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 GDP, 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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Fed Outlook Turns Gloomier as Coronavirus Spreads – WSJ – Federal Reserve officials meet Tuesday and Wednesday facing growing doubts about the prospect for a sustained economic rebound due to the nation’s uneven public-health response to the coronavirus.Officials have warned this month in speeches and interviews that the economy faces a deeper downturn and more difficult recovery if the country doesn’t take more effective action to slow the spread of infection.Since the Fed’s mid-June policy meeting, virus infection rates have accelerated in many statesthat were among the first to encourage businesses to reopen. Business leaders and economists have warned that hard-hit industries such as travel, entertainment and hospitality will face a more difficult recovery if consumers don’t feel confident spending money indoors and gathering in large groups.The Fed isn’t likely to roll out new stimulus measures this week but is debating how to provide more support to the economy once the economic outlook becomes clearer. They could do this by adjusting their purchases of Treasury and mortgage securities and by providing more detail about what conditions would lead them to consider withdrawing stimulus. Fed officials have focused their recent comments on the imperative of suppressing the virus by more aggressively adopting social-distancing measures, including wearing masks, and by boosting the capacity to test, trace and isolate known infection cases. “How well we follow the health-care protocols from here is going to be the primary economic tool we have,” said Dallas Fed President Robert Kaplan in a July 16 interview. Boston Fed President Eric Rosengren said he had expected infections to recede by the summer much as it has in Europe. “Unfortunately, that is not the case,” he said in a July 8 interview. “We have not been nearly as successful.” The longer that infection rates flare up, the harder it will be for a range of industries that employ millions of Americans to recover. That, in turn, could lead to higher spells of extended joblessness, business failure and stress on the banking system.The economy will face “severe economic consequences” if the public health response doesn’t improve, Mr. Rosengren said.Real-time data tracked by Fed economists suggested that strong gains in hiring in May and June may not be sustained, said Fed governor Lael Brainard in a speech July 14.”Business leaders are getting worried. Consumers are getting worried,” Atlanta Fed President Raphael Bostic said July 7 in a discussion hosted by the Tennessee Business Roundtable. “There is a real sense that this might go on longer than we had hoped and we had expected and we had planned for.”
Fed extends seven emergency facilities to end of 2020 – The Federal Reserve will extend the life of seven emergency lending facilities launched to respond to the coronavirus crisis through the end of 2020, the central bank said Tuesday. The three-month extension, to Dec. 31, will apply to the Primary Dealer Credit Facility, Money Market Mutual Fund Liquidity Facility, Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, Term Asset-Backed Securities Loan Facility, Paycheck Protection Program Liquidity Facility and Main Street Lending Program. The Commercial Paper Funding Facility is set to expire in March 2021. The Municipal Liquidity Facility was already set to expire Dec. 31. “The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic,” the Fed said in a press release. Prolonging the life of the facilities is one of several continuing steps in recent weeks by policymakers to stabilize the economy as the pandemic stretches through the summer and likely through the end of the year. This includes efforts to allow small businesses to seek forgiveness on loans made through the Paycheck Protection Program. The Fed has also modified its Main Street Lending Program to draw interest from bank providers and borrowers, including to allow wider access to nonprofit organizations such as hospitals and schools. Last week, the Fed announced it would broaden the criteria for eligible firms for three facilities: the Term Asset-Backed Securities Loan Facility, Commercial Paper Funding Facility and Secondary Market Corporate Credit Facility.
Fed Maintains Stimulus Commitment as Economic Outlook Dims – WSJ -Federal Reserve Chairman Jerome Powell said on Wednesday the U.S. economy faces a long road to recovery that will require greater public vigilance to prevent the spread of the coronavirus pandemic and more spending from Congress and the White House.Fed officials didn’t announce new policy steps at the conclusion of their two-day meeting Wednesday and reiterated their pledge to maintain aggressive measures to support the economy.”The path of the economy is going to depend to a very high extent on the course of the virus, on the measures that we take to keep it in check,” Mr. Powell said at a news conference. “We can’t say it enough.”The economic backdrop has weakened somewhat since the Fed’s rate-setting committee last met seven weeks ago. After surprising rebounds in employment in May and June, many states have seen significant increases in virus infections, leading to renewed curbs on certain commercial activities and a dampening of consumer confidence. Mr. Powell said various data sources the Fed monitors suggested hiring and consumer spending had slowed recently.He encouraged greater adoption of measures to contain the virus by disputing the idea of a trade off between virus suppression and a resumption of commercial activity.”Social distancing measures and fast reopening of the economy actually go together,” Mr. Powell said. “They’re not in competition with each other.”Fed officials have been weighing how to provide more support to the economyafter moving quickly this spring to cut interest rates to near zero, to ramp up purchases of government debt and to establish an array of emergency lending programs to stabilize funding and credit markets. But Mr. Powell suggested spending and taxation decisions by Congress and the White House are more urgent now that the Fed has pinned short-term rates pinned near zero while long-term rates hovering at all-time lows. “Fiscal policy can address things we can’t address,” said Mr. Powell, a Republican who was named to his current post by President Trump. The measures Congress has approved so far are “really helping now,” he said.
FOMC Statement: “The path of the economy will depend significantly on the course of the virus” – FOMC Statement:The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
Fed chair Powell says backstop to markets to remain for a “very long time”The Federal Reserve made no major changes to its monetary policy following its two-day meeting yesterday but warned that hiring and consumer spending had slowed in the recent period as a result of the increase in COVID-19 infections. At his press conference, Fed chairman Jerome Powell said the path of the economy was going to depend to a high extent on the course of the virus and the measures taken to keep it in check. But even with a re-opening of the economy millions of workers employed in industries that depend on large gatherings or close proximity indoors could be out of work for a long time. In his prepared remarks Powell said there had been some pick-up in the economy, with household spending recovering about half its previous decline. However, business investment had yet to show an increase and “the contraction in real GDP in the second quarter will likely be the largest on record.” As the meeting began, the Fed announced that emergency measures it put in place in March, when the key market for US Treasury bonds froze, would be extended for another three months to the end of the year. The move was not a surprise but it underscored the way in which so-called emergency measures to backstop financial markets become permanent. The extension avoided what one analyst described as a “credit cliff.” Powell said the Fed would continue to use its emergency measures until it was confident “we are solidly on the road to recovery,” adding that “when the time comes, after the crisis has passed, we will put these emergency tools back in the toolbox.” However, the record shows that time never comes as the financial system becomes ever-more dependent on the outflow of trillions of dollars from the Fed.
High Frequency Indicators for the Economy – . These indicators are mostly for travel and entertainment – some of the sectors that will recover very slowly. The TSA is providing daily travel numbers. This data shows the daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red). On July 26th there were 751,205 travelers compared to 2,700,723 a year ago. That is a decline of 72%. There had been a slow steady increase from the bottom, but air travel has mostly moved sideways over the last few weeks. The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities. This data is updated through July 25, 2020. This data is “a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. Note that this data is for “only the restaurants that have chosen to reopen in a given market”. The 7 day average for New York is still off 77%. Florida is down 60% YoY. Note that dining declined in many areas as the number of COVID cases surged. It appears dining has flattened out at a lower level (probably mostly outdoor dining). This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years. Data is from BoxOfficeMojo through July 23rd. Movie ticket sales have picked up a slightly from the bottom, but are still under $1 million per week (compared to usually around $300 million per week), and ticket sales have essentially been at zero for eighteen weeks.The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. 2020 was off to a solid start, however, COVID-19 crushed hotel occupancy. 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%.This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows the year-over-year change in gasoline consumption. At one point, gasoline consumption was off almost 50% YoY. As of July 17th, gasoline consumption was only off about 12% YoY (about 88% of normal). The final graph is from Apple mobility. From Apple: “This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities.” The graph is the running 7 day average to remove the impact of weekends. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I’m just using the transit data. According to the Apple data directions requests, public transit in the 7 day average for the US is still only about 51% of the January level. It is at 45% in New York, and 52% in Houston (down over the last few of weeks).
Trump Advisers Still Touting ‘V-Shaped’ Economic Recovery – WSJ — President Trump’s top economic advisers say they still expect a rapid economic recovery despite surges in new coronavirus infections that have rattled consumers and led to new limits on business activity.”I still think the V-shaped recovery is in place,” White House economic adviser Larry Kudlow said Sunday. “I don’t deny that some of these hot-spot states are going to moderate that recovery, but on the whole the picture is very positive.” Mr. Kudlow pointed to data last week showing that sales of existing homes jumped 20.7% in June after dropping 9.7% the month before, and another report showing that manufacturing in July expanded for the first time since February.A government report on Thursday showed that filings for weekly unemployment benefitsrose for the first time in nearly four months in the week ended July 18, a sign the jobs recovery could be faltering as some states rolled back reopenings because of the coronavirus pandemic.But the report also showed that unemployment rolls have shrunk in recent weeks, suggesting that new layoffs are being offset by hiring and employers recalling workers, though at a slower pace than a few weeks ago.”I do think the odds favor a big increase in jobs creation and a big reduction in unemployment” for July, Mr. Kudlow said on CNN’s “State of the Union.”Federal Reserve officials are set to discuss next week how to provide more economic stimulus, though they have signaled c omfort leaving policy on hold until they learn more about how the pandemic is weighing on the economy. Treasury Secretary Steven Mnuchin, speaking on Fox News’ “Fox News Sunday,” saidRepublicans would introduce their proposal for the next coronavirus relief bill on Monday and were prepared to act quickly to strike a deal with Democrats.
BEA: Real GDP Decreased at 32.9% Annualized Rate in Q2 – Note: This is the advance release. Most analysts expect downward revisions as more data become available. From the BEA: Gross Domestic Product, Second Quarter 2019 (Advance Estimate) and Annual Update: Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the second quarter, based on more complete data, will be released on August 27, 2020….The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment), while the decrease in residential investment primarily reflected a decrease in new single-family housing. The advance Q2 GDP report, at minus 32.9% annualized, was close to expectations. Personal consumption expenditures (PCE) decreased at 34.6% annualized rate in Q2, down from 6.9% decrease in Q1. Residential investment (RI) decreased at a 38.7% rate in Q2. Equipment investment decreased at a 37.7% annualized rate, and investment in non-residential structures decreased at a 34.9% pace.
Q2 GDP Advance Estimate: Real GDP at Record -32.9%, Annual Revisions – The Advance Estimate for Q2 GDP, to one decimal, came in at -32.9% (-32.90% to two decimal places), a massive decline from -5.0% (-4.99% to two decimal places) for the Q1 Third Estimate and its lowest on record. Investing.com had a consensus of -34.1%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release: The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2). The estimates released today also reflect the results of the Annual Update of the National Income and Product Accounts (NIPAs). The timespan of the update is the first quarter of 2015 through the fourth quarter of 2019 for estimates of real GDP and its major components, and the first quarter of 1999 through the fourth quarter of 2019 for estimates of income and saving. The reference year remains 2012. More information on the 2020 Annual Update is included in the May Survey of Current Business article, “GDP and the Economy.” [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We’ve also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.06% average (arithmetic mean) and the 10-year moving average, currently at 1.22.
U.S. Economy Contracted at Record Rate Last Quarter; Jobless Claims Rise to 1.43 Million – WSJ – The economy contracted at a record rate last quarter and July setbacks for the jobs market added to signs of a slowing recovery as the country faces a summer surge in coronavirus infections. The Commerce Department said U.S. gross domestic product – the value of all goods and services produced across the economy – fell at a seasonally and inflation adjusted 32.9% annual rate in the second quarter, or a 9.5% drop compared with the prior quarter. The figures were the steepest declines in more than 70 years of record-keeping. Meanwhile, the Labor Department’s latest figures on unemployment benefits suggested the jobs market was faltering. The number of workers applying for initial unemployment benefits rose for the second straight week – by a seasonally adjusted 12,000 to 1.43 million in the week ended July 25 – after nearly four months of decreases following a late-March peak. The number of people receiving unemployment benefits increased by 867,000 to 17 million in the week ended July 18, ending a downward trend that started in mid-May. “We’re expecting a longer and slower climb from the bottom unfortunately, and here the virus will dictate the terms,” Beth Ann Bovino, U.S. chief economist at S&P Global Ratings, said. The second-quarter economic contraction came as states imposed lockdowns in March and April to contain the coronavirus pandemic – triggering a steep drop in output – and then lifted restrictions in May and June – allowing growth to resume. Gains later in the second quarter weren’t enough to offset April’s steep drop, however. Economists expect the third quarter, which began on July 1, to show growth, though the summer rise in infections is likely to temper gains. “The ball is going to bounce less high than it should” in the third quarter, said James Sweeney, chief economist for Credit Suisse, as with new virus outbreaks, “we know there is an incremental slowing down of economic activity.” Private high-frequency data show “that the pace of the recovery looks like it has slowed since the cases began that spike in June,” Federal Reserve Chairman Jerome Powell said Wednesday, noting declining measures of debit- and credit-card spending, flattening hotel occupancy rates and fewer restaurant and salon visits. JPMorgan Chase & Co.’s tracker of credit- and debit-card transactions showed that spending rose in May and early June before stalling. Data by Facteus, which tracks transactions by 15 million debit and credit card holders, also suggest restaurant spending was increasing in June and has largely flattened since. The U.S. Census Bureau said in its latest weekly Household Pulse Survey that 51.1% of households experienced a loss of employment income in the week ended July 21, up from 48.3% four weeks ago.
GDP second-quarter data worst in decades –The U.S. economy shrank by a stunning 9.5 percent from April through June, a historic contraction and a stinging reminder of how much was lost in such a short period. The drop in gross domestic product was the fastest the quarterly rate has fallen in modern record-keeping. As the ground beneath the economy buckled amid the coronavirus pandemic, tens of millions of jobs were erased, businesses were gutted and the future of the economy became further intertwined with an uncontrolled public health crisis. With that pain still fresh for millions of Americans, economists say the second quarter stands as an urgent warning for what is at stake if the vestiges of a recovery from earlier this summer vanish. While Congress clashes over another stimulus bill and the virus forces more states to shut down bars and restaurants again, there is mounting fear that the economy could be held back even more, making a true recovery much more fraught. On Thursday, the government also reported that jobless claims increased once again last week to 1.4 million, another sign that any recovery is stalling. GDP shrank at an annual rate of 32.9 percent, according to the Bureau of Economic Analysis, the agency that publishes the statistics on quarterly economic activity. Although it usually stresses the annualized rate, that figure is less useful this quarter because the economy is unlikely to experience another collapse like it did in the second quarter. Still, while a tailspin at the second-quarter rate is unlikely, the nascent recovery that began appearing earlier this summer appears to be in jeopardy. On Wednesday, Federal Reserve Chair Jerome H. Powell warned that the most recent surge in infections has begun to weigh on the economy, while reemphasizing that a recovery cannot be sustained unless the virus is under control. “We’re still digging out of a hole, a really deep hole,” said Ben Herzon, executive director of IHS Markit. “The second-quarter figure will just tell us the size of the hole we’re digging out of, and it’s a big one.” Thursday’s report helps explain which parts of the economy suffered as people stayed home, cut back their spending and suddenly overhauled their routines. With retail stores shuttered and people swapping out their work wardrobes for leisurewear, clothing and footwear sales dropped. The pandemic also triggered a collapse in oil prices, exacerbated by lower gasoline sales and dampened transportation services, as Americans stayed home and avoided commutes or basic errands. Health care fell off as the pandemic pushed people to cancel non-emergency visits and procedures, triggering layoffs within the health-care industry. Restaurant closures fueled a drop in food services. The coronavirus tightens its grip on Alabama But even as the economy contracted at an unprecedented pace, some industries were at an advantage. Along with recreational goods and vehicles and farm inventories, auto sales rose. Inventories are at historic lows, with so many factories shuttered or scaled back, said Michelle Krebs, senior director of automotive relations for Cox Automotive and executive analyst for Autotrader. Krebs said that car buyers have proved to be “surprisingly resilient” and that there are signs that people are purchasing cars to avoid public transit and safely get around.
Record-breaking drop in GDP (7 graphs) The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP was 9.5% lower in the second quarter than it had been in the first quarter, which they reported as a decline at an annual rate of 32.9% (0.9054 – 1 = -0.329). That is four times as large a quarterly decline as anything since the BEA began reporting quarterly GDP in 1947, and represents a 10 sigma (10 standard deviations) event. I’ve been reporting a GDP-based recession indicator index each quarter since we started the blog in 2005. What I’ve been doing up to this point is re-estimating the parameters of the model (the numbers that describe what happens in a typical expansion or a typical recession) every time a new GDP observation gets released. If you try that with the data set from 1947:Q2 through 2020:Q2, the latest drop is so dramatic that the maximum likelihood estimates would put 2020:Q2 in a class all by itself, a severe recession unlike anything seen previously. What I have done to keep the index going is to fix parameters at the values estimated as of 2020:Q1 and interpret the 2020:Q2 data from the perspective of the historically observed patterns. This calculation results in a value for our recession indicator index for 2020:Q1 of 97.1. In other words, based on the historical record of GDP growth, the current numbers would lead us to conclude that there is a 97.1% probability that the twelfth postwar recession in the United States began in the first quarter of this year. This is not surprisingly the same conclusion that the Business Cycle Dating Committee of the National Bureau of Economic Research reached on June 8. The drop was across the board in terms of the traditional components of GDP. Consumption spending was the single biggest factor in the drop, offset a bit by the fact that a significant part of the lower consumption spending came in the form of lower spending on imported goods. But even if consumption and imports had held constant, lower fixed investment alone would have led to a -5% annual GDP growth rate, and lower exports by itself would have produced a GDP annual growth rate of -10%. It’s also helpful to break down the consumption spending. Spending on consumer services accounts for 47% of GDP. Service spending is usually quite stable even in severe recessions, while durable spending takes the brunt of the cutback. Not so this time. Durable spending was about the same in Q2 as in Q1, while services fell 43.5% at an annual rate. Investment spending is usually the biggest factor in a typical recession. The drop in residential and nonresidential fixed investment this time is similar in absolute size to what we see in other recessions. It only looks small in the graphs above in comparison to what happened to services consumption. The biggest single factor in lower services spending was health care, as people stayed away from doctors, dentists and hospitals as much as possible. That presumably will rebound. But other categories of spending, such as restaurants, hotels, recreation, and air travel could take quite a while to recover. Where do we go from here? The increase in the unemployment rate in April was the biggest increase on record. But the drop in June was also the biggest decrease on record. I would not be surprised to see something similar with GDP. Almost mechanically, real GDP in the third quarter has to be a bigger number than the second quarter. So, we may have seen the bottom, at least as far as GDP is concerned. But it could be a long time before we’re looking out over the top again.
Year-over-year and Quarterly Change in Real GDP -The following graph shows real GDP quarterly (blue, annualized), and the year-over-year (YoY) change in real GDP (red). The worst quarterly change in real GDP during the Great Recession was -8.4% annualized in Q4 2008. The worst YoY change in real change during the Great recession was -3.9% in Q2 2009.Annualized real GDP was at -32.9% in Q2 2020, and the YoY change in real GDP was -9.5%.Note that the tax changes at the end of 2017 had minimal impact on GDP (maybe boosted slightly), and also, as shown earlier, there was no investment boom following the tax changes. There will be some bounce back for GDP in Q3. The worst month for economic activity was in April 2020, and the economy bounced back in May and June. Even if there is no further increase in economic activity in the July, August and September – compared to June – GDP will increase because April was so bad.
Q2 GDP: Investment – Investment has been weak for some time, and slumped in Q1, and fell off a cliff in Q2 along with the overall economy. The first graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy. In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern – both into and out of recessions is – red, green, blue. Of course – with the sudden economic stop due to COVID-19 – the usual pattern doesn’t apply. The dashed gray line is the contribution from the change in private inventories. Residential investment (RI) decreased at a 38.7% annual rate in Q2. Equipment investment decreased at a 37.7% annual rate, and investment in non-residential structures decreased at a 34.9% annual rate. On a 3 quarter trailing average basis, RI (red) is down solidly, equipment (green) is strongly negative, and nonresidential structures (blue) is also down. The second graph shows residential investment as a percent of GDP. Residential Investment as a percent of GDP decreased slightly in Q2 (this means RI slumped slightly more than the overall economy in Q2). RI as a percent of GDP is close to the bottom of the previous recessions – and prior to the pandemic, I expected RI to continue to increase further in this cycle. I’ll break down Residential Investment into components after the GDP details are released. Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker’s commissions, and a few minor categories. non-Residential InvestmentThe third graph shows non-residential investment in structures, equipment and “intellectual property products”. Investment in equipment declined more than the overall economy.
Q2 Real GDP Per Capita: -33.2% Versus the -32.9% Headline Real GDP – The Advance Estimate for Q2 GDP came in at -32.9% (-32.90% to two decimals), down from -5.0% (-4.99% to two decimals) in Q1. With a per-capita adjustment, the headline number is lower at -17.71% to two decimal points. Here is a chart of real GDP per capita growth since 1960. For this analysis, we’ve chained in today’s dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale. The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 17.7% below the pre-recession trend. The standard measure of GDP in the US is expressed as the compounded annual rate of change from one quarter to the next. The current real GDP is -32.9%. But with a per-capita adjustment, the data series is lower at -33.18%. The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession and has dropped significantly during the COVID recession.
Government revisions show slightly slower 2019 GDP growth – — The government says the U.S economy grew a bit more slowly last year than it had previously estimated and slightly faster in 2018. Those changes emerged Thursday in the government’s annual revisions to its estimates of the gross domestic product, the economy’s total output of goods and services. The government each year revises the GDP figures going back five years. The Commerce Department’s Bureau of Economic Analysis said Thursday that GDP grew 2.2% last year, down slightly from the 2.3% gain it had previously estimated. For 2018, GDP growth was revised up to 3%, slightly above the 2.9% gain the government had initially reported. That revision means that President Donald Trump did barely achieve the goal of 3% growth in 2018, helped significantly by a boost from his December 2017 tax cut. The revisions showed that the 3% growth in 2018 was the strongest annual growth since a revised 3.1% gain in 2015, when Barack Obama was president. Before the revisions reported Thursday, the 2015 GDP gain had been reported as a slightly smaller 2.9% gain. The revisions showed GDP growth of 1.7% in 2016, up from 1.6% previously estimated, and 2.3% in 2017, down from 2.4% earlier reported. The small changes up and down did not change the overall performance over the past five years. GDP showed an average annual gain of 2.3% from the fourth quarter of 2014 to the fourth quarter of 2019, unchanged from the previous estimate. Consumer spending, which accounts for about 70% of economic activity, grew at a 2.7% annual pace over the five-year period, down slightly from the previous estimate of 2.8% spending growth. But business investment spending grew at a faster 2.5% annual pace, up from the previous estimate of 2.2%. Exports and government spending were also revised up slightly. The growth in imports, though, was revised down slightly. The government’s annual GDP revisions incorporate data that has become available since the last annual revisions. The annual revisions used to cover just three years but were expanded to cover five years starting last year.
