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 the failed virus relief negotiations and Trump’s subsequent executive orders to enacts parts of the package anyhow, and another batch of articles on schools’ plans for this fall. The news from the U.S. is substantially increased this week so we have only a very few reports from overseas at the end. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.
Please share this article – Go to very top of page, right hand side, for social media buttons.
Fed to Lower Rates for Cities, States Seeking Short-Term Loans – WSJ -The Federal Reserve said Tuesday it would reduce the rates it charges cities and states seeking short-term loans from an emergency lending program that has seen little takeup so far. Changes to the program must be agreed upon by the Treasury Department, which has approved $35 billion to cover losses on up to $500 billion in loans extended by the Fed. Municipal bond strategists and some Democratic lawmakers have expressed disappointment in recent weeks over the degree to which the Fed positioned the program as a backstop, though Fed officials say the mere announcement of the program in April helped reduce borrowing costs significantly for highly rated municipal issuers. With Tuesday’s changes, the Fed will reduce by 0.5 percentage point the interest-rate spread on tax-exempt notes, and it will also reduce the amount by which rates for taxable notes are adjusted relative to tax-exempt notes. The Fed is walking a careful line in a series of lending programs it has created to backstop credit markets. It announced the programs in late March and early April when many markets weren’t functioning well, but the announcement of those programs has encouraged private investors to lend, reducing demand for Fed loans. That is raising difficult questions for the Fed and Treasury over how aggressively to use money approved by Congress to encourage additional lending. In June, the Fed tweaked its corporate-debt lending program to actively purchase bonds from nearly 800 eligible firms even if they haven’t sought Fed help. The Fed has repeatedly broadened the number of local governments eligible for the lending program to allow more than 300 municipal issuers. So far, the Fed has purchased only one such note. The state of Illinois sold $1.2 billion of debt to the central bank in June at a rate more than 1 percentage point below the rate at which it was previously able to access markets in May.
Demand for Fed’s Main Street loan program is growing, Rosengren says – Despite a slow start, the Federal Reserve’s Main Street Lending Program is gaining steam, said Federal Reserve Bank of Boston President Eric Rosengren. In a speech Wednesday, Rosengren said the $600 billion middle-market business rescue program as of Aug. 10 had purchased participations in 32 loans totaling about $250 million. That is four times the amount of loans processed through the program as of July 27. The central bank has caught flak for the coronavirus relief program’s lackluster peformance out of the gate and because the Fed needed three months to set it up. Members of a congressionally appointed panel overseeing pandemic assistance efforts have even questioned the value of the Fed program. But Rosengren said the recent growth in loan participations shows the program is proving its worth as the persistence of the pandemic is forcing more businesses to seek credit. He noted that an additional 55 loans worth $574 million are under review for possible Fed purchases. “Much of the increase [in loans] has occurred recently, and I expect we will continue to see more activity as more firms are impacted by the pandemic,” Rosengren said in remarks to the South Shore Chamber of Commerce in Massachusetts. “Unfortunately, should the fall bring a resurgence of the virus as many epidemiological models predict, this program may become even more essential.” The program, which is being funded by the Fed and the Treasury Department through congressional appropriations in the Coronavirus Aid, Relief and Economic Security Act, is available to businesses with up to either 15,000 employees or $5 billion in annual revenue. Eligible companies can receive a loan of at least $250,000 and up to $300 million through the program. The pace of lending is consistent with “a gradual pace of initial activity that is more recently expanding as participants become familiar with the program’s parameters,” Rosengren said. “When the program was launched in early July, there were relatively few Main Street program loans submitted for participation purchase,” he said. “As borrowers and banks have become more familiar with the program, we have seen a steady increase in banks submitting loans to our portal.” So far, 522 lenders have registered with th e Main Street program; of those, more than 200 have assets of $1 billion to $10 billion.
Q3 GDP Forecasts — Important: GDP is reported at a seasonally adjusted annual rate (SAAR). A 15% annualized increase in GDP is about 3.6% quarter-over-quarter (QoQ). Also, a 15% annualized increase would leave real GDP down about 7.5% from Q4 2019. A 25% annualized increase in Q3 GDP, is about 5.7% QoQ, and would leave real GDP down about 5.5% from Q4 2019. For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous high. Also, even if activity is flat in Q3 compared to June, GDP will show a significant increase in Q3 over Q2 because of the sharp decline in April. From Merrill Lynch: 2Q GDP tracking remains at -32.6% qoq saar. We expect 3Q GDP growth of +15%. [August 14 estimate] From the NY Fed Nowcasting Report The New York Fed Staff Nowcast stands at 14.8% for 2020:Q3. [August 14 estimate] And from the Altanta Fed: GDPNow The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 is 26.2 percent on August 14, up from 20.5 percent on August 7. [August 14 estimate]
Q3 Preview: Real GDP as a Percent of Previous Peak –A key measure of the economy is real GDP. As the NBER committee notes in their business cycle dating procedure:The committee views real GDP as the single best measure of aggregate economic activity.We are seeing forecasts of a 15% to 25% increase in annualized real GDP in Q3 2020. It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR). A 15% annualized increase in GDP is about 3.6% quarter-over-quarter (QoQ). Also, a 15% annualized increase would leave real GDP down about 7.5% from Q4 2019. A 25% annualized increase in Q3 GDP, is about 5.7% QoQ, and would leave real GDP down about 5.5% from Q4 2019. The following graph illustrates these declines. This graph shows the percent decline in real GDP from the previous peak (currently the previous peak was in Q4 2019).This graph is through Q2 2020, and real GDP is currently off 10.6% from the previous peak. For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous peak.The two black arrows show what a 15% or 25% annualized increase in real GDP would look like in Q3.Even with a 25% annualized increase (about 5.7% QoQ), real GDP will be down about 5.5% from Q4 2019; a larger decline in real GDP than at the depth of the Great Recession.
Coronavirus-Hit State Budgets Create a Drag on U.S. Recovery – WSJ – Spending cuts by state and local governments grappling with the coronavirus pandemic pose a headwind to the U.S. economic recovery as lawmakers consider how much federal aid to provide.State and local governments reduced spending at a 5.6% annual rate in the second quarter as they laid off workers and pulled back on services to offset plunging tax revenues. More cuts are on the way.Moody’s Analytics estimates that without additional federal aid, state and local budget shortfalls will total roughly $500 billion over the next two fiscal years. That would shave more than 3 percentage points off U.S. gross domestic product and cost more than 4 million jobs, said Dan White, head of fiscal policy research at Moody’s.Talks in Congress on another economic relief package have stalled, with assistance for state and local governments among the sticking points. Democrats are pushing for $950 billion.Republican leaders, who didn’t include aid for cities and states in their initial plan, have offered $150 billion. They cite concerns about growing U.S. deficits and debt, and they say some state budget woes predate the pandemic. President Trump, in a tweet on Monday, suggested Democrats “only wanted BAILOUT MONEY for Democrat run states and cities that are failing badly.” Estimates of state revenue shortfalls show that the effects of the pandemic will reverberate in red and blue states alike, although its severity and the extent of lockdowns varies by state, and there are Republicans among the lawmakers calling for aid. “I understand concerns about spending, but the cost of doing nothing is worse,” said Sen. Bill Cassidy (R., La.). “The United States cannot fully recover economically if local communities cannot provide basic services, allowing commerce to flow,” Mr. Cassidy said on the Senate floor last month. State and local governments spent or invested $2.33 trillion in 2019, equivalent to 10.9% of gross domestic product. They employ 13% of U.S. workers, whose spending fuels economic growth and who help deliver essential services and safety-net programs, such as unemployment insurance and nutrition assistance.
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 Aug 2nd, the seven day average was 686,360 compared to the seven average of 2,589,300 a year ago. The seven day average is down 73% from last year. 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. 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 75%. Texas is down 51% YoY. Note that dining declined in many areas as the number of COVID cases surged. It appears dining is increasing again (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 August 6th. 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 twenty weeks. Most movie theaters are closed all across the country, and will probably reopen slowly (probably with limited seating at first). This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. COVID-19 crushed hotel occupancy, however the occupancy rate has increased in 15 of the last 16 weeks, and is currently down 35% year-over-year. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline consumption compared to the same week last year of . At one point, gasoline consumption was off almost 50% YoY. As of July 31st, gasoline consumption was only off about 11% YoY (about 89% of normal). This 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.” This is just a general guide – people that regularly commute probably don’t ask for directions. There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. IMPORTANT: All data is relative to January 13, 2020. 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 53% of the January level. It is at 48% in New York, and 55% in Houston.
The Double Dip Cometh? –Menzie Chinn – My base scenario is a slow recovery. However, I have always viewed – given the sheer incompetence of the Trump administration – the possibility of a double dip recession as a real one. Today, Diane Swonk lays out the case: Chart 1 lays out two scenarios for the economy over the next six months. We are down to about a 50/50 chance of the economy slipping again in the fourth quarter. This is despite an expected $1.5 trillion in additional aid from Congress. Another downturn would push out the time it takes to reach the pre-crisis peak in economic performance by six months, relative to our base case. … The White House has issued several executive orders intended to partially replace benefits, cut payroll taxes and reinstate moratoriums on evictions, but little appears actionable. The lapse in unemployment benefits alone will take weeks (if not longer) to restore, while evictions have already started. The level of extra unemployment benefits is expected to be cut from $600 to $400 per week … A drop in payrolls could come as soon as August when the remainder of the funds tied to the Payroll Protection Program (PPP) loans and grants are set to run out. Swonk gives 50/50 chance to each of the below scenarios. That’s the same logic that that induced me to say today: “We tried to skip over the step of getting the infection rates to manageable levels,” he continues. “We are in what I feared, and many people feared, which was a sort of stop-and-go policy. We tried to get the economy going, but we don’t have the prerequisites in place.” … … without a new federal recovery package, “what we’ve seen so far is just a prelude and it will get a lot worse,” he warns. “You’ve got withdrawal of stimulus, and lots of uncertainty for lots of people, and that’s not conducive to people spending.”
Teetering on the Precipice (Still) – Menzie Chinn – Round 6 results of the FiveThirtyEight/IGM COVID-19 Economic Outlook Survey Series is out. Fivethirtyeightcharacterizes the results:A sudden uptick in food insecurity. A wave of evictions. People spending less money at shops and restaurants. More job losses.According to leading economists, that’s what’s likely in store for the U.S. economy this year if Congress doesn’t renew any of the $600-per-week supplementary payment for unemployed workers by Sept. 1. … My assessment, taking into account the generally upward revisions in expectations, is included in the article:But even their revised predictions are still pretty gloomy. “Remember that 10 percent used to be the depths of a severe recession, and other measures of the labor market like participation and underemployment are still very bad,” Wright added.So while the July jobs report might have seemed, on the surface, to deliver good news, the survey makes clear that there is plenty that could keep us in the economic doldrums for the foreseeable future – particularly if Congress doesn’t act at some point soon. Menzie Chinn, an economist at the University of Madison-Wisconsin, said the July jobs report only confirmed his suspicion that the economic recovery was starting to plateau. Now, he thinks a W-shaped recovery – where the economy improves somewhat, only to crash again – is still possible, and “a stall is more and more likely.” What are the perceived risk factors? The poll results are all here. Notice the possibility of no significant Phase 4 bill figures substantially as a downside risk (I listed as the biggest risk). Fivethirtyeight article here, all poll results here. Diane Swonk on the W-shape recovery scenario, here.
Fed Deficit Leaps From Under 5% of GDP last year to 15% Now – In the second quarter, the federal deficit leaped from under 5% of GDP last year to near 15% now. This is new record compared to the prior record of almost 10% of GDP that Obama inherited from Bush. Yes, falling nominal GDP played a role, but a weak economy always plays a role in setting new record deficits. But in considering what new stimulus Washington comes up with it will serve us well to remember that the new base line already starts at 15% of GDP. While economists and others are debating the shape of any economic rebound we may happen to experience, it might serve you well to remember Japan’s lost decade. It was dominated by the government repeatedly providing stimulus with one hand while simultaneously taking it away with the other hand All the while this was accompanied by new record government deficits. Maybe what we learned from Japan is that government can stop the economy from collapsing, but to get the economy growing again could be a very different issue.
Budget Deficit Hits Record As U.S. Spends 100% More Than It Collects YTD (see graphics)Those who have been following the record surge in US public debt (excluding the roughly $100 trillion in off-balance sheet obligations), which exploded by $3 trillion in the three months following the covid shutdowns and which hit an all time high $26.547 recently, will be all too aware that the US budget deficit this year – and every year after – will be staggering. Sure enough, in the latest just released deficit report, the Treasury announced that in July the US burned through another $63BN, which however was a major “improvement” after the record $862 billion deficit recorded in June, as government receipts soared thanks to the July 15 tax date even as spending remained in the stratosphere. Specifically according to the Treasury, in July, government outlays were $626.5 billion, an increase of 68.8% Y/Y from the $371 billion spent last July if 43% below the record June outlays of $1.1 trillion… … while receipts jumped to the highest on record, surging 124.2% Y/Y to $563.5BN, up 132% from the $242.8BN in June receipts, which however was a one-time surge thanks to the July 15 tax filing deadline, and will promptly fade in the coming months. The chart below shows the July 2020 breakdown between various receipts and outlays. On a YTD basis, 10 months into the 2020 fiscal year, the US has spent $5.631 trillion and collected just $2.824 trillion, which means that YTD outlays are a record 100% higher than receipts, which also includes the $8.3BN received last month and $63.4BN YTD in deposits of earnings by the Fed. And since outlays equal receipts plus the deficit, it will come as no surprise to anyone that in the first 10 months of fiscal, the US budget deficit is a record $2.807 trillion (compared to “just” $866.8 billion in 2019), higher than at any other time in US history and unfortunately due to “helicopter money” it is unlikely that the exploding deficit will ever shrink again until the monetary system is overhauled… or collapses.
CBO Estimates Federal Budget Deficit Shrank in July – WSJ –The federal budget deficit shrank last month from a year earlier as households and businesses made tax payments that had been delayed from April, the Congressional Budget Office estimated. The CBO on Monday said the budget gap last month totaled $61 billion, compared with $120 billion in July 2019, as revenue jumped. The Internal Revenue Service pushed back the April 15 tax-payment deadline in an effort to keep more cash in Americans’ wallets in the early weeks of the coronavirus pandemic. Tax receipts totaled $563 billion, compared with $312 billion in the same period a year earlier, which CBO attributed to the delayed payment deadlines. But the agency noted receipts were still down 10% between April and June from a year earlier, reflecting the deep economic downturn triggered by the pandemic, which triggered widespread business closures and layoffs that have reduced tax revenue for the government. The deficit for the first 10 months of fiscal year 2020 reached $2.8 trillion, CBO estimated, $1.9 trillion more than the deficit recorded in the same period last year. Revenues were 1% lower and outlays were 51% higher in the period. Federal spending has soared after Congress approved trillions in economic relief measures, including enhanced unemployment benefits, stimulus checks for households and emergency small-business loans. Outlays totaled $624 billion last month, a 68% increase from the same period last year. Outlays more than doubled from April through July, after rising 7% in the first six months of the fiscal year, CBO said. Higher spending on jobless benefits, small-business loans, stimulus payments and health care were among the biggest drivers of increased outlays, while net interest costs declined thanks to lower inflation and interest rates. The CBO has projected the annual deficit could total $3.7 trillion in the fiscal year that ends Sept. 30. The gap could widen further if Congress and the White House agree on another round of emergency spending, which economists argue is vital to keep households and businesses afloat until the economy begins to recover. But the talks have stalled amid disagreements over how much aid is necessary and concerns from some Republicans over rising deficits.
