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 failed stimulus efforts, US employment, mortgage delinquencies, and nonpayment of rent and utility bills, plus articles on schools’ plans for this fall and problems with college campuses reopening. The bulk of the news is from the U.S., with a few articles 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.
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Fed Debates How to Implement New Policy Strategy – Federal Reserve officials forged an agreement last month on a new framework governing how they will conduct policy over the long run. In preparing for a September meeting, they are debating how exactly to implement this strategy for an economy recovering from a severe and unusual downturn.Central bank officials are likely at coming meetings to provide more specific guidance about what conditions would justify continued low interest rates, according to public speeches and interviews.They could also clarify that their purchases of Treasury and mortgage-backed securities, initiated in March with the stated goal of repairing market functioning, are being maintained now to support a faster economic recovery. But officials’ remarks heading into their Sept. 15-16 meeting suggested they haven’t agreed on how far to go in refining any new guidance on their policy plans and whether to wait until subsequent gatherings in November or December to more fully reconfigure policy statements to reflect the new framework.Officials have indicated less urgency to reach consensus on other questions surrounding their asset purchases. These include whether to shift purchases of Treasurys to longer-dated securities to hold down bond yields, as the Fed did during its last bond-buying campaign from 2012 to 2014, and whether to eventually link guidance about their rate plans to their pace of asset purchases. Officials cut interest rates to near zero in March and are purchasing government securities at an annual rate of more than $1 trillion. With rates pinned near zero, one way officials believe they can provide more stimulus is to fortify expectations around how long short-term rates will remain low – for instance, by spelling out the inflation and labor-market conditions that would warrant keeping rates near zero. Several officials at the July meeting of the Federal Open Market Committee said they expected the Fed would need to provide more stimulus. Many regard additional government spending as likely to deliver more bang for the buck with commercial activity and employment still depressed by measures designed to slow the spreading coronavirus. Officials are set to release after their meeting next Wednesday new economic and interest rate projections that run through 2023. Nearly all Fed officials in the last set of projections in June projected rates staying near zero through 2022. Projecting near-zero rates through 2023 would offer one way for the Fed to reinforce the “lower for longer” rate refrain that emerged from the framework review, though it may have a mild effect because investors in futures markets don’t expect the Fed to lift its benchmark rate until 2024. Some Fed officials have said they are in no rush to make their guidance more specific because investors already expect the Fed to keep rates low for several years. Moreover, the unusual nature of the current economic shock has scrambled the traditional dynamics of a business-cycle downturn by preventing low rates from spurring a rebound in activity in service sectors of the economy, such as recreation and travel, most damaged by the virus.
Different economic crisis, same mistake: The Fed cannot make up for the Republican Senate’s inaction – EPI Blog by Josh Bivens – The economic shock of the coronavirus is very different from the housing bubble shock that caused the Great Recession of 2008-2009. Yet six months into the current crisis, we are in danger of repeating a same key mistake: leaning too hard on the Federal Reserve to navigate the crisis while ignoring the much more important role of a bloc in Congress that is blocking needed aid. While it is true that the Fed has shown better judgement over the course of this crisis, the tools it currently has available to address it are weak. The tools Congress has are strong, but their actions have been stymied by the mystifyingly bad judgement of Senate Republicans. The Fed is an enormously powerful institution in many ways, but their policy tools are actually quite limited forboosting the economy out of a recession or even increasing the rate of growth during recoveries. The Fed can decisively slow economic expansions, and too often in the past they have done this explicitly to weaken workers’ bargaining position and keep wage-driven pressure on prices from forming. In short, the Fed has a powerful brake but a very weak accelerator, and their use of this brake has merited much criticism in the past. If the Fed is relatively weak in its ability to end recessions, why do its actions get so much attention during times of economic crisis? Mostly because the actions of Congress (dominated for the past decade by the Republican caucus in the Senate) have been either too weak or outright damaging during these crises. For example, in the weak recovery from the Great Recession of 2008-2009, austerity imposed by a Republican-led Congress throttled growth, even as historically aggressive actions by the Fed tried (only partly successful) to counter this fiscal drag. During this period, every new Fed decision about interest rate changes or quantitative easing (QE) sparked long and loud controversy, even while having a minimal economic effect. Yet the enormous cumulative damage of fiscal austerity stemming from Congressional actions like the Budget Control Act (BCA) of 2011 merited just a tiny fraction of this debate. Yet the damage done by the BCA utterly dwarfed the small (if admirable) attempts by the Fed to push the economy back to recovery.In the current moment, there has been plenty of debate about what the Fed should do differently to ease the economic crisis. But again, it is Congress – hamstrung by Senate Republicans’ refusal to act – which has all the power to end this crisis. And “end this crisis” is not an overstatement. The playbook for dealing with the current economic crisis is pretty obvious: provide relief for families with workers put out of work by the shock for as long as labor markets remain damaged, direct resources to state and local governments whose revenues have been savaged by the shock just as spending demands have risen, and spend every last dollar that would be useful for getting the virus under control. If the federal government is currently too dysfunctionalto figure out how to spend these dollars to control the virus, then this means the aid to state and local governments should be that much greater.
Most loans in Fed’s Main Street program exceed $1 million – The Federal Reserve’s Main Street Lending Program, aimed at supporting small to midsize businesses through the coronavirus pandemic, has mostly made loans in the millions of dollars, according to data disclosed by the central bank Tuesday. Of the 118 loans bought by the Fed’s program through the end of August, only 11 were under $1 million. Only one, at $265,000 was close to the $250,000 minimum loan size. The Fed initially announced the program with a minimum loan size of $1 million in April. It reduced it twice, bringing it to the existing minimum after it received comments from businesses and industry groups calling for more aid to smaller entities. Very small businesses had access to the Paycheck Protection Program, which saw loans averaging $107,000. Unlike with the Main Street facility, PPP lending is forgiven provided that certain criteria are met. Overall, the $600 billion program has made $1.2 billion in loans, the Fed said in a separate disclosure last week. That includes $741 million in loans in the Priority facility, $306 million in the New Loan facility and $82 million for two loans in the Expanded facility. Companies in 24 states have received Main Street loans, with Florida seeing the greatest volume at $332 million in borrowing.
The Fed Has Loaned $1.2 Billion from its TALF Bailout Program to a Tiny Company with Four Employees — By Pam Martens –Every Wall Street bailout program that the Fed has created since September 17 of last year has, according to the Fed, been ostensibly created to somehow help the average American.According to the Fed’s Term Sheet for the Term Asset-Backed Securities Loan Facility (TALF), it’s going to “help meet the credit needs of consumers and businesses by facilitating the issuance of asset-backed securities.” Not to put too fine a point on it, but asset-backed securities and related derivatives are what blew up Wall Street in 2008, creating the worst economic downturn, at that point, since the Great Depression.According to the Fed’s TALF transaction data, it has made $2.6 billion in total loans. Forty-six percent of that money, $1.2 billion, went to a company that has 4 employees (outside of clerical workers) according to its filing with the SEC. Much of the Fed’s $1.2 billion was loaned at an interest rate ranging from 0.75 percent to 1.26 percent. The loans are set to expire in three years.Under the CARES Act passed by Congress, the TALF has received $10 billion in taxpayer support from the U.S. Treasury to eat any losses in this program.On the most recent transaction data report filed by the Fed for the TALF, it lists the borrower that received the $1.2 billion total as Alta Fundamental Advisers SP LLC-Belstar-Alta Series 1 and 2. It lists the Investment Manager for the borrower as Belstar Management Company LLC. Both Alta Fundamental Advisers and Belstar Management Company LLC have funds that previously registered in the Cayman Islands, according to their SEC filings.The Fed is only selectively providing transaction level data for its myriad of bailout programs. As we previously noted, the Primary Dealer Credit Facility (PDCF) is one of the first bailout programs created by the Fed and yet it has never provided a drop of information as to who received the billions of dollars in loans under that program.The Primary Dealer Credit Facility was the most notorious of the Fed programs during the 2007 to 2010 financial crisis. The Fed secretly funneled $8.95 trillion in cumulative, below-market rate loans to the trading units of the biggest Wall Street banks and their foreign derivative counterparties according to an audit belatedly provided to the public in 2011 by the Government Accountability Office (GAO).The Fed’s hubris from 2007 to 2010 and its multi-year court battle to keep its transactions a secret from the American people make its actions today a critical area in which to demand transparency.Unfortunately, the Fed’s dealings are being essentially ignored by mainstream media – which is enabling ever more hubris.
As Fed helps businesses, Democrats ask- What about consumers? – – As the Senate Banking Committee met Wednesday to review the performance of the Federal Reserve’s emergency lending facilities, Democrats on the panel lamented lawmakers’ failure to to provide additional direct financial assistance to consumers during the coronavirus pandemic. The hearing included testimony from business and labor representatives on how Congress could make the Fed credit vehicles such as the Main Street Lending Program and Municipal Liquidity Facility more accessible to businesses. Democrats insisted that the facilities are not enough and direct aid to consumers is needed. “There’s broad agreement that the economy is in trouble,” said Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee. “The best way to address it is through direct help to households. It means unemployment insurance. It means rental assistance. It means support for state and local governments.” Sen. Chris Van Hollen, D-Md., echoed Brown’s sentiment and said renters in particular need to be able to pay their landlords. “I wish there was a broader recognition that getting funds into the hands tenants to pay their landlord on the residential side and also on the commercial side is something that would be very important at this time,” Van Hollen said. A focus on the Fed facilities comes as the central bank continues to make aid available to middle-market firms through the Main Street Lending Program, in which participating banks make loans that the Fed then purchases. The program is available to companies with up to 15,000 employees or $5 billion in annual revenue, and provides loans of $250,000 to $300 million. But the Democrats’ insistence that the focus of federal aid should be on consumers was backed by witnesses testifying before the panel. William Spriggs, an economics professor at Howard University who appeared on behalf of the American Federation of Labor and Congress of Industrial Organizations, pushed for direct unemployment aid. He said that the $600 in weekly supplemental unemployment assistance from the Coronavirus Aid, Relief, and Economic Security Act that expired at the end of July was key in preventing debt accrual. “We have to pump back into the system the money that we are losing from the loss in payroll,” Spriggs said. “Without that, we are going to face massive problems for loan holders when it comes to commercial real estate. The way to solve it isn’t to help the banks at the end. It’s to help the real economy on the front side and have workers have the money to pay the rent. Even with eviction abatement, you got to remember that people are still accruing the debt of holding that rent.” Jeffrey DeBoer, CEO of the Real Estate Roundtable, said eviction moratoriums aren’t sufficient because landlords still to need to pay their mortgages. “That problem is only going to get worse and … the moratorium does not solve the problem,” DeBoer said. “It creates a bigger problem once the moratorium is lifted without rental assistance.”
The US economy is having a Wile E Coyote moment – Megan Greene – US consumers and businesses have just run straight off a cash cliff, now that extra federal assistance to small companies and unemployed workers has ended. The US economy is now suspended in mid-air. The unemployment rate fell to 8.4 per cent in August from 10.2 per cent. Home and auto sales have been robust, driven by historically low interest rates. Consumer spending rose modestly during August.Numbers of seated restaurant diners andmanufacturing output increased. The spread of the virus has slowed. New cases in Arizona, California and Texas are trending down, though this has been partly offset by rising caseloads in 18 other states mainly driven by university reopenings. Don’t look down. The Conference Board consumer confidence index dropped to a six-year low in August. Worries about jobs and incomes increased as Congress failed to agree on a new stimulus package and the $600 per week unemployment benefit bonus expired. A temporary $300 weekly federal enhancement has been disbursed in only six states so far. Funding for that will run out in just over a month. More than 29mAmericans are still collecting some form of unemployment aid, yet federal and state unemployment benefits fell by around $60bn last month compared with July, according to research from Evercore ISI. Pandemic furloughs are becoming permanent; the number of people reporting that their jobs are gone rose to 3.4m in August – the most since 2013. American Airlines, Boeing, Raytheon and Coca-Cola are among the corporations that together have announced more than 200,000 job cuts to come. Then, there is the fact that the August payroll figures included 238,000 temporary census workers whose jobs will disappear in October. And with many schools reopening virtually, millions of parents may be unable to return to work. The Paycheck Protection Program, which offered loans to small businesses, expired in early August. Without a new round of financial assistance, the US faces a wave of small-business failures – these companies employ nearly half of American workers. According to the Census Bureau’s Small Business Pulse Survey, around 5 per cent of small firms expect to permanently shut down in the next six months, and roughly 25 per cent expect to have to obtain financial assistance or additional capital. Service industries are particularly hard hit. While some restaurants, bars, gyms and even retailers were able to move operations outside during the summer to stem losses, that will end once the weather turns in northern states. Consumption will also be damped by evictions. The Cares Act provided rental assistance and a temporary moratorium on evictions that expired in late July. Last week the government issued a new eviction moratorium but without funding for rental assistance, so that tenants unable to cover rent will face a massive balloon payment or eviction at the end of the year. This hardly gives them new financial breathing space. The US may not have started falling yet, but we are no longer on terra firma.
Seven 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 seven day average of daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red). This data is as of September 6th. The seven day average is down 66% from last year. Usually travel declines at this time of year (see Blue line), but travel is holding steady this year (so increasing as a percent of travel 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. This data is updated through September 6, 2020. This data is “a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year.” The 7 day average for New York is still off 65% YoY, and down 19% in Florida. 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 September 3rd. Movie ticket sales have picked up over the last few weeks, and were close to $16 million last week (compared to usually under $200 million per week in the late Summer / early Fall). This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. This data is through August 29th. COVID-19 crushed hotel occupancy, and is currently down 27.7% year-over-year. With so many schools closed, the leisure travel season might have lasted longer than usual this year, but it is unlikely business travel will pickup significantly in the Fall. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week last year of . At one point, gasoline supplied was off almost 50% YoY. As of August 28th, gasoline supplied was only off about 7% YoY (about 93% 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.” There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set “relative to its weekday-specific average over January – February”, and is not seasonally adjusted, so we can’t tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer. This data is through September 6th for the United States and several selected cities. The graph is the running 7 day average to remove the impact of weekends. According to the Apple data directions requests, public transit in the 7 day average for the US is still only about 57% of the January level. It is at 49% in Los Angeles, and 58% in Houston. Here is some interesting data on New York subway usage (HT BR). This data is through Friday, September 4th. Schneider has graphs for each borough, and links to all the data sources.
Q3 GDP Forecasts – From Merrill Lynch: We revise up our 3Q GDP forecast to 27% qoq saar from 15% previously, but take down 4Q to 3.0% qoq saar from 5.0%. 2Q GDP is tracking -31.6% qoq saar. [Sept 11 estimate].. From Goldman Sachs:We left our Q3 GDP tracking estimate unchanged at +35% (qoq ar). [Sept 10 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at 15.6% for 2020:Q3 and 7.3% for 2020:Q4. [Sept 11 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 30.8 percent on September 10, up from 29.6 percent on September 3. [Sept 10 estimate] It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR). A 30% annualized increase in Q3 GDP, is about 6.8% QoQ, and would leave real GDP down about 4.2% from Q4 2019. The following graph illustrates this decline.
WSJ Survey: Overall Economy Is Recovering Faster Than Economists Expected – WSJ – The U.S. economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, economists said in a monthly survey. Business and academic economists polled by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter. That is up sharply from an expectation of an 18.3% growth rate in the previous survey. “I have been encouraged that many of the economic indicators have come in above consensus, perhaps suggesting that the U.S. economy is bouncing back stronger than expected,” said Chad Moutray, chief economist for the National Association of Manufacturers. “With that said, there continue to be lingering challenges, especially in the labor market and with uncertainties surrounding Covid-19 outbreaks.” A rebound in growth in the third and fourth quarters isn’t expected to make up for ground lost earlier in the year. GDP shrank at a 31.7% annual rate in the second quarter and declined at a 5% pace in the first.The projected rebound for the third quarter would recoup about half of the output lost in the first half of the year. To return to the previous peak recorded in the final quarter of last year, the economy would need to grow at a roughly 24% rate again in the fourth quarter of this year. Economists see that as unlikely: Their forecast for fourth-quarter growth is for a 4.9% annual rate, suggesting the recovery will be protracted. The average forecast called for GDP to shrink 4.2% this year, measured from the fourth quarter of 2019, an improvement from the 5.3% contraction predicted in last month’s survey. Nonetheless, the U.S. economy would still be on track to contract in 2020 by the most since contemporary records began in 1948, as measured from the fourth quarter of the prior year. By comparison, in the fourth quarter of 2008 – during the financial crisis – GDP contracted just 2.8% from the prior year. Economists continue to believe that the economy is already in a recovery following a recession that the National Bureau of Economic Research determined began in February. Some 82.4% of economists said the recovery started in the second or third quarter of this year, broadly unchanged from last month’s survey. Economists also see faster improvement in the labor market, after employers added 1.37 million jobs to payrolls last month. The unemployment rate fell below 10% in August for the first time since March to 8.4%, and economists now expect the jobless rate to tick down to 8.1% in December. Last month, they expected a 9% unemployment rate at the end of this year.
