Written by rjs, MarketWatch 666
News posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. We cover the latest economic data, especially the new coronavirus relief bill and stimulus checks, government funding, the latest employment data, housing market reports, mortgage delinquencies & forbearance, layoffs, lockdowns, and schools, as well as GDP. The bulk of the news is from the U.S., with a few more articles than previously 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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Pandemic watchdog is probing Mnuchin, Cruz roles in Fed lending – A federal watchdog is looking into former Treasury Secretary Steven Mnuchin’s decision to roll back the U.S. Federal Reserve’s emergency lending programs at the end of 2020, an issue that has become a point of partisan tension in Congress. The Special Inspector General for Pandemic Recovery is also inquiring into Texas Republican Sen. Ted Cruz’s role in persuading the central bank to expand the eligibility rules for the Main Street Lending Program to make it easier for oil and gas companies to apply for the low interest rate loans. The probes were revealed in the watchdog’s quarterly report released Monday. The investigations, led by Brian Miller – the special inspector general in charge of overseeing the Treasury Department and Federal Reserve’s response to the pandemic – could shed more light on Mnuchin’s decision and legal basis for winding down the programs, which Democrats say was politically motivated. The probes mark some of the biggest moves yet for Miller, a Trump appointee, who has said he struggled to begin his oversight work since he was confirmed by the Senate in June because of technical challenges and the time needed to hire experienced staff. Sarah Breen, a spokeswoman for SIGPR, said that Treasury responded to the inquiry about the Fed facilities on Jan. 19, the final full day of Trump’s administration. She said that any concerns abut the discontinuation of the Fed facilities was rendered moot because of the compromise lawmakers reached in the December stimulus legislation, though that position may not reflect the views of the current administration. Breen also said that they have not received a reply to the Jan. 6 letter about Cruz’s influence on the Main Street Lending Program. Cruz’s office didn’t have an immediate response. The future of the Fed’s emergency lending powers was a key point of debate leading up to passage of pandemic relief legislation in December. Republicans pushed to make it more difficult to revive the programs and Democrats wanted to preserve the emergency lending structures. The two parties eventually reached a compromise allowing Congress to approve similar facilities in the future after stalling the stimulus bill for days. Mnuchin in mid-November said at year’s end he would pull unused money authorized by the Cares Act in March to back Federal Reserve emergency-lending facilities. The Treasury also unveiled plans to park those funds, along with other left-over lending authorization – some $455 billion in all – into the department’s general fund, over which Congress has authority, rather than the Exchange Stabilization Fund, over which the secretary has greater discretion. Lawmakers including House Speaker Nancy Pelosi argued that the actions amounted to a misreading of the law and were politically motivated to hamstring the incoming Biden administration. The probe also looks into changes made to the Main Street lending process, which Senate Democrats have said allowed indebted oil and gas companies to qualify for loans that should have gone to other companies hampered by the pandemic. Energy companies accounted for 13% of all loans made through the Main Street program as of the end of November, according to BailoutWatch, a climate advocacy group tracking government stimulus spending. Several Trump administration officials, including Energy Secretary Dan Brouillette and Mnuchin, worked with the Fed when the program was first being designed to allow for more mid-size companies, and therefore also energy companies, to access the facilities, Brouillette said in May. The Fed said at the time that it didn’t make modifications to the program to specifically accommodate energy companies. By law, its emergency facilities cannot target specific sectors.
“The Fed’s Monetary Punchbowl Is Fueling Rampant Home Price Appreciation”: AEI — by Wolf Richter – During the press conference following the FOMC meeting last week, Fed Chair Jerome Powell was asked by different reporters about the craziness going on in the stock market, the chaotic thingy with GameStop, corporate debt, and the housing market. The fact that he was asked several times about the exuberant nuttiness in asset prices shows that by now everyone has picked up on it. And people are increasingly incredulous that the Fed would continue with its monetary policies in face of these markets.Powell brushed off the GameStop thingy and gave his usual it’s-not-our-fault and it’s-never-ever-our-fault justifications for the exuberant nuttiness in the markets. The near-0% interest rates and $3 trillion in QE in just a few months had nothing to do with anything, but the drivers of the nuttiness have been the “expectations about vaccines” and “fiscal policy,” he said (transcript). “Those are the news items that have been driving asset values in recent months.” Upon hearing this, people globally were just rolling up their eyes. And a reporter challenged him softly about the housing market – the 9% surge in prices from already lofty levels. “Are you concerned about a bubble forming there yet? And is there a price increase that you’re looking at where it might change the level of mortgage-backed securities the Fed is buying?” That price surge “we think is a passing phenomenon,” he said. “There’s a one-time thing happening with people who are spending all of their time in their house. And they’re thinking either I need a bigger house, or I need another house, and a different house. Or a second house in some cases. So there’s a one-time shift in demand that we think will get satisfied, also that will call forth supply. And we think that those price increases are unlikely to be sustained for all of those reasons.” He said this after having said out of the other side of his mouth, “the housing sector has more than fully recovered from the downturn, supported in part by low mortgage interest rates. And he never responded to the question about changing – reducing – the mounts of mortgage-backed securities the Fed is buying. Quoting Powell’s “the housing sector has more than fully recovered from the downturn,” the American Enterprise Institute Housing Center said in a presentation this week that therefore “there is no justification for continuing or increasing investment in agency MBS.” Here are some of the points of the AEI’s presentation. It demonstrates how the Fed has gone nuts with its asset purchases and interest rate repression.
Fed’s Kashkari: Fed Shouldn’t Pull Back on Aid – The U.S. economy has a long way to go before it fully recovers and will need strong support from the Federal Reserve and the broader government to get there, Federal Reserve Bank of Minneapolis President Neel Kashkari said Monday. “The key now is for the Fed to keep its foot on the monetary policy gas” to help the economy overcome the coronavirus pandemic, Mr. Kashkari said. He also said it is critical that fiscal aid be in the mix as well, adding the central bank will use all available tools to help achieve its job and inflation targets…
U.S. Economy Is Expected to Reach Pre-Pandemic Peak by Mid-2021 – WSJ – The U.S. economy is expected to expand more rapidly in 2021 than officials projected in July, but it will take several years for output to reach its full potential and for the number of employed workers to return to its pre-pandemic peak, according to new economic projections released Monday. The Congressional Budget Office said it expects gross domestic product, the broadest measure of economic output, to return to its pre-pandemic level by the middle of this year, thanks in part to a surge of relief spending Congress authorized in 2020, including aid for households and businesses. Gross domestic product is expected to grow 3.7% in the fourth quarter of 2021, compared with a year earlier, and to expand 2.4% in 2022. Growth is likely to average 2.6% a year through 2025, the CBO said. The agency said a roughly $900 billion relief bill enacted in December would add about 1.5% to the level of GDP this year and next. The latest projections will be closely watched by lawmakers weighing how much additional government support the U.S. economy might need as it recovers from the coronavirus pandemic and its economic impact. Senate Republicans released new details of their roughly $618 billion coronavirus-relief proposal on Monday ahead of a meeting later in the day with President Biden. The GOP proposal is roughly one-third the size of Mr. Biden’s $1.9 trillion plan. The latest forecasts project a stronger economy this year than the CBO expected in July, “in large part because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected,” the agency said. But the CBO projects economic activity will remain below its potential – or maximum sustainable output – until 2025, suggesting the burst of activity expected this year could be followed by a long, slow recovery. The CBO also estimated the jobless rate will fall to 5.3% by the end of this year from 6.8% at the end of 2020. The number of people who are employed, however, won’t return to the level seen before the pandemic until 2024, the agency said. It also expects modestly higher inflation and higher interest rates over the coming years than anticipated in July.
CBO’s Outlook and the Output Gap – Menzie Chinn – CBO released its projections for GDP under current law, and potential GDP yesterday. Figure 1: GDP (black), CBO projection (red), and CBO estimate of potential GDP (gray), all in billions of Chained 2012$, SAAR. Source: BEA 2020Q4 advance, CBO, An overview of the Economic Outlook (Feb 1, 2021).To reiterate, the CBO projection is under current law, taking into account the December recovery package. This projection implies that the output gap in 2020Q4 was 3% and 2.3% in the current quarter. Does this mean we can sit on our hands? Consider:
- The projected output gap does not shrink to zero until the beginning of 2025.
- The projected output gap is 360 billion Ch.12$ in 2021 alone, and 670 billion through 2023 (that is $421 billion and $801 billion respectively in nominal terms).
- These calculations rely upon the CBO estimates of potential. An alternative measure of maximal output (per Delong and Summers, BPEA 1988, described here) implies a larger output gap of 553 billion Ch.12$, in 2021 alone.
Seven High Frequency Indicators for the Economy –These indicators are mostly for travel and entertainment. The TSA is providing daily travel numbers. This data shows the seven day average of daily total traveler throughput from the TSA for 2019-2020 (Blue) and 2020-2021 (Red). The seven day average is down 64.4% from last year (35.6% of last year). (Dashed line) 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 January 30, 2021. 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. Dining picked up during the holidays. Note that dining is generally lower in the northern states – Illinois, Pennsylvania, and New York. Note that California dining is picking up now that the orders to close has been lifted. This data shows domestic box office for each week (red) and the maximum and minimum for the years 2016 through 2019. Blue is 2020 and Red is 2021. Movie ticket sales were at $9 million last week (compared to usually around $200 million per week at this time of year). This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. This data is through January 23rd. Hotel occupancy is currently down 30.6% year-over-year. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019. At one point, gasoline supplied was off almost 50% YoY. Red is for 2021. As of January 2nd, gasoline supplied was off about 18.1% (about 81.9% of the same week in 2019). 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 January 30th 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 at 46% of the January 2020 level. It is at 35% in Chicago, and 54% in Houston – and mostly moving sideways. Here is some interesting data on New York subway usage. This graph is from Todd W Schneider. This is daily data since early 2020. This data is through Friday, January 29th. Schneider has graphs for each borough, and links to all the data sources.