What’s in Trump’s Executive Actions on Coronavirus Aid – and What’s Not – President Trump signed four executive actions Saturday to provide additional jobless aid, suspend the collection of payroll taxes, avoid evictions and assist with student-loan payments. Mr. Trump made the moves as talks in Congress over a broad new coronavirus aid package remained deadlocked and are seen as potentially accelerating talks. Mr. Trump said Saturday that the administration would roll out a $400 weekly payment, funded 75% by the federal government and 25% by states. It wasn’t clear if the states would go ahead and provide that share, given that many of them are facing budget shortfalls due to the coronavirus-sparked recession. “We’re looking at it right now to see whether we can do this,” Ohio Gov. Mike DeWine, a Republican, said on CNN Sunday. New York’s Democratic Gov. Andrew Cuomo rejected the plan as “just an impossibility,” saying the state’s 25% share would cost it $4 billion that it doesn’t have. An executive order signed by the president Saturday directs the Treasury and Housing and Urban Development departments to identify funds to provide temporary financial assistance to renters and homeowners who are struggling to meet their monthly rental or mortgage obligations during the pandemic. The order also directs HUD to take action to “promote the ability of renters and homeowners to avoid eviction or foreclosure.” It doesn’t reauthorize the eviction moratorium set in the Cares Act that expired at the end of July. That applied only to properties with government-backed mortgages, covering just one-third of renters. Housing experts say the best way to prevent a wave of evictions – and a domino effect of defaults and foreclosures by landlords – would be for Congress to enact a nationwide eviction moratorium and appropriate money for rental assistance. Mr. Trump directed the Treasury Department to defer the 6.2% Social Security tax on wages for employees making less than about $100,000 a year. That suspension would last from Sept. 1 through Dec. 31. If employers stop withholding those taxes, the move would deliver an increase in take-home pay just as Mr. Trump is running for re-election but also create a looming liability in 2021 because the taxes would still be due eventually. Mr. Trump said he would press Congress to turn the deferral into an actual tax cut. The tax code gives the Treasury secretary authority to delay tax filing and collection after presidentially declared disasters. The administration already used this authority to postpone a series of spring tax deadlines until July 15 and used it again Friday to delay some excise-tax collections. It is far from certain that many employers will stop withholding payroll taxes given the potential for future liability. The Cares Act gave most borrowers with federal student loans a six-month interruption of their monthly payments, interest-free. The law applies to roughly 35 million borrowerswhose loans are held by the federal government. It excludes about eight million borrowers whose loans are held by private lenders with a government guarantee, under a federal program that ended in 2010. The payment moratorium is set to expire Sept. 30. Saturday’s executive memorandum from Mr. Trump said the administration would extend the payment moratorium and zero interest until the end of the coronavirus crisis.
Trump’s Stimulus Orders Set Off Squabble – WSJ – Democrats called President Trump’s plan to bypass Congress and extend coronavirus economic relief insufficient and unconstitutional, but Treasury Secretary Steven Mnuchin defended the move and suggested efforts to block it could backfire politically. Mr. Trump’s plan, made public on Saturday after lawmakers and the White House had failed to reach a deal on another aid package, calls for among other things funding $300 a week in special unemployment benefits, with an additional $100 coming from states. Democrats had wanted to extend the $600 weekly additional benefits that were first approved in March and that expired last month, and House Speaker Nancy Pelosi (D., Calif.) and others said the plan not only didn’t go far enough but had breached congressional spending authority. “Children are food insecure, families are at the risk of being evicted, the virus is moving like a freight train, even though the president has ignored and delayed and distorted what that is,” Mrs. Pelosi said on “Fox News Sunday.” But with the November election approaching, any move to block the payments could backfire, Mr. Mnuchin suggested on the same program, adding that the White House was within its rights to move unilaterally. “We’ve cleared with the Office of Legal Counsel all of these actions,” Mr. Mnuchin said. “If the Democrats want to challenge us in court and hold up unemployment benefits to those hardworking Americans that are out of a job because of Covid, they’re going to have a lot of explaining to do.” Mr. Trump, a Republican, also issued on Saturday orders on payroll taxes, evictions and student-loan payments, issues that were all part of discussions on a broader aid package.A possible legal challenge was just one question surrounding the orders.Another was whether the states, strapped for cash because of the pandemic, would contribute the additional $100 in weekly benefits. Democrats had wanted some $915 billion in state and local aid in their $3.5 trillion aid bill passed by the House in May. Republicans had offered $150 billion during negotiations. Many economists had credited the $600 in additional weekly jobless aid as helping to keep the economy afloat while millions of people are home after the pandemic and lockdowns. Some said the new relief measures would provide less of a boost to the economy.
Trump’s Executive Orders Sow Confusion and Illusions -By Pam Martens — President Donald Trump has taken to governing from the 19th Hole in the midst of the worst economic crisis since the Great Depression. On Saturday, speaking from the clubhouse of the Trump National Golf Club in Bedminster, New Jersey, Trump announcedfour executive actions that he promised would “take care of, pretty much, this entire situation,” meaning economic relief for struggling workers who have lost their jobs as a result of the pandemic. But by the time the Sunday talk shows rolled around, it became clear that the executive orders and memorandum had been hastily cobbled together with gaping holes and obstacles to providing meaningful relief. Instead of actually extending the $600 supplemental federal unemployment assistance that unemployed workers have been receiving weekly under the CARES Act that Congress passed in March, Trump’s Memorandum offers only the possibility of $400 in weekly assistance and directs FEMA to come up with $44 billion of Disaster Relief Funds from the Department of Homeland Security to fund the program. Unfortunately, the Disaster Relief Funds, under statute, require a state match of 25 percent. This means that states, many of which are in desperate financial shape themselves, would have to provide $100 of the $400 federal supplement. Matthew Barakat of the Associated Press is reporting this morning that many state officials and governors are dubious about being able to afford to participate in the plan. The $600 federal supplement was needed because most states provide a miserly amount of state unemployment benefits (an average of $378 weekly). In the state of Florida, which has been heavily impacted by COVID-19, the maximum benefit is $275 weekly for just 12 weeks, or a cap of $3300. (Most states provide 26 weeks of state unemployment insurance, but for workers who lost their jobs during the major business shutdowns in March and haven’t been able to return to work, that will run out this month or next.) Florida’s $275 weekly benefit hasn’t increased in more than two decades, despite the cost of food and housing in Florida soaring over that period. Trump’s eviction relief Executive Order is far worse than his unemployment insurance quagmire. It does not order evictions to cease as a result of the pandemic. It simply directs that “The Secretary of the Treasury and the Secretary of Housing and Urban Development shall identify any and all available Federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.” There is no specific language in the Executive Order on how this money will be allocated; what agency will distribute it; or how individuals can apply for the aid.
Trump grabs ‘third rail’ of politics with payroll tax pause – President Trump’s pledge to “terminate” the payroll tax that funds Social Security defies the conventional wisdom of staying away from what’s known as the “third rail” of politics. Proposing a major reform to Social Security shortly before an election traditionally has been seen as the political equivalent of touching the highly electrified rail that powers subway cars. The last president to try, George W. Bush, made a similar move shortly after winning a convincing reelection in 2004, and he was stopped dead in his tracks. Bush’s ill-fated effort to reform Social Security energized dispirited Democrats and sapped political momentum from the start of his second term. Yet the danger of overhauling the funding stream for a program that in turn provides payments to seniors has not deterred Trump from risking support in key battleground states like Florida. Trump on Saturday, and again on Monday, said his goal is to get rid of the payroll tax altogether, raising the prospect that Social Security would be funded out of general fund revenues instead of having dedicated funding like it has for decades. “I signed directives to give a payroll tax holiday, with the understanding that after the election – on the assumption that it would be victorious for an administration that’s done a great job – we will be ending that tax. We’ll be terminating that tax,” Trump said Monday at the White House. The daring promise to scrap a tax that funds Social Security could have dire effects for Trump among older voters, who already prefer former Vice President Joe Biden by a substantial margin. “Biden was already doing better with seniors than any Democrat since before 2008 and this is game-changing,” said Democratic pollster Celinda Lake. “Seniors think overwhelmingly that politicians should just keep their hands off the [Social Security] trust fund,” she added, asserting that Trump “wants to break the trust fund.”
Employers Cast Wary Eye on Trump Payroll-Tax Deferral – WSJ – Employers considering President Trump’s plan to allow deferred payment of payroll taxes face a series of costs, uncertainties and headaches. The president wants employers to stop collecting the 6.2% levy that is the employee share of Social Security taxes for many workers, starting Sept. 1 and going through the end of the year. But his move, announced in a memo Saturday, doesn’t change how much tax employees and employers actually owe. Only Congress can do that. Employers’ biggest worry: If they stop withholding taxes without any guarantee that Congress will actually forgive any deferred payments, they could find themselves on the hook. That is a particular risk in cases where employees change jobs and employers can’t withhold more taxes from later paychecks to catch up on missed payments. “The Internal Revenue Service will come to that deep pocket” of employers to collect payroll taxes, said Marianna Dyson, a lawyer at Covington & Burling LLP in Washington who specializes in payroll taxes. “Liability is going to stick to the employer like flies to flypaper.” Employers and their lawyers are waiting for the Treasury Department and the IRS to issue formal rules to turn the president’s weekend statements and directives about the payroll-tax collection suspension into action. Those details will be crucial as companies decide whether and how to implement the plan, and many employers might not even bother if they have a choice. Treasury and IRS officials declined to comment Monday about the timing or content of the rules. Every day that passes without those rules will make it harder to make any changes by Sept. 1, the start date set by Mr. Trump. “This is going to be a pretty big programming lift, technology lift for us to do,” said Mike Trabold, director of compliance at Paychex Inc., which processes payrolls for 680,000 employers. Mr. Trump on Saturday ordered the Treasury Department to postpone payroll-tax deadlines for employees making up to about $104,000 in annualized wages. The administration has authority to act under a law that lets the Treasury Secretary postpone tax deadlines after a presidentially declared disaster. It is the same law the government used to delay the April 15 tax-filing deadline to mid-July.
Funding for $300-a-Week Unemployment Benefits Could Run Out in Six Weeks – WSJ – An extra $300 a week in federal unemployment benefits is likely to take a couple of weeks to reach workers and funding could be exhausted a month and a half later, a senior Labor Department official said. The official said states should be able to begin delivering the payments after applying for funding with the Federal Emergency Management Agency and making technical changes to systems to distribute the money. Based on the current number of unemployment benefit recipients, the official said the $44 billion in funds allocated for the enhanced benefits could be spent in five or six weeks, if all states participate. That time line would put the benefits on pace to expire sooner than the December termination set in Saturday’s executive action by President Trump. More than 30 million workers were receiving some form of unemployment benefits in the week ended July 18, the Labor Department said last week. State unemployment systems will need to make changes to their technology to start sending out the extra jobless benefits included in the executive action that President Trump signed, the Labor Department official said. The official expected the technological changes to be less onerous than when states had to roll out new federal programs for expanded unemployment benefits in March, including the $600-a-week in benefits that expired at the end of July. Some states have said that sending out the additional aid would be a complicated task. “These are new programs that would have to be set up at enormous costs,” New Jersey Democratic Gov. Phil Murphy said Monday. Mr. Trump’s executive action called for a federally funded $300 a week in enhanced unemployment benefits for workers laid off during the coronavirus pandemic. Mr. Trump asked states to provide another $100 a week. States aren’t required to extend either of the payments to workers. The payments would replace the $600 payments, which resulted in 68% of unemployed workers receiving more in benefits than they did working, researchers at the University of Chicago found. The Labor Department official said the $300 supplemental unemployment payments would give about 50% of workers at least the same amount of money through benefits that they earned while working. Raising the total to $400 with additional state funds would bring that total to about two-thirds of workers.The outsize hit reflects the timing and duration of the U.K.’s nationwide lockdown. Britain locked down late March, weeks after comparable European countries, and only gradually began easing restrictions late May. That meant the economy was shut throughout most of the second quarter, whereas Germany and other neighbors had already begun to reopen. Another factor is the makeup of its economy. Compared with its peers, a larger share of the U.K. economy is devoted to activities that require close personal contact, which has been especially hit by measures to halt the spread of Covid-19, the disease caused by the virus. The BOE calculates that spending on such activities, such as going to the cinema or theater, eating out or attending live sporting events, represents around 13% of total output in Britain, compared with around 11% in the U.S. and 10% in the euro area. Data Wednesday showed household spending shrank 23.1% in the second quarter compared with the first, while business investment fell by almost a third. Manufacturing and services output both fell by a fifth as factories idled and businesses closed.
Trump, Democrats Open to Restarting Coronavirus Talks Despite Stalemate – WSJ – Trump administration officials and Democratic leaders urged each other to return to the negotiating table to craft a broad coronavirus package after President Trump issued executive actions on jobless aid and other relief over the weekend. Treasury Secretary Steven Mnuchin said he believed states could start rolling out additional federal unemployment payments within two weeks, as officials made clear that states could provide $300 a week in federal funds for unemployed workers without adding any of their own funds. The initial plan released Saturday had envisioned a total weekly payment of $400, with states contributing $100. “We don’t have to do that,” Mr. Trump said at a news briefing, referring to the state funding. “So we’ll see what it is, depends on the individual states,” he said. The executive actions were designed to step up pressure on Democrats, but they also underscored the limits of the White House’s powers over spending, which is controlled by Congress. Administration officials have accused congressional Democrats led by House Speaker Nancy Pelosi (D., Calif.) and Senate Minority Leader Chuck Schumer (D., N.Y.) of making unreasonable demands in negotiations for the next round of relief. Republicans have expressed concerns about another round of spending to address the coronavirus crisis, citing deficit concerns. “Any time they want to meet, they’re willing to negotiate, have a new proposal, we’re more than happy to meet,” Mr. Mnuchin said. Democrats, who have backed $3.5 trillion in new spending, said that Mr. Trump acted illegally, breaching congressional spending authority with the executive orders, and that his plan wouldn’t provide enough relief to the unemployed. They say Republicans are aiming too low with their $1 trillion aid package, saying it doesn’t fully address the economic pain of workers, businesses or states during the pandemic.