Q2 GDP does not bode well for early 2021 – There are two components of quarterly GDP that are long leading indicators, giving us information about the economy 12 months from now. If you think, as I do, that it is likely there will be a new Administration in Washington next year, which will competently follow the science, then there is every reason to believe that by 12 months from now the pandemic will have been contained, and so the long leading indicators are more likely to be valid. In that regard, this morning’s Q2 2020 GDP was not grounds for optimism. As an initial matter, the GDP decline of -9.5% annualized was the biggest decline since the Great Depression: The two forward-looking components of GDP are (1) private fixed residential investment, and (2) corporate profits. Because corporate profits are delayed by one more month, I use proprietors income as a temporary proxy. Let’s look at each in turn. Real private residential fixed investment decreased over 10% q/q. Real GDP decreased a little less than 10%: Thus real private fixed residential investment as a share of GDP declined slightly (red in the graph below) as did nominal investment as a share of nominal GDP: This is a negative. Meanwhile, proprietors income declined -13.2% in Q2: Since the GDP implicit price deflator declined -2.1%, this was also a large negative. In sum, both long leading indicators in the GDP report suggest that the economy will not be doing that well by summer 2021, even if the coronavirus is contained.
US GDP Seen Rebounding 11.9% In Q3 By Atlanta Fed – One day after the BEA reported that US GDP crashed an annualized 32.9% in the second quarter, the biggest drop since the great depression… … moments ago, the Atlanta Fed published its first GDPNow “nowcast” estimate for the third quarter, which is a relatively healthy 11.9%, and follows the regional Fed’s Q2 GDP estimate which was 0.8% above the official BEA print, at -32.1%. The Atlanta Fed’s Q3 estimate is most pessimistic than the 18% Q3 GDP consensus estimate from 63 economists polled by Bloomberg, and is just above the lowe-end of the range although both of these numbers will be woefully inaccurate if more US states decide to follow through with another round of shutdowns. It goes without saying that if Congress fails to roll over the expiring unemployment benefits into August- which as noted earlier now are instrumental in the record 25% of personal income that is funded by the US government…… Q3 GDP will be another unmitigated disaster and far below any official estimates.
Economic Recoveries in U.S., Europe Take Diverging Paths – WSJ – The U.S. economy lagged in July and Europe’s bounced back, according to fresh surveys of purchasing managers, evidence that the two economic powerhouses are recovering at different speeds from the coronavirus pandemic. In the U.S., output in the service sector shrank for the sixth consecutive month as companies faced a wave of coronavirus cases that prompted new restrictions in several states. Manufacturing output expanded for the first time since February as new orders ticked up. Overall, economic activity in the U.S. was unchanged. The divergence between the U.S. and Europe suggested that European countries could be benefiting from the strict lockdowns they pursued in the spring, as well as current policies regarding mask wearing, social distancing and bans on large gatherings. Most European countries are seeing just several hundred cases of new infections a day, compared with several thousand at the peak of the crisis. In contrast, the surge in infections in the U.S. – which has recorded more than a quarter of world-wide cases – is holding the recovery back. Data firm IHS Markit said Friday its U.S. composite purchasing managers index – a measure of manufacturing and service-sector activity – rose to 50 from 47.9 in June, indicating that activity had flattened after five months of contraction. A level below 50.0 points to a decline in activity from the previous month, while a reading above that threshold points to an increase. The data was weaker than economists had expected and suggested the U.S. economy was struggling to fire up its economy as many states continue to be hampered by coronavirus flare-ups. On Thursday, the total number of cases in the U.S. surpassed four million, just two weeks after reaching three million, with Florida, California and Tennessee reporting single-day records in deaths. Several states – including California and Texas – have rolled back plans for reopening in the face of a resurgence of cases, forcing many restaurants and stores to shut down again shortly after reopening. “While the stabilization of business activity in July is welcome news, the lack of growth is a disappointment,” said Chris Williamson, IHS Markit chief business economist. “Many companies, notably in consumer-facing areas of the service sector, linked falling sales to reimposed lockdowns.” In Europe, IHS Markit’s index surged to 54.8 from 48.5 in June, indicating that activity increased at the fastest pace in more than two years after four months of contraction. The strength of Europe’s rebound could lay the groundwork for a recovery in the remainder of the year and could push the global economy to expand in the three months through September, having contracted sharply in the second quarter as lockdowns stilled businesses around the world. So far, Europe hasn’t experienced the same resurgence in the virus as in the U.S., allowing its economic recovery to proceed at a rapid pace. France, for instance, endured some of the strictest limits on movement and saw very large declines in its PMIs during lockdown, particularly in its services sector. In July, its composite PMI jumped to a 30-month high of 57.6, from 51.7 in June.
The United States Will Not Recover By Raising Taxes Or Printing Money – The dramatic economic decline due to the Covid-19 crisis and the unprecedented recovery spending plans approved by President Trump will drive the fiscal 2020 United States budget deficit to a record $3.8 trillion, or 18.7% of U.S. gross domestic product, according to the Committee for a Responsible Federal Budget (CRFB). According to the same estimates, the fiscal 2021 deficit would reach $2.1 trillion in 2021, and average $1.3 trillion through 2025 as the economy recovers from the impact of the forced shutdowns. To finance this staggering fiscal effort, the Democratic Party leader, Joe Biden, is announcing a massive tax hike that will neither help the economy nor reduce the deficit. The solution to the United States budget deficit is not more taxes. Even in the most optimistic receipt scenario, there is no tax hike program that would even start to address the structural deficit, estimated at one trillion dollars a year, even less with the above-mentioned estimates. More taxes will hurt the recovery, damage the job improvement potential, and reduce investment in the economy. More taxes mean less growth and no deficit improvement. A wealth tax, often repeated by the most extreme politicians in America, would not only provide exceedingly small revenues for the Treasury, it would generate more negatives than any improvement in tax receipts. There is no way that a wealth tax would collect 1.4% of GDP as Senator Warren estimated. A wealth tax in the United States would make no visible reduction in the existing deficit, let alone finance the trillions in entitlement spending that Biden has announced. US deficit is rising due to excessive spending increases, despite periods of rising tax receipts. The federal government’s revenue went up by 4%, to $3.46 trillion in the 2019 fiscal year, according to the Congressional Budget Office (CBO) report. However, spending went up by more than 8%, to $4.45 trillion. The rise in 2019 deficit was not due to the “tax cuts”. If anything, the tax cuts helped the economy stay in expansion, creating jobs and increasing receipts at the same time. Corporate income taxes increased by $25 billion (+12%), while individual income and payroll taxes together rose by $107 billion (+4%). Overall, total receipts rose by 4% ($3,462 billion in the fiscal year 2019). Total receipts remained at 16.15% of GDP, which is the long-term trend figure and consistent with an economy that remained in expansion with moderate growth. The main problem is that total outlays rose by 8% (to $4,446 billion), driven mostly by mandatory expenses in Social Security, Medicare, and Medicaid.
Fitch Revises United States Credit Outlook To “Negative” – Just over a month ago, Fitch Ratings downgraded Canada from AA+ to AA; and tonight, shortly after the market close – with bond yields at record lows – the ratings agency has revised its outlook for the United States from Stable To Negative, citing “ongoing deterioration in US public finances and the absence of a credible fiscal consolidation plan…” Full Statement: The U.S. sovereign rating is supported by structural strengths that include the size of the economy, high per capita income and a dynamic business environment. The U.S. benefits from issuing the U.S. dollar, the world’s preeminent reserve currency, and from the associated extraordinary financing flexibility, which has been highlighted once again by developments since March 2020. Fitch considers U.S. debt tolerance to be higher than that of other ‘AAA’ sovereigns. However, the Outlook has been revised to Negative to reflect the ongoing deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan, issues that were highlighted in the agency’s last rating review on March 26, 2020. High fiscal deficits and debt were already on a rising medium-term path even before the onset of the huge economic shock precipitated by the coronavirus. They have started to erode the traditional credit strengths of the US. Financing flexibility, assisted by Federal Reserve intervention to restore liquidity to financial markets, does not entirely dispel risks to medium-term debt sustainability, and there is a growing risk that U.S. policymakers will not consolidate public finances sufficiently to stabilize public debt after the pandemic shock has passed. Although a massive policy response has prevented a deeper downturn – such that Fitch expects a less severe contraction in the U.S. in 2020 than in many other advanced economies – the agency has revised down our macroeconomic projections since March and downside risks persist. The U.S. had the highest government debt of any AAA-rated sovereign heading into the crisis, and Fitch expects general government debt to exceed 130% of GDP by 2021. Fitch’s debt dynamics analysis indicates that debt/GDP could stabilize temporarily from 2023 if fiscal balances return to pre-pandemic levels, but only assuming that interest rates stay very low. Fitch expects the general government calendar year deficit to widen to over 20% of GDP in 2020. The agency expects the deficit to narrow to 11% of GDP in 2021 as economic support measures are rolled back. The cumulative federal deficit in the first nine months of FY20 (starting in October 2019) reached USD2.7 trillion, compared with USD747 billion in the same period of FY19. [ … ] In line with our assumption that the Federal Reserve will hold its policy rate at 0.25%, Fitch expects negative real interest rates to provide some support to public debt dynamics. If real growth also reverted to 2%, a debt stabilizing primary deficit for the general government by 2024 could be around 3%-4% of GDP, comparable with 2019 levels. But it is uncertain whether very low market rates will persist once growth and inflation pick up. At current levels of indebtedness, a 1% rise in the effective rate on the debt would add 1.2% of GDP to the interest bill in a single year.
Trump team, Senate Republicans agree on coronavirus aid offer to Democrats – (Reuters) – Top aides to U.S. President Donald Trump said on Sunday they agreed in principle with Senate Republicans on a $1 trillion coronavirus relief package – the party’s opening offer in negotiations with Democrats less than a week before enhanced unemployment benefits expire. White House Chief of Staff Mark Meadows told reporters in the Capitol that he expects the package to be unveiled on Monday afternoon after some final details are clarified. U.S. Treasury Secretary Steve Mnuchin said the package will contain extended unemployment benefits that aim to replace 70% of a laid-off worker’s previous wages. “We’re done,” Mnuchin told reporters as he left the Capitol on Sunday. He said some language was being checked, but there were “no outstanding issues.” Mnuchin and Meadows would not discuss details, but the $1 trillion Republican offer was expected to include another round of direct payments to individuals, a reduced federal supplement to unemployment benefits and liability protections against coronavirus-related lawsuits. An extra $600 per week in federal unemployment benefits, which economists say has propped up consumer spending and has allowed laid off workers to pay rent and mortgages, is due to expire on Friday. The benefits were part of $3.7 trillion in coronavirus aid approved in March as the U.S. economy shut down. But widespread business reopenings have been thwarted as the virus surges in states such as California and Florida, which overtook New York, an early hotspot, in total cases on Sunday. More than 146,000 Americans have died of COVID-19 – nearly a quarter of the global total – and there are nearly 4.2 million confirmed cases in the country, a rate of 1 infection in 79 people
GOP Reach Agreement On COVID-19 Relief; $600 Unemployment Boost Becomes 70% ‘Wage Replacement’; Pelosi Pops Fuse – With the Trump Treasury sitting on $1.8 trillion and three months to spend it, the White House and Senate Republicans are set to introduce a $1 trillion spending bill on Monday which would be released in stages – angering Democrats who are pushing for an immediate, $3 trillion shotgun blast of stimulus. Speaking with ABC‘s “This Week,” White House Chief of Staff Mark Meadows said “I see us being able to provide unemployment insurance, maybe a retention credit, to keep people from being displaced or brought back into the workplace, helping with our schools,” adding “we can negotiate on the rest of the bill in the weeks to come.”The Trump administration opposes an extension of a $600-a-week enhanced unemployment payment that expired this month, Mnuchin and Meadows said. Instead, White House officials favor a plan to reimburse an individual’s lost wages or salary by up to 70%, said Mnuchin and Meadows. –NewsdayAsked whether expiring federal unemployment benefits will be extended, WH Chief of Staff Mark Meadows says “The original benefits will not… We are going to be prepared, on Monday, to provide unemployment insurance extension that would be 70% of wages.” https://t.co/qxICVVlxra pic.twitter.com/cDY6VWjXNN House Speaker Nancy Pelosi (D-CA) popped a fuse at the GOP proposal, blaming Republicans for waiting too long to negotiate for more relief after House Democrats passed a fifth, $3 trillion relief bill which w ould have included immediate aid to state and local governments, expanded testing and contact tracing for COVID-19. Appearing on CBS’s “Face the Nation,” Pelosi said that Republicans are “in disarray and that delay is causing suffering for America’s families. So we have been ready for two months and 10 days. I’ve been here all weekend hoping they had something to give us.” Treasury Secretary Steven Mnuchin, meanwhile, says the White House is “prepared to act quickly.”
GOP Releases Coronavirus Relief Proposal After Delay – WSJ – Senate Republicans rolled out a roughly $1 trillion coronavirus relief bill proposal Monday, launching a mad dash to reach a deal with Democrats on expiring unemployment payments and other aid disputes in the parties’ rival plans. The Republican plan cuts the current federal $600 weekly unemployment supplement to $200 a week through September, when the payment will then combine with state benefits to replace 70% of previous wages. Democrats have proposed continuing through January the current $600 a week supplement, which costs about $15 billion a week. The U.S. jobs market has partially rebounded since the unemployment rate went from 50-year-lows to record highs early in the pandemic, with employers adding 7.5 million jobs in May and June after cutting 22 million nonfarm jobs the prior two months. But a recent increase in people seeking unemployment insurance signaled the recovery could be faltering as Covid-19 cases surged in the South and West, prompting new business closures. Senate Majority Leader Mitch McConnell (R., Ky.) billed the Republican proposal as the appropriate response to the toll the virus continues to take across the country. “We have one foot in the pandemic, and one foot in the recovery. The American people need more help. They need it to be comprehensive, and they need it to be carefully tailored to this crossroads. That is what this Senate majority has assembled,” he said. Democrats criticized the GOP proposal as offering too little aid, and said Republican senators should have introduced their bill earlier. “We’re running out of time. but Senate Republicans just ran down the clock and tossed an air ball,” said Senate Minority Leader Chuck Schumer (D., N.Y.). The number and size of the policy differences between Republicans and Democrats will likely make it difficult for the parties to come together on a compromise in just a few days. Republicans have also struggled to tamp down differences in their own ranks over the new round of deficit spending. Over the weekend, Sen. Lindsey Graham (R., S.C.) warned that half of the GOP caucus wouldn’t support the Republican bill, setting up a difficult negotiation ahead. “You’ve got to thread the needle,” Mr. Graham told reporters on Monday. “At the end of the day we all have a need to pass something.”
Trump, Republicans demand $400-a-week cut for the unemployed– Senate Republicans unveiled plans Monday to slash federal supplemental unemployment compensation by $400 a week, a two-thirds reduction, in a savage attack on the lifeline that 20 million workers across the United States have relied on to survive for the past four months. The $600-a-week benefit for workers laid off because of the coronavirus crisis was established in the CARES Act passed in March. It has an official expiration date of July 31, but effectively ended this weekend, given how state-run unemployment compensation systems calculate the benefit week. Senator Charles Grassley of Iowa, outlining the unemployment compensation plan, denounced the $600-a-week benefit as an incentive for idleness that had caused many people to refuse jobs. “We’ve learned a tough lesson,” he said. “If you pay people not to work, what do you expect?” He went on to hail the bill for providing “further tax relief for businesses to encourage hiring and rehiring.” The Republican bill is a political provocation against the working class. In the CARES Act, the Democrats and Republicans combined limited subsidies to the unemployed with trillions for corporations and banks, using the increased unemployment compensation as a screen to disguise the real nature of the CARES Act as a handout to the multimillionaires. The legislation unveiled Monday would strip away the disguise, combining further subsidies for the wealthy and corporate America with a $400-a-week cut in benefits for millions who have only barely been able to pay urgent and pressing bills. Even with the federal extended benefits, some 12 million people failed to make rent payments due by July 1, and 23 million said they feared missing rent payments due August 1.
Economic relief talks ramp up as GOP releases bill; Democrats, White House officials meet — A fraught showdown over the next coronavirus relief bill got underway Monday as Senate Republicans unveiled a $1 trillion package and congressional Democratic leaders met with top White House officials.All parties faced a tight deadline for a breakthrough as expanded jobless aid benefits are set to expire later this week.The prospects for a bipartisan deal remained far from certain as House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles E. Schumer (D-N.Y.) met late Monday with Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows to begin formal negotiations.The White House officials described the talks as productive and said they would resume on Tuesday, but Democrats left the nearly two hour meeting describing the initial GOP offer as inadequate.AD”We hope that we would be able to reach an agreement,” Pelosi said after the meeting. “We clearly do not have shared values. Having said that, we just want to see if we can find some common ground to go forward. But we’re not at that place yet.”Schumer said that he and Pelosi had told the administration officials they would review the bills carefully overnight.At the same time elsewhere in the Capitol, Majority Leader Mitch McConnell (R-Ky.) and some of his top lieutenants were briefing reporters on the package of bills assembled as the GOP negotiating position with Democrats. But the GOP legislation contains a number of provisions not directly related to the coronavirus, including $1.8 billion for construction of a new FBI headquarters in Washington. President Trump has taken a personal interest in this project, but White House officials have not stipulated why they believe the language needed to be inserted in the coronavirus bill. Critics have alleged Trump is trying to keep the FBI building at its current location, which is diagonal from a Trump hotel property in downtown D.C. McConnell and his team worked for days to try to put together a $1 trillion package that could unite Republicans in a way that would strengthen their negotiating power with Democrats, but there were signs Monday that Republicans remain split over how to proceed. Congress already pumped $3 trillion into the economy in March and April, a level that many Republicans believe is sufficient.”There is significant resistance to yet another trillion dollars,” said Sen. Ted Cruz (R-Tex.).
McConnell announces new round of PPP funds in GOP stimulus plan – Senate Republicans have announced another round of funding for the Small Business Administration’s Paycheck Protection Program as part of a new stimulus bill to deal with the coronavirus pandemic. Senate Majority Leader Mitch McConnell, R-Ky., outlined the GOP plan in a floor speech but did not specify how much money would be allocated for the small-business loan program. “So we have one foot in the pandemic and one foot in the recovery,” McConnell said. “The American people need more help. They need it to be comprehensive. And they need it to be carefully tailored to this crossroads. That is what this Senate majority has assembled.” McConnell said the stimulus proposal, known as the Health, Economic Assistance, Liability Protection, and Schools Act, or HEALS Act, will include another round of $1,200 relief payments to individuals. Republicans are also proposing to extend the expanded weekly unemployment benefits that were provided in the Coronavirus, Aid, Relief, and Economic Security Act, but decrease the dollar amount from $600 per week to $200 per week. McConnell’s announcement comes as unemployment benefits in the CARES Act are set to expire at the end of this week. But PPP funds are still available. The program also allows loan borrowers to seek forgiveness of their outstanding credit. The SBA is expected to launch a portal next month for processing loan forgiveness decisions. Banks have generally supported the PPP, but some lenders have said they are less enthusiastic about participating. Republicans still need to negotiate with Democrats before any additional stimulus legislation can become law. The Democratic-controlled House in May passed the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES, Act. Yet that $3 trillion package has been panned by the GOP.
Trump dismisses virus aid for cities, lashes out at GOP – (AP) – President Donald Trump on Wednesday dismissed Democratic demands to include aid for cash-strapped cities in a new coronavirus relief package and lashed out at Republicans, saying they should “go back to school” if they reject money for a new FBI building in downtown Washington, D.C.Trump, speaking alongside Treasury Secretary Steven Mnuchin at the White House, signaled his interest in preventing an eviction crisis as a federal moratorium expires Friday on millions of apartment units. But he and his top emissary to Congress portrayed an otherwise dismal outlook as negotiations drag ahead of looming deadlines.”It’s a shame to reward badly run radical left Democrats with all of this money they’re looking for,” Trump said at the White House, complaining about the “big bailout money” for cities.Trump was publicly critical of his GOP allies over the $1.7 billion for FBI headquartersthat’s included in the bill, but which Senate Majority Leader Mitch McConnell later said he opposes as not related to virus relief. The president wants to keep the building that sits across the street from his signature Trump International Hotel, which could face competition if the FBI moves and another hotel is developed there.At the White House on Wednesday, Trump said the FBI building should remain in Washington, near the Justice Department. He added: “It’s the best piece of property in Washington. I’m very good at real estate. So I said, we’ll build a new FBI building. Let’s build a new FBI building, either a renovation of existing or even better would be a new building.””Republicans should go back to school and learn,” he said. “You need a new building.”Trump’s comments came a day after he dismissed the GOP’s COVID-19 package as “semi-irrelevant.””We want to take care of t he people,” Trump said. “We want to stop the evictions.”
Dems reject short-term deal ahead of unemployment deadline – Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows said on Thursday night that Democrats rejected a short-term deal as negotiators remain at loggerheads over the next coronavirus relief bill. “We made a proposal for a short-term deal. And as of now they’ve repeated they don’t want to do that,” Mnuchin told reporters after a nearly two-hour meeting with House Speaker Nancy Pelosi (D-Calif.), Senate Democratic Leader Charles Schumer (N.Y.) and Meadows. Mnuchin declined to say what the administration offered during the meeting, which was the fourth the group has had in as many days. But Meadows subsequently tweeted that they offered a “temporary extension of needed unemployment assistance.” “The proposals we made were not received warmly,” Meadows told reporters at the Capitol. Trump and his chief of staff indicated just hours before the meeting that they were hoping to get Democrats to a smaller agreement on just two issues: unemployment benefits and preventing evictions. “I think probably trying to resolve the enhanced unemployment issue, obviously,” Meadows said, asked about the goal for the meeting. “And so we want to go ahead and address that [and] address the eviction provisions that hopefully will keep people from being evicted from the homes, at least through the end of the year, on both of those things.” Trump homed in on evictions while speaking from the White House saying that, “we’re asking Democrats to work with us to find a solution that will temporarily stop evictions.” But any attempt to get a short-term or pared-down bill was all but guaranteed to be rejected by Pelosi and Schumer, who have remained united during the days-long talks. Democrats have repeatedly said they do not want a short-term deal or a smaller bill. The stalemate comes as the talks come as the $600-per-week federal unemployment benefit will expire Friday. With the Senate leaving town until Thursday, and negotiators nowhere close to a deal, they were all but guaranteed to miss the deadline.