Q1 GDP Forecasts — Some forecasters have increased their 2021 forecasts significantly, and see possible further upside. However, there is ongoing concern about the pandemic, and the impact of the COVID variants. From Merrrill Lynch: 2021 is poised for a robust rebound in real activity, with growth likely to reach 6.0%. Strong fiscal support and a successful vaccine rollout will provide a spark particularly in 2Q and 3Q. [Q1 GDP of 4.0%] [Feb 5 estimate] From Goldman Sachs: We left our Q1 GDP tracking estimate unchanged at +5.0%. [Feb 5 estimate] From the NY Fed Nowcasting Report: The New York Fed Staff Nowcast stands at 6.8% for 2021:Q1. [Feb 5 estimate]And from the Altanta Fed: GDPNow: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2021 is 4.6 percent on February 5, down from 6.0 percent on February 1 [Feb 5 estimate]
Biden Meets Republicans to Discuss Their Covid-19 Stimulus Plan – WSJ – A group of Senate Republicans outlined their roughly $618 billion coronavirus-relief offer Monday, including a round of $1,000 direct checks for many adults, as Democrats began a process that would allow them to pass President Biden’s $1.9 trillion plan along party lines. The 10 Republican senators met with Mr. Biden Monday evening to discuss their proposal, which would provide $300 a week in enhanced federal unemployment benefits through June, versus the $400 a week through September in the Biden plan. The GOP proposal also outlines $20 billion each for child care and schools – both lower than the Biden proposal – as well as $50 billion for small-business relief and $160 billion for vaccines, testing and protective equipment, according to a summary released Monday morning. The proposal omits measures favored by many Democrats, such as aid for state and local governments and a plan to raise the federal minimum wage to $15 an hour.The meeting lasted roughly two hours, and Sen. Susan Collins (R., Maine) said the two sides explained their proposals further and agreed to keep talking. Nine senators joined in person, with Sen. Mike Rounds (R., S.D.) attending remotely. “It was a very good exchange of views. I wouldn’t say that we came together on a package tonight. No one expected that in a two-hour meeting,” Ms. Collins said outside the White House. After the meeting White House press secretary Jen Psaki said that Mr. Biden and the Republicans had a productive discussion but emphasized that the president wants to move quickly with a large aid plan. “While there were areas of agreement, the president also reiterated his view that Congress must respond boldly and urgently and noted many areas which the Republican senators’ proposal does not address,” Ms. Psaki said.
Pelosi, Schumer set to ram COVID plan through GOP with Biden support – House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer on Monday filed a resolution clearing the path for Democrats in Congress to ram through President Biden’s $1.9 trillion rescue plan without any Republican support. Pelosi and Schumer announced their plan an hour before Biden was due to meet a group of 10 Republican lawmakers at the White House after they introduced a scaled back $600 billion relief deal.”Congress has a responsibility to quickly deliver immediate comprehensive relief to the American people hurting from COVID-19,” Pelosi (D-Calif) and Schumer (D-NY) said in a statement. “The cost of inaction is high and growing, and the time for decisive action is now.”The new resolution contains a provision for a process known as “budget reconciliation,” which allows for the passage of some spending bills by a majority of 51 votes in the Senate. With Vice President Kamala Harris the tie-breaking vote in the 50-50 chamber, Democrats could override Republicans’ concerns about the enormous package.Earlier Monday, White House press secretary Jen Psaki repeatedly dismissed concerns that Biden’s $1.9 trillion coronavirus rescue plan is a Democratic wish list at a briefing where she also suggested the bill could be rammed through Congress without Republican support.Speaking at her daily briefing, Psaki was pressed by reporters on the fact that no GOP lawmakers had come out in favor of the huge bailout that the Biden administration insists is bipartisan. “The president has been clear since long before he came into office that he’s open to engaging with both Democrats and Republicans in Congress about their ideas and this is an example of doing exactly that,” Psaki said ahead of a White House meeting between Biden and GOP lawmakers.
Manchin says he doesn’t support raising minimum wage to $15 per hour – Sen. Joe Manchin (D-W.Va.) said Tuesday that he does not support increasing the minimum age to $15 an hour – a critical roadblock to including the proposal in the final coronavirus relief bill. “No I’m not. I’m supportive of basically having something that’s responsible and reasonable,” Manchin told The Hill, asked if he is supportive of a $15 per hour minimum wage. Manchin added that for West Virginia, his home state, that would be $11 per hour, and adjusted to inflation. Manchin’s opposition underscores the headaches awaiting Democrats as they try to craft a final coronavirus relief bill. Democrats are poised to pass a budget resolution this week that allows them to pass a subsequent coronavirus bill with only a majority, bypassing the 60-vote legislative filibuster. The budget resolution will greenlight a coronavirus bill of up to $1.9 trillion, the same amount backed by President Biden. Democrats are expected to craft legislation that largely mirrors Biden’s proposal, which includes a $1,400 stimulus check, more state and local aid, unemployment assistance and an increase in the minimum wage to $15. Increasing the minimum wage has been a top priority and a memo from the staff director for incoming Senate Budget Committee Chairman Bernie Sanders (I-Vt.) touted that the budget resolution would allow for a coronavirus bill that raises the federal minimum wage “from a starvation wage of $7.25 an hour to a living wage.” Democrats have been split over whether the minimum wage provision will survive arcane Senate rules that determine what can, and cannot, be passed under reconciliation. But if it does, Manchin’s opposition to a $15 per hour minimum wage underscores that specifics of the bill are likely to change during weeks-long negotiations.
Manchin rips Harris for pressuring senators to back COVID bill – Democratic Sen. Joe Manchin slammed Vice President Kamala Harris ahead of her meeting with a group of Senate Republicans on Monday on passing bipartisan COVID-19 relief. Manchin (D-W.Va.) denounced Harris for appearing on local TV stations in West Virginia and Arizona last week in what was effectively a targeted pressure campaign on senators from those states to support the Biden administration’s $1.9 trillion relief package. Speaking to local station WSAZ on Friday, the same outlet where Harris urged West Virginia’s lawmakers to back their coronavirus legislation, Manchin argued that the vice president’s interview went against President Biden’s message of unity. “I saw [the interview], I couldn’t believe it. No one called me. We’re going to try to find a bipartisan pathway forward, I think we need to,” the self-proclaimed conservative Democrat said. “We need to work together. That’s not a way of working together,” he continued.
Senate Democrats take first step toward big COVID-19 bill – Senate Democrats took a first step on Tuesday toward passing a coronavirus relief bill – with or without GOP support. The Senate voted 50-49 to proceed to a budget resolution that greenlights passing a separate coronavirus relief bill through reconciliation, avoiding a 60-vote legislative filibuster. The House is expected to pass its budget resolution Wednesday. The Senate will now need to go through tens of hours of debate and a marathon session known as a vote-a-rama, before they can hold a final vote on the budget resolution. Democratic leaders voiced confidence that they would have the support from within the caucus to get started. Because Democrats have a slim majority, they need the support from all 50 members of the caucus to advance and ultimately pass the budget resolution in the face of what is shaping up to be unanimous opposition from Senate Republicans. “The Senate must move forward today with a vote to begin debate on the budget resolution, and I’m optimistic that the motion to proceed will pass,” Senate Majority Leader Charles Schumer (D-N.Y.) said earlier Tuesday. Asked if Democrats had the 50 votes on the budget resolution, Sen. Dick Durbin (D-Ill.), Schumer’s No. 2, added: “We haven’t whipped it. But we’ve spoken to members and have a positive feeling. That’s why we’re going forward.” The biggest question heading into Tuesday was if Sen. Joe Manchin (D-W.Va.) would vote to support the budget resolution. He said in a statement that he would, but warned that he wants a targeted relief bill. “Let me be clear – and these are words I shared with President Biden – our focus must be targeted on the COVID-19 crisis and Americans who have been most impacted by this pandemic. The President remains hopeful that we can have bipartisan support moving forward. I will only support proposals that will get us through and end the pain of this pandemic,” Manchin said. Sen. Angus King (I-Maine), who caucuses with Senate Democrats, said they were continuing bipartisan negotiations but that they wanted to be prepared for the possibility that they wouldn’t be able to get the support of 10 GOP senators – the number needed to overcome a filibuster. “As these negotiations continue and with time of the essence, I feel it’s important to prepare for all outcomes, including the possibility that there are not 10 Republican votes for legislation that sufficiently addresses the needs of the American people. The vote we took today does not preclude a bipartisan solution; if anything, I am hopeful that it could speed up negotiations and expedite an agreement,” King said. President Biden and Treasury Secretary Janet Yellen spoke with Senate Democrats during their caucus lunch on Tuesday urging them to go big. “President Biden spoke about the need for Congress to respond boldly and quickly. He was very strong in emphasizing the need for a big, bold package. He said that he told Senate Republicans that the $600 billion that they proposed was way too small,” Schumer told reporters after the call. The call came after Biden met with a group of 10 Republican senators at the White House on Monday night, with both sides agreeing to keep talking. GOP senators are hoping they can talk Biden into supporting a smaller, bipartisan coronavirus package. But they also acknowledged that the president could go ahead if he has the votes of 50 Democrats.
Biden to discuss relief bill with House, Senate Democrats – President Biden on Wednesday will talk with congressional Democrats to discuss his economic relief proposal as the party weighs how to push forward with the White House’s $1.9 trillion package. Biden will call into the weekly House Democratic Caucus meeting at 9:45 a.m. The president will then host some Democratic senators in the Oval Office for a meeting at 11:30 a.m. The White House said the meeting would include Senate Majority Leader Chuck Schumer (D-N.Y.) and a number of committee leaders. Vice President Harris will join the meeting with Democratic senators, according to guidance sent out by the White House. Biden’s outreach to Democrats comes two days after he met with 10 Republican senators in the Oval Office to discuss their $600 billion economic relief proposal. Biden has repeatedly expressed a desire to have bipartisan support, but he and other White House officials have signaled they are prepared to move on their original proposal with or without Republican votes. Senate Democrats took a first step on Tuesday toward passing a relief bill, even if no GOP senators support it. The Senate voted 50-49 to proceed to a budget resolution that greenlights passing a separate coronavirus relief bill through reconciliation. The reconciliation process would require a simple majority to pass a bill, avoiding a 60-vote legislative filibuster. The House is expected to pass its budget resolution Wednesday. Sen. Joe Manchin (D-W.Va.), who is seen as a key swing vote in whether the relief package can get to 50 votes, said Tuesday that he would vote to support the budget resolution, but warned that he wants a targeted relief bill.
Democrats push ahead on COVID-19 relief, Biden flexible on who gets checks (Reuters) – The Democratic-controlled U.S. Congress pushed ahead on Wednesday with a maneuver to pass President Joe Biden’s $1.9 trillion COVID-19 relief package without Republican support, as the White House said it was flexible on a key element of the plan. Biden told Democrats he would consider tighter limits on who would qualify for $1,400 checks, although he said he would not compromise on the size of the payments. That could possibly narrow the gap between his package and the $600 billion Republican proposal. Biden has promised to work with Republicans when possible, but he is also pressing Congress to move quickly before existing benefits expire in March. The House of Representatives approved a budget plan on Wednesday that would allow it to pass the coronavirus package without a single Republican vote if necessary. The Senate has yet to vote on the plan. House Speaker Nancy Pelosi said the budget plan did not make cooperation impossible but that Democrats needed to be able to act on their own if need be. “We must use every option at our disposal,” she said on the House floor.Representative Jason Smith, the top Republican on the House Budget Committee, said Democrats were using the maneuver to impose a “radical” agenda. “Their plans are to try and use this pandemic to seize more government control of your life,” he said on the House floor. The budget plan would allow Democrats to pass coronavirus aid with a simple 51-vote majority in the Senate, rather than the 60 votes needed to advance most legislation in the 100-seat chamber. The Senate is split 50-50 between the two parties, giving Vice President Kamala Harris the tie-breaking vote. Republicans used the same budget maneuver to pass a $1.9 trillion tax cut in 2017.