Pelosi: COVID talks will resume when GOP offers $2T –Speaker Nancy Pelosi (D-Calif.) said Thursday that the high-stakes talks between the White House and Democrats on coronavirus relief will resume only when Republicans come to the table with at least $2 trillion. “When they’re ready to do that, we’ll sit down,” Pelosi told reporters in the Capitol. The comments foreshadow a rocky road ahead as the parties haggle over a fifth round of emergency relief designed to address the health needs and economic devastation caused by the pandemic, which has hit the United States harder than any other country. Pelosi and Senate Minority Leader Charles Schumer (D-N.Y.) had huddled with the White House negotiators – Treasury Secretary Steven Mnuchin and chief of staff Mark Meadows – for a full two weeks when the talks broke down last Friday. Quite aside from specific policy prescriptions, the sides have not yet agreed to the overall size of the next aid package. Pelosi and House Democrats had passed a $3.4 trillion relief bill in May, while Senate Republicans responded late last month with a $1.1 trillion counterproposal. The Democrats last week had offered to meet in the middle – somewhere in the $2 trillion range – but the Republicans refused the offer, ending the talks indefinitely. Seeking a breakthrough, Mnuchin and Pelosi spoke by phone on Wednesday, but the conversation did nothing to break the stalemate. Indeed, Pelosi said she’d made the same $2 trillion offer, and Mnuchin had responded with the same rejection. Mnuchin issued a statement afterward saying Pelosi’s account was “not an accurate reflection” of the conversation. “She made clear that she was unwilling to meet to continue negotiations unless we agreed in advance to her proposal, costing at least $2 trillion,” Mnuchin said, adding that the Democrats “have no interest in negotiating.” Pelosi on Thursday wondered where the inaccuracy lay, noting that both sides were clear that the disagreement centered on the Democrats’ $2 trillion demand. “We said, ‘$2 trillion and then we can sit down at the table.’ Then he said, ‘That’s not what she said. She said $2 trillion or we can’t sit down at the table,'” Pelosi said. “Didn’t you think that that was strange?” Asked when she might speak with Mnuchin again, Pelosi amplified her numerical requirement. “I don’t know. When they come in with $2 trillion,” she said. “But we’re not sitting down at the table to validate what [they] have proposed, because it does not meet the needs of the American people.”
Millions of workers are relying on unemployment insurance benefits that are being stalled and slashed –EPI Blog – Last week 1.3 million workers applied for unemployment insurance (UI) benefits. More specifically, 832,000 applied for regular state unemployment insurance (not seasonally adjusted), and 489,000 applied for Pandemic Unemployment Assistance (PUA). Some headlines this morning are saying there were 963,000 UI claims last week, but that’s not the right number to use. Instead, our measure includes PUA, the federal program that is supporting millions of workers who are not eligible for regular UI, such as the self-employed. We also use not seasonally adjusted data, because the way Department of Labor (DOL) does seasonal adjustments (which is useful in normal times) distorts the data right now.Astonishingly high numbers of workers continue to claim UI, and we are still 12.9 million jobs short of February employment levels. And yet, Senate Republicans allowed the across-the-board $600 increase in weekly UI benefits – the most effective economic policy crisis response so far – to expire.In an unserious move of political theater, the Trump administration has proposed starting up an entirely new system of restoring wages to laid-off workers through executive order (EO). But even in their EO wishlist, the Trump administration would slash the federal contribution to enhanced unemployment benefits in half, to $300. This inaction and ongoing uncertainty is causing significant economic pain for workers who have lost their job during the pandemic and their families. It also causes an administrative hassle for state agencies that have already struggled immensely to process the huge number of claims early in the pandemic and implement the new UI protections in the CARES Act. Since the states with the least stable UI systems also have the highest populations of Black and Latinx people, existing inequalities will likely deepen even further by both the cutoff of supplementary benefits and the increased chaos introduced by having presidential EOs pretend to stand in for the legislative action that is needed. Cutting UI benefits is directly harmful not just to the individual workers who rely on them, but to the economy as a whole. The additional $600 in benefits allowed for a large amount of spending, sustaining these workers’ effective demand for goods and services even in the face of joblessness. If the Trump administration gets their way and these benefits are cut in half, it would cause such a large drop in spending that it would cost us2.6 million jobs over the next year.
After White House, Congress cut aid to unemployed, evictions and food lines spread across the US – Less than two weeks after the White House and congressional Democrats allowed the $600 weekly federal unemployment supplement to expire, slashing the income of some 30 million unemployed workers by 60-80 percent, evictions are already on the rise and food lines are growing by leaps and bounds across the United States.In signing four executive actions on Saturday, President Donald Trump claimed that he had intervened to temporarily resume the unemployment benefit, although at a sharply reduced rate of $300-$400. He also said his unilateral action, bypassing Congress, would prevent a wave of evictions following the expiration of a partial moratorium at the end of July.But it will be weeks or even months before jobless workers receive any of the promised money. Moreover, Trump’s executive memorandum on rent failed to extend the expired ban on evictions or provide any rental assistance, setting the stage for a rapid growth in the ranks of the homeless.A senior White House official confirmed to CBS News on Tuesday that there are currently no plans for congressional Democratic leaders, Speaker of the House Nancy Pelosi and Senate Minority Leader Charles Schumer, and White House negotiators, Treasury Secretary Steven Mnuchin, and White Chief of Staff Mark Meadows, to meet this week to discuss a fifth coronavirus relief bill. In fact, Meadows has already left Washington DC “for an unspecified amount of time,” according to a Washington Post report Tuesday. Under Trump’s legally dubious executive orders, US states already slashing budgets and furloughing workers in an attempt to make up for massive deficits incurred as a result of the pandemic are being asked to contribute an additional $100 a week on top of whatever meager state unemployment benefit is being paid out. The federal government would then add a further $300 a week. In a letter released Monday in response to Trump’s executive actions, the National Governors Association registered its “concern” over “the significant administrative burdens and costs this latest action would place on the states.” The letter requests that Congress and the administration “get back to the negotiating table and come up with a workable solution.” Meanwhile, early data from across the country indicate that evictions have already begun en masse. In Florida, Republican Governor Ron DeSantis postured as a protector of renters when he announced he was extending the state moratorium on evictions for a month. However, the text of the order bars only “final actions” in eviction proceedings, and only if the tenant can prove that nonpayment of rent is due to the coronavirus.
America Is About To Feel Like A 3rd World Nation – Ian Welsh -I spent a good chunk of my childhood in third world countries. Most of it was in Bangladesh, then arguably the poorest country in the world, but I visited or lived in Malaysia, Singapore, Indonesia, Nepal and India, among others. There’s a feel to the third world one becomes familiar with: beggars, infrastructure that doesn’t really work, people doing terrible menial jobs. There’s the huge disparity between the wealthy and everyone else, or even those who have managed to attach themselves in a semi-dignified way to the wealthy. Cruelty is routine and unremarked. Indian police officers routinely beat people as punishment (similar to American ones). Servants are treated terribly, and in fact the locals routinely treated the servants far worse than foreigners. America’s about to make a double digit percentage of its population homeless. Something like 20 to 30%, or more of American small businesses have or will shut down by the end of the pandemic. The jobs won’t all come back and those that do will pay worse and feature worse treatment than the ones before (which were mostly not well paid and featured routine meanness.) We’re talking about 30 million to 60 million homeless. These are staggering numbers. The United States will feel third world. Oh, parts already did, when I landed in Miami airport the first time I immediately thought “third world”. Relatively prosperous third world, but third world. Those places will be worse. Of course, for many, little will change. They’ll keep their jobs, they’ll be fine. I recently witnessed a discussion of infosec jobs, talking about how for a person with a degree and a couple certification $120,000 was a lowball. There will still be good jobs, and you’ll still be able to lose everything in a few months if you become seriously ill. But when those people who are hanging on go out in the streets, they’ll see, even more than now, the fate that awaits them if they slip. So much of American meanness, and the culture is mean in the details of its daily life, comes from this fear. Because it is so easy to slip into the underclass, even if one “does everything right”, Americans are scared, even terrified, all the time. They suppress it with massive amounts of drugs (most of them legal), and most deny it, but the fear drives the cruelty.
US Supreme Court defends deadly jail conditions in California – In a 5 – 4 vote last week, the US Supreme Court stayed an injunction originally granted on May 26 on the basis of a class-action lawsuit brought by over 3,000 inmates to protect them against COVID-19 in the pandemic. The suit sought to force Sheriff Don Barnes and Orange County, California, to take urgent steps to remedy conditions in Orange County jails, a four-facility penitentiary complex. The Supreme Court ruling reflects the contempt of the ruling class for constitutional rights and its indifference for human life. The Ahlman v. Barnes complaint granted injunction in May alleged various causes of action, such as unconstitutional conditions of confinement and unconstitutional punishment in violation of the Fourteenth Amendment and, where applicable, in violation of the Eighth Amendment to the US Constitution. It also alleged discrimination on the basis of disability in violation of Title II of the Americans with Disabilities Act and of Section 504 of the rehabilitation Act. The District Court concluded that the risk of harm in the jail was “undeniably high.” The lawsuit sought the immediate release of vulnerable and disabled people in jail, plus the demand to expand social distancing, care, testing and personal protective equipment (PPE). It also sought additional releases to bring the jail population to a level that is compatible with public health experts’ recommendations. At the time of this writing, the Orange County Sheriff’s Department alleges that all inmates and staff are tested for the coronavirus. This claim is contradicted by facts presented in the complaint, as well as inmates’ reports, taken into account by the District and Appeals’ courts, that the facility was not testing all suspected cases and that at least one symptomatic inmate was left in areas with inmates displaying no symptoms. The Orange County jails complex has run 3,133 tests, with 489 positive results. In Ahlman v. Barnes, the plaintiff alleged that limits in the jail’s design and capacity preclude full social distancing, with beds less than six feet apart. Symptomatic inmates mingle in common areas. Cleaning supplies are insufficient to disinfect living areas, with several cases of supplies not received for days. Moreover, on many occasions, inmates were not tested after exposure to an infected individual. Remarkably, the original injunction specifically focused on deliberate indifference on the part of the defendant, who was alleged to have made an intentional decision with respect to the conditions that put inmates at substantial risk of suffering serious harm, evinced by the high number of confirmed infections. The injunction agreed that the defendant was not even complying meaningfully with the meek Centers for Disease Control and Prevention (CDC) guidelines, which focus on prevention and management and don’t even contemplate a situation where hundreds within the inmate population have indeed been infected.
COVID-19 and the California Prison Crisis: 24th San Quentin Inmate Dies Last Friday – The 24th inmate from San Quentin State Prison died Friday from COVID-19 complications, part of the unfolding national prison apocalypse.San Quentin has the largest cluster of COVID-19 cases in the country, with a third of inmates and staff members -about 2500 people – testing positive.As reported by The Mercury News:The inmate is the 52nd in the state prison system to die from complications of the virus, according to the state’s tracker. The prisons have confirmed 8,665 cases of the virus in the system, including 1,007 over the past two weeks.The initial outbreak at San Quentin seems to be a direct consequence of California’s prisoner transfer policy, according to The Guardian, San Quentin faces California’s deadliest prison outbreak after latest Covid fatalities:The outbreak at San Quentin began after a late-May transfer of 121 people whom officials deemed to be at high risk of contracting and becoming seriously ill from Covid-19, from the California Institution for Men in Chino. Before the transfer San Quentin had zero positive cases; within four weeks of the move, it had reached almost 1,200 cases.Let me turn over the floor to Rahsaan Thomas, a San Quentin inmate, writing in Inside, I’ve served 19 years in San Quentin prison and I just got diagnosed with COVID-19. Where is the justice?:The corrections officers aren’t good at telling us whether we’re positive. For some people, the only hint has been when an officer keys your door, meaning you’re forced to stay in your cell while everyone else goes to chow. When they’re done, you pick up your tray or sack lunch with everyone else who tested positive. They don’t clean the railings or anything between groups of people with positive cases and negative cases. Everyone mingles in the same space, one after the other.Everyone who lives in North Block will have COVID-19 sooner or later. It’s up to the disease whether we live or die because the system won’t release people who committed violent crimes, and that’s almost all of us in the cell blocks.
Lebanon’s Leaders Resign over deaths of 200, but Trump refuses Accountability for 163,462 Deaths – On Monday, the prime minister of Lebanon and his entire cabinet resigned en masse, reports Bassem Mroue at the Associated Press. Last week an enormous explosion destroyed Beirut’s port and part of the city, killing over 200 persons and wounding thousands, and leaving 300,000 homeless. The explosion came about after volatile ammonium nitrate was stored at the port carelessly for seven years, despite expert warnings that it could flatten the city. Government corruption and neglect were at the root of the tragedy. Hassan Diab, a former engineering professor at the American University in Beirut and former minister of education, became prime minister in December after massive protests ousted his predecessor, Saad Hariri. When he resigned, he said of the old political class of warlords and elite sectarian families, “They should have been ashamed of themselves because their corruption is what has led to this disaster that had been hidden for seven years. I have discovered that corruption is bigger than the state and that the state is paralyzed by this clique and cannot confront it or get rid of it.” There is a difference between a parliamentary system and a presidential one, and in the latter resignations over policy failures are rare. But as an American I can’t help but be struck that Diab and his colleagues resigned over the deaths of some 200 Lebanese, while the death toll from COVID-19 in the US, according to Johns Hopkins, has reached 163,462. Trump and his cabinet cannot be blamed for all of those deaths. They are, however, responsible for a hefty chunk of them, often estimated at 40 percent. That percentage is based on Trump’s reluctance to initiate a lockdown in late February, waiting instead until mid-March. But since then there have been many more missteps, and new information has surfaced. It turns out that we didn’t have a national response to the pandemic in part because Jared Kushner concluded that it would mainly hit states that usually vote Democratic, like New York. We still don’t have a nationally backed system of rapid testing, and we don’t have nearly enough contact tracers. There is in short no Federal policy or significant Federal aid and coordination to country health departments. Then, Trump rushed the country to reopen on Memorial Day, before the curve had been flattened. He persuaded his lackeys, who hope to succeed him, like Florida governor Ron DeSantis, to open too early. He bullied and threatened governors like Michigan’s Gretchen Whitmer, who would not go along, and in the latter case encouraged the occupation of the State House by armed right wing Trumpies. He has politicized wearing masks, which reduce transmission by 80%, and discouraged people from wearing them. He has held large rallies in Tulsa and elsewhere, which certainly spread the disease. So by now I think more than 40% of the deaths can be laid at Trump’s doorstep. But even if we say it is only 40%, that would be over 65,000 Americans that Trump killed. On September 11, al-Qaeda killed almost 3,000 Americans and our country jumped into a 20-year global war. But Trump by his peculiar combination of narcissism, contrarianism, irrationality, and political guile, has polished off more Americans than died in the entire Vietnam War. So if he were even as upright as the corrupt and venal Lebanese government, he would resign. But poor little Lebanon is a piker when it comes to corruption compared to Trump.
Fed publishes big-bank capital requirements tied to stress test buffer – The Federal Reserve on Monday published capital requirements for the largest banks it supervises that for the first time will incorporate a so-called stress capital buffer. Goldman Sachs will have to comply with the highest capital requirements out of all of the 34 banks, with a common equity Tier 1 requirement of 13.7%. The new requirements will kick in Oct.1 . The common equity Tier 1 capital requirement is made up of the minimum CET1 capital ratio of 4.5%, which applies to each of the 34 banks, combined with the stress capital buffer requirement and, if applicable, a surcharge for the eight U.S.-based global systemically important banks. The stress capital buffer – which the Fed finalized in March – is calculated as the difference between a bank’s starting and projected capital ratios under the “severely adverse” stress test scenario. The buffer also factors in a bank’s common stock dividends as a percentage of risk-weighted assets. Morgan Stanley will be required to comply with the second-highest capital requirements after Goldman Sachs with a CET1 requirement of 13.4%. DB USA, an affiliate of Deutsche Bank, has the highest capital requirement among non-U.S. GSIBs at 12.3%. The lowest capital requirements are 7% for American Express, DWS USA (another arm of Deutsche Bank), Fifth Third Bancorp, Huntington Bancshares, KeyCorp, M&T Bank, Northern Trust, PNC Financial Services Group, Santander Holdings USA, TD Group and U.S. Bancorp. State Street Corp. has the lowest capital requirements out of the eight GSIBs at 8%, followed by Wells Fargo at 9%. However, the final capital requirements could be subject to change. The Fed is conducting a midcycle stress test this year due to the coronavirus pandemic, and it has left open the possibility that a firm’s stress capital buffer could be recalculated based on the results of the second round of stress tests. Although the midcycle stress tests will likely not be conducted before the capital requirements are set to take effect Oct. 1, the Fed could update a firm’s stress capital buffer requirement and require a firm to comply with a new requirement at a later date.