Congress has failed to extend additional unemployment benefits as millions of workers across the country file new UI claims –The U.S. Department of Labor (DOL) released the most recent unemployment insurance (UI) claims data last Thursday, showing that another 2.3 million people filed for UI benefits during the week ending July 18. Huge swaths of workers in every state are relying on UI for food, rent, and basic necessities. There are 14 million more unemployed workers than jobs. In the face of this economic crisis, Congress has let the extra $600 in weekly UI benefits expire, and now Senate Republicans are proposing reducing the increase to $200, which would cause such a huge drop in spending that it would cost 3.4 million jobs. These benefit cuts will directly harm the workers and their families who need these benefits to weather the pandemic and will cause further economic harm over the next year.Figure A shows the share of workers in each state who either made it through at least the first round of state UI processing (these are known as “continued” claims) or filed initial UI claims in the following weeks. The map includes separate totals for regular UI and Pandemic Unemployment Assistance (PUA), the new program for workers who aren’t eligible for regular UI, such as gig workers. Three states had more than 1 million workers either receiving regular UI benefits or waiting for their claim to be approved: California (3.0 million), New York (1.6 million), and Texas (1.4 million). Seven additional states had more than half a million workers receiving or awaiting benefits. While the largest U.S. states unsurprisingly have the highest numbers of UI claimants, some smaller states have larger shares of the workforce filing for unemployment. Figure A also displays the numbers of workers in each state who are receiving or waiting for regular UI benefits as a share of the pre-pandemic labor force in February 2020. In six states and the District of Columbia, more than one in seven workers are receiving regular UI benefits or waiting on their claim to be approved: Hawaii (20.8%), Nevada (20.7%), the District of Columbia (17.9%), New York (17.1%), Louisiana (15.9%), Georgia (15.8%), and California (15.5%).
McConnell: Dropping liability protections from coronavirus deal ‘not going to happen’ – Senate Majority Leader Mitch McConnell (R-Ky.) said Friday that liability protections will be in any coronavirus relief deal amid mixed signals from the White House, which has increasingly focused on a smaller or short-term deal. Asked if the White House was trying to drop liability protections from the talks, McConnell told WHAS, a Kentucky radio station, that both he and President Trump support the proposal. “Ultimately if we get a deal I’ll be the one to put it on the floor in the Senate. I assure you it will have liability protection in it,” McConnell said. “There was some rumor that they were prepared to negotiate it away. That’s not going to happen,” he added. McConnell’s comments come as White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin have both signaled that they remain far from a deal with congressional Democrats on the next coronavirus relief package, including at a stalemate on help for state and local governments, how to address unemployment insurance and liability protections. Instead, they’ve tried to push Democrats toward accepting a smaller, short-term bill that focuses on unemployment benefits and preventing evictions. “I think probably trying to resolve the enhanced unemployment issue,” Meadows told reporters late Thursday afternoon when asked about the goal for a Thursday night meeting with Democrats. “And so we want to go ahead and address … the eviction provisions that hopefully will keep people from being evicted from the homes, at least through the end of the year, on both of those things.”
McConnell: 15-20 GOP senators will not vote for any coronavirus deal – Senate Majority Leader Mitch McConnell (R-Ky.) said Friday that more than a third of Republican senators will not vote for any coronavirus relief package, underscoring division with his caucus. “I think there are 15-20 of my guys that are not going to vote for anything. … It’s a statement of the obvious that we will not have everybody on our side,” McConnell told WHAS, a Kentucky radio station. McConnell’s estimate comes as congressional Democrats and the administration are struggling to reach an agreement after days of talks about a potential fifth coronavirus package as cases climb across the country and an economy bludgeoned by the pandemic. McConnell, during the radio interview, said the two sides were “light-years apart,” the latest sign that Congress and the White House are not close to a quick deal. “This negotiation is going to be tough,” he added. “At the moment there’s not much movement.” But GOP divisions have also been in the spotlight after several senators trashed their own party’s package, which was unveiled Monday. Sen. Josh Hawley (R-Mo.) called the bill a “mess,” while Sen. Ben Sasse (R-Neb.) argued that the negotiations were being carried out by “two big government Democrats.” McConnell, asked why a sizable portion of his conference is opposed to another bill, noted the growing size of the country’s debt after Congress has already appropriated nearly $3 trillion in the previous four coronavirus bills. “Their argument’s not irrational. … They don’t think we ought to pass another one of these bills. I don’t agree with that,” McConnell said. Asked what those GOP senators would say to voters, McConnell added, “I think everybody’s got to make their best call here.” If 20 Republicans voted against an eventual coronavirus deal, that means McConnell would need support from at least 27 Democratic senators to get the bill over a 60-vote procedural threshold and pass it in the Senate. McConnell said during an interview with PBS “Newshour” earlier this week that “about 20 of my members think that we’ve already done enough.”
Stimulus checks debate now focuses on size, eligibility –Republicans and Democrats negotiating the next coronavirus relief package are voicing support for including another round of stimulus checks, but their competing proposals for direct payments have some differences that need to be hammered out. The two key issues that need resolving: payment amounts for dependents and eligibility requirements. Lawmakers on both sides of the aisle have put forth direct-payment proposals largely similar to the stimulus checks included in the CARES Act from late March that provided checks for most Americans — up to $1,200 per adult and $500 per child under 17. The differences between Democrats and Republicans on direct payments are narrower than they are on other potential elements of a COVID-19 relief package, like aid to state and local governments and liability protections for businesses. “This is one of the places where they’re pretty close,” said Mark Zandi, chief economist at Moody’s Analytics. But as negotiations spill over into the weekend, Democratic leaders and Trump administration officials will have to iron out the details on checks that will give households an infusion of cash to spend on key expenses amid the coronavirus recession. House Democrats passed a $3 trillion package in May, known as the HEROES Act, that would provide for a second round of payments of $1,200 per adult and $1,200 per dependent for up to three dependents. Adult dependents, such as college students and elderly relatives, would qualify for payments in addition to children. The measure would allow people with Social Security numbers and those with individual taxpayer identification numbers (ITINs) to receive payments. A number of foreign nationals, including many undocumented immigrants, use ITINs to pay U.S. taxes. Senate Republicans and the White House on Monday released their coronavirus-relief package — the $1 trillion HEALS Act — that would also provide for a second round of payments, but at $1,200 per adult and $500 per dependent regardless of age. The proposal mirrors the identification-number requirements of the CARES Act, under which work-eligible Social Security numbers are required and a U.S. citizen who is married to an ITIN filer would generally not receive a payment if the couple filed a joint tax return. On Thursday, a group of GOP senators senators introduced their own bill with parameters that fall in between the HEROES Act and the HEALS Act. The new measure, backed by GOP Sens. Bill Cassidy (La.), Steve Daines (R-Mont.), Mitt Romney (Utah) and Marco Rubio (Fla.), both adults and dependents would receive payments of $1,000. Under their proposal, people would have to have Social Security numbers to receive payments, but U.S. citizens in households with foreign nationals would be able to get payments.
Small-Business Disaster Relief Program Target of Fraud, Watchdog Says – WSJ – The federal government’s disaster loan and grant program for small businesses has been subject to more than 5,000 complaints of suspected fraud from lenders, a watchdog agency warned Tuesday as it called for closer oversight of the program. The Small Business Administration’s inspector general’s office said it had been “inundated with contacts to investigative field offices from financial institutions across the nation and the complaint hotline” regarding the Economic Injury Disaster Loan and EIDL Advance grant programs. It urged SBA Administrator Jovita Carranza to take “immediate attention and action” to reduce or prevent additional losses to taxpayers. Nearly 3,800 of the suspected fraud complaints came from just six lenders, the inspector general’s report said. Among them, nine financial institutions reported a combined total of $187.3 million in suspicious transactions. In addition, more than 1,000 complaints have been received through its complaint hotline. Reported suspicious activities include accounts established using stolen identities, account holders unable to identify business names on loans or customers attempting to transfer funds into accounts located overseas or used for investment purposes. Others account holders were reported to have attempted to withdraw loan funds in cash or transfer the funds to other newly established accounts, or claimed to use the funds to open a business – a use not permitted under the program.
Florida Man Used PPP Loans To Buy Lamborghini Huracan, Goes On Spending Spree – For months, we’ve warned loans granted under the Paycheck Protection Program (PPP) for businesses seeking coronavirus relief funds were susceptible to fraud.A Florida man was charged Monday after using PPP loans to buy a 2020 Lamborghini Huracan, according to the U.S. Department of Justice (DoJ). David T. Hines of Miami, Florida, fraudulently obtained $3.9 million in PPP loans and used those funds to buy the Huracan, shop at luxury stores, and splurge on fancy Miami resorts. The DoJ charged Hines,29, with one count of bank fraud, one count of making false statements to a bank and one count of engaging in transactions in unlawful proceeds. The DoJ complaint claims the man requested $13.5 million in PPP loans for four companies with dozens of employees.“In the days and weeks following the disbursement of PPP funds, the complaint alleges that Hines did not make payroll payments that he claimed on his loan applications,” according to the complaint. “He did, however, make purchases at luxury retailers and resorts in Miami Beach.”In early July, we reported a Texas man received almost $1 million in PPP loans to support 51 employees at his “Texas Barbecue” company, though the company never existed. The man used the loans to trade cryptocurrency on Coinbase. Not too long ago, Treasury Secretary Steven Mnuchin said that he is considering “forgiving all small loans, but would need fraud protection,” for businesses. The government has so far approved about $518.1 billion spread over 4.9 million PPP loans since the pandemic began. The LA Times notes there are at least a dozen PPP fraud cases filed in 11 states in July. Many of these cases are blatant fraud, such as falsifying tax or business records, lying on applications, and misusing the money. While safeguards to prevent PPP fraud appear to be lacking, Senate Republicans have unveiled even more PPP loans for business, which has really upset the Tea Party. “Republicans are now no different than socialist Democrats when it comes to debt,” Senator Rand Paul said.
Trump national security adviser O’Brien has the coronavirus (AP) – President Donald Trump’s national security adviser, Robert O’Brien, has tested positive for the coronavirus – making him the highest-ranking official to test positive so far.The White House said O’Brien has mild symptoms and “has been self-isolating and working from a secure location off site.”Officials did not respond to questions about the last time the president and O’Brien had contact, but the White House insisted that “There is no risk of exposure to the President or the Vice President” and that the “work of the National Security Council continues uninterrupted.”Trump told reporters as he left the White House on Monday that he wasn’t sure when his national security adviser had tested positive and that he hadn’t “seen him lately,” but would be giving O’Brien a call. White House economic adviser Larry Kudlow had said earlier that O’Brien’s daughter also has the virus and that that is how officials think he was exposed.O’Brien also recently returned from a trip to France, where he met with top European officials and was photographed standing close to others and not wearing a mask. O’Brien is the first White House official known to have contracted the virus since May, when a personal valet to the president and the vice president’s press secretary tested positive for the virus that has now infected more than 4 million people nationwide. Numerous Secret Service agents and Trump campaign staffers have also tested positive, including national finance chair Kimberly Guilfoyle, who is the girlfriend of Trump’s eldest son, Donald Trump Jr.
Rep. Louie Gohmert Tests Positive For COVID-19 Ahead Of Presidential Flight To Texas – Texas Rep. Louie Gohmert has tested positive for COVID-19, Politico reports.The Republican Congressman was tested Wednesday morning during a pre-clearing process for Wednesday’s historic anti-trust hearing. Rep. LOUIE GOHMERT has covid. Tested positive this morning. Has NOT been wearing a mask on the Hill, and defended tghe practice to @mkraju.https://t.co/H5Ps4NLT7r – Jake Sherman (@JakeSherman) July 29, 2020 Gohmert also attended yesterday’s hearing with AG Barr, which begs the question: why wasn’t his illness flagged yesterday? As Gohmert was sitting in the presence of not only the AG but many of his colleagues for hours, often shouting questions and commentary back and forth. Politico noted that the Republican, who represents Texas’s 1st District, has been seen “walking around the Capitol…without a mask.” In another close call for the president, Gohmert had been scheduled to fly to Texas on Wednesday morning with the president. The eighth-term Republican told CNN last month that he wouldn’t bother wearing a mask because he was being tested regularly.
GOP lawmakers comply with Pelosi’s mask mandate for House floor – Speaker Nancy Pelosi’s (D-Calif.) new mask requirement for the House floor had its intended effect Thursday: For once, there was effectively universal compliance. The new requirement came after Rep. Louie Gohmert (R-Texas) tested positive for the coronavirus the day before, rattling lawmakers and staff across the Capitol complex. Gohmert was among the handful of House Republicans who had been resistant to wearing masks despite public health experts’ recommendations that facial coverings are an effective way to prevent spread of viral droplets. Many of those lawmakers who didn’t consistently wear masks represent states that are currently coronavirus hot spots, including Texas, Arizona and Florida. But on Thursday, every Republican on the House floor had a mask. Floor staffers also enforced compliance by telling members to pull up masks that were slipping under their noses. One GOP lawmaker didn’t completely follow the rules, however. At one point, Rep. Glenn Grothman (R-Wis.) was taking a phone call – which no one is supposed to do while seated in the chamber – with his mask under his chin. A young female staffer quickly approached Grothman, who initially ignored her. But once an older male staffer intervened, Grothman got up and left. He later returned to the House chamber with his mask on. Pelosi warned while announcing the new policy from the House floor on Wednesday evening that any lawmaker or staffer without a mask would be barred from entering the chamber and risked removal by the sergeant-at-arms if they didn’t comply.
Mask-skeptic Republican Gohmert gets COVID-19; U.S. congressional colleagues to self-quarantine – Reuters (Reuters) – Republican U.S. congressman Louie Gohmert, who has steadfastly refused to wear a mask during the coronavirus pandemic, said on Wednesday he had tested positive for COVID-19, leading at least three of his colleagues to say they would self-quarantine.Attorney General William Barr, who testified to a committee hearing on Tuesday in which Gohmert participated, will be tested for coronavirus as a result, a Justice Department spokesman said. Gohmert, a U.S. representative from Texas, where coronavirus cases have surged since the state reopened, said he tested positive in a pre-screening at the White House and would self-quarantine for 10 days. “Now I need to self-quarantine,” Gohmert said in an interview with Texas broadcaster KETK-TV. “It’s really ironic, because a lot of people have made a big deal out of my not wearing a mask a lot. But in the last week or two, I have worn a mask more than I have in the whole last four months.” Republican Representatives Mike Johnson and Kay Granger and Democratic lawmaker Raul Grijalva said they would self-quarantine after being in contact with Gohmert, according to statements from their offices or media reports. “I’m self-quarantining until I take a test and then again until results are in. In the meantime, my work schedule and the lives of my employees are disrupted,” Grijalva said in a statement. “This stems from a selfish act by Mr. Gohmert, who is just one member of Congress.”
Herman Cain dies of coronavirus, statement on his website says – Herman Cain, the former pizza chain executive who sought the 2012 Republican presidential nomination, has died weeks after testing positive for the coronavirus. “You’re never ready for the kind of news we are grappling with this morning,” Dan Calabrese, the editor of Cain’s website, wrote in a statement Thursday. “Herman Cain – our boss, our friend, like a father to so many of us – has passed away.” Calabrese confirmed the death to The Washington Post and said the cause was covid-19, the disease caused by the novel coronavirus. Although it is unclear where Cain, who was 74, contracted the disease, he was among several thousand people, most of whom did not wear masks, who attended a Trump campaign rally in Tulsa on June 20. Cain, who co-chaired Black Voices for Trump, was photographed maskless and not socially distancing at the event. “My friend Herman Cain, a Powerful Voice of Freedom and all that is good, passed away this morning,” Trump said in tweets in which he relayed that he had spoken to members of Cain’s family. “Herman had an incredible career and was adored by everyone that ever met him, especially me. He was a very special man, an American Patriot, and great friend.” Cain is one of the most prominent Americans to have died of the virus, which has claimed more than 150,000 lives in the United States. Word of his death comes amid a heightened focus on how seriously Republicans have taken advice from medical experts.On Wednesday, Rep. Louie Goh-mert (R-Tex.), who had been seen walking the halls of the U.S. Capitol without a mask and not socially distancing, announced that he had tested positive shortly before a planned Air Force One flight with President Trump.
Trump halts daily briefing amid questions about support for ‘alien DNA’ doctor – video – Donald Trump in his daily coronavirus briefing praises as ‘very impressive’ a doctor who dismissed the use of face masks, backed hydroxychloroquine and reportedly claimed that alien DNA is used in medical treatments. When asked about reports Dr Stella Immanuel believes scientists are creating a ‘vaccine to make you immune from becoming religious’, the US president claimed she had had success in using hydroxychloroquine before adding: ‘I thought her voice was an important voice, but I know nothing about her.’ On the topic of Dr Anthony Fauci’s enduring popularity with the US public, he said: “So why don’t I have a high approval rating with respect – and the administration – with respect to the virus? We should have it very high … but nobody likes me. It can only be my personality, that’s all.’
Trump’s New Favorite COVID Doctor Believes in Alien DNA, Demon Sperm, and Hydroxychloroquine – A Houston doctor who praises hydroxychloroquine and says that face masks aren’t necessary to stop transmission of the highly contagious coronavirus has become a star on the right-wing internet, garnering tens of millions of views on Facebook on Monday alone. Donald Trump Jr. declared the video of Stella Immanuel a “must watch,” while Donald Trump himself retweeted the video.Before Trump and his supporters embrace Immanuel’s medical expertise, though, they should consider other medical claims Immanuel has made – including those about alien DNA and the physical effects of having sex with witches and demons in your dreams. Immanuel, a pediatrician and a religious minister, has a history of making bizarre claims about medical topics and other issues. She has often claimed that gynecological problems like cysts and endometriosis are in fact caused by people having sex in their dreams with demons and witches.She alleges alien DNA is currently used in medical treatments, and that scientists are cooking up a vaccine to prevent people from being religious. And, despite appearing in Washington, D.C. to lobby Congress on Monday, she has said that the government is run in part not by humans but by “reptilians” and other aliens. both Facebook and Twitter eventually deleted videos of Immanuel’s speech from their sites, citing rules against COVID-19 disinformation. The deletions set off yet another round of complaints by conservatives of bias at the social-media platforms. Immanuel responded in her own way, declaring that Jesus Christ would destroy Facebook’s servers if her videos weren’t restored to the platform. “Hello Facebook put back my profile page and videos up or your computers with start crashing till you do,” she tweeted. “You are not bigger that God. I promise you. If my page is not back up face book will be down in Jesus name.” Immanuel was born in Cameroon and received her medical degree in Nigeria. In sermons posted on YouTube and articles on her website, Immanuel claims that medical issues like endometriosis, cysts, infertility, and impotence are caused by sex with “spirit husbands” and “spirit wives” – a phenomenon Immanuel describes essentially as witches and demons having sex with people in a dreamworld. It’s also not clear that Immanuel has abided by her claims that face masks aren’t necessary. In her Washington speech, Immanuel claimed that she and her medical staff had avoided any COVID-19 infections while wearing only medical masks. But in two videos shot at her clinic, Immanuel appears to be wearing an N95 mask, which offers more protection. Immanuel has also alleged that masks of all kinds are superfluous, because she says COVID-19 can be easily cured with hydroxychloroquine. But in a Facebook video advertising her clinic, Immanuel said anyone seeking treatment should wear a face mask before entering the clinic.
House lawmakers probe hydroxychloroquine use at state veterans homes – House lawmakers pressed top officials at the Department of Veterans Affairs on Wednesday about staff shortages, the lack of covid-19 testing and infection-control lapses at state-run nursing homes for veterans and called on the administration to take a leading role in oversight that’s typically left to the states.The hearing before the health subcommittee of the House Veterans’ Affairs Committee also probed the use of the antimalarial drug hydroxychloroquine at a home for veterans and their spouses outside of Philadelphia.Subcommittee Chairwoman Julia Brownley (D-Calif.) questioned why the drug, touted by President Trump for months as a potential treatment for covid-19, was administered to 30 residents at the Southeastern Veterans’ Center in Spring City, Pa., including patients who had underlying heart conditions and those who had not been tested for covid-19.Earlier this month, The Washington Post reported that doctors at the 238-bed nursing home dosed patients with what came to be called a “covid cocktail” for more than two weeks in April, often over the objections of nurses and without the full knowledge of residents’ families. At least 11 residents received the drug even though they had not been tested for covid-19, The Post found. Rep. Chrissy Houlahan (D-Pa.), who represents the district where the state-run home is located, asked VA officials whether the department provided any guidance on the use of the unproven drug, which has been shown to trigger cardiac problems and other adverse effects in patients. The Food and Drug Administration revoked an emergency-use authorization issued in late March.
