Written by rjs, MarketWatch 666
News posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. We cover the latest economic data, especially GDP, the jobs report, banking oversight, mortgage delinquencies, local schools & universities, plus coronavirus relief (right now it appears Trump is closer to the Democrats than to the GOP Senate). There’s more news on Trump and his team getting infected. 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’s Bostic says significant portions of U.S. recovery are weak or nonexistent (Reuters) – It will be a while before the U.S. economy is fully recovered and before the Federal Reserve will raise interest rates or remove the support it is providing financial markets, Atlanta Federal Reserve Bank President Raphael Bostic said on Monday. “On balance, I am comfortable with our current policy stance,” Bostic said in remarks prepared for a virtual event organized for the Securities Industry and Financial Markets Association Annual Meeting. “As I have detailed today, though the U.S. economy continues to show clear signs of recovery, there remain significant portions where the recovery has been weak or nonexistent.” The Fed moved quickly to support the economy in March by slashing rates to zero and launching emergency lending programs to support market functioning. Those programs will stay in place as long as needed, however, market participants should expect the central bank to sunset some of its emergency lending vehicles after the crisis has passed, Bostic said. The economic crisis caused by the coronavirus pandemic caused the most pain for Black and Hispanic workers, who were disproportionately affected by job losses, Bostic said. Many of the jobs lost may not return, particularly in travel and food services, as companies adjust to lower demand or use technology to replace workers, he said. Leaders in economics and finance need to openly acknowledge gender, racial and other disparities and support policies that can help close those gaps, he said. For the Fed, that includes supporting the labor market recovery to minimize the risks of long-term damage, Bostic said. “Indeed, an unnecessarily slow labor market rebound could just drive historic wedges deeper, continuing to exacerbate the geographic, racial, gender, and income disparities in our economy,” Bostic said.
Top Fed Official Says Policy Response Could Speed Faster Recovery – WSJ – A top Federal Reserve official said Monday the U.S. economy could stage a faster recovery from the coronavirus-induced recession than it did following the 2008 global financial crisis. Fed Vice Chairman Richard Clarida said it is possible that the recession that began in March already has ended, though it could take another year before broad measures of economic output fully recover to their pre-pandemic levels. In remarks delivered virtually at a banking-industry conference, Mr. Clarida said the strong rebound in part reflected aggressive actions by policy makers at the Fed, in Congress and the White House to maintain access to credit and to provide relief to households and businesses. “Additional support from monetary – and likely fiscal – policy will be needed,” Mr. Clarida said. He didn’t go into specifics about what steps the Fed might take after it last month made more explicit its plans to hold interest rates lower for longer than it has done in past economic downturns. Most officials in projections last month indicated they expect to hold rates near zero for at least three years. The Fed isn’t anticipated to take new policy action at its next meeting on Nov. 4-5. Mr. Clarida said the path of the recovery going forward will be shaped in part by the course of the virus, social-distancing responses and other mitigation efforts. The recovery in economic data that followed efforts in March and April to suppress the virus by reducing commercial activity had been “surprisingly strong,” he said. This development was “especially noteworthy when set in relief against the surge in new [virus] cases that were reported this summer and the coincident flatlining in a number of high-frequency activity indicators that we follow to track the effect of the virus on economic activity,” he said.
Fed’s Brainard Says More Spending Needed to Avoid Recovery Imbalance – WSJ – A top Federal Reserve official warned that the U.S. economy would face a substandard and uneven recovery without additional government spending to shore up the hardest-hit sectors from the coronavirus pandemic. “Apart from the course of the virus itself, the most significant downside risk to my outlook would be the failure of additional fiscal support to materialize,” said Fed governor Lael Brainard in remarks set for delivery in an online discussion on Wednesday. Ms. Brainard said robust relief efforts this spring and summer to provide more generous unemployment benefits and grants to small businesses had likely contributed to a stronger-than-anticipated rebound after the coronavirus pandemic froze economic activity in March and April. But she warned that the current K-shaped recovery would further exacerbate longstanding disparities in the economy and labor market without more targeted government spending, including for unemployed Americans and hard-hit businesses, cities and states. “Premature withdrawal of fiscal support would risk allowing recessionary dynamics to become entrenched, holding back employment and spending, increasing scarring from extended unemployment spells, leading more businesses to shutter, and ultimately harming productive capacity,” she said. Ms. Brainard said the monetary-policy framework adopted by the Fed in August would allow the central bank to provide more support to the economy by keeping interest rates lower for longer than it has in prior business cycles. Officials last month said they would keep rates near zero until the labor market has recovered and inflation has hit 2% and is on track to exceed 2%. The strategy entails allowing inflation to moderately overshoot the Fed’s 2% target and could lead the Fed to raise rates more gradually after any initial increase, Ms. Brainard said. For the new policy to be effective, the Fed will have to “stay the course resolutely,” she said. Ms. Brainard said the Fed would deliberate and could clarify in the months ahead how its purchases of Treasury and mortgage-backed securities can complement the more detailed rate guidance that officials issued last month. The Fed is buying $120 billion in securities a month to keep short- and long-term interest rates low but hasn’t offered as much precision about how long those purchases will last.
Fed’s Beige Book shows slight to modest growth, recovery uneven — The U.S. economy continued to grow across the country as it recovered from the coronavirus pandemic, but the picture was uneven, according to a new report from the Federal Reserve. “Changes in activity varied greatly by sector,” the central bank said in its Beige Book survey released Wednesday in Washington. “Economic activity continued to increase across all districts, with the pace of growth characterized as slight to modest in most districts.” The report was based on information collected by the Fed’s 12 regional banks through Oct. 9. The U.S. economy’s rebound has shown some signs of slowing in recent weeks as fiscal stimulus passed in early spring has expired and COVID-19 makes an autumn resurgence. The most recent economic data has been mixed, with consumer spending rising while jobs gains have slowed. Fed Gov. Lael Brainard warned earlier Wednesday that more fiscal stimulus is needed, with spending and employment at risk. The report was released in advance of the Federal Open Market Committee’s meeting Nov. 4-5, which starts the day after the U.S. election. Economists expect the central bank to make few if any changes to policy. “Districts characterized the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty,” the Beige Book noted. Restaurants – many of which have been able to stay afloat by offering outdoor dining – were worried about the looming cooler weather slowing sales. Banks voiced concern about the prospect of rising delinquency rates in coming months, though they’ve so far been stable. Employment increased but growth remained slow, with the labor market seen as tight by hiring firms, which they blamed on workers’ health and child care concerns, and the outlook cloudy. “With the pandemic ongoing and the stimulus ended, uncertainty remained extremely high in anticipation of layoffs, foreclosures, and bankruptcies,” the Philadelphia Fed reported. Several districts reported robust activity in the construction sector amid increased real estate market activity, driving up wages as demand for workers increased. The price of building materials rose and lumber was often hard to come by. The chance that lawmakers in Washington will agree on a new round of spending remains in the balance. The White House has boosted its fiscal-stimulus offer in negotiations with Democrats, and House Speaker Nancy Pelosi said she’s hopeful for a deal.
Fed’s Beige Book: “Slight to modest” Growth in Economic Activity – Fed’s Beige Book “This report was prepared at the Federal Reserve Bank of St. Louis based on information collected on or before October 9, 2020.” Economic activity continued to increase across all Districts, with the pace of growth characterized as slight to modest in most Districts. Changes in activity varied greatly by sector. Manufacturing activity generally increased at a moderate pace. Residential housing markets continued to experience steady demand for new and existing homes, with activity constrained by low inventories. Banking contacts also cited increased demand for mortgages as the key driver of overall loan demand. Conversely, commercial real estate conditions continued to deteriorate in many Districts, with the exception being warehouse and industrial space where construction and leasing activity remained steady. Consumer spending growth remained positive, but some Districts reported a leveling off of retail sales and a slight uptick in tourism activity. Demand for autos remained steady, but low inventories have constrained sales to varying degrees. Reports on agriculture conditions were mixed, as some Districts are experiencing drought conditions. Districts characterized the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty. Restaurateurs in many Districts expressed concern that cooler weather would slow sales, as they have relied on outdoor dining. Banking contacts in many Districts expressed concern that delinquency rates may rise in coming months, citing various reasons; however, delinquency rates have remained stable….Employment increased in almost all Districts, though growth remained slow. Employment gains were reported most consistently for manufacturing firms, although firms continued to report new furloughs and layoffs. Most Districts continued reporting tight labor markets, attributing it to workers’ health and childcare concerns, with many firms consequently offering increased schedule flexibility; a few Districts, however, noted some firms were finding it easier to hire workers. Wages increased slightly in most Districts, often tied to firms’ difficulty finding workers, especially for low-wage or high-demand jobs. Some firms reported returning wages (and raises) to normal levels, but many reported more stable wages.CR Note: This suggests economic growth has slowed recently.
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).The dashed line is the percent of last year for the seven day average.This data is as of Oct 18th. The seven day average is down 64% from last year (36% of last year). There has been a slow increase from the bottom.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 October 17, 2020. Note that this data is for “only the restaurants that have chosen to reopen in a given market”. Since some restaurants have not reopened, the actual year-over-year decline is worse than shown. 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 October 15th. Movie ticket sales have picked up slightly over the last couple of months, and were at $12 million last week (compared to usually around $150 million per week in the early Fall). This 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 since the Great Depression for hotels – prior to 2020). This data is through October 10th. Hotel occupancy is currently down 29.2% year-over-year. Notes: Y-axis doesn’t start at zero to better show the seasonal change. So far there has been little business travel pickup that usually happens 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 October 9th, gasoline supplied was off about 8.3% YoY (about 91.7% of last year). 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. This data is through October 17th for the United States and several selected cities. According to the Apple data directions requests, public transit in the 7 day average for the US is still only about 56% of the January level. It is at 49% in Chicago, and 59% in Houston. Here is some interesting data on New York subway usage (HT BR). This graph is from Todd W Schneider.This data is through Friday, October 16th. Schneider has graphs for each borough, and links to all the data sources.
Q3 GDP Forecasts –From Merrill Lynch: The advance 3Q GDP report should reveal a historic 33% qoq saar rebound in real activity, driven largely by recoveries in consumption, residential and equipment investment. This forecast will recoup half of the decline in GDP during from the COVID shock. [Oct 23 estimate] From Nomura: Base effects will drive Q3 2020 real GDP higher but monthly data suggest the recovery has entered a slower phase. We think real GDP rose 34.7% q-o-q saar (7.7% q- o-q unannualized) in Q3, highlighting the swifter-than-expected pandemic recovery thus far. As COVID-19 weighs on activity, we expect a more gradual recovery through H1 2021 before an acceleration in H2. [Oct 23 estimate] From the NY Fed Nowcasting Report:The New York Fed Staff Nowcast stands at 13.7% for 2020:Q3 and 3.5% for 2020:Q4. [Oct 23 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 35.3 percent on October 20, up from 35.2 percent on October 16. [Oct 20 estimate] It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR). A 35% annualized increase in Q3 GDP, is about 7.8% QoQ, and would leave real GDP down about 3.3% from Q4 2019.The following graph illustrates this decline. This graph shows the percent decline in real GDP from the previous peak (currently the previous peak was in Q4 2019). This graph is through Q2 2020, and real GDP is currently off 10.2% from the previous peak. For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous peak.The black arrow shows what a 35% annualized increase in real GDP would look like in Q3. Even with a 35% annualized increase (about 7.8% QoQ), real GDP will be down about 3.3% from Q4 2019; a slightly smaller decline in real GDP than at the depth of the Great Recession.
Fiscal Policy Efficacy in Times of Covid – Menzie Chinn – From a CBO working paper by Selsiki, Betz, Chen, Demirel, Lee, and Nelson, “Key Methods That CBO Used to Estimate the Effects of Pandemic-Related Legislation on Output”. Table 2 reports the ranges for a period of economic slack (empirical evidence in support of recounted in this New Palgrave survey article on multipliers), and then the adjustments made for social distancing. The “direct effect” varies by measure (purchases of goods and services vs. unemployment insurance enhancement vs. PPP). Noteworthy is the fact that the demand multiplier for the Paycheck Protection Program is quite small; however, if we are interested in preventing the scarring effect due to massive bankruptcies of small and medium sized firms, we might still view this measure as a net positive. These estimates underpin the no-Covid legislation counterfactual described in this post from exactly one month ago. Figure 1: GDP as reported (black bold), CBO July 2020 projection (blue), CBO counterfactual of no pandemic related recovery legislation (red), all in billions Ch.2012$, SAAR. Source: CBO, The Effects of Pandemic-Related Legislation on Output (September 18, 2020), and author’s calculations.Without the quick and substantial measures undertaken in the spring, we would be in a much deeper hole. A prospective analysis of different spending packages – using a similar methodology – is provided by Wendy Edelberg and Louise Sheiner at Brookings here. The key graph depicts the impact on real GDP, for each $400 billion dollar package.
Pelosi gives White House 48-hour deadline for coronavirus stimulus deal | TheHill Speaker Nancy Pelosi (D-Calif.) gave the White House a 48-hour deadline for the coronavirus stimulus deal, her top aide tweeted Saturday night. Pelosi’s deputy chief of staff, Drew Hammill, posted that the Speaker and Treasury Secretary Steven Mnuchin spoke on the phone for more than an hour on Saturday night. He said the agreement had to be “addressed in a comprehensive manner in the next 48 hours.” The speaker told ABC’s “This Week” on Sunday that the 48-hour deadline applies to whether the coronavirus stimulus deal would be completed before the election. “The 48 only relates to if we want to get it done before the election, which we do,” she said. “I’m optimistic because, again, we’ve been back and forth on all of this.”When asked by George Stephanopoulos whether Americans would “get relief before Election Day,” Pelosi responded, “Well, that depends on the administration.”The Saturday talks between Pelosi and Mnuchin resulted in “some encouraging news on testing,” Hammill tweeted.But he added that “there remains work to do to ensure there is a comprehensive testing plan that includes contact tracing and additional measures to address the virus’ disproportionate impact on communities of color.”President Trump has encouraged a deal before the election, suggesting Mnuchin should go beyond the current $1.8 trillion proposal, despite Republican senators’ pushback on the cost. Senate Majority Leader Mitch McConnell (R-Ky.) has said he will not bring a $1.8 trillion deal to the Senate floor, but the chamber plans to vote this week on a $500 billion bill with a Paycheck Protection Program extension and expanded unemployment benefits. Pelosi and Democrats have argued that proposed bills from the White House and Senate are inadequate, calling for more funding for state and local governments.
Pelosi, Mnuchin push coronavirus relief talks as U.S. Senate votes on limited bill (Reuters) – U.S. Senate Republicans are preparing to bring up legislation on Tuesday to replenish a program that helps small businesses slammed by the coronavirus, as House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin discuss a larger stimulus package. Pelosi and Mnuchin, who have been negotiating intermittently since August on a fresh coronavirus aid plan, plan to speak again on Tuesday after they “continued to narrow their differences” in a nearly hour-long call Monday, Pelosi’s spokesman, Drew Hammill, wrote on Twitter. Pelosi, the top elected U.S. Democrat, has set the end of the day Tuesday as a deadline for agreement with the White House, if a comprehensive coronavirus relief bill is to get through both chambers of Congress before Election Day on Nov. 3. President Donald Trump’s administration has proposed $1.8 trillion, while Pelosi has been pushing for a $2.2 trillion aid and stimulus package. That is in addition to the $3 trillion in coronavirus relief Congress already approved in the spring. While Pelosi said on Sunday she was optimistic a deal could be reached on a fresh package, and a spokeswoman said Monday the White House was also “cautiously optimistic,” optimism was in shorter supply in the Republican-run Senate, where many Republicans oppose passing more coronavirus aid. A senior Senate Republican, John Thune, expressed doubt Monday that there would be enough Senate Republican votes to pass a comprehensive bill as large as the White House bid of $1.8 trillion. “It’d be hard,” Thune, the Senate Republican whip, told reporters.
McConnell warns White House against making stimulus deal before election – Prospects for an economic relief package in the next two weeks dimmed markedly on Tuesday after Senate Majority Leader Mitch McConnell (R-Ky.) revealed that he has warned the White House not to strike an agreement with House Speaker Nancy Pelosi before the the Nov. 3 election.In remarks at a closed-door Senate GOP lunch, McConnell told his colleagues that Pelosi (D-Calif.) is not negotiating in good faith with Treasury Secretary Steven Mnuchin, and any deal they reach could disrupt the Senate’s plans to confirm Amy Coney Barrett to the Supreme Court next week. Republicans have voiced concerns that a stimulus deal could splinter the party and exacerbate divisions at a time when they are trying to rally behind the Supreme Court nominee. The comments were confirmed by three people who spoke on condition of anonymity to discuss them.McConnell’s attempted intervention came as Pelosi and Mnuchin continued negotiating over the roughly $2 trillion economic relief package. Pelosi spokesman Drew Hammill said the “conversation provided more clarity and common ground as they move closer to an agreement.” But no deal can become law without McConnell’s blessing, and his direct warning to the White House imperils the chances of any bill becoming law in the next two weeks.McConnell told reporters Tuesday that if a deal were reached and passed by the House with President Trump’s support he would put it on the Senate floor “at some point” — but did not commit to doing so before the election.McConnell has not been part of the Pelosi-Mnuchin talks, which have jumped around in chaotic fashion, and had already made his opposition to an enormous new bill clear. Republicans could lose control of the Senate based on the outcome of Novembers elections, and senators have made clear to the White House that voting on a huge stimulus deal could mean the end of their majority if it scares away fiscally conservative voters. Mnuchin and Pelosi have continued dancing around a deal for weeks, however, particularly amid signs that the economic recovery is weakening markedly. The deal under discussion would provide another round of $1,200 stimulus checks, more unemployment benefits, aid for small businesses, money forcoronavirus testing, and support for airlines and hospitals, among other things.