A Surprisingly Durable Recovery Faces Tougher Tests – When the stock market began to rally back in March, it seemed oblivious to an economy sliding into its worst contraction since the Great Depression. Nearly six months later, some of that optimism has proved justified. The economy touched bottom in April, and it has clawed back ground every month since. The recovery has shown surprising resilience in the face of resurgent coronavirus infections and expiring fiscal stimulus. That’s the good news. The less-good news is that recovering the remaining ground may be tougher, which may be why the stock market has wobbled recently. Back in May, economists projected unemployment would still be 11% this December. Last month, it dropped to 8.4%. August was the fourth straight month the job market outperformed economists’ expectations. As the economy shrank at a record 31.7% annual rate in the second quarter, economists saw only a halting recovery. In July, IHS Markit, an economic analysis firm, projected gross domestic product would expand 17.7% annualized in the third quarter. But most economic indicators since have been better than projected, and IHS now sees GDP growing 29.6% in the third quarter, which ends Sept. 30. Goldman Sachs is even more optimistic, projecting a 35% gain. Economists have long used letters of the alphabet like V and U to describe economic recoveries. But the coronavirus downturn is so different from past recessions that economists are coming up with new shapes to describe the potential recovery. WSJ explains. Illustration: Jacob Reynolds Those numbers aren’t quite as good as they seem: Expressing quarterly growth as an annual rate tends to overstate the bounceback. IHS’s forecast means two-thirds of the second-quarter drop will be reversed in the third quarter; Goldman’s means roughly three-quarters would be reversed. One reason for this comeback is unprecedented monetary and fiscal stimulus. After the Federal Reserve slashed interest rates to near zero in March and boosted purchases of government bonds, mortgage rates plunged. As a result, new home sales hit a 13-year high in July, and home construction is back to pre-pandemic levels. Congress supplied households and laid-off workers with enough added income to more than offset lost wages, bolstering retail sales. More important is that, unlike typical recessions, this one was caused by a natural disaster – the Covid-19 pandemic and related restrictions on economic activity. Typically when a disaster fades, activity snaps back to its previous level. While the pandemic hasn’t passed, the economy did begin to reopen in May, and a new wave of infections across the South and West didn’t reverse that. “I’d have expected a resurgence in infections to produce more caution in consumers,” said Ben Herzon, an economist at IHS Markit. But “we haven’t seen it yet.”
Symone Sanders warns of ‘K-shaped’ economic recovery benefiting wealthy – Symone Sanders , a senior campaign adviser to Democratic presidential nominee Joe Biden, said on Sunday that recent economic gains are indicative of a “K-shaped” recovery that benefits the wealthy. “It is going well for folks at the top, but for folks who are middle class or below, it’s going down,” Sanders said on “Fox News Sunday.” “The question really is, is this working for working families, and the answer is no.” Sanders noted that while numerous white-collar workers have been able to work from home during coronavirus-related shutdowns, she and Biden are thinking about truck drivers, cashiers, autoworkers and others “who are at higher risk of shortened hours but also higher risk of being exposed” to COVID-19. “I just think we have to think about the pain that the working families across this country are experiencing right now,” she added. Guest host Bret Baier also questioned Sanders about whether Biden would take a potential coronavirus vaccine if it was approved before Election Day. “We all want a vaccine, but we want that vaccine to be safe, and when a vaccine is eventually available we want it to be equitably distributed,” Sanders responded but did not definitively say whether the former vice president would get vaccinated. Biden’s running mate, Sen. Kamala Harris (D-Calif.), made similar comments this weekend. “I will say that I would not trust Donald Trump, and it would have to be a credible source of information that talks about the efficacy and the reliability of whatever he’s talking about,” she told CNN’s “State of the Union.” Baier on Sunday also pressed Sanders on the Biden campaign’s condemnation of violence and New York Gov. Andrew Cuomo’s (D) comment that President Trump would need “an army” to visit New York City. Sanders said she was not aware of the context of Cuomo’s remarks but added that “Gov. Cuomo doesn’t work for the Biden campaign.”
Budget Deficit Hits Record $3 Trillion As US Spends 100% More Than It Collects YTD – 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 $26.7 this week, 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 August the US burned through another $200BN, which was a sharp increase from the $62.9 billion deficit in July when government receipts soared thanks to the July 15 tax date even as spending remained in the stratosphere. That said, the number was an “improvement” from the record $862 billion deficit recorded in June. Specifically according to the Treasury, in August, government outlays were $423.3 billion, roughly the same as the $428 billion the US spent last July, and an improvement from the record June outlays of $1.1 trillion… … while receipts slumped from the July record of $563.5 billion – which was a one-time surge thanks to the July 15 tax filing deadline – to just $223.2 billion (the question of why anyone still pays taxes in a time of helicopter money, when the Fed simply purchases whatever debt the Treasury issues, remains). The chart below shows the July 2020 breakdown between various receipts and outlays. What all this means, is that on a YTD basis, with 1 month left to go in fiscal 2020, the US has spent $6.054 trillion and collected just $3.048 trillion, which means outlays are a record 100% higher than receipts, which also includes the $8.7BN received last month and $72.2BN 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 11 months of fiscal year, the US budget deficit is a record $3 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. At some point the market will realize that this insanity is simply unsustainable. And, in fact, looking at the soaring price of gold recent temporary downdraft notwithstanding, that realization may not take too long.
As Budget Gap Soars, Costs of Servicing Federal Debt Shrink – WSJ – The cost of servicing the nation’s growing debt load is shrinking despite a historic rise in government red ink this year, suggesting the U.S. still has room to borrow to fight the coronavirus pandemic. Demand for safe Treasury assets has kept interest rates near historic lows this year, pushing net interest costs down by 10% from October through August, the Treasury Department said Friday. “That’s despite a significant increase in the level of debt outstanding,” a senior Treasury official said on a call with reporters. Soaring deficits have forced the government to ramp up borrowing this year as policy makers try to cushion the economy from the effects of the virus, which triggered business shutdowns and millions of layoffs The annual deficit nearly tripled through the first 11 months of the fiscal year, to $3 trillion from $1 trillion during the same period a year earlier. Total debt held by the public has risen to $20.8 trillion as of Wednesday, from $17.4 trillion in early March. The nation’s widening budget gap is at the center of a debate over how much more support the economy needs to recover from the pandemic, which sent the U.S. into a recession in February. Democrats have called for another sweeping aid package, which they say is essential to help the U.S. avoid a prolonged, lackluster recovery similar to the years following the 2007-09 recession. Republicans say policy makers need to keep rising debt in check, and called for a narrower bill with targeted aid. The Congressional Budget Office last week said debt as a share of economic output is set to approach 100% for fiscal year 2020, compared with 79.2% last year, and hit 108.9% by the end of the next decade. Despite the rising red ink, however, CBO lowered its projections for interest costs over the next decade by $2.2 trillion from its forecast in March, reflecting lower-than-expected interest rates. “The idea that we’ve done all this spending and our debt service is actually lower than it was in the pre-pandemic baseline is a remarkable testament to, in my view, how much more fiscal space you get when you have really low interest rates,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a Washington think tank.M
DoD Confirms $10-$20 Billion COVID Bailout For Contractors After Trump Blasted Military-Industrial Complex – This is surely the last thing the American people want to hear, but it does confirm President Trump’s recent statements saying that top Pentagon brass essentially seeks out constant wars to keep defense contractors “happy”: the Department of Defense plans to cut major military contractors a $10 billion to $20 billion COVID bailout check.Defense One reports: “With lawmakers and the White House unable to come to an agreement on a new coronavirus stimulus package, it’s unlikely that money requested to reimburse defense contractors for pandemic-related expenses will reach these companies until at least the second quarter of 2021, according to the Pentagon’s top weapons buyer.”Defense undersecretary for acquisition and sustainment, Ellen Lord, in recent statements has indicated the private defense firm stimulus would cover the period from March 15 to Sept. 15 and is estimated at “between $10 and $20 billion.” “Then we want to look at all of the proposals at once,” Lord said at a press briefing Wednesday. “It isn’t going to be a first in, first out, and we have to rationalize using the rules we’ve put in place what would be reimbursable and what’s not.”And strongly suggesting that it won’t be the last of such stimulus for defense firms who have already profited immensely off post 9/11 ‘wars of choice’ launched under Bush and Obama, Lord said, “I would contend that most of the effects of COVID haven’t yet been seen.”
Some Large Employers Reject Trump’s Payroll-Tax Deferral Plan – Some of the nation’s largest employers – including CVS Health Corp., Wells Fargo & Co. and the U.S. Postal Service – say they won’t implement President Trump’s payroll-tax deferral plan, opting to leave employee paychecks alone this fall.The president’s plan lets employers stop withholding the 6.2% Social Security tax now for most workers and requires them to pay it back early next year through additional paycheck withholding. Mr. Trump wants Congress to forgive those deferred taxes, but without any assurance of that happening, the plan continues to find little footing in the private sector as companies make their decisions.”We have reviewed the guidance issued by the U.S. Treasury Department and the IRS and have determined that participating in this optional deferral program is not in our employees’ best interest,” said Michael DeAngelis, a spokesman for CVS Health.Other large employers, including United Parcel Service Inc., JPMorgan Chase & Co., Costco Wholesale Corp. and Home Depot Inc., say they aren’t participating either. Wells Fargo wanted “to avoid creating a future financial burden for employees,” said spokesman Peter Gilchrist.That lack of interest from companies – some of which employ hundreds of thousands of potentially eligible workers – limits the broader economic impact of the deferral. Mr. Trump, who had hoped to get Congress to slash payroll taxes to boost the economy, has been left with a program that has little reach across the country.For now, the largest group of affected workers is the one controlled by Mr. Trump – federal executive-branch employees and military-service members who will see their paychecks grow this month and then shrink in January.Mr. Trump announced the payroll-tax deferral in August, offering it as his way of getting money to households during the pandemic-induced economic downturn amid a stalemate in Congress over further assistance. He used a law that lets the administration postpone tax deadlines after a disaster. The deferral is available through Dec. 31 for workers making under $104,000 on an annualized basis. Someone making $80,000 a year could push as much as $1,653 in the employee’s share of payroll taxes from this year’s paychecks into next year’s.
1.3 million active-duty troops will have their payroll taxes deferred under Trump’s controversial order – and they can’t opt out– President Donald Trump’s payroll-tax deferral will go into effect for 1.3 million active-duty US troops later this month – and they can’t opt out of it. The Federal News Network first reported on Friday that the Trump administration was moving ahead with the deferral for the military. It will also kick in for hundreds of thousands of civilian employees within the Defense Department. A senior administration official confirmed the policy move to Business Insider. The Defense Finance and Accounting Service, which handles payment services for military service members, said in a memo that both service members and civilian employees would be “automatically” included in the initiative without the ability to opt out. It will be effective as of the pay period starting September 15. The Defense Finance and Accounting Service also said that if a military member or civilian employee departed or retired from the service before the tax collection next year, they would still be responsible for paying the tax back. It didn’t provide further details on how that could be arranged. Read more: MORGAN STANLEY: The government’s recession response has the stock market heading for a massive upheaval. Here’s your best strategy to capitalize on the shift. The development comes as the administration also enacts the deferral for 1.3 million federal employees through the end of December. Last month, Trump signed an executive order to implement a payroll-tax holiday that temporarily suspends the collection of a 6.2% Social Security levy from workers’ paychecks through the end of the year. It affects people earning below $104,000 annually. Trump has called on Congress to absolve the payments, but that’s unlikely since lawmakers in both parties oppose pulling money going into Social Security, an increasingly cash-starved safety-net program. The directive has sparked substantial criticism from scores of business groups that have called it “unworkable” to set in motion. Recent guidance from the IRS said the money had to be repaid by April 30. Experts say Trump’s policy will prompt a temporary pay hike for employees lasting several months, only to force workers to take a pay cut early next year. Employers must recoup the money in early 2021 by collecting the Social Security payroll tax twice. Democrats fiercely criticized the measure. Rep. Don Beyer, the vice chair of the House Joint Economic Committee, attacked the policy as a politically motivated decision that would set back troops’ pocketbooks. “The President’s order will give the illusion of pay increases until after the election, and then require service members to pay the money back with double tax withholding,” Beyer said in a statement on Tuesday. “This is a disgraceful way to treat those who serve and sacrifice to keep us safe, and Trump’s trickery is obviously designed to help his campaign.”
Lawmakers Tackle Spending Deadline, Look to Revive Coronavirus Aid Talks – WSJ – Lawmakers returning to Washington after their late-summer break are hoping to revive long-stalled negotiations over additional coronavirus relief with less than two months until the election. But if they can’t reach an agreement on Covid-19 aid in coming weeks, they at least plan to avoid a government shutdown. With no Covid-19 aid deal on the horizon, House Speaker Nancy Pelosi (D., Calif.) and Treasury Secretary Steven Mnuchin agreed last week to pursue a short-term spending bill without any controversial policy measures. The government’s current funding expires at 12:01 a.m. on Oct. 1. “The speaker and I have agreed, we don’t want to see a government shutdown. So we’ve agreed that we are going to do a clean CR,” Mr. Mnuchin said on Fox News Sunday, referring to a continuing resolution, or short-term spending bill. He said they would do this separately from the Covid-19 aid negotiations. That agreement means that bogged-down negotiations over another relief package likely won’t derail routine government funding and spark a shutdown, which would deliver another blow to the economy if some government workers are furloughed and federal contracting projects are stalled. However, if lawmakers can reach an agreement with the administration over coronavirus aid, that could still get attached to the spending bill, aides said. Both congressional leaders and White House officials have sounded increasingly pessimistic notes about the chances of a relief deal coming together in the weeks before the election, when mounting political pressure makes it hardest to compromise. Talks between the White House and Democrats broke down last month. “I personally would like to see one more rescue package, but I must tell you the environment in Washington right now is exceedingly partisan because of the proximity to the election,” Senate Majority Leader Mitch McConnell (R., Ky.) said at an event in Kentucky Friday. “I can’t promise one final package.” Senate Republicans, who have urged caution on the size of the next package, are discussing whether to bring forward this week a “skinny” package of aid that would cost less than their previous $1 trillion proposal. Mr. Mnuchin said Sunday he expects Republicans would move forward with that this week. Democratic leaders, meanwhile, have said GOP proposals have fallen short of what is needed to respond to the coronavirus pandemic’s health and economic toll. “
Mnuchin: ‘The president and I believe we should do more stimulus’ – Treasury Secretary Steven Mnuchin said Sunday that he and President Trump are in favor of further stimulus in response to the ongoing coronavirus pandemic. “The president and I believe we should do more stimulus,” Mnuchin said on “Fox News Sunday.” “We have about 7 and a half million jobs we need to get back until we’re back to where we were, and we want to help small businesses. We want to help businesses that are particularly impacted by this, and we’ll continue to work on proposed new legislation.” Mnuchin told guest host Bret Baier that he believed negotiations with Democrats are stuck “both on certain policy issues but more importantly on the top line.” Speaker Nancy Pelosi (D-Calif.), Mnuchin said, “has refused to sit down and negotiate unless we agree to something like a $2.5 trillion-dollar deal in advance.” “As you know, we put $3 trillion into the economy when the economy was completely shut down. We’ve now reopened the economy. Let’s do a more targeted bill,” he said. Baier went on to ask if the White House hoped to move forward with a so-called skinny stimulus bill in the week ahead. “I’d like to call it a more targeted bill, but, yes, our expectation is we will move forward with that next week,” Mnuchin said. In the meantime, Mnuchin discussed his informal agreement with Pelosi to avert a government shutdown independent of coronavirus funds. “The Speaker and I have agreed we both don’t want to see a government shutdown, so we are going to do a clean CR [continuing resolution],” he said. “I hope by the end of the week we can begin moving forward on that.” “We haven’t agreed on the specific details,” Mnuchin said, adding that he expects it would go “through the beginning of December. That’s what we did this year.”
Top GOP senator: ‘It’s not beyond’ Pelosi to play politics with government funding –Sen. John Barrasso (R-Wyo.) said Sunday that he would not put it past House Speaker Nancy Pelosi (D-Calif.) to politicize a deal to avert a government shutdown. “I will believe it when I see it,” Barrasso said on Fox News’s “Sunday Morning Futures” in reference to an informal deal between Pelosi and Treasury Secretary Steven Mnuchin to pass a clean bill to fund the government. “It’s not beyond Nancy Pelosi to play politics with this.” “We have been at this point before, where Democrats just want to add more money to the federal debt, with more spending. We need to end government shutdowns permanently,” Barrasso added. “I have introduced legislation with a number of my colleagues, the End Government Shutdown Act, so that there would never be a government shutdown again.” Pelosi and Mnuchin last week agreed to a clean continuing resolution to avert a shutdown at the end of the month. “We do believe that we’ll be able to get funding to avoid a shutdown,” White House press secretary Kayleigh McEnany told reporters Thursday. Mnuchin and Pelosi agreed to “work to avoid a shutdown and keep the government open, and that the best way to do that is a clean CR [continuing resolution],” a source familiar with the talks told The Hill the same day. While the duration of the new continuing resolution is not set in stone, Mnuchin told Fox News’s Bret Baier on Sunday that the deal would likely fund the government until December, at which point Congress would need to return for a lame-duck session to pass another bill. The agreement means the continuing resolution is unlikely to be tied to coronavirus relief.
Lenders press Congress to restart – and revamp – PPP – As Congress returns to Washington after a summer break, lenders are pressing lawmakers to resuscitate the Paycheck Protection Program. While the first two rounds of the $659 billion program centered on getting loans into the hands of new participants, lenders want the next iteration to focus on quickly getting many of those borrowers’ loans forgiven or helping those still struggling secure another round of funding. Specifically, lenders want a streamlined forgiveness process for loans of $150,000 or less. They would also like permission to make new loans to PPP participants that can show ongoing stress from the coronavirus pandemic. The viability of scores of small businesses is at stake, lenders said. “It’s critical we do an additional round of stimulus,” said Christopher Maher, chairman and CEO of the $11.3 billion-asset OceanFirst Financial in Red Bank, N.J. “This round needs to be far more targeted on the people who are feeling continuing pain.” Though Democrats and Republicans have struggled to find common ground on extending unemployment benefits, aiding state and local governments and another round of direct stimulus for Americans, broad agreement exists on the need to reinvigorate the Paycheck program, lenders said. “There’s a lot of agreement around PPP,” said Lendio CEO Brock Blake. “I’m disappointed we didn’t get it done before the recess.” PPP “seems to be the one thing everyone agrees on,” added Ryan Metcalf, Funding Circle’s head of U.S. regulatory affairs and social impact. The Small Business Administration, which is administering the Paycheck Protection Program in partnership with the Treasury Department, approved 5.2 million PPP loans totaling $525 billion before the program closed on Aug. 8. That left more than $133 billion unallocated. With the timing of a recovery unclear, demand for capital is surging after many small businesses exhausted their original loans, Blake said.