Local TV stations across the country set to air discredited ‘Plandemic’ researcher’s conspiracy theory about Fauci — Local television stations owned by the Sinclair Broadcast Group are set to air a conspiracy theory over the weekend that suggests Dr. Anthony Fauci, the nation’s top expert on infectious diseases, was responsible for the creation of the coronavirus. The baseless conspiracy theory is set to air on stations across the country in a segment during the program “America This Week” hosted by Eric Bolling. The show, which is posted online before it is broadcast over the weekend, is distributed to Sinclair Broadcast Group’s network of local television stations, one of the largest in the country. A survey by Pew Research Group earlier this year showed that local news was a vital source of information on the coronavirus for many Americans, and more trusted than the media overall. In this week’s episode of the show, Bolling spoke with Judy Mikovits, the medical researcher featured in the discredited “Plandemic” video that went viral earlier this year and which was banned from platforms such as Facebook and YouTube. Throughout the segment, the on-screen graphic read, “DID DR. FAUCI CREATE COVID-19?” Bolling also spoke with Mikovits’ attorney, Larry Klayman, a right-wing lawyer who also has a history ofpushing misinformation and representing conspiracy theorists. During the interview Mikovits told Bolling that Fauci had over the past decade “manufactured” and shipped coronaviruses to Wuhan, China, which became the original epicenter of the current outbreak. Bolling noted that this was a “hefty claim,” but did not meaningfully challenge Mikovits and allowed her to continue making her case. Klayman also pushed conspiracy theories about the coronavirus. He said the “origins” of the virus were in the United States. Bolling didn’t meaningfully challenge Klayman either. In the segment that immediately followed, Bolling spoke to Dr. Nicole Saphier, a Fox News medical contributor, to get her response to the claims from Mikovits and Klayman. Bolling and Saphier agreed that it was, in Saphier’s words, “highly unlikely” that Fauci was behind the coronavirus. But they went on to theorize about other possible explanations for what had happened. Saphier said it was possible the virus was “man-made within a laboratory” and escaped. That claim has been rejected by experts who have studied the virus’ genetic sequence. The segments were first reported on by Media Matters, a progressive media watchdog.
Fauci resists Republican effort to turn testimony against protesters – (Reuters) – Top U.S. infectious disease expert Dr. Anthony Fauci on Friday resisted efforts by a staunch ally of President Donald Trump to turn his testimony about controlling the coronavirus pandemic into criticism of protests against racial injustice. Fauci clashed with Representative Jim Jordan at a hearing of the U.S. House of Representatives Subcommittee on the Coronavirus, after the Ohio Republican demanded Fauci’s opinion about whether protests should be curbed or eliminated to control the pandemic. “Should we limit the protesting?” Jordan asked. When Fauci said he was not in a position to make such a recommendation, the lawmaker retorted: “You make all kinds of recommendations. You make comments on dating, on baseball and everything you could imagine.” “I’m not favoring anybody over anybody,” Fauci replied. “I’m not going to opine on limiting anything … I’m telling you what is the danger, and you can make your own conclusion about that. You should stay away from crowds, no matter where the crowds are.” Fauci’s testimony comes at the end of a month in which U.S. coronavirus deaths rose by almost 25,000 and cases doubled in at least 18 states, according to a Reuters tally, dealing a crushing blow to hopes of quickly reopening the economy. The United States has recorded nearly 1.8 million new COVID-19 cases in July out of its total 4.5 million known infections, an increase of 66% with many states yet to report on Friday. Deaths in July rose at least 19% to a total of more than 152,000.
A man who thought the coronavirus was a ‘scamdemic’ wrote a powerful essay warning against virus deniers after he hosted a party and got his entire family sick –A conservative man in Texas has written a powerful essay saying he once believed the coronavirus was a hoax, but has now had a dramatic change of heart after he and his entire family tested positive for COVID-19 following a party at his house. “All the defiant behavior of Trump’s more radical and rowdy cult followers, I participated in it. I was a hard-ass that stood up for my ‘God-given rights,'” he wrote. Green’s belief that the virus was fake prompted him and his partner to host a house party on June 13 for family members. He did not say how many people attended.The next morning, Green woke up sick, and over the following days the virus continued to spread throughout both his and his partner’s families – including his father-in-law’s mother, who died of COVID-19 on July 1. Green himself and his father-in-law were both hospitalized for the virus. Catching the coronavirus has changed Green’s mind on the issue, and he’s now calling for an end to the politicization over the virus. “You cannot imagine the guilt I feel, knowing that I hosted the gathering that led to so much suffering,” he wrote.”You cannot imagine my guilt at having been a denier, carelessly shuffling through this pandemic, making fun of those wearing masks and social distancing. You cannot imagine my guilt at knowing that my actions convinced both our families it was safe when it wasn’t.””For those who deny the virus exists or who downplay its severity, let me assure you: The coronavirus is very real and extremely contagious,” he added. “Before you even know you have it, you’ve passed it along to your friends, family, coworkers and neighbors.”
Wuhan’s ‘Bat Woman’ Demands Trump Apology As New Whistleblower Describes Early CCP Cover-Up – Dr. Shi Zhengli – the Wuhan Institute of Virology (WIV) ‘Bat Woman’ who fell under international scrutiny in 2015 over her ‘gain-of-function‘ experiments to make bat coronaviruses transmissible to humans – has hit back at accusations that COVID-19 escaped from her lab, and says President Trump should apologize for promoting the theory. After taking two months to respond to a series of questions by Science magazine, Zhengli emailed the publication answers which Rutgers molecular biologist, Richard Ebright, says are “formulaic, almost robotic, reiterations of statements previously made by Chinese authorities and state media.” Zhengli, whose answers were coordinated with the Chinese Academy of Sciences, which WIV belongs to, claims that she and her colleagues discovered SARS-CoV-2 in late 2019 in samples from patients who had contracted pneumonia of unknown origin. “Before that, we had never been in contact with or studied this virus, nor did we know of its existence,” she wrote. “U.S. President Trump’s claim that SARS-CoV-2 was leaked from our institute totally contradicts the facts,” she added. “It jeopardizes and affects our academic work and personal life. He owes us an apology.” In April, the Daily Telegraph reported that Western intelligence agencies are investigating Zhengli, as well as her colleague Peng Zhou – over whether COVID-19 originated from a wet market, or whether the virus may have been an accidental release from their level-4 lab. In mid-April, the Washington Post reported that the US State Department received two cables from US Embassy officials in 2018 warning of inadequate safety at Wuhan Institute of Virology, which was conducting ‘risky studies’ on bat coronaviruses, according to the report – which notes that the cables have “fueled discussions inside the U.S. government about whether this or another Wuhan lab was the source of the virus.” Meanwhile, Chinese virologist Dr. Li-Meng yan – who specialized in virology and immunology at the Hong Kong School of Public Health and fled Hong Kong in late April, insists COVID-19 was created in a lab, and says she’s going to prepare a “very solid scientific report to show people how easily this can be done from the lab.”
Hundreds Of Angry Protesters Gather Outside Hamptons Billionaire Mansions To Demand Wealth Tax – Over 200 protesters wielding pitchforks marched through the Hamptons Thursday to demand that Governor Andrew Cuomo (D) slap billionaires with a wealth tax. According to Business Insider, the group – organized by a coalition of activist groups including New York Communities for Change, a homeless advocacy organization, and News Guild (CWA) marched throughout the ultra-wealthy vacation town. Stops included the homes of several billionaires, including investor Daniel Loeb, real-estate developer Steven Roth and Hudson Yards developer Steven Ross – all Cuomo donors, according to the report (citing The Guardian). Thank you â¦@JabariBrisportâ© for coming to to the Hamptons with us to pay a visit to Dan Loeb, the Cuomo donor and billionaire who has used his billions to attempt to privatize our Public Schools. #MakeBillionairesPay pic.twitter.com/rRGcu4jroc – New York Communities for Change (@nychange) July 30, 2020 The protesters were joined by State Senatorial candidate Jabari Brisport, who said outside of Loeb’s East Hampton mansion “If there is one thing that makes me more mad than billionaires, it’s billionaires like Dan Loeb that push and advocate for charter schools,” adding “I’m sick of the attacks on our public school children, and I’m sick of people like this donating to Andrew Cuomo so he can sit there in Albany twiddling his thumbs about how to deal with this budget deficit.”The economic crisis brought on by the coronavirus crisis has strengthened calls for a wealth tax, especially in New York, where Rep. Alexandria Ocasio-Cortex has proposed a special state tax on the ultrawealthy. The proposal has the support of at least 83 ultrawealthy peop le, including Ben & Jerry’s cofounder Jerry Greenfield and Disney heiress Abigail Disney, who penned an open letter arguing that such a tax would “ensure we adequately fund our health systems, schools, and security … immediately. Substantially. Permanently.”Cuomo shot down the idea, saying that it would drive New York’s 118 billionaires out of state. At the same time, the governor announced cuts to state funding for schools, public housing, and hospitals amid a budget crisis brought on by the coronavirus crisis, sparking protests. Thursday’s march was the second protest in the Hamptons featuring pitchforks this month. The pitchforks used in the July 1 event were plastic ones purchased from a Halloween store, Patch reported at the time. –Business Insider Later in the march, protesters began beating drums and chanting “Oh the rent is too damn high,” a phrase coined by former New York mayoral candidate Jimmy McMillan over a decade ago. “The governor has a choice: He can either cut funding from students, nurses, seniors, and working families who keep our city running – or he can tax the rich,” said event organizer Alice Nascimento, who serves as the Director of Policy & Research at New York Communities for Change. “And he keeps choosing cuts over taxes – because he’d rather protect his wealthy billionaire donors than protect working New Yorkers.”
Notre Dame Withdraws From Hosting First Presidential Debate; “Could Be Conducted Online” – The University of Notre Dame has withdrawn from hosting the first Trump-Biden debate scheduled for September 29, citing advice from the St. Joseph County deputy health director, and the “diminished educational value” of hosting the event. In a unanimous decision by the Executive Committee of the University’s Board of Trustees, University President John Jenkins – who sits on the Commission on Presidential Debates – says he made “this difficult decision because the necessary health precautions would have greatly diminished the educational value of hosting the debate on our campus.”Jenkins added that “the inevitable reduction in student attendance in the debate hall, volunteer opportunities and ancillary educational events undermined the primary benefit of hosting – to provide our students with a meaningful opportunity to engage in the American political process.”Instead, the debate will move to Sampson Pavilion at the Health Education Campus (HEC) in Cleveland, Ohio on the same date, September 29.According to HEC President Barbara Snyder, “Samson Pavilion provides a particularly apt setting for this first debate” (in case Biden’s brain needs a reboot?), adding “It takes place soon after the start of the nation’s first full school year under the constraints and risks of the pandemic, and focuses specifically on health care.”That said, Snyder mentioned in an email to faculty, staff and students that “pandemic developments could require that the debate be conducted online,” adding that “It is no one’s preference, of course, but as we have seen firsthand, much can change in nine weeks.” Read the full letter below:
Twitter penalizes Donald Trump Jr. for posting hydroxychloroquine misinformation amid coronavirus pandemic – Twitter on Tuesday penalized Donald Trump Jr. for posting misinformation about hydroxychloroquine, the social media giant said, underlining the tough stance it has taken in policing misleading posts from high-profile users, including President Trump, in recent months. Twitter said that it ordered the president’s son to delete the misleading tweet and that it would “limit some account functionality for 12 hours.” Trump Jr. can still direct-message followers using his account, but he cannot tweet, retweet or like other tweets during the 12-hour restriction. Trump Jr.’s deleted tweet now shows a notice that says, “This Tweet is no longer available because it violated the Twitter Rules.” The tweet, which featured a viral video showing a group of doctors making misleading and false claims about the coronavirus pandemic, was directly tweeted by Trump Jr.’s account. That contrasts with his father, who retweeted multiple tweets from others showing clips of the same video to his 84.2 million followers Monday night. Read more: Trump retweeted a video with false covid-19 claims. One doctor in it has said demons cause illnesses. Twitter removed the videos, deleting several of the tweets that President Trump shared, and added a note to its trending topics warning about the potential risks of hydroxychloroquine use.
YouTube – Censoring the COVID-19 Narrative – With the Big Tech Congressional antitrust hearing taking place in the hallowed halls of Washington, a fine example of how the technology monopoly is controlling a key part of the global narrative is timely. In this posting, we will take a look at how Google/YouTube is handling its responsibility to its stakeholders during the COVID-19 pandemic. As we all know, Google’s YouTube has increasingly become a heavily censored platform in which dissenting views are not permitted. By controlling the COVID-19 narrative, Google has essentially white-washed any views that go against those promoted by governments, the mainstream media and the World Health Organization (aka The Bill and Melinda Gates Health Organization). Here is a list of what is “verboten” under the guise of protecting the unwashed masses from ourselves: “YouTube doesn’t allow content about COVID-19 that poses a serious risk of egregious harm. YouTube doesn’t allow content that spreads medical misinformation that contradicts the World Health Organization (WHO) or local health authorities’ medical information about COVID-19. This is limited to content that contradicts WHO or local health authorities’ guidance on:
- Treatment
- Prevention
- Diagnostic
- Transmission”
Here is what Google terms as “misinformation”:
- “1.) “Treatment Misinformation: Discourages someone from seeking medical treatment by encouraging the use of cures or remedies to treat COVID-19.
- a.) Claims that COVID-19 doesn’t exist or that people do not die from it
- b.) Content that encourages the use of home remedies in place of medical treatment such as consulting a doctor or going to the hospital
- c.) Content that encourages the use of prayer or rituals in place of medical treatment
- d.) Content that claims that a vaccine for coronavirus is available or that there’s a guaranteed cure
- e.) Content that claims that any currently-available medicine prevents you from getting the coronavirus
- f.) Other content that discourages people from consulting a medical professional or seeking medical advice
- 2.) Prevention Misinformation: Content that promotes prevention methods that contradict WHO or local health authorities.
- 3.) Diagnostic Misinformation: Content that promotes diagnostic methods that contradict WHO or local health authorities.
- 4.) Transmission Misinformation: Content that promotes transmission information that contradicts WHO or local health authorities.
- a.) Content that claims that COVID-19 is not caused by a viral infection
- b.) Content that claims COVID-19 is not contagious
- c.) Content that claims that COVID-19 cannot spread in certain climates or geographies
- d.) Content that claims that any group or individual has guaranteed immunity to the virus or cannot transmit the virus
- e.) Content that disputes the efficacy of WHO or local health authorities’ guidance on physical distancing or self-isolation measures to reduce transmission of COVID-19“
Let’s look at some more specific examples of what is not allowed on YouTube when it comes to furthering the discussion about the COVID-19 pandemic:
New York Times Rewrites the Timeline of the Fed’s Wall Street Bailouts, Giving Banks a Free Pass – Pam Martens – Last Friday, the New York Times officially embarked on what we have been expecting – an attempt to rewrite the current, ongoing Wall Street bank bailout. We were so certain that an alternative reality was going to emerge at the Times, that we had the foresight to create an archiveof Wall Street On Parade articles (122 so far) that document every major bailout step the Fed has taken since September 17, 2019 – five months before the first COVID-19 death was reported in the United States. One of our articles, published on January 6, 2020, shows that before the first COVID-19 case had even been reportedin the U.S., the Fed had pumped more than $6 trillion cumulatively into the trading units of the largest Wall Street banks – not hedge funds, that the Times now attempts to blame for the crisis. On Friday, the Times headlined an article by Jeanna Smialek and Deborah B. Solomon as: A Hedge Fund Bailout Highlights How Regulators Ignored Big Risks. Smialek is regularly present at the press briefings of Fed Chairman Jerome Powell so she can’t claim ignorance of what the Fed has been doing since September 17, 2019. Nonetheless, the reporters write that “in March … the Federal Reserve came to Wall Street’s rescue for the second time in a dozen years.” In March? What about the onset of the crisis on September 17, 2019 and the launch of the Fed’s money spigot on that date? Is the New York Times really going to attempt to erase from the history books a $9 trillion bailout of the Wall Street banks’ trading firms? According to the New York Times reporters, the blame belongs on hedge funds, while “commercial banks like JPMorgan Chase and Bank of America are better regulated and safer” than before the last crash in 2008 because of the Dodd-Frank reform in 2010. If JPMorgan Chase is “better regulated and safer,” someone forgot to tell the federal body that accumulates data on dangers lurking at the nation’s biggest banks. That body, the Federal Financial Institutions Examination Council (FFIEC), ranked JPMorgan Chase to be the riskiest bank in America, as we reported in-depth on November 25 of last year. According to charges brought last September 16 by the U.S. Justice Department, the bank has also allowed two current and one former trader to turn its precious metals desk into a racketeering conspiracy. The traders were indicted under criminal RICO charges, a law typically reserved for members of organized crime.Organized crime is exactly how two trial lawyers, Helen Davis Chaitman and Lance Gotthoffer, described how JPMorgan Chase’s Chairman and CEO, Jamie Dimon, runs the bank. The lawyers wrote a book in 2016, JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook, comparing the bank to the Gambino crime family.
Fed Extends Emergency Lending Programs by Three Months – WSJ – The Federal Reserve said Tuesday it extended by three months the operation of all of itsemergency lending programs that had been set to run through September to support economic activity during the coronavirus pandemic. In a statement, the Fed said that the extension of the programs, through Dec. 31, would “facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover.” The Fed announced nine lending programs when the pandemic roiled the U.S. in March. One of those programs had already been extended to run through Dec. 31, while a second is set to last until next March. On Tuesday, the Fed and Treasury Secretary Steven Mnuchin agreed to extend all of the others. All five Fed board members voted to extend the programs. The extensions weren’t surprising given the amount of work and time that has gone into rolling out the programs and the persistence of the coronavirus pandemic. When policy makers announced the programs in March, analysts hoped the virus might be brought under control by the summer. But accelerating virus infection rates this summer suggest the economy will face a more uncertain and potentially prolonged downturn. The programs serve two main functions. A few are playing a classic lender-of-last-resort function, allowing the Fed to flood short-term funding markets – the plumbing of modern finance – with loans. Those programs have seen sustained declines in demand over the past two months, reflecting how severe funding strains have been tamed for now.
Fed’s Powell makes case why Congress should relax bank capital rule – – If Congress provides temporary relief from a key bank capital rule as part of the next stimulus package, banks would be able to grow their balance sheets and better serve their customers amid the global pandemic, Federal Reserve Chair Jerome Powell said Wednesday. Senate Republicans are considering whether to ease the so-called Collins amendment in their $1 trillion Health, Economic Assistance, liability Protection and Schools Act to give the Fed the authority to adjust the Tier 1 leverage ratio for banks. The amendment was included in the 2010 Dodd-Frank Act to help strengthen large banks’ balance sheets. “Many, many bank regulators around the world have given leverage ratio relief,” Powell said at a news conference following a meeting of the Federal Open Market Committee. “What it’s doing is allowing [banks] to grow their balance sheet in a way that serves their customers.” That Collins amendment imposed a fixed risk-based capital floor, but some bank regulators have suggested that provision is straining banks’ ability to handle an influx of deposits in the stressed economic environment. Those deposits cause “banks run up against their leverage ratio, which is a non-risk sensitive measure just of the amount of assets on the balance sheet,” Powell said. The Fed in April sought to address that problem by temporarily allowing banks to exclude Treasury securities and deposits held at Federal Reserve banks from the calculation of their supplementary leverage ratios. Congress already tweaked the Collins amendment in 2014, clarifying that it does not apply to insurance companies. But Fed Vice Chairman for Supervision Randal Quarles has urged lawmakers to go even further to enable the Fed to lower the statutory capital floor. “Congress has amended … [the Collins amendment] before, recognizing the complications it presents in tailoring a capital regime to a diverse financial sector and to changing risks in the financial system over time,” Quarles said in an April 22 letter to Senate Banking Committee Chairman Mike Crapo, R-Idaho. Powell added Wednesday that any statutory change should be temporary. There is also no guarantee that the Fed would use such authority from Congress to relax the capital rule, he said. “If Congress chooses to do this, we would want it to be explicitly temporary,” said Powell. “This will not be a permanent change in capital standards.” Some banking trade groups like the Bank Policy Institute have been urging Senate Republicans to revise the Collins amendment. But proponents of the Dodd-Frank Act have expressed concern that easing bank capital requirements could pose a risk to financial stability.
PPP forgiveness plan leaves bankers wanting – Paycheck Protection Program lenders should circle Aug. 10 on their calendars. It’s the date the Small Business Administration expects to launch its long-awaited portal through which lenders will seek approval of their PPP-loan forgiveness decisions, according to a procedural notice issued by the agency Thursday. The SBA plans to email instructions for using the portal to lenders before the launch, the document says. Lenders will be able to electronically submit applications individually, or in batches using an application programming interface that will be made available on the portal. Neither the SBA nor Goldschmitt-CRI, the Reston, Va., contractor hired to help construct the forgiveness platform, immediately commented Friday. A number of trade groups, including the American Bankers Association, Consumer Bankers Association and National Association of Federally-Insured Credit Unions, said Friday they were still reviewing the document. The SBA released its initial forgiveness application May 15 and followed up with a shorter version about a month later. Until the procedural notice, the agency had neither explained how lenders could transmit completed applications to the agency, nor indicated how closely they were expected to review them. The SBA’s instructions make it clear that calculating how much of a loan can be forgiven is the borrower’s responsibility – either on the longer SBA Form 3508 or the shorter 3508EZ. At the same time, the instructions state lenders “are expected to perform a good-faith review in a reasonable time” of the borrower’s calculations and supporting documents. The SBA allows lenders 60 days to review applications. It says it will provide payment within 90 days of receiving a forgiveness application that it approves. The procedural notice states the lender is responsible for notifying the borrower of any forgiveness amount the SBA remits. If a lender denies a borrower’s forgiveness application, the borrower has 30 days to appeal. Once a lender receives an appeal, it has five days to transmit it to the SBA.
Banks call on Congress to freeze new ILC approvals – Banks and consumer advocates are pushing for Congress to use coronavirus stimulus legislation to block the Federal Deposit Insurance Corp.’s approval of industrial loan company charters. The Bank Policy Institute, Independent Community Bankers of America and the Center for Responsible Lending wrote to the heads of the Senate Banking and House Financial Services committees Wednesday, calling on them to include a three-year moratorium on regulatory approvals for ILCs in the next coronavirus relief package. ILCs are federally insured banks that can be owned by commercial firms that in turn do not have to register as bank holding companies. They have drawn interest lately from companies seeking charter options – such as fintechs – that do not want to operate full-service banks. Square was recently approved for an ILC by the Federal Deposit Insurance Corp., but other bids are pending from Rakuten and the parent company of Edward Jones. But the two banking trade groups and the Center for Responsible Lending echoed longstanding industry concerns that the charter gives firms a way into the banking system while avoiding regulatory requirements. “While enactment of legislation to permanently close the loophole is preferable, this intermediate action will give Congress the time necessary to approve an appropriate legislative framework,” they said. The proposed moratorium is similar to a temporary freeze on ILC decisions that was included in the 2010 Dodd-Frank Act. “Congress should not abdicate its duty to address the ILC loophole and allow bank regulators to decide the fate of our banking system,” the groups wrote. The letter comes after three banking trade groups wrote to the FDIC last month in opposition to the ILC application from the Japanese tech giant Rakuten. Rakuten first applied for an ILC charter last year, before withdrawing this past March and reapplying in May. The policy question on whether commercial firms should be able to own ILCs has been looming for decades, and received the most attention just before the financial crisis when Walmart sought a charter in 2005. The retailer’s bid drew a storm of opposition from banks and others that said a Walmart-owned bank would cross the traditional line separating banking and commerce. The application stalled and Walmart ultimately withdrew.