Bombshell Report: Fed Is Aware that Big Banks Are Rigging their Stress Tests and Letting Them Get Away with It – Pam Martens — On January 31 of this year, researchers for the Federal Reserve released a study that showed that the largest banks operating in the U.S. have been gaming their stress test results by intentionally dropping their exposure to over-the-counter derivatives in the fourth quarter. The fourth quarter data is the information used by the Federal Reserve to determine surcharges on capital for Global Systemically Important Banks, or G-SIBs.The report, “How Do U.S. Global Systemically Important Banks Lower Their Capital Surcharges?,” was written by Jared Berry, Akber Khan, and Marcelo Rezende.We decided to evaluate this claim for ourselves, usingthe quarterly derivative reports provided by the Office of the Comptroller of the Currency (OCC), the regulator of national banks. The data was appalling. The largest Wall Street banks not only dropped their level of derivatives by trillions of dollars in the fourth quarter, but they restored those derivatives by the end of the following first quarter. (See first OCC chart below which shows the largest of the top 25 banks by derivative exposure.)In the case of JPMorgan Chase, it dropped its total derivatives from $55 trillion notional (face amount) in the third quarter to $46.9 trillion in the fourth quarter of 2019, a decline of $8 trillion in one quarter or 15 percent. But by the end of the first quarter of 2020, JPMorgan had pushed those derivatives back up to $59.6 trillion.The Federal Reserve seems to be accepting this behavior from JPMorgan Chase as a legitimate means of reducing its capital requirements. Yesterday, the Federal Reserve announced the new capital requirements for the largest, Global Systemically Important Banks, or G-SIBs. We fully expected JPMorgan Chase to be slapped with the highest capital requirement since its Systemic Risk Report last year showed it to be the riskiest bank in the U.S. and, clearly, based on the above research that appears on the Fed’s own website, it’s aware of JPMorgan’s “window dressing,” the term used by its own researchers.But instead of JPMorgan Chase getting slapped with the highest Common Equity Tier 1 (CET1) capital requirement of all 34 banks that underwent the stress test, it was given a relatively tame 11.3 percent CET1. The banks hit with the highest CET1 capital requirements were Goldman Sachs at 13.7 percent and Morgan Stanley at 13.4 percent. (See the Fed’s full chart of capital requirements here.)Morgan Stanley does not show up on the first OCC chart below because it holds its huge derivatives book at its bank holding company, rather than at its federally-insured commercial banks. The second OCC chart below suggests that Morgan Stanley was also window-dressing its derivatives book, dropping it from $36.2 trillion in the third quarter of 2019 to $32.5 trillion in the fourth quarter; then back to $35.6 trillion in the first quarter of 2020. Goldman Sachs and Morgan Stanley came away with a higher CET1 capital requirement than even Deutsche Bank’s U.S. entity, DB USA, which was assigned a CET1 capital requirement of 12.3 percent. That’s really saying something. Deutsche Bank has lost money in four of the last five years, including a whopping $5.8 billion last year. Its stock price has evaporated 90 percent of its value since 2007 and it has been repeatedly hit with large fines by regulators for money laundering.
Why banks are putting PPP forgiveness on the back burner – The Paycheck Protection Program’s forgiveness portal has debuted, leaving bankers and their borrowers with a big decision. Those who participated in the $659 billion program must determine if they are ready right now to navigate the complex system for having loans forgiven, or if it makes sense to wait and see if Congress intervenes and simplifies the process. That decision was complicated over the weekend when talks about a new round of stimulus collapsed, casting doubt on when – or if – PPP will get an overhaul. A number of banks, including JPMorgan Chase, the program’s biggest participant with $29.2 billion in PPP originations, plan to hold off on processing applications. The $3.2 trillion-asset banking giant will start the forgiveness process next month, said Kimberly Hooks, a vice president at Chase Business Banking. JPMorgan Chase is backing a push for automatic forgiveness “as it would help thousands of small business owners get back on their feet,” Hooks added. Holtmeyer & Monson in Memphis, Tenn., is taking a similar wait-and-see approach with the 12,000 PPP loans it is servicing for 450 banks. “We had hoped today to actively start taking applications, but we made the decision to hold off,” said Arne Monson, the firm’s president and a co-founder. “We’re hoping like hell we get automatic forgiveness for loans of $150,000 and below, and maybe a streamlined [process] for those up to $2 million.” An SBA spokeswoman confirmed Monday that the agency’s platform began accepting forgiveness applications on schedule, though she did not provide any statistics on opening-day activity. The SBA stopped accepting applications for new Paycheck Protection loans on Saturday, after Congress failed to extend the program’s operating authority. Lawmakers are considering a number of proposals for a revived PPP, including increased funding and letting the hardest-hit small businesses obtain a second loan. Lenders’ willingness to procrastinate, even if it means delaying resolution of billions of dollars in loans, comes as little surprise to many industry observers.The SBA approved about 5.2 million PPP loans for more than $525 billion before the portal’s closure. The program offers low-interest loans to small businesses impacted by the coronavirus pandemic. Funds spent on basic operating expenses are eligible for forgiveness, making the program even more attractive to struggling entrepreneurs, but the process has been rocky, characterized by delays and unclear guidance. The forgiveness process has been stressful for borrowers and lenders. The SBA did not release a forgiveness application until mid-May, nearly six weeks after it began approving loans. A month later, following criticism that the original 11-page application was too long and complex, the agency released a streamlined form for self-employed borrowers and those that did not reduce employees’ wages by more than 25%. Before July 23, when it released news of the forgiveness platform, the SBA had never indicated where lenders could submit their applications.
Spike in disputed payments causing headaches for card industry– The credit card industry’s No. 1 concern during the coronavirus pandemic is that tens of millions of Americans are unemployed and struggling to pay their monthly bills. But the COVID-19 crisis has also given rise to a second problem: a sharp increase in the number of disputed card transactions, as airlines have canceled flights, performers have postponed concerts, and supply chain disruptions have delayed the delivery of many goods. In June, chargebacks that were not a result of fraud were 23% higher than during the same period a year earlier, according to e-commerce data released Wednesday by the payment processing firm ACI Worldwide. A Mastercard executive estimated that the increase in requests for consumer refunds has been even larger – somewhere in the range of 35% to 40% higher than last year. “There’s no question that the number of chargebacks has increased,” said Marie Russo, a senior vice president at Mastercard who is responsible for dispute resolution management, “just due to the circumstances around COVID.” The number of disputed transactions is still small in comparison with the total volume of U.S. card payments. Before the pandemic, Brian Riley at Mercator Advisory Group estimated that around four in 10,000 credit card transactions were the subject of a dispute. It is also the case that COVID-19 has been a boon for the electronic payments industry, as many transactions that were previously conducted in person are now being handled online. Still, the recent jump in chargebacks is having important consequences for card-issuing banks, retailers and other players in the electronic payment ecosystem. Payment disputes have been adding to long waits at call centers that have also been hit hard by customer requests for forbearance. Riley offered some advice to consumers who call their credit card company: “You’d better be prepared to read a book or something.” It is not just banks that have gotten slammed with phone calls from dissatisfied consumers. Many retailers are in a similar position, in part because shelter-in-place orders impacted their ability to operate call centers effectively. “Some merchants that we work with,” said Erika Dietrich, a vice president at ACI Worldwide, “just didn’t have the ability for their call center staff to work from home.” The travel and entertainment industry, which does not typically deliver physical goods, but instead offers experiences that require people to leave their homes, was especially hard hit, particularly in the early days of the pandemic, according to Jodie Kelley, CEO of the Electronic Transactions Association. “Certain merchants are just getting flooded with requests,” she said.
Hotel Bailouts At Taxpayer Expense Coming Right Up – Mish – Commercial Real Estate delinquencies have soared led by lodging. Trepp research shows CMBS Delinquency Rate Surges for the Third Month; Nears All-Time High. That was for June. For July, Trepp reported CMBS Delinquency Rate Sees Biggest Drop in More Than Four Years but even with the decline, delinquencies are near record levels.The notable change in the overall delinquency rate was the result of having more than $8 billion in loans “cured” – which means the loan was delinquent in June but reverted to “current” or grace/beyond grace period status in July. As we reported in TreppWire in mid-July, some of the improvements came via loan modifications such as a maturity extension. Additional benefit came via reserve relief, whereby borrowers were permitted to use reserves to keep the loan current. (This was confirmed by special servicer or watchlist comments in July.)The above paragraphs show that it is not clear how much of the alleged improvement is due to extend-and-pretend maneuvers vs. real improvement. How Long Will Hotels Stay Empty? That is the key issue. Trepp discussed that question on June 18. The report is now a bit out of date, but the observations are still worth a look. At the beginning of this year, one of the biggest headlines in the hotel sector was a measly growth in revenue per available room (RevPAR) in 2019. According to STR, the hotel industry recorded a 0.9% increase in RevPAR in 2019 – the lowest annual increase since 2009. At the time, STR had predicted that in 2020, overall RevPAR will only grow by 0.5% as an increase in supply would outpace growth in demand. Little did we know that any forecast – no matter how conservative – would not be applicable in the next few months. With the sudden COVID-19 outbreak spreading at a rapid pace, the hotel and tourism industries across the world faced a devastating halt. STR’s US hotel performance data has shown week-over-week increases in occupancy recently. From above 60% in late-February, the occupancy dropped sharply to only a third at 22% in early-April. It has since inched up slowly every week, coming in at 41.7% for the week ending June 13th. Going forward, CBRE expects that the hotel demand will return to pre-crisis levels in the third quarter of 2022. In this context, roughly $16.9 billion and $14.7 billion worth of hotel CMBS loans are set to mature in 2020 and 2021 respectively according to Trepp data. Over half of the balance of these maturing loans is backed by full-service hotels.
Obstacles mount for passage of CMBS relief bill – A bipartisan congressional bill introduced last month that would benefit struggling CMBS borrowers through a new Treasury-backed lending facility has moved on to the House Financial Services Committee for consideration. But passage could be an uphill battle, based on negative reaction to the measure. Even an influential pioneer in the commercial mortgage-backed securities market has bashed the measure as a bailout for deep-pocketed developers and investors that is “wrong, plain and simple.” “CMBS borrowers are corporate entities or wealthy individuals who should have known better and who took risks they must now pay for,” Ethan Penner, co-founder and managing partner of New York-based Mosaic Real Estate Investors, wrote in an Aug. 6 online commentary on the website Medium. “These businesses should be allowed to fail.” Penner, a former Nomura Securities financier who as “father of CMBS” helped develop the market for securitizing commercial real estate loans in the 1990s, voiced the kind of criticism that securitized credit analysts from Barclays had predicted shortly after the July 29 introduction of the HOPE (Helping Open Properties Endeavo”) Act. “[D]espite the bipartisan support, we think that there are various obstacles for this bill to pass, the biggest of which is that it will likely be perceived as bailing out wealthy landlords,” according to a July 31 Barclays securitized credit research note. The HOPE Act bill is co-sponsored by three lawmakers – Reps. Van Taylor, R-Texas, Al Lawson, D-Fla., and Andy Barr, R-Ky. – who have warned of a growing wave of delinquencies, foreclosures and further job losses in the hotel and retail industries if CMBS obligors cannot meet their debt service payments. CMBS delinquencies in May topped 10% for the first time in eight years, and borrowers have little flexibility through lenders or servicers to manage their sharp reduction in income due to coronavirus-related business shutdowns. The bill would authorize the U.S. Treasury to purchase preferred equity investments in CMBS loans, using funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act. But while the legislators discuss the threat to CMBS borrowers’ livelihoods, large investment firms will also be among the chief beneficiaries of the legislation.
Fee to shield Fannie, Freddie from COVID losses draws instant backlash – Fannie Mae and Freddie Mac will impose an “adverse market fee” of 0.5% on most refinanced mortgages starting Sept. 1 due to economic uncertainty, a move that the mortgage industry argues could effectively raise monthly mortgage payments for borrowers. Due to cratering mortgage rates since the onset of the coronavirus pandemic, many homeowners have looked to refinance their mortgage in order to lower their monthly payments. But the forthcoming adverse market fee could effectively raise costs for consumers looking to refinance, to the tune of $1,400 for the average consumer, the Mortgage Bankers Association is estimating. The new loan-level price adjustment will apply to all refinances. Neither company specified an end date for the fee. In a letter to lenders, Fannie said it would be implementing the extra fee “in light of market and economic uncertainty resulting in higher risk and costs.” But the announcement by Fannie and Freddie on Thursday night drew an immediate backlash from the mortgage industry. “The stated rationale for the loan-level price adjustment increase rings hollow, and at a time when consumers are struggling in the worst economy since the Great Depression, to add what amounts to a $1,400 fee on every refinance is outrageous,” said Robert Broeksmit, the MBA’s president and CEO. The policy resembles a similar fee that the companies implemented during the financial crisis. However, the two situations are somewhat different. The companies imposed the 2008 fee as they faced dramatic losses from the housing crash. Soon after they announced the fee then, the GSEs were placed in government conservatorships, which still exist to this day. By comparison, today the GSEs already have the financial backing of the U.S. government, and the mortgage sector to date has limited effects from the coronavirus pandemic. The companies’ second-quarter earnings were a combined $4.33 billion. The Federal Housing Finance Agency approved the request from the GSEs to impose the adverse market fee, an agency spokesperson said. “Based on their projected COVID-related losses, Fannie Mae and Freddie Mac requested, and were granted, permission from FHFA to place an adverse market fee on mortgage refinance acquisitions,” the spokesperson said. “FHFA will continue to ensure that the enterprises fulfill their missions and provide liquidity across the economic cycle.” Meanwhile, a Fannie spokesperson said the fee “is designed to ensure we are able to maintain market stability during a time of economic uncertainty.”
CoreLogic: “Overall Mortgage Delinquency Rates Beginning to Climb” -From CoreLogic: Clouds on The Horizon for Many U.S. Homeowners: Overall Delinquency Rates Beginning to Climb, According to CoreLogic Loan Performance Insights Report: On a national level, 7.3% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure). This represents a 3.7-percentage point increase in the overall delinquency rate compared to 3.6% in May 2019.To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency, including the share that transition from current to 30 days past due. In May 2020, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows:
Early-Stage Delinquencies (30 to 59 days past due): 3%, up from 1.7% in May 2019.
Adverse Delinquency (60 to 89 days past due): 2.8%, up from 0.6% in May 2019.
Serious Delinquency (90 days or more past due, including loans in foreclosure): 1.5%, up from 1.3% in May 2019. This is the first year-over-year increase in the serious delinquency rate since November 2010.
Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in May 2019. This is the second consecutive month the U.S. foreclosure rate was at its lowest level for any month since at least January 1999.
Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 2.2%, up from 0.8% in May 2019. By comparison, in January 2007 – just before the start of the financial crisis – the current- to 30-day transition rate was 1.2%, while it peaked in November 2008 at 2%.