Dozens of Austrians with no US affiliation get coronavirus stimulus checks: report — Hundreds of Austrians have received U.S. coronavirus stimulus checks despite being ineligible, according to The Washington Post.Several of the recipients were puzzled to get the checks, including pensioner Manfred Barnreiter, 73, who said he believed he was the victim of a scam at first.”We quietly went to the bank … where we were told they’ll see if it’s real,” Barnreiter told Austrian public broadcaster ORF. “Three days later, we had the money in our bank account.” Barnreiter, who briefly worked in the U.S. in the 1960s, received the full $1,200, as did his wife. Neither are citizens of the U.S. or live there, which are required to be eligible for the checks.”People initially thought it’s a treacherous form of fraud – but the checks were real,” a spokeswoman for Austria’s Oberbank told the Washington Post.The report comes the month after NPR reported thousands of foreigners who once worked in the U.S. had accidentally received checks. Government officials attributed the error to likely tax return errors. Three Austrian bank branches said that as of Wednesday, they had cashed approximately 200 American stimulus checks. None of the banks could say how many were cashed by people ineligible for the payments.Barnreiter told ORF he would likely spend the money in the U.S. once travel restrictions imposed due to the pandemic are relaxed. “Initially, I felt bad, thinking, ‘Those poor Americans, maybe they need the money more urgently than we do here in Europe,” he said. “But in the grand scheme of things,” he said, “it’s peanuts.”
DOJ has filed over 50 PPP fraud cases – The Department of Justice has filed more than 50 criminal fraud charges related to the Paycheck Protection Program since banks started issuing PPP loans in April, officials said Thursday. The program leveraged federal funding for banks to deliver forgivable loans to small businesses hurt by the coronavirus pandemic. The funds were intended to help businesses pay their employees while they had to close down under stay-at-home orders. But the Justice Department cited numerous cases where borrowers applied for loans that were instead used to buy luxury items and launder money. “In each and every one of these cases, the success of the defendants’ fraudulent loan applications meant there were fewer funds available at that time in the PPP for legitimate businesses that were in genuine need of economic support,” said Brian Rabbit, acting assistant attorney general of the department’s criminal division. The 57 individuals charged accounted for about $175 million in fraud, the department said during a press conference. The hugely popular $695 billion PPP program was administered by the Small Business Administration in connection with the Treasury Department. As recently as Wednesday, the Justice Department charged 11 Miami-based individuals in a criminal ring that included a professional athlete and his business and allegedly involved $24 million in fraud, said Rabbit. Among those charged, he said, were “individuals or small groups, acting on their own, who lied about having legitimate businesses who claimed that they needed PPP money for things like paying workers or paying bills, but instead used it to buy splashy luxury items for themselves.” “As we allege in a number of our charging documents, these defendants use lies to obtain millions of dollars in PPP funds, and then spent those funds, not on their workers, but on things like luxury cars, home renovations, diamond jewelry, even adult entertainment and trips to Las Vegas,” Rabbit said. Officials said banks assisted in identifying potentially fraudulent loans. “Many financial institutions and banks such as credit unions and other banks have been strong partners in assisting us in detecting and investigating potentially fraudulent activity in connection with the PPP and other government aid programs and safeguarding taxpayer dollars by spotting fraud and freezing funds or accounts,” Rabbit said. The Justice Department also expects to file more charges related to PPP fraud in the future, Rabbit said. “We’re talking about millions of dollars being stolen instead of going to people that are desperately in need,” said James Lee, deputy chief of the Internal Revenue Service. “We’re talking about hundreds of hours agencies are taking to prosecute fraudulent claims, as opposed to spending that time processing legitimate requests.”
Senate Democrats Using Filibuster To Block GOP Pandemic Relief -The US Senate will vote today on a ‘skinny’ GOP bill to provide approximately $300 billion in new COVID-19 aid – a stopgap measure which would renew a federal unemployment benefit, and establish new protections for businesses against liability lawsuits brought during the pandemic, which Democrats have labeled a “poison pill.” As Reuters notes, this could be the final vote on pandemic relief before the November 3rd elections, as lawmakers will likely focus on wrapping up other work over the next few weeks so they can return to their home states and begin campaigning for reelection.Some Republican senators expressed doubts on Wednesday that a compromise coronavirus bill would emerge quickly if McConnell’s latest “skinny” bill is rejected on Thursday in the Republican-controlled chamber.“There’s always some possibility,” said Senator Richard Shelby, adding: “Unless something really broke through, it’s not going to happen.” –ReutersThe stopgap, which is not expected to reach the 60 votes needed in the 100-member chamber to advance Senate Majority Leader Mitch McConnell’s latest bill, comes as Republicans and Democrats remain deadlocked over the larger stimulus package – with Republicans insisting on a bill hovering around the $1 billion mark, and Democrats digging in on over $3 trillion in aid. Nearly $1 trillion of the Democratic proposal would go towards shoring up financially ailing cities and states. Excluded from Thursday’s GOP bill is an array of other initiatives – including a second round of direct federal payments to households, bailouts for US airlines, and the aforementioned aid to state and local governments. In a surprise to nobody, Senate Democrats have used the filibuster to block debate on the GOP “skinny” pandemic relief bill.There’s the 41st vote. Senate Democrats have used the filibuster to block debate on a new COVID relief package. They recently did this on police reform, too.(Reminder: They are openly discussing eliminating the tool they’re currently using if they gain power in November).
UI claims rising as jobs remain scarce: Senate Republicans must stop blocking the restoration of UI benefits – EPI Blog by Heidi Shierholz -Last week, total initial unemployment insurance (UI) claims rose for the fourth straight week, from 1.6 million to1.7 million. Of last week’s 1.7 million, 884,000 applied for regular state UI and 839,000 applied for Pandemic Unemployment Assistance (PUA). A reminder: Pandemic Unemployment Assistance (PUA) is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits and expires at the end of this year.Last week was the 25th week in a row total initial claims were far greater than the worst week of the Great Recession. If you restrict to regular state claims (because we didn’t have PUA in the Great Recession), claims are still greater than the 2nd-worst week of the Great Recession. (Remember when looking back farther than two weeks, you must compare not-seasonally-adjusted data, because DOL changed – improved – the way they do seasonal adjustments starting with last week’s release, but they unfortunately didn’t correct the earlier data.)Most states provide 26 weeks of regular state benefits. After an individual exhausts those benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of state UI benefits that is available only to people who were on regular state UI. Given that continuing claims for regular state benefits have been elevated since the third week in March, we should begin to see PEUC spike up dramatically soon (starting around the week ending September 19th – however, because of reporting delays for PEUC, we won’t actually get PEUC data from September 19th until October 8th). It is also important to remember that people haven’t just lost their jobs. An estimated 12 million workers and their family members have lost employer-provided health insurance due to COVID-19.Figure A combines the most recent data on both continuing claims and initial claims to get a measure of the total number of people “on” unemployment benefits as of September 5th. DOL numbers indicate that right now, 32.4 million workers are either on unemployment benefits, have been approved and are waiting for benefits, or have applied recently and are waiting to get approved. But importantly, Figure A is an overestimate of the number of people “on” UI, for two reasons: (1) Some individuals are being counted twice. Regular state UI and PUA claims should be non-overlapping – that is how DOL has directed state agencies to report them – but some individuals are erroneously being counted as being in both programs; (2) Some states are including some back weeks in their continuing PUA claims, which would also lead to double counting (the discussion around Figure 3 in this paper covers this issue well).
Democrats unveil green alternative for U.S. economic stimulus (Reuters) – Democratic lawmakers on Thursday unveiled a U.S. economic recovery agenda that would bolster union jobs while tackling climate change and racial injustice – a wide ranging alternative to Republican proposals for stimulating the coronavirus-battered economy.Senate Minority Leader Chuck Schumer and Representative Deb Haaland introduced the resolution called THRIVE (Transform, Heal, and Renew by Investing in a Vibrant Economy), which so far has 83 congressional co-sponsors, including Senator Ed Markey and congresswoman Alexandria Ocasio-Cortez, co-authors of the Green New Deal.”It is the duty of the Federal Government to respond to the crises of racial injustice, mass unemployment, the COVID-19 pandemic, and climate change with a bold and holistic national mobilization,” the resolution says.Republicans have resisted efforts to use economic stimulus to further environmental or social issues. Disagreements between the parties have contributed to an impasse over new measures to help the country recover from the economic fallout of the pandemic. The new resolution calls for federal investments to boost renewable energy and retrofitting buildings to make them more efficient, giving workers the right to organize, protecting minority communities affected by air and water pollution and defending tribal sovereignty. Supporters say the resolution contains several elements of the Green New Deal, a sweeping climate change agenda that did not have support from party moderates and energy industry unions. “We have an opportunity to not just recover from these interlocking crises, but to thrive by creating millions of good-paying, union, clean, green jobs while building a more just, healthy, and stable economy that leaves no one behind,” Haaland said in a statement.
Hopes Fade for Second Round of Stimulus Checks, Federal Jobless Aid – WSJ – A second round of $1,200 stimulus checks to help Americans weather the pandemic once seemed all but ensured, with both Democrats and Republicans supporting the provision in early coronavirus relief negotiations in July. Likewise, many Americans were confident that Congress would approve a new round of federal jobless aid, even if it might be less than the $600 a week that ran out at the end of that month. But with bipartisan talks now stalled, a second direct check is one of several policy proposals left in the lurch. Jobless aid is stuck as well. After Democrats blocked a pared-down Republican proposal on Thursday, lawmakers in both parties are increasingly pessimistic that Congress can reach an agreement before the November election. Some also see the urgency of new aid fading, thanks to an improving economy. No deal would mean no new check and no enhanced unemployment benefits from Congress. “I’m one of the most hopeful people I know, and I’m still not overly hopeful. Nor am I anxious about it like I might have been a month or two ago,” said Sen. Kevin Cramer (R., N.D.), referring to a new round of relief. Each party blames the other for the impasse. Republicans argue that Democrats are refusing to compromise because they think they have the upper hand politically if talks fail, while Democrats say Republicans won’t accept the level of aid necessary for the economic and public health crises. “Republicans have tried repeatedly to build on the Cares Act to get more help out the door to American families,” said Senate Majority Leader Mitch McConnell (R., Ky.) ahead of the vote Thursday, accusing Democrats of standing in the way of aid by insisting on a broader package.Senate Minority Leader Chuck Schumer (D., N.Y.) countered that Democrats were “waiting for our Republican colleagues to wake up to the size of the crisis in our country and work with us on a bill that actually makes sense.”In the $2.2 trillion Cares Act passed in March and signed into law by President Trump, Congress approved sending a $1,200 check to many Americans. The payments began phasing out at adjusted gross income above $75,000 for individuals, $112,500 for heads of households (often single parents) and $150,000 for married couples. The bill provided $500 for each dependent as well.In a bill that passed the House in May, Democrats proposed another $1,200 check for adults and $1,200 for dependents, with a maximum of $6,000 sent to each household. A $1 trillion proposal released by Senate Republicans in July largely replicated the first round of stimulus checks. Both the Republican and Democratic plans had income caps.
To Cowed GOP Senators, ‘Herd Immunity’ Means Protection from Trump’s Tweets – –This is the first election in my memory where a vote for any of the Republicans running for reelection to the Senate is totally irrelevant. Why? Because Republican senators have opted for “herd immunity,” an immunity that has nothing to do with the pandemic. Rather, they are huddled as a herd to protect themselves from Donald Trump’s tweets. Is Trump trashing the nation’s intelligence agencies? No problem. Surrounding himself with convicted felons? Yawn. Turning the Census into a political football? Compromising Congress’s subpoena and appointment confirmation powers? Politicizing Homeland Security, the Post Office, the EPA? Wrecking relationships with allies? Betraying the Kurds? Not only has Trump told more than 20,000 lies since he took the oath of office, he has committed dozens of offenses that most presidents would have been pilloried for by responsible congresses. This is not history. It’s current events. Senators are not bystanders. They have a constitutional duty to see to it that the president does his–and to call out offenses when they occur. Just in recent weeks Trump has admitted trying to cripple the U.S. Post Office so it won’t be able to deliver the expected crush of absentee ballots. He’s illegally used the White House as a campaign prop and smugly bragged that no one could stop him. He’s threatened to deny cities run by Democratic mayors legally authorized federal payments. And he’s been credibly accused of violating the honor of everyone who has died serving in this nation’s uniform. Asked what he thought of Trump’s outrageous comments about the nation’s military dead, all South Carolina Sen. Lindsay Graham could do was praise Trump for saving the Stars & Stripes newspaper. In Arizona, Sen. Martha McSally could only muster nice words to say about the late John McCain, whose seat she filled through appointment. On the nation’s most serious current problem, there’s been no effort by Republican senators to investigate why the U.S. has been so deficient in handling the coronavirus crisis.
Trump said he knew virus was deadly but still played down crisis: Woodward book – (Reuters) – U.S. President Donald Trump acknowledged to a journalist early in the coronavirus pandemic that he played down the danger of the health crisis despite having evidence to the contrary, according to a new book. “I wanted to always play it down,” Trump told author Bob Woodward on March 19, days after he declared a national emergency. “I still like playing it down, because I don’t want to create a panic.” CNN on Wednesday broadcast interviews Woodward did with Trump for his new book “Rage.” The book, to go on sale next Tuesday, just weeks before the Nov. 3 presidential election, comes amid criticism of Trump’s efforts to battle COVID-19. The Republican president, assailed by his Democratic rival Joe Biden over the slow U.S. government response to the coronavirus, played down the crisis for months as it took hold and spread across the country. In the March 19 conversation, Trump told Woodward that some “startling facts” had emerged showing the extent of those at risk: “It’s not just old, older. Young people too, plenty of young people.”Trump on Wednesday defended his handling of the virus, which has killed more than 190,000 people in the United States. “The fact is I’m a cheerleader for this country. I love our country and I don’t want people to be frightened,” Trump said at the White House. “We’ve done well from any standard.” According to the interviews, CNN and The Washington Post reported, Trump knew the virus was dangerous in early February. “It goes through the air,” Trump said in a recording of a Feb. 7 interview with Woodward. “That’s always tougher than the touch. You don’t have to touch things. Right? But the air, you just breathe the air and that’s how it’s passed. “And so that’s a very tricky one. That’s a very delicate one. It’s also more deadly than even your strenuous flus.”
The plot against America and the world: How the US government and the media suppressed the truth about the COVID-19 pandemic – On Wednesday, senior Washington Post reporter and establishment insider Bob Woodward released recordings of telephone calls with US President Donald Trump, making clear that the White House, despite its public efforts to downplay the threat of COVID-19, was fully aware in January of the massive danger posed by the deadly new disease. The tapes establish that the Trump administration lied to the public about the threat while it deliberately implemented a policy that has led to the deaths of nearly 200,000 people. During the critical period of January through March, when timely actions, similar to those taken in China, would have saved hundreds of thousands of lives in the United States and internationally, the White House made a cold-blooded decision to lie to the public, in an unprecedented crime. This was a plot against the people of America and the world. On February 7, Trump told Woodward he had just had a conversation with Chinese President Xi Xinping, who had provided the American president with a clear and blunt assessment of the dangers posed by the pandemic. “This is deadly stuff,” Trump said. “It’s also more deadly than … even your strenuous flus … this is five percent [case fatality rate] versus one percent and less than one percent.” These words were in flagrant contradiction to the statements Trump made in public over the following weeks and months, in which he equated the pandemic with the seasonal flu, promised it would “disappear,” and claimed that cases were “going down.” Eschewing the antiscientific demagogy of his public statements, Trump demonstrated a clear and precise understanding of the spread of the disease in his discussion with Woodward. “It goes through air, Bob. That’s always tougher than the touch,” Trump said, an appraisal fully in line with the current scientific consensus. On January 28, according to Woodward’s account, Trump was told by his national security adviser, Robert C. O’Brien, “This will be the biggest national security threat you face in your presidency… This is going to be the roughest thing you face.” The fact that Woodward, who made his career publishing the results of the Washington Post’s Watergate investigation day by day as it was occurring, withheld information that could have saved tens of thousands of lives, makes him, for all intents and purposes, an accessory to the crime committed by the White House.
Science editor says Trump ‘flat-out lied’ about COVID-19, demoralizing scientific community – The editor of the leading academic journal Science wrote in an editorial published Friday that President Trump “flat-out lied” to the American people based on comments revealed this week to journalist Bob Woodward. “As he was playing down the virus to the public, Trump was not confused or inadequately briefed: He flat-out lied, repeatedly, about science to the American people,” wrote the editor, H. Holden Thorp. “These lies demoralized the scientific community and cost countless lives in the United States.” Thorp pointed to tapes of Trump telling Woodward in early February that coronavirus was much more deadly than the flu, at a time when publicly Trump was explicitly comparing the virus to the flu. Trump later told Woodward in March: “I wanted to always play it down. I still like playing it down, because I don’t want to create a panic.” Thorp wrote Friday that “playing it down meant lying about the fact that he knew the country was in grave danger.” “A U.S. president has deliberately lied about science in a way that was imminently dangerous to human health and directly led to widespread deaths of Americans,” Thorp added. “This may be the most shameful moment in the history of U.S. science policy.” Trump defended his response to the virus during a press conference Wednesday, saying when asked if he “misled” the public: “I think if you said ‘in order to reduce panic,’ perhaps that’s so.” The president maintained that he is a “cheerleader for this country, I love our country, and I don’t want people to be frightened.” Asked to respond to the Science editorial, White House spokeswoman Sarah Matthews said: “The suggestion that President Trump misled the public or concealed information that cost lives is an absurd proposition.” “He has always put the health of the American people first as evidenced by his early response in January when he issued a travel ban on China, declared a public health emergency, and created the coronavirus task force,” she added. “During times of crisis, people want a leader who will make decisive actions in a calm manner and as the President noted he didn’t want to induce unnecessary panic and was seeking to calm the nation.”