Nonbanks face new disclosure rules on small-business loans in N.Y — New York is on the verge of becoming the second state in the nation behind California to require greater transparency from nonbank lenders making small-business loans. This week the New York State Senate and Assembly passed twin bills that call for fintechs and other nonbanks to disclose metrics on each loan such as total cost of capital, the estimated annualized percentage rate and the total repayment amount including the finance charge.The point of the bill is to allow borrowers to compare multiple offers when shopping for loans. The online lenders Kabbage and OnDeck Capital applauded New York’s passage of the legislation. Both companies are members of the Innovative Lending Platform Association, a four-year-old group of online lending and service companies that helped draft the legislation. According to Sam Taussig, head of global policy at Kabbage, the intent of the bill is to give small businesses access to a uniform pricing-comparison model. Kabbage, like all members of the association, already discloses rate and total cost metrics to small-business customers seeking loans. “They can have an apples-to-apples experience when comparing products,” Taussig said. The bill, which does not apply to banks and credit unions, covers specific commercial lending products such as sales-based financing, closed-end financing and open-end financing. Supporters say it is especially crucial at this time as small-businesses are struggling to stay afloat in the pandemic economy. OnDeck’s head of government relations, Patrick Cuff, said the legislation aligns with the firm’s purpose of providing small businesses with “efficient, accessible and transparent capital.” “I think it’s about being a transparent actor and providing customers with clear and concise information about what the terms of the product will be,” he said. Similar legislation was signed into law two years ago in California, which at the time was the first state to require small-business lenders to make standardized interest rate disclosures. But regulators in that state have not yet finalized rules that determine how disclosures will be made.
Small-business owners are leaning on credit cards to survive – For more than one-third of the owners of small U.S. businesses, keeping their ventures alive during the coronavirus pandemic is coming at a high personal cost. As the American economy faces an unprecedented contraction and COVID-19 deaths top 150,000, the debate over reopening states has hinged in some quarters on how to balance protecting lives and livelihoods. Government loans through the Paycheck Protection Program have helped support some businesses, but the accumulating months of reduced revenue are forcing entrepreneurs to buoy their own businesses with their personal assets and credit. Many have already succumbed. “People have really put their livelihoods on the line here. I think they feel really responsible, too – that they’ve already put in so much blood, sweat and tears, and they don’t want to see it fail,” said CreditCards.com analyst Ted Rossman. Seven in 10 small-business owners say they’ve used some form of support for their business since March, according to a new CreditCards.com survey. The most common option was PPP loans, with 30% of respondents saying they received one, followed by 24% saying they turned to personal credit cards and business savings accounts. In total, 35% of owners used either personal credit cards or savings accounts, with 10% using both, to support their business. This personal funding has further blurred the line between personal and business finances. Small businesses that bring in less than $1 million annually typically need the owner to personally back the debt, meaning they’re responsible if the company can’t pay, Rossman said. This leaves entrepreneurs on the hook for the risk, even if it’s in the name of their business. While this has always been the case, the pandemic has intensified the personal financial risk to small entrepreneurs. Now, small-business owners are looking to customers to help them out: Some 32% of respondents said they need sales to increase for them to stay afloat this year. About one in five said they would need government assistance – a $669 billion federal relief program has doled out funds, and more money is being considered. More than half of respondents say they won’t survive long past the new year without additional support. Looking ahead, small businesses face high degrees of uncertainty as the rules for reopenings shift under their feet. Additionally, the economic brunt of the shutdown is coming down disproportionately on African American-run businesses. On the big-business scale, more than 140 companies have declared bankruptcy. “It’s going to be hard to get more customers when people are worried about their own finances and health,” Rossman said. “I tend to think that this one is going to be a longer fix, not a shorter one, unfortunately.”
Sens. Warren, Schatz press Wells Fargo on forbearance practices – Two Senate Democrats are seeking details from Wells Fargo about news reports that the bank has been placing borrowers into mortgage forbearance programs without their consent. Sens. Elizabeth Warren of Massachusetts and Brian Schatz of Hawaii wrote to Wells Fargo CEO Charlie Scharf on Thursday requesting more information about an NBC News report from earlier this month that said the bank was placing borrowers who had fallen behind on their mortgage payments were placed into forbearance programs without their knowledge, potentially damaging their credit reports. The report said that borrowers in 14 states told courts or NBC News that they were forced into forbearance plans without being asked. The senators say they are concerned that the bank is putting consumers at risk of greater financial hardship in the midst of the coronavirus pandemic. “Wells Fargo’s history of taking actions without the consent of consumers is cause for serious concern that this is another systemic failure at the bank,” the senators wrote. “Indeed, if these reports are true, they represent one more addition to a long list of inexcusable actions by Wells Fargo at customers’ expense.” Wells acknowledged in a statement to NBC News last week that “misinterpreted customers’ intentions” in some cases. “In those limited cases,” the statement continued, “we are working directly with customers to ensure they are receiving the assistance they need and make any corrections to their accounts that may be required.” The news reports suggest that the bank wrongly claimed that borrowers asked to pause their mortgage payments in bankruptcy filings. Because of the way that loan servicers are compensated for forbearance, the senators say, “it is possible” that Wells Fargo profited from the alleged faulty forbearance. Specifically, the senators are asking the bank about circumstances in which it would place a consumer who is not delinquent on mortgage payments in forbearance, and how the bank notifies consumers if their mortgages were placed in forbearance. They are asking how the bank reports information to the credit bureaus for consumers who have been placed in forbearance. They are also asking how they bank has been compensated for forbearance filings that were not requested by borrowers, and how it handles funds for borrowers who continue to make payments while their loan is in forbearance. Wells Fargo has been placed under a growth cap by Federal regulators over a series of scandals, including the opening of millions of accounts without consumers’ consent. But the Federal Reserve announced in April that the bank can make additional loans to small businesses through the Small Business Administration’s Paycheck Protection Program and the Fed’s Main Street Lending Program that will not count against the cap. “But this recent reporting highlights the broken culture at the bank, and the need for Wells Fargo to remain under intense regulatory scrutiny until it is clear that the necessary changes have been made to ensure that the bank is truly committed to its consumers,” the senators wrote.
BankThink: Lenders shouldn’t waver on monitoring early payment defaults – The Federal Housing Administration’s temporary waiver of its required monthly early payment default quality control reviews was a welcome concession to the unique circumstances lenders and borrowers are facing during the coronavirus pandemic. However, other factors indicate that EPDs still pose risk for lenders in the months to come and should, therefore, be closely monitored. The primary reason for the FHA’s waiver is clear: The agency feels current quality control (QC) review efforts will be expended on something blatantly obvious, as the vast majority (though not all) of EPDs during this period are related to the pandemic. In issuing its temporary waiver, the FHA noted the financial issues borrowers are experiencing as a result of the coronavirus, rather than any failure by lenders to comply with its single-family origination and underwriting requirements, as a potential cause for the recent spike in EPDs. Furthermore, the FHA also cited the mortgage relief options provided by the coronavirus relief bill as a potential trigger for EPD “false positives.” Thus, the agency opted to waive its loan-level QC requirement for EPDs from May through July. It has not been extended. While the FHA’s waiver is certainly the most generous guidance issued regarding EPDs, it is not the only federal mortgage-related agency to do so. Freddie Mac temporarily altered its requirements to allow lenders to sample EPDs through the end of June, rather than performing a 100% review per its usual requirement. Although Fannie Mae has only made a passing reference to lenders’ EPD review efforts in relation to discretionary sampling, it has announced that it will be increasing its review of EPDs, thus signaling an increased awareness on its part of the increase in EPDs. However, the key word lenders must keep in mind regarding these communications from the FHA and the GSEs is “temporary.” July was the last month in which FHA-approved lenders are not required to conduct QC reviews of their EPDs. While Freddie Mac didn’t extend its relaxed EPD sampling requirements beyond June, both it and Fannie Mae issued updates on July 1 to their joint COVID-19 Frequently Asked Questions – Selling document, which states that the GSEs will not issue automatic repurchase requests for loans entering EPDs status. Instead, the GSEs “will follow existing QC practices to review any sampled loan against the requirements of the Selling Guide and any other agreements in place at the time of delivery.” Given this response, it is safe to assume that, as far as the GSEs are concerned, it is business as usual regarding EPDs, and without explicit continuation of the temporary measures issued by the GSEs and/or FHA, lenders can expect to be on the hook for EPDs moving forward. What’s more, factors at work in the larger economic market only extend the risk of EPDs throughout the remainder of the year.
MBA Survey: “Share of Mortgage Loans in Forbearance Decreases for Sixth Straight Week to 7.74%” 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 Sixth Straight Week to 7.74%The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 6 basis points from 7.80% of servicers’ portfolio volume in the prior week to 7.74% as of July 19, 2020. According to MBA’s estimate, 3.9 million homeowners are in forbearance plans….”The share of loans in forbearance declined by a smaller amount than in previous weeks, as the pace of borrowers exiting forbearance slowed,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Although the GSE portfolio of loans in forbearance should continue to improve, Ginnie Mae’s portfolio saw an uptick of both loans in forbearance and borrowers requesting forbearance. The high level of unemployment claims in recent weeks may be playing a role, as weakness would likely impact Ginnie Mae’s portfolio first.” Added Fratantoni, “As a result of large buyouts from Ginnie Mae pools in recent weeks, many FHA and VA loans are now being held as portfolio loans by bank servicers. That is why the share of portfolio loans in forbearance has increased and is now typically at a higher level than that for Ginnie Mae loans.”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 six 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%. “
Census: Household Pulse Survey shows 26.5% Missed or Expect to Miss Rent or Mortgage Payment -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) PandemicThe U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey is designed to deploy quickly and efficiently, collecting data to measure household experiences during the Coronavirus (COVID-19) pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning. … Data collection for the Household Pulse Survey began on April 23, 2020. The Census Bureau will collect data for 90 days, and release data on a weekly basis. This will be updated weekly, and the Census Bureau released the recent survey results today. This survey asks about Loss in Employment Income, Expected Loss in Employment Income, Food Scarcity, Delayed Medical Care, Housing Insecurity and K-12 Educational Changes. 35.2% 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% five weeks ago. This might suggest the job gains stalled after the data was collected for the June employment report. 12.1% of households report food scarcity. This has increased over the last couple of weeks.40.1% of households report they delayed medical care over the last 4 weeks.26.5% 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. Essentially all households with children are reporting were not being taught in a normal format.
Freddie Mac: Mortgage Serious Delinquency Rate increased sharply in June, Highest in 7 Years – Freddie Mac reported that the Single-Family serious delinquency rate in June was 2.48%, up from 0.81% in May. Freddie’s rate is up from 0.63% in June 2019. This is the highest serious delinquency rate since October 2013. Freddie’s serious delinquency rate peaked in February 2010 at 4.20%. These are mortgage loans that are “three monthly payments or more past due or in foreclosure”. With COVID-19, this rate will increase significantly again in July (it takes time since these are mortgages three months or more past due).Mortgages in forbearance are being counted as delinquent in this monthly report, but they will not be reported to the credit bureaus.This is very different from the increase in delinquencies following the housing bubble. Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes – and they will be able to restructure their loans once they are employed.
US Pending Home Sales Soar In June… To Highest Since 2006! – After rebounds in new- and existing-home sales, pending home sales in June were expected to continue to surge (after screaming 44% higher MoM in May) and they did, rising 16.6% MoM (beating the 15.0% expectations) and sending the YoY sales number UP 12.7%… This is the biggest annual rise in pending home sales in over 5 years as mortgage rates hit record lows. “It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” Lawrence Yun, NAR’s chief economist, said in a statement. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.” And the pending home sales index is back at its highest since 2006… And in case you’re wondering why the housing market was able to bounce so quickly in the face of an historic shock which left 22 million people unemployed? Here BofA offers five explanations:
- An uneven recession: the shock disproportionally impacted the lower income population who are less likely to be homeowners. Consider that 55% of households earning less than $35K a year lost employment income vs. only 40% of those earning $75K and above. According to the NAR, the median household income of recent homebuyers is $93k.
- Record low interest rates: mortgage rates reached a new historic low last week. Average monthly mortgage payments have declined by $80/month relative to this time last year due to lower mortgage rates.
- Running lean pre-crisis: inventory was low, home equity was high and debt levels manageable. The homeowner vacancy rate reached the lows of the mid-1990s.
- Supportive fiscal and monetary policy: forbearance programs reduced potential stress from delinquencies – according to the MBA, 7.8% of all mortgages were in forbearance as of July 12, which amounts to 3.9mn homeowners.
- Pandemic-related relocations: moving to the ‘burbs is a real phenomenon. Take NYC – according to data from USPS, the number of mail forwarding requests from NYC spiked to more than 80,000 in April, 4X the pre-COVID-19 monthly pace.
HVS: Q2 2020 Homeownership and Vacancy Rates –McBride – The Census Bureau released the Residential Vacancies and Homeownership report for Q2 2020. It is likely the results of this survey were significantly distorted by the pandemic. See note from Census below. This report is frequently mentioned by analysts and the media to track household formation, the homeownership rate, and the homeowner and rental vacancy rates. However, there are serious questions about the accuracy of this survey. The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn’t use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.”National vacancy rates in the second quarter 2020 were 5.7 percent for rental housing and 0.9 percent for homeowner housing. The rental vacancy rate of 5.7 percent was 1.1 percentage points lower than the rate in the second quarter 2019 (6.8 percent) and 0.9 percentage point lower than the rate in the first quarter 2020 (6.6 percent). The homeowner vacancy rate of 0.9 percent was 0.4 percentage points lower than the rate in the second quarter 2019 (1.3 percent) and 0.2 percentage points lower than the rate in the first quarter 2020 (1.1 percent). The homeownership rate of 67.9 percent was 3.8 percentage points higher than the rate in the second quarter 2019 (64.1 percent) and 2.6 percentage points higher than the rate in the first quarter 2020 (65.3 percent). ” The Red dots are the decennial Census homeownership rates for April 1st 1990, 2000 and 2010. The HVS homeownership rate increased to 67.9% in Q2, from 65.3% in Q1. The HVS homeowner vacancy declined to 0.9%. From Census: As a result of the coronavirus pandemic (COVID-19), data collection operations for the CPS/HVS were affected during the second quarter of 2020. In-person interviews were suspended for the duration of the second quarter and replaced with telephone interview attempts when contact information was available. If the Field Representative was unable to get information on the sample unit, the unit was made a Type A non interview (no one home, refusal, etc).
“Like Nothing We’ve Ever Seen” – Imminent Eviction Wave Is Coming To These States – The eviction moratorium expired last Friday nearly four months after the US economy effectively shutdown due to the covid pandemic, and more than 12 million renters – all behind on rent payments because of the virus-induced recession – are now at imminent risk of getting booted to the curb. This Friday, some 25 million Americans will no longer receive their weekly $600 federal unemployment checks, and the next round of government handouts, currently discussed by Republicans and Democrats, could see benefits slashed from $600 to $200 (or be nothing at all if no deal is reached in Congress). This would crush household finances across middle-class America, resulting in an even higher number of households unable to pay their rent bill in the months ahead. That said, Trump’s top economic advisor Larry Kudlow, who has religiously pumped stocks with meaningless headlines any time the S&P is even barely in the red, recently said an extension for the eviction moratorium program could be seen. But what if there isn’t one?In late July, more than 31 million Americans collected unemployment benefits of some form. The economic recovery reversed in late June, as the next crisis among households looms. “It’s like nothing we’ve ever seen,” said John Pollock, coordinator of the National Coalition for a Civil Right to Counsel. In 2016, there were 2.3 million evictions, Pollock said.“There could be that many evictions in August,” he said. On Sunday, food bank lines reemerged as people’s benefits ran out. The number of jobless Americans is staggering and downright, depressionary, suggesting no labor market recovery this year or next. With a fiscal cliff unfolding, benefits set to run out, and a rebound in the economy reversing, Household Pulse Data from mid-July outlines an even gloomier rent crisis unfolding. The analysis is based on Household Pulse Data from mid-July and it found that some states will be hit harder than others. For example, West Virginia is estimated to have the highest share of renter households facing eviction at close to 60%. Tennessee, Minnesota, Mississippi, Florida and Louisiana are all among the states set to be worst impacted with shares at 50% or higher. Elsewhere, Vermont is the state where renters will be at the lowest risk of eviction, though 22% of them will potentially lose their homes over the course of the crisis. – Forbes Shown below (charted by Statista), here are the states where renters will be pressured the most.
Hotels: Occupancy Rate Declined 38% Year-over-year – From HotelNewsNow.com: STR: US hotel results for week ending 25 July: U.S. hotel performance data for the week ending 25 July showed slightly higher occupancy and room rates from the previous week, according to STR.
19-25 July 2020 (percentage change from comparable week in 2019):
Occupancy: 48.1% (-37.9%)
Average daily rate (ADR): US$99.24 (-27.3%)
Revenue per available room (RevPAR): US$47.75 (-54.8%)
U.S. occupancy has risen week over week for 14 of the last 15 weeks, although growth in demand (room nights sold) has slowed. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. As STR noted, the occupancy rate has increased week-to-week in “14 of the last 15 weeks”. The increases in occupancy have slowed and are well below the level for this week last year of 78%.
Google Postpones Employee Return till Mid 2021 as Office Buildings Remain Empty, Residential Delinquencies Soar – Yves Smith — Even though the Wall Street Journal published a story last week where employers whined that they were getting less productivity out of now far-flung workers, it does not appear that many major employers will be arm-twisting workers to come back to the office any time soon. The latest major sighting is Google’s announcement that it won’t be asking employees to come back to its campuses prior to July 2021. The Wall Street Journal attributes this decision in large measure to uncertainty about schooling: Google will keep its employees home until at least next July, making the search-engine giant the first major U.S. corporation to formalize such an extended timetable in the face of the coronavirus pandemic … . [CEO] Mr. [Sundar] Pichai was swayed in part by sympathy for employees with families to plan for uncertain school years that may involve at-home instruction, depending on geography. It also frees staff to sign full-year leases elsewhere if they choose to move. The comment about leases underscores a second issue: when Covid risk finally wanes, most employers will go back to the old normal. Execs feel more powerful and efficient when they manage by walking around and have in person meetings. But as we have said, that rollback looks to be a very long time coming. And business travel, will probably never revert to the old normal. Keeping highly paid workers at home, even in cities like New York City where Covid-19 risk has been tamed and mask-wearing discipline is high, does not bode well for the survival of restaurants and central-city small businesses. Again from the Journal:In New York, fewer than one-tenth of Manhattan office workers are back to the workplace, a full month after the city gave businesses the green light to reoccupy buildings vacated in March. “People are being rightfully careful,” said William Rudin, chief executive of Rudin Management Co. and head of one of New York’s most prominent real-estate families … .In New York City, only 8% of the employees who work in downtown office buildings managed by office colossus CBRE Group Inc. have returned from sheltering in place from the pandemic. The figure, as of last week, was based on unique card-swipes at security turnstiles. CBRE manages 20 million square feet of space in Manhattan.
Charting The Retail Devastation- Here Is The Stunning List Of US Store Closures In 2020 – While the US “bricks-and-mortar” retail industry was already on its deathbed before the covid pandemic struck with stories discussing the “retail apocalypse” as far back as 2015, the events in the past few months have simply accelerated a long-overdue process that would have taken several years to conclude with mass bankruptcies of corporate zombies coupled with tens of thousands of store closures.And so, unlike other sectors of the US economy which have – for now – avoided to be swept by the “biblical” default wave that is sweeping across the US corporate sector, amid temporary store closures as part of shelter-in-place measures, Goldman calculates that the announcement (and completion) of permanent store closures YTD (~7,430) has already reached more than half of 2019 figures (~12,370) due to slowing/declining sales growth, leveraged balance sheets, and rising occupancy costs.It’s only going to get worse: according to Coresight Research, around 20,000-25,000 stores could permanently close in 2020 on COVID-19 headwinds in the US, implying an accelerated store closure schedule in the second half of the year. Further, it expects to see an increase in bankruptcy filings owing to reorganizations or difficulties with financing activities amid the current pandemic.Meanwhile, as some retailers are experiencing a surge in digital volumes, pure-play eCommerce companies like Amazon continue to benefit from greater access to consumer data and purchase history that enable compelling consumer experiences and also deliver efficiency and competitive benefits through advertising, product recommendations, and dynamic pricing. This is also why Goldman believes that eCommerce growth will accelerate over the course of the second half amid social distancing measures, record number of retail store closures, investments in fulfillment by Amazon, and increasing tech investments by traditional retailers. Not surprisingly, with apparel & accessories continuing to record large share of store closures as shown in the charts above and below, Goldman which just upped its price target on Amazon to $3,800, believe the online retail giant will be the primary beneficiary considering this segment already sees >20% online penetration.
Dying Restaurants Are Rushing To Liquidate Assets On Facebook Marketplace (pictures of dozens of ads included) The restaurant industry is in collapse. More specifically, small restaurants have been crushed by the virus-induced recession. We’ve noted at least half of the restaurant closures on Yelp are now permanent. The National Restaurant Association has determined that at least 15% of all restaurants will close. This number could be a lot higher at the end of the year as Goldman Sachs reports the economic recovery is now reversing. Small restaurant operators, who fear a double-dip recession, have now resorted to liquidating their eateries on Facebook Marketplace. A simple search of “restaurant” on Facebook Marketplace, within 80 miles of Trenton, New Jersey, comes up with dozens and dozens and dozens of mom and pop eateries that are trying to get out of the game. Another search on the social media marketplace for “restaurant” around the Baltimore – Washington metropolitan area shows even more small business operators are calling it quits. Here’s Miami, Florida… Here’s Denver. Small restaurant owners in San Diego, California, are trying to sell their eateries on Facebook Marketplace. Here’s the Bay Area in California. Elsewhere in California… The volume of small restaurants trying to liquidate on Facebook Marketplace is so massive that we weren’t able to show the complete disaster unfolding across America. To sum up, there’s no V-shaped recovery this year – the administration has no plan to revive economic growth except for bailing out Wall Street that has angered Tea Party Republicans. The country is imploding from within – all the Trump administration cares about is optics ahead of the election and the stock market.