Biden commits to $1,400 checks, but open to eligibility limits President Biden said during a call with House Democrats on Wednesday that he is committed to boosting stimulus checks to $2,000 by giving most Americans another $1,400 in direct payments in a new round of coronavirus relief. However, Biden did crack the door open to tightening income restrictions on which Americans are eligible to receive the checks. Under the relief package passed by Congress late last year, individuals making less than $75,000 and couples making less than $150,000 received the full $600 payment. “We can’t walk away from an additional $1,400 in direct checks that we proposed because the people need them,” Biden told Democrats, according to a source on the call. “We can better target them,” he said, “but I’m not going to start my administration by breaking a promise to the American people.” He took no questions during the five-minute call, but urged House Democrats to “go big, not small” on a new COVID-19 relief package – the first major legislative push of his presidency. Biden also called on Democrats to stick together as they sell his nearly $2 trillion stimulus plan to the American people, and he made clear that shifting toward the $618 billion plan offered by 10 GOP senators was “not in the cards.” “I’ll have your back. I ask that you have mine,” Biden said. The president was expected to huddle with Senate Democrats at the White House later Wednesday to build support for his $1.9 trillion health and economic relief package, dubbed the American Rescue Plan. It addition to the bigger stimulus checks, Biden’s proposal includes $400 billion for more vaccines, testing and other measures to combat the coronavirus pandemic and to help reopen schools; $350 billion for cities, states and tribal governments; billions more for small businesses, rental assistance and increasing unemployment insurance; and raising the federal minimum wage to $15 an hour. House and Senate Democrats are expected to pass a budget resolution this week that would give them the ability later this month to pass a massive COVID-19 package through the Senate with just a simple majority. That will be crucial given the Senate’s 50-50 split. While Biden’s stimulus plan is expected to cruise through the House, it is already facing some hurdles in the Senate, where Sen. Joe Manchin (D-W.Va.) is opposing the minimum wage hike.
U.S. Senate Democrats prepare to push through Biden’s $1.9 trillion COVID-19 package (Reuters) – Democrats in the U.S. Senate were poised on Thursday to take a first step toward President Joe Biden’s $1.9 trillion COVID-19 relief proposal, in a marathon “vote-a-rama” session aimed at overriding Republican opposition to the package. Senate Democrats need to pass a budget resolution to unlock a legislative tool called reconciliation, which would allow them to approve Biden’s proposal in the narrowly divided chamber with a simple majority. The House of Representatives approved the budget measure on Wednesday. Most legislation must get at least 60 votes in the 100-seat Senate to pass. But the chamber is divided 50-50 and Republicans oppose the Democratic president’s proposal. Reconciliation would allow the Senate’s 48 Democrats and two independents to approve the relief package with a tie-breaking vote from Vice President Kamala Harris. Senate Democrats and the Biden administration have left the door open to Republican participation but have said they want comprehensive legislation to move quickly to address a pandemic that has killed over 450,000 Americans and left millions more jobless. “Seeing long lines of people waiting to get food around the country is something we should never see in the United States,” U.S. Treasury Secretary Janet Yellen said on ABC News’ “Good Morning America” program. “This is really an urgent need. And we need to act big. We need to make sure that we provide a bridge so that people aren’t scarred indefinitely by this crisis,” she said. But the Democrats’ march to add more assistance to last year’s $4 trillion in coronavirus relief could be complicated by the impeachment trial of Republican former President Donald Trump, which is set to begin next week and could distract from the legislation. Once adopted, the budget resolution would provide spending instructions to House and Senate committees charged with crafting COVID-19 relief legislation. The reconciliation measure is not a piece of legislation and does not require the president’s signature to take effect. If the Senate passes it without amendments, it will take effect immediately. If any amendments pass, the package would return to the House, which would need to vote on it again. In show of bipartisanship, Senate Majority Leader Chuck Schumer, a Democrat, this week pledged that consideration of the budget resolution would be open to amendments from both parties in a process known informally as a “vote-a-rama,” which could run to late Thursday night or early Friday. “We invite participation from both sides of the aisle,” Schumer on Thursday. “But I urge members not to lose sight of what this legislation will mean for the American people.” Republicans expect to offer up to 20 amendments on issues ranging from energy and federal land use to executive orders.
Senate approves budget for $1.9 trillion COVID relief package – CNET – After an overnight session, the Senate approved on Friday morning a budget resolution for President Joe Biden’s $1.9 trillion stimulus package by a vote of 51-50, with Vice President Kamala Harris casting the tie-breaking vote. The budget resolution, which does not have the force of law, paves the way for Democrats to move forward on a subsequent COVID-19 relief bill that can bypass a filibuster in the Senate. It also potentially affects the timeline to send the third wave of stimulus checks out faster. Among the amendments that senators agreed to during a marathon legislative session were measures to block tax increases on small businesses and to create a fund that provides grants for restaurants impacted by the pandemic, according to The New York Times. There was also bipartisan support to restrict $1,400 direct payments in Biden’s stimulus package from going to Americans with high incomes, though the amendment didn’t specify what income level would be considered too high for a $1,400 stimulus check. Senators also agreed to a Republican proposal to prohibit minimum wage increases during the pandemic, according to the Times. This could signal trouble for part of Biden’s stimulus package, which calls for raising the minimum wage to $15 per hour by 2025. The budget resolution now heads back to the House, where lawmakers must pass the same version before they begin writing the final relief bill. That vote is reportedly expected to come as soon as Friday. Once the House approves the funding proposed by the Senate, Congress will use the approved budget as a blueprint to build Biden’s bill, which is expected to come up for a vote in March, if not earlier.
15-hour ‘vote-a-rama’ got Senate Democrats closer to a relief bill. Yet much of the night was anything but. – – After a 15-hour stretch that kept lawmakers on the Senate floor until the wee hours of Friday morning, Democrats moved one step closer to passing President Biden’s $1.9 trillion rescue plan. Yet most of the night – a marathon process known a “vote-a-rama” – had little to do with negotiating the makeup of the actual coronavirus relief package. By Thursday, Republicans had filed almost 900 budget amendments on everything from “developing technology to counter unmanned aircraft” to streamlining “permits for production of rare earth elements.” And among the roughly 45 amendments that were considered, the handful that passed also at times strayed from the pandemic response. Even amendments that were adopted would not have the force of law. But they could still resurface in future political ads. One amendment, for instance, aimed to ensure that the U.S. Embassy in Israel remains in Jerusalem. Another would bar the Environmental Protection Agency from banning fracking. The lengthy vote that dragged lawmakers, congressional aides and journalists into an all-night C-SPAN watch party was unusual in and of itself. Vote-a-ramas don’t happen every year. The late-night Senate tradition also brought Vice President Harris to the Senate floor to cast her first tiebreaking vote before most of Washington was even awake. The chaotic process ended with the Senate passing a budget resolution and moved the “budget reconciliation” process forward. Senate Democrats opened the process so they could pass Biden’s stimulus package in coming weeks with a simple majority vote, instead of the 60 votes typically required. As most Americans on the East Coast were probably getting ready for bed on Thursday, senators spent 25 minutes debating and voting on an amendment to bar the Environmental Protection Agency from banning fracking, or hydraulic fracturing, a method of extracting oil and gas that has increased U.S. fossil fuel production while contributing to drinking-water contamination, methane leaks and more-frequent earthquakes. Sen. Mike Braun (R-Ind.), who proposed the amendment, argued that fracking had helped the United States achieve energy independence and boosted the economy. Braun acknowledged in his remarks that Biden has promised not to ban fracking. Sen. Thomas R. Carper (D-Del.) spoke against the bill, pointing out that Biden does not support a blanket ban on fracking and arguing that Braun’s amendment would prevent the federal government from regulating fracking emissions. The amendment passed by a vote of 57 to 43, but in the end was stripped out of the resolution by Democrats. One of the first amendments offered, by Sen. Roy Blunt (R-Mo.), sought to block funding for schools that do not reopen for in-person learning once teachers have been vaccinated. It failed on a party-line vote. An amendment by Sen. Patrick J. Toomey (R-Pa.) aimed at ensuring that state and local jurisdictions cooperate with federal law enforcement authorities also failed along party lines. Democrats blocked an amendment by Sen. Tom Cotton (R-Ark.) aimed at opposing packing the Supreme Court, and one from Sen. Bill Cassidy (R-La.) that sought to block stimulus checks from going to prison inmates.
January jobs report shows ongoing economic disaster as US Senate strips minimum wage increase from the relief bill – The US Senate voted Friday morning to approve a budget bill, a key step toward enactment of the Biden administration’s $1.9 trillion pandemic relief package. In securing passage of the budget bill the Democrats made several key concessions to Republicans, barring a rise in the federal minimum wage to $15 an hour during the pandemic, putting a graduated income cap on the $1,400 stimulus payment to individuals and barring payments to undocumented immigrants. The action on the relief package came as new government economic figures show there was a net increase of just 49,000 jobs in January following a revised figure showing a loss of 227,000 jobs in December. November employment figures were also revised downward. For the week ending January 30 there were 779,000 new claims for unemployment benefits, a decline from the previous week, but still an unprecedented level. After the Senate vote the Democratic-controlled House passed a key procedural vote clearing the way for the lower chamber in Congress to pass the pandemic relief bill by the end of the month. The employment figures show the continued heavy economic impact of the coronavirus pandemic on workers and their families. With the daily COVID-19 death toll running at over 3,000 and wide areas of the economy nonfunctional, millions are suffering destitution, hunger, the cutoff of medical benefits and the danger of eviction. The Democrats are using a parliamentary tactic, budget reconciliation, to advance the pandemic relief bill to avoid the threat of a Republican filibuster. However, despite having a working majority in both houses of Congress, the Democrats capitulated on the proposal for a phased-in increase of the minimum wage, set currently at the sub-starvation rate of $7.25 an hour, to $15 by 2025. This after one Democratic Senator, Joe Manchin of West Virginia, threatened to vote “no.” The miserable $7.25 rate was set in the first year of the Obama administration and has not budged since then despite periodic cynical posturing by Democrats. Following the Senate vote Biden said it is likely the minimum wage increase would be dropped from the final relief bill after it emerges from the House-Senate reconciliation process. He claimed it would be put forward later as a separate measure, but passage even in a scaled-back form is extremely unlikely given the ability of Senate Republicans to block legislation using the filibuster. The refusal of the Democrats – in full control of Congress and the White House – to draw a line in the sand over the minimum wage increase, a measure that would potentially benefit 32 million workers, shows the insincere character of Biden’s claims, reiterated at a news briefing on the pandemic relief measure Friday, that he was prioritizing the needs of workers over the wealthy. A full time worker earning the current minimum wage takes home about $15,080 annually. That is well below the absurdly low official poverty level of $17,240 annually for a family of two and $21,720 for a family of three. Significantly, Democratic Senator Bernie Sanders, now chairman of the Senate budget committee, supported the amendment by Republican Senator Joni Ernst of Iowa saying that no minimum wage increase should take place during the pandemic. The callousness of this move is hard to overstate. Many of those workers who would be immediately benefited by a minimum wage increase are in food distribution and logistics and other essential, frontline services, where workers risk their lives daily for starvation rates of pay. In addition, eight Democrats also joined the entire Republican Senate delegation to impose a ban on the distribution of pandemic relief checks to undocumented workers.