Waiting for aid: U.S. airline workers ‘pawns’ in stimulus battle -After so far failing to convince Congress to approve another $25 billion bailout for coronavirus-slammed airlines, the industry is looking to a fresh Tuesday deadline set by Democratic House of Representatives Speaker Nancy Pelosi for a COVID-19 relief deal with the Republican White House. Airlines were hoping for legislation before Sept. 30, when a first package tied to job protections expired despite broad bipartisan support as Democrats and Republicans wrestled with conflicting agendas and priorities before the Nov. 3 election. “We’re pawns,” said Houston resident Jessica Trujillo, one of at least 50,000 airline workers – along with her flight attendant husband Rene – without a paycheck. United Airlines and American Airlines, two of the top three U.S. carriers, have furloughed 32,000 workers. At least 20,000 other employees of the two companies have taken unpaid leaves of absence while watching rollercoaster negotiations in Washington that have seen prospects for more aid rise and fall on a daily, and even hourly, basis. “We are bare-bones right now and the emotions back and forth are really really hard,” said Trujillo. She and her husband both chose unpaid leave from United in order to ensure medical coverage after losing Rene’s brother, who did not have health insurance, to the coronavirus in September. They are part of a politically diverse group of airline workers from gate agents to pilots who have spent the past three months bombarding lawmakers with phone calls, letters, emails, social media posts and marches pleading for more airline payroll support either through a large COVID-19 relief deal or a standalone bill. Last week President Donald Trump was willing to raise his offer of $1.8 trillion for a COVID-19 relief deal with Democrats in the U.S. Congress, but the idea was shot down by Senate Majority Leader Mitch McConnell, a fellow Republican, who plans a Senate vote on a $500 billion proposal on Wednesday. Meanwhile, Pelosi has stuck to her demand for a $2.2 trillion aid and stimulus package.
U.S. coronavirus aid talks imperiled amid Republican opposition (Reuters) – The White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party. With just two weeks until the U.S. presidential election, Trump signaled a willingness to go along with more than $2.2 trillion in new COVID-19 relief, a figure Democrats have been pushing for months. Senate Majority Leader Mitch McConnell, a Republican, publicly said he would bring up a deal if one is reached by Treasury Secretary Steven Mnuchin and Democratic House Speaker Nancy Pelosi and approved by the House of Representatives. But he provided no timetable and privately has told his fellow Republicans that he did not favor a deal before the Nov. 3 presidential and congressional elections, a senior Senate Republican aide told Reuters. Holding a vote on a costly new package of aid could prove politically difficult for some Senate Republicans running for re-election in conservative states. Nonetheless, Trump, whose prospects for re-election are in doubt, tacked in the opposite direction. “I want to do it even bigger than the Democrats,” Trump said in an interview with Fox News, as talks between Pelosi and Mnuchin continued. Pelosi, speaking to reporters after a mid-afternoon call with Mnuchin, was asked about prospects for a legislative package by the end of this week. “I hope so. That’s the plan,” she said. In a letter to her fellow Democrats on Tuesday evening, however, Pelosi made no mention of wrapping up the battle by week’s end. “I remain hopeful that we can reach an agreement before the election,” she wrote. Pelosi’s deputy chief of staff, Drew Hammill, said that a 45-minute call between the speaker and Mnuchin was productive “as they move closer to an agreement.” Hammill said on Twitter that negotiations would continue on Wednesday. The White House has proposed $1.8 trillion in coronavirus relief, while Pelosi is pushing for $2.2 trillion. In an interview with Bloomberg TV, Pelosi said aid to state and local governments and Republican demands for liability protection for businesses remain sticking points. But she suggested the Democrats could find grounds to agree on liability protections if the administration agrees to eliminate certain language sought by McConnell that she believes would overshadow protections for workers.
“Fiscal Cliffication” Continues as the Election Looms – Long time readers will remember that I’ve been an aggressive advocate of large fiscal support to the economy so that there weren’t major income and financial impacts from having to quarantine. As the prospects of a new deal become more remote, I added my voice to the larger calls for a new package. I’ve outlined the damage that could be inflicted by not having a deal. I ended this run of articles with a piece in the Guardian warning against the terrible prospect of congress passing another fiscal deal. And especially not extending the supplemental unemployment insurance. When it became clear we weren’t getting a fiscal package, I stepped back to analyze the “Fiscal Cliffication” of our economic policy. As I explained in that article, the Republican party has many political incentives not to pass a fiscal package. These hold especially if they strongly suspect Donald Trump will lose in November. Meanwhile, Democrats also have political incentives not to engage in a deal.. As I said: While this is disastrous for the country at large, the political incentives each party faces are going to lead to intensifying fiscal cliffs for the foreseeable future [ … ] Without major and extreme change to our politics, we’re much more likely to see half-hearted and inadequate short-term extensions to the most minimal support to households and businesses, for as long as legislation requires inter-party cooperation. Clearly, however, the politics of a new fiscal package have now evolved. For details on the negotiations, you should be reading the excellent coverage by Jeff Stein at the Washington Post. The most important thing to understand is that the negotiations have not moved onto the main hurdle – Senate Republicans. While Democrats have been able to get the Trump administration to improve it’s offer in terms of dollar amounts, it’s not clear how meaningful that is without Senate Republicans participating. Negotiations have stalled at a back-and-forth between Trump, and House Democrats. House Speaker Pelosi’s stated position as of this writing is that she is not willing to accept the Trump administration’s proposed 1.8 trillion dollar offer. This offer includes another round of stimulus checks to every American, expanded unemployment insurance, and 300 billion for state and local governments. Pelosi’s stated objections are firstly that the Trump administration is asking for too much discretion in allocating funding for coronavirus testing and secondly that they haven’t agreed to set terms on how state and local government support would be allocated. There are also a range of other issues where the terms and dollar amounts are not set, such as for childcare and a refundable tax credit for lower income Americans. She is also strongly objecting to the controversial idea of providing businesses a liability shield from coronavirus related lawsuits. This is a stated “red line” for Senate Majority Leader Mitch McConnell. While these issues are significant, it is not clear that they are worth holding up a package while millions of households are facing starvation and eviction.
5 Senate Democrats break ranks in vote on PPP small-business loans – Five Senate Democrats joined Republicans Tuesday in a vote on extending small-business Paycheck Protection Program loans without a broader COVID-19 stimulus deal. The defections bring Republicans in the Senate within striking distance of the 60 votes needed to pass legislation, though House Speaker Nancy Pelosi (D-Calif.) insists on a larger package. In a “show” vote called by Senate Majority Leader Mitch McConnell (R-Ky.), the five Democrats broke with party leaders, giving a 57-40 division in favor of McConnell’s preference for smaller bills. Sens. Maggie Hassan (D-NH), Doug Jones (D-Ala.), Gary Peters (D-Mich.), Jeanne Shaheen (D-NH) and Mark Warner (D-Va.) backed McConnell’s position. All except Hassan are seeking re-election Nov. 3, with Peters and Jones considered the most vulnerable. One Republican, Sen. Rand Paul of Kentucky, and a moderate Democrat, Sen. Kyrsten Sinema of Arizona, did not vote, meaning Republicans are within one to three votes of 60. The vote was staged as a motion to table, in which McConnell motioned to table the PPP legislation, then voted against tabling it. The maneuver maintains his ability to call another vote on the legislation.
Coronavirus stimulus update: Senate relief bill blocked as Pelosi, Mnuchin talk – Senate Democrats blocked Republicans’ attempt to pass a $500 billion coronavirus stimulus bill Wednesday as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin make a last-ditch push to strike a relief deal before the 2020 election. The GOP tried to advance its bill, similar to one Democrats opposed last month. The measure failed in a 51-44 party-line vote, falling short of the 60 votes needed. The stalemate in the Senate extends months of gridlock on Capitol Hill as millions of Americans, trying to afford food and housing and keep their businesses open, await more federal aid during an economic crisis. Election-year politics have jarred the legislative process as new Covid-19 infections in the U.S. reach levels unseen in weeks. Republicans in Congress argue Democrats have reached for an expensive wish list filled with many provisions unrelated to the crisis. Senate Majority Leader Mitch McConnell, R-Ky., has said Democrats are engaging in “all-or-nothing obstruction” as they hold out for a comprehensive deal worth about $2 trillion. Democrats, meanwhile, accuse the GOP of failing to recognize the magnitude of the economic and health crisis gripping the country. Senate Minority Leader Chuck Schumer, D-N.Y., has called the Republican plan “partisan” and “emaciated.” The legislation before the Senate on Wednesday included funds for a second Paycheck Protection Program loan for struggling small businesses, a $300 per week supplemental unemployment insurance benefit, and liability protections for businesses, among other provisions. It did not include another round of direct payments to people. The Senate vote on a bill that had little chance of becoming law came as Pelosi and Mnuchin extended their discussions toward a comprehensive agreement. The sides said they made progress in a conversation Tuesday. Both Pelosi and White House chief of staff Mark Meadows said they aim to have a deal in place before the end of the week. Pelosi and Mnuchin spoke Wednesday afternoon, and the speaker’s office said they moved closer to being able to write legislation. The pair will talk again Thursday. The negotiators face a range of political pitfalls with under two weeks until the election. After at one point pulling out of talks, President Donald Trump has pushed for a sprawling relief bill as voters head to the polls. He has even claimed he wants to put more money into a package than the $2.2 trillion Democrats seek. But every step the White House takes toward Democrats’ position risks losing more Senate Republican support in a potential vote. It appears unlikely a bipartisan agreement would get the 13 Senate GOP votes needed to overcome a filibuster. “If they’re going to come up with a $2 trillion bill that is going to put money on items that are not needed directly related to Covid, then that is not a direction we should travel,” Sen. Marsha Blackburn, R-Tenn., told CNBC on Wednesday.
Mnuchin downbeat on economic relief talks with Pelosi as clock runs out ahead of election – Treasury Secretary Steven Mnuchin delivered a downbeat assessment Friday about his economic stimulus talks with House Speaker Nancy Pelosi (D-Calif.), saying the speaker had “dug in” and “significant differences” remain.Mnuchin’s comments at a White House event came at the end of a week Pelosi had established as an informal deadline for getting agreement on an approximately $2 trillion spending bill in order for legislation to pass before the election. There was no agreement in sight, although Pelosi insisted that she remained optimistic.”You have to be optimistic in a negotiation,” the speaker said on MSNBC.Later in the day, Pelosi spokesman Drew Hammill wrote on Twitter that the Democratic leader and the Treasury secretary would “speak again once additional progress is made.” He said staff-level work would continue through the weekend.Mnuchin said that if Pelosi wanted to compromise, they could get a deal. Pelosi said essentially the same thing about President Trump.Senate Republicans fume as Mnuchin gives ground to Pelosi in search of a deal.For his part, Trump repeated his accusation that Pelosi just wants to “bail out” poorly run blue states, even though governors of both parties have sought additional federal assistance. Trump accused Pelosi of trying to put off a deal until after the election in order to score political points, which he predicted would backfire.”I’d like to see the people get the money,” Trump said at the event. “I don’t think she wants the people to get the money before the election.”
The Red Zone – YOU MAY HAVE NOTICED that the United States has been rightly captivated in recent weeks by a hideous and drawn out medical spectacle that began with a judicial announcement on the First Lawn of the nation and has since super-spread through the capitol thanks to the willful negligence of some of the country’s most powerful people. The subsequent infection of dozens of White House and Capitol Hill officials, not to mention the potentially tragic collateral damage inflicted upon a range of staff and workers, has dominated the news cycle and enraged the country such that between it and his belligerent debate performance, the President’s polling numbers took a plunge. In some of the most heavy-handed synecdoche imaginable, seven months of catastrophic public health policy were laid bare in a few days of grotesque political theatre. Meanwhile, on Saturdays, that same American public has sure as hell been enjoying the return of college football, particularly since the start of the SEC schedule. Here’s the thing, though: college football is bad. Like, really bad. It’s not bad in the sense that all labor under capitalism is bad – the neoliberal hellscape most of us are subjected to in our daily lives. No, it’s that other special kind of bad we might call Trumpist. College football is all the ugliest facets of U.S. society: unapologetic racism, violence, raw exploitation, and endless harm all so that powerful people and institutions can make a buck. It’s no wonder that Trump literally shouted out his complicity in restarting the Big Ten season during the Presidential Debate. When we see those traits manifest in the White House, so many of us find it intolerable. Yet, when it plays out on America’s campus gridirons, the truth is that most people don’t seem to give a fuck. Indeed, even the righteous disgust expressedby so many this summer over the dangers of college football during a pandemic has been supplanted by an attitude of indifference; the harm has been normalized as banal. This is, doubtless, in no small part because we have already collectively decided it is acceptable to sacrifice largely Black unpaid athletic workers on the football field to fund our universities and, as an Ohio State professor and graduate student put it, “help get us through these uncharacteristically difficult times of great isolation, division and uncertainty.”But it’s time to snap out of it and face up to the fact that everything wrong with America is manifest in college sports. The events that have occurred – and are occurring – in college football are in fact every bit as egregious as the spectacle in the nation’s capital. And they deserve the same level of scrutiny and outrage.
Infectious disease expert calls White House advisers herd immunity claims ‘pseudoscience’ – Infectious-diseases expert Michael Osterholm blasted a report that Scott Atlas, a medical adviser to President Trump, is pushing the White House to attempt a “herd immunity” approach to the coronavirus pandemic.”First of all, that 20 percent number is the most amazing combination of pixie dust and pseudoscience I’ve ever seen,” Osterholm said, in reference to the proportion of the population Atlas reportedly said would need to contract the virus to achieve herd immunity. “It’s 50 percent to 70 percent at minimum.” “And remember when we talk about getting to 50 percent to 70 percent protection, we’re talking you can get there with disease – but if that happens, there will be lots of deaths, a lot of serious illnesses – or we can try to get there with vaccination, and postponing the number of people who get sick until we have the vaccines available,” Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, said on NBC’s “Meet the Press.””50 percent to 70 percent just slows down transmission, it doesn’t stop it,” he added. “So this virus is going to keep looking for wood to burn for as long as it can … so, our goal is to get as many people protected with vaccines.” Anthony Fauci, the U.S.’ top infectious diseases expert, has also been sharply critical of the idea. “If you just let things rip and let the infection go, no masks, crowd, it doesn’t make any difference – that quite frankly, George, is ridiculous,” Fauci told ABC’s George Stephanopoulos on “Good Morning America” last week.
Trump Calls Fauci ‘a Disaster,’ Tries to Blame Science and Medical Experts for Failed Coronavirus Response -President Trump attacked the nation’s top infectious disease specialist in a call with campaign staffers that several reporters were allowed to listen to on Monday. In the call, Trump said that Dr. Anthony S. Fauci was “a disaster.” He added that despite the evidence that coronavirus cases are once again rising across the country, the public was tired of hearing so much news about the virus, especially from “these idiots” in the government and scientific community, as The Washington Post reported. Trump seemed irked by an interview that Fauci, the director of the National Institute of Allergy and Infectious Diseases, gave to 60 Minutes in which Fauci said he was not surprised that Trump contracted the coronavirus after attending a large event at the White House for Supreme Court nominee Amy Coney Barrett where attendees were not masked.In many interviews, Fauci has touted the efficacy of wearing masks and social distancing, while warning that a failure to follow those safety measures could lead to a very difficult fall and winter as coronavirus and influenza intersect. The evidence suggests Fauci is correct, as the U.S. saw more than 70,000 new cases on Friday, its highest total in months, while the virus is gaining strength in Europe once again, as The New York Times reported.In his broadside Monday, Trump dismissed those concerns about the virus, claiming that the public’s interest has waned. “People are tired of COVID,” Trump said on the call, according to The New York Times. “I have the biggest rallies I’ve ever had. And we have COVID. People are saying: ‘Whatever. Just leave us alone.’ They’re tired of it.” He tried to shift blame for the administration’s response by saying, “People are tired of hearing Fauci and all these idiots – these people, these people that have gotten it wrong,” Trump said, as NBC News reported. “Fauci’s a nice guy. He’s been here for 500 years. He called every one of them wrong. And he’s like this wonderful guy, a wonderful sage telling us how to respond to the pandemic. Fauci is a disaster. If I listened to him, we’d have 500,000 deaths. If we listened to him, we’d have 700-800,000 deaths right now.” At the same time that Trump was issuing his attacks on the government’s medical experts, Fauci was receiving the National Academy of Medicine’s first-ever Presidential Citation for Exemplary Leadership in a virtual event, as CNN reported. Trump’s attack on one of the nation’s most revered doctors generated a swift backlash from both sides of the aisle.The Biden campaign responded by saying, “Mr. President, you’re right about one thing: The American people are tired. They’re tired of your lies about this virus,” as The New York Times reported.
Whatever happened to Deborah Birx? –Deborah Birx is nowhere to be found at the White House these days. Though she retains the title of coordinator of the White House coronavirus response, Birx has not attended any of President Trump’s press briefings on the pandemic since he started them anew in late July, nor was she at a recent event to tout the administration’s advances in testing. Instead, Birx has been on the road, visiting 36 states and 27 different colleges and universities since the end of June to meet with state, local and university leaders to advise on best practices for containing the coronavirus and to gather information on what’s been working in each place. Olivia Troye, a former coronavirus task force adviser who worked with Birx and is now a Trump critic, said White House officials grew irritated by Birx’s detailed and data-heavy presentations in the early summer that showed emerging hot spots and difficulties getting the virus under control. Some officials rolled their eyes as Birx delivered a message that clashed with the administration’s preferred narrative that things were improving, Troye said. The frustration preceded a push to get Birx out on the road to meet with state and local leaders, multiple officials familiar with the discussions said. She last appeared publicly alongside Trump in an early August Oval Office meeting with Arizona Gov. Doug Ducey (R). “It’s convenient because they don’t want her at the White House and don’t want her at the podium,” Troye said. “But in many ways it probably ended up being better for her.”