Consumer Spending Rose 5.6% in June – WSJ -U.S. consumers increased spending a solid 5.6% in June but appear to have pulled back since then, restraining the economy’s recovery from the coronavirus outbreak. Spending rose for the second consecutive month after steep declines in the spring during widespread lockdowns to contain the pandemic, the Commerce Department said Friday. Consumers shelled out more for clothing, health care and restaurant visits in June compared to the prior month – categories that had been particularly hard hit earlier in the pandemic. Meanwhile, household income fell 1.1% in June, as layoffs remained high and the effects of federal stimulus payments eased. Income – which includes salaries, government aid and investment returns – influences Americans’ willingness and ability to spend in coming months.Household spending reflects two-thirds of economic demand in the U.S. Americans’ spending will help determine the economy’s path in the coming weeks and months. A sharp drop in spending – tied to business closures and fears of the virus – was the biggest reason the U.S. economy contracted at a record rate in the second quarter.June’s spending growth wasn’t large enough to make up for the sharp drop in spending earlier this spring. Compared with February, ahead of the pandemic, spending for the month was still down by 7%.While household incomes dipped last month, income was 4% above the level in February, in part due to the stimulus payments and enhanced unemployment benefits.The data show many households are stashing away money instead of spending it, which strengthens their position financially but restrains the economy’s ability to dig out from the severe recession. The personal savings rate fell last month but remained exceptionally high historically at 19.0%, more than double the February level of 8.3%. The extra unemployment benefits that have pumped billions of dollars a week into workers’ pocketbooks will expire at the end of July without action from Congress.
US Personal Spending Rebound Continues Despite Sinking Incomes – US Personal spending and income habits are hard to decipher amid the massive government transfers and pent-up (and bought-forward) demand of various items – with spending plummeting and incomes soaring – and June pushed that even further with incomes falling 1.1% MoM, worse than the expected 0.6% drop; and spending rising 5.6% MoM (better than expected 5.2% and off a revised higher May). On a year-over-year basis, incomes remain higher (government transfers) and spending lower… Graphs: Bloomberg Government workers saw income losses accelerate as private sector workers saw their income losses rebound somewhat – both still down hard YoY… How long will this last as the $600 government handouts to stay home evaporate? The brief ‘forced’ savings is starting to disappear… Finally, The Fed’s favorite inflation indicator – the Core PCE Deflator – rose by a smaller than expected 0.9% YoY, stuck at its weakest since 2010.
Consumer Confidence Down in July — The headline number of 92.6 was a decrease from the final reading of 98.3 for May. Today’s number was below theInvesting.com consensus of 94.5. “Consumer Confidence declined in July following a large gain in June,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index improved, but the Expectations Index retreated. Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of COVID-19. Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects. Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending.” Read more The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
Michigan Consumer Sentiment: July Final Sinks Further – The July Final came in at 72.5, down 5.6 from the June Final. Investing.com had forecast 73.0.Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer sentiment sank further in late July due to the continued resurgence of the coronavirus. In the last four months, the Sentiment Index has remained trendless, averaging 73.7, a decline of 25% from the same period in 2019. The Expectations Index fell back to 65.9 in July, tied with the six-year low recorded in May, providing no indication that consumers expect the recession to end anytime soon. While the 3rd quarter GDP is likely to improve over the record setting 2nd quarter plunge, it is unlikely that consumers will conclude that the recession is anywhere near over. The federal relief programs have prevented more substantial declines in consumer finances, partially shielding consumers from the unprecedented surge in job losses, reduced work hours, and salary cuts (see the chart). The lapse of the special jobless benefits will directly hurt the most vulnerable and spread even further by missed rent, mortgage, and other debt payments. Easing off the added jobless benefit will naturally result with job growth as well as provide for a delayed and gradual reduction in added benefits so that its eventual absence is much less disruptive. [More…] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
Visa Profit Falls on Lower Payments Volume – WSJ – A drop in payments activity pushed Visa Inc. V -0.09% earnings down 23% in the quarter that ended in June. The largest U.S. card network said payments volume fell 10% from the year-earlier period. Credit-card payments volume dropped 20%. Debit-card payments volume rose 3%. “All of the business drivers were significantly impacted by the pandemic,” Visa Chief Executive Alfred Kelly said on a call with analysts Tuesday afternoon. The company declined to provide an earnings outlook for the remainder of the fiscal year, citing “significant uncertainty in the global economy” caused by the coronavirus pandemic. Still, Visa said U.S. payments activity “meaningfully improved” each month of the quarter, and spending picked up globally throughout the quarter. Suppressed travel activity helped push cross-border transactions, excluding those within Europe, down 47% in the quarter, Mr. Kelly said. Net income fell to $2.4 billion from $3.1 billion. Revenue dropped 17% from the year-earlier period to $4.8 billion, matching analysts’ estimates.
‘Recovery’ Hopes Fade As US Wholesale Inventories Unexpectedly Plunge In June -June was supposed to be the month of second-derivative beats in economic data, reaffirming the manic bid in stocks. For Wholesale Inventories it was not. Against expectations of a rebound from a 1.2% drop in May to a 0.5% drop in June, wholesale inventories actually tumbled 2.0% MoM, the worst since the peak of the great financial crisis… On a YoY basis, wholesale inventories are down 6.1%, less than at the peak of the great financial crisis… Graphs: Bloomberg Specifically, Durable Goods inventories fell 2.1% MoM (worsening from June) and Non-durable goods inventories dropped 1.7% MoM (vs unchanged in May). Motor Vehicle & Parts Dealers inventories fell 6.8% MoM. Retail inventories also tumbled 2.6% MoM in June (but that did slow the collapse from May). And this data has a direct impact on GDP, suggesting the hoped-for recovery is far from certain… and in fact may be getting worse.
Richmond Fed: “Manufacturing in the Fifth District showed signs of recovery in July” –From the Richmond Fed: Manufacturing in the Fifth District showed signs of recovery in July Manufacturing in the Fifth District showed signs of recovery in July, according to the most recent survey from the Richmond Fed. The composite index rose from 0 in June to 10 in July, its first positive reading since March, buoyed by increases in all three components. The indexes for shipments and new orders suggested expansion, while the third component index – employment – remained slightly negative. The local business conditions index rose further, suggesting some improvement in sentiment. Survey respondents were optimistic that conditions would improve in the next six months. This was the last of the regional Fed surveys for July. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
Chicago PMI Bounces Back in July, Out of Contraction Territory – The Chicago Business Barometer, also known as the Chicago Purchasing Manager’s Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.The latest Chicago Purchasing Manager’s Index, or the Chicago Business Barometer, rose to 51.9 in July from 36.6 in June, which is in expansion territory after 10 consecutive months in contraction territory. Values above 50.0 indicate expanding manufacturing activity.Here is an excerpt from the press release:The Chicago Business BarometerTM, produced with MNI, rose to 51.9 in July, the highest level since May 2019. Business activity recovered following twelve consecutive months of readings below 50. Nevertheless, companies noted continued uncertainty amid the ongoing Covid-19 crisis.Among the main five main indicators, New Orders and Production saw the largest monthly gains, while Supplier Deliveries eased. [Source] Let’s take a look at the Chicago PMI since its inception.
U.S. Orders for Long-Lasting Goods Gained in June – WSJ – Orders for long-lasting U.S. factory goods rose in June as the economy continued its climb back from disruptions related to the coronavirus pandemic, though a summer surge in virus infections could damp future gains.New orders for durable goods – products designed to last at least three years – increased a seasonally adjusted 7.3% in June from the previous month, the second consecutive monthly gain, the Commerce Department said Monday. Economists surveyed by The Wall Street Journal had expected orders to rise 5.4%.The auto sector was a big driver. New orders for motor vehicles and parts jumped 85.7% from the previous month.Underlying figures were more modest. New orders for nondefense capital goods excluding aircraft – a closely watched proxy for business investment – rose 3.3%.Even with two consecutive monthly gains, demand remains well below prepandemic levels. Overall, new orders last month were 15% lower than in February, and core capital orders were down 3%. “The manufacturing sector remains exposed to weak demand, which will impact investment and hiring decisions going forward,” .Manufacturers were already caught up in trade disputes between the U.S. and China. The coronavirus pandemic was another blow, further disrupting supply chains while forcing some plants to suspend production and implement new safety measures. It isn’t clear how robust growth will be in coming months. Factories haven’t been as exposed to social-distancing mandates that, for example, forced restaurants and salons to temporarily close and later limited the number of customers. Separate data out last week suggested that factory activity continued to grow into July. A survey of purchasing managers from data firm IHS Markit last week found that overall U.S. manufacturing output expanded for the first time since February as new orders ticked up.
Rough Ride for Airlines – Full Recovery Moved to 2024: IATA – Globally and industry-wide, a measure of business for airlines, “revenue passenger-kilometers” (RPKs), in June was still down -86.5% compared to June last year, but a smidgen less bad than in May (-91.0%), according to the IATA’s newly released analysis. By comparison, during the six months following the 9/11 attacks – “considered to be the most severe aviation crisis prior to 2020” – revenue-passenger kilometers declined by 12% (the next three charts below via International Air Transport Association, available on IATA Economics). Passenger volume. Worldwide, the recovery, so to speak, occurred mostly in domestic air travel, which in June was down -67.6% compared to June last year, an improvement from May (-78.4%). But international air passenger volume in June was still down -96.8% from June last year, and only a minuscule 1.5 percentage points up from May (-98.3%), which had been as close to zero traffic as you can get without actually reaching zero. International flights have been handicapped by travel restrictions many countries have still in place. Even if people wanted to fly to some distant destinations either on business or vacation, they might not be able to, or would have to subject themselves to long quarantine periods, coming and going, making shorter trips practically impossible. The number of flights on domestic routes worldwide rose in June and into July but remained down by about half from January pre-Covid. The number of flights on international routes ticked up in late June and into July as the EU’s Schengen Area lifted border-crossing restrictions, but remained dreadfully low: By country, the number of domestic flights recovered more in some countries than in others. In Russia, local carriers resumed all of their domestic flights in June, and in terms of the number of flights, air traffic by mid-July was nearly back to normal (yellow line). Chinese airlines started to add domestic flights in late March, but then renewed outbreaks occurred, which has put the recovery of flights into a holding pattern since May. US airlines were adding flights in May and June for summer travel season (red line): Industry-wide capacity has been slashed radically starting in February, as airlines tried to grapple with the collapse in air-travel demand. Then, from the low in April, airlines started to add some capacity. In June, industry-wide capacity, as measured in available seat-kilometers (ASKs) was still down -80.1% from June last year, but a slight improvement from May (-86%).
Delta flight forced to turn around after passengers refused to wear masks – Two passengers on a Delta Airlines flight from Detroit to Atlanta last week refused to wear masks, forcing the plane to return to the gate, a Delta spokesperson said.Flight 1227 returned to the gate at Detroit Metro Airport on July 23 because the two “were non-compliant with crew instructions,” WXYZ reported.The plane eventually left for Atlanta after a short delay. It’s unclear if the pair were banned from the airline for refusing to wear masks.Delta’s COVID-era policies are among the most stringent among US-based airlines.Last month, the airline announced that it will require medical screenings for passengers who can’t wear face masks due to health concerns. Delta also insists on pre-departure medical screenings along with its COVID-era public health protocols.
Boeing Posts Massive Loss, Burns $5.3 Billion As Aircraft Production Slows And Debt Explodes — Boeing reported another dismal quarter, helping the company emerge as one of the companies most directly impacted by the global covid pandemic. For the second quarter Boeing, which said that results are still significantly impacted by Covid-19, reported a 25% drop in revenue to $11.81, badly missing estimates of $12.99 and leading to a $2.4 billion net income loss which translated into a $4.79 loss per share, which while better than the $5.21 per share loss a year ago, was far worse than the $2.54 loss expected… … as a result of a “slow, uneven” business environment recovery, with defense, government service operations providing stability, but not enough and forcing the company to raise (a lot) of additional debt to bolster liquidity. As a reminder, Boeing’s best-selling plane, the 737 Max, has been grounded since March 2019 following two fatal crashes. Regulators aren’t expected to clear the planes to fly again before the fall. Separately, the pandemic has driven up financial losses at Boeing’s airline customers and hurt demand for new planes, though Boeing was in crisis even before coronavirus spread around the world. The company confirmed plans to slow production of its main commercial aircraft as the coronavirus pandemic hurts demand for new planes and its best-selling 737 Max jets remain grounded. Boeing said it would further cut 787 production to just six per month in 2021, the production rate of the 777/777x will be gradually cut to 2 per month in 2021, while it gradually increases manufacturing of its 737 Max to 31 a month by the beginning of 2022, compared with plans to do so next year.
Caterpillar North America Machine Sales Crash Most Since The Financial Crisis – Earlier today, heavy machinery giant Caterpillar which has been hit hard by the collapse in global industrial activity, reported earnings which came in a bit above sharply reduced expectations, thanks to aggressive cost-cutting efforts (read mass layoffs) which helped the company make up for slowing sales: total operating costs were 25% lower, the company said Friday in an earnings statement released before regular trading hours. The numbers outside of costs were dismal: sales fell across the company’s segments, with dealers slashing inventories by $1.4 billion signaling a market that remains glutted with equipment. And while Caterpillar declined to provide forward guidance, it sees a similar percentage decrease in end-user demand in the third quarter, and expects dealers to cut stockpiles by more than $2 billion for the full year. “Unfavorable price realization also contributed to the sales decline due to the geographic mix of sales and competitive market conditions in China,” the company said. “Sales were lower across all regions and in the three primary segments.” And while the earnings were enough to help push the stock higher premarket, it has since slumped into the red after the company unveiled its latest global retail sales data, which showed that despite a modest, 7% increase in Asia-Pac sales, which rose for the first time since April 2019, it was the continued crash in global sales which tumbled by 23% Y/Y for the second month in a row, the biggest decline since 2010. More striking however was the devastation in North American (read US and Mexico) sales, which plunged by a near record 40%, the biggest monthly drop since the financial crisis.
Hertz Has To Sell 182,000 Cars By 2021 – Two months after filing for bankruptcy protection, Hertz finally has a plan in place to attempt to stay afloat until 2021. To appease lenders and maintain future business, it will unload nearly 200,000 of the manufacturer’s total leased vehicles, numbering under 500,000.The long-awaited bulk sale of 182,521 cars will take place over the course of the rest of the year, with a deadline set for December 31st, in order to fund an agreed $650 million in other lease-related debts. The number is a step up from the 144,000-car shedding Hertz had proposed last month, but leaves the company with a large enough fleet to maintain a viable business when it emerges from bankruptcy into a world that will, hopefully, involve enough routine travel for rental cars to be a viable business enterprise.The deal is a direct result of a more positive used car market than the one Hertz had previously faced when it announced its filing in May. The market will allow the rental giant to recoup more of its losses than it had previously expected, which seems to have been the sticking point for lenders approving the deal.That same market, however, could look very different by the end of the sale period, thanks in no small part to the potential market flooding of 182,000 former rental cars hitting the market with a requirement to be sold in a specific time period.While no specifics were offered about which portion of the Hertz fleet will be sold, earlier sales this year have included a wide range of low mileage C7 Corvette Z06 options, as well as two of the unique-to-Hertz, 750 horsepower Camaro ZL1s.
US Major League Baseball season roiled by COVID-19 postponements –Just four days after beginning a truncated coronavirus-delayed season, Major League Baseball (MLB) ran into a serious obstacle on Monday with the postponement of two scheduled games due to a COVID-19 outbreak among Miami Marlins players. The postponement of the games in Philadelphia and Miami was a potentially ominous development for MLB and other major professional sports leagues in the United States and Canada hoping to forge ahead during the pandemic. The National Basketball Association (NBA) and National Hockey League (NHL) are set to resume play this week after a hiatus of more than four months, while National Football League (NFL) training camps are opening. While it was unclear whether the MLB season has been placed in jeopardy, some public health experts urged the suspension of play. MLB Commissioner Rob Manfred has not specified the conditions under which he would consider such action. “They need to suspend games, do aggressive contact tracing, and see how bad this outbreak is,” Dr Ashish Jha, director of the Harvard Global Health Institute, wrote on Twitter. “I don’t know if MLB can resume the season. But, without aggressive action and vigilance, there is little hope we’ll see more baseball without more outbreaks.” MLB Commissioner Rob Manfred has not specified the conditions under which he would consider such action. He told the MLB Network on Monday that the health of the players and their families was the league’s “first concern.” “We’ve been fortunate so far, we’ve done tens of thousands of tests – our positive rate has been four-tenths of a percent. So we feel like the protocols have worked pretty well,” Manfred said. “We’re doing some additional testing, if the testing results are acceptable the Marlins will resume play in Baltimore on Wednesday against the Orioles.”
Are baseball’s virus problems a bad omen for America? — If baseball is any indication, our country is striking out against the coronavirus.Everyone was thrilled to see the shortened season finally get under way, and within days it’s in jeopardy.Is that an unfortunate metaphor for America’s effort to reopen the economy while keeping people safe? Given the summertime surge in the virus, was the notion that professional athletes could safely compete on the diamond, even without fans in the stands, just an illusion?What’s chilling is that the nation’s schools are grappling with momentous decisions on whether to reopen their doors or stick with virtual learning. This is hardly an exact analogy: Very young children are less susceptible to the disease, but the magnitude of dealing with thousands of schools across 50 states dwarfs that of one professional sport. And if one or two students, teachers or staff members gets Covid-19, that school would face the prospect of fully or partially shutting down–precisely the dilemma facing Major League Baseball today. Governors who are now mandating masks, reimposing restrictions on bars and requiring out-of-state travelers to quarantine are struggling with the same thorny questions. With half the Miami Marlins testing positive for the virus–at least 14 players and staffers, according to ESPN–that team has had to cancel its home opener in a state hard hit by the pandemic. The team has been stranded in Philadelphia. And since the Marlins were playing the Phillies, which had seven players test positive a month ago, the Pennsylvania team had to cancel its Monday game against the Yankees. Both teams have had their seasons suspended through Thursday. This is the virulence of the virus. One player might have gotten it from a family member, or another player, and the infection quickly spreads.
Gov. DeWine wants 10 p.m. last call for all Ohio bars, restaurants – All Ohio bars and restaurants would stop alcohol sales at 10 p.m. under an emergency order the Ohio Liquor Control Commission is to vote on Friday at the urging of Gov. Mike DeWine.Patrons already served would have to consume their drinks by 11 p.m. under the order aimed at slowing transmission of Covid-19.”We do not want to shut down Ohio bars and restaurants. That would be devastating to them,” DeWine said at Thursday’s coronavirus briefing. “We do have to take some action.”Stopping the sales at 10 o’clock is going to help thin crowds.”If it is approved and takes effect Friday, the order does not change closing times. Alcoholic beverages still can be part of takeout orders.A state order would in part accomplish the goal of a Columbus ordinance approved Monday to close bars and restaurants at 10 p.m. Implementation is put on hold for at least two weeks as part of a pending lawsuit.Ohio hit a new daily record of new confirmed cases with 1,733 reported Thursday. Nine of the 10 highest one-day reports have come in the past three weeks, DeWine said. That comes a day after the state’s current number of patients hospitalized with Covid-19 surpassed the peak in April – and hospital admission typically lags onset by more than a week.
Weekly Initial Unemployment Claims increase to 1,434,000 –The DOL reported: In the week ending July 25, the advance figure for seasonally adjusted initial claims was 1,434,000, an increase of 12,000 from the previous week’s revised level. The previous week’s level was revised up by 6,000 from 1,416,000 to 1,422,000. The 4-week moving average was 1,368,500, an increase of 6,500 from the previous week’s revised average. The previous week’s average was revised up by 1,750 from 1,360,250 to 1,362,000 The previous week was revised up.This does not include the 829,697 initial claims for Pandemic Unemployment Assistance (PUA).The following graph shows the 4-week moving average of weekly claims since 1971.
$600-per-week jobless benefit expires for 20 million US workers – Sunday, July 26 marked the beginning of the first week in which 20 million American workers are deprived of a $600-per-week federal supplemental unemployment benefit that has served as a lifeline under conditions of Depression-era levels of joblessness triggered by the coronavirus pandemic. The benefit was terminated as a result of the failure of the White House and Democratic and Republican leaders in Congress to extend it beyond the deadline set in the CARES Act corporate bailout passed at the end of March. The cutoff was dictated by the corporate-financial elite that controls both political parties. There is no cutoff of the trillions of dollars in handouts to giant corporations and banks enacted in a near-unanimous bipartisan vote, despite the fact that many of the same companies have announced massive permanent layoffs. Over the past four months, while the financial aristocracy has actually increased its wealth, the severe limitations in the benefits provided to working people under the CARES Act have become apparent. Some 53 million people filed new claims for unemployment insurance during that period, and at least 32 million are still out of work, but only 20 million are currently receiving the $600-per-week federal supplement. Millions of workers lost their benefits when they were forced to return to work at unsafe workplaces. Many more lost their benefits because they refused to go back to work, fearing their health and lives were in danger. Many others never received the federal supplement in the first place because their state unemployment compensation systems were so decrepit they could not program the additional payments. The federal supplement expires on July 31, but since state systems pay benefits on a full-week basis only, with the benefit week ending on a Saturday or Sunday, benefits stopped for nearly all eligible workers on July 26 or July 27, for the week that ends August 1 or August 2. The consequences of this cutoff will be felt in mass impoverishment, hunger, foreclosures, evictions and a dramatic increase in homelessness. This in turn will provide additional fuel for the coronavirus pandemic, which has a hugely disproportionate impact on the most vulnerable sections of working people.