Most dangerous phase of US Covid-19 crisis may be yet to come | Barry Eichengreen – April marked the most dramatic and, some would say, dangerous phase of the Covid-19 crisis in the US. Deaths were increasing, bodies were piling up in refrigerated trucks outside hospitals in New York City and ventilators and personal protective equipment were in desperately short supply. The economy was falling off the proverbial cliff, with unemployment soaring to 14.7%.Since then, supplies of medical and protective equipment have improved. Doctors are figuring out when to put patients on ventilators and when to take them off. We have recognised the importance of protecting vulnerable populations, including the elderly. The infected are now younger on average, further reducing fatalities. With help from the Coronavirus Aid, Relief, and Economic Security (Cares) Act, economic activity has stabilised, albeit at lower levels.Or so we are being told.In fact, the more dangerous phase of the crisis in the US may actually be now, not last spring. While death rates among the infected are declining with improved treatment and a more favourable age profile, fatalities are still running at roughly a 1,000 a day. This matches levels at the beginning of April, reflecting the fact that the number of new infections is half again as high.Mortality, in any case, is only one aspect of the virus’s toll. Many surviving Covid-19 patients continue to suffer chronic cardiovascular problems and impaired mental function. If 40,000 cases a day is the new normal, then the implications for morbidity – and for human health and economic welfare – are truly dire. And, like it or not, there is every indication that many Americans, or at least their current leaders, are willing to accept 40,000 new cases and 1,000 deaths a day. They have grown inured to the numbers. They are impatient with lockdowns. They have politicised masks. This is also a more perilous phase for the economy. In March and April, policymakers pulled out all the stops to staunch the economic bleeding. But there will be less policy support now if the economy again goes south. Although the Federal Reserve can always devise another asset-purchase programme, it has already lowered interest rates to zero and hoovered up many of the relevant assets. This is why Fed officials have been pressing the Congress and the White House to act.
Trump administration adds $1 billion to USDA food box program that has failed to deliver on food aid — New reports on the Farmers to Families Food Box program indicate that the US Department of Agriculture (USDA) overpaid and underprovided on promises to deliver tens of millions of food aid boxes to families in need. Ostensibly, the program was designed to bridge the gap between farmers who had lost markets during the pandemic and the millions of people struggling to put food on the table. It would do this by contracting distributors to purchase, package and deliver the food to charities and food banks around the country. In theory, this would have provided food to those in need, saved farmers from bankruptcy and eased the burden on food banks. The reality has been far from what was promised. Within just weeks, the program has been riddled with issues of inefficiency, disorganization and fraud. The USDA had promised to deliver 40 million boxes by the end of June. By June 17, only 17 million boxes had been delivered and by the end of July Reuters was reporting that just two-thirds of the boxes ordered had actually arrived. Food banks across the country were reporting that orders were not being fulfilled. In Puerto Rico, the distributor Caribbean Produce Exchange failed to show up to a scheduled distribution event in mid-May in San Juan, leaving 600 people waiting for food that never arrived. The catering company CR8AD8 (pronounced Create a Date) was awarded a $39 million contract but failed to deliver 250,000 boxes of the 750,000 ordered. The boxes that were delivered were often reported to have issues with packaging and labeling, making it difficult for food banks to actually distribute the provided food once delivered. Even when food boxes were delivered on time they were consistently overpriced. Both Caribbean Produce Exchange and CR8AD8 were paid up to $100 per box, much to the dismay of food bank organizers who noted that equivalent boxes could be made for two-to-three times less money.
Court Puts Census Count On ‘More Solid Footing’ – For Now – The Census Bureau sent out new guidance to its regional directors after a federal judge temporarily stopped the Trump administration from “winding down or altering any census field operations,” according to a Tuesday court filing. The lawsuit, led by the National Urban League, aims to stop the administration from chopping the timeline for census data collection from eight months to four. The guidance targets a lot of the on-the-ground work census workers do, including having workers resume making six contact attempts to make sure that a housing unit is vacant and reintroducing random cases to reinterview. “The order puts the largest, most complex census operation – which is the door-knocking phase – back on more solid footing, in my opinion,” said Terri Ann Lowenthal, a consultant who is a well-regarded expert on the census. “It takes the pressure off of census workers to rush through data collection at a time when that work should take more time, not less, because of the disruption and displacement of people and even entire households caused by the pandemic.” Earlier this month, the administration severely curtailed the time census workers had to collect and review data, a decision in contradiction to the advice of the Bureau’s own experts. That announcement came on the heels of President Donald Trump’s directive to exclude undocumented immigrants from apportionment data which determines, among other things, how many House seats each state gets.The temporary halt is better than nothing, said Lowenthal. “I don’t think the court order has created any more chaos than the administration’s unexplained, sudden decision in early August to abandon its request for an extended timeframe for the census and for reporting data and for reporting the results,” she said.
‘Dereliction of Duty’: Outrage as USPS Board Issues Gushing Praise for DeJoy Amid Mail Slowdowns, Medicine Delays, and Straw-Donor Scandal -Brushing aside widespread alarm over mail slowdowns, prescription medicine delays, potentialelection sabotage, and Postmaster General Louis DeJoy’s reported role in an illegal straw-donor scheme, members of the Republican-dominated U.S. Postal Service Board of Governors on Wednesday said they are “thrilled” by DeJoy’s performance thus far as head of America’s most popular government institution.After meeting with DeJoy behind closed doors to discuss several ongoing congressional investigations into his actions as USPS chief and previous work as a GOP fundraising powerhouse, two Republican board members gushingly praised the postmaster general and said there are no plans to discipline him over his destructive policy changes or possible criminal actions.”The board is tickled pink, every single board member, with the impact he’s having,” board member John Barger – who, like DeJoy, is a Republican donor – told the Washington Post in an interview following the private meeting. “He’s an excellent leader. He’s an excellent supply-chain logistics savant. And I’m very, very pleased with his performance since coming on board.”William Zollars, another GOP member of the board, said DeJoy has the full support of the panel, which currently consists of four Republicans and two Democrats – all appointed by President Donald Trump. Zollars told the Post that DeJoy insisted during the closed-door meeting that “he feels like he has done nothing wrong.””From a logistics and operations standpoint, Louis DeJoy is as good as it gets,” said Zollars. “He has support on both sides of the aisle.”The board members’ comments drew ou trage from lawmakers and watchdogs who have been urging the body to exercise its authority to remove – or, at the very least, suspend – DeJoy over policy changes that have significantly disrupted Postal Service operations just weeks ahead of an election that could be decided by mail-in ballots.Rep. Gerry Connolly (D-Va.), chairman of the House Subcommittee on Government Operations,tweeted late Wednesday that “when given the opportunity to restore confidence in the USPS, the Board of Governors today chose instead to continue their dereliction of duty.””Mr. DeJoy’s term as postmaster general has been defined by conflict, sabotage, incompetence and politicization,” said Connolly. “Anything short of his immediate removal is a total failure in oversight and accountability.”The USPS Board of Governors unanimously appointed DeJoy – a former logistics executive with zero prior Postal Service experience – in May following a search process that Democratic lawmakers have deemed “highly irregular.”David Williams, a former board member who resigned in protest in April, told the Congressional Progressive Caucus last month that he believes it was Barger who suggested DeJoy as a postmaster general candidate “late in the process.” Williams also alleged that Barger assisted DeJoy in job interviews with the board, helping him “finish a number of sentences where he got stuck.”
Facebook announces political censorship plan in advance of US presidential election – Facebook CEO Mark Zuckerberg announced a program of censorship measures on Thursday that the social media platform will take “to help secure the integrity of the US elections” before, during and after November 3. In a lengthy post to his own Facebook account, Zuckerberg said that he is concerned about “the challenges people could face when voting” and “worried that with our nation so divided and election results potentially taking days or even weeks to be finalized, there could be an increased risk of civil unrest across the country.” In motivating his proposed censorship actions, Zuckerberg claims that they are needed to protect “our democracy” by “helping people register and vote,” “clearing up confusion” about the elections and “taking steps to reduce the chances of violence and unrest.” Zuckerberg also says that Facebook’s leadership has learned “from our elections work over the past four years and the conversations we’ve had with voting rights experts and our civil rights auditors.” In other words, taking direction from the US government – and the intelligence agencies in particular – the social media giant has spent the last four years developing political censorship techniques aimed at ensuring that the content and dialogue on Facebook do not find a path outside of the narrow confines of the capitalist two-party system. Among the measures that Facebook will take are refusing to accept any new political advertising in the last week before the election, removing posts that claim people will get COVID-19 by voting in person and placing an “informational label” on content that seeks to delegitimize the election outcome or any candidate or campaign that seeks to declare victory before the official results are published by Reuters and the National Election Pool, a consortium composed of ABC News, CBS News, CNN, and NBC News. That the fundamental purpose of Zuckerberg’s announcement is aimed at defending the bourgeois political setup dominated by the Democrats and Republicans and especially at blocking socialist and left-wing politics from entering the public discourse prior to the elections is revealed in the last of the proposed measures. Zuckerberg says that Facebook has already “strengthened our enforcement against militias, conspiracy networks like QAnon, and other groups that could be used to organize violence or civil unrest in the period after the elections.”
Trump Labor Day press conference: Empty boasts and fascistic threats – The Labor Day press conference held by President Trump at the White House was a spectacle of snarling ferocity, lies and appeals based on nationalistic frenzy. All that was missing to complete the picture of Trump as a cornered rat was a declaration that “you’ll never take me alive.”The US president began by boasting of what he called the “spectacular” performance of the American economy, which he claimed was outperforming that of every other nation. “We are rebounding much more quickly from the pandemic,” he said. “We have added a record-setting 10.6 million jobs since May.”Since the US economy lost 21.2 million jobs officially in March and April – plus another 10 million or more when contractors, the self-employed and other contingent workers are included – this Trump claim merely demonstrates the gulf between the real conditions of life for working people and the fortunes of the superrich, which have fully recovered and in some cases risen sharply because of the pandemic.Hailing the creation of one-half or one-third the number of jobs wiped out by the COVID-19 pandemic is like cheering the dispersion of flood waters after Hurricane Katrina: The damage has been done, and the wreckage stretches as far as the eye can see. As always, Trump celebrated the stock market, which he said was “setting records. The NASDAQ has set 17 records already.” He pledged a new round of tax cuts to boost “growth,” modeled on those enacted in December 2017, which overwhelmingly favored the wealthy.As he continued through the 45-minute session, Trump’s tone became more and more strident and his threats about the consequences of a Democratic victory November 3 more apocalyptic.He warned Wall Street, “Joe Biden and radical socialist Democrats would immediately collapse the economy. If they get in, you will have a crash the likes of which you have never seen before.”Actually, however, both the stock exchange and the major banks are favoring the Democrats with the lion’s share of their campaign funds, in part as insurance because they see the Democrats as more likely to win, in part because the financial elites view the present occupant of the White House as a spent force who is provoking increasing popular opposition that endangers the profit system as a whole.
Trump Unveils List Of Potential Supreme Court Picks, Challenges Biden To Do Same – President Trump unveiled a ‘short’ list of 20 potential Supreme Court nominees on Wednesday – a move which will put pressure on the Biden camp to do the same, according to USA Today. “My nominee will come from the names I have shared with the American public,” in the event of a vacancy, said Trump, adding “Joe Biden has refused to release his list, perhaps because he knows the names are so extremely far-left.” “Apart from matters of war and peace, the nomination of a Supreme Court justice is the most important decision an American president can make,” Trump added – saying that presidential candidates “owe the American people” a list of potential Supreme Court picks. The move comes nearly two months after Justice Ruth Bader Ginsburg, 87, disclosed that she is receiving treatment for a resurgence of liver cancer. Ginsburg was previously treated for pancreatic cancer in 2019 and 2009. Trump’s list includes Sens. Tom Cotton of Arkansas, Ted Cruz of Texas and Josh Hawley of Missouri – who has already turned down the potential nomination.
“Pandemic be damned”: Forbes 400 wealthiest Americans list reveals billionaire bonanza – The American business magazine Forbes published its 39th annual list of the 400 richest people in the country on Tuesday, celebrating the parasitic elite’s total wealth expansion by $240 billion to a record $3.2 trillion over the past year. While millions of working-class families in the US are facing unemployment, economic ruin, eviction and hunger arising from the deep economic crisis sparked by the coronavirus pandemic, Forbes introduces its top billionaires list with “Pandemic be damned.” Noting that the stock market has “defied the virus,” Forbes editors write, “Even in these trying times mega-fortunes are still being minted.” Topping the Forbes list for the third year in a row is Amazon CEO Jeff Bezos, with a net worth of $179 billion. Up from $114 billion in 2019 – an increase of 57 percent – Bezos’s increase in personal wealth of $65 billion in one year is greater than the individual wealth of all but eight others at the top of the list. Along with Bezos, the top ten richest Americans include: Bill Gates (Microsoft, $111 billion), Mark Zuckerberg (Facebook, $85 billion), Warren Buffett (Berkshire Hathaway, $73.5 billion), Larry Ellison (Oracle, $72 billion), Steve Ballmer (Microsoft, $69 billion), Elon Musk (Tesla, SpaceX, $68 billion), Larry Page (Google, $67.5 billion), Sergey Brin (Google, $65.7 billion) and Alice Walton (Walmart, $62.3 billion). With the exception of Warren Buffett, whose net worth dropped by $7.3 billion over the past year, the other nine of the top ten richest billionaires increased their wealth by a total of $194 billion. This means that 80 percent of the increases in the top 400 wealthiest fortunes went to nine of the ten richest individuals. Forbes began the repugnant business of hailing the accumulation of personal capitalist wealth in 1982. This was during the decade that began with the election of Republican Ronald Reagan as President and when the ruling elite went on the offensive against every gain made by the working class since the 1930s. Since that time, a massive intensification of the exploitation of the working class and transfer of wealth to the financial oligarchy has taken place. Providing something of a picture of just how far the social counterrevolution of the past four decades has penetrated American society, in 1982 there were 13 billionaires in the Forbes 400, and someone with a fortune of $75 million could secure a spot on the list.
JPMorgan probing employees’ role in misuse of COVID relief funds– JPMorgan Chase says it has identified instances in which COVID-relief funds were misused by customers and is probing employees’ involvement in the potentially illegal activities. The New York-based bank said the conduct includes “instances of customers misusing Paycheck Protection Program Loans, unemployment benefits and other government programs” and that some “employees have fallen short, too,” according to a memo to staff from the bank’s senior leaders Tuesday. The firm said the incidents don’t meet its principles “and may even be illegal.” “We are doing all we can to identify those instances and cooperating with law enforcement where appropriate,” according to the memo. The bank asked workers to report any conduct that violates its policies. JPMorgan spokeswoman Trish Wexler declined to comment. The Small Business Administration’s paycheck program was the centerpiece of the $2.2 trillion coronavirus relief package enacted in March and allowed small businesses to apply for a loans of as much as $10 million each. JPMorgan, the biggest U.S. bank, issued about 280,000 loans totaling more than $29 billion, making it the top PPP lender in the country, according to SBA data. The U.S. Department of Justice has been pursuing cases of potential fraud in the emergency program. A congressional subcommittee found earlier this month that more than $1 billion in federal coronavirus relief went to U.S. small businesses that received multiple loans, according to a report that also raised red flags for potential fraud with thousands of other companies.
JPMorgan finds some workers improperly pocketed COVID relief funds – JPMorgan Chase found that some of its employees improperly applied for and received COVID 19-relief money that was intended for legitimate U.S. businesses hurt by the pandemic, according to a person with knowledge of the matter. The bank discovered the actions, all of which were tied to the Economic Injury Disaster Loan program, after noticing that suspicious amounts of money had been deposited into checking accounts owned by bank employees, said the person, who asked not to be identified because the information is private. The findings prompted an unusual all-staff message from JPMorgan on Tuesday that puzzled many across the industry for its candid admission of potentially illegal acts by some of its own while not describing what they had done. The Small Business Administration’s disaster loan program had been expanded significantly after the pandemic led to rolling shutdowns across the country, leaving many small enterprises in need of a cash lifeline. Unlike with the Paycheck Protection Program, banks didn’t issue or underwrite the disaster loans and grants. Instead, loans or grants came directly from the SBA. The findings of employee misconduct came in a broader sweep of individual accounts that received business aid, the person said. The SBA warned banks on July 22 to be on the lookout for suspicious deposits or activity as part of the EIDL program. The agency’s inspector general has since flagged evidence of fraud in the program, saying it identified more than $250 million in aid given to potentially ineligible recipients as well as $45.6 million in possibly duplicate payments. A Bloomberg Businessweek analysis of SBA data last month identified $1.3 billion in suspicious payments. A JPMorgan spokeswoman declined to comment. The nation’s largest bank sent a memo to roughly 256,000 employees Tuesday in which senior leaders said they were probing whether any staffers helped people misuse aid programs including “Paycheck Protection Program Loans, unemployment benefits and other government programs.” The firm had said it identified conduct by customers that didn’t meet its principles and “may even be illegal” and that some employees had fallen short on ethical standards, too. The firm’s leaders decided to send the memo to highlight the widespread abuse of relief programs they’d found, the person said, and the message asked employees to report any unethical activity they’d witnessed.