In the months leading up to the pandemic, U.S. mortgage performance was showing signs of sustained improvement. The national unemployment rate matched a 50-year low in February, and overall delinquency had been on an impressive 27 consecutive-month decline. However, by May 2020 – just two months after the coronavirus (COVID-19) was declared a global pandemic – U.S. unemployment surged past 13%, leaving over 4 million homeowners (accounting for more than 8% of all mortgages) little choice but to enter a COVID-19 mortgage forbearance program. “The national unemployment rate soared from a 50-year low in February 2020, to an 80-year high in April,” said Dr. Frank Nothaft, chief economist at CoreLogic. “With the sudden loss of income, many homeowners are struggling to stay on top of their mortgage loans, resulting in a jump in non-payment.” Absent further government programs and support, CoreLogic forecasts the U.S. serious delinquency rate to quadruple by the end of 2021, pushing 3 million homeowners into serious delinquency.
MBA Survey: “Share of Mortgage Loans in Forbearance Decreases to 7.44%” of Portfolio Volume Note: This is as of August 2nd. The share of mortgage loans in forbearance decreased, but there was a slight uptick in forbearance requests last week.From the MBA: Share of Mortgage Loans in Forbearance Decreases for the Eighth Straight Week to 7.44%mThe Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 23 basis points from 7.67% of servicers’ portfolio volume in the prior week to 7.44% as of August 2, 2020. According to MBA’s estimate, 3.7 million homeowners are in forbearance plans. …”The share of loans in forbearance declined at a more rapid pace last week, with many borrowers who had been making payments while in forbearance deciding to exit. New forbearance requests increased, but are still well below the level of exits,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Some of the decline in the share of Ginnie Mae loans in forbearance was due to additional buyouts of delinquent loans from Ginnie Mae pools, which result in these FHA and VA loans being reported in the portfolio category.”Added Fratantoni, “The job market data in July came in better than expected. However, the unemployment rate is still quite high, and the elevated level of layoffs and slowing pace of hiring will make it more difficult for borrowers to get back on track – particularly if there is not an extension of relief.”By stage, 40.87% of total loans in forbearance are in the initial forbearance plan stage, while 58.43% are in a forbearance extension. The remaining 0.70% are forbearance re-entries. 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 eight weeks.The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week from 0.10% to 0.12%”
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Decreased — Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. This data is as of Monday, August 10th. From Forbearances Below 4 Million for First Time Since April: The overall trend of incremental improvement in the number of mortgages in active forbearance continues. According to the latest data from Black Knight’s McDash Flash Forbearance Tracker, the number of mortgages in active forbearance fell by another 71,000 over the past week, pushing the total under 4 million for the first time since early May. As of August 10, 3.9 million homeowners were in active forbearance, representing 7.4% of all active mortgages, down from 7.5% the week prior. Together, they represent $852 billion in unpaid principal. …Again, the ongoing COVID-19 pandemic around much of the country and the expiration of expanded unemployment benefits last month continue to represent significant uncertainty for the weeks ahead. Black Knight will continue to monitor the situation and provide updates via this blog. CR Note: There will probably be another disaster relief package soon, but we might see an increase in forbearance activity in the coming weeks as we wait for additional relief.
Fannie and Freddie: REO inventory declined sharply in Q2, Down 35% Year-over-year — Note, from Fannie: “The decline in single-family REO properties in the first half of 2020 compared with the first half of 2019 was primarily due to the suspension of foreclosures and a reduction in REO acquisitions from serious delinquencies aged greater than 180 days. With instruction from FHFA, we have prohibited our servicers from completing foreclosures on our single-family loans through at least August 31, 2020, except in the case of vacant or abandoned properties. In addition, some states and local governments have enacted additional foreclosure constraints that extend beyond that timeframe.” As a result of COVID-19, Fannie and Freddie kept disposing of REO in Q2, but there were very few acquisitions.Fannie and Freddie earlier reported results earlier for Q2 2020. Here is some information on Real Estate Owned (REOs). Freddie Mac reported the number of REO declined to 2,812 at the end of Q2 2020, compared to 5,869 at the end of Q2 2019. For Freddie, this is down 96% from the 74,897 peak number of REOs in Q3 2010.Fannie Mae reported the number of REO declined to 12,675 at the end of Q2 2020 compared to 17,913 at the end of Q2 2019. For Fannie, this is down 92% from the 166,787 peak number of REOs in Q3 2010.
Hotels: Occupancy Rate Declined 33% Year-over-year -From HotelNewsNow.com: STR: US hotel results for week ending 8 August: U.S. hotel performance data for the week ending 8 August showed slightly higher occupancy and room rates from the previous week, according to STR.
2-8 August 2020 (percentage change from comparable week in 2019):
Occupancy: 49.9% (-32.6%)
Average daily rate (ADR): US$100.88 (-24.9%)
Revenue per available room (RevPAR): US$50.37 (-49.4%)
U.S. occupancy has risen week over week for 16 of the last 17 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 “16 of the last 17 weeks”. The increases in occupancy have slowed and are well below the level for this week last year of 74%. The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).According to STR, most of the improvement appears related to leisure travel as opposed to business travel. The leisure travel season usually peaks at the beginning of August (right now), and the occupancy declines sharply in the Fall.
NMHC: Rent Payment Tracker Finds Decline in People Paying Rent in August — From the NMHC: NMHC Rent Payment Tracker Finds 79.3 Percent of Apartment Households Paid Rent as of August 6 : The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 79.3 percent of apartment households made a full or partial rent payment by August 6 in its survey of 11.4 million units of professionally managed apartment units across the country.This is a 1.9-percentage point, or 223,000-household decrease from the share who paid rent through August 6, 2019 and compares to 77.4 percent that had paid by July 6, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.”While President Trump announced executive orders relating to rental assistance and continued unemployment benefits, it is unclear when and if those resources will be available to families. NMHC continues to urge the Trump administration and Congressional leaders to restart negotiations and reach a comprehensive agreement on the next COVID relief package. It is critical lawmakers take urgent action to support and protect apartment residents and property owners through an extension of the benefits as well as targeted rental assistance. That support, not a broad-based eviction moratorium, will keep families safely and securely housed as the nation continues to recover from the pandemic.” CR Note: This is for larger, professionally managed properties. It appears fewer people are paying their rent this year compared to last year (down 1.9 percentage points from a year ago). But this hasn’t fallen off a cliff – yet – with the expiration of the extra unemployment benefits.
Millennials Slammed by Second Financial Crisis Fall Even Further Behind – WSJ – The economic hit of the coronavirus pandemic is emerging as particularly bad for millennials, born between 1981 and 1996, who as a group hadn’t recovered from the experience of entering the workforce during the previous financial crisis.For this cohort, already indebted and a step behind on the career ladder, this second pummeling could keep them from accruing the wealth of older generations.The 12.5% unemployment rate among millennials is higher than that of Generation X (born between 1965 and 1980), and baby boomers (1946 to 1964), according to May figures from the Pew Research Center. One reason is that some of the hardest hit industries, including leisure and hospitality, have a younger workforce. Millennials have found it fundamentally more difficult to start a career and achieve the financial independence that allowed previous generations to get married, buy a home and have children. Even the most educated millennials are employed at lower rates than older college graduates, research shows, and millennials’ tendency to work at lower-paying firms has caused them to lag behind in earnings. “It’s a sign that something has broken in the way the economy is working,” . “It’s gotten harder and harder for people to find their footholds.” As a result, the millennial generation has less wealth than their predecessors had at the same age, and about one-quarter of millennial households have more debt than assets, according to the St. Louis Fed. About one in six were unable to cover a $400 emergency expense before the pandemic started; that share is about one in eight among all Americans, the bank found. Millennials are now at risk of falling further behind because they entered the pandemic in a weaker position than older Americans.
35% Of Small-Business Owners Tapped Personal Savings To Pay Rent, Wages During Pandemic — As the federal government steps in to bail out overleveraged borrowers in the commercial real estate space, a growing body of evidence is highlighting the fact that Congress’s ‘PPP’ lending program – despite the fact that it has been extended through Aug. 8 – still wasn’t enough to save many small business owners from ruin (though there was unsurprisingly no shortage of fraud). A survey published by CreditCards.com shows that 35% of small-business owners were forced to dip into emergency savings to help tide their business or businesses over. Our July 2020 Small Business Poll uncovered a worrisome fact – 35% of American small-business decision-makers have tapped into personal funds to finance their businesses since the Coronavirus pandemic struck. That includes those who have dipped into a personal savings account (21%), used a personal credit card (24%) or both (10%).“It’s commendable how far these dedicated business owners are willing to go in search of their dreams,” says Ted Rossman, industry analyst at CreditCards.com. “I worry, however, about the debt they’re taking on, and how they’re potentially putting their personal finances at risk.”Also notably, 38% of business leaders have turned to either business or personal credit cards during this time, with 20% of those polled leaning on business cards.Paying off credit card debt can be stressful, but there’s a way to do so efficiently. Negotiating interest rates and paying more than the minimum are two ways to reduce the total time and amount of money repaid. “Many of the normal debt reduction tools are in shorter supply these days – for instance, 0% balance transfer offers have dried up due to worries about the economy. That’s why it’s so important to be creative and ask for a break,” Rossman added. Another good strategy: If you have multiple cards with balances and are able to put some money toward your debt, prioritize the highest interest rates in order to reduce the total interest expense.Meanwhile, the single most popular form of funding was Paycheck Protection Program loans from the Small Business Administration, used by 30% of small businesses.
“Financially Devastated” – 83% Of NYC Restaurants Unable To Pay July Rent –The state of the New York City restaurant industry is in dire straits. July proved to be another disastrous month for restaurants, bars, and nightlife establishments across the city with a majority unable to pay rent in July, a new survey found.NYC Hospitality Alliance surveyed about 500 owners and operators of eateries in the city, with 83% of respondents indicating they couldn’t pay the entire rent in July while 37% paid no rent at all. “Restaurants and nightlife venues are essential to the economic and social fabric of our city, but they are struggling to survive and absent immediate and sweeping relief so many will be forced to close permanently,” said Andrew Rigie, executive director of The Alliance.“While complying with the necessary pause, our industry has been uniquely and financially devasted. Small businesses urgently need solutions from government leaders at the city, state, and federal level, inclusive of extending the moratorium on evictions, extending the suspension of personal liability guarantees in leases, pausing commercial rent taxes, providing landlords with needed support, and infusing small businesses with enough cash to weather the storm,” Rigie said.To make matters worse, 71% of owners and operators said landlords “would not waive portions of rent due to COVID-19.” About 61% said, landlords “would not defer rent payments,” while 90% of landlords “would not formally renegotiate leases.”Indoor dining in the city remains halted, “outdoor dining service is not generating sufficient revenue to cover rent and other expenses, small business owners in the industry continue to express significant concerns about surviving the pandemic and staying viable in the future,” said The Alliance. Through July, OpenTable restaurant data reveals foot traffic at eateries remains depressed.
Gasoline Demand Hits Highest Level Since March — U.S. gasoline consumption recovered last week to where it stood just before the pandemic forced everyone inside but uncertainty lingers for the oil industry as driving season season approaches its end. Will anyone be driving back to school? Gasoline demand last week increased to 8.715 million barrels-a-day, the highest level for the four-week moving average since March 20, Energy Information Administration data show. “That’s an impressive number,” said Phil Flynn, senior market analyst at Price Futures Group. “It looks like people are finally getting back on the road, especially since we had been seeing a lot of discussion of the second wave of the virus.” More drivers were spotted in California and Texas, the states with the most registered vehicles, Macquarie said in a note this week. Still, demand is off last year’s figure by nearly 1 million barrels a day. That’s the equivalent of taking about 1.5 million pickup trucks off the road. Gasoline isn’t the only road fuel in recovery mode. Product supplied for diesel last week rose to its highest since April 3. Highway miles for trucks are up this year over 2019 with more shoppers turning to online orders. The uptick in consumption has prompted once-moribund refiners to process more crude. Refinery utilization rose to 81% so far in August from 73% in early June. These embers of a recovery may flicker out as summer comes to a close. September will likely bring a drop in gasoline demand figures both monthly and compared to last year with fewer parents driving kids to school, . U.S. Labor Day marks the end of summer travel
Retail Sales increased 1.2% in July – On a monthly basis, retail sales increased 1.2 percent from June to July (seasonally adjusted), and sales were up 2.7 percent from July 2019. From the Census Bureau report: Advance estimates of U.S. retail and food services sales for July 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $536.0 billion,an increase of 1.2 percent from the previous month, and 2.7 percent above July 2019. Total sales for the May 2020 through July 2020 period were down 0.2 percent from the same period a year ago.This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 0.9% in July. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Year-over-year change in Retail Sales Retail and Food service sales, ex-gasoline, increased by 4.2% on a YoY basis. The increase in July was below expectations, however sales in May and June were revised up.
Covid-19 Shortages Continue and Could Get Worse – Yves Smith – The Wall Street Journal has a terrific article on the current state of consumer supplies. The short version, as many of you have been reporting, is many things that were scarce no longer are, like toilet paper and chicken breasts. I can’t comment personally about other items that got cleaned out due to Covid-19 stockpiling, such as flour and pasta. However, I have yet to see isopropyl alcohol or disinfectant wipes return to area drugstores. USA Today confirms my impression: Clorox wipes are likely to be scarce through 2021. However, more and more research suggests that the surface cleaning is overdone. According to the Journal, we’re not the only ones thinking this way: As Covid-19 cases continue to rise in certain states, grocers are reporting a new increase in staples purchases that could lead to scarcity. The even-stronger demand for items such as baking ingredients and paper towels has made it tough for manufacturers to produce the items fast enough to keep shelves full.Stores are better supplied than during the lockdown crunch, but not back to the old normal: During the peak shopping spree at the end of March, stores ran out of 13% of their items on average. Now, roughly 10% of items remain out of stock, compared with a normal range of 5% to 7% before the pandemic.That might not seem significant, but leaving shelves 90% full for half a year would cost the supermarket industry some $10 billion in lost revenue, according to research from trade associations.For grocery shoppers, it means that someone with 20 items on their list would be out of luck on two of them. Shopper surveys have shown that if people can’t find what they are looking for, they will try a different store, and the retailer risks losing that customer for good.The Journal also showed types of items still in spotty supply: And as consumers no doubt recall from the way meat prices spiked during the worst of the crunch, supply isn’t the full story. High prices also serve to create a bit of rationing, since budget-crunched customers will buy less or switch to substitutes. Again from the Journal:
America can’t afford to ignore the foodservice distribution industry – The impact of the coronavirus pandemic on the foodservice distribution industry has been devastating. Foodservice distribution is an enormous yet relatively unknown industry, which before the pandemic, totaled more than $300 billion in annual sales and employed 350,000 Americans in all 50 states and the District of Columbia. The industry is bigger than the airline industry, with thinner operating margins. Preserving this essential industry is critical to helping our economy recover. Congress must act now to pass the Providing Liquidity for Uncollectible Sales (PLUS) Act to ensure distributors can continue to provide the support their restaurant customers need to survive this crisis. Foodservice distributors feed America, delivering 8.7 billion cases of food and food-related products annually. They ensure fresh, safe food produced by America’s farmers and manufacturers fills the kitchens, shelves and pantries of our nation’s restaurants, schools, hospitals, entertainment venues, military bases and other public service institutions. In Illinois alone, it’s an $11 billion industry with 570 distribution centers that employ 13,300 people. But the uncertainties of coronavirus including state shutdowns and limited re-openings have pushed the foodservice industry to the brink. Four in ten restaurants have closed their doors completely; some may never re-open. Thousands of schools and universities are going virtual for the school year, and professional sports teams are struggling to keep players on the field, never mind fans in the stands. America cannot fully re-open without a strong foodservice distribution industry. Foodservice distributors serve as the bank for America’s restaurants and play a critical role getting our economy up and running again. Restaurants buy their supplies on payment terms that allow them to generate revenue before the bill comes due. Over the last five months restaurant sales have plummeted, and they have not been able to pay their distributors for purchased inventory. This uncollectible debt has created a significant limitation on distributor liquidity when they need it most to extend credit to their customers so they can restart their businesses. Foodservice distributors currently have more than $12 billion in unpaid debt as a result of this crisis.