Democrats clear path for approval of Biden’s $1.9 trillion COVID package (Reuters) – President Joe Biden and his Democratic allies in Congress forged ahead with their $1.9 trillion COVID-19 relief package on Friday as lawmakers approved a budget outline that will allow them to muscle Biden’s plan through in the coming weeks without Republican support. By a party line vote of 219-209, the House of Representatives passed the budget plan, after the Senate approved it in a pre-dawn vote. Vice President Kamala Harris cast the tie-breaking vote in the Senate for the first time. Speaker Nancy Pelosi predicted the final COVID-19 relief legislation could pass Congress before March 15, when special unemployment benefits that were added during the pandemic expire. Meeting at the White House, Biden and top Democrats said they wanted to enact the massive aid package as quickly as possible to beat back a pandemic that has killed more than 450,000 Americans and left millions of jobless. Biden said he was open to compromise with Republicans as long as they did not slow things down. “If I have to choose between getting help right now to Americans who are hurting so badly and getting bogged down in a lengthy negotiation … that’s an easy choice. I’m going to help the American people hurting now,” he said. Continued weakness in the job market, underscored by data released on Friday, proved the need for aggressive action, Biden said. Republicans have floated a $600 billion aid package, less than a third the size of the Democratic plan. Even some Democrats, like Larry Summers, an economic adviser to former President Barack Obama, have warned that Biden might be spending too much. Republican Representative Michael Burgess said Congress should wait until all of the previous $4 trillion in pandemic relief has been spent. He said $1 trillion has yet to go out the door. “Why is it suddenly so urgent that we pass another $2 trillion bill?” Burgess demanded. The budget resolution enables Democrats to pass Biden’s plan by a simple majority in the 100-member Senate instead of the 60 votes required for most legislation. That means Democrats, who control 50 seats in the 100-seat chamber, might not need Republican votes. Democrats have a 10-seat majority in the House. In its overnight session, the Senate voted to oppose an immediate increase of the federal minimum wage from $7.25 per hour to $15 per hour. Senators also backed a motion calling for direct payments of up to $1,400 to be tailored to low-income earners. The White House says it is open to that idea. The House vote Friday incorporated the Senate’s changes. The approved amendments do not carry the force of law in a budget blueprint, but can serve as guidelines for developing the actual coronavirus aid bill in coming weeks.
House aims to pass $1.9 trillion Covid relief bill within two weeks as budget reconciliation moves forward, Pelosi says The House aims to pass a coronavirus relief bill within two weeks, as Democrats push ahead with the process that enables them to approve a rescue package with no Republican votes, House Speaker Nancy Pelosi said Friday. The Senate passed a budget resolution early Friday after a marathon of votes on dozens of amendments. The House followed in the afternoon in a nearly party line vote, starting the reconciliation process that would allow President Joe Biden’s $1.9 trillion rescue package to get through the Democratic-held Senate with a simple majority. “On Monday we will begin working on the specifics of the bill,” Pelosi told reporters after meeting with Biden and Democratic House committee chairs at the White House. House Majority Whip James Clyburn, D-S.C., said it will have the votes to pass despite some concerns within the party about its cost. Democrats passed the budget resolution 51-50 in the evenly split Senate, as Vice President Kamala Harris had to cast her first tiebreaking vote. The party line vote after about 15 hours of considering politically thorny amendments underscores the divide in Congress on how to structure the next aid package. “I am so thankful that our caucus stayed together in unity,” Senate Majority Leader Chuck Schumer, D-N.Y., said after the vote. “We had no choice given the problems facing America and the desire to move forward. And we have moved forward.” He contended “this was a bipartisan activity” because the chamber adopted several amendments written by senators from both parties. While President Joe Biden has said he hopes to win Republican support for the aid plan, Democrats have started to set up the framework to pass the proposal as soon as possible without GOP support. Without using reconciliation, Democrats would have to win 10 Republicans over in a Senate split 50-50. Speaking after new data showed the U.S. gained only 49,000 jobs in January, Biden said he wants to work with Republicans, but the party is “just not willing to go as far as I think we have to go.” He said he faces an “easy choice” between passing a bill now with only Democrats or getting “bogged down in a lengthy negotiation.”
The macroeconomic implications of Biden’s $1.9 trillion fiscal package – brookings.edu -The Biden Administration recently proposed an additional $1.9 trillion in federal spending to address the ongoing pandemic. We estimate that the package would boost economic activity, as measured by the level of real gross domestic product (GDP), by about 4 percent at the end of 2021 and 2 percent at the end of 2022, relative to a projection that assumes no additional fiscal support. We project that if the Biden package were enacted, GDP would reach the Congressional Budget Office’s (CBO) pre-pandemic GDP projection after the third quarter of 2021, exceeding it by 1 percent in the fourth quarter. In the middle of 2022, GDP would show a temporary and shallow decline and then grow at an annual rate of about 1.5 percent, coming close to the path projected just before the pandemic (see figure 1). Without additional fiscal support, we project that real GDP would remain below the pre-pandemic level for the next several years. In the near term, without additional federal resources to contain the resurgence of the pandemic and distribute vaccines, the economy will face substantial headwinds. More broadly, millions of households will suffer as a result of waning fiscal support for the unemployed and households and businesses suffering financially. Indeed, Biden’s fiscal package should be judged primarily based on the extent to which it invests in COVID-19 containment and vaccination and provides needed relief to help households and businesses weather the pandemic. Nonetheless, an analysis of how the fiscal package would affect the overall economy is instructive, although subject to a great deal of uncertainty. In all, with the $1.9 trillion package, we project that cumulative real GDP between 2020 and 2023 would end up close to its pre-pandemic projection; over the next two years households and businesses would make up some of the economic activity foregone during the pandemic. By late 2021, we would likely see the economy operating above its maximum sustainable level. That positive output gap would likely put upward pressure on inflation, which the Federal Reserve has said would be welcome. A risk worth noting is that the return of GDP back to its maximum sustainable level may create a difficult economic period after 2021. While our estimates show a “soft landing,” with a temporary and shallow decline in GDP after the fourth quarter of 2021, the slowdown could be more abrupt and painful than our projections suggest.
House Puts $1.9 Trillion Stimulus on Fast Track, With No G.O.P. Votes – The House gave final approval on Friday to a budget blueprint that included President Biden’s $1.9 trillion stimulus plan, advancing it over unanimous Republican opposition as Democrats pressed forward with plans to begin drafting the aid package next week and speed it through the House by the end of the month. “Our work to crush the coronavirus and deliver relief to the American people is urgent and of the highest priority,” Speaker Nancy Pelosi wrote in a letter to Democrats shortly before the bill passed by a 219-to-209 margin. President Biden, speaking just before the House acted, cited a weak jobs report in justifying the use of a procedural device, called reconciliation, to ram through the measure if Senate Republicans oppose his effort to speed aid to families, businesses, health care providers and local governments. “It is very clear our economy is still in trouble,” Mr. Biden said during remarks at the White House – amping up the pressure on an upper chamber bracing for former President Donald J. Trump’s impeachment trial next week. “I know some in Congress think we’ve already done enough to deal with the crisis in the country,” added Mr. Biden, who reiterated his commitment to fund $1,400 direct checks to low- and middle-income Americans. “That’s not what I see. I see enormous pain in this country. A lot of folks out of work. A lot of folks going hungry.” Mr. Biden’s comments came as the Labor Department’s reported on Friday that the economy added only 49,000 jobs in January, and just 6,000 in the private sector. The labor market remains 10 million jobs below its pre-pandemic levels. Hours earlier, as the sun rose over the Capitol dome, the Senate approved a fast-track budget measure, with Vice President Kamala Harris casting her first-ever tiebreaking vote after a grinding all-night session. The move, in theory, allows them to enact the package without any Republican votes. Senate leaders could begin working on their own bill in hopes of delivering a final package to Mr. Biden’s desk before supplemental unemployment benefits are set to expire in mid-March. Jen Psaki, the White House press secretary, cited poll numbers showing bipartisan support among American voters for the plan, brushing aside criticism the White House was sacrificing bipartisan solidarity for partisan celerity. “He didn’t run on a promise to unite the Democratic and Republican Party into one party in Washington,” she said in her Friday briefing at the White House. Still, Mr. Biden offered one olive twig on Friday, saying his plans could change to win over moderates in both parties, acknowledging that he favored restricting the direct payments to people earning less than $300,000. “I’m not cutting the size of the checks,” he said on Friday. “They’re going to be $1,400, period.”
Even Biden’s $1.9 trillion isn’t nearly enough pandemic relief –President Joe Biden wants a $1.9 trillion pandemic relief package; Senate Republicans only a third that much. Both proposals are too little for too short a time. Even more important, both propose too little for where help is needed most. The Republicans say America just can’t afford more relief. Their skimpy plan would provide nothing for renters facing eviction, just the latest sign of how since Trump the Republicans have chosen to become the party of white skin privilege since it’s Black and Latino renters most at risk of eviction. The GOP would do little for small business, offering only 10 cents on the Biden dollar; to reopen schools, 12 cents; for the jobless, 34 cents. Complaints that America can’t afford the Biden relief package ring hollow. The Trump-Radical Republican tax cuts – passed in December 2017 without a single vote from a Democrat – used borrowed money to bestow $2.4 trillion in tax savings to large corporations and rich individuals. The 99% got crumbs. Biden’s tax plan would raise $2.1 trillion over 10 years, taking back much of the savings from large companies and individuals making more than $400,000 per year. The COVID-19 relief package Trump signed into law last spring was heavily weighted to those who didn’t need help. As the graphic below shows, such excess cash nearly doubled from when Trump assumed office and last May. Only a little of that money has been withdrawn, an indication that federal aid included a lot of welfare for the rich. Cash parked in institutional money market funds used by corporations almost doubled between Trump becoming president and soon after. During the pandemic, many millions of American households have reduced their debts and increased their savings because they had continued to be employed while their spending dropped. They don’t need relief. Since your spending is my income, and vice versa, the people suffering because of the drop in spending do need help. Think of restaurant workers, barbers, gym trainers, and retail store clerks. In a nation whose political and economic power structure is largely white and in which large numbers of Americans have few to no minorities as neighbors, it’s easy for those suffering the most to be invisible.