JPMorgan Finds Some Employees Illegally Pocketed Covid-Relief Funds -Yesterday, when we first reported that JPMorgan was probing its employees’ role in abuse of PPP funds following reports of “instances in which Covid-relief funds were misused by customers and is probing employees’ involvement in the potentially illegal activities”, we said that it was about time the role of banks was put under the microscope because ” while it was easy to blame the administration for rushing to hand out hundreds of billions in grants/loans (without which the US economy would still be in a depression), a key question is how and why did the private banks that were gatekeepers for all this capital, allow such abuse to take place.“Well, it now turns out that not only did JPM employees allegedly enable fraud by clients when obtaining PPP loans, the largest US bank also found that some of its employees themselves “improperly applied for and received”, i.e. stole, Covid-relief money that was intended for legitimate U.S. businesses hurt by the pandemic, according to Bloomberg.The bank discovered the actions, which were tied to the Economic Injury Disaster Loan program, “after noticing that suspicious amounts of money had been deposited into checking accounts owned by bank employees.” The findings prompted an unusual all-staff message from JPMorgan Tuesday which according to Bloomberg “puzzled many across the industry for its candid admission of potentially illegal acts by some of its own while not describing what they had done.” What is odd, is that unlike with the Paycheck Protection Program, banks didn’t issue or underwrite the disaster loans and grants. Instead, loans or grants came directly from the SBA, which raises questions how employees of the largest US commercial bank intermediated themselves in a process that should have been streamlined without middle-men. JPM’s surprising findings of illegal employee activity come amid a broader sweep of individual accounts that received business aid. On July 22, the SBA warned banks to be on the lookout for suspicious deposits or activity as part of the EIDL program. The SBA’s inspector general has also flagged evidence of fraud in the program, saying it identified more than $250 million in aid given to potentially ineligible recipients as well as $45.6 million in possibly duplicate payments. A Bloomberg analysis of SBA data last month identified $1.3 billion in suspicious payments. According to the FT, JPMorgan has fired several employees accused of pocketing U.S. coronavirus relief funds. The employees had not been acting in their capacity as JPMorgan employees and breaking the law was a violation of the bank’s conduct code, which led to the dismissals. Clearly at JPM only executives are allowed to benefit from billions in government relief funds.
FDIC board to discuss fund restoration plan next week – The board of the Federal Deposit Insurance Corp. will consider a plan on Sept. 15 to shore up the Deposit Insurance Fund after its reserve ratio fell below the statutory minimum. Last month, the FDIC announced that the reserve ratio of the DIF – the fund responsible for covering depositor losses and administrative costs when a bank fails – had fallen 9 basis points between the first and second quarter of 2020, from 1.39% to 1.30%. The decline was attributed to an unprecedented surge in deposits. Congress requires the agency to maintain reserves of 1.35% of estimated insurance deposits. “I want to emphasize that the Fund has more money than at any time in the FDIC’s history, and the reduction in the reserve ratio was solely a result of the unprecedented increase in bank deposits,” FDIC Chair Jelena McWilliams said in prepared remarks last month announcing the results of the agency’s Quarterly Banking Profile. The DIF’s current balance is $114.7 billion. It is unclear whether the FDIC’s coming restoration plan will raise premiums on banks. While the DIF is primarily funded by assessment fees paid by banks, McWilliams said in her prepared remarks last month that the agency believes “deposit growth is likely to normalize in the upcoming quarters and for the reserve ratio to rise above 1.35 without any need to modify assessment rates in the near term.” The Dodd-Frank Act raised the statutory minimum of the DIF’s reserve ratio from 1.15% to 1.35% in 2010, and gave the agency until Sept. 30, 2020, to hit the new target. The FDIC managed to reach the goal early, achieving a reserve ratio of 1.36% in September 2018.
BofA details investments to help Black- and Hispanic-owned businesses – After pledging $1 billion to address racial and economic inequities in the areas it serves, Bank of America is detailing how it plans to spend $300 million of that financial commitment.The Charlotte, N.C., bank said Tuesday that it will invest a combined $200 million in Black- and Hispanic-owned businesses seeking capital and in programs that develop future entrepreneurs in minority communities.The company will invest $50 million in minority depository institutions. The bank will also spend $25 million on community outreach and an additional $25 million on jobs initiatives in Black and Hispanic communities.”These initiative investments will address access to jobs and support for small businesses by creating more pathways to employment in communities of color and more support for minority entrepreneurs,” Chairman and CEO Brian Moynihan said in a news release. The bank’s financial support is already underway. So far, it has completed investments in three minority depository institutions: First Independence Corp. in Detroit, Liberty Financial Services in New Orleans and SCCB Financial Corp. in Columbia, S.C. Each of those investments amounted to roughly 5% of the respective bank’s common equity. To help communities combat the spread of coronavirus, the bank has also already provided 5 million masks to communities in need.On deck are investments in additional Black and Hispanic-owned depository institutions, more donations of personal protective equipment, and grant funding to provide career training for Black and Hispanic individuals. The grants will be facilitated through partnerships with over 20 colleges and universities serving Black and Hispanic students. The bank said it expects to release more details about direct equity investments at a later date.
Morgan Stanley pledges $15B help low-income communities – Morgan Stanley will commit $15 billion over the next four years in the form of lending, investments and other financial support for low-income communities, as part of its deal to buy E-Trade Financial Services. The plan includes financial support for community development financial institutions and other nonprofit organizations, as well as a pledge to bolster its own internal diversity efforts. Morgan Stanley developed the plan with input from the National Community Reinvestment Coalition, the NCRC said Thursday. “This is a big commitment for Morgan Stanley to increase the value of the firm’s lending and investments in lower-income communities and communities of color that have long been neglected by the nation’s banks,” NCRC CEO Jesse Van Tol said in a press release. Such large-dollar community benefits plans have long been a feature of mergers and acquisitions, although nationwide protests over racial injustice and the COVID-19 pandemic have drawn greater attention to racial and economic inequality this year. For instance, Huntington Bancshares in Columbus, Ohio, recently announced a similar, $20 billion pledge building off a community benefits plan it made in 2016 when it acquired FirstMerit. Morgan Stanley first announced in late-February that it would buy the discount brokerage firm for $13 billion. That deal, which is expected to close in the fourth quarter, will give Morgan Stanley a stronger foothold into retail banking. Van Tol said the bulk of the $15 billion will go toward lending and investments in community development projects, like affordable housing. He said that currently, Morgan Stanley and E-Trade make around $2 billion a year in lending and investments in lower-income communities and that the plan outlined on Thursday represents about a 43% increase over that. The investment bank’s community benefits plan includes $50 million in grants to CDFIs, loan funds and community development groups providing counseling and capital during the pandemic. It will also make a $5 million grant to the NCRC, which the nonprofit will then pass on to NCRC members that are focused on racial equity and don’t currently receive support from Morgan Stanley. Additionally, Morgan Stanley will make up to $1 billion in bond offerings to CDFIs with no fees and will support uniform standards for supplier diversity.
CFPB gets tough with debt collectors as it readies rule The industry has largely praised the Consumer Financial Protection Bureau’s cautious approach to regulating debt collection, but at the same time the agency has been willing to punish collectors that it sees treating borrowers unfairly. The agency is expected to finish a rule next month setting limits on collectors’ communications with debtors. Financial institutions supported the bureau’s middle-of-the-road proposal last year, which was not as severe as restrictions initially proposed by former Obama-appointed CFPB Director Richard Cordray. But observers say recent CFPB enforcement actions against two debt collection operations are a sign the agency still intends to crack down on certain activities, even if those activities are not highlighted in the upcoming rule. “This is definitely a shot across the bow to the collection industry,” said Joann Needleman, leader of the consumer financial services group at the law firm Clark Hill, of the two recent actions. This past week, the CFPB filed a lawsuit against Encore Capital Group, the nation’s largest giant debt buyer and collector, claiming the San Diego company and its subsidiaries violated a 2015 consent order by filing at least 100 lawsuits against consumers to collect debts after the statute of limitations had expired. The CFPB also said Encore failed to provide consumers with the required documentation verifying debts, among other practices. “The failure to provide these consumers with the [original account-level documentation] that they had requested impeded the consumers’ ability to determine whether their debts were truly owed,” the CFPB said in the complaint. On the same day, the bureau filed a lawsuit with the New York attorney general against a network of five companies outside of Buffalo for allegedly using deceptive, harassing and improper methods to collect debts. The complaint accuses the companies of violating the Fair Debt Collection Practices Act by threatening arrests or other legal action that they did not intend to pursue, among other things. “This lawsuit should send a clear message to debt collectors who violate the law that we will take action to stop such practices and protect consumers,” CFPB Director Kathy Kraninger said in a statement accompanying the complaint. “The Bureau is committed to holding these companies and individuals accountable for threatening, harassing, and deceiving consumers.” Observers said the enforcement actions are consistent with the suggestion from policymakers that debt collectors should suspend aggressive actions as consumers cope with the fallout from the coronavirus pandemic. They also imply the agency could take a tougher approach to punishing firms for “unfair, deceptive, or abusive acts and practices.” As the virus spread this past spring, many banks and auto lenders began self-imposed moratoriums on collecting debts. Most courthouses were closed, making collections difficult. Banks were also on the front lines helping small-business owners apply for loans and didn’t want to draw scrutiny from regulators by collecting debts when so many workers were unemployed. Large debt buyers, however, took the opposite position, experts said. They continued to file lawsuits against defaulted consumers. “There has been a big drumbeat to stop debt collection since COVID started,” said Needleman. “We’re going back to the era for legal collections to be highly scrutinized again.”
HUD finalizes contentious revamp of fair-lending rule with one tweak – The Department of Housing and Urban Development has finalized a controversial interpretation of the Fair Housing Act’s disparate impact standard – with one twist. “With the exception of the defense for algorithms, the rule is broadly the same as what HUD proposed last year,” said Jeffrey Naimon, a partner at the law firm Buckley LLP, who represents financial services companies and has defended them against several types of claims, including allegations of fair-lending rule violations. The original proposal allowed a defendant to rebut a plaintiff’s case by citing the use of an algorithm that was “nondiscriminatory.” Because HUD received several comments citing a concern about algorithms, which some fear could make lending discrimination worse instead of better, it removed the specific reference to them as a way to rebut claims. “HUD expects that there will be further development in the law in the emerging technology area of algorithms, artificial intelligence, machine learning and similar concepts. Thus, it is premature at this time to more directly address algorithms,” the department said in its final rule. However, the rule also noted that “a defendant may show that predictive analysis accurately assessed risk” to support a rebuttal of claims, and called this “an alternative for the algorithm defenses.” Some consumer and civil rights advocacy groups acknowledged that the softening of the language around algorithms was welcome, but they are still concerned about remaining language around the use of predictive analysis because it leaves the door open for the use of algorithms in the defense of fair housing and lending claims. “I think the ways algorithms are referred to in the final rule is still pretty concerning,” said Linda Jun, senior policy council at the Americans for Financial Reform Education Fund. “I think a few things are slightly improved, but taken as a whole this rule is extremely dangerous. It really guts the ability to challenge hidden discrimination at a time when COVID is already having a disparate impact on communities of color.” However, HUD said the revision could encourage more lending by bringing previous standards more in line with a Supreme Court ruling on the issue and decreasing fears about broad legal liabilities that increase risk-management costs. “HUD is bringing the 2013 Obama-Biden disparate impact rule into alignment with the 2015 Supreme court ruling,” the department said in the statement. “This action brings legal clarity for banks and underwriters, and that clarity will stimulate mortgage credit and affordable housing for low-income and minority populations.”
MBA Survey: “Share of Mortgage Loans in Forbearance Declines to 7.16%” – Note: This is as of August 30th. From the MBA: Share of Mortgage Loans in Forbearance Declines to 7.16% The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 4 basis points from 7.20% of servicers’ portfolio volume in the prior week to 7.16% as of August 30, 2020. According to MBA’s estimate, 3.6 million homeowners are in forbearance plans….”The share of Ginnie Mae loans in forbearance increased again this week, as the current economic crisis continues to disproportionately impact borrowers with FHA and VA loans. As a result, IMB servicers, which have roughly one-third of their portfolio with Ginnie Mae, had a forbearance share that was unchanged, while depositories, which have a larger share of GSE and portfolio loans, saw a decrease,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The labor market continued to heal in August, with strong job growth and a large decline in the unemployment rate. However, the economy still faces an uphill climb and remains far away from full employment. High unemployment, and jobless claims consistently around 1 million a week, continue to cause financial strain for some borrowers – and especially for those who work in industries hardest hit by the pandemic.”By stage, 35.76% of total loans in forbearance are in the initial forbearance plan stage, while 63.29% are in a forbearance extension. The remaining 0.94% 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 ten weeks.The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.10% to 0.09%, the lowest level reported for this series since March.”There hasn’t been a pickup in forbearance activity related to the end of the extra unemployment benefits.
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 September 8th. From 1.7M Forbearance Plans Set to Expire in SeptemberImprovement in the number of active forbearance plans continued this past week. Entering the month, more than 2M forbearance plans were set to expire in September.That number’s already down 350K to 1.7M in the first full week of the month as those expirations begin to be assessed for extensions and removals. After dropping by nearly 150K last week, the total number of mortgages in active forbearance declined another 66K (-2%) this week….All in all, active forbearances are now down 238K (-6%) over the past 30 days, as servicers continue to proactively work their way through the wave of forbearance plans set to expire in September. As of September 8, 3.7M homeowners remain in COVID-19-related forbearance plans. That’s down more than 22% from the peak of over 4.7M in late May. Note: We might see an increase in forbearance requests in September without further relief, although the lack of disaster relief is probably hitting renters harder.
Black Knight Mortgage Monitor for July: “Record-Low Rates, Largest Quarterly Volume on Record” – Black Knight released their Mortgage Monitor report for July today. According to Black Knight, 6.91% of mortgages were delinquent in July, down from 7.59% in June, and up from 3.46% in July 2019. Black Knight also reported that 0.36% of mortgages were in the foreclosure process, down from 0.49% a year ago. This gives a total of 7.40% delinquent or in foreclosure. Press Release: Black Knight: Surge in Refinance Lending Driven by Record-Low Rates Leads to Largest Quarterly Volume on Record; Just 18% of All Refinancing Borrowers Retained by Servicers This month, Black Knight looked at both Q2 2020 origination data as well as interest rate locks thus far in Q3 2020 to get a sense of how the lending market has fared in the era of COVID-19. A period of record-low interest rates has provided a much-needed backstop to the impact of shutdowns, unemployment and economic uncertainty. “Despite the nation being under pandemic-related lockdowns for much of the quarter, a record-breaking surge in mortgage originations occurred in Q2 2020, driven by the record-low interest rate environment,” . “Nearly $1.1 trillion in first lien mortgages were originated in Q2 2020, which is the largest quarterly origination volume we’ve seen since first reporting on the metric in January 2000. Refinance lending grew more than 60% from the previous quarter and more than 200% from the same time last year, accounting for nearly 70% of all Q2 originations by dollar value. At the same time, purchase lending declined 8% year-over-year as the traditional spring homebuying season was impacted by COVID-19-related restrictions. However, mortgage loan rate lock data – a leading indicator of lending activity – suggests that the homebuying season was simply pushed forward into the third quarter. “Purchase locks in Q3 2020 have already made up for the losses of a COVID-impacted Q2 – and then some – based upon normal seasonal expectations. In fact, rate locks are suggesting that we could see Q3 purchase lending break typical seasonal trends and rise by 30-40%, which would push us to a new record high. Likewise, while Q2 refinance activity was record-breaking, refi lock data suggests Q3 refinance volumes could climb even higher. Locks on refinance loans expected to close in the third quarter, assuming a 45-day lock-to-close timeline, are already up 20% from Q2. With market conditions as they are and given the recent delay of the 50 basis points fee on GSE refinances until December, we would expect near-record low interest rates to continue to buoy the market. This graph from Black Knight shows the surge in first lien originations in Q2. Nearly $1.1T in first lien mortgages were originated in Q2 2020, the largest quarterly origination volume on record since Black Knight began reporting the metric in January 2000
NMHC: Rent Payment Tracker Shows Decline in Households Paying Rent in September – From the NMHC: NMHC Rent Payment Tracker Finds 76.4 Percent of Apartment Households Paid Rent as of September 6: The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 76.4 percent of apartment households made a full or partial rent payment by September 6 in its survey of 11.4 million units of professionally managed apartment units across the country. This is a 4.8-percentage point, or 552,796-household decrease from the share who paid rent through September 6, 2019 and compares to 79.3 percent that had paid by August 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. “The initial rent payment figures from September have begun to demonstrate the increasing challenges apartment residents are facing. Falling rent payments mean that apartment owners and operators will increasingly have difficulty meeting their mortgages, paying their taxes and utilities and meeting payroll,” said Doug Bibby, NMHC President. “The enactment of a nationwide eviction moratorium last week did nothing to help renters or alleviate the financial distress they are facing. Instead, it only is a stopgap measure that puts the entire housing finance system at jeopardy and saddles apartment residents with untenable levels of debt. Federal policymakers would have been better advised to continue to provide support as they successfully did through the CARES Act.” … “It is worth noting that the Labor Day weekend, which occurred a week later than in 2019, may have impacted the collections data for the first week of the month, just as our data showed a comparable dip the first week of July because of the Fourth of July holiday,” said Bibby. “Next week’s Rent Payment Tracker numbers will help indicate the degree to which the drop in payments was a result of the holiday weekend or decreased ability of residents to pay their rent.”