BLS: CPI increased 0.6% in July, Core CPI increased 0.6% — From the BLS: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.0 percent before seasonal adjustment.The gasoline index continued to rise in July after increasing sharply in June and accounted for about one quarter of the monthly increase in the seasonally adjusted all items index. …The index for all items less food and energy rose 0.6 percent in July, its largest increase since January 1991. …The all items index increased 1.0 percent for the 12 months ending July, a larger increase than the 0.6-percent rise for the period ending June. The index for all items less food and energy increased 1.6 percent over the last 12 months. Overall inflation was above expectations in July. I’ll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.
July Consumer Prices Rise Amid Increased Demand for a Range of Goods, Services – WSJ – U.S. consumer prices rose in July on higher costs for a range of products and services, a sign of firming inflation as demand for goods rebounded following steep declines earlier in the coronavirus pandemic. The consumer-price index – which measures what consumers pay for everyday items including groceries, medical care and electricity – climbed a seasonally adjusted 0.6% in July, the Labor Department said Wednesday. The rise was the second in as many months.. The index also rose 0.6% in June, which was seen as a potential turning point for consumer prices, following declines in March, April and May amid the pandemic’s initial economic fallout. Excluding the often-volatile categories of food and energy, so-called core prices rose 0.6%, compared with a 0.2% increase in June, posting its largest month-to-month increase since January 1991. Economists surveyed by The Wall Street Journal expected a 0.3% increase for the overall consumer-price index, and a 0.2% gain for the core index. Roughly a quarter of the July increase was due to gasoline prices, the Labor Department said, which were up 5.6%. Prices for apparel and used vehicles also rose sharply. Notably, prices for food fell 0.4%, with grocery costs declining 1.1%, following significant increases earlier in the pandemic as Americans stayed at home. The advance in overall consumer prices during July came despite a month when the U.S. saw a resurgence in coronavirus cases, which forced some states to put new restrictions in place aimed at containing the virus. Some states reimposed social distancing measures and business closures as a result. The rise in consumer prices last month aligns with an increase in the producer-price index, a measure of the prices businesses receive for their goods and services. That index rose a seasonally adjusted 0.6% in July, the Labor Department reported Tuesday, the largest monthly rise since October 2018.
July Producer Price Index: Core Final Demand Up 0.5% MoM – Today’s release of the July Producer Price Index (PPI) for Final Demand was at 0.6% month-over-month seasonally adjusted, up from a 0.2% decrease last month. It is at -0.4% year-over-year, up from -0.8% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.5% MoM, up from -0.3% the previous month and is up 0.3% YoY NSA. Investing.com MoM consensus forecasts were for 0.3% headline and 0.1% core.Here is the summary of the news release on Final Demand:The Producer Price Index for final demand increased 0.6 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed a 0.2-percent decline in June and a 0.4-percent advance in May. (See table A.) The July increase is the largest rise since a 0.7-percent advance in October 2018. On an unadjusted basis, the final demand index moved down 0.4 percent for the 12 months ended in July.In July, the advance in the final demand index was led by a 0.5-percent rise in prices for final demand services. The index for final demand goods also moved higher, increasing 0.8 percent.Prices for final demand less foods, energy, and trade services advanced 0.3 percent in July, the same as in June. For the 12 months ended in July, the index for final demand less foods, energy, and trade services edged up 0.1 percent, following three straight 12-month declines. More … The BLS shifted its focus to its new “Final Demand” series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.
Industrial Production Increased 3.0 Percent in July; Still 8.4% Below Pre-Crisis Level – From the Fed: Industrial Production and Capacity Utilization: Total industrial production rose 3.0 percent in July after increasing 5.7 percent in June; even so, the index in July was 8.4 percent below its pre-pandemic February level. Manufacturing output continued to improve in July, rising 3.4 percent. Most major industries posted increases, though they were much smaller in magnitude than the advances recorded in June. The largest gain in July – 28.3 percent – was registered by motor vehicles and parts; factory production elsewhere advanced 1.6 percent. Mining production rose 0.8 percent after decreasing for five consecutive months. The output of utilities increased 3.3 percent, as unusually warm temperatures increased the demand for air conditioning. At 100.2 percent of its 2012 average, the level of total industrial production was 8.2 percent lower in July than it was a year earlier.Capacity utilization for the industrial sector increased 2.1 percentage points in July to 70.6 percent, a rate that is 9.2 percentage points below its long-run (1972 – 2019) average but 6.4 percentage points above its low in April.This graph shows Capacity Utilization. This series is up slightly from the record low set last month, and still below the trough of the Great Recession (the series starts in 1967). Capacity utilization at 70.6% is 9.2% below the average from 1972 to 2017. Note: y-axis doesn’t start at zero to better show the change. Industrial ProductionThe second graph shows industrial production since 1967. Industrial production increased in July to 100.2. This is 8.4% below the February 2020 level. The change in industrial production was at consensus expectations, however industrial production in May and June was revised down.
BLS: Job Openings increased to 5.9 Million in June –From the BLS: Job Openings and Labor Turnover Summary: The number of job openings increased to 5.9 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Hires decreased to 6.7 million in June, but was still the second highest level in the series history. The largest monthly increase in hires occurred in May 2020. Total separations increased to 4.8 million. Within separations, the quits rate rose to 1.9 percent while the layoffs and discharges rate was unchanged at 1.4 percent. These changes in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. This series started in December 2000. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs – when it is below the columns, the economy is losing jobs. Jobs openings increased in June to 5.889 million from 5.371 million in May.The number of job openings (yellow) were down 18% year-over-year.Quits were down 25% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for “quits”). Job openings increased in June, but were still down sharply YoY.
Did July’s headline jobs number miss business closures, and so overcount job gains? –A few issues arose with regard to last Friday’s jobs number; in particular, the effect of government jobs in the form of Census and teaching jobs, whether seasonal adjustments are unhelpful at this time; and whether the birth/death model used by the BLS has undercounted job losses (due to increased non-reporting by closed businesses). I’m going to examine this in two posts. Today I want to compare the BLS payrolls data with the Census’s household survey. Let’s start with the issue of government employment. Since there were lots of layoffs in schools earlier, the lack of new layoffs in July meant that “seasonally” over 200,000 gains of the 1.763 million jobs reported in July were included in the nonfarm payrolls number (Blue in the graph below). When they are taken out, however, you still get a gain of 1.462 million (red): A second issue is whether the BLS has been undercounting job losses due to closed businesses. Let’s look at this together with the issue that the pandemic has rendered the seasonal adjustments counterproductive. Because the way to deal with both is to compare the Census Bureau’s household employment report, and compare both on a non-seasonally adjusted basis. So, all of the graphs below are *not* seasonally adjusted. First, here are nonfarm payrolls (blue) compared with household employment (red) for the past 5 years: There is always a big decline in January, and a secondary one in July. Needless to say, they have both been dwarfed by the effect of the pandemic. But also, notice that both measures have bounced back since April, in roughly equivalent amounts, and both showed gains in July (again, remember these graphs are not seasonally adjusted, so the lack of school layoffs last month is moot). Here is a close-up of the last few months. Again we see that the improvements in both the BLS employer survey and the Census Bureau’s household survey have been comparable: The same shows up in the YoY% measures of both the BLS and Census Bureau data: Finally, let’s compare the monthly % change for both measures over the past 5 years through this past January: Again, note the large January and smaller July declines. In the case of July, it’s not unusual for there to be a one month delay in the Census (red) vs. the BLS (blue) decline. It’s also not unusual at all for there to be a month to month deceleration in job gains in the Census figure. Now let’s show just this past year: Notice that the scale of the % losses and gains is much larger. But the Census and BLS monthly changes are in line with one another. In sum, comparing the Census Bureau’s household report data with the BLS’s employer survey strongly suggests that the official BLS jobs number has not been missing a significant number of job losses due to a spike in business closures.
U.S. weekly jobless claims drop below one million; labor market still weak – (Reuters) – The number of Americans seeking jobless benefits dropped below one million last week for the first time since the start of the COVID-19 pandemic in the United States, though at least 28 million people are still receiving unemployment checks, indicating the labor market was far from healing. The expiration of a $600 weekly jobless supplement at the end of July likely contributed to the decline in claims reported by the Labor Department on Thursday. Reports from payroll scheduling and workforce management firms suggested a decline in employment in early August due to the spread of new COVID-19 cases across the United States. “Unemployment remains a huge problem for the U.S. economy,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh. “It could also be that the expiration of bonus unemployment payments of $600 per week at the end of July has discouraged some potential beneficiaries from applying for unemployment insurance, the expiration may also have encouraged some beneficiaries to leave unemployment and take a job.” Initial claims for state unemployment benefits decreased 228,000 to a seasonally adjusted 963,000 for the week ended Aug. 8. That was the lowest level since mid-March when authorities started shutting down non-essential business to slow the spread of the novel coronavirus. Economists polled by Reuters had forecast 1.12 million applications in the latest week. Claims peaked at a record 6.867 million in late March.
Initial and continuing claims: the most “less awful” so far – This morning’s initial and continued jobless claims continue the trend of “less awful” numbers that resumed last week. New jobless claims, which fell to under 1,000,000 for the first time on an un-adjusted basis last week, declined about 150,000 further to 831,856 (red in the graph below), and on an adjusted basis (blue) declined to 963,000, the first time since the pandemic that number was also under 1 million: Continuing claims, on both an un-adjusted (red), and seasonally adjusted (blue) basis, also made new pandemic lows under 16 million, at roughly 15.2 million and 15.5 million respectively: All of these remain at far worse levels than even at their worst during the Great Recession, as shown below in the seasonally adjusted numbers (initial claims, dark blue; continuing claims, light blue): On both an adjusted basis, initial claims peaked at roughly 650,000 during the Great Recession, while their non-adjusted peak came during January, when there is typically a big spike, at roughly 950,000. Continuing claims peaked at roughly 6.5 million on both an adjusted and unadjusted basis, so claims now are roughly 2.5 times that peak. This is progress, so it’s “good” news, and a positive short leading indicator for the economy, but of course, as I have said many times over the past few months, on an absolute basis it is really just “less awful.”
Comments on Weekly Unemployment Claims – McBride – On a monthly basis, in normal times, most analysts focus on initial unemployment claims for the BLS reference week of the employment report. For August, the BLS reference week is August 9th through the 15th (the current week), and initial claims for this week will be released next week. However, continued claims are probably much more useful now. Continued claims are released with a one week lag, so continued claims for the reference week will be released in two weeks. Continued claims are down 1.5 million from the reference week in July, suggesting some increase in employment in August. decreased last week to 15,486,000 (SA) from 16,090,000 (SA) the previous week. Continued claims are now down 9.4 million from the peak, suggesting a large number of people have returned to their jobs (as the last three employment reports showed).There are another 10,723,396 people receiving continued PUA. The following graph shows regular initial unemployment claims (blue) and PUA claims (red) since early February. This was the 21st consecutive week with extraordinarily high initial claims, however initial claims have declined over the last two weeks. We are probably seeing some layoffs related to the higher level of COVID cases and also from the end of some Payroll Protection Programs (PPP).
Walmart Is Turning Its Parking Lots Into Drive-In Movie Theaters For Its Customers – In an announcement that will certainly come as welcome news for the homeless and unemployed already living in their cars in Walmart parking lots, the retailer said yesterday that effective August 14, it is going to be kicking off the “Walmart Drive-in movie theater experience”. The retailer’s “first ever drive-in” movie theater will debut at 160 different Walmart stores across the country starting this month in a partnership with the Tribeca Film Festival. Because showing Disney movies to overweight Walmart customers eating McDonald’s in their Dodge pickup trucks is basically synonymous with the elite crowds that attend the Tribeca Film Festival. Better yet, you know the drive-ins will attract an elite crowd, because Walmart is offering them as “free to Walmart customers”. Janey Whiteside, Walmart’s chief customer officer, said: “We recognize the challenges our customers and their families have faced over the last few months, and we wanted to create an experience where they could come together safely to create new memories. The Walmart Drive-in is one small way we’re supporting the communities we serve.”The drive-ins will feature filmmakers and surprise guests making appearances at “select showings”, the retailer says. The company says the films will include:
COVID-19: A blessing for Bezos and a nightmare for workers – Since the coronavirus was first detected in China in December 2019, nearly 20 million people worldwide have become infected and over 700,000 people have died, including 160,000 in the United States. Over 32 million people in the United States are now unemployed, exceeding records which have stood since the Great Depression.Over that same time, Amazon’s value on the stock market has nearly doubled from $867 billion dollars to $1.61 trillion. Amazon CEO Jeff Bezos’ personal net worth has skyrocketed to $192 billion, including a $13 billion increase during a single day last month. This points to two interconnected processes: the devastating impact of the virus on human life on the one hand, and the engorging of the super-rich on a massive run-up in share values, driven by a massive government bailout on the other. The first reported cases of COVID-19 at Amazon were two workers in Milan, Italy, March 1. Two days later workers in Seattle, Washington, tested positive for the virus. As time elapsed, the virus spread, infecting more and more Amazon workers, with confirmed cases in Germany, Spain, France, Poland, USA, etc. Amazon, which utilizes state-of-the art warehouse robots and surveillance technology, gave its workers surgical masks and gloves which were often recycled as “protection” from COVID-19. Warehouses were not disinfected properly, non-essential items were being shipped, workers worked in cramped conditions; inevitably, many began to show up sick. The anger bubbling up among Amazon workers could no longer be contained and a wave of strikes washed over warehouses and delivery stations around the world in late March and April. In March and April there were also strikes by Amazon workers in Spain, but the exact dates are unable to be verified. Strike action was planned byPolish workers, but this was halted by the trade unions. Trade unions for German workers began closed negotiations with Amazon, as tensions began to boil within the rank and file, and in late June more than 2,000 Amazon workers in Germany launched a two-day strike in six facilities. For all of the Amazon workers, from American workers to workers in Germany, the role of the unions has been to contain their fighting spirit, feed illusions of reform, and ultimately tire out workers into accepting Amazon’s terms and conditions of employment. This fact finds clear expression in the “May Day Strike ,” a protest stunt manufactured by the Democratic Party, the trade unions and corporate news media like the Bezos-owned Business Insider.