Dr. Birx reportedly asked Pence to remove COVID-19 adviser pushing ‘junk science’ – Dr. Deborah Birx has reportedly been trying to get controversial adviser Dr. Scott Atlas removed from the White House coronavirus task force. A new report in The Washington Post describes the “discord on the coronavirus task force” that has reportedly “worsened” ever since the arrival of Atlas, a neuroradiologist who has no background in epidemiology. Atlas has reportedly “succeeded in largely sidelining” other doctors on the White House coronavirus task force, has challenged analysis from Birx and others with what experts have dismissed as “junk science,” and is seen by colleagues as “ill-informed, manipulative and at times dishonest.”Birx, who serves as the task force’s response coordinator, recently confronted Vice President Mike Pence about Atlas, telling his office he should be removed from the task force and that she “does not trust” him nor does she believe “he is giving Trump sound advice,” the Post also reports. Her effort was evidently unsuccessful, and Pence reportedly “did not take sides” in the conflict.The report also describes how Atlas has baselessly claimed to the task force that the United States is close to achieving herd immunity, an idea scientists have rejected, and that all coronavirus restrictions should be lifted. This, the Post says, led Birx and Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, to demand he produce data to support his claims during a “fierce debate.” Atlas over the weekend also falsely claimed that masks don’t work in fighting COVID-19, leading Twitter to remove the post.
Dr. Deborah Birx says she was relieved after Scott Atlas’ mask tweet was removed – Members of the White House coronavirus task force are praising a move by Twitterremoving a misleading tweet from top Trump adviser Dr. Scott Atlas that told Americans masks don’t work. The tweet’s removal was a “relief” among some task force members, Dr. Deborah Birx told friends over the weekend, according to a source with knowledge of the conversation.Atlas, a neuroradiologist and President Donald Trump’s hand-picked coronavirus adviser, had undermined the importance of face masks with misinformation in a Saturday Twitter post. “Masks work? NO,” Atlas wrote, followed by a series of misrepresentations about the science behind the effectiveness of masks in combating the pandemic. The tweet and its subsequent removal comes as coronavirus cases spike across the US and other members of the task force have taken to the airwaves to urge Americans to heed basic mitigation strategies, including mask usage and social distancing.According to the Washington Post, Birx recently confronted Vice President Mike Pence’s office about Atlas, saying during a meeting “that she does not trust Atlas, does not believe he is giving Trump sound advice and wants him removed from the task force.”
Fauci: COVID-19 outbreaks would have to ‘get really, really bad’ before advocating for national lockdown – New COVID-19 cases are accelerating across the U.S., rising swiftly above previous record case counts set during the tumultuous spring and summer months. There has been a documented 30 percent increase in testing positivity rates over the past two weeks and more than 8 million COVID-19 cases reported in the country. But, even as the U.S. enters a potentially troubling winter season, Anthony Fauci, the country’s leading infectious diseases expert, says that a nationwide lockdown may not be the best solution at this time. Speaking to “60 Minutes,” Fauci says outbreaks would have to “get really, really bad” before he would advocate for a national lockdown. “First of all, the country is fatigued with restrictions. So we wanna use public health measures not to get in the way of opening the economy, but to being a safe gateway to opening the economy,” Fauci said. “So instead of having an opposition, open up the economy, get jobs back, or shut down. No. Put ‘shut down’ away and say, ‘We’re gonna use public health measures to help us safely get to where we want to go.'” Instead, Fauci says, the emphasis remains on practicing now-familiar public health measures like wearing masks, physically distancing and washing hands frequently – key steps in controlling virus transmission. He elaborated that these practices are not intended to halt the reopening of public spaces, but to facilitate a gradual reopening while still mitigating transmission levels or how quickly the virus spreads. Responding to President Trump’s criticism that he suddenly reversed course on his stance regarding the public wearing facial coverings, Fauci explained that his initial decision to discourage public mask-wearing came during the shortage of personal protective equipment (PPE). When masks, especially homemade ones, became widely available and were shown to prevent virus transmission, Fauci advocated for their universal use. “It became clear that cloth coverings…not necessarily a surgical mask or an N95, cloth coverings, work,” Fauci said. “Now there’s no longer a shortage of masks. Number two, meta-analysis studies show that, contrary to what we thought, masks really do work in preventing infection.” Still, he admits he was wrong in his initial decision to discourage widespread mask-wearing.
HHS secretary: Avoiding large gatherings ‘a difficult message for all Western democracies’ – Health and Human Services (HHS) Secretary Alex Azar is defending the federal government’s progress on the coronavirus pandemic, saying on Sunday “all Western democracies” are having trouble avoiding large gatherings. “I guess what I’m trying to figure out is how are the American people supposed to take your advice if the president of the United States won’t take your advice?” host Chuck Todd asked Azar on “Meet the Press,” noting that President Trump on Saturday held a large event in Wisconsin, a state HHS has classified as in the “red zone” for community spread. “We’re seeing an increase in cases in states whether red or blue or open or closed, we’re seeing an explosion of cases in Europe,” Azar responded. “The ticket is in our hands, it’s about those basic public health mitigation steps … we have it in our individual control.” “Why is that message so difficult for the president?” Todd asked. “I think it is a difficult message for all Western democracies,” Azar said. “We’re seeing that in Europe, people are tired … we’re so close. Hang in there with us, we are so close.” Azar went on to claim “we are weeks away” from monoclonal antibodies and effective vaccines for the virus. “What message are we sending, what example are you setting as a top public health official participating in indoor events like that?” Todd asked, in reference to an indoor event in Fort Myers, Florida. Azar responded that masks had been distributed at the event in question and seating had been arranged in keeping with social distancing practices. “We encourage people to wear face coverings and I wish everybody there would have worn face coverings and maintained social distancing,” he added.
White House looks at cutting Covid funds, newborn screenings in ‘anarchist’ cities — The White House is considering slashing millions of dollars for coronavirus relief, HIV treatment, screenings for newborns and other programs in Democratic-led cities that President Donald Trump has deemed “anarchist jurisdictions,” according to documents obtained by POLITICO. New York, Portland, Ore., Washington, D.C., and Seattle could lose funding for a wide swath of programs that serve their poorest, sickest residents after the president moved last month to restrict funding, escalating his political battle against liberal cities he’s sought to use as a campaign foil. The Department of Health and Human Services has identified federal grants covering those services, which are among the nearly 200 health programs that could be in line for cuts as part of a sweeping government-wide directive the administration is advancing during the final weeks of the presidential campaign and amid an intensifying pandemic Trump has downplayed. Trump in a Sept. 2 order called on federal agencies to curtail funding to jurisdictions that “disempower” police departments and promote “lawlessness.” The memo argued that the cities haven’t done enough to quash riots stemming from this summer’s protests over systemic racism and police violence. The HHS list offers the most detailed picture yet of the administration’s efforts to quickly comply with the Trump directive and the potentially large cuts facing these cities even as the pandemic strains local budgets. It isn’t immediately clear what criteria the budget office will use to evaluate the grants – or how or when cuts may be made. But while the White House pores over existing funds, at least one department has already moved to implement Trump’s directive for new funding. The Department of Transportation earlier this month said Trump’s “anarchy” memo would factor into the department’s review of applications for a new $10 million grant program supporting Covid-19 safety measures. “My Administration will do everything in its power to prevent weak mayors and lawless cities from taking Federal dollars while they let anarchists harm people, burn buildings, and ruin lives and businesses,” Trump tweeted shortly after releasing the Sept. 2 defunding memo. Almost three weeks later, Attorney General Bill Barr labeled New York City, Portland and Seattle as “anarchist jurisdictions.” The White House budget office also instructed departments to also scrutinize funding for Washington, D.C.
Ivanka Trump, Jared Kusher’s lawyer threatens to sue Lincoln Project over Times Square billboards –Ivanka Trump, Jared Kusher’s lawyer threatens to sue Lincoln Project over Times Square billboards – Attorneys for Ivanka Trump and Jared Kushner threatened to sue The Lincoln Project, a prominent Republican group opposing the president, for billboards it put up in Times Square in Manhattan. The attorneys in a letter to The Lincoln Project complained about one billboard showing Trump, a senior adviser to her father, smiling and gesturing next to figures showing over 33,000 New Yorkers and 221,000 Americans have died from the coronavirus. The lawyers also cited a billboard featuring Kushner, another senior White House adviser, next to body bags and an unrelated 2019 quote from before the pandemic in which he said New Yorkers would “suffer.” “I am writing concerning the false, malicious and defamatory ads that the Lincoln Project is displaying on billboards in Times Square,” wrote attorney Mark Kasowitz. “If these billboards are not immediately removed, we will sue you for what will doubtless be enormous compensatory and punitive damages.” The Lincoln Project, as well as Democrats, have launched withering criticism at the White House over its handling of the coronavirus pandemic as cases spike across the country. The group has risen to prominence by releasing rapid-fire ads highlighting the latest controversy stemming from the White House, often going viral online and drawing rebukes from the president. The anti-Trump group has most recently begun teaming up with Democratic groups to roll out ad buys worth millions of dollars in key swing states to hit President Trump on an array of issues, including the current health crisis and its economic fallout.
Judge Denies Trump Effort to Slash Food Stamps for 700,000 Americans -A federal judge in Washington, D.C. late Sunday struck down the Trump administration’s proposed changes to the SNAP benefits program, potentially saving hundreds of thousands of people from losing badly needed federal food assistance.U.S. District Chief Judge Beryl Howell issued a scathing ruling, denouncing President Donald Trump and U.S. Agriculture Secretary Sonny Perdue, who she said have been “icily silent about how many [adults] would have been denied SNAP benefits had the changes sought … been in effect while the pandemic rapidly spread across the country.”New York Attorney General Letitia James, who was among more than a dozen state attorneys general who joined the District of Columbia in suing the administration over the changes, called Howell’s ruling “a major victory for common sense and basic human decency in our nation.” The USDA proposed the changes months before the coronavirus pandemic began. They were initially set to go into effect in April, but Howell issued an injunction in March, as the president declared a state of emergency, ordering the administration to delay the changes. Perdue later appealed Howell’s order, potentially allowing the new rules to go into effect despite a pandemic that has left millions unemployed. Under existing SNAP benefits rules, states are able to waive work requirements for SNAP benefits for areas with unemployment rates as low as 2.5%. Perdue and Trump moved to tighten the criteria for waiving the requirements by raising the minimum rate to 6%. The change could have left nearly 700,000 people without the benefit, the Washington Post reported Sunday. Tamar Haspel, a Post food policy columnist, tweeted that the proposal, and the administration’s attempt to ensure it could go into effect during the public health and economic crisis, was in the running for Trump’s “Vilest Policy Ever.” The pandemic, Howell said in her ruling, exposed how unworkable the administration’s proposed changes were, with the number of Americans relying on SNAP benefits growing by 17%, or six million enrollees, and unemployment rates quadrupling.Perdue and Trump displayed an “utter failure to address the issue” of how millions would be affected by new work requirements during the crisis, Howell said, rendering their changes “arbitrary and capricious.” With the ruling handed down two weeks before Nov. 3, the last day Americans can vote in the presidential election, journalist Matt Taibbi wrote that it may serve as a reminder of the president’s priorities.
The Fed Did a Lot of Talking Yesterday about a Big Bank Failure: Should We Worry? – By Pam Martens – Turns out the federal government’s plan for dealing with a mega bank failure on Wall Street is no better conceived than the federal government’s plan for dealing with the worst pandemic since 1918. The Federal Reserve issued two press releases yesterday about “large banks.” One read: “Agencies finalize rule to reduce the impact of large bank failures.” The other read: “Agencies issue final rule to strengthen resilience of large banks.” Wait. What? Fed Chairman Jerome Powell has been telling anyone who would listen this year – from Congress to viewers of the Today show – that the large banks have been a “source of strength” during the worst economic downturn since the Great Depression. If that were true (which we’ve questioned from the first time Powell said it) why is the Fed now worrying about a “large bank failure” and the need to “strengthen” large banks? The first press release from the Fed yesterday deals with the fact that the biggest banks on Wall Street remain interconnected to one another. If you recall, in 2008 the interconnections of Lehman Brothers, Citigroup and AIG to the biggest banks on Wall Street created a daisy chain of rapid meltdowns across Wall Street. So federal regulators had this plan: They would make the largest banks issue TLAC debt – “Total Loss Absorbing Capacity” debt. The idea, according to the regulators, was that this “debt could be used to recapitalize the holding company during bankruptcy or resolution if it were to fail,” rather than putting the taxpayer on the hook for another massive bailout like 2008. Now, if you read between the lines of the finalized rule, it would appear that the banks have attempted to game this plan by buying up their own and/or each other’s TLAC debt, thus increasing the very interconnectedness and systemic risk that the federal regulators were trying to avoid. So the federal regulators, including the Fed, are going to spank the large banks by penalizing them on what they will count toward their regulatory capital if they hold their own or other bank’s TLAC debt. The problem is that the largest interconnected risk between the banks is not their mutual holdings of each other’s debt, which is in the billions of dollars, but their mutual holdings of each other’s derivatives, which are in the trillions of dollars, in terms of face amount. The tangle of incestuous derivative relationships is as bad, if not worse, than it was in 2008. And these trillions of dollars in derivatives, thanks to a repeal of a part of Dodd-Frank through lobbying by Citigroup, are still sitting at the federally-insured part of the Wall Street bank, where the taxpayer is still on the hook for any blowup. According to the September 30, 2019 report from the Office of the Comptroller of the Currency (OCC), JPMorgan Chase has exposure to $1.2 trillion in Credit Default Swaps while Citibank has exposure to $1.76 trillion. According to the same OCC report, the total exposure to Credit Default Swaps among all national banks in the U.S. is $3.7 trillion – meaning that just these two banks are responsible for 80 percent of that exposure. Who is on the other side of these trades, i.e., the counterparty? No one really knows because these are mostly private contracts between two parties. That was supposed to change under Dodd-Frank, where the derivatives would become centrally-cleared or traded on exchanges, but the majority of derivatives remain over-the-counter private contracts.
Loan Loss Reserves at Mega Banks Are Far from Where They Need to Be – Pam Martens – Consider us on record as waving our arm in the air and shouting that there is zero, ZERO! chance that the megabanks in the U.S. are properly reserved for what comes next. The reason that these publicly-traded mega banks, with CEOs making in the range of $25 million to $30 million a year, don’t want to properly reserve for potential losses is that it crimps quarterly earnings, which might crimp their stock awards, which might crimp their pursuit of becoming a billionaire like Sandy Weill did at Citigroup – not long before the bank began secretly receiving the largest bailout in history from the Federal Reserve Bank of New York, topping out at more than $2.5 trillion in cumulative loans according to a government audit released in 2011. Good quarterly earnings also provide a prop under the share price so that the guys in the corner offices can cash out their stock option grants at a fat profit.These same mega banks are also the most politically-connected. Quietly, they managed to get relief from reserving for losses on financial instruments stuffed into the CARES Act stimulus bill passed by Congress in the spring. The language in the bill relieves the banks from a new accounting measure that would have forced these banks to begin anticipating losses and reserving for them. The measure is called Current Expected Credit Losses or CECL (pronounced Cecil). We had watched numerous Senate hearings prior to the passage of the CARES Act where Republicans argued for relief for the banks from Cecil. They cleverly managed to get it stuffed into the desperately needed CARES Act. The CARES Act contains this passage: Notwithstanding any other provision of law, no insured depository institution, bank holding company, or any affiliate thereof shall be required to comply with the Financial Accounting Standards Board Accounting Standards Update No. 2016 – 13 (‘Measurement of Credit Losses on Financial Instruments’), including the current expected credit losses methodology for estimating allowances for credit losses, during the period beginning on the date of enactment of this Act and ending on the earlier of – (1) the date on which the national emergency concerning the novel coronavirus disease (COVID – 19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 16 U.S.C. 1601 et seq.) terminates; or (2) December 31, 2020.” But, there will be a day of reckoning according to the accounting firm Grant Thornton. It writes: “Based on discussions with the SEC staff, we understand that eligible entities that elect to defer the adoption of ASU 2016-13 will need to apply the transition provisions of ASU 2016-13 when the deferral period under Section 2014 ends. That is, entities will need to retrospectively restate their year-to-date results when they adopt ASU 2016-13 to reflect its application as of the beginning of the entity’s fiscal year, which would be as of Jan. 1, 2020, for entities with calendar year-ends. Quarterly results during the deferral period will also need to be retrospectively restated in future quarters when presenting comparative results.” The pandemic – with its temporary store closures, social distancing requirements, e-commerce boom and supply chain disruption – in the first six months of this year fueled uncertainty for retailers and accelerated existing trends, according to BDO’s biannual bankruptcy update.BDO counts 18 retailers that headed to bankruptcy court in the first half of the year and another 11 in July through mid-August. Retail Dive’s bankruptcy tracker similarly lists 27 so far this year, compared to 17 in 2019. The industry’s bankruptcy record so far put it on pace with 2010, following the Great Recession, when there were 48 bankruptcy filings by retailers, according to BDO’s report.The COVID-19 pandemic has essentially interfered with what is normally a cyclical pattern for retailers and set up the industry for yet more bankruptcies in 2020’s second half, according to BDO researchers. In the first six months of 2020, 18 retailers filed for Chapter 11 bankruptcy, with an additional 11 filing in July through mid-August. These defaults were concentrated in apparel and footwear, home furnishings, food and department stores, with many prominent retailers filing during this time period, With 29 filings in 2020 to date, this year is on-pace to rival 2010, following the Great Recession, that resulted in 48 total filings. “In short, 2020 is on track to set the record for the highest number of retail bankruptcies and store closings in a single year,” they wrote. “
Comerica prioritizes forgiveness of larger PPP loans – Comerica Bank in Dallas has begun inviting clients who received emergency loans through the Paycheck Protection Program to apply for forgiveness. But only the largest accounts are getting a first crack at relief, executives said on a call with analysts Tuesday. “It’s difficult to predict what the volume would be, but we’re going to concentrate on the larger customers first because we are still hopeful, quite frankly, that we get additional relief for the smallest borrowers in terms of simplifying the application,” said Comerica Chief Credit Officer Melinda Chausse. This “tiered” strategy for dealing with what some expect to be a flood of applicants seeking to turn their loans backed by the Small Business Administration into grants is being followed across the industry. “Banks that have opened the forgiveness process are primarily working with the larger borrowers,” said Nick Simpson, senior vice president of public affairs at the Consumer Bankers Association. “I don’t believe there has been a specific request, but it has more to do with the fact that there isn’t a streamlined process for them being discussed, and those are the businesses most likely to have dedicated financial teams to complete the applications.” The Treasury Department on Oct. 8 announced a simpler forgiveness process for borrowers with less than $50,000 in PPP loans. The Senate is scheduled to vote Tuesday on a bill that would expand the simpler process to loans under $150,000, but it’s fate is uncertain. Nearly 72% of the $525 billion in PPP loans were for more than $150,000, according to Treasury data as of Aug. 8. While that covers the dollar amount, about two-thirds of the actual number of loans are below $50,000. Nearly 1 million PPP borrowers are above the $50,000 threshold but still have loans below $150,000 and may find themselves at the back of the line for forgiveness if the process is ultimately not streamlined for them.