Eviction Moratorium Delays Crisis Until January, When Tenants Will Owe Back Rent – Alexis Goldstein – The nationwide eviction moratorium announced by the Department of Health and Human Services (HHS) and the Centers for Disease Control and Prevention (CDC) will provide immediate and welcome relief through the end of the year for certain renters, buthousing rights advocates say the move is woefully inadequate because it fails to provide any payment assistance to renters.Tenants will still owe back rent plus interest and fees once the moratorium ends in January. This new eviction moratorium is in effect from September 4 through December 31, 2020, and is expected to face legal challenges by landlords. It applies to all 50 states, the District of Columbia and U.S. territories, with the exception of American Samoa, which is excluded for now as it has reported no cases of COVID-19. In order to qualify, renters must meet five requirements. First, they must expect to face homelessness, or expect to move into “close quarters” with others if they are evicted. Second, they must be unable to pay their rent either due to a loss of income or major medical expenses. Third, they must make partial rent payments each month “as close to the full payment as the individual’s circumstances may permit.” Fourth, they must have “used best efforts” to find government assistance for rent. Finally, they must either have received a stimulus check, not filed a tax return in 2019 or make less than $99,000 (or less than $198,000 if filing a joint tax return).If a renter meets all of these criteria, they must sign a written declaration to their landlord, under penalty of perjury, stating they meet the requirements. (A declaration form can be found on the last few pages of the HHS/CDC notice). Needing to supply this written declaration directly to their landlord may prove difficult to renters whose only access to a computer or internet is through a smartphone – which is about one in five U.S. residents. Those without easy access to a printer (especially with the closure of libraries due to the pandemic) may also have difficulty getting the required documentation to their landlord. “Any time you impose even minimal documentation requirements to qualify for a protection like this, it raises an impediment for people to comply,” said Eric Dunn, director oflitigation at the National Housing Law Project. The documentation requirement may also create opportunities for landlords to say what tenants submit isn’t sufficient.
What Rent Drop? Listed Prices Aren’t Budging Where COVID-19 Hit Hardest – In some parts of the city, rents have dropped since the COVID-19 crisis began. But for neighborhoods that felt the effects of the coronavirus most, listed prices have risen slightly, according to a new analysis. The annual rental report by the apartment-listings site StreetEasy paints a very different price picture between the neighborhoods with the lowest coronavirus infection rates – primarily wealthier neighborhoods in Manhattan and Brooklyn – and the hardest-hit areas, mostly in Queens and The Bronx.Between February and July of this year, rents fell by 1.9% in the zip codes with the lowest COVID-19 rates in the city, like Battery Park City, Greenwich Village and Tribeca, according to the report, comprised of market-rate listing data.However, in the neighborhoods with the highest rates of COVID-19, per city health department data – East Elmhurst, Corona and Jackson Heights topped the list – advertised rents have climbed a bit in the same time period, rising 0.3%. The findings contradict the claim that there’s an “exodus out of the city,” said Nancy Wu, an economist at StreetEasy. “That’s specific to Manhattan, and a lot of these Manhattan-esque neighborhoods,” she said. Elsewhere in the city, “it’s a very different picture.”The StreetEast report released Thursday analyzed six years of rental data in the five boroughs through July of 2020, comparing ZIP codes with the highest tested rates of COVID-19 per 100,000 people since the start of the pandemic with those with the lowest.Each pool of least- and most-affected neighborhoods was defined by StreetEasy by adding up top and bottom ZIP codes with the highest and lowest infection rates until they had 1 million people in each category.Over that period, listed rents in the most virus-affected neighborhood rose by 22.1% while the least-affected areas saw advertised prices rise only 10% over the same period.Some of the trend is attributable to the fact that, generally, areas with lower median rents tend to see price growth at rates faster than higher-priced neighborhoods, Wu noted – because “there’s more demand for affordable properties as other places get more expensive.”But it also points to a confluence of factors and “housing stressors” that overlap in the communities that have experienced high COVID-19 rates, said Barika Williams, executive director at the Association for Neighborhood & Housing Development, a consortium of nonprofit development groups.
52% of young adults are living with their parents: Pew Research Center –Pete Davidson isn’t the only one: 52% of young Americans are living with their parents, according to a new poll by Pew Research Center.The number is now the highest on record, according to Pew, surpassing the 48% peak recorded during the Great Depression.Even prior to the COVID-19 pandemic, a large portion of 18- to 29-year-olds were living with a parent. A 2016 report said millennial men were more likely to live with a mom or dad than with a significant other. And a 2019 report found that millenials, already behind because of the 2008 financial crisis, are plagued by four main costs: college tuition, housing, healthcare, and childcare. In July of 2019, 47% of young adults lived with a parent. But the coronavirus pandemic has worsened the economic outlook for this generation struggling financially, pushing 2.6 million more young people to move back home. One quarter of young-adult workers, aged 16 to 24, lost their jobs between February and May, according to Pew, and another study found that 18- to 29-year-olds lost jobs or received pay cuts in greater shares than other age groups. Comedian and actor Pete Davidson, who is known to live in the basement of a Staten Island home he bought with his mom, put the phenomenon simply on an episode of “Saturday Night Live.” “She’s not just my mom,” he said. “She’s also my roommate.”
Hotels: Occupancy Rate Declined 19% Year-over-year; Boosted by Hurricane and Fires — From HotelNewsNow.com: STR: US hotel results for week ending 5 September: Boosted in part by Labor Day weekend, U.S. hotel occupancy increased slightly over the previous week, according to the latest data from STR.
30 August through 5 September 2020 (percentage change from comparable week in 2019):
Occupancy: 49.4% (-18.9%)
Average daily rate (ADR): US$100.97 (-17.1%)
Revenue per available room (RevPAR): US$49.87 (-32.8%)
Hotel demand grew to 18 million room nights sold (+500,000 week over week). Saturday (5 September) occupancy came in at 69.0%, just 2.6% less than the comparable Saturday in 2019, and leisure markets that have showed the highest summer occupancy levels reported strong increases from the previous weekend. At the same time, the markets with the highest occupancy for the week were not leisure destinations. Rather, the high occupancy markets were those housing displaced residents from Hurricane Laura and the California wildfires. The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. 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). The leisure travel season usually peaks at the beginning of August, and then the occupancy rate typically declines sharply in the Fall. However, with so many schools closed (or openings delayed), the leisure travel season lasted longer than usual this year. It seems unlikely business travel will pickup significantly in the Fall.
Apocalypse On Broadway- Study Finds 78% Increase In Vacant Storefronts – If the rising taxes and complete loss of law and order in the midst of a global pandemic wasn’t enough to drive you out of New York City, perhaps complete apocalypse on the city’s iconic Broadway will do it. A stunning new report shows that more than 300 storefronts are now vacant along Broadway. It marks a 78% increase from three years ago. More than 33% of those vacancies were located between 14th and 59th streets, in the heart of Manhattan. The tally was calculated by Manhattan Borough President Gale Brewer and her staff in late August while visiting 13 miles and 244 blocks, according to the Wall Street Journal. Her staff was able to count 39 empty storefronts between 96th and 125th street, 66 empty spots between 59th and 96th street and 43 vacancies below 14th street. 42 stores were boarded up – though some were open for business. Brewer commented: “The rent is so high, particularly on Broadway in Manhattan, that it’s hard for the small shops to make a go of it. At this point, with the gates down and sometimes plywood on the storefront, you don’t know whether it’s going to be rented.” Marilyn Jacques, a wholesaler of imported lace and tulle from France, who has a company off Broadway near West 36th Street, commented: “It’s not only Broadway, it’s also all the side streets. Retail is in terrible trouble, we all know that. But now, when you’re working from home, you don’t need 25 pairs of leggings.” She compared the current state of Broadway to when she started her business back in 1980: “At lunch time you couldn’t walk on the sidewalk, it was so full. The side streets were filled with people with racks of clothes going through, yelling, ‘Watch your backs, watch your backs.'”Recall, we posted a video in mid-August of a dystopian looking New York City, following a car driving down a deserted 5th Avenue, with almost all of the area’s high end stores boarded up and shut down. There are few people seen on what is usually a busy street. “Look at everything. Everything’s boarded up. Even the hotel. Boarded up,” the video’s narrator, who is obviously fed up with how the city looks, says. He continues: “This is all Manhattan, boarded up. Have you ever seen Manhattan look like this? The media will not report this.” “Everything boarded up. They don’t want to show this to you people because they’re afraid. Saks 5th Avenue – boarded up from end to end. They put up barbed wire. Everywhere you see boards, windows are gone. Look at New York City – what happened,” he says. The video runs over 2 minutes and shows dozens of boarded up businesses. You can watch it here:
A ‘tsunami’ of retail bankruptcies is about to sweep the US and drown courts in Chapter 11 filings, lawyer says Bankruptcy lawyer Corali Lopez-Castro has been even busier than usual these past few months. The Miami-based firm where Lopez-Castro works typically handles 15-20 Chapter 11 cases at a time. But since the pandemic hit, they have had about 30-35 cases going at once – almost twice the volume as before. “Not a lot of sleep, let’s just say that. I have three devices going at any one time,” she told Business Insider in an interview. “I feel like I’m looking at three screens continually and there’s no time where I can say, ‘okay I’m going home now and I’m off work.’ I’m on 24/7″ Castro-Lopez’s crazy hours and increased caseload likely aren’t shocking to anyone following the retail headlines during the pandemic. More than 30 retailers have filed for Chapter 11 restructuring since the pandemic first hit the U.S. and forced closures in March, affecting the already stressed industry. Lopez-Castro unfortunately doesn’t think that’s going to slow down anytime soon, either.”We still haven’t even seen what we’re going to see. I think a tsunami is coming,” she said. Lopez-Castro outlined for Business Insider two major reasons she thinks that the retail industry has yet to see all of its bankruptcy filings.First, “some businesses have been surviving on their PPP loan from the government,” she said. The U.S. government gave out more than $659 billion in loans to businesses through the Paycheck Protection Program (PPP), which closed to applications on August 8. Lopez-Castro thinks that many businesses have been able to stay afloat because of these loans, but when the funds run out, they might have to consider entering into Chapter 11 bankruptcy.”And two, the banks have been forbearing on exercising their rights,” Lopez-Castro said. Many banks offered deferrals to customers who were affected by the pandemic, but deferral periods don’t last forever. “Banks have shareholders that they answer to, and that’s coming to a close too.” When an indebted company decides to file for Chapter 11 bankruptcy, the company has to propose a plan for the reorganization of their business that will both keep the company alive and pay its creditors over time. That plan then is approved by the bankruptcy court. Lopez-Castro said that another major obstacle for companies who file for Chapter 11 restructuring is the unpredictable economic state of the country during COVID. Many retailers have already reopened their doors, only to have to close them shortly thereafter because of another surge in cases. “How can you comfortably and confidently project what your revenues will be in the future in order to prove feasibility under the bankruptcy court?” she said. “How much confidence can you have in those projections when there’s so much uncertainty about what’s going to happen to business openings and closures during the next few months?”
J.C. Penney Reaches $800 Million Rescue Deal With Landlords To Avoid Liquidation — Don’t count the venerable – if bankrupt – department store and mall anchor tenant, J.C. Penney out just yet. One week after we reported that J.C. Penney (docket #20-20182, in the U.S. Bankruptcy Court for the Southern District of Texas) was on the verge of liquidation after talks with its two largest landlords had collapsed, today the company’s lenders reached a tentative deal with mall landlords Simon Property Group and Brookfield Property Partners to buy the bankrupt chain. The deal, valued at $1.75 billion, would rescue the beleaguered department store chain from bankruptcy proceedings, averting a liquidation that would have threatened roughly 70,000 jobs and represented one of the most significant business collapses following the coronavirus pandemic, Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing the company, said during a brief court hearing Wednesday, confirming an earlier Reuters report. The landlords are poised to put $300 million toward the rescue and have agreed to a nonbinding letter of intent with J.C. Penney, he said. The operating company they are acquiring would assume $500 million of debt. The deal also calls for new financing from existing lenders; in the end, J.C. Penney will have about $1 billion of cash to fund its business when the deal closes, Sussberg said. The financing includes a commitment for $2 billion of new asset-based lending led by Wells Fargo, as well as $500 million of so-called takeback debt from existing first-lien lenders, he said. The deal would split J.C. Penney into an operating company and two real estate holding companies. The restructured retailer is expected to operate about 650 stores, according to Reuters: hedge funds and private-equity firms financing J.C. Penney’s bankruptcy, meanwhile, would take ownership of 161 of those stores and separate distribution centers after forgiving portions of the Plano, Texas-based company’s $5 billion debt load, Sussberg said. These lenders, led by H/2 Capital Partners, would own those assets in two separate real estate investment trusts.
U.S. Consumer Prices Broadly Rebounded in August – WSJ – U.S. consumer prices rose in August due to higher costs for a range of items, a sign of firmer inflation as demand for goods continues to rebound from a coronavirus pandemic-induced downturn earlier this year. The consumer-price index – which measures what consumers pay for everyday items including groceries, clothing and electricity – climbed a seasonally adjusted 0.4% in August,, the Labor Department said Friday. That marked the third straight month of gains for consumer prices, after sharp declines at the pandemic’s onset. Excluding the often-volatile categories of food and energy, so-called core prices increased 0.4%. Economists surveyed by The Wall Street Journal expected a 0.3% increase for both the overall consumer-price index and the core index. The bounceback in consumer prices over the summer came as states reopened their economies and weathered a resurgence in coronavirus cases. Prices for certain goods have rebounded especially well, reflecting a shift in consumer habits and preferences amid the pandemic, as well as continued business disruptions and adaptations in many industries. Used-vehicle prices, for example, rose 5.4% in August, accounting for 40% of the increase in core prices, the Labor Department said. Sales of used cars and trucks have increased during the pandemic due to several factors, including limited supply of new vehicles because of factory closures during the spring. Prices for gas, shelter, and apparel also moved higher last month. Notably, prices for food at home fell slightly by 0.1% over the month, the second consecutive decline. Grocery prices posted strong increases in February through June as people stayed at home. Longer-term trends suggest inflationary pressures are muted. On a non-seasonally adjusted basis, the overall consumer-price index rose 1.3% in August from a year earlier and core prices increased 1.7% over the year. The Federal Reserve, acknowledging that inflation has mostly remained below its 2% target for several years, recently changed its policy framework to no longer pre-emptively lift interest rates to prevent higher inflation.
US Consumer Prices Accelerate In August; Used Car & Furniture Prices Spike As Rent Inflation Slows – While yesterday’s producer prices continued to show YoY deflation, this morning’s consumer price data printed hotter than expected with the headline up 1.3% YoY – the fastest since March. Graph Source: Bloomberg Core CPI also surged more than expected, rising 1.7% YoY. The index for all items less food and energy increased 0.4 percent in August after rising 0.6 percent in July. The index for used cars and trucks increased 5.4 percent in August, its largest monthly increase since March 1969. The shelter index increased in August, rising 0.1 percent, with the indexes for rent and owners’ equivalent rent both rising 0.1 percent. The recreation index increased 0.7 percent in August after falling in June and July. The index for household furnishings and operations increased 0.9 percent, its largest monthly increase since February 1991, as the index for furniture and bedding rose 1.6 percent and the index for appliances increased 2.0 percent. The apparel index rose 0.6 percent in August, its third consecutive monthly increase. The index for motor vehicle insurance rose 0.5 percent, and the index for airline fares increased 1.2 percent over the month. The index for medical care rose slightly in August, increasing 0.1 percent. The indexes for hospital services and for physicians’ services both rose 0.1 percent, while the index for prescription drugs declined 0.2 percent. The new vehicles index was unchanged in August after rising in July. The education index decreased 0.3 percent in August, the first decline in the history of the index, which dates to 1993.
U.S. producer prices beat expectations in August – U.S. producer prices rose a bit more than expected in August as the cost of services increased solidly, while underlying producer inflation continued to firm. The producer price index for final demand rose 0.3% last month after surging 0.6% in July, the Labor Department said on Thursday. In the 12 months through August, the PPI fell 0.2% after dropping 0.4% in the 12 months through July. Economists polled by Reuters had forecast the PPI would gain 0.2% in August and fall 0.3% on a year-on-year basis. Producer prices were led by a 0.5% increase in services. Nearly 20% of the rise in services was attributed to a 1.1% increase in margins for machinery, equipment, parts, and supplies wholesaling. Prices for goods edged up 0.1%. Excluding the volatile food, energy and trade services components, producer prices rose 0.3% in August, advancing by the same margin for three straight months. In the 12 months through August, the core PPI gained 0.3%. The core PPI edged up 0.1% on a year-on-year basis in July. The Federal Reserve tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target, a flexible average. The core PCE price index climbed 1.3% in July after increasing 1.1% in June. August data is scheduled to be released at the end of the month.