Key ex-Obama adviser says Biden stimulus is too big –Larry Summers, the top economic adviser to former President Obama, warned in an op-ed on Friday that President Biden’s proposed COVID-19 relief package is too big and could overheat the economy. Summers, the Treasury secretary under former President Clinton, wrote in The Washington Post that the proposed $1.9 trillion stimulus could ignite inflationary pressures “of a kind we have not seen in a generation.” He said the risk of inflation could have “consequences for the dollar and financial stability.” “Stimulus measures of the magnitude contemplated are steps into the unknown,” Summers wrote. Summers’s remarks are notable because Biden has received almost no pushback from Democrats in pursuit of his legislation. Some progressives have griped about Biden not going big enough, but Democrats are largely united behind the bill. Biden met with Republican senators this week pushing a scaled back $618 billion bill, but the administration and Senate Democrats have given every sign that they’re prepared to pass the $1.9 trillion stimulus without GOP support, if necessary. The Summers op-ed is likely to be seized upon by conservatives who argue Biden and Democrats are preparing to spend too much. A new jobs report on Friday, however, found the economy added 49,000 jobs in January, a low number likely to bolster calls for a large relief package. Senate Democrats approved a budget resolution early Friday that would allow them to pass the relief bill on a 50-50 party line vote, with Vice President Harris acting as the tiebreaker. Republicans would not be able to block the measure with a filibuster under those budgetary rules. In coming up with his analysis, Summers looked back at the Obama fiscal rescue package from 2009, which he said was far too small to address the magnitude of the Great Recession. Summers calculated that in 2009, the gap between actual and estimated potential output was $80 billion a month and that the Obama stimulus covered about half of the shortfall. At the moment, Summers estimates the gap to be at $50 billion a month and said the Biden stimulus would address three times that. Furthermore, Summers noted that in 2009, unemployment was skyrocketing and projections of future consumer spending looked bleak. In the current climate, unemployment is falling and economists believe consumers could be poised to start spending some of the $1.5 trillion in accumulated savings from the lockdown. “While the arguments for providing relief to those hurt by the economic fallout of the pandemic, investing in controlling the virus and supporting consumer demand are compelling, much of the policy discussion has not fully reckoned with the magnitude of what is being debated,” Summers wrote.M
Policy trolls: the Larry Summers edition — Roger Gathmann – There’s one thing about the meanstesting neolibs, who claim to be so compassionate towards the poors that they wanna means test any relief package so it doesn’t benefit the nasty riches – that is, people who make btw 80- 100 thou. Many of these means testers come from Harvard, or Yale, or Stanford, or Chicago. Schools with amazingly high endowments, to which rich peeps give and get accordingly tax deductions. Many of them even teach there, or, in the case of Larry Summers, used to be the president there -of Harvard, in his case. Oddly, none of the means testers seem to notice that a small, poor college, Wabash College or something, and a multibillion dollar endowed university, Harvard, get – horrors! – the same tax exemption!Surely, these neolib centrists, who know all about that there economics, should be on the forefront of trying to get their alma maters taxed, and taking away tax exemption from those rich dudes with their “philanthropy”. Means testing, if it means anything, means not only testing the positive recipients of government funding, but also the recipients of what Milton Friedman called negative taxation.But I’ve never yet read anything about this from the meanstestin’ dudes. And I don’t expect I will. It is one thing when you pretend to be all concerned that low income people receive the sole benefit from government funding, in order to block that funding at all – and quite another thing when you attack the mother ship for real. Larry Summers was booted from Harvard for being a sexist pig, but he woulda been booted much sooner if he made a big deal about shutting down Harvard’s tax exempt status. What we can conclude about this is that these neolibs form a group that thinks of itself as wonky, but in reality, they are policy trolls. And their trolling has been a disaster.
Susan Sarandon slams Democrats for ‘bait and switch’ on $2,000 relief checks — Actress Susan Sarandon blasted Democrats on Thursday, accusing them of pulling a “bait and switch” when it comes to the party’s push for $2,000 coronavirus relief checks. The actress was responding to a video mashup shared on Twitter that shows President Biden, Vice President Harris and Democratic Georgia Sens. Jon Ossoff and Raphael Warnock all calling for speedy legislation granting the American people $2,000 checks at various campaign rallies. COVID-19 aid legislation passed late last year included $600 direct payments to taxpayers. Biden’s current $1.9 trillion coronavirus proposal includes a round of $1,400 checks, meant to bring the total to $2,000. “Where are the $2K checks you promised @JoeBiden @KamalaHarris @ReverendWarnock @ossoff? At a time when only 39% of Americans could afford a $1,000 emergency & over 15 million have lost employer-sponsored health insurance, the diff between $1,400 & $2K is a matter of survival,” Sarandon wrote. A budget resolution that would be the first step in passing the coronavirus relief bill while bypassing the 60-vote legislative filibuster cleared the Senate in a 50-50 party-line vote early Friday morning, with the tie broken by Harris. In addition to the $1,400 checks, Biden’s plan calls for a $400 per week federal unemployment benefit, $350 billion for state and local governments, a minimum wage hike to $15 per hour and more money for child care and schools.
Former CBP Head: Biden Has Decimated Border Protections With “Stroke Of A Pen” – Former Acting U.S. Customs and Border Protection Commissioner Mark Morgan slammed the Biden administration Tuesday for undoing significant border protections put into place by President Trump. Morgan first took aim at White House Press Secretary Jen Psaki for trashing Trump’s efforts to secure the border, and attributing the infamous Obama/Biden ‘kids in cages’ and family separation policy to Trump. After Psaki had spoken, calling Trump’s border policies “horrific”, Morgan stated that “There isn’t enough time to address all the spin and misinformation that the Press Secretary just sent out.” Morgan outlined that agencies within the Trump administration have been “working tirelessly” to reunite families separated at the border. Morgan explained that the “broken immigration system was exploited” by human smugglers and cartels who knew US authorities could not detain children. Morgan further reeled off a list of actions by the Biden administration that have put border officers in grave danger. “Just in a couple of weeks [Biden has] decimated our ability to secure this border, and keep our country safe,” Morgan warned, adding that Biden has “completely dismissed” the pleas of those working on the border.
Biden on immigration orders: ‘I’m eliminating bad policy’ – President Biden on Tuesday defended his early reliance on executive actions as he signed three more orders focused on immigration. “There’s a lot of talk, with good reason, about the number of executive orders I’ve signed. I’m not making new law. I’m eliminating bad policy,” Biden told reporters in the Oval Office. “What I’m doing is taking on the issues that, 99 percent of them, that the last president of the United States issued executive orders I thought were counterproductive to our national security, counterproductive to who we are as a country,” he added. “Particularly in the area of immigration.” Biden signed off on three orders on immigration. One established a task force focused on the reunification of migrant families separated at the southern border under the Trump administration’s “zero tolerance” policy. The task force will be led by Homeland Security Secretary Alejandro Mayorkas, who was confirmed by the Senate earlier Tuesday. The order also revokes a measure signed by former President Trump that halted certain separations and called on Congress to address the matter. “We’re going to work to undo the moral and national shame of the previous administration that literally, not figuratively, ripped children from the arms of their families, their mothers and fathers, at the border,” Biden said. “And with no plan, none whatsoever, to reunify the children who are still in custody and their parents.” Another order directs agencies to undertake their own sweeping review of asylum policy in the U.S. The orders nix a number of Trump immigration executive orders while directing the Department of Homeland Security to review policies that require immigrants to wait in Mexico while filing asylum claims and limit the opportunity to apply for asylum to those who passed through other countries in trying to reach the U.S. It also outlines two prongs for dealing with migration patterns: a “root causes” strategy that primarily focuses on aid to El Salvador, Honduras and Guatemala and a “collaboration strategy” to expand pathways for those fleeing those countries to access resources in neighboring ones. But it also opens more opportunities for people leaving those countries to join family members in the U.S. and suggests the Biden administration will expand the criteria for allowing people to apply for asylum in the U.S. It requires evaluating “whether the United States provides protection for those fleeing domestic or gang violence” – a nod to those who have been denied asylum because they don’t fit into current protections for those fleeing racial, religious or political persecution. A final order directs a review of Trump’s public charge rule, which limited immigration opportunities for those who might need to rely on assistance such as food stamps or other social programs.
Trump aides say they lost parental leave benefits during transition -A number of political appointees hired during the Trump administration were surprised to learn that their parental leave benefits ended with the inauguration of President Biden, a Politico investigation found.Numerous appointees across the federal government told the news outlet that they had been under the impression that the incoming Biden administration would effectively keep them employed for the remainder of their federal maternity or paternity leave benefits, which some were exercising during the transition period.”I got completely screwed,” Vanessa Ambrosini, a former deputy communications director at the Commerce Department, told Politico. “There were no caveats in that language saying anything about if the administration turns, you get nothing and of course, that happened and so I got nothing.”Other officials who would not give their names provided emails to Politico from federal officials indicating that their parental leave benefits would be treated the same as career agency employees, followed by later emails apologizing for an error and stating that their benefits would end Jan. 20. “This is not what you were hoping to hear but I think you also knew that this was the most likely outcome,” an email to one couple who appealed the Department of Homeland Security’s decision to end their benefits read. “I am sorry to be the bearer of this news and I am sorry I don’t have other news.”
PPP loans reach $72.7 billion in new round with big lenders – The number of Paycheck Protection Program loans to U.S. small businesses more than doubled in the third week of the latest round of pandemic relief aid, as Bank of America and JPMorgan Chase each processed more than $1 billion in funding. The Small Business Administration approved 891,044 loans worth $72.7 billion through Jan. 31, up from the 400,580 loans totaling $35 billion a week prior, according to data released Tuesday. The pace picked up after a slow start following the program’s opening in Jan. 11 with another $284 billion from Congress as part of a stimulus package for the economy. Bank of America moved to the top lender slot in the past week, with about 35,000 loans worth $1.9 billion, followed by JPMorgan. Small lenders and fintech companies, including Zions Bancorp NA and Itria Ventures, continued to outlend big banks including PNC Financial Services Group and Wells Fargo. After the first week was dedicated exclusively to community financial institutions and small lenders, there’s sign of pent-up demand at large banks waiting for their applications to be processed. Wells Fargo has received about 77,000 applications for more than $4 billion, spokesman Manuel Venegas said by email. As of Jan. 31, the San Francisco-based bank had received approval for 18,272 loans, SBA data shows. Overall, about three-quarters of the loans approved by the SBA are for borrowers who already received one last year. Under a law passed by Congress in December, companies can apply for a second loan if they can show revenue loss. The average loan size was $81,635, with first-draw loans being much smaller on average. First-time business applicants received an average loan of $21,157 while second-time recipients got $102,228.