House bill would let smaller banks exclude PPP loans from asset totals – House lawmakers have introduced a bill to exclude Paycheck Protection Program loans from regulators’ calculations of the asset size of smaller banks. The legislation, introduced Friday, would benefit banks and credit unions with assets under $15 billion. It requires federal regulators to exclude PPP loans from asset-size calculations for the purpose of determining capital ratios, deposit insurance premiums and other asset thresholds at those financial institutions. PPP loans, which are administered by the Small Business Administration, would not be excluded from assets on the institutions’ quarterly call reports. “The purpose is to make sure that banks and credit unions are not subjected to more burdensome regulations as a result of assisting with an emergency economic relief program,” a spokesperson for Rep. Barry Loudermilk, R-Ga., one of the co-sponsors of the legislation, said in an email. The legislation comes in response to community bankers’ worries that their newly swollen balance sheets may trigger new regulatory requirements. Banks nearing $10 billion in assets have been particularly concerned that PPP loans could subject them to Consumer Financial Protection Bureau supervision. “We understand that there are 178 banks on the verge of crossing an asset-based regulatory threshold as a result of PPP loans remaining on their balance sheets,” Loudermilk’s spokesperson said. Other co-sponsors of the bill are Reps. David Scott, D-Ga., Frank Lucas, R-Okla., Steve Stivers, R-Ohio, Roger Williams, R-Texas, Ted Budd, R-N.C., David Kustoff, R-Tenn., Trey Hollingsworth, R-Ind., John Rose, R-Tenn., Denver Riggleman, R-Va., and Van Taylor, R-Texas. The Paycheck Protection Protection, which was established by Congress in March, enabled small businesses that were impacted by the pandemic to access forgiveable loans in an effort to stave off layoffs.
Ex-Trump adviser Cohn predicts bleak future for community banks – Former Trump administration economic adviser Gary Cohn anticipates more banking industry consolidation as smaller institutions struggle to keep up with technological innovations that are altering the financial services landscape. Cohn, who headed the National Economic Council in 2017 and 2018 after serving as chief operating officer at Goldman Sachs, said handling the evolving technological and regulatory changes requires size. “I just don’t think you can really be a one- or two- or three-branch regional bank in this world with the legal component, regulatory and digital needs that you have today,” he said in an interview with Rob Blackwell, former editor-in-chief of American Banker and now chief content officer for IntraFi Network – previously known as Promontory Interfinancial Network – as part of an American Bankers Association event. The trend of disappearing community banks will likely only be hastened by the coronavirus pandemic, added Cohn. “We’ve seen it through this epidemic,” he said. “More and more transactions have been done digitally. Less and less people actually go to branches. More and more digital payments are being used.” To survive, community banks will need to invest in digital technology, Cohn said. But those banks will need to get bigger to cover the costs of that technology, which will lead to mergers of community banks into smaller regional banks and regional banks into “super-regional banks,” he said. “The role of the community banker has been diminished in some ways, which in some respects is a shame,” said Cohn. “But it’s just sort of the natural evolution of where banking has come.” Between 1990 and 2018, the number of banks with assets of less than $500 million declined by about 70%, or by about 7,600 institutions. Today, the U.S. has almost 5,000 community banks. Many have expressed concern about the loss of community banks, which in some rural areas and urban banking deserts are the only way residents can readily access financial services. Federal Reserve Bank of Kansas City President Esther George said in 2019 that community banks are “both the catalyst and the backbone for sustained growth.” But Cohn said that while the decreasing number of community banks is “probably not a good thing overall,” it could be a trend that represents a natural evolution toward a bigger role for financial technology. “You’re now starting to see more and more technological competition from an unregulated community,” he said, speaking of fintech companies. “That’s forcing the banks to become more technologically savvy themselves. So even the existing banks today are spending more … of their time and more and more of their money providing a digital product for their clients, and I think that’s going to continue to be more important.” Cohn said he isn’t expecting a wave of bank failures as a result of the COVID-19-induced recession, since U.S. banks are well-capitalized. But he said large banks have to start changing the way they do compliance.
Regulators close Kansas bank in fourth failure of 2020 – Almena State Bank in Kansas was closed by state regulators late Friday, the fourth failure of the year and the second in as many weeks. The $70 million-asset bank had “experienced longstanding capital and asset quality issues, operating with financial difficulties unrelated to the current economic conditions resulting from the pandemic,” the Federal Deposit Insurance Corp. said in a press release. The FDIC said the $4.2 billion-asset Equity Bank in Andover, Kan., will acquire the failed bank’s operations, including two branches and roughly all of its assets. The buyer also agreed to assume all of Almena’s $68.7 million of deposits. The failure is estimated to cost the Deposit Insurance Fund $18.3 million. First City Bank of Florida in Fort Walton Beach was closed by state regulators last Friday. Almena had lost more than $9.3 million since 2018 and had not turned an annual profit since 2017, according to FDIC data. It is the first institution to be shuttered in the Kansas since Farmers and Merchants State Bank of Argonia in October 2017.
Black Knight: National Mortgage Delinquency Rate Decreased in September – Note: Loans in forbearance are counted as delinquent in this survey, but those loans are not reported as delinquent to the credit bureaus. From Black Knight: Serious Delinquencies Improved in September for the First Time Since the Start of the Pandemic:
The number of seriously delinquent mortgages (90+ days) fell by 43,000 in September, marking the first such improvement in serious delinquencies since the start of the pandemic
More than 2.3 million homeowners – five times the number entering 2020 – remain 90 or more days past due, but not in foreclosure
The national delinquency rate fell in September to 6.66%, down from 6.88% the month prior
Early-stage delinquencies continue to show strong improvement, with rolls from current to 30-days delinquent, as well as the number of borrowers less than 90 days delinquent, having returned to pre-pandemic levels
Both foreclosure starts and foreclosure sales continue to remain muted given the widespread foreclosure moratoriums still in place
According to Black Knight’s First Look report, the percent of loans delinquent decreased 3.1% in September compared to August, and increased 89% year-over-year. The percent of loans in the foreclosure process decreased 2.9% in September and were down 29% over the last year. Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 6.66% in September, down from 6.88% in August. The percent of loans in the foreclosure process decreased in September to 0.34%, from 0.35% in August. The number of delinquent properties, but not in foreclosure, is up 1,688,000 properties year-over-year, and the number of properties in the foreclosure process is down 71,000 properties year-over-year.
MBA Survey: “Share of Mortgage Loans in Forbearance Declines to 5.92%” – Note: This is as of October 11th. From the MBA: Share of Mortgage Loans in Forbearance Declines to 5.92%: The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 40 basis points from 6.32% of servicers’ portfolio volume in the prior week to 5.92% as of October 11, 2020. According to MBA’s estimate, 3.0 million homeowners are in forbearance plans….”The share of loans in forbearance declined across all loan types, primarily because of borrower forbearance plans expiring at the six-month mark. Federally backed loans under the CARES Act are eligible to be extended for up to 12 months, but borrowers must contact their servicer for an extension. Without that contact, borrowers exit forbearance, whether they are delinquent or current on their loan,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Borrowers with federally backed mortgages should contact their servicer if they still have a hardship due to the pandemic.”Added Fratantoni, “The steady improvement for Fannie Mae and Freddie Mac loans highlights the improvement in some segments of the job market and broader economy. The slower decline for Ginnie Mae loans continues to show that this improvement has not been uniform, and that many are still struggling to regain their footing.”…By stage, 26.32% of total loans in forbearance are in the initial forbearance plan stage, while 72.08% are in a forbearance extension. The remaining 1.60% 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 few months.The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.11% to 0.10%.”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 Declined Slightly – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. This data is as of October 20th. From Forbearance Volumes Continue Modest Improvement from Pandemic-Related Peak: The market saw modest improvement in forbearances this past week, according to data from Black Knight’s McDash Flash Forbearance Tracker. Forbearance volumes fell by 11K from the prior week, which was the result of larger declines among GSE loans (14K) and portfolio-held and privately securitized loans (2K) being offset by an increase of 5K in FHA/VA loans in forbearance. As of Oct. 20, nearly 3 million borrowers remain in active COVID-19 forbearance plans, which represents 5.6% of first lien mortgages. This is a noticeable reduction from the market’s peak of 4.76 million in late May. More than 80% of remaining forbearance plans have had their terms extended with their servicer. Despite the muted improvement seen this week, overall forbearance volumes are down 623K month-over-month, driven by the large reduction in loans in active forbearance plans at the beginning of the month. This marks a 17% decline from September, showing sustained downward movement in forbearance volumes.
NMHC: Rent Payment Tracker Shows Households Paying Rent Declined in October – From the NMHC: NMHC Rent Payment Tracker Finds 90.6 Percent of Apartment Households Paid Rent as of October 20: The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 90.6 percent of apartment households made a full or partial rent payment by October 20 in its survey of 11.4 million units of professionally managed apartment units across the country. This is a 1.8-percentage point, or 199,224-household decrease from the share who paid rent through October 20, 2019 and compares to 90.1 percent that had paid by September 20, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price.”The importance of the initial support provided to apartment residents by the CARES Act is becoming increasingly clear,” said Doug Bibby, NMHC President. “However, that support has now long since expired and the savings households were able to build are evaporating quickly. NMHC continues to urge lawmakers to come together and pass meaningful assistance to support renters and keep America’s rental housing sector stable.”
Ten percent of US households face eviction by year’s end — On January 1, the Center for Disease Control emergency evictions moratorium will expire, raising the existing US eviction and homelessness crisis to unprecedented proportions. While tens of thousands of evictions have been filed throughout the pandemic, according to a recent report by the Aspen Institute, 30-40 million more Americans could be at risk of eviction by the end of this year. This is a staggering 10 percent of the American population. In addition, millions of Americans are at risk of being evicted from homes for non-payment of mortgages. According to mortgage analytics firm Black Knight, 3.9 million households were not paying their mortgages as of late August. Before the COVID-19 pandemic, over 20.8 million renter households – almost half of all US renter households – were “rental cost-burdened,” a term defined as households who pay over 30 percent of their income towards rent. Twenty-five percent of rental households were spending over 50 percent of their income on rent before the pandemic. The higher a household’s rental cost-burden, the more likely they are to become evicted. Some states, such as Ohio, are more vulnerable to the eviction crisis due to insufficient COVID-19 protections, high poverty rates and high pre-pandemic eviction rates. Avery Kreemer, the founder of Ohio Eviction Watch, recently spoke to the WSWS on the eviction crisis in the state. Ohio Eviction Watch seeks to establish a central database for eviction information in the state by requesting and publishing data from various courthouses around the state. As a result, Kreemer hopes to illuminate the full scope of a crisis that is both growing and underreported. “Our state legislature has been ineffective with anything regarding Covid-19 measures,” Kreemer noted. “Since March, proposals for eviction and foreclosure prevention haven’t gotten much traction in the House or Senate. This is important because the CDC eviction moratorium only goes into effect if there isn’t a pre-existing protection in that state.”
“January Is Going To Be A Mess” – A Tsunami Of Evictions Expected Across US – The Trump administration walked back federal pro-tec-tions for renters in early October, even though rent moratoriums were still in effect, which allowed property owners and operators to begin the eviction process for millions of people as tens of billions of dollars in back rent is coming due. In early September, the CDC published new, temporary guidelines to halt evictions because of the virus pandemic. The public health agency said: “The CDC, located within the HHS announces the issuance of an Order under Section 361 of the Public Health Service Act to temporarily halt residential evictions to prevent the further spread of COVID-19… This Order is effective September 4, 2020, through December 31, 2020.”Before the eviction moratorium went into effect on September 4, there was a 72-hour lapse, allowing landlords to evict non-paying tenants. Reuters interviewed Latrise Bean,35, who was one of the unfortunate people evicted during that time from her Milwaukee apartment. Bean, who works at a software company, like millions of other Americans, had their working hours reduced by of the virus-induced economic downturn – now with an eviction on her record, making it more difficult to find a rental, she is now living at a temporary housing unit in a neighborhood even worse than the one before with her five-year-old daughter. “I feel so unlucky,” said Bean. “I have really been through it.” 2020 has been a nightmarish year for millions of America’s renters. At least 8 million of them are facing eviction in the coming months. Collectively, these folks owe an estimated $32 billion in back rent. Months of non-payment have exerted financial pressure on property owners and operators, some of whom have already failed to service their mortgage debts.
NMHC: “October Apartment Market Conditions Showed Some Rebound from COVID-19 Impacts” – The National Multifamily Housing Council (NMHC) released their October report: October Apartment Market Conditions Showed Some Rebound from COVID-19 Impacts: Apartment market conditions moderated in the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for October 2020, as the industry continues to cope with the ongoing Covid-19 pandemic. While the Sales Volume (72), Equity Financing (62) and Debt Financing (73) indexes all came in above the breakeven level (50), the index for Market Tightness (35) indicated continued weakness.”The ongoing Covid-19 pandemic continues to constrain economic activity, resulting in higher vacancies and lower rent growth for apartments overall,” noted NMHC Chief Economist Mark Obrinsky. “Still, industry professionals are observing more favorable conditions in many suburban markets. And, while this round marks the fourth consecutive quarter of deteriorating conditions, there was considerably more variation in responses compared to last quarter – less than half (49 percent) thought that market conditions were looser.”…The Market Tightness Index increased from 19 to 35, indicating looser market conditions. Nearly half (49 percent) of respondents reported looser market conditions than three months prior, compared to 18 percent who reported tighter conditions. One in three respondents (33 percent) felt that conditions were no different from last quarter. This graph shows the quarterly Apartment Tightness Index. Any reading below 50 indicates looser conditions from the previous quarter.
Suburban Rents Rise As Urbanization Trend Reverses – There’s a new twist to the rental market: Apartment rents in suburban markets rise across the U.S., while city rents are slumping, mostly because city dwellers are fleeing imploding liberal-run metro areas. By now, readers have grasped several of the factors pushing city dwellers out to rural communities, that is, the virus pandemic and resulting lockdowns, socio-economic implosions, and, of course, remote working. A revival of the suburbs is the most significant 2020 real estate trend that will likely persist for a couple of years. Apartments in rural America offer more room, peace of mind, less crime, and lower probabilities of contracting the virus than ones stacked on top of each other in densely populated cities. As early as March 25, we noted how city folks in Southern California packed up their bags and stayed in rural desert Airbnb properties to escape the pandemic. The trend has certainly evolved since then, with many top metro areas, including New York City and San Francisco, seeing large outflows of folks. WSJ cited a new report from data firm CoStar Group Inc. as saying apartment rents in suburban markets of Sacramento, California; Norfolk, Virginia; and the Inland Empire of Southern California increased 3.2% to 4.6% at the end of the third quarter compared with March. Notice how rental apartment vacancy rates in cities have surged while suburban vacancy rates remain at multi-year lows. CoStar points out rents in top metro areas have been tumbling this year. San Francisco rents cratered 17% since the March peak, the country’s hardest-hit metro. Rents have dropped 9.2% in Boston and between 5%-6% in New York City, Los Angeles, and Philadelphia.WSJ notes, of the people fleeing cities, many are millennial couples who have delayed marriage and kids and now want to start a family. They also say landlords have noticed higher cost metro areas like New York City and San Francisco have seen outflows of folks to places like Austin and Denver. Many city dwellers are seeking more space for their money as opposed to 1,000 sq ft flats in cities. The flight to the suburbs may have reversed or at least stalled decades worth of urbanization trends. At least now, the Baby Boomer generation can dump their suburban condos or McMansions to millennials.