More on Deaths of Despair: New Study Links Early Job Loss to Higher Rates of Overdose Deaths and Suicides – Yves Smith — A new study published in the Journal of Epidemiology and Public Health (hat tip reader ma) gives more granular insight into the triggers of so-called deaths of despair, as in the AIDS-level rise of deaths of the middle aged with high-school-only educations. We’ve embedded the study at the end of this post; the data supplement is here. The article uses a large data set of United AutoWorkers at GM in Michigan, with workers hired as far back as 1938, including mortality information. The authors scrubbed the data to focus those who joined after 1970 in three plants, one in Detroit, one 50 miles west of Detroit, and one in a more rural area. All plants were downsizing prior to their closures in 2012, 2010, and 2014 respectively. Women were excluded because there were so few suicide and overdose deaths among them. The authors describe the contract terms that suggest that job departures before the age of 55 were likely to be involuntary. They found that employees who stopped working were 16 times as likely to die of suicide or overdose as ones who stayed employed. The odds of death were highest among workers in rural areas, likely due to the difficulty of finding a new job: Of the three study plants, Plant 2 had the highest incidence rate of suicide in this study. … .By 1970, it employed 10 000 workers making automatic transmissions. Plant 2 closed in 2010 as part of GM’s bankruptcy proceedings. In 1970, the population of the surrounding township was 30 000; today it is 20 000. Nearly all the drug deaths occurred at Plant 2 in runup to its closure. This would also have been during the financial crisis, which could have hit older workers with investments.1 The authors also push back mildly on the popular notion that deaths of despair are a white phenomenon. The plant in Detroit, which did have a lower suicide rate, was where nearly all the African Americans work. Angus Case and Anne Deaton speculated that the higher death rates among lesser educated whites was due to Hispanics and blacks having stronger family/informal social safety nets. That may be conflated by the fact that working class Hispanics and blacks are more concentrated in cities that rural areas, so the quiet impoverishment of rural America would hit older, not well educated whites, who by virtue of being in the most disadvantaged communities, would suffer the most.
Children of Paradise — Never in our lifetimes has it been more obvious that politics, as we’ve shaped it, involves the administration of life, sickness, and the end of life. This realization, new to some who have never had to worry about health care, cuts against a longstanding media narrative about politics “as usual,” or politics as something that happens in the capitol, or even the idea that a political representative could be an outsider: there is no outside to the administration of death, and so there is nothing that can reasonably be said to be outside of politics. It’s an epiphany worthy of a global crisis, and as Asad Haider reminds us in the opening essay of Issue 52, the word crisis has, in part, a medical origin, meaning “both the condition itself and a judgment on a patient’s fate.” It’s up to us, Haider argues, to determine who makes the judgment, and whether we avoid “epochal failure.” Though this crisis is global, it is not universal. “Like cholera and poverty,” Ann Neumann writes, “Covid-19 is not the crisis; it’s a disease that feeds on our racialized inequalities.” The lifetime of our country, its pretenses to democracy, liberalism itself: all of these are premised on the administration of death to black and brown people. That is the root of the American crisis. And so appeals to liberalism and to its supposed “illiberal” opposite begin to sound curiously similar. “The absence of a coherent response to the public health crisis is an inevitable outcome of the bipartisan commitment to neoliberal governance and the maintenance of U.S. empire,”Brendan O’Connor asserts in his anatomy of the contemporary right. “Protect private property, the fascist says. The liberal and conservative nod in agreement. Which rightly belongs to white men, the fascist adds. The liberal stammers; the conservative pretends not to hear.” Nick Estes explores the colonial myths that leave Indigenous people and lands more vulnerable to the ravages of disease, incarceration, and war. And Alexander Clappreports from North Kosovo, where after decades of ethnic conflict, “all it’s taken for Serb and Albanian politicians to finally put aside their ancient resentments is the prospect of getting rich.” Of course, high-tech predation like this abounds the world over, and Patrick McGinty takes on driverless car industry, whose head honchos are “laughably, embarrassingly, nowhere close to delivering on the pie-in-the-sky promises they began making years ago,” and the cottage industry of authors who refuse to expose these snake oil salesmen.
Why Does It Feel Like We’re In “Life During Wartime”? – Call it cultural synchronicity, but it increasingly feels like we’re living in the 1979 Talking Heads song Life During Wartime, which was anchored by the lyric “This Ain’t No Party, This Ain’t No Disco, This Ain’t No Foolin’ Around.” Indeed. It also feels like Life During Wartime because the propaganda is so blatant and intense: we’re winning the war on Covid-19, and our wars on everything else, too, of course, as war is the favored metaphor and favored policy at the end of the Empire.The ceaseless propaganda is that “a vaccine is right around the corner.” The inconvenient reality is that Corporate Insiders Pocket $1 Billion in Rush for Coronavirus Vaccine: Well-timed stock bets have generated big profits for senior executives and board members at companies developing vaccines and treatments. In other words, wartime profiteering isn’t just allowed, it’s encouraged–yet another sign that we’re in the final decay/collapse phase of Imperial Pretensions. It’s easy to mix up the propaganda and the counter-propaganda, because they’re both so extreme. There is no middle ground, only pre-packaged positions which dictate which “data” is cherry-picked to support the political partisanship that’s being defended. Metaphorically speaking, the civilian populace believes “we’re winning” until the bombs start dropping on their homes. For some reason, this doesn’t feel like “winning.” The V-shaped recovery is the propaganda war the status quo must win, for this is the narrative battle for the hearts and minds of the populace. The fear here is that should the populace lose confidence in The V-shaped recovery, they might reduce their borrowing and spending and increase their saving, dooming an economy that depends entirely on marginal spending funded by debt to keep from imploding.As the chart of the rising wedge model of breakdown below illustrates, when big-ticket costs ratchet higher like clockwork–rent, property taxes, childcare, higher education, debt, healthcare, etc.– while income stagnates for the bottom 90%, any drop in spending, no matter how modest, breaks the system because any reduction in spending reduces tax revenues, corporate profits and debt payments below the critical threshold.This is why the Federal Reserve is so keen on bailing out bankrupt-in-all-but-name corporations and banks: The laughably hopeless hope is that by propping up the corpses, the populace will discern some faint flicker of life in the decaying carcasses and return to their free-spending ways.
Hitchens: “Excessive COVID Fears Have Completely Changed The Country” – Have government and the mainstream media gone too far in amplifying the risks and dangers to public health over Coronavirus? First they ordered the public to stay at home in order to ‘Save the NHS’ and save lives, and now as the virus has almost disappeared from public health statistics, the government of Boris Johnson is ordering the nation to wear face masks in stores and public spaces in order to supposedly stop the spread of the virus – after previously giving advice that masks were not needed outside medical and care settings.“They deliberately stirred up excessive fear at the beginning, which has completely changed the nature of the country,” says Peter Hitchens.He adds that,“What we had before was a country that was used to the disciplines of work, used to the disciplines of commuting … that link has now been broken.”In this episode, talkRADIO’s Mike Graham speaks with UK journalist Peter Hitchens about how the government has instilled “excessive fear” of a coronavirus ‘second wave’ which has fundamentally altered the way people feel about returning to work. The result has been an economic free-fall which has no end in sight. Watch:
Almost 30 Million Americans Went Hungry Last Week As Recovery Stalls – A depressionary perfect storm continues to crush households as tens of millions of Americans are reporting they didn’t have enough to eat last week (the seven days through July 21). Bloomberg cites the Census Bureau’s latest weekly Household Pulse Survey, revealing almost 30 million Americans went hungry last week. About 23.9 million of 249 million respondents said they had “sometimes not enough to eat.” Around 5.42 million indicated they had “often not enough to eat.” This is the highest total of hungry Americans in the survey since early May, which was around the time when food bank lines across the country were swamped with jobless and hungry folks. Last Sunday, we noted food bank lines reemerged in Baltimore as the crisis in households persists. Tens of millions of folks are going hungry in mid-July as the recovery stalled in late June. At the same time, a fiscal cliff is hitting where $600-a-week federal unemployment benefits are now expiring. Another stimulus bill is set to be rolled out in the near term, but Republicans and Democrats are at odds over how large the next round should be. White House chief of staff Mark Meadows said both parties are “nowhere close to a deal,” one day before the fiscal cliff hits. This would undoubtedly lead to a decline in overall consumption. “This follows a deep recession resulting from the pandemic, which put millions of Americans out of work. Unemployed Americans have been receiving an extra $600 per week benefit, which is set to expire at the end of July as Congress debates a new relief package,” Bloomberg said. To make matters worse, millions of Americans behind on rent payments, now face imminent eviction as an eviction moratorium expired last Friday. The disagreement on Capitol Hill about another round of stimulus means no imminent moratorium extension which could lead to an eviction wave, more massive than 2008. The Trump administration can pretend all they want that the economy is on the verge of re-booming for reelection purposes, pointing to the stock market of how great everything is, but everyday Americans are suffering amid the worst depression since the 1930s.
Florida Covid-19 cases in children: Hospitalizations among kids jump 23% – Just weeks before schools must open across Florida, the numbers of new cases and hospitalizations due to Covid-19 have surged. On July 16, the state had a total of 23,170 children ages 17 and under who had tested positive since the beginning of the pandemic, according to the Florida Department of Health. By July 24, that number jumped to 31,150. That’s a 34% increase in new cases among children in eight days.And more children in Florida are requiring hospitalization. As of July 16, 246 children had been hospitalized with coronavirus. By July 24, that number had jumped to 303. That’s a 23% increase in child Covid-19 hospitalizations in eight days. During that same time period, the death toll among children in Florida went from 4 to 5. On July 18, Kimora “Kimmie” Lynum died from Covid-19 complications, according to state health department records. The 9-year-old girl’s family said Kimmie had no known pre-existing conditions or underlying health issues.The surges in child Covid-19 cases and hospitalizations come amid rampant debate over whether children should return to classrooms this fall, or if they should continue remote learning.They also directly contradict US Secretary of Education Betsy DeVos’ claims that children are “stoppers of the disease” who “don’t get it and transmit it themselves.” Researchers in South Korea found that young people between ages 10 and 19 transmit the virus just as easily as adults.
Young Children May Have Higher Coronavirus Levels, Raising Concerns About Schools Reopening -As the debate about reopening schools continues in the U.S., a new study has found that children under five might have 10 to 100 times more coronavirus in their upper respiratory tracts than adults. The study, published in JAMA Pediatrics Thursday, does not prove that children are passing on the virus, but does suggest that they could be “important drivers” of community spread. And this raises concerns about what will happen when and if children return to school, the researchers said. “The school situation is so complicated – there are many nuances beyond just the scientific one,” study leader and Ann and Robert H. Lurie Children’s Hospital of Chicago pediatric infectious diseases expert Dr. Taylor Heald-Sargent told The New York Times. “But one takeaway from this is that we can’t assume that just because kids aren’t getting sick, or very sick, that they don’t have the virus.”The assumption that young children are not a driving force behind disease outbreaks is one of the arguments for reopening schools in the fall.In recommending in-person schooling, the Centers for Disease Control and Prevention (CDC) said that current data suggests low rates of transmission between school age children or from students to teachers. The study authors acknowledged this, but also said the evidence was limited. The research was inspired when Dr. Heald-Sargent noticed that children’s coronavirus tests were showing up positive after fewer cycles, The New York Times explained. Each cycle picks up more virus, so a low “cycle threshold,” or C.T., means more virus in the sample. “It wasn’t even something we had set out to look for,” she told The New York Times. Older children and adults had similar median C.T.s, but the median C.T. for younger children was significantly lower, the study found. “The observed differences in median CT values between young children and adults approximate a 10-fold to 100-fold greater amount of SARS-CoV-2 in the upper respiratory tract of young children,” the scientistsconcluded.
A North Carolina private school reopened amid national concerns over in-person classes. Days later a staff member tested positive for coronavirus. – A Pre-K-7 private school in North Carolina notified parents that a staff member had tested positive for the coronavirus a few days after it reopened for in-person teaching. Thales Academy, a private school that has eight locations across North Carolina in addition to new branches in Tennessee and Virginia, resumed in-person teaching on Monday. On Thursday, Thales Academy Raleigh told parents that a staff member had tested positive for the coronavirus, The News & Observer reported. The school stated that the staff member had been present at the school for training on Monday and interacted with at least 16 students, according to NBC affiliate WRAL. The school emailed parents that “the staff member in training was asymptomatic” and “passed the temperature check,” according to WRAL. The News & Observer reported that a spokeswoman stated the school would disinfect the classrooms with a Clorox Total 360 machine and resume in-person classes on Friday. Private schools are not governed by the same requirements as public schools. As The New York Times reported out earlier this month, public schools “tend to have less money and larger class sizes,” allowing for less flexibility to accommodate in-person teaching in comparison to private schools. While many private schools in North Carolina plan to have in-person learning, a majority of public schools will start the new academic year completely online, according to EducationNC. North Carolina Governor Roy Cooper said mid-July announced schools would reopen for the fall term and operate in a series of plans like holding classes with reduced capacity or only remote learning. “There is much risk in not going back to in-person school,” Cooper said. We know that schools provide so much more than just academic lessons.”
Court orders release of Black Michigan teen who was jailed for missing schoolwork – The Michigan Court of Appeals ordered the release of a Black 15-year-old who was detained for failing to complete schoolwork during the pandemic, a case that had drawn nationwide attention and scrutiny. Detroit News reports that the court overturned a previous ruling that said the teen violated her probation by missing homework. The court blasted the previous ruling, calling it “callous” and ordered the teen, known only as Grace, to be immediately released to her mother’s custody. A report by ProPublica earlier this month first shed light on Grace’s case, as it noted that she was on probation for fighting with her mother and stealing, but there were reportedly no other examples of students taken into custody for failing to complete schoolwork. The Black teen’s teacher and many others said it has not been uncommon for students to miss work while remote learning during coronavirus-related school closures, and ProPublica reported that she is diagnosed with a learning disability – attention-deficit hyperactivity disorder. “We’re so happy that Grace is going to go home with her mom and sleep in her own bed tonight,” Grace’s attorney Jonathan Biernat said according to Detroit News. “She’ll be where she belongs, really.”
The school transportation crisis in the age of coronavirus – “This is getting scarier by the day. They want to get everybody back to work. It’s like sending cattle to the slaughterhouses,” a veteran school bus driver, “Laura,” told the World Socialist Web Site. “I’ve been a school bus driver since 1994. I’m 60 years old, and I am very worried about going back before this virus is contained. Educators and school workers across the United States are horrified at the demand that they be guinea pigs in an “experiment” on the reopening of schools, in the words of Dr. Anthony Fauci on Tuesday. The science continues to point to the homicidal character of a return to school. The pandemic rages out of control without a vaccine or adequate treatment in sight. This week a study from JAMA Pediatrics further undermined the notion promoted by the Trump administration that children will not transmit the virus. The study showed that children under five with mild to moderate symptoms of COVID were found to contain higherconcentrations of the virus than older children or adults. The first study of its kind, another JAMA report, demonstrated that school closures in the US between March and May were associated with a significant decline in COVID-19 and fewer deaths.School transportation may be the single most daunting obstacle to even the most minimal infection control, although every scenario for a return to school risks widespread community transmission. The existing school bus system, serving up to one half of the nation’s schoolchildren, is not in any way designed to impede COVID. The National Council on School Facilities and Cooperative Strategies says that a 56-person bus should only hold seven children without masks; that number only goes up to 28 if everyone wears masks.”The kids inside the bus aren’t going to sit with distance. They will take off the mask and ignore the bus driver. It doesn’t work that way. If they don’t want to do it, they don’t do it. They already dispute everything you say. It’s usual stuff. They are children, not soldiers.”Moreover, the costs associated with social distancing and bus transportation are out of reach for many, if not most, districts. The New York Times reports that Marietta, Ga., plans to spend $640,000 to hire 55 monitors to check students’ symptoms before they board, and Dundee, Mich., expects to spend over $300,000 to add routes. In Odessa, Texas, there are plans for buses to run on continuous routes, like city transit, with students arriving and leaving school at staggered times.With most school bus drivers over the age of 55, those who opt to stay home this fall will be substantial, calling into question the ability to staff even the standard routes necessary for districts.
White House brands teachers “essential workers” to force reopening of schools – Under conditions in which the coronavirus pandemic is raging out of control, the Trump administration is escalating its homicidal campaign to reopen schools across the US, which is guaranteed to spike infection rates even further. At a press conference Friday, White House Press Secretary Kayleigh McEnany branded teachers “essential workers” akin to meatpackers, one of the sections of the working class most devastated by the pandemic. McEnany declared that “schools are essential places of business … our teachers are essential personnel.” She added, “Our meatpackers were meatpacking because they were essential workers. … And we believe our teachers are essential.” The comparison between teachers and meatpacking workers is highly significant and must be taken as a sharp warning by teachers and all education workers. Since the start of the pandemic, meat processing plants have seen among the highest rates of infections and deaths of any industry in the US. In late April, following a series of walkouts and job actions over unsafe conditions, which forced the closure of 22 plants across the country, Trump invoked the Defense Production Act and deemed meatpacking plants “critical infrastructure,” requiring them to stay open. As a result, the number of cases and deaths have tripled, with well over 30,000 workers infected and more than 100 killed by the virus. In drawing this comparison, the White House is putting teachers on notice that they intend to carry out the same dictatorial measures should there be organized strikes or mobilizations to prevent the reopening of schools. While branding teachers “essential,” McEnany defended the deployment of at least 200 federal agents to Portland, Oregon, where they have brutally repressed peaceful protesters, in multiple flagrant violations of the Constitution. Last week, Trump threatened to deploy 75,000 agents to “any of the cities” that he chooses. The ultimate target of these shock troops is the working class, including educators, meatpackers, autoworkers and more, who are being forced to sacrifice their lives for corporate profit.
Teachers face battle as Trump pushes school reopenings – After waging years of strikes and protests against cuts to school funding and wages, educators in the US are heading into a direct confrontation with the Trump administration over its drive to reopen schools as the pandemic continues to rage out of control. At a press conference Friday, White House Press Secretary Kayleigh McEnany branded teachers “essential personnel,” comparing them to meatpackers, saying “schools are essential places of business.” The comparison between meatpackers and teachers is no accident. From the outset of the pandemic, meat processing plants became some of the most dangerous workplaces in the US and globally, with over 30,000 workers infected and more than 100 killed by COVID-19. Facing walkouts and job actions at 22 plants across the US in April, Trump invoked the Defense Production Act to force workers back on the job. The Trump administration’s criminal policy of forcing teachers back into classrooms as the pandemic continues to spread uncontrollably will lead to the deaths of countless teachers, students and their family members. The White House’s declaration that teachers are “essential” is absurd, coming from an administration single-mindedly determined to destroy public education through budget cuts and privatization. Trump does not care about students. He only cares about getting kids out of the house so their parents can go to work generating profits for corporations. Having given the corporations trillions of dollars in government bailouts and free cash from the federal reserve, the ruling class is determined to pump profits out of workers to pay for it. Spearheading the resurgence of class struggle in the US since the powerful statewide wildcat strike organized by West Virginia teachers in February 2018, teachers and education workers have moved increasingly to the left and become more radicalized, with many participating in the mass, multiracial demonstrations against the police murder of George Floyd.
Lawyers in Florida are offering free wills for teachers. One says he received about 600 inquiries. – Lawyers are offering free wills for teachers and educators are responding. Charles Gallagher, a lawyer at Tampa Bay lawfirm Gallagher & Associates, told NBC News he decided to offer free wills for teachers after seeing one protesting with a sign that read, “Teacher supplies: books, crayons and wills.” Gallagher told NBC News he received inquiries from around 600 teachers and school staff. Jen Englert, a managing partner of an Orlando law firm, told NBC News that they were offering discounted wills to teachers, just as they had done for first responders and medical teachers. “We decided to offer these services because teachers were actually coming to us asking for our help,” Englert told NBC News. In June, Florida Governor DeSantis announced that they plan to move schools to fully in-person teaching. On Monday, Florida’s largest teachers’ union sued against the state over plans to move back to in-person instruction. Moving to fully in-person teaching poses many health concerns given the rising number of coronavirus cases. The US recorded its 4 millionth coronavirus case on Thursday. Florida has reported over 400,000 coronavirus cases so far. Teachers across the country have expressed concerns for their own health, in addition to putting their own families and students at risk. One teacher told Insider that “I totally am preparing to get sick.”
Middletown Schools to announce fall sports suspended for now due to coronavirus – Middletown City Schools announced the suspension of all fall extracurricular activities and campus activities, such as athletics and band, effective until further notice.Middletown school officials recently announced all classes will be remote when the fall semester begins Aug. 17.”In this ever-changing, complicated, emotional season we have been placed in, we cannot lose focus on what is most important. The focus should be on the safety of our children, educators, staff, and all the families involved as we move forward with the main objective of educating our youth. We must remain vigilant and flexible and if ever there was a time that the old adage is paramount ‘it takes an entire village’ it is now!,” Jackie Phillips, City of Middletown Health Commissioner said in a news release. The school district said they are doing it to flatten the curve and keep the district on track to bring students back to the classroom. “If our families and friends want schools to open in the fall, we need to get serious and we need to mitigate the community spread. We need to social distance. We need to mask up. By suspending fall extracurricular activities, we are giving our students the best opportunity to get back to the classroom,” MCSD Superintendent Marlon Styles said. Still, for some the announcement was a tough blow in an already tough time.”This is my daughters senior year for volleyball and they wait so long for senior year because they get the recognition and they get the little posters she has recruits coming from Miami to watch her play..so it’s just super disappointing and I think it should be left up to the parents whether they play or not,” said Jennifer Calton of Middletown.
Union Representing 1.7 Million U.S. Teachers Says It Will Support Strikes If Schools Reopen Unsafely – The second largest teachers union in the U.S. announced Tuesday it would support strikes if schools reopened without proper safety measures in place to prevent the spread of the new coronavirus.The announcement comes as the Trump administration has called for schools to reopen in the fall for in-person instruction amid a nationwide surge in cases, NPR reported. “We will fight on all fronts for the safety of our students and their educators,” American Federation of Teachers (AFT) President Randi Weingarten said at the union’s biennial convention Tuesday, as NPR reported. “But if authorities don’t protect the safety and health of those we represent and those we serve … nothing is off the table. Not advocacy or protests, negotiations, grievances or lawsuits, or, if necessary and authorized by a local union, as a last resort, safety strikes.”The union, which represents 1.7 million teachers, issued the resolution in support of strikes on Friday but announced it at its convention Tuesday, which was held online because of the pandemic, as ABC News reported. The resolution means that the union will offer legal, communications and staffing support to any local districts that decide to strike.The resolution also lists certain conditions that must be met in order for schools to reopen safely. They include:
- Only reopening in areas that have reduced the infection rate to below five percent and the transmission rate to below one percent
- Only reopening in areas with effective testing and tracing mechanisms in place
- Having a trigger in place to close schools again if infections rise
- Establishing workplace accommodations for employees who are at greater risk if they contract COVID-19
- Enacting safety measures like requiring masks for staff and students, ensuring physical distancing of six feet and providing well-stocked hand-washing facilities
The largest U.S. teachers union, the National Education Association (NEA), also said it would not rule out strikes to keep staff and students safe.”Nobody wants to see students back in the classroom more than educators,” NEA President Lily Eskelsen Garc’a said in a statement Tuesday reported by POLITICO. “But when it comes to their safety, we’re not ready to take any options off the table.”