Fast-tracked PPP forgiveness provided unexpected earnings lift – Through Jan. 12, the SBA had forgiven more than $100 billion in PPP loans, triggering fee payments to the lenders. Expedited forgiveness bolstered the bottom lines at hundreds of banks during the fourth quarter, providing a bright spot at a time of anemic core loan growth and uncertain credit quality resulting from the pandemic. The fees, which ranged from 1% to 5%, are accounted for as net interest income. As they find their way to lenders’ bottom lines, the revenue will provide a lift to capital as banks weigh strategic options and mull charge-offs for troubled credits. “Accelerated PPP forgiveness fees seem to be the only real driver of outperformance,” “It’s income at a time when income is hard to come by,” “It gives banks dry powder for other opportunities that may come up. To the extent that they can take a temporary gain and turn it into something more permanent, I think investors would look favorably on that.” The net interest margin at Level One Bancorp in Farmington Hills, Mich., widened by 47 basis points from a quarter earlier to 3.27%. The $2.4 billion-asset company said its margin would have been relatively flat absent the forgiveness of $102 million of PPP loans. At the $6.6 billion-asset Heritage Financial, fees from $159 million of PPP loans turned what would have been 6 basis points of margin compression into 15 basis points of expansion, Chief Financial Officer Donald Hinson said during the Olympia, Wash., company’s earnings call. The decision by legislators to increase the cutoff for streamlined forgiveness to $150,000 could fast-track more fees. About 28% of the PPP volume from 2020 mets that threshold, along with 38% of the volume from this year, according to the SBA. The SBA released a one-page application last month that simply requires borrowers to certify they were eligible to receive a PPP loan, spent it on permissible expenses and correctly calculated the requested forgiveness. PPP lenders insist the changes will produce even bigger forgiveness numbers in the first quarter. “The borrower essentially has the ability to self-certify or create a process that leads to full forgiveness,” . “That will accelerate loans off our balance sheet, accelerate capital and leave a very happy customer on the other end with a grant as opposed to a loan.” While generally pleased with the fees’ contribution to banks’ bottom lines, industry observers noted that PPP revenue will be unpredictable each quarter, based on the pace of forgiveness, and, despite a new round that began last month, will go away when the program concludes.
Small businesses give fintechs low marks for pandemic relief – Small-business owners who received loans from the Paycheck Protection Program last year gave high marks to community development financial institutions for overall service and low ones to fintechs that bill themselves as speedier alternatives to traditional lenders. The grades were more mixed for banks and credit unions, according to a Federal Reserve survey of more than 15,000 small businesses released Wednesday. Six in 10 business owners said they were satisfied with the support they received from small banks – those with less than $10 billion of assets – but less than half said the same about large banks and credit unions. The Fed has been conducting its small-business credit survey since 2016. The 2020 survey was focused heavily on the coronavirus pandemic’s impact on credit conditions and was conducted in September and October, several weeks after the first round of PPP lending closed. Another round of PPP lending opened up last month and so far lenders have made nearly $73 billion of emergency loans to small businesses. Big banks took early criticism for slow response times and prioritizing existing customers when PPP first launched in April. Online lenders had been hyped as alternatives for small businesses looking to quickly navigate the PPP process, but the Fed survey showed that speed was not necessarily a measure of customer satisfaction. “That is not the case for many small businesses that don’t have specialized staff on hand who can easily devote time to completing an application or digitizing all of their records,” a Federal Reserve official, who asked not to be named, said on a call with reporters Wednesday. About 42% of small-business owners who turned to online lenders for a PPP loan or other service during the coronavirus pandemic were dissatisfied with the support they received, and just 18% reported being satisfied. Fintechs were also less likely than banks and credit unions to approve PPP loan applications, the survey found. About 47% of those who applied for PPP assistance through an online lender got the full amount they applied for, compared to 78% who got what they were hoping for through a small bank and 70% from a large bank. Sixty-three percent of credit union borrowers and 44% of CDFI borrowers said they received the amounts they requested. The survey also found that fewer small businesses are turning to online lenders for financing than in years past. Of those surveyed, 20% said they applied to a fintech company for financing last year, down from 33% in the 2019 survey.
Banks remain wary about releasing reserves — Sometimes headlines from early in bank earnings season can be deceiving. JPMorgan Chase commanded attention last month when it said it had released nearly 9% of loan-loss reserves between Sept. 30 and Dec. 31, and some other big banks trimmed the stockpiles they had built since the pandemic recession hit. The reductions perhaps were a sign of optimism about the economy. However, U.S. Bancorp and Truist Financial held their reserves steady, and they weren’t the only cautious ones. Total allowances for loan losses at 13 of the largest U.S. banks declined on aggregate 4.5% in the fourth quarter from the height of the buildup six months earlier, according to company filings. Some analysts had expected more. “Some banks are holding back,” said Scott Siefers, managing director and senior research analyst at Piper Sandler, citing the uneven pace of the economic recovery and the rollout of COVID-19 vaccines. Many banks aren’t expecting any return to normalcy until the second half of the year, he said. Reserves held specifically for consumer debt, like auto loans and credit cards, were largely left untouched across the industry. Speeding up vaccinations is viewed as key to getting the 10.7 million unemployed Americans back to work and to ease concerns of the estimated 7.3 million who are no longer seeking jobs, according to the latest data from the Bureau of Labor Statistics. Delays in getting shots in arms have dampened earlier, more upbeat outlooks about the 2021 economy. “One of the keys is that we see a pickup in the rollout of vaccinations,” Bryan Jordan, CEO of the $84.2 billion-asset First Horizon, said on a Jan. 22 call with analysts. “I would say, to date, it’s been woefully inadequate, and it’s got to pick up for us to see a much stronger back half of the year.” Minneapolis-based U.S. Bancorp is looking closely at public health data and the level of state and local limits on business activity and public gatherings, Chief Financial Officer Terry Dolan said on a Jan. 20 call with analysts.
Acting CFPB chief signals tougher stance against redlining -Banking attorneys are bracing for an immediate sea change in the Consumer Financial Protection Bureau’s approach to fair-lending cases even before the Biden administration’s nominee to run the agency is confirmed. Many in the industry view lending discrimination probes as a primary focus of acting Director Dave Uejio’s tougher stance toward financial institutions compared to his predecessor. Observers expect Uejio to revive the agency’s controversial “disparate impact” standard – used to punish lenders that unintentionally discriminate against minorities – that the industry has long criticized. They expect him to fast-track investigations that could be reviewed by Rohit Chopra, once he is Senate-approved as the permanent director, for possible fines and other penalties. “The playbook is to use the fair-lending hook to go after big banks and mortgage lenders whenever possible,” said Brian Levy, of counsel at the law firm Katten & Temple. Uejio made clear his intent in a recent blog to be aggressive despite his interim appointment, taking a page from other interim appointees such as former acting CFPB Director Mick Mulvaney, who was an outspoken chief of the bureau until he passed the baton to Kathy Kraninger upon her Senate confirmation. While Mulvaney and Kraninger slowed enforcement activity, and fair-lending cases in particular, Uejio signaled a return to Obama-era policies. More aggressive enforcement of fair-lending laws points to interest among Biden-appointed regulators in addressing racial-equity issues. Uejio’s post said the CFPB will consider using the disparate impact legal standard to punish lenders for discriminatory effects that result even from neutral policies. “The country is in the middle of a long overdue conversation about race, and as we all know, practices and policies of the financial services industry have both caused and exacerbated racial inequality,” Uejio wrote last week. “I am going to elevate and expand existing investigations and exams and add new ones to ensure we have a healthy docket to address racial equity.” And such investigations will not be limited to mortgages and other consumer loans, he said. Lenders that took part in the Paycheck Protection Program to dispense government-backed loans to small businesses seeking pandemic relief could also be in the CFPB’s crosshairs. “Examiners found that the widely used policy of banks only taking PPP applications from pre-existing customers may have a disproportionate negative impact on minority-owned businesses,” he said.
CFPB considers halting implementation of QM, debt collection rules – The Consumer Financial Protection Bureau is looking to delay the implementation dates of the Qualified Mortgage and debt collection rules and will resume collecting data on home loans, credit cards and prepaid cards. Acting CFPB Director Dave Uejio wrote in a blog post late Wednesday that the CFPB needs more time to consider rules that were implemented – but have not yet gone into effect – under the Trump administration. “I will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with our consumer protection mission and mandate,” Uejio wrote, adding that changes include ways to “explore options for preserving the status quo with respect to QM and debt collection rules.” In June, the CFPB extended the QM rule until April 2021, further delaying an exemption from strict underwriting guidelines given to Fannie Mae and Freddie Mac during the last financial crisis. The changes are not a surprise. Many had expected the CFPB under President Biden would move to delay the effective dates of several rulemakings started under former CFPB Director Kathy Kraninger, including two recent debt collection rules finalized in October and December. The debt collection rules for the first time would restrict how often debt collectors can call borrowers, to seven calls per week, and would require collectors to provide detailed disclosures on old debts that have exceeded the statute of limitations. To aid consumers and military veterans suffering financially from the coronavirus pandemic, Uejio also directed the bureau’s research division to resume collecting Home Mortgage Disclosure Act data that had Kraninger put on hold in March. The CFPB originally required quarterly HMDA reporting to understand when markets are under stress or in flux and some experts saw the suspension of quarterly data collection as a mistake. The CFPB said it will also resume data collection for credit cards, small-business and clean energy loans to help better understand who is receiving credit and assess how borrowers are faring during the pandemic. Uejio made clear that he is moving quickly to implement changes even before Rohit Chopra, President Biden’s nominee to lead the agency, is confirmed. Chopra, a commissioner at the Federal Trade Commission, also has shown an interest in small-businesses’ access to credit.
Black Knight Mortgage Monitor for December -Black Knight released their Mortgage Monitor report for December today. According to Black Knight, 6.08% of mortgages were delinquent in December, down from 6.33% of mortgages in November, and up from 3.40% in December 2019. Black Knight also reported that 0.33% of mortgages were in the foreclosure process, down from 0.46% a year ago. This gives a total of 6.54% delinquent or in foreclosure. Press Release: Black Knight: 24% of Active Forbearance Plans Scheduled to End in March, When More than 600,000 Homeowners Face 12-Month Expirations:As the final, 12-month expiration point for many forbearance plans quickly approaches, this month’s report looks at how the slowdown in improvement in recent months may present new challenges to recovery for seriously delinquent homeowners. According to Black Knight Data & Analytics President Ben Graboske, the end of March 2021 is shaping up to be an inflection point for the industry. “For the roughly 6.7 million Americans who have been in COVID-19 related mortgage forbearance at some point since the onset of the pandemic, the programs have represented an essential lifeline,” said Graboske. “The vast majority of plans have a 12-month cap on payment forbearance, though. And the various moratoriums which have kept foreclosure actions at bay over the past 10 months may be lulling us into a false sense of security about the scope of the post-forbearance problem we will need to confront come the end of March. Last year saw the largest number of homeowners – nearly 3.6 million – become 90 or more days past due since 2009, and as of the end of December, 2.1 million remained so. Here is a graph from the Mortgage Monitor that shows Black Knight’s estimate of inventory over the last several years. From Black Knight:
Severe inventory shortages persist across the country, with the number of homes listed for sale down 40% from last year, representing a 450K decline in the number of homes available for sale compared to the same time last year
Even factoring in a slight downward trend in new listings in recent years, volumes for 2020 suggest that more than 750K homeowners chose to forego listing their homes for sale in 2020 because of the pandemic (a 16% decline year-over-year)
Nearly 2/3 of the shortage of listings came in Q2 2020 alone, which was down more than 470K new listings from the year prior
By December, new listings were flat year-over-year, suggesting that volumes may be normalizing to some degree; even so, a return to the status quo would still leave us at a significant deficit should buyer demand remain strong.