NAR: Existing-Home Sales Increased to 6.54 million in September From the NAR: Existing-Home Sales Soar 9.4% to 6.5 Million in September Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 9.4% from August to a seasonally-adjusted annual rate of 6.54 million in September. Overall sales rose year-over-year, up 20.9% from a year ago (5.41 million in September 2019). … Total housing inventory at the end of September totaled 1.47 million units, down 1.3% from August and down 19.2% from one year ago (1.82 million). Unsold inventory sits at a 2.7-month supply at the current sales pace, down from 3.0 months in August and down from the 4.0-month figure recorded in September 2019.This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in September (6.54 million SAAR) were up 9.4% from last month, and were 20.9% above the September 2019 sales rate. This was the highest sales rate since 2006. The second graph shows nationwide inventory for existing homes. According to the NAR, inventory decreased to 1.47 million in September from 1.49 million in August. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.
U.S. Home Sales Rise to New 14-Year High, Offering a Boost to Economy – WSJ – Home sales rose to a new 14-year high in September, bolstered by robust demand and a shortage of homes for sale that is making the housing market one of the brightest spots for the U.S. economy. Existing-home sales rose 9.4% in September from August to a seasonally adjusted annual rate of 6.54 million, the highest rate since May 2006, the National Association of Realtors said Thursday. The September sales marked a 20.9% increase from a year earlier. The latest figures for existing-home sales, which make up most of the housing market, marked the fourth straight monthly increase and one of the best stretches for the housing market in years. Real-estate agents and economists credit the strong demand for housing to record-low interest rates, a large population of millennials entering prime homebuying years and a desire for more household space driven by the coronavirus pandemic. As many people work and attend school from home, home shoppers are willing to move farther from their offices in exchange for bigger houses with more outdoor space. “Home prices are simply rising too fast due to insufficient supply and very strong demand,” said Lawrence Yun, NAR’s chief economist.A very limited supply of homes for sale, especially in lower price tiers, pushed prices to new highs. The median existing-home price rose 14.8% from a year earlier to $311,800, a record high nominally and adjusted for inflation, NAR said, and the highest annual median price increase in 15 years. U.S. jobless claims fell last week to their lowest level since March, the Labor Department said Thursday, raising hopes that the economy could be starting to mend following pandemic-related lockdowns and layoffs. The housing market has been one of the economy’s few consistent areas of strength since sales picked up in the spring. Strong home sales can create more construction jobs and lead to more spending on home goods such as furniture and appliances. Housing data reflecting building and new-home sales has also been bullish. A measure of U.S. home-builder confidence rose to a record high in October in data going back to 1985, the National Association of Home Builders said Monday. Housing starts, a measure of U.S. home-building, rose 1.9% in September from August, the Commerce Department said Tuesday. Residential permits, which can be a bellwether for future home construction, increased 5.2%.
Comments on September Existing Home Sales – Mcbride – Earlier: NAR: Existing-Home Sales Increased to 6.54 million in September. A few key points:
1) This was the highest sales rate since 2006. Existing home sales are counted at the close of escrow, so the September report was mostly for contracts signed in July and August – when the economy was much more open than in March and April. Some of the increase over the last few months was probably related to pent up demand from the shutdowns in March and April. However, with the high unemployment rate and the high rate of COVID infections, housing might be under some pressure in 2021. That is difficult to predict and depends on the course of the pandemic.
2) Inventory is very low, and was down 19.2% year-over-year (YoY) in September. This is the lowest level of inventory for September since at least the early 1990s.
3) As usual, housing economist Tom Lawler’s forecast was closer to the NAR report than the Consensus.
This graph shows existing home sales by month for 2019 and 2020. Note that existing home sales picked up somewhat in the second half of 2019 as interest rates declined. Even with weak sales in April, May, and June, sales to date are only down about 0.2% compared to the same period in 2019. The second graph shows existing home sales Not Seasonally Adjusted (NSA) by month (Red dashes are 2020), and the minimum and maximum for 2005 through 2019. Sales NSA in September (560,000) were 24% above sales last year in September(450,000).
Housing Market Goes Nuts, Everyone Sees it, But it Can’t Last – Wolf Richter – Another batch of crazy housing data yesterday. Crazy in the sense that the housing market, or rather part of it, namely the higher end of it, has gone totally crazy and that by now everyone knows that this isn’t “sustainable,” that “there’s no way it can last forever,” as Redfin CEO Glenn Kelman told CNBC. And he pointed out what everyone has already been pointing out, that “part of what is fueling this boom is that the economy has just split into two, and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes.” But “there’s just another group of Americans who are still struggling, who can’t access the credit because we’ve raised credit standards, and you have high unemployment. I just think those two trends, at some point, have to collide.”It’s the now well-established phenomenon of the “K-shaped recovery,” where one part is doing well, and the other part is getting crushed. Or as WOLF STREET commenter IdahoPotato called it vastly more accurately and unforgettably, the “FU-shaped recovery.” Meaning, people who got bailed out and enriched by the Fed’s $3 trillion that it threw at the markets to inflate the prices of stocks, bonds, housing, etc. are now happy as a lark, and to heck with the rest of the people that are getting crushed. But this craziness in the housing market is not sustainable. The National Association of Realtorsreported yesterday that sales of existing homes – single-family houses, condos, and co-ops – surged in September by 9.4% from August and by 20.9% from a year ago to a seasonally-adjusted annual rate of 6.54 million homes, the highest since 2006 (data via YCharts):Seasonally, home sales normally decline in late summer and fall. But not this year. And the seasonal adjustments of the above numbers are designed for normal seasons. The NAR also releases raw(-er) sales numbers that are neither “seasonally adjusted” nor “annualized.”On a not-seasonally adjusted basis and not annualized, 500,000 homes were sold in September,up 24.7% from September last year, the highest year-over-year increase in the data except for two months during the depth of the Housing Bust – April 2010 and November 2009 – when sales were compared to a year earlier when sales had collapsed. Sales went through some wild gyrations from 2009 through 2011.And on this basis (not seasonally adjusted, not annualized), and compared to September 2018, homes sales were up by 34%. The median price of existing homes in September jumped 14.8% year-over-year to $311,800. The median price is skewed by a shift in the mix, and the price increase could also partially a result of red-hot demand for higher-priced homes (data via YCharts): “The uncertainty about when the pandemic will end coupled with the ability to work from home appears to have boosted sales in summer resort regions, including Lake Tahoe, mid-Atlantic beaches (Rehoboth Beach, Myrtle Beach), and the Jersey shore areas,” the report said. But here is what I also heard: People bought their new home without first selling their old home. They still have their place in San Francisco, or wherever, and will eventually put it on the market, but meanwhile they plowed a few million bucks into a house in Carmel and moved. These stories are everywhere.
Housing Starts at 1.415 Million Annual Rate in September — From the Census Bureau: Permits, Starts and Completions: Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,415,000. This is 1.9 percent above the revised August estimate of and is 11.1 percent above the September 2019 rate of 1,274,000. Single-family housing starts in September were at a rate of 1,108,000; this is 8.5 percent above the revised August figure of 1,021,000. The September rate for units in buildings with five units or more was 295,000. Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,553,000. This is 5.2 percent above the revised August rate of 1,476,000 and is 8.1 percent above the September 2019 rate of 1,437,000. Single-family authorizations in September were at a rate of 1,119,000; this is 7.8 percent above the revised August figure of 1,038,000. Authorizations of units in buildings with five units or more were at a rate of 390,000 in September. The first graph shows single and multi-family housing starts for the last several years. Multi-family starts (red, 2+ units) were down in September compared to August. Multi-family starts were down 17% year-over-year in September. Single-family starts (blue) increased in September, and were up 22% year-over-year. Total Housing Starts and Single Family Housing StartsThe second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following the housing bubble, and then eventual recovery (but still historically low). Total housing starts in September were below expectations – due to weakness in multi-family – and starts in July and August were revised down.
U.S. single-family homebuilding accelerates in September (Reuters) – U.S. single-family homebuilding surged in September, cementing the housing market’s status as the star of the economic recovery, thanks to record-low interest rates and a migration to the suburbs and low-density areas as Americans seek more room for home offices and schooling. The report from the Commerce Department on Tuesday reinforced expectations that the economy rebounded sharply in the third quarter after suffering its deepest contraction in at least 73 years in the second quarter. But the recovery from the COVID-19 recession has entered a period of uncertainty, with fiscal stimulus, which spurred the burst in activity last quarter, depleted. Single-family homebuilding, the largest share of the housing market, jumped 8.5% to a rate of 1.108 million units last month. But starts for the volatile multi-family housing segment fell 16.3% to a pace of 307,000 units. Overall, housing starts increased 1.9% to a seasonally adjusted annual rate of 1.415 million units last month. Data for August was revised down to a 1.388 million-unit pace from the previously reported 1.416 million. Groundbreaking activity rose in the West, South and Northeast, but fell in the Midwest. Economists polled by Reuters had forecast starts increasing to a rate of 1.457 million units in September. A survey on Monday showed confidence among single-family homebuilders increased to a record high in October. Builders, however, said constructing affordable homes was becoming increasingly challenging because “shortages of lots, labor, lumber and other key building materials are lengthening construction times.” The housing market has been a bright spot in the economy despite 25.3 million people being on unemployment benefits. Unemployment has disproportionately affected low-wage workers, who are typically young and renters. The 30-year fixed mortgage rate is around an average of 2.81%, according to data from mortgage finance agency Freddie Mac.
Comments on September Housing Starts – McBride – Earlier: Housing Starts at 1.415 Million Annual Rate in SeptemberTotal housing starts in September were below expectations, and starts in July and August were revised down. The weakness in September was due to the volatile multi-family sector (apartments are under pressure from COVID). The housing starts report showed starts were up 1.9% in September compared to August, and starts were up 11.1% year-over-year compared to September 2019. Single family starts were up 22% year-over-year. Low mortgage rates and limited existing home inventory have given a boost to single family housing starts. The first graph shows the month to month comparison for total starts between 2019 (blue) and 2020 (red). Starts Housing 2019 and 2020Click on graph for larger image. Starts were up 11.1% in September compared to September 2019. Last year, in 2019, starts picked up towards the end of the year, so the comparisons were easy in the first seven months of the year.. Starts, year-to-date, are up 5.5% compared to the same period in 2019. This is below my forecast for 2020, but I didn’t expect a pandemic! I expect starts to remain solid, but the growth rate will slow. Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment). These graphs use a 12 month rolling total for NSA starts and completions. Multifamily Starts and completionsThe blue line is for multifamily starts and the red line is for multifamily completions. The rolling 12 month total for starts (blue line) increased steadily for several years following the great recession – then mostly moved sideways. Completions (red line) had lagged behind – then completions caught up with starts- then starts picked up a little again late last year, but have fallen off the pandemic. Single family Starts and completionsThe last graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion – so the lines are much closer. The blue line is for single family starts and the red line is for single family completions. Note the relatively low level of single family starts and completions. The “wide bottom” was what I was forecasting following the recession, and now I expect some further increases in single family starts and completions.
NAHB: Builder Confidence Increased to 85 in October, Record High –The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 85, up from 83 in September. Any number above 50 indicates that more builders view sales conditions as good than poor. From the NAHB: Builder Confidence Continues Record Climb In a further show of strength for the housing sector, builder confidence in the market for newly-built single-family homes increased two points to 85 in October, further surpassing the previous all-time high of 83 recorded in September, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). These are the first two months the index has ever been above 80. The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs and small towns. Moreover, NAHB analysis published last week showed that new single-family home sales are outpacing starts by a historic margin. Bridging this gap will require either a gain in construction volume or reductions in available inventory, which is already at a historic low in terms of month’s supply.Buyer traffic remains high and record-low interest rates are keeping demand strong as the concept of ‘home’ has taken on renewed importance for work, study and other purposes during and after the virus-induced downturn. However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times. This graph show the NAHB index since Jan 1985. This was above the consensus forecast. Housing and homebuilding have been one of the best performing sectors during the pandemic.
AIA: “Architectural billings slowdown moderated in September” – Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: Architectural billings slowdown moderated in September: A slight improvement in business conditions has led to fewer architecture firms reporting declining billings, according to a new report today from The American Institute of Architects (AIA). AIA’s ABI score for September was 47.0 compared to 40.0 in August (any score below 50 indicates a decline in firm billings). Last month’s score indicates overall revenue at U.S architecture firms continued to decline from August to September, however, the pace of decline slowed significantly. Inquiries into new projects during September grew for the second time since February, with a score of 57.2 compared to 51.6 in August. The value of new design contracts moderated to a score of 48.9 in September from 46.0 the previous month.”Despite the multi-family residential sector showing signs of improvement, overall business conditions are recovering at a disappointingly slow pace,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Other sectors may begin to stabilize in the coming months, but across the board improvement shouldn’t be expected until the economic impact of the pandemic subsides significantly.”…
Regional averages: Midwest (45.6); West (45.6); South (43.7); Northeast (41.5)
Sector index breakdown: multi-family residential (54.0); mixed practice (47.3); commercial/industrial (43.3); institutional (40.5)
This graph shows the Architecture Billings Index since 1996. The index was at 47.0 in September, up from 40.0 in August. Anything below 50 indicates contraction in demand for architects’ services. Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions. This index has been below 50 for seven consecutive months. This represents a significant decrease in design services, and suggests a decline in CRE investment through the first half of 2021 (This usually leads CRE investment by 9 to 12 months). This weakness is not surprising since certain segments of CRE are struggling, especially offices and retail.
San Fran’s New Normal: Third Walgreens In A Year Is Closing Due To “Rampant Shoplifting” -The effects of allowing chaos to prevail in liberal run cities across America might not be obvious to liberals now, but when their cities empty out completely, it’s going to become crystal clear.Such is the case in San Francisco, where the city’s new normal of shoplifting and chaos has driven another Walgreens pharmacy out of the city. The move to close the Walgreens at Van Ness and Eddy came after “months of seeing its shelves repeatedly cleaned out by brazen shoplifters”, according to the SF Chronicle. The location served “many older people” who lived in the area. One customer told the paper: “All of us knew it was coming. Whenever we go in there, they always have problems with shoplifters.”The same customer photographed someone in the store, days prior, “clearing a couple shelves and placing the goods into a backpack”. Because when there’s no police and politicians are afraid to enforce the law – why not? The penalty for shoplifting is a “nonviolent misdemeanor” that carries a maximum sentence of 6 months. But in most cases, for simple shoplifting, the criminal is simply released with conditions.The customer, who lives a block away, said: “I feel sorry for the clerks, they are regularly being verbally assaulted. The clerks say there is nothing they can do. They say Walgreens’ policy is to not get involved. They don’t want anyone getting injured or getting sued, so the guys just keep coming in and taking whatever they want.”When the Chronicle went to visit the store, they noticed “aisle after aisle of near empty shelves” and said that beauty products seemed to be a favored target. While the Chronicle was in the store, a man with a mask on walked in, emptied two shelves into a bag and walked out the door. When they asked a clerk where all the products were, the clerk responded: “Go ask the people in the alleys, they have it all.”
Merchants brace for ‘friendly fraud’ surge as holiday shopping moves online – Online fraud typically spikes when holiday shopping begins in November, but so-called friendly fraud poses another big threat this year with the pandemic pushing more consumers – and inexperienced merchants – to online sales channels. Friendly fraud occurs when a consumer demands the reversal of a purchase they made online but don’t recognize, triggering chargebacks with merchandise losses and time-consuming negotiations between banks and merchants. With coronavirus driving a mass migration to online shopping, friendly fraud is already suspected to be higher than last year. The payments fraud-monitoring company Kount is responding with unprecedented steps on the eve of the fourth-quarter shopping frenzy. Kount last month hired longtime fraud-prevention consultant Scott Adams as the Boise, Idaho, company’s first-ever vice president of friendly fraud, and the firm also unveiled a new partnership with Verifi, Visa’s dispute-resolution service, to help block excess chargebacks in near-real time. “This year consumers are buying a lot more items online through unfamiliar channels and many times they don’t recognize these charges, triggering lots of chargebacks,” Adams said. Adams co-founded FraudPVP, which supplies fraud management tools to Visa. In addition to rising friendly fraud, “coronavirus killed off a lot of brick-and-mortar shopping, and some merchants looking to recoup their losses are going online for the first time, without realizing how much friendly fraud is mixed in with traditional third-party online fraud,” Adams said. Friendly fraud creates chaos because 90% of consumers who don’t recognize a purchase they made online typically make their first call to the card issuer, which usually has no immediate insight into shopping cart or transaction details, according to Kount’s research. By integrating with Verifi, Kount’s detailed fraud-detection filters combine with Verifi’s insight into merchants’ transaction data to quickly determine whether a consumer actually made a purchase, in many cases short-circuiting the chargeback process. “With friendly fraud, it’s often consumer confusion where they don’t recall making that purchase or it was someone else in the household,” Adams said. Merchants opting in to Verifi’s service will benefit from Kount’s vast trove of data to determine which purchases are legitimate. “Kount sits in the middle, letting merchants collaborate with the card issuer through Verifi, so the bank can provide the consumer with details helping them to recognize a transaction they actually made,” Adams said. The process produces results in as little as two seconds, but Kount recommends that to be fully effective merchants share full shopping cart information to give a complete picture of each customer’s purchases.
LA Area Port Traffic: Strong Imports, Weak Exports in September Note: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average. On a rolling 12 month basis, inbound traffic was up 1.5% in September compared to the rolling 12 months ending in August. Outbound traffic was down 0.4% compared to the rolling 12 months ending the previous month.The 2nd graph is the monthly data (with a strong seasonal pattern for imports). Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year. Imports were up 16% YoY in September, and exports were down 4% YoY.