17-year-old Chili’s hostess attacked by diners for enforcing social distancing – A teenage Chili’s hostess in Louisiana is reportedly recovering from injuries after being attacked by dining guests for enforcing social distancing policies at the restaurant. Kelsy Wallace, 17, said the attack occurred Sunday after she told a group of 13 people they could not sit at a single table, citing company COVID-19 measures, local ABC affiliate WBRZ reported. “My general manager tells us we’re not supposed to sit a table over 6 because of the coronavirus,” Wallace said, adding that since the group had 13, one extra table would still not work for the guests. Wallace said the diners became upset and attacked her before she could reach her manager. “She pushed me. And when she pushed me, all I knew was to push her back. I reacted. That’s when her and her daughters, they all came. And they’re grown women. I’m 17-years-old. They’re like, 20, 30, and the woman that pushed me looked like she was 40,” Wallace said. “So I’m standing there, they’re on me, beating me,” she added. “I’m standing there trying to hit them, trying to get all of them off me. And the lady she takes a wet floor sign and slams it in my eye. And I had blood rushing everywhere.” Wallace went to the emergency room after the incident, where she received five stitches above her eye. One of the patrons involved in the tussle also ripped out some of her hair. The diners reportedly left the scene in two separate cars before authorities could arrive, Baton Rouge police said. UK holds first concert at venue designed to follow social distancing… NH issues mask mandate ahead of motorcycle rally: ‘Sturgis was a real… Wallace said her biggest surprise was that nobody stepped in to help her during the fight, adding that while she is technically still employed, she would not be returning to the Chili’s. “The managers let them walk out. Like, how y’all let them leave like that? I mean, they could have locked the doors until the police came,” Wallace said.
At Least 97,000 Children in the U.S. Tested Positive in Last 2 Weeks of July – NYTimes – At least 97,000 children in the United States tested positive for the coronavirus the last two weeks of July alone, according to a new report from the American Academy of Pediatrics and the Children’s Hospital Association. The report says that at least 338,000 children have tested positive since the pandemic began, meaning more than a quarter have tested positive in just those two weeks.The report comes as parents and education leaders grapple with the challenges of resuming schooling as the virus continues to surge in parts of the country.More than seven out of 10 infections were from states in the South and West, according to the report, which relied on data from 49 states along with Washington, D.C., Puerto Rico and Guam. The count could be higher because the report did not include complete data from Texas and information from parts of New York State outside of New York City.Missouri, Oklahoma, Alaska, Nevada, Idaho and Montana were among the states with the highest percent increase of child infections during that period, according to the report. New York City, New Jersey and other states in the Northeast, where the virus peaked in March and April, had the lowest percent increase of child infections, according to the report.In total, 338,982 children have been infected, according to the report.Not every locality where data was collected categorized children in the same age range. Most places cited in the report considered children to be people no older than 17 or 19. In Alabama, though, the age limit was 24; in Florida and Utah the age limit was 14. The report noted that children rarely get severely sick from Covid-19, but another report, from the Centers for Disease Control and Prevention, highlighted how the threat from a new Covid-19-related condition, called Multisystem Inflammatory Syndrome in Children or MIS-C, has disproportionately affected people of color.
97,000 U.S. Kids Test Positive for COVID-19 on the Brink of Schools Reopening –The coronavirus cases surging around the U.S. are often carried by kids, raising fears that the reopening of schools will be delayed and calling into question the wisdom of school districts that have reopened already.A new study found that more than 97,000 children around the country tested newly positive for the virus by the end of July, marking a 40 percent increase in the number of infected children, according to a new reportfrom the American Academy of Pediatrics and the Children’s Hospital Association, as The New York Timesreported. The report says that at least 338,000 children had tested positive through July 30, meaning more than a quarter tested positive in just the two weeks between July 15 and the end of the month. The eye-popping data that the medical organizations compiled comes during back-to-school season as health officials are trying to understand the effects of the virus on children and the role young people play in its spread. Some schools have begun welcoming crowds back to class and others have had to readjust their reopening plans in response to infections. North Paulding High School near Atlanta, Georgia made headlines for its packed hallways and has abruptly shifted to online instruction after there were nine positive cases in the school – three among staff and six among students, according to CNN. The report cited data from 49 states, New York City, Washington, Puerto Rico and Guam, most of which defined children as younger than 19 years old, though some states defined children as only up to 14, while Alabama defined it as up to 24. While children make up a small fraction of the number of positive coronavirus cases in the U.S., their portion is growing. According to The Washington Post, while children were only 2 percent of cases nationwide in April, they now account for 8.8 percent. The numbers of children affected followed the national trend, with large upticks in the South and Southwest, and much smaller numbers in the Northeast, where the virus is much more in control. New York City, New Jersey and other Northeastern states had the lowest number of childhood infections, according to the report. Seven out of 10 new pediatric cases were reported in southern and western states, according to the paper, as the The Washington Post reported. Northeastern states saw much more limited growth in children’s cases. Arizona reported the most cases per 100,000 children, with more than 1,000 on July 30. Louisiana, South Carolina and Tennessee were the only other states with more than 800 cases per 100,000.
Coronavirus testing in Texas plummets as schools prepare to reopen — Texas’ low number of tests and large percentage of positive results suggest inadequacies in the state’s public health surveillance effort at a time when school reopenings are certain to increase viral spread, health experts said. The number of Texans being tested for the coronavirus has fallen sharply in recent weeks, a trend that has worried public health experts as officials consider sending children back to school while thousands more Texans are infected each day. In the week ending Aug. 8, an average 36,255 coronavirus tests were administered in Texas each day – a drop of about 42% from two weeks earlier, when the average number of daily tests was 62,516. At the same time, the percentage of tests yielding positive results has climbed, up to 20% on average in the week ending Aug. 8. Two weeks earlier, the average positivity rate was around 14%. On Saturday, the state set a record for its positivity rate, with more than half of that day’s roughly 14,000 viral tests indicating an infection. Taken together, the low number of tests and the large percentage of positive results suggest inadequacies in the state’s public health surveillance effort at a time when school reopenings are certain to increase viral spread, health experts said. “Opening the schools is a really complicated problem, and the best thing we can do is get the number of cases down so kids can go back to school safely,” said Catherine Troisi, an infectious disease epidemiologist at UTHealth School of Public Health in Houston. “There are so many reasons why kids need to be in school, particularly younger kids, but we’re finding out more and more they can get infected, and the concern is them bringing it home and spreading in the community and spreading to teachers. “I think the worst thing would be for schools to open, then close,” she said. “That really makes it hard on parents, that unpredictability, and there’s a lot of costs associated with opening the schools safely.” The decline in tests may be driven in at least some places by a drop in demand. In Austin, health officials say fewer people are seeking tests through the city’s online portal and at local events. Local officials had been forced in late June to limit testing only to people who were showing symptoms of the coronavirus. Now, they are opening it back up to asymptomatic people.
Georgia teachers and students force temporary closure of North Paulding High School over COVID-19 outbreak – On Sunday, the superintendent of the Paulding County School district in Dallas, Georgia sent an email alerting the parents of North Paulding High School that the school would be closed for in-person instruction on Monday and Tuesday of this week. The superintendent, Dr. Brian Otett, explained in the letter that the school had suffered nine confirmed cases of COVID-19 since reopening one week ago. The cases included three staff members and six students.The cluster of cases emerged as a direct consequence of the reckless decision of the Paulding County Board of Education to reopen schools for in-person instruction amid a surge in COVID-19 cases in the state. It appears that the county opened its schools with almost no protective measures in place.Parents of North Paulding High students reported that they were offered the choice between in-person and virtual learning, but a limit was placed on how many students could do virtual learning. That option was so popular that the limit was reached within a few days. Many families are now on a waiting list, according to the school board. North Paulding High School opened its doors on August 3. The school made national headlines just days later after students posted pictures and videos of their peers walking through crowded hallways, without masks.School administrators responded to the exposure with hostility. Two of the students involved were suspended, including 15-year-old Hannah, who told Buzzfeed that she was found to have violated rules against unauthorized use of smartphones in school hallways. The school principal can also be heard in this leaked audio filethreatening anyone else with “consequences” if he or she posts anything “negative” on social media. The posts went viral on social media, prompting a massive backlash from students, parents, teachers and others in the Dallas area and throughout the country. Only after the school was made the focus of nationwide negative attention were the students reinstated.
Schools can stay open until coronavirus positivity rate hits 25%, Shelby County health department says – Shelby County health officials say they won’t recommend closing schools or returning to a stay-at-home order until 25% of coronavirus tests in the community come back positive – a threshold dramatically higher than other cities across the nation. By contrast, New York City’s mayor has said school buildings must shutter if the positivity rate exceeds 3%, and other school districts have vowed to limit in-person learning when the rate hits 5%. While Shelby County’s guidelines mean that coronavirus infection rates would have to get a lot worse before the health department urges school buildings shut, the majority of students in the county won’t be returning to campuses just yet. That’s because Shelby County Schools is scheduled to begin online Aug. 31 and remain virtual until further notice. The district has not yet indicated what coronavirus case numbers would signal a safe return to school buildings or what would prompt recurring closures. Some local charter schools, private schools, and suburban districts have already begun in-person learning or are planning to do so later this month.
Trump administration doubles down on push to reopen school buildings – Chalkbeat -The Trump administration mounted a pressure campaign last month aimed at getting America’s schools to reopen their doors. To a large extent, it didn’t work.Now, officials are trying again, in a move that might signal that Republican leaders are unlikely to relent in their push to tie additional school funding to physical reopening.At a White House event Wednesday, President Trump and Education Secretary Betsy DeVos continued to make the case that schools must reopen because children benefit from in-person learning and the economy benefits from the de facto child care that schools provide. They cast opposition to reopening as driven by teachers unions, while pushing aside concerns about virus transmission.”For students and their families, they can’t be held captive to other people’s fears or agendas,” said DeVos. “We have got to ensure that families and parents have options that are going to work for their child.””We cannot indefinitely stop 50 million American children from going to school and harming their mental, physical, emotional, and academic development and inflicting long-term, lasting damage,” Trump said at a Wednesday evening press conference.The comments signal that President Trump continues to see school reopening as key to the country’s, and perhaps his electoral, fortunes. But it’s unclear whether he will find any more success. Most of the country’s largest districts are starting the year virtually, and most parents, teachers, and voters are skeptical of the push to reopen school buildings – even as many worry about child care and the ability of students with disabilities, among others, to get the support they need at home. The administration’s messaging has contributed to a deep political polarization on the issue of reopening, a divide that may have affected which districts reopen buildings. A Brookings Institution analysis found that schools were more likely to open for in-person instruction in areas where Trump got more votes.
NJ Scraps ‘In-Person Learning’ Order As Unions Push Back; Texas COVID-19 Positivity Rate Nears 25% — In a move that shows the power of teachers’ unions have to get their way even at the expense of students, NJ Gov. Phil Murphy announced Wednesday that he would scrap his order that children return to classrooms at the beginning of the new school year. This will affect all 2,500 public schools in the state.Certain districts may have “legitimate and documentable reasons” for not meeting state-mandated health and safety standards. Those can “begin their school year in an all-remote fashion,” he said.The governor didn’t immediately name any potential districts or estimate how many people might not be able to meet these standards.Trump is now laying out a back to school plan of his own.The decision, announced at a Trenton news conference on Wednesday, comes on day after a powerful group representing school administrators joined with the NJ Education Association, the state’s biggest teachers’ union, to raise alarms about classroom safety.Meanwhile, Arizona reported 148 new deaths, the most since July 30, and 706 new cases (+0.4%), which is lower than the prior seven-day average of 0.6%. Florida cases accelerated slightly with the state reported a 1.5% increase to 550,901 total cases, up 1.5% from a day earlier, compared with an average increase of 1.3% over the prior 7 days. Texas’s positivity rate surged to a record 23.9% as questions swirled about how a backlog of un-run tests might be impacting the state’s COVID numbers. Tests processed has fallen by nearly half in Texas from the states’ peak, and though hospitalizations are also on the decline, many are worried that too many cases are going undiagnosed.
Principals call on NYC to delay start of in-person school – As New York City hurtles toward a Sept. 10 school start date, the unions representing both school administrators and teachers are asking the city to delay the start of in-person school until the end of September. Opening in less than one month ignores “dire warnings” from principals and would “disregard” the “well-being of our school communities,” Mark Cannizzaro, president of the Council of School Supervisors and Administrators wrote Wednesday to Mayor Bill de Blasio and Schools Chancellor Richard Carranza. The union, which the city has regularly consulted on its fall scheduling, said last month that the planning process had an “alarming lack of direction.” Schools must submit their individual plans by Friday and then wait for approval, which could mean less than 15 working days to prepare for the arrival of students, Cannizzaro said. On top of that, they are still waiting for guidance for many details about reopening, making the task impossible to complete while also providing assurances that their buildings are safe. “Regrettably, the city started the planning process far too late for them to have any faith or confidence that they can reopen their buildings on September 10th,” Cannizzaro wrote. “Especially given that teachers do not report until September 8th, allowing frighteningly little time for the preparation and training necessary for these unprecedented circumstances.” Separately, nearly three dozen principals in Brooklyn’s District 15 asked the city to phase-in the reopening of schools, starting with a remote-only schedule, according to a letter they addressed to de Blasio, Carranza and Gov. Andrew Cuomo. The Brooklyn principals are calling to have students learn from home through Sept. 18, with pre-recorded lessons only, to give staff time to learn new safety protocols and practice safety procedures, set up and inspect classrooms, and ensure that promised building improvements have actually been made. Schools would also use this time to train staff on trauma-informed instruction. Then, from Sept. 21 to Oct. 18, they would phase-in the children opting for the mix of in-person and at-home learning.
As NYC’s virtual summer school wraps up, 23% of students never logged on. Here’s what went wrong. — After the coronavirus threw more than 1 million children out of their school buildings, Mayor Bill de Blasio made a bold promise: Those who struggled most would experience “unprecedented learning” during summer school to help them catch up for fall. The education department scrambled to scale up a centralized online platform called iLearn, which contained pre-packaged digital lessons. At the same time, it began requiring that educators conduct live meetings with students – a break from the spring when no such mandate existed. Officials hoped to use the summer as a testing ground for iLearn as well as for its live instruction requirements. But summer school was hobbled from the start and never bounced back, according to interviews with over a dozen students, teachers, administrators, and experts. By the final week of the program, at least 23% summer school students who were required or recommended to attend have not logged on a single time, representing almost 27,000 students, according to internal data obtained by Chalkbeat. (This does not include students with disabilities who are entitled to attend school year round.)The rollout raises questions about the city’s ability to support a quality online learning experience as officials prepare for another year dominated by remote instruction. It also may cast a shadow over the fall, as students who were already behind became further disengaged and may be even more distrustful of online learning when they return to school.”The fear is they won’t persist and are just going to decide that online learning has just been too hard,” said Rachel Forsyth who helps supervise school programs for Good Shepherd Services, a non-profit that partners with dozens of city schools.From the moment summer school launched in July, iLearn did not work properly. Widespread technical glitches prevented many students from accessing their classes or assignments, problems that stretched over several weeks of the six-week program. Many students received little direction on how to sign on with usernames and passwords newly mandated from the education department’s central offices. “It was such a choppy beginning – we lost a lot of kids,” “We were just set up to fail.”
Oklahoma schools reopen amid growing opposition from teachers – Many Oklahoma school districts are set to begin their fall semesters this week with in-person instruction. Statewide, there have been at least 43,962 cases and 605 deaths since the beginning of the pandemic, according to aNew York Times database.Teachers across the state have reacted with disgust and anger at the re-opening of schools, which threatens to produce an explosion of new infections and deaths. Many are opting for retirement, rather than risking the illness and possible death caused by the inevitable spread of the virus with schools opening.Districts throughout the state, concerned with the growing danger of a rank-and-file rebellion, are threatening teachers for speaking out. One such warning states: “Not telling anyone what they can and can’t say but want to remind you, if you’re on social media, anything said about the school that’s not good is bad. I assure you that we are doing everything humanly possible to keep everyone safe.”Oklahoma teachers rank second from the bottom nationwide in pay, with the conditions in rural parts of the state particularly bad. Oklahoma, like much of rural America, was hard hit by the 2008 Great Recession. This led to widespread job losses and desperation, leading directly to a surge in methamphetamine addiction and other social ills. This immense crisis impelled teachers to launch a 10-day statewide strike in April 2018 to demand improvements in teacher pay and school funding, one of the major early episodes of a strike wave that began that year among public school teachers. However, as in other states, the unions – including the Oklahoma Education Association (OEA) and the Oklahoma City-American Federation of Teachers (AFT) – shut the struggle down and cut a deal with the state’s Republican governor and state legislature, leaving teacher pay and per-pupil funding levels near the bottom nationally.