December saw another modest improvement in mortgage delinquencies, with the national mortgage delinquency rate falling by 3.9% for the month to 6.08%
Serious delinquencies (90+ days) also improved in December, falling to 3.43M from 3.56M the month prior
Nearly 40% of the pandemic-related rise in overall delinquencies has now been reversed, but only 11% of the rise in serious delinquencies, providing a more accurate representation of the true recovery to date
There is much more in the mortgage monitor.
MBA Survey: “Share of Mortgage Loans in Forbearance Remains Unchanged at 5.38%” – Note: This is as of January 24th. From the MBA: Share of Mortgage Loans in Forbearance Remains Unchanged at 5.38%: The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance remained unchanged relative to the prior week at 5.38% of servicers’ portfolio volume as of January 24, 2021. According to MBA’s estimate, 2.7 million homeowners are in forbearance plans….”The share of loans in forbearance was unchanged in the prior week, with a gain in the portfolio/PLS loan segment offset by declines in the Ginnie Mae and GSE investor loan categories. When servicers buy out delinquent loans from Ginnie Mae pools, they are reclassified as portfolio loans, which can lead to a decrease in the Ginnie Mae forbearance share and an increase in the portfolio/PLS share,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “While new forbearance requests dropped slightly, the rate of exits from forbearance was at the slowest pace since MBA began tracking exit data last summer.” Fratantoni added, “Overall, the forbearance numbers have been little changed over the past few months. Homeowners still in forbearance are likely facing ongoing challenges with lost jobs, lost income, and other impacts from the pandemic.” 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, then trended down – and has mostly moved sideways recently. The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) decreased relative to the prior week: from 0.07% to 0.06%.”
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Decreased — Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.This data is as of February 2nd. From Black Knight: End of January Sees Reduction Of 45k Forbearance Plans, But Overall Recovery Remains Stalled: New data from our McDash Flash Forbearance Tracker shows that the end of the month brought about an expected reduction of 45,000 (-1.6%) active forbearance plans, driven by month-end expirations. Servicers still have an additional 47,000 plans with Jan. 31 expiration dates on their books, which opens up the potential for additional modest declines in volumes over the next few days as these plans are reviewed for extension/removal. … As of Feb. 2, there are now 2.72 million homeowners in active COVID-19-related forbearance plans. This is 5.1% of all U.S. mortgage-holders. While this is the lowest such volume of forbearances seen since late April, volumes have been stuck in the 2.72-2.81 million range since early November. As we move toward the middle of February, it will be worth focusing on the trend of mid-and late month increases in active forbearance plans. Looking ahead to February’s month-end, some 390,000 plans are set to expire, representing one (and potentially the last) moderate opportunity for improvement in forbearance volumes before the first wave of plans is set to reach their 12-month expiration at the end of March. At Black Knight, we will be especially interested in what the next couple months bring as far as forbearance-related recovery and will continue to closely monitor the data. The number of loans in forbearance has moved mostly sideways for the last few months.
CoreLogic: House Prices up 9.2% Year-over-year in December – Notes: This CoreLogic House Price Index report is for December. The recent Case-Shiller index release was for November. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: Onward and Upward: Annual US Home Price Appreciation in 2020 Outpaced 2019 Levels by 50%, CoreLogic Reports: CoreLogic … today released the CoreLogic Home Price Index (HPI) and HPI Forecast for December 2020, providing a lookback at the state of the housing market and the pandemic’s impact on home price performance throughout 2020. The housing market exceeded expectations in 2020, closing out the year with the highest annual home price gain since February 2014 in December at 9.2%. Despite a blip in April, home-purchase demand surged as record-low mortgage rates persuaded first-time homebuyers to enter the market. Meanwhile, the consequences of the pandemic were seen in the dwindling supply of homes – dropping, on average, 24% below 2019 levels – as homeowners delayed selling. These factors translated to significant home price growth in 2020, surpassing the previous year’s levels with an average monthly year-over-year gain of 5.7%, compared with 3.8% in 2019. However, with the severe shortage of for-sale homes, we may see rising affordability concerns and some prospective buyers priced out of the market in 2021. “At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market,” said Frank Martell, president and CEO of CoreLogic. “However, market conditions leading into the crisis – namely low home supply, desire for more space and millennial demand – amplified the rapid acceleration of home prices.” “Two record lows are fueling home price gains: for-sale inventory and mortgage rates,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated. We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”
Home Ownership Rate: 65.6% in Q4 – The Census Bureau has now released its latest quarterly report with data through Q4 2020. The seasonally adjusted rate for Q4 is 65.6 percent, down from Q3. The nonseasonally adjusted Q4 number is 65.8 percent, also down from the Q3 2020 67.4 percent figure. Over the last decade, the general trend has been consistent: The rate of homeownership continued to struggle. The recent recession as a result of the COVID-19 global pandemic has caused a massive, but brief, jump in homeownership due to grossly reduced spending. Here’s an excerpt from the press release: Announcement: Due to the coronavirus pandemic (COVID-19), data collection operations for the CPS/HVS were affected during the fourth quarter of 2020, as in-person interviews were only allowed for portions of the sample in October (100 percent), November (98 percent), and December (84 percent). If the Field Representative was unable to get contact information on the sample unit, the unit was made a Type A noninterview (no one home, refusal, etc). We are unable to determine the extent to which this data collection change affected our estimates. See the FAQ for more information. National vacancy rates in the fourth quarter 2020 were 6.5 percent for rental housing and 1.0 percent for homeowner housing. The rental vacancy rate of 6.5 percent was not statistically different from the rate in the fourth quarter 2019 (6.4 percent) and not statistically different from the rate in the third quarter 2020 (6.4 percent). The homeowner vacancy rate of 1.0 percent was 0.4 percentage points lower than the rate in the fourth quarter 2019 (1.4 percent) and not statistically different from the rate in the third quarter 2020 (0.9 percent). The homeownership rate of 65.8 percent was 0.7 percentage points higher than the rate in the fourth quarter 2019 (65.1 percent) and 1.6 percentage points lower than the rate in the third quarter 2020 (67.4 percent). The Census Bureau has been tracking the nonseasonally adjusted data since 1965. Their seasonally adjusted version only goes back to 1980. Here is a snapshot of the nonseasonally adjusted series with a 4-quarter moving average to highlight the trend.
Construction Spending Increased 1.0% in December; 4.7% Annual Increase — From the Census Bureau reported that overall construction spending increased: Construction spending during December 2020 was estimated at a seasonally adjusted annual rate of $1,490.4 billion, 1.0 percent above the revised November estimate of $1,475.6 billion. The December figure is 5.7 percent above the December 2019 estimate of $1,410.3 billion. The value of construction in 2020 was $1,429.7 billion, 4.7 percent above the $1,365.1 billion spent in 2019. Both private and public spending increased: Spending on private construction was at a seasonally adjusted annual rate of $1,137.6 billion, 1.2 percent above the revised November estimate of $1,124.4 billion. … In December, the estimated seasonally adjusted annual rate of public construction spending was $352.8 billion, 0.5 percent above the revised November estimate of $351.1 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Residential spending is 2% above the bubble peak (in nominal terms – not adjusted for inflation). Non-residential spending is 8% above the previous peak in January 2008 (nominal dollars), but has been weak recently. Public construction spending is 8% above the previous peak in March 2009, and 35% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 20.7%. Non-residential spending is down 9.8% year-over-year. Public spending is up 3.0% year-over-year. Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential, and public spending (depending on disaster relief), will be under pressure. For example, lodging is down 25% YoY, multi-retail down 21% YoY, and office down 3% YoY. This was slightly above consensus expectations of a 0.9% increase in spending, and construction spending for the previous two months was revised up. A strong report.
Update: Framing Lumber Prices Almost Double Year-over-year -Here is another monthly update on framing lumber prices. This graph shows CME framing futures through Feb 2nd. This is up 93% year-over-year – Almost double. There is a seasonal pattern for lumber prices, and usually prices will increase in the Spring, and peak around May, and then bottom around October or November – although there is quite a bit of seasonal variability. Clearly there is another surge in demand for lumber.
Underlying Inflation Gauge: December Update — Here is the latest from the NY Fed:
- The UIG “full data set” measure for December is currently estimated at 1.5%, a 0.1 percentage point increase from the previous month.
- The “prices-only” measure for December is currently estimated at 2.1%, unchanged from the previous month.
- The twelve-month change in the December CPI was +1.4%, a 0.2 percentage point increase from the previous month.
- For December 2020, trend CPI inflation is estimated to be in the 1.5% to 2.1% range, which is a tad bit narrower than the currently estimated November 2020 range. Note that the COVID-19 outbreak continues to impact data collection for the CPI release.
Economists at the NY Federal Reserve Bank introduced a new measure of trend inflation in September 2017, the Underlying Inflation Gauge (UIG), meant to complement the current standard measures. Investors and policymakers alike have an interest in the behavior of inflation over longer time periods. The trend component of inflation is not an observed measure and a proxy measure is required to calculate it. To calculate trend inflation, transitory changes in inflation must be removed such as volatile components or specific items. Core CPI, which is the most widely used and accepted form of estimating trend inflation, only focuses on price components. The UIG derives trend inflation from a large set of data that extends beyond price variables. Additionally, it has shown higher forecast accuracy than traditional core inflation measures.
Hotels: Occupancy Rate Declined 29.6% Year-over-year – From CoStar: STR: Top 25 Markets Notch Lower Occupancies: U.S. weekly hotel occupancy remained relatively flat from the previous week, according to STR’s latest data through Jan. 30.
Jan. 24-30, 2021 [percentage change from comparable week in 2020]:
Occupancy: 40.4% [-29.6%]
Average daily rate [ADR]: US$89.62 [-29.8%]
Revenue per available room [RevPAR]: US$36.23 [-50.6%]
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. The red line is for 2021, black is 2020, blue is the median, and dashed light blue is for 2009 (the worst year since the Great Depression for hotels prior to 2020). Even when occupancy increases to 2009 levels, hotels will still be hurting. Seasonally we’d expect that business travel would start to pick up in the new year, but there will probably not be much pickup early in 2021.