US Manufacturing Disappoints In Early October PMI Data As Election Anxiety Builds –After a mixed bag of PMI data from Europe (UK ugly, Services weak compared to Manufacturing), preliminary October data for both segments of the US economy were expected to rise (despite a trend towards weaker macro data for the last two months).Interestingly, US saw a mirror image of Europe – with Manufacturing disappointing (53.3 vs 53.5 3exp) and Services stronger (56.0 vs 54.6 exp) The combination proved enough though to lift the US Composite index to 20-month highs and suggest economic growth is rebounding confidently… Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:“The US economy looks to have started the fourth quarter on a strong footing, with business activity growing at a rate not seen since early 2019. The service sector led the expansion as increasing numbers of companies adapted to life with COVID19, while manufacturing continued to report solid growth amid rising demand from households and businesses.“A slowdown in hiring and weaker new order inflows were in part attributable to hesitancy in decision making ahead of the presidential election. More encouragingly, business optimism surged higher, indicating that firms have become increasingly positive about prospects for the coming year amid hopes of renewed stimulus, COVID-19 containment measures gradually easing and greater certainty for businesses a and households after the presidential elections.”Perhaps most worrying for The Fed however, is that Markit found “Inflationary pressures also eased. Despite a further strong rise in cost burdens, service providers sought to generate more sales and limit increases in output charges.”
DOT: Vehicle Miles Driven decreased 12.3% year-over-year in August — The Department of Transportation (DOT) reported:Travel on all roads and streets changed by -12.3% (-35.3 billion vehicle miles) for August 2020 as compared with August 2019. Travel for the month is estimated to be 251.3 billion vehicle miles. The seasonally adjusted vehicle miles trave led for August 2020 is 239.7 billion miles, a -11.8% (-32.2 billion vehicle miles) decline from August 2019. It also represents a 0.8% increase (2 billion vehicle miles) compared with July 2020. Cumulative Travel for 2020 changed by -15.3% (-332.5 billion vehicle miles). The cumulative estimate for the year is 1,844.4 billion vehicle miles of travel. This graph shows the rolling 12 month total vehicle miles driven to remove the seasonal factors. Miles driven declined during the great recession, and the rolling 12 months stayed below the previous peak for a record 85 months. Miles driven declined sharply in March, and really collapsed in April. Vehicle Miles YoYThis graph shows the YoY change in vehicle miles driven. Miles driven rebounded in May through August, but is still down 12.3% YoY (seasonally adjusted). Based on gasoline consumption, I expect the year-over-year decline in vehicle miles to be about the same in September as in August.
As safety protocols vanish, Fiat Chrysler advises workers “protect your pets from COVID” – The other day, a Fiat Chrysler worker in the Detroit area brought to the attention of the WSWS Autoworker Newsletter a management memo circulating at their plant providing some helpful information on halting the spread COVID-19. It was titled “Pets and COVID-19 risk.” At first, we thought this was a spoof, a well-aimed satire of management disconnect. But we have been assured it is genuine. The memo advises “The COVID-19 pandemic has created unprecedented concern over all facets of what used to be our normal daily activities and interactions. For some, reaching for the comfort of a hug or a smooch from your best friend, may cause you to hesitate or question whether your cat or dog may present a COVID-19 risk.” What is some of the helpful advice to keep pets safe from COVID? “Just as we practice social distancing, keep your pets at a safe distance from other animals and people. “If someone is sick with COVID-19 keep your pet away from the patient.” It advises to clean and disinfect leashes, water bowls and toys. It takes a lot gall for management to pretend to show concern for pets when it is pretty evident they don’t give two hoots about protecting workers. No offense to our pets, but do they really think workers are that stupid?
Weekly Initial Unemployment Claims decrease to 787,000 — Special Note: “California has completed its pause in processing of initial claims and has resumed reporting actual unemployment insurance claims data based on their weekly claims activity. This News Release reflects actual counts for California for the current week and revisions to the two prior weeks.” The DOL reported: In the week ending October 17, the advance figure for seasonally adjusted initial claims was 787,000, a decrease of 55,000 from the previous week’s revised level. The previous week’s level was revised down by 56,000 from 898,000 to 842,000. The 4-week moving average was 811,250, a decrease of 21,500 from the previous week’s revised average. The previous week’s average was revised down by 33,500 from 866,250 to 832,750. This does not include the 345,440 initial claims for Pandemic Unemployment Assistance (PUA) that was up from 337,228 the previous week. (There are some questions on PUA numbers). The following graph shows the 4-week moving average of weekly claims since 1971
Many Workers Gave Up Looking for Jobs Across the U.S. in September – WSJ – Workers gave up looking for jobs across the U.S. in September, with the size of the labor force shrinking in more than half of the 30 states in which unemployment rates fell last month, Labor Department data released Tuesday showed. Declining unemployment rates in states across the U.S. masked signs of labor-market deterioration. The unemployment rate fell to 7.9% at the national level in September, from 8.4% in August. The lower rate reflected both people finding jobs as well as those who couldn’t find work and exited from the labor force altogether. Oren Klachkin, lead U.S. economist at Oxford Economics, said a slowing of the labor-market recovery amid the coronavirus pandemic is fairly broad-based. “Businesses have now likely rehired the workers they need to meet current demand and won’t look to significantly add more to their payrolls until the pandemic threat is addressed,” Mr. Klachkin said. “We see heightened risks that the labor market recovery will slow ahead.” In New York, some 300,000 workers came off the unemployment rolls in September, pushing the unemployment rate down 2.8 percentage points to 9.7%. But this wasn’t because of a hiring boom. Instead, the hard-hit state saw an even bigger number of workers stop searching for work, suggesting that workers who had been employed in August exited from the workforce, too. Labor-market trends brightened in around half of the country, as unemployment numbers fell. In Arizona and Utah, unemployment rates rose but the number of people employed or looking for work increased, both positive signs. The longer people stay out of work, the rustier their skills get and the harder it is for them to find jobs again when the economy improves, economists say. Since growth depends in part on an expanding labor force, the loss of would-be workers could erode the economy’s potential. Some economists said they were cautious in parsing month-over-month changes in the state data. Even in normal times, the data can prove volatile, said Richard F. Moody, chief economist at Regions Financial Corp. He added that seasonal adjustments – meant to smooth out data for annual changes in hiring patterns – may be distorting trends at the state level because of pandemic-related disruptions. There isn’t a clear cause driving varying labor-market health across states, said Julia Pollak, labor economist at ZipRecruiter. School-building closures, for instance, may be taking some working parents, particularly women, out of the workforce to care for their children. Yet, labor-force participation remained essentially flat in California, where many schools are closed, and in Florida, where many are open. The numbers also didn’t offer evidence that more people started looking for jobs in states that reinstated work-search requirements for unemployment insurance, said Ms. Pollak. She also didn’t see signs that outbreaks of coronavirus were driving labor-force changes.
Trends in Educational Attainment in the U.S. Labor Force – The first graph shows the unemployment rate by four levels of education (all groups are 25 years and older) through September 2020. Note: This is an update to a post from a few years ago. Unfortunately this data only goes back to 1992 and includes only three recessions (the stock / tech bust in 2001, and the housing bust/financial crisis, and the 2020 pandemic). Clearly education matters with regards to the unemployment rate, with the lowest rate for college graduates at 4.8% in September, and highest for those without a high school degree at 10.6% in September. All four groups were generally trending down prior to the pandemic. And all are trending down now. Note: This says nothing about the quality of jobs – as an example, a college graduate working at minimum wage would be considered “employed”. This brings up an interesting question: What is the composition of the labor force by educational attainment, and how has that been changing over time? Here is some data on the U.S. labor force by educational attainment since 1992. Currently, about 60 million people in the U.S. labor force have a Bachelor’s degree or higher. This is almost 42% of the labor force, up from 26.2% in 1992. This is the only category trending up. “Some college” has been steady (and trending down lately), and both “high school” and “less than high school” have been trending down. Based on current trends, probably more than half the labor force will have at least a bachelor’s degree at the end of this decade (2020s). Some thoughts: Since workers with bachelor’s degrees typically have a lower unemployment rate, rising educational attainment is probably a factor in pushing down the overall unemployment rate over time. Also, I’d guess more education would mean less labor turnover, and that education is a factor in lower weekly claims (prior to the pandemic).
BLS: September Unemployment rates down in 30 States, Higher in 8 States -From the BLS: Regional and State Employment and Unemployment Summary – Unemployment rates were lower in September in 30 states, higher in 8 states, and stable in 12 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. All 50 states and the District had jobless rate increases from a year earlier. The national unemployment rate declined by 0.5 percentage point over the month to 7.9 percent but was 4.4 points higher than in September 2019.Nonfarm payroll employment increased in 30 states, decreased in 3 states, and was essentially unchanged in 17 states and the District of Columbia in September 2020….Hawaii had the highest unemployment rate in September, 15.1 percent, followed by Nevada, 12.6 percent. Nebraska had the lowest rate, 3.5 percent, followed by South Dakota, 4.1 percent, and Vermont, 4.2 percent. Hawaii and Nevada are being impacted by the lack of tourism.
Lehner: “COVID’s Impact on State and Local Governments” – Josh Lehner, at the Oregon Office of Economic Analysis, has an interesting post today: COVID’s Impact on State and Local Governments: This started with a seemingly basic question: “Why is public sector employment down so much this year?” The normal pattern we see is that the public sector is more of a stabilizing force in the economy. Job losses and budget cuts come with a delay as it usually takes time for lower levels of economic activity to translate into fewer tax collections. Those impacts usually hit the budget the fiscal year after the recession starts. However, so far in 2020 local governments have shed nearly as many jobs as the private sector. Both the size of the losses and swiftness with which they came is highly unusual. After digging into the data it is quite clear that the local government job losses are not a result of your standard budget cuts. That traditional recessionary dynamic is likely to come, but will hit next year, not this. The losses today are directly related to the pandemic and social distancing …In terms of higher education, the impacts of the pandemic, social distancing, and online schooling are clear. … Besides education, the public sector does a lot of things. Employment here is down largely due to zoos, convention centers, recreation facilities, public pools, libraries and the like being limited during the pandemic. The losses in public administration are relatively small to date. All of that said, there is still the traditional recessionary dynamic at play. Those impacts will largely come next year, not this. Without fiscal relief from the Federal Government, we will probably see significant state and local government layoffs next year. There is much more in the post.
Economy-Crushing COVID-19 Lockdowns Contributed To 100,000 US Deaths, New CDC Guidance Suggests – Yesterday, NY Gov Andrew Cuomo made headlines after laying into President Trump during a press briefing yesterday, accusing the president of having the blood of tens of thousands of dead New Yorkers – and hundreds of thousands more across the US. Ironically, the news follows reports from Kansas about a nursing home that saw every single one of its residents infected during one of the worst such outbreaks in the US since COVID-19 first arrived in the US early this year. But Cuomo’s comments, and the backlash they elicited, also coincided with the latest guidance update from the mercurial CDC, which offered some fresh insight into the breakdown of the excess mortality across the US since the WHO first declared COVID-19 to be a global pandemic. While 200,000 of the 300k excess deaths have been directly attributed to COVID-19, researchers suspect that the other 100,000 excess deaths were indirectly caused by COVID-19: For example, they might have been drug overdoses or suicides brought on by depression, or a fatal stroke caused by a lack of testing availability. According to data cited by the AP, between the beginning of February and the end of September, about 1.9 million deaths are typically reported. This year, it’s closer to 2.2 million, a 14.5% increase. Unsurprisingly, the greatest number of excess deaths was recorded among the elderly population, which saw an additional 95,000 people between the ages of 75 to 84 pass away this year. That’s 21.5% larger than in a normal year. But the biggest increase, up 26.5%, was in people ages 25 to 44. The increase likely appears so large because the number of deaths within this age group every year is notably small. Another example of this phenomenon can be seen in the youngest age group, people younger than 25; that group actually saw its mortality rate decrease this year. That might seem unusual, until one accounts for the fact that so few people die in this age group that large fluctuations are magnified by only a handful of additional deaths. Then, on Wednesday, the CDC followed up with another set of guidance essentially reiterating the importance of wearing masks. The agency said it “strongly recommends” all passengers on planes, trains and automobiles. It comes as more US states, including NY, as we noted above, are ratcheting back up their COVID-19 restrictions as another wave of COVID-19 strikes the Midwest.
Fed’s Bostic says minority, lower-income communities still struggling amid pandemic – Federal Reserve Bank of Atlanta President and CEO Raphael Bostic said Sunday that minority and low-income communities are still struggling amid the coronavirus pandemic. Bostic told CBS’s “Face The Nation” that he’s “concerned” as he sees some areas of the economy “recovering and rebounding in a very robust” while others are not so lucky.”In other segments, things like hotels and restaurants, small businesses in particularly minority and lower income communities, those places are seeing much more difficult situations,” he said. “I see two real stories going on,” @AtlantaFed‘s@RaphaelBostic tells @margbrennan of the#COVID19 recession and disjointed recovery. Some sectors – like the service industry – are struggling to recover. The professional industry – office workers – has rebounded significantlypic.twitter.com/kqgAI5zMol – Face The Nation (@FaceTheNation) October 18, 2020CBS’s Margaret Brennan questioned Bostic on what the U.S. needs to do to combat a “widening inequality” as Black Americans have recovered just more than a third of employment lost during the pandemic. Bostic said the Federal Reserve has to “acknowledge that there’s a problem” and “be willing to talk about it.””My institution has for a long time not been willing to be out in front to talk about the importance of racial inequalities,” he said. “I actually think that that’s been a mistake.”The Atlanta Fed president named “two dimensions” to fight inequality: efforts “to change the trajectory for the generations to come” through good education and training, and efforts to provide resources and infrastructure to those “who are trying to benefit from this economy and participate in it.” “We have to change the trajectory for the generations to come,” @AtlantaFed‘s tells@margbrennan about policy to tackle ongoing racial economic disparities.pic.twitter.com/Gf1YvfBqZ9 – Face The Nation (@FaceTheNation) October 18, 2020 Bostic said the coronavirus pandemic has “put a wedge in our economy,” making situations “even more precarious” for those already struggling.
Federal judge strikes down Trump’s cuts on food stamps for unemployed – A federal judge in Washington, D.C., moved Sunday to end the Trump administration’s changes to the federal food stamps program that would have likely ended the benefits for tens of thousands of Americans.In a ruling reported by The Washington Post, Chief U.S. District Judge Beryl Howell wrote that the Department of Agriculture had not adequately addressed how its decision to remove the ability of cities to waive work requirements for the program in economically-distressed areas would affect states around the country.The administration’s rule ending that discretionary power “abruptly alters decades of regulatory practice, leaving States scrambling and exponentially increasing food insecurity for tens of thousands of Americans,” wrote Howell, according to the Post. Howell went on to point to the ongoing COVID-19 pandemic, which has killed more than 200,000 Americans and left millions jobless, as the kind of situation that demonstrated the pitfalls of removing crucial benefits for so many. Trump administration officials have “been icily silent about how many [adults] would have been denied SNAP benefits had the changes sought…been in effect while the [coronavirus] pandemic rapidly spread across the country,” Howell wrote.More than a dozen states as well as Washington D.C. sued the Trump administration in January to stop the changes, arguing at the time that the Agriculture Department’s new rule would have “a drastic impact on [localities] and their residents by depriving between 688,000 and 850,000 vulnerable Americans of much-needed nutritional assistance.”Agriculture Secretary Sonny Perdue, when announcing the rules last year, called them an attempt to move the food stamp program towards one that encouraged Americans to seek self-sufficiency.
U.S. judge strikes down USDA rule on food benefits during pandemic (Reuters) – A U.S. federal judge has struck down a Trump administration rule that would have cut food stamp benefits to almost 700,000 unemployed Americans amidst the COVID-19 pandemic, court documents showed. The judge, in a court filing, said the U.S. Department of Agriculture (USDA) has been “icily silent” about how many people would have been denied the benefits with the changes. The pandemic has left millions of U.S. residents without jobs, sending thousands into lines at food banks. – – In 2019, the Supplemental Nutrition Assistance Program, known as SNAP, provided stamps giving free food to about 36 million Americans. “The Final Rule at issue in this litigation radically and abruptly alters decades of regulatory practice, leaving States scrambling and exponentially increasing food insecurity for tens of thousands of Americans,” chief judge Beryl Howell of the U.S. District Court in Washington, D.C. said in the ruling. The USDA announced the rule in December and President Donald Trump said at the time many Americans receiving food stamps do not need them given the strong economy and low unemployment. A coalition of attorneys general from several states, the city of New York and the District of Columbia challenged the USDA rule in January. In March, the judge had granted a preliminary injunction and a stay on part of the rule, which was scheduled to take effect on April 1, noting food needs during the pandemic. USDA filed a notice in May appealing the order. Its rule would have limited each state’s ability to waive work mandates, effectively requiring more food stamp recipients to work. The judge added that the rosters of the SNAP program have grown by over 17% in the pandemic’s wake, with over 6 million new enrollees as of May.
Million New Yorkers Can’t Afford Food As Hunger Crisis Worsens – In the seventh month of the virus pandemic, New York City is still in shambles, with more than half a million residents unemployed as the small business collapse continues. Broadway is closed, Manhattan offices are empty as remote work dominates, violent crime is surging, and an exodus of people from the city has created a perfect storm of economic chaos that will haunt many New Yorkers for years. A byproduct of the virus-induced economic downturn is food and housing insecurity for millions of people in the Tri-state area. Deep economic scarring produced by permanent job loss has left many people in a bind; some working-poor may never recover while others could take years. Food and housing insecurity will be, or should be, a hot subject as millions in the Tri-state area are suffering ahead of the holidays. Readers may recall in early October, the Community FoodBank of New Jersey warned that more than one million New Jerseyans were expected to suffer food insecurity by the end of the year. Now the problem is becoming more widespread. At least one million New Yorkers are expected, or will soon, experience food insecurity, according to FOX 5 NY. Alexander Rapaport, the executive director of Masbia soup kitchen network, said, “We have done disasters before, but nothing is even close to what we are doing now,” referring to the long lines at food banks across the city is all too common. Masbia is a nonprofit soup kitchen network and food pantry, with Borough Park and Flatbush locations in Brooklyn and Forest Hills in Queens. Rapaport said there had been a 500% increase in demand. In a separate report, NYT estimates the number of New Yorkers who are going hungry could be upwards of 1.5 million.