As opposition mounts to reopening of schools, US teacher union opposes national strike – Across the United States, teachers and parents are increasingly opposed to the reopening of schools as the pandemic continues to surge across the country. Protests against the imminent reopening erupted this week in Michigan, New Jersey, Rhode Island and other states. In opposition to President Trump’s demand for full, in-person instruction from the start of the school year, teachers are demanding online-only instruction until there are no new cases of community transmission. Poll after poll shows that there is widespread opposition to a return to in-person education until the virus is contained. An AP poll last week showed only 8 percent of the population supported opening schools as usual while 77 percent supported major adjustments or having no in-person instruction at all. Teachers in districts as far apart as California and Texas have threatened strikes to protect students and families. Under these conditions, the American Federation of Teachers (AFT), the second largest teachers union in the US, is trying to limit and isolate the emerging teachers’ struggles. At their biennial convention being held online this week, AFT officials passed a resolution on the reopening of schools, which paid lip service to the safety of educators and students but included no serious actions to oppose the reckless and deadly policy. Instead, AFT locals “will use every action and tool available to us from serving on state and local reopening committees to filing grievances, lawsuits and other actions against unsafe and unsound plans or the faulty implementation of plans.” According to the resolution they would only support “local and/or state affiliate safety strikes on a case-by-case basis as a last resort.” In other words, the AFT and its state and local affiliates will collaborate with government officials to reopen the schools while the union diverts and dissipates anger with impotent grievances and legal complaints. In the event this is not enough to stop the teachers from taking strike action, the AFT will do everything to prevent local and state walkouts from coalescing into a powerful nationwide strike against the two corporate-controlled parties
Some Colleges Will Require Students To Take COVID-19 Test Twice A Week – Colleges and universities across the US are planning to roll out strict COVID-19 testing measures at their campuses for those starting back this Fall. In some instances, like Cornell University in New York or Baylor in Waco, all students, faculty, and staff will be required to test negative before being admitted on campus. Even more extreme measures are being taken by Colby College in Maine. The Associated Press reports testing will be a “routine part of campus life”. Students will be nasal swabbed twice a week throughout at least the Fall. Perhaps more and more students must be thinking: time for a gap year? All students will be required to provide a nasal swab every other day for two weeks, and then twice a week after that. All told, the college says it will provide 85,000 tests, nearly as many as the entire state of Maine has since the pandemic started. – APCurrently it appears that most schools with a testing regimen in place, which they say is a necessity to prevent being forced to go to online only classes (Harvard recently announced all undergraduate classes will be conducted online, with only 40% of students invited back to campus), will only screen students once arrived, with further tests reserved only for those students showing symptoms. Texas A&M University, for example, will use its some 15,000 tests only for those who are known to have been exposed or who are showing symptoms. Still, there’s a raging debate within the health and scientific community over testing approach and strategy, as the AP summarizes:At Cornell University, a research team recently found that students would need to be tested every seven days to keep infections down. A separate study at Yale University and Harvard Medical School suggested that all students should be tested every two or three days. It found that testing only once a week could lead to thousands of infections over a semester.Going to college in Boston this fall? Prepare to have cotton swabs stuck up your nose, maybe twice a week. https://t.co/DyWhrKxJJv
More Than 6,300 Coronavirus Cases Have Been Linked to U.S. Colleges – As college students and professors decide whether to head back to class, and as universities weigh how and whether to reopen, the coronavirus is already on campus. A New York Times survey of every public four-year college in the country, as well as every private institution that competes in Division I sports or is a member of an elite group of research universities, revealed at least 6,600 cases tied to about 270 colleges over the course of the pandemic. And the new academic year has not even begun at most schools. Outbreaks have emerged on Greek Row this summer at theUniversity of Washington, where at least 136 residents were infected, and at Harris-Stowe State University in St. Louis, where administrators were re-evaluating their plans for fall after eight administrative workers tested positive. The virus has turned up in a science building at Western Carolina, on the football team at Clemson and among employees at theUniversity of Denver.At Appalachian State in North Carolina, at least 41 construction workers have tested positive while working on campus buildings. The Times has identified at least 14 coronavirus-related deaths at colleges. The list includes public, four-year universities in the United States, as well as private colleges that compete in Division I sports or are members of an elite group of research universities. Only schools that reported cases are shown. Note: The charts show the cases per 100,000 residents reported each week in the county where each school is located. The location of a university’s main campus is listed unless otherwise specified. In several instances, colleges noted that some cases were tied to branch campuses or satellite locations. Universities with no case total listed either did not respond to inquiries, declined to provide information or said they had no known infections. There is no standardized reporting method for coronavirus cases and deaths at colleges, and the information is not being publicly tracked at a national level. Of nearly 1,000 institutions contacted by The Times, some had already posted case information online, some provided full or partial numbers and others refused to answer basic questions, citing privacy concerns. Hundreds of colleges did not respond at all. Still, the Times survey represents the most comprehensive look at the toll the virus has already taken on the country’s colleges and universities. This data, which is almost certainly an undercount, shows the risks colleges face as they prepare for a school year in the midst of a pandemic. But because universities vary widely in size, and because some refused to provide information, comparing case totals from campus to campus may not provide a full picture of the relative risk. What is clear is that despite months of planning for a safe return to class, and despite drastic changes to campus life, the virus is already spreading widely at universities.
Congress should consider the evidence in funding college students’ success –As it considers another COVID relief package, Congress should provide additional financial support to unemployed and underemployed workers seeking new skills. Research on the 2008 recession makes clear why that matters: 95 percent of the jobs created in the wake of that recession required a college education. In both good and bad economic times, the likelihood of securing a fulfilling career with good wages and work conditions increases with a college credential. But not every college credential leads to a job with decent wages. So, as Congress considers how to support the development of new skills that our workforce needs, it should pay attention to the evidence that indicates which investments are most likely to set people up for success; not just during the recession but after it ends. Troublingly, Congress is considering a proposal to allow the biggest federal pot of money that supports college students – Pell grants – to be spent on very short-term job training programs (those that are just eight to 15 weeks long). To be clear, many people could benefit from well-designed short-term training programs that confer skills they need to gain a surer foothold in an uncertain economy. Understanding this, many community college leaders support the proposal for short-term Pell as a way to help more students at a time of tremendous need. But research shows that, outside of a few fields, short-term certificate programs do not lead to notably higher wages for those who complete them. By comparison, decades of research has found that adults who complete longer programs, like certificates of at least a year in length or two-year associate degree programs, on average see greater returns to their credentials. Economists project that for the foreseeable future, the vast majority of good jobs will necessitate a college education that has traditionally required at least a year to complete. That timeframe may be shorter in the future, but evidence shows that day has not arrived. Currently, Pell grants can be used for programs that range from 15 weeks in length, roughly a semester long, to bachelor’s degrees. The risk of moving eligibility for Pell funding to shorter programs is significant, especially for students from low-income backgrounds and students of color, who are most likely to enroll in such programs. Unless Congress required that short-term programs funded by Pell result in living wage jobs – which does not appear to be part of current proposals – its approval of short-term Pell could exacerbate deep race- and income-based disparities in higher education, resulting in an even greater number of Black, Latinx, indigenous and lower-income students being tracked into low-wage jobs. Congress has much better options. It can provide community colleges direct financial support to build career training programs that will lead to good jobs for their students, which is exactly what it did during the last recession. In 2011, Congress earmarked $2 billion in federal funds – in the form of Trade Adjustment Assistance Grants – for programs at community colleges and other training providers, dedicated to fields ranging from advanced manufacturing and information technology to health care. Bolstered by evidence showing that the program worked, Congress is now considering a similar bipartisan bill.
Treasury to conduct policy review of tax-exempt status for universities after Trump tweets – Treasury Secretary Steven Mnuchin anticipates that his department will conduct a review of guidance related to the tax-exempt status of universities after President Trump tweeted earlier this month that he wanted the department to re-examine schools’ tax exemptions. “Secretary Mnuchin expects that Treasury’s Office of Tax Policy will conduct a policy review of the generally applicable regulations and guidance implicated by the President’s comment,” Treasury’s deputy general counsel told inspectors general for the department. The inspectors general relayed the response on Friday to House Ways and Means Committee Chairman Richard Neal (D-Mass.). Trump on July 10 asked Treasury to look into universities’ tax-exempt status, arguing that many institutions “are about Radical Left Indoctrination, not Education.” The president’s tweets came as he was pressing schools to physically reopen in the fall. “Too many Universities and School Systems are about Radical Left Indoctrination, not Education,” Trump tweeted. “Therefore, I am telling the Treasury Department to re-examine their Tax-Exempt Status and/or Funding, which will be taken away if this Propaganda or Act Against Public Policy continues.” The tweets drew concerns from Neal, who called for oversight of Trump’s demand. Neal noted in letters to the IRS and to Treasury’s inspectors general that under the federal tax code, it is unlawful for the president to request that the IRS investigate specific taxpayers. Treasury’s Office of the Inspector General and the Treasury Inspector General for Tax Administration (TIGTA) told Neal on Friday that according to Treasury’s deputy general counsel, Treasury has referred the portion of Trump’s tweets relating to higher education funding to the Education Department. The deputy general counsel also said that to the best of the general counsel office’s knowledge, no one has been directed to investigate any particular school. Both of the inspector general offices said that they had not initiated investigations related to the tweet, but the Office of the Inspector General said it would monitor developments in the Treasury tax policy office.
China’s Manufacturing Recovery Picks Up the Pace – WSJ – An official gauge of China’s factory activity expanded at a faster pace in July, as improving demand inside and outside the country kept the recovery of the world’s second-largest economy on track. China’s official manufacturing purchasing managers index rose to 51.1 in July from 50.9 in June, the National Bureau of Statistics said Friday, beating economists’ expectations and marking the fifth consecutive month that the closely watched measure of China’s factory activity topped the 50 mark that separates expansion from contraction. China’s official nonmanufacturing purchasing managers index, a gauge of business activity outside the factory floor, remained in positive territory, thanks to robust activity in the property and investment sectors, fueling construction activity. Even so, the overall nonmanufacturing index slipped to 54.2 in July, compared with 54.4 in June, the statistics bureau said, indicating a slight deceleration in the recovery for China’s service sector as heavy floods hit swaths of central and southern China. Taken together, the data suggests that consumer demand continues to lag behind the recovery in China’s industrial capacity, which has recovered more quickly from the coronavirus. “It’s still a two-track recovery,” said Andrew Polk, a partner at research firm Trivium China. Mr. Polk said that while recent data points show China’s factories have returned to pre-coronavirus levels, consumer demand remains much weaker – which means inventory is piling up.
Hundreds jam airport as evacuations from Vietnam’s Danang begin – (Reuters) – The airport in the central Vietnamese tourism hotspot of Danang was packed on Monday after three residents tested positive for the coronavirus and the evacuation of 80,000 people began. The Southeast Asian country is back on high alert after authorities on Saturday confirmed the first community infections since April, and another three cases on Sunday, all in or around Danang. A further 11 cases linked to a Danang hospital were reported late on Monday. The evacuations of mostly local tourists will take at least four days with domestic airlines operating approximately 100 flights daily from Danang to 11 Vietnamese cities, the government said. Vietnam has also reintroduced social distancing measures in Danang. Nguyen Tien Nam, an English teacher based in Ho Chi Minh City, said he had got on the last flight out of Danang on Sunday night. “Everyone was just trying to get out of the city on Sunday,” said Nam. “Everyone was telling me that I should get out as soon as possible.” By imposing strict quarantine measures and carrying out an aggressive testing programme during the pandemic, Vietnam has kept its tally of reported infections to 431, with no deaths.
Australia: International students voice anger over wage theft, poor working conditions –The International Youth and Students for Social Equality (IYSSE) spoke with international students from universities around Australia this week about their dire circumstances, which have worsened amid the coronavirus pandemic and the criminally negligent policies of governments.A recent report highlighted egregious levels of wage theft targeting international students working in Australia to pay for rent, food and exorbitant course fees. It warned that financial hardship brought on by the coronavirus crisis will exacerbate the exploitation of international students.Governments have done virtually nothing to aid the hundreds of thousands of international students enrolled at universities across Australia. Many lost their jobs due to limited social distancing measures when lockdowns began in March. Now, amid a profit-driven, back to work campaign, they are being forced back into low-wage positions with poor conditions, and the threat of contracting the potentially deadly virus.The IYSSE spoke with a Pakistani student at Victoria University in Melbourne who said he lives “hand to mouth. I cannot save anything. I pay so much for the fees at university and there are no jobs.”He said universities gave a one-off payment of $1,200 to international students from the government, but he has received only $700 so far. The student said “universities aren’t taking any real measures. … There is no help for us students.”A business student from China studying at Brisbane’s Griffith University told the IYSSE that he previously worked part-time in restaurants and supermarkets, but had not received shifts since the pandemic began.He said: “I have rarely heard of Chinese students ever getting the legal minimum wage.” The statutory minimum wage in Australia for part-time workers aged 20 is $18.49 per hour and $18.93 for workers aged 21.”For international students,” he said, “fighting for the minimum wage is an uneconomical trouble – few international students receive assistance in this area. … It will affect students’ future work and life. Most of the time, students are reluctant to cause trouble.”
Empty beaches and fear of flying –From the Algarve to the Amalfi Coast and the islands of Croatia, waiters are twiddling their thumbs and lifeguards gazing out over half-empty beaches as Europe’s tourism sector takes a huge hit from the effects of the coronavirus pandemic. Families across the continent are being put off traveling by the fear of contracting coronavirus, a lack of money as a result of being furloughed or laid-off altogether, and onerous quarantine rules. Hoteliers and restaurant owners across the Mediterranean are lamenting the absence of foreign visitors and glumly contemplating the loss of billions of pounds’ worth of revenue. Spain’s hopes of salvaging a summer tourism season were thrown into disarray by the UK government’s decision at the weekend to impose a two-week quarantine on all tourists returning from Spain, making the country a far less attractive destination for Britons. The abrupt announcement torpedoed the plans of hundreds of thousands of British tourists, who normally make up 20 per cent of all foreign visitors to Spain. In the resort of San Antonio on Ibiza, beaches were all but empty as a result of the sudden quarantine regulation. Spain’s tourism is reeling from a tough first half of the year – the pandemic meant that the rate of hotel occupancy more than halved between January and June. The worst hit part of the country were the Balearic Islands, which are normally popular with British and German holidaymakers. Tourism accounts for around 12 per cent of the Spanish economy but the sector has lost on average euro 5 billion a week since March. An estimated 40,000 bars and restaurants have shut down permanently as a result of the pandemic and another 85,000 are at risk if the country is engulfed by a second wave, according to the country’s main hospitality business lobby.
Pandemic turns Europe’s retail sector on its head as shoppers stay close to home –(Reuters) – City centre shops and malls may have lost their lustre during the COVID-19 pandemic, but as lockdowns ease across Europe many stores in and around residential areas stand to benefit as consumers remain reluctant to venture far from home. While retail sales appear to be rebounding – surging 17.8% in the euro zone in May and approaching pre-lockdown levels in Britain in June – shoppers are increasingly staying local, leaving Europe’s most renowned shopping districts from London’s West End to Berlin’s Kurfurstendamm struggling in the absence of office workers and tourists. On Germany’s main shopping streets in Hamburg, Cologne and Berlin, footfall in June was as much as 50% lower than a year earlier, according to the German Retail Federation, while in London’s West End it was down 75%, according to the New West End Company, an association of retailers and landlords in the area. Many consumers have shifted to buying goods online, but they are also heading out to shops in residential areas and 46% of consumers across Europe aim to shop more locally in the long term than they did before the pandemic, data from Ernst & Young shows. The trend could mean a significant shift in earnings patterns for major European retail landlords such as Unibail-Rodamco-Westfield (URW.AS), Klepierre (LOIM.PA), and Carmila (CARM.PA) with their mix of city centre and suburban shopping malls. Germany’s ECE operates nearly 200 shopping centres across Europe and told Reuters that centres in areas with a local customer base are approaching pre-lockdown footfall levels – whereas city-centre locations were serving just two thirds of their usual customer base. In Britain, shoppers are buying local not just for convenience goods, but other items such as clothes which they would usually buy on a day out in the centre of town, said Jonathan de Mello of retail consultancy Harper Dennis Hobbes. “People are being very careful about where and how many times they shop,” he said. Half of Britons in a YouGov survey of 1,032 people said they would now feel uncomfortable visiting an enclosed retail space like a shopping mall. “What was once a fabulous shopping experience at a central location is now actually just a place full of risk,”
Europe’s Banks Reveal Fuller Picture of Coronavirus Impact – WSJ – Some of Europe’s biggest lenders reported a big jump in coronavirus-related losses and provisions for bad loans as the pandemic’s impact on their businesses becomes clearer. Germany’s Deutsche Bank AG DB -1.05% , the U.K.’s Barclays BCS 1.23% PLC and Spain’s Banco Santander SA SAN 0.83% all reported an increase in loan-loss charges in the second quarter, as the companies they bank for struggle to repay debts, and unemployment rises across the regions in which they operate. Deutsche Bank set aside euro 761 million ($892 million) to cover potential losses on loans to borrowers hurt by the coronavirus pandemic although it reported a small second-quarter profit on the back of strong investment banking performance on Wednesday. Barclays’ net profit dropped 91% after it set aside Pound Sterling1.62 billion ($2.10 billion) in provisions for losses from loans. The London-based lender’s U.K. unit swung to a loss but its investment bank performed well. Santander, based in Spain but with operations in Europe, Latin America and the U.S., reported a euro 12.6 billion charge from a lower valuation of some previous acquisitions, which it attributed to the deterioration in the economic outlook caused by the pandemic. The charge is a one-off and won’t have impact on its liquidity and capital ratios, but it drove the lender to a second-quarter loss of euro 11.13 billion. “The past six months have been among the most challenging in our history,” Ana Botin, the bank’s executive chairman, said, but added “the foundations of our business remain extremely strong.” Although the banks struck a more optimistic tone for the rest of the year, the real impact of the pandemic on Europe’s economy still lies ahead. For instance, many programs that have kept people employed with the support of state money are due to expire later this year. Shares of Barclays were down over 5% in the early afternoon, while Deutsche Bank and Santander fell more than 3%. In a Deutsche Bank conference call, analysts raised questions about the bank’s profitability outlook, given the booming investment-banking activities are set to subside.
Europe Plunges Into Recession as Economy Suffers Record Contraction – WSJ – Stringent lockdowns weighed heavily on Europe’s economy in the second quarter, causing a record decline that was even more severe than in the U.S., but the continent’s strategy of containment coupled with aggressive stimulus is fanning hopes of a robust recovery. The eurozone’s gross domestic product fell 40.3% annually in the three months through June, exceeding the U.S. economy’s 32.9% contraction, according to data published Friday. That is by far the sharpest decline since comparable records began in 1995, according to the European Union’s statistics agency. However, recent statistics suggest Europe is having a “much bigger snapback and there are some indicators that it may be getting ahead [of the U.S.],” said Holger Schmieding, chief economist at Berenberg Bank. The U.S. economy is being supported by a massive fiscal stimulus that will likely translate into a 2020 government budget deficit roughly twice as large as Europe’s, Mr. Schmieding added. “The U.S. is paying with fiscal stimulus for its failure to tackle the pandemic decisively,” he said.
Germany’s Economy Suffers Biggest Contraction on Record, but Green Shoots Emerge – Germany suffered a record economic contraction in the second quarter as measures to slow the pandemic’s spread closed businesses and kept consumers at home, but Europe’s powerhouse is nonetheless expected to shrink by less and recover faster than other major economies. Germany’s gross domestic product fell 10.1% compared with the previous quarter, the largest decline since comparable records began in 1970, and roughly double its contraction at the nadir of the global financial crisis in 2009, the federal statistics agency said Thursday. The economy shrank by 34.7% on an annual basis, roughly matching the 32.9% contraction in the U.S. economy over the same period, according to data published by the Commerce Department on Thursday. Weakness in Germany is ominous for the rest of Europe, and not just because of the country’s size, accounting for about a fifth of the European Union’s total GDP. German manufacturers are also tightly integrated in the continent, particularly Italy and Eastern Europe. Other European economies including France and Italy are expected to post even deeper contractions when they report second-quarter economic data on Friday. Still, a host of recent indicators suggest that the German economy is staging a sharp V-shaped recovery, bolstered by aggressive state-support schemes for workers and businesses. Despite its heavy reliance on global supply chains and foreign demand, Germany has so far managed to limit the coronavirus’s economic toll. Its strategy: a relatively light lockdown, strict hygiene measures and testing, and a heavy dose of government spending. That cocktail of policies will likely help Germany to outperform all other Group of Seven advanced economies, analysts say. The German economy is likely to shrink 4.3% this year and surpass its pre-pandemic size by the end of 2021, according to analysts at JPMorgan. In contrast, the U.S. economy will likely shrink more than 5% this year and still be around 2.5% smaller at the end of 2021 than it was going into the crisis, the analysts said.
Thousands march in Berlin against coronavirus curbs –(Reuters) – Thousands marched in Berlin on Saturday to protest against measures imposed in Germany to stem the coronavirus pandemic, saying they violated people’s rights and freedoms.The gathering, estimated by police at 17,000, included libertarians, constitutional loyalists and anti-vaccination activists. There was also a small far-right presence with some marchers carrying Germany’s black, white and red imperial flag.Protesters danced and sang ‘We are free people!’ to the tune of rock band Queen’s ‘We Will Rock You’. Others marched with placards saying ‘We are making a noise because you are stealing our freedom!’ and ‘Do think! Don’t wear a mask!’.”Our demand is to return to democracy,” said one protester who declined to give his name. “The mask that enslaves us must go.”
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