Schools make students sign liability waivers acknowledging risk of death -Many colleges, universities and K-12 schools across the United States have sent letters and emails to parents and students, requiring liability waivers be signed before students can return for in-person classes.Some of the higher education institutions using such waivers include Bates College, the University of New Hampshire, Point Park University in Pittsburgh and St. Xavier University. Universities such as the University of Memphis and Ohio State University sent liability waivers to all student athletes but may extend these waivers to all students.There are also a number of K-12 school districts using these waivers including Florida’s Volusia County, South Carolina’s Berkeley County, the Catholic schools and centers in St. Petersburg and Tampa under superintendent Chris Pastura, and St. Andrew’s Schools in Honolulu, Hawaii. The purpose of these waivers is to exempt schools from liability in the event that students get infected with the coronavirus when they return to campuses and schools in the fall.Some schools and colleges are requiring students and parents to sign forms that directly suggest students will be waiving their right to hold the school liable if they become infected. Other institutions are opting for more subtle agreements that use terms like “informed consent” and “shared responsibility.”In a recent article in Inside Higher Ed, Heidi Li Feldman, a professor at Georgetown University Law Center, stated, “Universities encourage students to think that the universities they are enrolled in are benevolent towards them, that they care about them as people.” Feldman continued: “You cultivate a climate of trust, and in the context of a deadly disease, you’re busy laying the groundwork for your litigation defense.” One such agreement issued by the College of Southern Maryland, a community college in La Plata with over 6,000 students, includes the following language: … by coming to campus, you indicate your understanding of these safety requirements and rules, and you agree to comply with and abide by them.In the interest of complete transparency, CSM wishes to reinforce to students, employees, and visitors that attending, visiting, or working on any CSM campus carries an inherent risk of being exposed to or contracting the coronavirus or COVID-19. By coming onto campus, you indicate your acknowledgement, acceptance, and assumption of these risks.You likewise signal, by returning to a CSM campus, that you understand the contagious nature of the virus, the potential difficulty of identifying it in others, the possibility of exposure to a person infected with COVID-19, and the risk of subsequently being infected with the disease. You further signal your acceptance and assumption of these risks. Such COVID-19 student agreements imply that the decision to risk one’s life is being made by the student of their own volition and, should a student become infected, the students are at fault for not following the institution’s safety guidelines. As we have noted in a recent article “Universities prepare to blame students for COVID-19 outbreaks,” students are being set up to take the blame when coronavirus outbreaks occur.
Big Ten to cancel 2020 college football season – will SEC, ACC, Pac-12 and Big 12 be next? –The Detroit Free Press is reporting the cancellation will formally be announced on Tuesday. It’s unclear if any part of the football season will be made up in the spring.NBC’s Dan Patrick said on his radio show that the Big Ten universities voted 12-2 to cancel the upcoming football season. Iowa and Nebraska voted against canceling the season.The remaining four power-five conferences in the NCAA – the SEC, ACC, Pac-12 and Big 12 – have not made any announcements on the status of their 2020 football season.Many college football players have voiced their opinions on wanting to play the 2020 season, with many of them tweeting using the #WeWantToPlay hashtag on Twitter. Donald Trump has urged for college football to play its season as well. University of Michigan head football coach Jim Harbaugh released a statement in the aftermath of the reports saying he thinks the conference should play the 2020 season. Michigan is part of the Big Ten conference. The news comes after the cancellation of fall 2020 championships for both Division II and Division III. The NCAA Board of Governors on Wednesday directed each division of the NCAA to decide independently by Aug. 21 whether it will be able to conduct championship events safely in fall sports such as soccer, volleyball and lower levels of football during the pandemic.
NCAA head doctor calls state of pandemic ‘exceptionally disappointing’ – The NCAA’s chief medical officer is expressing his disappointment with the situation that college athletics finds itself in due to the coronavirus pandemic. Dr. Brian Hainline told reporters during a virtual media briefing hosted by the Infectious Diseases Society of America (IDSA) that deciding whether to hold college sports seasons this fall has been hampered by the resurgence of COVID-19 across the country, saying that the NCAA had hoped that testing capacity and positivity rates around the country would be lower. “That hasn’t happened, and it’s made it very challenging to make decisions,” Hainline said. “I don’t know where we’ll be in the spring, but where we are today is exceptionally disappointing.” Carlos Del Rio, one of the two IDSA doctors on the call, echoed Hainline’s frustration. “I feel like we have hit the iceberg and we are making decisions about when we should have the band play,” Del Rio said, referring to the sinking of the Titanic. He added that the main focus shouldn’t be on college sports, but getting the pandemic under control. Del Rio also said that once cities and states across the country report 10 or fewer cases per 100,000 people and have a testing positivity rate of less than 5 percent, hot-button issues such as college sports and reopening schools become more feasible. The Big Ten and the Pac-12 – two of the “Power 5” athletic conferences in NCAA Division I – announced this week that they would be postponing their fall sports seasons, including football, until the spring.
Grim College COVID-19 Rules – Supposedly because of a virus that for most college students is less of a threat to their lives than riding in a car, students at college campuses this fall will be subjected to dystopian controls from required mask wearing and “social distancing” to surveillance via contact tracing and health monitoring.Many prospective and set to return students will see this as an undesirable situation. College enrollment in America has been dropping over the last ten or so years. Make college dreary enough and there can be a big additional drop as this year’s fall semester begins.For an example of the kind of restrictions and surveillance being imposed on students at many university campuses, consider these requirements in the Duke Compact that Duke University is imposing and even wants all students to sign: To comply with requirements from Duke University, and state and local authorities, I will:
- Wear a mask or face covering in all public spaces.
- Maintain appropriate physical distance.
- Wash my hands often.
- Monitor and report my symptoms through the SymMon app, or approved alternatives, before coming to campus.
- Avoid large gatherings.
- Stay home when I feel ill.
- Know and follow safety plans and additional guidance that are specific to my group, workplace or activity.
- Keep confidential all health information I know or learn about others.
- Participate in required COVID-19 testing, contact tracing and health monitoring.
- If instructed, self-isolate for the required duration.
- Get the flu shot and other required vaccinations by designated deadlines.
- Consent to the use of institutional data to identify others who have been in proximity or close contact.
- Accept the benefits and consequences for the conditions of this compact.
- Speak up to share suggestions or concerns by calling 800.826.8109 or completing an online form.
Making it clear that these requirements are not just advisory or aspirational statements, the Frequently Asked Questions (FAQ) section following the Duke Compact includes these entries: While some minor violations will result in reminders and educational engagement, other flagrant and repeated violations may result in restricting your access to Duke facilities, employment actions or removal from campus. Consult your student, faculty or staff handbooks for further information… We expect all members of the Duke community to be united in protecting ourselves, each other and the community that depends upon us. A signature is required to have access to the campus, and, based on the expectations and requirements of your academic field, refusal to sign and comply with the provisions may impact your student status.
Louisiana Supreme Court says online bar exams will be open-book –The Louisiana Supreme Court on Tuesday announced the state bar exam will be online and open book due to the coronavirus pandemic. During the exam, set to be held remotely on Aug. 24 and Oct. 10, applicants will be allowed to consult outside materials but not other people, the court said in a statement Tuesday. “The Louisiana Supreme Court Committee on Bar Admissions has worked diligently throughout this pandemic to find workable solutions which will allow applicants the ability to safely sit for the Bar Exam while being mindful of issues which may present themselves that could affect the applicants’ ability to test,” state Supreme Court Chief Justice Bernette Joshua Johnson said. “The Committee on Bar Admissions advised that it is not feasible to administer the remote bar examinations utilizing the current software vendor, therefore today’s Order provides Bar Exam applicants with the opportunity to sit for the Bar Exam without further delay due to conditions presented by the COVID-19 pandemic and possible unexpected technical issues which may have interrupted their remote testing,” she added. The announcement follows a July 22 order allowing for the exam to be held remotely and administrated on two separate days. Applicants will still be required to meet the state bar’s normal character and fitness requirements. State bar exams have adopted various strategies to accommodate the pandemic. In New York, the state Board of Law Examiners canceled it outright. “In light of accelerating public health concerns and continuing governmental restrictions, the Board of Law Examiners has concluded that an in-person bar exam cannot be safely administered on September 9-10, 2020,” bar officials wrote in July. “Participants’ health and safety must remain our top priority and, because conditions have not sufficiently improved, the September exam has been canceled.” Several other states, including Massachusetts, Michigan, Indiana, Maryland and Nevada, will offer the exam online like Louisiana. Oregon, Utah and Washington, meanwhile, will grant some law school graduates “diploma privileges” that allow them to practice without having passed the exam.
John McAfee Arrested For Wearing A Woman’s Thong As A Facemask In Germany – John McAfee, former founder of McAfee Antivirus Software, was reportedly arrested in Germany for making an unwelcome fashion statement with his face cover when he wore a woman’s thong – instead of a face mask – over his head. McAfee tweeted out on Monday that he had been detained because he wouldn’t put on a medically certified mask instead of the thong. He wrote: “Visited Catalonia just before Europe banned Catalonians from travelling. Tried to return to Germany and were refused entrance. They demanded we wear masks. I put on my thong mask. They demanded I replace it. I refused. Tussle. Jail. Black eye. Released.”
Air travel is recovering slower than expected, energy agency says. – The New York Times – A global “stalling of mobility,” especially in air travel, has prompted the International Energy Agency to make a slight downgrade in its forecast for oil demand in 2020. The agency said Thursday that demand would fall by 8.1 million barrels a day in 2020, 140,000 barrels lower than last month’s prediction.”The aviation and road transport sectors, both essential components of oil consumption, are continuing to struggle,” the Paris-based forecasting group said in its monthly Oil Market Report. Overall, the I.E.A. predicts a roughly 8 percent decline in oil demand this year compared with 2019.Air travel, in particular, is recovering slower than expected because of border closures and other restrictions. Aviation mileage was down 67 percent in July compared with a year before, only a modest recovery from the 80 percent decline in April. The agency also said that it did not expect the picture would improve “significantly soon,” and was now forecasting a 39 percent fall in jet fuel consumption for 2020 compared with 2019, while 2021 would also see only a gradual recovery.Some areas are recovering faster. In China, demand for oil in June rose by 750,000 barrels a day compared with the same period a year before, “a remarkable feat,” the agency said.
Germany reopens its schools: An experiment in herd immunity — Although there are currently more than 1,000 new coronavirus infections per day in Germany, all of the country’s state governments are ruthlessly enforcing school openings after the summer break. This can only be called an experiment in “herd immunity” – a policy with potentially lethal consequences for children, teachers, teaching assistants and their families. Last Thursday, the Robert Koch Institute (RKI) reported 1,045 new infections and on Friday 1,147 new infections. These figures refer to infections measured about 10 days ago. This means that the current rate of infection is very likely much higher. There are over 19 million cases of SARS-CoV-2 worldwide, more than 712,000 people have already died, and in Germany the number of deaths rose to 9,183 on Friday. In this situation, all state governments are determined to send children back to school without restrictions. This is despite the fact that the increase in new infections has reached a level equivalent to that of mid-March 2020, when all schools and day-care centres were closed and the lockdown was imposed. Now, however, all of these facilities are being reopened. The goal is very clear: get the population back to work so that profit-making can resume and stock markets can soar even higher. Politicians of all stripes and business representatives leave no doubt about their intentions. What politicians, managers and journalist are demanding are conditions that will lead to thousands of illnesses and deaths. Just to recall, it was school closures in particular that helped to contain the pandemic initially and prevent deaths. As the Journal of the American Medical Association (JAMA) documented in a study, in the last two weeks of March about 40,600 lives were saved thanks to the closure of schools worldwide. Without the four weeks of school closures from mid-March to mid-April, nearly 1.4 million more people would have been infected worldwide. On Friday it was announced that there have already been cases of coronavirus at a minimum of at least two schools in the state of Mecklenburg-Western Pomerania where classes recommenced last Monday. After a high school teacher in Ludwigslust and a primary school pupil in Graal-Muritz tested positive, both schools had to be closed again. In Hamburg, where classes restarted last Thursday, the number of COVID-19 infections is rising sharply. According to official figures, there were 80 new cases from Thursday to Friday. In addition to a number of persons returning from travel, workers at the Hamburg shipyard Blohm+Voss have tested positive. On Wednesday, 60 new infections were detected among shipyard workers and employees of contractors at the shipyard.
French government ends social distancing requirements in schools as classes set to resume – The Macron administration has released new guidelines for school reopenings at the beginning of September that slash social-distancing requirements for teachers and students. The document was quietly produced on July 9 and reportedly circulated to educational institutions on July 20, without any public announcements. Media reports cited the document for the first time over the weekend. The new guidelines state that “in closed areas (classrooms, workshops, libraries, canteens, boarding rooms, etc.), physical distancing is no longer obligatory where it is not physically possible or would not permit the return of all students.” As many teachers have commented on social media, since classrooms typically contain up to 35 students, the rule that distancing will be eliminated if “is not physically possible” for the return of all students means it will apply nowhere. Students above 11 years old are required to wear masks if they cannot maintain a distance of one meter from one another. Teachers are only required to wear a mask if they are “less than one meter” from students. This directly contradicts scientific evidence that the virus spreads via aerosolized particles which spread far further than one meter in the air. The new guidelines add an exception for teachers in creches for young children, who are no longer required to wear a mask under any conditions. There are also no longer any restrictions on inter-mixing of students in different classrooms or year levels, which otherwise limit the spread of the virus among students inside the same school. The guidelines simply state that schools “organize the daily schedule and activities to limit, as much as possible, large mixing and crossings.” There is no requirement that additional public transportation be organized to limit physical contact between students. This analysis of the back-to-school plans makes clear the fraudulent and essentially homicidal character of the Macron administration’s policy. The government is pursuing this policy well aware that it will accelerate the ongoing resurgence of the virus once schools reopen in September. Students will become infected; their parents, family members and teachers will catch the virus from them; and many more people will die due to these policies.
U.K. Economy Shrinks by More Than Any Other Rich Country – WSJ – The U.K. recorded a steeper second-quarter contraction than its peers, a performance that means it suffered the worst economic hit from the coronavirus in Europe as well as reporting the highest death toll. The economy is already recovering as restrictions on daily life ease and workers trickle back to factories and offices, recent data show, but Bank of England officials have warned that it could take until the end of 2021 to regain the ground lost during the pandemic. U.K. gross domestic product shrank 20.4% in the second quarter, equivalent to an annualized rate of 59.8%, the country’s statistics agency said Wednesday. Over the same period, the U.S. and Germany lost around 10% of their output, with Italy losing 12%, France 14% and Spain 19%.
include(“/home/aleta/public_html/files/ad_openx.htm”); ?>