NYC finds few positive cases as schools open – The first targeted coronavirus testing in New York City schools since they reopened three weeks ago found low positivity rates, despite fears the virus would spread rapidly in classrooms. Approximately 15,000 students and staffers have been tested, and results are in for 10,676. Only five students and 13 staff members have tested positive, according to The New York Times. Mobile testing sites stationed near Queens and Brooklyn schools in at-risk neighborhoods have only returned four positive results out of more than 3,300 tests, the newspaper noted. The spikes in the two boroughs, many of them in ultra-Orthodox communities, have sparked new restrictions and fears of a second wave in the city, which was a national epicenter in early spring. New York was the first major city district to reopen public schools for in-person classes last month. About half of its students are currently in a program in which they only attend in-person classes some of the week, allowing schools to physically separate students. “That data is encouraging,” Paula White, executive director of Educators for Excellence, a teachers group, told the Times. “It reinforces what we have heard about schools not being super spreaders.” The targeted program involves testing between 10 and 20 percent of students and staff once a month. Some critics have said that while the low positivity rate is encouraging, this testing approach could mean larger outbreaks could go undetected. “It’s great that New York City is doing some level of random testing,” Ashish Jha, dean of the Brown University School of Public Health, told the Times. “It’s not at the level that would be ideal.” Teachers union president Michael Mulgrew said New York officials are currently exploring the possibility of increasing testing to three times a month, which he said would be “much more valuable” in detecting any outbreaks.
New York state teachers describe disaster of school reopening – New York state has seen an increase of 18 percent in reported COVID-19 cases over the last two weeks and a four percent increase in deaths. The state and in particular, New York City, was the epicenter of the COVID-19 pandemic in the spring, with nearly 33,000 deaths.Much of resurgence of infections has been driven by Democratic Governor Andrew Cuomo’s decision to open primary and secondary schools in September, along with the large State University of New York (SUNY) system, which serves 1.4 million students.For months, the Democratic Party and the media have hailed Cuomo as a sane alternative to Trump. In reality, Cuomo, New York City Mayor Bill de Blasio and other Democrats have implemented a variant of the deadly “herd immunity” policy promoted by Trump, albeit with the support of the teacher unions and rhetoric about the “safe reopening” of schools. This has resulted in incalculable damage to the lives and physical and mental health of teachers, parents, and students.Last month, teachers, school bus drivers and other school employeeslaunched the New York City Educators Rank-and-File Safety Committee to unite educators, independently of the United Federation of Teachers (UFT), to fight the unsafe openings and to enforce safety conditions. The committee is reaching out to educators across the state to the join the fight. Three teachers in different parts of New York state recently spoke to theWorld Socialist Web Site about conditions in their schools since their reopening in September. All three work in districts that implemented hybrid learning, a combination of remote and face-to-face learning. Sandra teaches high school in Orange County, a suburban county of about 300,000 people north of New York City in the Hudson Valley region. Like nearby Rockland County, Orange County has seen massive outbreaks of the coronavirus in recent weeks. The town of Monroe, for example, which includes the Hasidic Jewish community of Palm Tree, has had recent positivity rates as high as 27 percent of those tested. The state recently shut the private religious schools in Palm Tree. Sandra: We were one of the few districts in our entire county that opened in early September for hybrid learning. We were the guinea pigs and everybody watched us to see how it would go. It went well in the beginning but it’s all starting to crumble now. Honestly, we don’t know for sure, but I believe there are almost 100 people who have been quarantined. One teacher tested positive in my building on October 5 and the information didn’t come to us until October 15. The school informed us immediately once they were given the information, but it took 10 days to get it. Now they’re short of money. They’re cutting all the extracurricular activities, the things that the kids really want. They only kept the honor societies and the things that the kids would need specifically for college, publication stuff like that. Everything else has been canceled.
Missouri coronavirus infection rates spike, creating havoc in schools, economy – A third wave of the coronavirus pandemic is sweeping over the Midwest region of the US. Missouri state officials reported the positivity rate for coronavirus tests over the last seven days stands at 21.1 percent, and the state recorded 159,625 cases and 2,615 total deaths as of Tuesday.Six counties – Holt, New Madrid, Osage, Stoddard, Dekalb and Moniteau counties – reported positivity rates of more than 50 percent, with Holt County reporting a positivity rate greater than 60 percent. Local media report that more than 1,000 people have been hospitalized with the virus since September 16. Not only have regional state governors failed to enact measures to prevent the spread of the virus, leading to this hit to the center of the country, but a bipartisan “reopening” led by the White House has been enforced and is driving with uncontrolled spread, with infection highest in rural counties. These figures are worsened by the lack of basic containment measures in Missouri, such as mandated mask wearing, mass testing and contact tracing. As expected, students returning to in-person instruction in schools has led to outbreaks. Nearly 500 students of the Fort Zumwalt School District, serving the largest cities in St. Charles County, were ordered to quarantine last week after it was determined they were in potential contact with someone infected with the virus. For the week of October 4 through October 10, 10 faculty members and 10 students had tested positive. In-person instruction was allowed to resume for the district August 31.Beginning October 19, kindergarten through grade 2 students will return to St. Louis City’s school district, Saint Louis Public Schools. Third through fifth graders are scheduled to return October 27. Kirkwood School District will have middle school students return to class in November. Mehlville School District in St. Louis County announced that K-12 students will return to class on a hybrid model at the end of October. On the western side of the state, near Kansas City, 200 people were quarantined from the Olathe, Kansas school district after 25 students and 11 faculty tested positive. The Olathe Northwest football team has also been ordered to quarantine until October 21. In addition to schools opening for in-person instruction across the state, high-risk extracurricular activities such as youth sports are being encouraged to resume. “High school football will be played in some schools this Friday,” St. Louis County Executive Sam Page said October 7. School districts had their “health and safety plans” approved by the state prior to reallowing youth sports. Over 1,600 students at the University of Missouri-Columbia (Mizzou) have tested positive. Surveys taken by students show that there has been increased need for mental health services in 2020. College sports games are being delayed due to outbreaks. The Mizzou Tigers football team had their SEC game against Vanderbilt postponed. This game was scheduled to be played in Columbia and would have been the Mizzou team’s homecoming game. The Mizzou volleyball team had their two-game opener against Alabama delayed until October 21 and 22.
Chicago officials plan to reopen schools for 20,000 students – Chicago Public Schools (CPS) recently announced a proposal to return roughly 20,000 special education and pre-kindergarten students to in-person learning in the coming weeks. The plan to shift from online learning to a daily in-person schedule was announced last Friday as Illinois’ seven-day average COVID-19 testing positivity rate surpassed five percent for the first time since early June. The push to reopen the third largest district in the US takes place as the coronavirus pandemic spreads uncontrollably across much of the country. The number of COVID-19 cases in Illinois now stands at 368,746, with 9,688 deaths and over 2,300 people currently hospitalized. CPS could move forward with the reopening proposal in early November, giving parents and teachers little time to prepare. Other grades are slated to remain online until January 2021, but by sending 20,000 students back to classrooms the district aims to set a precedent for a full reopening. The district is exploiting the difficulties faced by special education and pre-K students with remote learning to press for school reopenings, while starving these and all other programs of the resources needed to provide high quality online learning. Despite rising cases, Health Commissioner Dr. Allison Arwady gave her support for the reopening plan, claiming that there have been low infection rates among schoolchildren in private and parochial schools that have already returned to classrooms. However, any claims that reopening can be done safely or that schools are not vectors for the spread of the virus are wholly unscientific. If there have been a small number of cases in private and parochial schools, this is primarily due to inadequate testing and reporting policies. Until last week, the Illinois Department of Health was tracking cases but would not release the names of schools where an outbreak took place. Further, these schools are better funded and able to implement more safety measures than cash-strapped public schools. On October 1, 58-year-old teacher Olga Quiroga, who taught in Chicago since 1991, died from COVID-19. Although her classes were taught virtually, Quiroga was forced to return to school for various preparatory events in which she had contact with parents. Following Quiroga’s death, her daughter condemned the district’s decision to reopen the schools, stating that for “my mom, it took one visit to that building to contract it.” She added, “According to them, they’re safe, they’re ready, and they’re clearly not.”
Judge dismisses teachers union challenge to W.Va. covid map that determines classroom closures – A judge dismissed a teachers union challenge to a map established by Gov. Jim Justice to assess coronavirus spread and determine whether West Virginia schools should be open or closed. The West Virginia Education Association contended the map has been altered repeatedly to make it more likely that classrooms will be open and football teams will play. At the end of a hearing that lasted about two hours, Kanawha Circuit Judge Carrie Webster described the governor’s broad emergency powers and said the court’s judgement should not be a substitute unless circumstances are extreme. “The governor of West Virginia is the person who is supposed to take charge. When he adopts policies and procedures after a State of Emergency has been declared, this court would have to find his acts to be arbitrary and capricious or unconstitutional – so, overtly reckless – before this court would intervene,” Webster said. “This court cannot find that he has.” The West Virginia Education Association almost immediately expressed disappointment. “To be frank, we knew we were fighting an uphill battle in challenging the governor’s changes in the map. Nevertheless, we needed to explore every possible avenue on behalf of our members’ and students’ safety,” said WVEA President Dale Lee in a statement distributed by the union. “We were not questioning the governor’s ability to act in an emergency. However, we do not believe his actions should supersede our school employees’ right to have a safe environment in which to work. We believe the continued manipulation of the map has crossed the line and created an unsafe working environment based on the numbers in certain counties.” This was the third challenge to the color-coded map established by the state to depict covid rates in West Virginia counties. Higher levels depicted as orange or red dictate remote learning and halt extracurricular activities. Lower levels depicted as gold, yellow or green allow classroom learning. The previous two cases filed on behalf of a parent and an athlete contended the map is unfairly applied only to schools, rather than to additional aspects of society – like restaurants, bars, gyms or churches – that might also be involved virus spread. Those cases were also dismissed, with judges citing the governor’s broad emergency powers.
Tennessee educator dies of COVID-19 after governor touts “strong safety measures” in schools -Susan Keener – a 53-year-old educational assistant at Walter Hill Elementary in Rutherford Country, Tennessee – died on October 14, several weeks after contracting COVID-19. Her death is a tragic reminder of the disease’s deadliness and an indictment of the entire political establishment that has given the green light for the reopening of schools and businesses across the country. There have been at least 47,376 reported COVID-19 cases nationally in K-12 schools since the start of the year, and at least 37 educators have died from the virus since August 1. Tennessee alone has experienced over 220,000 COVID-19 cases and 2,847 deaths from the disease since the start of the pandemic. While Keener’s death has not been widely acknowledged by the national media, only reported in a handful of local news outlets, details of her tragic death further expose how reckless and criminal it is to reopen schools in the midst of a deadly pandemic. According to Keener’s family, she was in good health prior to contracting the virus and was not afraid to return to the job that she loved. Keener had worked at Walter Hill Elementary for 15 years, and, at the time of her death, was an educational assistant working with students with disabilities. Autumn Raffaele, Keener’s daughter, told the Murfreesboro Daily News Journal, “There was nothing to indicate she would be at greater risk for this level of seriousness of the virus. Doctors were unable to give us clear answers (for her condition). … There’s still so much they don’t know (about the virus).” Raffaele also stated, “The virus had just ravaged so many different organs by the time everything had been said and done. “I want people to know that unless you’re directly affected, I completely understand the sense that it’s just a bad flu. I had that same thought process until my healthy … mother contracted it and had such severe complications.” Keener’s battle with COVID-19 is shocking as it further reveals how rapidly the virus had impacted an otherwise healthy individual. The educator was admitted to Saint Thomas Rutherford Hospital due to complications from the virus August 25, a mere five days after receiving an initial diagnosis. Two weeks later she was put on a ventilator and transferred to Vanderbilt University Medical Center in Nashville. She eventually tested negative and had what was described as “several good days” before passing away. “They told us we weren’t going to have any more of those good days,” Raffaele told reporters. “I was with her all day the day she passed. I told her I loved her, and everything is okay, and it’s just hard to see your mommy that sick, but I wasn’t going to leave her, and I didn’t.”
Florida school bus driver dies from COVID-19 weeks before her planned retirement – With Florida pressing forward with plans for the reopening of schools for in-person learning, the tragic October 9 death of 66-year-old school bus driver Gail Brusseau in metropolitan Jacksonville has again exposed the homicidal campaign being waged against the working class. Brusseau had worked as a school bus driver for 26 years and was planning to retire in December. Within three weeks of returning to driving for Clay County School District, Brusseau fell ill with COVID-19. Facing increasingly severe symptoms, she was admitted to an intensive care unit where she entered into a half-comatose state for 31 days. After remaining heavily sedated and deprived of the ability to speak or hear, Brusseau was eventually placed on life support and died. She is survived by four children, nine grandchildren and two great-grandchildren. Brusseau is the eighth teacher or school worker reported to have died from COVID-19 in Florida since schools began reopening across the US in late July. She is the second school bus driver in the state to fall victim to the novel coronavirus, after Troyanna Hamm, an Alachua County School bus driver of more than 15 years, died in early August. As of this writing, there have been 755,020 COVID-19 infections and 15,970 deaths in Florida, nearly all of which were entirely preventable. Republican Governor Ron DeSantis has deliberately sidelined scientists in favor of supporting President Trump’s herd immunity policy, including through the unsafe reopening of schools. This produced a massive spike in cases between June and September, with daily new cases beginning to trend upwards once again as more districts resume in-person instruction.
School nurse dies from COVID-19 as officials in Baltimore – Washington region reopen schools – Marchiel McDuffie, a school health aide who worked at an elementary-middle school in West Baltimore, died of COVID-19 on October 8. McDuffie’s death comes as school systems in Democratic Party-controlled districts across the wider Washington, D.C.-Maryland-Virginia region begin to reopen despite the resurgence of the COVID-19 pandemic, part of a nationwide trend that has been spearheaded by the reopening of schools in New York City, the largest district in the US. In Baltimore City, 1,000 students have already returned to designated schools for in-person instruction, including students with special needs and English language learners. By November 12, a total of 25 Baltimore schools will be open for in-person classes for these students. School district CEO Sonja Santelises announced last week that by the start of the second semester, on January 29, the city aims to open all schools for in-person learning, while allowing parents to continue to opt for online classes. Other school districts surrounding Baltimore, including Anne Arundel and Carroll counties, have also announced plans to bring back elementary school students in October and November. In Washington D.C., all elementary schools will reopen for in-person learning on November 9, the start of the second term. Classes will consist of up to 11 students attending five days a week, with parents able to have their children continue with online learning. Northern Virginia school districts have begun to reopen as well. Fairfax County, the largest school district in the state, began a phased-in reopening of schools last week. By the end of October, the school system plans to offer in-person instruction to at least 3.5 percent of its more than 180,000 students. Superintendent Scott Brabrand laid out a plan last week that would give parents the option to return children to all schools by February 1, while continuing to offer online classes. Loudoun County, another Northern Virginia school district, plans to bring back thousands of kindergartners, first-graders and second-graders to classrooms in a hybrid learning model starting in late October. The school reopenings occur as cases of coronavirus have been steadily increasing across the region. Across the three jurisdictions, new cases plateaued at roughly 900 per day in the latter half of June; however, as of yesterday, the seven-day average of new reported daily cases is up to 1,676. Health experts have attributed small social gatherings as a major driver of the higher infections, with cooler weather forcing more people to gather indoors.
SUNY Cortland continues pause on in-person instruction following continued outbreak – Democratic Party officials and the State University of New York (SUNY) have decided to continue the initial two-week pause on in-person learning after a sharp rise in the number of COVID-19 cases at the SUNY campus in Cortland, New York. SUNY Cortland had recorded 166 new cases of COVID-19 between October 10 and October 18. The university was already in a temporary two-week pause on in-person instruction since October 7, after more than 100 students contracted the virus in a two-week period. The University has now recorded 521 cases in total since the semester began. Cases continue to rise at the campus at an alarming rate. Forty-seven were reported over this past weekend alone. There are currently 114 active cases on the campus. There is no doubt that if the re-opening plans are allowed to be carried through, more students will become infected. This reality is underscored by the fact that the two – week pause on in-person instruction could not stop the spread of the virus on the campus. Despite the clear and present danger to students and staff, Cortland President Erik Bitterbaum tried claiming that there was no need to keep the school closed for another two-weeks. This perspective flew in the face of state regulations requiring that any SUNY school that reaches 100 cases in a two-week period must switch to online instruction for 14-days. Bitterbaum stated: “there is no automatic consequence simply for hitting that benchmark [100 cases in 14-days].” Even with more than enough cases to force any other school to close, he stated that “it does not mean a new two-week period will drop into place when this one runs its course on Wednesday, Oct. 21.”However, the severity of the recent rise in cases forced the SUNY system to change course. Especially concerning is the rise in cases in the local community since the semester began. Cortland County has recorded 642 cases over the course of the pandemic. Of these, 543 have come since September 8, one week after classes began.