‘The Situation Is Dire’: As Trump Takes Victory Lap, New Jobs Report Reveals Alarming Surge in Permanent Unemployment – President Donald Trump on Friday wasted no time taking a victory lap after the Bureau of Labor Statistics announced the U.S. unemployment rate fell to 8.4% in August, but economists warned a closer look at the new economic figures reveals an alarming surge in permanent joblessness that could portend a prolonged recession if Congress and the White House fail to quickly approve additional relief. The number of Americans classified as permanently unemployed – as opposed to being on temporary furlough – grew by 534,000 in August even as the U.S. economy added 1.4 million jobs. On Twitter, Trump celebrated the latter data point as “great” and “much better than expected.” The total number of workers who are permanently jobless is now 3.4 million, according to the bureau’s latest data. Elise Gould, senior economist at the Economic Policy Institute (EPI), wrote in a blog postFriday that contrary to the White House’s rosy spin, the new BLS report shows “the pain is nowhere near over for millions of workers and their families across the country.””At this point, the U.S. economy is still down 11.5 million jobs from where it was in February, before the pandemic hit,” wrote Gould. “With this kind of slowing in job growth, it will take years to return to the pre-pandemic labor market. And, without the $600 boost to unemployment insurance, jobs will return even more slowly than had policymakers stepped up and continued that vital support to workers and the economy.”EPI’s Heidi Shierholz echoed Gould’s assessment, noting in a series of tweets that “the situation is dire” and “the labor market remains in crisis.”On top of the growing number of Americans whose jobs have completely disappeared due to the Covid-19 pandemic and resulting economic collapse, economist Jared Bernstein noted that another “worrisome development” spotlighted by the new BLS report is “the shift to longer-term unemployment: the share of job losers unemployed for at least 15 weeks has gone from 8% in April to 60% in August.” “In sum, the failure of the Trump administration to control the virus has led to a slower pace of job gains and, while the jobless rate fell significantly last month, it is still in recessionary territory and more job seekers are at risk of longer-term unemployment,” wrote Bernstein, a senior fellow at the Center on Budget and Policy Priorities. “Importantly, note that this shift is occurring as Congress, particularly Senate Republicans, has dropped the ball on further fiscal relief.”
BLS: Job Openings increased to 6.6 Million in July – From the BLS: Job Openings and Labor Turnover Summary -The number of job openings increased to 6.6 million on the last business day of July, the U.S. Bureau of Labor Statistics reported today. Hires decreased to 5.8 million in July. Total separations was little changed at 5.0 million. Within separations, the quits rate rose to 2.1 percent while the layoffs and discharges rate decreased to 1.2 percent. These changes in the labor market reflected an ongoing resumption of economic activity that had been curtailed 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. . 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. The huge spikes in layoffs and discharges in March and April 2020 are labeled, but off the chart to better show the usual data. Jobs openings increased in July to 6.618 million from 6.001 million in June. The number of job openings (yellow) were down 8.5% year-over-year. Quits were down 18% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for “quits”). Job openings increased in July, but were still down YoY – and quits are down sharply YoY.
Weekly Initial Unemployment Claims unchanged at 884,000 – The DOL reported:In the week ending September 5, the advance figure for seasonally adjusted initial claims was 884,000, unchanged from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 881,000 to 884,000. The 4- week moving average was 970,750, a decr ease of 21,750 from the previous week’s revised average. The previous week’s average was revised up by 750 from 991,750 to 992,500.The previous week was revised up.This does not include the 838,916 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 747,993 the previous week.The following graph shows the 4-week moving average of weekly claims since 1971.
Comments on Weekly Unemployment Claims – McBride – Earlier: Weekly Initial Unemployment Claims unchanged at 884,000 This was the 25th consecutive week with extraordinarily high initial claims. More importantly, continued claims are still extremely high (second graph below). The following graph shows regular initial unemployment claims (blue) and PUA claims (red) since early February (all NSA). Initial claims, including Pandemic Unemployment Assistance (PUA) are rising, and are close to 1.7 million per week.The worst week during the great recession was 665,000 (SA). So total initial weekly claims are still more than 1 million higher than the worst week of the great recession!We are probably seeing some layoffs related to the end of some Payroll Protection Programs (PPP), andpossibly due to the fires in the West. The second graph shows all person receiving unemployment insurance benefits on all programs. Note that this data is released with a two week lag, and is not seasonally adjusted. There are typically around 2 million people receiving benefits from the various programs (mostly regular unemployment insurance).As of the release this morning, there were still almost 30 million people receiving benefits as of August 22nd.This was a very disappointing weekly report. Initial claims were higher than expected, and there was a further increase in initial claims (regular and PUA), and the total continued claims increased – and remains at a very high level.
Rate case activity slips, COVID-19 proceedings remain at the forefront in August | S&P Global Market Intelligence – A relatively modest amount of rate case activity took place in August, with a handful of initial filings and decisions occurring. State regulators and utilities continue to grapple with the short- and long-term effects of the coronavirus pandemic, with several states extending moratoriums on service disconnections while other states head in the opposite direction. On Aug. 31, Avista Corporation subsidiary Alaska Electric Light and Power Co., or AEL&P, submitted a compliance update with the Regulatory Commission of Alaska and stated that effective Oct. 1, the utility will resume disconnections of service for customers who have delinquent balances and who have not submitted to AEL&P a signed statement of COVID-19-related financial hardship and a signed deferred payment agreement. AltaGas Ltd. subsidiary ENSTAR Natural Gas Co. submitted its compliance update with the commission Aug. 26, stating that effective for billings on or after Sept. 1, it would resume service disconnection with respect to commercial, i.e., nonresidential, general-service customers.Delaware Gov. John Carney extended the state of emergency and each of its related provisions Aug. 5, including the moratorium on utility disconnections until Sept. 4.The Hawaii Public Utilities Commission voted Aug. 25 to extend the state’s moratorium on utility service disconnections through the end of 2020.The Maryland Public Service Commission issued an emergency order Aug. 31 extending the moratorium on utility service disconnections to Nov. 15 from Sept. 1. Under the emergency order, termination notices could be issued as early as Oct. 1, but service could not be shut off for 45 days following the notice. On Aug. 21, New Jersey Gov. Phil Murphy announced that the state’s water, gas and electric utilities agreed to extend their voluntary moratorium on customer shut-offs through Oct. 15 and agreed to offer customers flexible extended deferred payment plans of between 12 and 24 months.On Aug. 7, Duke Energy Corp. subsidiaries Duke Energy Carolinas LLC and Duke Energy Progress LLC requested authority from the North Carolina Utilities Commission to defer incremental expenses associated with the COVID-19 pandemic for potential recovery in a future rate case. Pennsylvania Public Utility Commission Chairman Gladys Dutrieuille issued a letter Aug. 10 directing utilities and other interested parties to offer comments regarding amendments to the existing service termination moratorium and other coronavirus-related customer protections. Written comments are due Aug. 18. The PUC had been expected to consider whether it should lift the COVID-19-related mandatory moratorium on utility service disconnections at its Aug. 27 open meeting. However, the PUC postponed the discussion until its next open meeting, scheduled for Sept. 17.On Aug. 10, the Tennessee Public Utility Commission voted to lift the ban on utility service disconnections effective Sept. 28.The Public Utility Commission of Texas adopted a transition plan Aug. 27 that allows customers to apply for benefits, including protection from a service shut-off for nonpayment, under its Electricity Relief program through Aug. 31, but the benefits themselves would not expire until Sept. 30.On Aug. 24, the Virginia State Corporation Commission extended the mandatory moratorium on utility service disconnections through Sept. 16 as the General Assembly debates issues related to COVID-19 in a special session convened Aug. 18.On Aug. 20, the Public Service Commission Of Wisconsin extended the moratorium, which had been scheduled to expire Sept. 1, to Oct. 1. The commission is to again consider whether to extend or rescind the moratorium at a Sept. 17 meeting.
COVID Financial Pain ‘Much, Much Worse’ Than Expected, Warns Harvard Study – New findings from a survey by the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health, published by NPR News on Wednesday, reveal low-income minority households have experienced the most financial hardships in the virus-induced recession. The pandemic heavily impacted Black and Latino households across America’s four largest cities (New York, Los Angeles, Chicago, and Houston) with massive job loss or reduction in hourly wages or a decline in working hours. The survey, conducted from July 1 through Aug. 3, found Latino households (77%) and Black households (81%) in the Greater Houston area incurred “serious” financial problems. As for the three other major cities, the survey showed 73% of Latinos in New York City experienced severe financial hardships, 71% of Latinos in Los Angeles, and 63% in Chicago. Black households in New York City (62%), Los Angeles (52%), and Chicago (69%) also reported severe financial distress because of the downturn. The survey found a majority of low-income minority households had their savings wiped out, which is similar to our recent report detailing how tens of millions of Americans depleted emergency savings this year. Nationally, white households and ones that have incomes over $100,000 escaped much of the financial distress. But for low-income minorities, which mostly survived on direct transfer payments from the government (i.e., Trump stimulus checks), the exhaustion of the checks has caused more financial stress ahead of the presidential election in November. “Before federal coronavirus support programs even expired, we find millions of people with severe problems with their finances,” said Robert Blendon, a poll co-director and executive director of the Harvard Opinion Research Program at the Harvard Chan School. “And it’s going to get worse because there is nothing for the people we surveyed who earn under $100,000 a year to fall back on.” Blendon said the downturn has produced substantial economic damage among low-income minority households. He warned: “This is much, much, much worse than I would’ve predicted.”
Workers Keeping Americans Fed Are Going Hungry in the Heartland — Jessica Traxler was surrounded by food that she couldn’t afford. In southern Minnesota, she looked out at corn stalks, lush green, as far as the eye could see. A few miles to the east, a mill was pumping out flour. Just beyond it, a farm grew peppers, beans and berries. To the north, there were dairies, one after the other. To the south, a huge pork plant. Grain elevators, poultry yards, cheese plants – all stood just a short drive away. If one place underscores just how dire America’s hunger problem has become during the pandemic, it is here – in the middle of the breadbasket that supplies food from coast to coast. The ranks of Americans fighting hunger are projected to swell some 45% this year to more than 50 million. Traxler, her husband and six children are among them. She had come to this spot, an empty school parking lot in the town of Mankato, to collect free boxes of food staples: milk and apples and carrots. Hundreds of Minnesotans waited in line ahead of her for hours. Before the coronavirus shut down the U.S. economy and cost Traxler her job as a substitute teacher, she’d visited some community food shelves, but had never been to a large-scale food bank in her life. Now, at age 41, she is a regular. This is one of the most jarring aspects of the hunger crisis: About one-third of those relying on food shelves, large-scale and emergency food distributions now are doing so for the first time, according to Feeding America, the nation’s largest hunger-relief organization. In parts of Minnesota, that number is closer to 70%.With the nation pitched in a fierce debate over entrenched and systemic inequalities, the most basic divide – who eats well and who goes hungry – is becoming more acute every day. Even before the pandemic, the U.S. already had the highest number of people who couldn’t afford a basic energy-efficient diet among the world’s 63 high-income countries. During the pandemic, about a 10th of American households reported they haven’t had enough food in a given week. That’s a shocking figure for the world’s richest country. It’s more than double pre-Covid figures and the highest since comparable government data starts in 1995.In contrast to the Dust Bowl years of the Great Depression or the rationing of World War II, the crisis has nothing to do with food supplies. The U.S. is in a time of historic abundance, with plentiful grains, meat and dairy, so much so that farmers have been plowing over excess crops and dumping milk. But lockdowns have snarled supply chains, and food inflation is projected to rise at the fastest pace in almost a decade. Meanwhile, unemployment, low wages and reduced working hours are diminishing purchasing power – all of which are disproportionately impacting women and minorities, as is food insecurity.
Remote Schools’ Hidden Cost: Parents Quit Work to Teach, Prompting New Recession Woes – Clara Vazquez’s 7-year-old son, Kevin, asks her a troubling question before he goes to sleep each night. “‘Mom, who’s going to take care of me tomorrow?’ he asks me,” said the 27-year-old resident of Sunnyside, Wash. “I feel so bad because I have to say, ‘I don’t know.'” She’ll have to come up with an answer soon, and it may cost Ms. Vazquez a big part of her livelihood. In two weeks, her son’s online-only classes start running from 9 a.m. to 3:30 p.m. If she can’t find child care, she will give up at least one of her two jobs as a home health-care worker to help her son manage his studies. “I don’t want to quit my job because it’s going to put us in financial strain,” said Ms. Vazquez, whose husband is a truck driver. “But I feel like I’m out of options.” It is a trade-off that looms for millions of families across the U.S. whose children are returning to partial or completely remote learning at K-12 schools this fall, and the potential blow to the economy could be big enough to rival a small or medium-size recession. According to research that Brevan Howard Asset Management recently shared with its investors, about 4.3 million U.S. workers could find themselves staying home unless they find other child-care arrangements. If those parents are counted among the unemployed, it would boost the unemployment rate by 2.6 percentage points, according to Brevan Howard. That would be a sharper increase than occurred in both the 1990-91 and 2001 recessions, though smaller than what occurred in the 2007-09 downturn, the researchers said.
Health disaster and class conflict on horizon as millions of students return to US schools – Following the Labor Day holiday, the vast majority of K-12 public schools have now begun their fall semester across the United States. Millions of students and educators have been forced back into overcrowded and dilapidated schools, which will induce a massive spread of the COVID-19 pandemic. Yesterday, the US surpassed 6.5 million COVID-19 cases and is on track to soon reach the gruesome death toll of 200,000.The nation’s roughly 13,600 school districts have been left to their own devices, reopening either fully in-person, or fully remote instruction, or under the “hybrid” model combining the two. Given the rapid level of community transmission of COVID-19 and the porousness of district and state boundaries, the latest science makes clear that the only safe method of instruction at present is full remote learning.A study released in July found that the transition to remote learning in the spring prevented 1.37 million infections over a 26-day period and saved roughly 40,600 lives in the US over a 16-day period. Another study last month found that aerosolized particles containing COVID-19 can travel up to 16 feet through indoor settings, exposing the utter fraud that a “hybrid” model with minimal social distancing can be done safely.Democratic and Republican politicians nationally are consciously implementing a policy of “herd immunity” that they know will lead to a catastrophic loss of life for the most vulnerable sections of the population. They do so in order to reduce pension and health care obligations, and to force parents back into factories and other workplaces where they face ramped-up exploitation in order to service the unprecedented levels of debt produced by the CARES Act bailout of Wall Street and major corporations.There are no national or state bodies aggregating reopening plans for all school districts in the country, a damning testament to the contempt of the ruling class for educators and the entire working class.The most comprehensive list of reopening plans has been compiled byEducation Week, which reports plans for 888 districts across the country, including the 100 largest districts. Of these districts, 219 are providing fully in-person instruction involving 2.54 million students; 246 are reopening under the “hybrid” model involving 3.84 million students; and 423 are reopening fully online involving 13.2 million students.Based on this list, roughly a third of all public school students have returned to classrooms at least part-time. If these figures are extrapolated for all 50.8 million students in the US, then roughly 6.6 million have now resumed fully in-person learning and another 10 million have resumed partial in-person learning under the hybrid model.
West Virginia schools return to in-person instruction – As West Virginia public schools reopen Tuesday, September 8, all but nine of the state’s 55 counties are scheduled to begin instruction in person. Thousands of teachers, staff and students will be put in danger of contracting COVID-19 and spreading it through their communities. The counties ordered by the state Department of Education to open online-only include Kanawha around the capital city of Charleston and nearby Putnam; and Morgantown’s Monongalia County. Six southern counties – Fayette, Logan, Mercer, Mingo, Monroe, and Wayne – are also included in the order. In Mingo County, the school superintendent tested positive for COVID-19 and the high school football and golf teams were exposed during practice in late August. In Cabell County, where the state’s second largest metro area of Huntington is located, schools are scheduled to start in person. The Department of Health and Human Resources’ (DHHR) tracking of COVID-19 in the county does not include the student population of Marshall University, where 26 students and staff were confirmed positive with the virus in the past week. Although the campus is located in downtown Huntington, it is not being included in the area numbers or the school district considerations. The state was the last in the US to report a case of COVID-19 back in the spring, partly due to a lag in testing. West Virginia has trailed behind surrounding states in the numbers and rate of coronavirus, a fact Republican Governor Jim Justice has touted as evidence the state will escape the worst of the pandemic. In reality, the state’s population is vulnerable to a severe outbreak. West Virginia has the third oldest population in the US, and residents are among the poorest and in worst health. Residents suffer from obesity, diabetes, heart disease, and pulmonary diseases at high rates, making complications and death more likely from infection. Over the weekend, the DHHR issued an updated COVID-19 map in which counties reporting fewer than 10 cases per 100,000 were considered safe to reopen the schools. The DHHR’s assessment uses a seven-day trend, rather than a 14-day trend, and a color-coding to indicate whether a county can open up schools to in-person teaching after a week of downward trending cases.
Largest Texas school districts slated to open without testing anyone – It has recently been revealed that major school districts in the largest cities in Texas, including Dallas Independent School District (ISD), Houston ISD, Austin ISD, and El Paso ISD, have no requirements or plans for COVID-19 testing for “anyone at any point,” as the Texas Tribune put it. Students who are symptomatic will simply be asked to go home for 14 days or until they seem to improve, meaning that students who are still sick could be sent back to school. Schools that have already reopened, such as Dumas ISD in Dumas, Texas have seen cases since the district first reopened, with the school administration flaunting social distancing measures. The superintendent for the district, Monty Hysinger, said, “We can’t promise, and we haven’t promised, our parents that we can socially distance.” He cited space restrictions applicable to all districts in the state, saying, “I don’t know of a district in the state that has the space.” All of the major school districts mentioned which are not going to test students are situated in densely populated areas that are also COVID-19 hotspots with rampant community spread, producing thousands of new cases daily. Texas has the second-highest number of cases of any state in the US at roughly 668,787, and the third-highest number of deaths at 13,819. Harris County, where Houston ISD is located, has a population of 4.7 million and has seen over 111,000 cases and 2,327 deaths. Saturday saw 928 new cases added. Houston ISD has already had multiple outbreaks, with a staff member testing positive after handing out laptops over the summer and student athletes becoming infected during summer training. Dallas County has an estimated population of almost 2.4 million, and has over 73,000 recorded COVID-19 cases and 944 deaths. On Saturday, 398 additional cases were added, partially due to a backlog of tests. Travis county, where Austin ISD is situated, has a population of almost 1.3 million, with 26,931 cases recorded in total. AISD has already seen an outbreak over the summer, with nearly 700 staff quarantined and at least 51 infected. El Paso, population 839,238, has recorded 6,265 cases and 157 deaths, with 334 additional cases recorded Saturday. In all of these counties, youth made up a significant portion of the case numbers. In Harris County, the 10-to-19-year-old age group made up almost 10,000 cases, with children aged 0-9 accounting for over 4,000 cases. In Travis county, the same age groups had more than 2,000 and 800 cases, respectively. Given community spread, all counties where schools are reopening are going to have significant numbers of COVID-19 cases among school-aged children.
