of China, South Korea and Japan in this period is just a phase of a larger series of advances that are now likely to become more distributed and at the same time reshuffle the geopolitical trend lines we currently experience. The reshuffling is coming in large part because America’s historic military dominance has less relevance in a world where the new forms of competition place greater weight on access to advanced research and technologies, rather than the projection of brute military force (especially given the increasing proliferation of nuclear technologies and the rise of asymmetric warfare). Furthermore, the lack of American manufacturing capacity has left it open to a significant loss of influence to the benefit of other regions, notably China (in Asia), and Germany (in the European Union). China in particular will likely remain both a geopolitical and economic rival to the United States for the foreseeable future, especially as it already supersedes the United States in some areas of technology (such as 5G), and is increasingly becoming the locus of economic activity in Asia. As yet, Asia is by no means a cohesive economic or strategic bloc (such as the European Union), especially given the ongoing American influence in countries such as Japan, South Korea and Taiwan. But longer term, it is hard to believe that an independent democratic Japan would embrace a foreign policy stance that risks antagonizing a country of almost 1.4 billion people with nukes. According to some projections, by 2050 Japan will likely constitute about one-eighth of China’s GDP, South Korea much less. On the basis of that size disparity, strategic triangulation is a non-starter. Japan will no more be able to “balance” China than Canada today can “contain” the United States. It is likewise difficult to envisage Seoul continuing to have its own relations with the North being continuously subject to the vagaries of Pentagon politics in D.C. Heightening instability on the Korean peninsula is hardly in the long-term interests of either Seoul or Pyongyang.
Russia, hit by coronavirus crisis, considers military spending cuts – (Reuters) – Russia is considering cutting spending on the military as low oil prices and the coronavirus crisis have pummeled its economy, a document published by the finance ministry shows. The ministry has proposed the government cut state spending on the military by 5% between 2021 and 2023. The proposal, published on Monday, also includes budget spending cuts of 10% for the court system, the servicing of Russia’s debt and wages for civil servants. Russia, which flexed its military muscle with its 2014 annexation of Crimea from Ukraine and intervention in the Syrian conflict, dropped out of the list of the top five biggest military spenders in 2018 after its spending fell 3.5%. Last year it returned as the world’s fourth largest military spender and increased its military expenditures by 4.5% to $65.1 billion, according to the Stockholm International Peace Research Institute. That amount corresponded to 3.9% of its gross domestic product, it said. President Vladimir Putin has called for better living standards and investment in healthcare and education. Some government officials have called for lower military spending to free up funds for such initiatives. Military expenditures have increased under Putin, but the Kremlin said in 2018 that Russia would cut its defence budget to less than 3% of GDP within the next five years. Exact figures for military funding are considered a state secret in Russia, but in 2018 the defence ministry said 20 trillion roubles ($282 billion) had been earmarked for the construction of military infrastructure under a new armament programme for 2018-2027.
EU leaders reach deal on recovery package – EU leaders agreed early Tuesday to an unprecedented euro 1.8 trillion ($2 trillion) aid and budget deal aimed at helping hard-hit bloc members recover from the economic fallout of the novel coronavirus pandemic. The package includes a euro 750-billion fund to be sent as loans and grants, as well as a seven-year euro 1 trillion EU budget. European Council President Charles Michel tweeted a brief message minutes after leaders adopted the plan: “Deal!” “We did it. Europe is strong, Europe is united. This is a good deal, this is a strong deal and most importantly this is the right deal for Europe right now,” Michel said. “I believe this agreement will be seen as a pivotal moment for Europe’s journey.” The breakthrough comes after more than four days of wrangling, with talks often stretching into the early hours. European Commission President Ursula von der Leyen thanked German Chancellor Angela Merkel for “steering” negotiations towards a European solution. “Europe as a whole has now a big chance to come out stronger from the crisis. Today we have taken a historic step that we can all be proud of,” said von der Leyen. “Tonight is a big step toward recovery.” Merkel described the agreement as an “important signal,” and said she was “very relieved” that EU leaders were able to cooperate. It was good “that we pulled ourselves together in the end,” she said. That sentiment was echoed by French President Emmanuel Macron, who called it a “historic day for Europe.” “There is no such thing as a perfect world, but we have made progress,” said Macron. However, the European Parliament will still have to agree to the package.
EU reaches historic deal on pandemic recovery after fractious summit – (Reuters) – European Union leaders clinched an historic deal on a massive stimulus plan for their coronavirus-throttled economies in the early hours of Tuesday, after a fractious summit lasting almost five days. The agreement paves the way for the European Commission, the EU’s executive, to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration. Summit chairman Charles Michel called the accord, reached at a 5.15 a.m. (0315 GMT), a pivotal moment for Europe. Many had warned that a failed summit amid the coronavirus pandemic would have put the bloc’s viability in serious doubt after years of economic crisis and Britain’s recent departure. World shares climbed to their highest since February and the euro briefly hit its strongest since March on news of the deal. “This agreement sends a concrete signal that Europe is a force for action,” a jubilant Michel told reporters. French President Emmanuel Macron, who spearheaded a push for the deal with German Chancellor Angela Merkel, hailed it as truly historic. Leaders hope the 750 billion euro ($857.33 billion) recovery fund and its related 1.1 trillion euro 2021-2027 budget will help repair the continent’s deepest recession since World War Two after the coronavirus outbreak shut down economies. Germany Economy Minister Peter Altmaier said that, with the agreement, the chances of “a cautious, slow recovery” in the second half of this year had increased enormously. While strong in symbolism, the deal came at the cost of cuts to proposed investment in climate-friendly funds and did not set conditions for disbursements to countries, such as Hungary and Poland, seen as breaching democratic values. European Council President Charles Michel and European Commission President Ursula Von Der Leyen do an elbow bump at the end of a news conference following a four-day European summit at the European Council in Brussels, Belgium, July 21, 2020. Stephanie Lecocq/Pool via REUTERS In an unwieldy club of 27, each with veto power, the summit also exposed faultlines across the bloc that are likely to hinder future decision-making on money as richer northern countries resisted helping out the poorer south. The Netherlands led a group of so-called frugal states with Austria, Sweden, Denmark and Finland, insisting that aid to Italy, Spain and other Mediterranean countries that took the brunt of the pandemic should be mainly in loans, not in non-repayable grants. “There were a few clashes, but that’s all part of the game,” said Dutch Prime Minister Mark Rutte, describing a warm relationship with his Italian counterpart, Giuseppe Conte. But Austrian Chancellor Sebastian Kurz said the frugals’ negotiating power was here to stay, suggesting Europe’s traditional Franco-German engine will be challenged.
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