Northern Virginia Community College faculty and staff speak out about loss of work due to budget crisis – As budget crises intensify throughout the United States, budget cuts and other forms of the pandemic’s lasting social impact are increasingly being felt by working people and working-class youth. In the past week, members of the Northern Virginia Community College chapter of the International Youth and Students for Social Equality (IYSSE) have been contacted by faculty and staff members at NVCC (also referred to as NOVA) describing the loss of work in the state’s community college system. “Before the semester started [an administrator] told me that they had to take one of my classes and give it to a full-timer who had low enrollment,” stated an adjunct faculty member who chose to remain anonymous. The professor explained that the loss of one class would result in a de facto wage cut of $2,700 for the semester. The stipulation which allows this brazen poaching of students essentially pits full-time faculty members against the more numerous adjunct staff in a race to the bottom. “I’ve been so angry about this policy for years, but this is the first time it affected me,” the professor said. “Since they only let us know one to two weeks before school starts we don’t even have a chance to try to find another job or a way to make up for the loss in our paychecks.” The teacher noted that students who sign up to take a class from a preferred professor will find out that they’ve been transferred to another professor without being given a choice in the matter. The loss of work and pay is taking place as funding for public college dries up and the state begins to implement austerity measures in the midst of the pandemic economic collapse. According to the Public Broadcasting System, about 70 percent of college professors are nontenured or on track to be tenured. “Described as the ‘gig workers’ of academia, adjuncts receive contracts on a course-by-course basis and make, on average, about $3,000 per class,” the report notes. For such professors, “[F]ate is tied firmly to student enrollment. Even in boom times, colleges can scrap an adjunct-taught course if enrollment in that course doesn’t meet expectations. The hook can come as the semester begins, or even a week or two in.”
DeVos says it isn’t Department of Education’s job to track schools’ coronavirus reopening plans Education Secretary Betsy DeVos said Tuesday it is not the job of her department to track school districts’ reopening plans or the number of coronavirus cases they are grappling with as districts look for guidance as to how to conduct classes safely during the pandemic. “Well I’m not sure there’s a role for the Department of Education to compile and conduct that research,” DeVos said Tuesday at an event hosted by the Milken Institute in response to a question about the role of the federal government to boost confidence regarding in-person schooling. “The data is there for those who want it,” she added, referring to figures kept by local and state government. The remarks come as public school districts across the country scramble to figure out how to provide safe, in-person instruction during the pandemic and assure anxious parents that reopening won’t help spread more cases of COVID-19. Top education groups have formed a dashboard of school infection rates that has collected information from over 2,000 schools thus far, though educators have called on the federal government to take a more proactive role in providing guidance from Washington. President Trump and other administration officials have been bullish that schools should reopen, expressing doubts that the coronavirus could spread among younger students who could more effectively combat the illness. But that stance has received pushback from top activists across the country, saying the White House is downplaying the risks of reopening and should work more closely with state and local governments regarding how to safely resume schooling. “Donald Trump’s disregard for science has already cost 200,000 American lives during this pandemic. Secretaries Alex Azar and Betsy DeVos are accomplices in this malicious incompetence,” National Education Association (NEA) President Becky Pringle wrote in a September letter, referring to Health and Human Services Secretary Alex Azar.
Profits Over Human Life? ER Doctor’s Story Is Fearful Lesson for U.S. Workers During Pandemic – Interview By Lynn Parramore – When the pandemic unleashed its deadly havoc on the world, Dr. Ming Lin was an emergency physician at PeaceHealth St. Joseph Medical Center in Bellingham, Washington – a frontline hero in the battle against coronavirus. But soon he saw that safety measures were not enough to keep either his patients orthe hospital staff safe.In March, Lin went public with his concerns on Facebook. Soon after, in a move that has been widely condemned, he was terminated from a position he had held for 17 years. The signalto frontline health workers across America was unmistakable: Speak out about safety and you risk your job.TeamHealth, a corporation owned by the private equity company the Blackstone Group, which contracts with hospitals to staff emergency rooms, offered to find Lin a new position in another state, or lower-paid, part-time work as a floating ER physician at other Washington hospitals. Unwilling to accept these conditions or uproot his family, including three smallchildren, Lin did not accept these offers. Instead, he is fighting back: The American Civil Liberties Union of Washington is representing him in a lawsuit against both PeaceHealth and TeamHealth.
US health insurance companies see profits soar while mounting medical bills bankrupt Americans – US insurance companies saw their profit margins soar during the first half of this year while millions of American families are being sent into bankruptcy under the weight of massive medical debts during the coronavirus pandemic. A Kaiser Family Foundation (KFF) reportreleased last week revealed that the top insurance companies have amassed a substantial growth in wealth due to a sharp increase in marginal gains and lower administrative costs. Despite the coronavirus pandemic wreaking havoc across health care systems and hospitals nationwide, insurers such as UnitedHealthcare, CVSHealth (Aetna), and Cigna have raised their profitability to new heights. One of the main drivers of the profit bonanza has been the sharp fall in medical claims for major operations and hospital procedures, including elective surgeries and other advanced treatments. The KFF analysis found that gross margins for the most prominent companies increased since the start of the pandemic relative to the first half of 2019. The underlying cause for the marked drop in health insurance claims was driven by hospitals and health care facilities focusing attention on treating patients infected with COVID-19. The rampage of the virus across the country beginning in late March led to a sweeping suspension of routine and non-emergency medical care and a growing disinclination of the population toward seeking treatment for other health-related issues out of fear of catching the contagion. In the analysis conducted by KFF researchers, insurance companies with group market plans saw their gross margins increase by 22 percent through the second quarter of 2020, while gross margins for Medicare Advantage plans increased 41 percent through the first six months of 2020 compared to the same time last year. Before the pandemic, such upticks in group plans and Medicare markets had only occurred gradually over years. Moreover, insurers have seen a decline in their medical loss ratios, meaning that more income is remaining after paying out medical costs which can then be reallocated for administrative costs or pocketed as profits. Loss ratios in the Medicare Advantage market declined by 5 percentage points this year and market loss ratios decreased approximately 3 percentage points. Although the KFF study acknowledges that estimates on the actual profits of insurance companies cannot be made directly, the analysis indicates that health insurance companies have profited handsomely amidst mass death and suffering in the wider population. Health insurance giant UnitedHealth Group saw its net income during the second quarter grow from $3.4 billion in 2019 to $6.7 billion in 2020 and Anthem Inc.’s net income increased from $1.1 billion to $2.3 billion.
UVA Health Still Squeezing Money From Patients – By Seizing Their Home Equity – Doris Hutchinson wanted to use money from the sale of her late mother’s house to help her grandchildren go to college.Then she learned the University of Virginia Health System was taking $38,000 of the proceeds because a 13-year-old medical bill owed by her deceased brother had somehow turned into a lien on the property Property liens are the hidden icebergs of patient medical debt, legal experts say, lying unseen, often for decades, before they surface to claim hard-won family savings or inheritance proceeds.An ongoing examination by KHN into hospital billing and collections in Virginia shows just how widespread and destructive they can be. KHN reported a year ago that UVA Health had sued patients 36,000 times over six years for more than $100 million, often for amounts far higher than what an insurer would have paid for their care. In response to the articles, the system temporarily suspended patient lawsuits and wage garnishments, increased discounts for the uninsured and broadened financial assistance, including for cases dating to 2017.Those changes were “a first step” in reforming billing and collection practices, university officials said at the time.However, UVA Health continues to rely on thousands of property liens to collect old bills, in contrast to VCU Health, another huge, state-owned medical system examined by KHN. VCU Health pledged in March to stop seizing patients’ wages over unpaid bills and to remove all property liens, which are created after a creditor wins a court judgment.Working courthouse-by-courthouse, VCU Health now says it has discovered and released 45,000 property liens filed against patients just in Richmond, its home city, some dating to the 1990s. There are an estimated 35,000 more in other parts of the state. Fifteen thousand of those have been canceled and they are working on the rest, officials said. These figures have not been previously reported. The system is part of Virginia Commonwealth University. VCU Health’s total caseload is “a huge number” but perhaps not astonishing given the energy with which many hospital systems sue their patients, said Carolyn Carter, deputy director of the National Consumer Law Center. Despite having suspended patient lawsuits, UVA Health has continued to create property liens based on older court cases, court records show. Nobody knows how many old or new UVA Health liens are scattered through scores of Virginia courthouses. The health system, which has sued patients in almost every county and city in the state, has failed to respond to repeated requests over two years to disclose the number and value of its property liens.
China Economy Grows 4.9% as Rest of World Struggles With Coronavirus – WSJ – Chinese officials said Monday that gross domestic product expanded by 4.9% in the third quarter from a year earlier, putting China’s economy back toward its pre-coronavirus trajectory half a year after the pandemic gutted its economy. The 4.9% growth figure for the third quarter fell short of expectations but brings China’s trajectory closer in line with forecasts made at the beginning of the year for 2020 growth of between 5.5% and 6% – forecasts made before the pandemic swept across the globe, killing more than a million people and crushing the global economy. The third-quarter expansion builds on the second quarter’s 3.2% growth, which follows a historic contraction of 6.8% in the first three months of the year, when authorities locked down the central Chinese city of Wuhan in a bid to curb the fast-spreading virus. The International Monetary Fund is projecting China’s economy to expand by 1.9% in 2020, putting it on track to be the only major world economy to grow this pandemic-hit year. By contrast, the American economy is expected to shrink by 4.3%, while the eurozone is forecast to contract by 8.3%, the IMF said in its latest update this month. Monday’s third-quarter growth number offers further evidence of China’s relative strength and moves the country’s economy into positive territory for the first nine months of the year, expanding 0.7% from a year earlier. Other economic indicators released Monday offered additional signs of strength. China’s headline unemployment figure, the urban surveyed jobless rate, fell to 5.4% in September, lower than August’s 5.6% rate and Beijing’s target of around 6%. China revived its economy in roughly three stages: first, by shutting down most economic activity beginning in late January, a lockdown that lasted largely until the end of March. Beginning in April, authorities sought to get factories revved up again. With production ramping up, China was able to increase its share of global exports, shipping medical equipment like face masks and sterilizer in addition to work-from-home computer equipment to customers around the world as other exporting nations suffered through their own lockdowns. If the second quarter represented China’s factory recovery, then the third quarter marked its consumer recovery, with authorities – having almost entirely stamped out the coronavirus within its borders – encouraging consumers to begin venturing outside of their homes and opening up their wallets.
World Bank: South Asian economies hit hard by COVID-19 – The World Bank’s recently released South Asia Economic Focus, Fall 2020 report has revealed the sharp economic impact of COVID-19 in a region that is home to 1.38 billion people or one fourth of the world’s population. Entitled “Beaten or Broken? Informality and COVID-19,” the report says that South Asia is experiencing its worst ever recession, with economic activity in the area brought “to a near standstill.” It estimates that the regional economy will contract by 7.7 percent this year, with India contracting by 9.9 percent and Maldives and Sri Lanka by 19.5 and 6.8 percent respectively. Although the World Bank optimistically expects South Asia to rebound by 4.5 percent in 2021, its per-capita income will be 6 percent lower than in 2019 and its population far poorer than that year. The report, which estimates that over three quarters of the total work force is in the informal sector, states that “more people will be added to the ranks of the extreme poor in South Asia than in any other region in 2020.” On October 14, South Asia had officially recorded more than eight million coronavirus cases and 125,000 deaths. These figures, however, are not reliable because of the low rates of testing and the deliberate negligence of data-gathering by governments in order to downplay the extent of the pandemic. “Beaten or Broken? Informality and COVID-19,” reports that millions of jobs have been destroyed in India, producing a sharp increase in urban poverty and the creation of a “new poor.” Indian economic growth, which was already slowing prior to the pandemic, underwent an unprecedented economic contraction of almost 25 percent in the April to June quarter. According to the Centre for Monitoring Indian Economy (CMIE), an independent body, 18.9 million permanent jobs were destroyed in that quarter. Pakistan has also been severely affected, particularly its service sector, with the overall economy expected to contract by 1.5 percent and a serious increase in poverty. The consumer price inflation has already risen to 10.7 percent and the Pakistani rupee has fallen by 13.8 percent so far this year. Bangladesh’s economic growth is expected to fall from 8.1 percent in 2019 to 2 percent this year and poverty likely to “increase significantly” with the greatest impact on “daily and self-employed workers in the non-agricultural sector and salaried workers in the manufacturing sector.”
Pandemic Causes Food Security to Wobble, While Much of Rural India Still Continues to be Underfed –Jerri-Lynn Scofield – As regular readers know, the pandemic has brought this problem to the fore, and it is an issue over which I have great concern. Yet while food security has indeed wobbled as a result of the pandemic, in many places not accustomed to seeing food supply problems, there has yet to be a widespread lack of food – despite many areas experiencing shortages of particular foodstuffs (see Food Security: UN Warns People Are Vulnerable to Shortages as the COVID-19 Pandemic Continues). Although there have been clusters of infection concentrated among those who produce our food – take, as just a few examples, meatpackers in the U.S. and Germany, and migrant or temporary workers who sow, tend, or harvest food – so far, these problems have been manageable to the security of our food supply. I’m not sure what will happen if the pandemic continues, particularly in regions that account for major shares of local or international food production. But the assumed ability to continue to feed ourselves adequately is by no means a certainty, as the pandemic continues and spreads in much of the world. Against this grim backdrop, however, what I do want to focus on today is a paper published by the International Food Policy Research Institute, and summarised in The Wire, After Abysmal Hunger Index Rank, Paper Points Out 3 of 4 Rural Indians Can’t Afford Nutritious Diet. To those who don’t know that much about India, I want to highlight that the bulk of the population resides in rural areas, where people produce the food that they and the rest of the country rely on to consume. So it’s especially sad these rural Indians cannot afford a nutritious diet – and that this problem predates the onset of the COVID-19 pandemic. Over to The Wire: India has ranked 94 among 107 nations in the Global Hunger Index 2020 and is in the ‘serious’ hunger category. Experts have blamed poor implementation processes, lack of effective monitoring, a siloed approach in tackling malnutrition and poor performance by large states.Published in the peer-reviewed journal Food Policy, this latest paper, titled Affordability of nutritious diets in rural India, iThe paper arrives at the conclusion that ‘malnutrition is endemic in India,’ based on information on rural food price and wages gleaned from the 2011 National Sample Survey. In spite of the fact that, “in 2015-16 some 38% of preschool children were stunted and 21% were wasted, while more than half of Indian mothers and children were anaemic,” the paper finds that “surprisingly few” discuss the role of diets, particularly the affordability of nutritious diets in India.
Global Migration Trends Plunge As COVID Crushes Worldwide Travel To A Halt –Migration trends have hit a wall in 2020 as a result of the coronavirus pandemic – resulting in what will be even more pressure to the global economic outlook.New visa issuances by the 37 members of the Organization for Economic Co-operation and Development (OECD) were down 46% in the first half of 2020. The organization warned that continued restrictions on travel means that it could be “some time” before trends return back to normal. Migration has a direct impact on the transport, domestic services and IT industries, Bloomberg notes. Migrants also make up 24% of medical doctors and 16% of nurses, the article says. OECD Secretary General Angel Gurria said: “Migration will continue to play an important role for economic growth and innovation, as well as in responding to rapidly changing labor markets. We need to avoid rolling back on integration and reaffirm that migration is an integral part of our lives.”Immigrants have also been disproportionately affected by job losses resulting from the pandemic. Immigrant unemployment has moved from 1% below native workers to now 2% above native workers in the U.S. In Canada, Norway and Sweden, similar trends are showing up.The OECD concludes that migrants also have increased chance of health risks, since many work on the “front line”.It also concludes that the progress many nations have made in welcoming migrants could wind up being undone as a result of the global economic slowdown.
Eurozone Government Borrowing Soars as Countries Seek to Cushion Covid-19’s Blow – WSJ – Government borrowing in the eurozone surged this spring to its highest levels since the creation of the currency union, as countries spent hundreds of billions of euros to cushion their populations against the devastating economic impact of the coronavirus pandemic. The combined budget deficits of eurozone governments surged to 11.6% of gross domestic product, more than four times the 2.5% deficit recorded in the first quarter, and well above the 7% deficit recorded in the first quarter of 2010, which was the largest seen in the wake of the global financial crisis. The European Union’s statistics agency said Thursday that government debt totaled 95.1% of GDP, more than reversing six years of progress in reducing borrowing from the previous peak of 94% of annual economic output. Eurozone government debts jumped in the second quarter, more than reversing six years of steady fallsthat were led by Germany. The statistics follow last week’s estimates from the Treasury Department that showed the U.S. budget deficit tripled to a record $3.1 trillion in the fiscal year that ended Sept. 30, or 16.1% of economic output. Despite a rise in debt that is unprecedented outside of war, governments on both sides of the Atlantic Ocean appear set to borrow heavily again next year, marking a sharp change from the aftermath of the financial crisis, when governments rushed to cut spending in painful austerity programs. The International Monetary Fund, which at the time backed that austerity drive, urged European governments on Wednesday to continue to spend freely in support of businesses and households, and worry about rising debts later. “Policy makers need to do whatever it takes,” said Alfred Kammer, director of the IMF’s European department. “We should not repeat the mistake of the global financial crisis.” The IMF expects the eurozone’s budget gap to widen to 10.1% of GDP in 2020, from 0.6% last year. That is a much smaller deficit than the 18.7% it expects for the U.S., although the budget gap there had reached 6.3% of GDP in 2019, before the pandemic hit. As a group of countries that cooperate on economic policy, the EU has rules designed to limit budget deficits, although they are often disregarded. Now, the bloc has suspended those rules, giving governments more freedom to continue to borrow large sums next year, while leaving it unclear what happens after that. According to Oxford Economics, budgets for next year submitted by governments from the 11 largest eurozone members suggest they are going to use that freedom, since they envisage deficits of roughly 6% of GDP. The IMF expects the U.S. government to run a deficit of 6.9% next year
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