Coronavirus cases spike among school-age children in Florida, while state orders some counties to keep data hidden – One month into the forced reopening of Florida’s schools, dozens of classrooms – along with some entire schools – have been temporarily shuttered because of coronavirus outbreaks, and infections among school-age children have jumped 34 percent. But parents in many parts of the state don’t know if outbreaks of the virus are related to their own schools because the state ordered some counties to keep health data secret.Volunteers across Florida have set up their own school-related coronavirus dashboards, and one school district is using Facebook after the county health department was told to stop releasing information about cases tied to local schools. Gov. Ron DeSantis (R) has pushed aggressively for schools to offer in-person classes, even when Florida was the hot spot of the nation, and threatened to withhold funding if districts did not allow students into classrooms by Aug. 31. In the state guidelines for reopening schools, officials did not recommend that coronavirus cases be disclosed school by school. In fact, the DeSantis administration ordered some districts, including Duval and Orange, to stop releasing school specific coronavirus information, citing privacy issues.
First school in New York City closes due to positive COVID-19 cases – P.S. 811x The Academy for Career and Living Skills, a district 75 school in the Bronx, is the first public school to close after two staffers tested positive for COVID-19 in seven days, the Department of Education announced on Friday. The department also confirmed that seventeen more Department of Education employees have tested positive for COVID-19 since school buildings reopened for teachers on Tuesday, officials said Friday. So far, about 15,000 staffers have taken advantage of expedited testing, according to the DOE. The turnaround time for test results is 48 hours for 97% of tests. After mounting pressure to delay the start of in-person classes, Mayor Bill de Blasio pushed back the start of the school year until Sept. 21. But teachers returned to buildings on Sept. 8, to prepare for their students’ return. Reports of instructors testing positive for the virus a day after buildings reopened caused panic among some teachers and parents frazzled by the constant worry of outbreaks linked to schools. The Justice caucus of the city’s United Federation of Teachers, also known as MORE UFT, alleged on Wednesday that three teachers had self-reported testing positive to their higher-ups and colleagues. Miranda Barbot, a spokesperson for the Department of Education, confirmed two Brooklyn employees – a staffer at P.S.001 in Sunset Park and another at M.S. 88 in Park Slope – had indeed tested positive for the virus. More reports began to circulate online a day later and the President of the UFT Michael Mulgrew told reporters 16 of its members self-reported testing positive for the virus on Thursday. After a day of radio silence, the DOE confirmed at least 17 other staffers in 17 different buildings have tested positive for the virus.
Sick Students Flee College Campuses As COVID Outbreaks Rage – The notion that the US will experience a resurgence in COVID-19 cases this fall is almost starting to look like a self-fulfilling prophecy. A couple of weeks ago, as coronavirus cases were just starting to climb in the state of Iowa, the Daily Iowan, the student newspaper at the University of Iowa, published a harrowing account of one student’s trip through the campus quarantine procedure after testing positive for COVID-19 on campus. The student described confusion and disorder every step of the way, apathetic staff, and substandard living conditions in the “quarantine” dorms. She eventually decided to walk away from it all and return home to Illinois. The student’s story wound up in the press after going viral after being shared on student life social media pages. “I felt like a guinea pig,” she told the Daily Iowan. Since then, Iowa has become host to one of the fastest growing outbreaks in the US. Outbreaks on college campuses have received growing national attention in recent weeks as more universities opt to send students home, despite a growing scientific consensus that sick students would be better off remaining on campus. Ravina Kullar, epidemiologist and spokesperson for Infectious Diseases Society of America, said schools should quarantine students on campus, and that students shouldn’t be sent home. Amazingly, schools have rejected this guidance seemingly en masse, risking a repeat of one of the dynamics that definitely helped spread COVID-19 across the country. As Bloomberg reports, schools around the country are increasingly sending students home, often due, it appears, to their own inability to effectively execute hastily organized plans to deal with sick students. Instead of taking responsibility and risking more financial losses. Some schools have seen infection rates north of 1% for their student populations. Ohio State saw 1.6% of students test positive during the latter half of August. At Ohio State University, President Kristina Johnson sent an email to the more than 60,000 students, faculty and staff Thursday urging them all to “act as though you are positive” going into Labor Day weekend. Between Aug. 14 and Sept. 1, about 1.6% of the public flagship’s student population – 1,052 students – contracted the disease. Deans “can pretty much trace” the spread from party to party, and the ability of the university to provide in-person education will rely on students’ restraint, Governor Mike DeWine said at a news conference. “No one is telling students to hibernate for nine months or the whole year,” he said. “Look, this is the reality: If the numbers get too high and the spread is too much, these schools are going to have absolutely no choice but to pull back.”
Colleges Send Students Home as Outbreaks Worsen. Are They Creating a New Coronavirus Threat? – Administrators at California State University, Chico, determined late last month that coronavirus outbreaks in classrooms and residence halls could be catastrophic at the school. Its response: to send students back home. Many schools have made similar decisions, including James Madison University, North Carolina State University, Colorado College and the State University of New York in Oneonta. Public-health officials worry that dispatching students to their hometowns, often without testing them before departure, could lead to new outbreaks around the country. “Shipping the problem back to the community, where they can further spread, just doesn’t seem like the right answer,” said A. David Paltiel, a professor at the Yale School of Public Health. “Just because a kid is asymptomatic doesn’t mean it’s safe to send that kid home. They could be exposed and incubating. They could be in fact a ticking time bomb.” Dr. Paltiel said the viral load rises steeply in the few days following exposure, and someone infected can transmit the virus to others starting around day three after exposure – before symptoms may present, if they ever present. “Even where you have test positivity on campuses, we want to encourage universities to have students remain on or near campus and minimize the potential exposure to the wider community,” he said, according to a recording of the call reviewed by The Wall Street Journal. At Chico State, more than 90% of classes were already online, and the school had just about 750 students in residence halls. Another 8,000 to 10,000 are living near campus. The school didn’t test students on arrival, and testing of potentially symptomatic individuals has been led by local health officials.By Aug. 30, there were nearly 30 cases on campus, with additional exposures “that could have an exponential and devastating effect on campus,” President Gayle Hutchinson wrote to the school community, announcing plans to reduce campus housing significantly.
Kaitlin Bennett: Pro-Trump ‘Gun Girl’ chased off Florida college campus when trying to ‘interview’ students – Kaitlin Bennett came to the University of Central Florida to defend President Trump to college students – and incited a protest while she was there. 24-year-old Bennett is also known as ‘Kent State Gun Girl’ after a stunt in 2018 in which she attended her university graduation carrying an AR-10 rifle. She has been a popular figure among the Trump administration and his supporters because of the fact that she’s young and conservative. Bennett was previously linked to Alex Jones of InfoWars, and despite a lot of other controversy – including leaked anti-Semitic group texts – she’s still incredibly popular. Bennett seemed to have been invited to the university by a group on campus, but was quickly criticised for not wearing a mask and saying that she didn’t have to – despite the fact that the University of Central Florida actually has a policy on mask wearing. Bennett then accused the university of lying, saying that she had gone to the campus to ask students if they thought Trump would be a good president. Bennett has her own website and is incredibly active on social media, where she often posts ‘vox pops’ – short clips speaking to people about an issue. She also alleged that her head of security – who she had not previously mentioned – had spoken to UCF police Commander Freeman about the situation, and that they had given her and her team reassurances that they would not be forced to wear masks. Even so, it seems like Bennett did actually comply, with a pro-Trump face mask, as she walked around the school for the rest of the day. She also seemed to tweet about the university after, saying that she had a message for Donald Trump – which was to defund public universities, saying that they are centers for left-wing indoctrination.
Trump says Big Ten could play football without schools in three states -President Trump suggested Sunday that the Big Ten conference could go ahead with its football season without participation from schools in three states as some players and parents have called for the season to resume. In a tweet, Trump took aim at the governors of Illinois, Michigan and Maryland for what he called a “ridiculous lack of interest or political support” for games to go on, and suggested that the league could go on without them. Trump’s tweet comes about a month after the Big Ten moved officially to cancel its football season, set to begin this fall, over ongoing concerns due to the coronavirus pandemic. Some players and others involved with the conference have called for the decision to be reversed. University of Michigan head coach Jim Harbaugh is among those who has called publicly in recent days for the season to resume, even as colleges around the country that have returned to on-campus learning have battled clusters of outbreaks in student housing and Greek Life residences. “Everybody has been, we want to play as soon as we possibly can. And we’re ready to play, we could be ready to play a game in two weeks,” Harbaugh said this week. “Just get the pads on and our guys have trained without a pause since June 15. That’s our position, we’re ready to play as soon as we possibly can play.” Presidents of a dozen universities voted in favor of halting the Big Ten’s season last month, with just two members of the conference, Nebraska and Iowa, voting to go forward with games.
University of Michigan grad students reject administration offer, continue strike against unsafe conditions – In an act of tremendous courage, striking graduate student instructors at the University of Michigan voted by more than 700 to 400 to reject a proposal from the university administration and continue their strike to demand the shutdown of in-person learning amidst the coronavirus pandemic. The “offer” from the university administration failed to meet the strikers’ main demands. On the demand for a universal right to work remotely, the university’s only offer was that grad students could work remotely during a period of arbitration if they were required to work in-person against their will. On the demand for the demilitarization of the campus, the university agreed only to have two meetings per term to hold further discussions. The university also agreed to disclose the methodology it had adopted for testing, but would not increase its testing capacity. The struggle at the University of Michigan is part of a broader fight against the reopening of campuses. In an indication of the catastrophic impact of school reopenings throughout the country, the University of Wisconsin-Madison announced Wednesday that it is moving all classes online after a surge of COVID-19 cases, with more than 1,000 infections over the past several days. Similar outbreaks have occurred on other campuses, endangering the lives not only of students, but also the broader community. The vote was held in the face of blackmail from the UM Board of Regents, made up of powerful Democrats, including billionaire Little Caesars owner Denise Ilitch and Jordan Acker, the former assistant to Obama’s secretary of the Department of Homeland Security Janet Napolitano. The university threatened to take retaliatory action against striking students if they rejected the deal, saying it was “considering all options available,” according to the Michigan Daily. The administration also said its offer would “explode” if it was not immediately accepted, meaning any guarantees against retaliation in it would no longer be on the table.
China Parties Like It Is 2019 As Patrons Pack Pool Parties, Nightcubs & Bars From Wuhan To Beijing – A few weeks ago, we joked that the people of Wuhan were ‘partying at ground zero’ when a story about a massive pool party to celebrate the end of the SARS-CoV-2 outbreak went viral around the world, eliciting frustrated reactions from public officials and social-distancing-obsessed “Karens”. But unlike in the US, the Communist Party defended the pool party by arguing that it was a much-needed release for the people of Wuhan. After suffering through one of the first, and most restrictive, global lockdowns, the people of Wuhan have defeated the virus, a party spokesman said. The party was one of their rewards. Now, the Financial Times is reporting on the return of the nightlife scene in China. Revelers have returned to China’s nightclubs and bars at a faster pace than perhaps anywhere else in the world. In the US, bars and nightclubs have been closed and blamed for causing the outbreak across the Sun Belt that peaked over the summer. South Korea has also blamed its nightlife for an outbreak that, as it turned out, was largely the result of tests picking up asymptomatic people who were infected elsewhere. But in Beijing, partiers have reverted to the pre-pandemic tableau: bars are tightly packed, with revelers wearing little in the way of clothing, and no masks.The procedure is simple. Revelers must use their smartphones to show their COVID-19 testing status is negative. Then they’re temperatures are taken, before being allowed in. Once inside, they can rest assured that the odds of being infected are minuscule. When asked, several revelers told the FT they felt like they had earned the “freedom to party”.Analysts of the middle class in China have also bandied about the term “revenge spending”, even as China’s economic collapse was even worse than expected. “From restrictions [on movement] and shop closures to no restrictions and shops opening, there’s [going] to be a big rebound,” said Tao Wang, chief China economist at UBS in Hong Kong. But while many middle-class professionals are engaging in “revenge spending” after months of being unable to splash the cash, lower-income workers are still suffering. Economists say China’s economy is stuck in two-track growth, widening the wealth gap. The most conspicuous sign of the return to confidence in China was the giant pool party held last month in Wuhan, the city where the outbreak originated.
Chinese Farmers Hoard Wheat In Hopes Of Creating Shortages That Push Prices Higher – The latest Chinese inflation data released overnight showed that consumer prices slowed again, dropping to 2.4% Y/Y, the lowest since early 2019, largely moderating on lower pork inflation (still over 50% y/y, but slowing), while producer price inflation remains negative. And while Chinese food inflation dropped in half from the record 20% Y/Y increase hit in March as Chinese supply chains were disrupted by the covid lockdowns… … this decline may not last because as Caixin reports, China’s farmers are stockpiling more of their wheat harvest this year rather than selling to the government and the market as they expect prices to rise and want to hold onto their stocks in case of shortages stemming from the severe summer flooding and fallout from the coronavirus pandemic.Farmers in the country’s main wheat-growing regions sold only 49.3 million tons of their crop for commercial use and to state reserves as of Aug. 31, 20% less than in the same period last year, according to government data. Within that total, sales to the National Food and Strategic Reserves Administration, which stockpiles and manages the country’s strategic food reserves, sank by almost 70% to 6.2 million tons. Wheat purchased by market participants such as mills accounted for about 86% of the total in 2020, up from 70% last year, the official Xinhua News Agency reported on Aug. 14.Fears about food security in China have intensified this year amid the coronavirus pandemic and severe flooding that’s hit swathes of agricultural land since June. Speculation that shortages of basic foodstuffs like rice and wheat could emerge has sent prices soaring even as government officials have sought to reassure the population that the country is self-sufficient in staple crops and that the recent price fluctuations in the grain market are temporary.”As state purchases of wheat dropped this year, market purchases accounted for a higher portion, increasingly becoming the main channel of wheat purchases,” Tang Ke, senior official at Ministry of Agriculture and Rural Affairs said at a press conference on Aug. 26.In keeping with Chinese tradition of stockpiling strategic reserves across most commodities, since 2006 the government has purchased wheat at annual state-set prices to ensure that any dramatic decline in market prices would not discourage farmers from cultivating the crop. When market prices are low, farmers can opt to sell more of their crop to state purchasers to support their income.
Professor Dies of Coronavirus During Zoom Lecture – Paola Di Simone, an Argentinian professor, reported on August 28 that she had tested positive for the coronavirus and had been showing symptoms for four weeks. This week, she collapsed in the middle of a live virtual lecture. Her employer, the Universidad Argentina de la Empresa (UADE), has not yet explained why Paola was working while ill. Paola Di Simone, 45, taught political science at UADE, the University of Buenos Aires, and Torcuato Di Tella University. She died this Wednesday while giving a virtual class, which she was still teaching despite being positive for the coronavirus. Her students noticed that she was having trouble breathing and asked her to share her address so they could call an ambulance. She was only able to say “I can’t” before passing out. Her death occurred on Wednesday and was made public a day later via social media posts by her colleagues and students. The UADE released a condolences statement; however, the university said nothing about why Paola was still being asked to teach despite having been suffering from the coronavirus for four weeks. Her colleagues and students remembered her as professional, tireless, and above all as a wonderful, warm person. This incident is yet another example of how, despite the global pandemic, employers are prioritizing “normal” operations over the health and lives of their workers. Time and time again, they lack or fail to enforce safety protocols, continue business as usual despite pockets of infection, and conceal cases in order to keep their companies open. Clearly, the lives of workers do not matter to them.
Global Economic Recovery Shows Signs of Slowing – WSJ – The global economy is bouncing back strongly from the collapse it suffered in the spring, but fresh data suggest the early gains from the lifting of coronavirus lockdowns are already exhausted, adding to evidence that the world economy could take many months, if not years, to heal. Fresh figures from the U.K. provide valuable insight into the state of the continuing economic recovery. The country is one of a handful of economies to release month-to-month figures for economic growth and is also the largest to do so, offering a more up-to-date snapshot than quarterly gross domestic product figures provide. The U.K. economy grew 6.6% in July from June, having expanded by 8.7% in that earlier month. That puts the U.K. on track for a 15% gain in output in the third quarter, following a 20.4% drop in the second. However, output remained 11.7% lower than it was in February, the last month before the pandemic began to disrupt the economy. Output in the services sector, which relies more on face-to-face contact, was down 12.6% from February, while industrial output was down 7%. The figures strengthen the view of many economists that a return to pre-coronavirus levels of output will be painfully slow in most of the rich world, as the coronavirus deters everything from travel to entertainment to office work. Economic data that has a good record of anticipating growth indicates that strong growth in the third quarter will likely be followed by more modest expansion as companies, workers and governments adjust to what could be an extended period of uncertainty over the evolution of the pandemic and the availability of a vaccine. “As long as the major economies do not need to get into generalized lockdown, the economy should continue to mend, but cannot sustain the spectacular rebound seen upon reopening businesses a few months ago,” said Gilles Moec, chief economist at the Axa insurance company. “The hard part starts now.” Economists don’t expect the British economy to return to its pre-pandemic size until 2022. The U.K. suffered the most severe decline in output among rich countries during the second quarter, but the month-to-month sequence of decline and recovery has been broadly similar in other countries, including the U.S.
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