U.S. should prepare for a COVID-19 hospital consolidation surge – The COVID-19 pandemic has created a buyer’s market for large health systems looking to acquire struggling hospitals hard-hit by the pandemic. Despite claims that mergers bring greater efficiencies and more coordinated care, research suggests that consolidation increases health care costs and does not meaningfully improve quality. In addition to continuing antitrust investigations, three policy options can help maintain competition in U.S. health care markets. The pandemic has brought many hospitals to their knees. With a dramatic reduction in routine procedures and the added costs of caring for COVID-19 patients, U.S. hospitals and health systems suffered an estimated $202.6 billion in total losses between March and June alone.Hospitals in rural and low-income areas are particularly vulnerable to these losses. Even before the pandemic, 25 percent of rural hospitals were experiencing financial strain and were at “high risk of closing.” These rural hospitals are important for maintaining health care access in the surrounding communities. The federal government has passed billions of dollars in pandemic bailout funds to aid hospitals, but distribution of the funds has been unbalanced, favoring larger, wealthier hospital systems. As a result, some of the hard-hit small independent hospitals may close after the pandemic, leaving patients with fewer options for care. Rather than close their doors during times of financial distress, independent hospitals can choose to merge with larger health systems. This is a growing trend in the U.S. health care system, which is becoming increasingly consolidated – dominated by fewer, larger health care organizations.Now, with financial conditions deteriorating for hospitals during the pandemic, there is even more incentive for smaller independent hospitals to merge with the dominant health systems or risk going out of business.Hospital administrators and national hospital associations defend mergers and acquisitions, claiming they will lead to better coordination, lower costs, and improved patient care. The American Hospital Association has published research on mergers’ consequences, which found reductions in operating expenses at acquired hospitals, reductions in readmission and mortality rates, and savings for health plans.However, most evidence from antitrust experts suggests that hospital mergers lead to price increases and higher premiums for patients because there is less competition in the marketplace.
Q4 2020 GDP Details on Residential and Commercial Real Estate – The BEA has released the underlying details for the Q4 advance GDP report. The BEA reported that investment in non-residential structures increased at a 3.0% annual pace in Q4. This followed four consecutive quarterly declines (weakness started before the pandemic). On an annual basis, investment in non-residential structures was off 9.5% in 2020 from 2019. Investment in petroleum and natural gas structures increased sharply in Q4 compared to Q3, but was still down 37% year-over-year. On an annual basis, investment in petroleum and natural gas structures was off 39% in 2020 compared to 2019. The first graph shows investment in offices, malls and lodging as a percent of GDP. Investment in offices decreased in Q4, and was only 6.1% year-over-year. Investment in multimerchandise shopping structures (malls) peaked in 2007 and was down about 19% year-over-year in Q4 – and at a record low as a percent of GDP. The vacancy rate for malls is still very high, so investment will probably stay low for some time. Lodging investment decreased in Q4, and lodging investment was down 23% year-over-year. All three sectors – offices, malls, and hotels – are being hurt significantly by the pandemic. The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes). Even though investment in single family structures has increased from the bottom, single family investment is still low, and still below the bottom for previous recessions as a percent of GDP. Investment in single family structures was $337 billion (SAAR) (about 1.6% of GDP), and up 16.2% year-over-year. Investment in multi-family structures increased in Q4. Investment in home improvement was at a $306 billion Seasonally Adjusted Annual Rate (SAAR) in Q3 (about 1.4% of GDP). Home improvement spending has been solid during the pandemic. Note that Brokers’ commissions (black) increased sharply as existing home sales increased in the second half of 2020, and was up 32% year-over-year in Q4.
U.S. Courts: Bankruptcy Filings Decline 29.7% in 2020 – From the U.S. Courts: Annual Bankruptcy Filings Fall 29.7 Percent: Bankruptcy filings fell sharply for the 12-month period ending Dec. 31, 2020, despite a significant surge in unemployment related to the coronavirus (COVID-19). Annual bankruptcy filings in calendar year 2020 totaled 544,463, compared with 774,940 cases in 2019, according to statistics released by the Administrative Office of the U.S. Courts. That is a decrease of 29.7 percent. Only one category saw an increase in filings. Chapter 11 reorganizations rose 19.2 percent, from 6,808 in 2019 to 8,113 in 2020. Of those, 7,561 involved business reorganizations.The number of total filings was the lowest since 1986, when 530,438 bankruptcies were filed. Filings fell sharply in the early months of the pandemic, starting in March 2020, when many courts offered limited access to the public. In addition, bankruptcy filings can lag behind other economic indicators. Following the Great Recession, which began in 2007, new filings escalated until they peaked in 2010. This graph shows the business and non-business bankruptcy filings by calendar year since 2001.The sharp decline in 2006 was due to the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005”. (a good example of Orwellian named legislation since this was more a “Lender Protection Act”).Due to the pandemic, bankruptcy filings fell sharply in 2020 to the lowest level since 1986. It is likely that bankruptcy filings will increase in 2021.
The richest 20% of America are the real pandemic supersavers –During the worst year for economic recovery since 1946, Americans socked away money at a historically high pace. But those savings largely stayed in the pockets of higher earners, while everyone else held close to nothing by the end of 2020.U.S. households accumulated around $1.6 trillion in excess savings over the last 10 months, according to an analysis by Oxford Economics. But the top 20% of earners – and to a lesser extent the second 20% – account for all the current accumulated cash. Meanwhile, the bottom 60% have spent most of the savings they accumulated in the pandemic from direct payments and unemployment benefits.”All of the savings buffer is essentially now in the hands of the top 40%,” Gregory Daco, Oxford Economics’ chief U.S. economist, told Yahoo Money. “Whereas the bottom 60% have essentially spent most of their fiscal transfers.”The top quintile of households has saved an average of $50,000 since the pandemic started, while for the second quintile averaged $9,000, the analysis found. For the rest of the population, their savings are currently at their pre-pandemic levels or, in some cases, lower.The personal savings rate reached a historic high of 33% in April and remains elevated at 13.4% in the fourth quarter of 2020, which would be the highest quarterly rate since 1975 if second and third quarters of 2020 are excluded.The savings rate for the bottom 60% of earners, though, is now at its pre-pandemic levels or lower, while it remains higher for high-income earners, according to Daco.And while lower-income households held a larger share of the savings in the spring months when the bulk of the $1,200 stimulus checks were disbursed and the extra $600 in weekly unemployment benefits under the CARES Act was available, that money quickly disappeared.”Even though the fiscal transfers did lift the savings rate to 33% back in April, a lot of that was was fairly rapidly spent,” Daco said.
January Vehicles Sales increased to 16.63 Million SAAR – The BEA released their estimate of light vehicle sales for January this morning. The BEA estimates sales of 16.63 million SAAR in January 2021 (Seasonally Adjusted Annual Rate), up 2.5% from the December sales rate, and down 1.5% from January 2020. This was above the consensus estimate of 16.3 million SAAR.This graph shows light vehicle sales since 2006 from the BEA (blue) and the BEA’s estimate for January (red).The impact of COVID-19 was significant, and April was the worst month.Since April, sales have increased, but are still down year-over-year,The second graph shows light vehicle sales since the BEA started keeping data in 1967.Note: dashed line is current estimated sales rate of 16.63 million SAAR.This was the highest sales rate since before the start of the pandemic, and a solid start for 2021 (although down year-over-year).
Trade Deficit Decreased to $66.6 Billion in December — From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $66.6 billion in December, down $2.4 billion from $69.0 billion in November, revised.December exports were $190.0 billion, $6.2 billion more than November exports. December imports were $256.6 billion, $3.8 billion more than November imports…. For 2020, the goods and services deficit increased $101.9 billion, or 17.7 percent, from 2019. Exports decreased $396.4 billion or 15.7 percent. Imports decreased $294.5 billion or 9.5 percent. Both exports and imports increased in December. Exports are down 10.2% compared to December 2019; imports are unchanged compared to December 2019. Both imports and exports decreased sharply due to COVID-19, and have now bounced back (imports much more than exports), The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Note that the U.S. exported a slight net positive petroleum products in recent months. Oil imports averaged $38.30 per barrel in December, up from $35.68 per barrel in November, and down from 51.48 in December 2019. The trade deficit with China increased to $27.2 billion in December, from $24.83 billion in December 2019.
AAR: January Rail Carloads down 2.1% YoY, Intermodal Up 12.1% YoY — From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission. U.S. rail volumes in January 2021 weren’t exemplary, but they were encouraging. Total carloads averaged 232,576 per week in January, the highest weekly average for any month in a year. Ten out of 20 carload categories had higher volumes in January 2021 than in January 2020. In January 2021, U.S. intermodal volume and carloads of chemicals were both higher than ever before (on a weekly average basis); carloads of grain were higher than in any month since October 2007 and the eleventh most for any month on record; and carloads for several other major carload categories, including primary metal products, lumber, paper, and iron and steel scrap, were higher than they’ve been since the pandemic began. Total carloads excluding coal were up 2.3% in January 2021 over January 2020, their second yearover-year increase in a row following 22 straight year-over-year monthly declines. This graph from the Rail Time Indicators report shows the six week average of U.S. Carloads in 2018, 2019 and 2020: U.S. railroads originated 930,303 total carloads in January 2021, down 2.1% (19,799 carloads) from January 2020. January 2021 was the 24th consecutive month with a year-over-year decline for total carloads, but 2.1% is the smallest percentage decline in 21 months. The second graph shows the six week average of U.S. intermodal in 2018, 2019 and 2020: (using intermodal or shipping containers):U.S. railroads originated 1.17 million intermodal containers and trailers in January 2021, an average of 293,305 per week – a new all-time record and up 12.1% (126,548 units) over January 2020. Note that rail traffic was weak prior to the pandemic, however intermodal has come back strong.
January Regional Fed Manufacturing Overview — Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country’s GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, “The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. Significant revisions in the history of the CFMMI are anticipated.” Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. The latest average of the five for January is 13.6, up from the previous month’s 11.5. It is well below its all-time high of 25.1, set in May 2004.
ISM Manufacturing index Decreased to 58.7 in January –The ISM manufacturing index indicated expansion in January. The PMI was at 58.7% in January, down from 60.5% in December. The employment index was at 52.6%, up from 51.7% last month, and the new orders index was at 61.1%, down from 67.5%. From ISM: Manufacturing PMI at 58.7%; January 2021 Manufacturing ISM Report On Business: “The January Manufacturing PMI registered 58.7 percent, down 1.8 percentage points from the seasonally adjusted December reading of 60.5 percent. This figure indicates expansion in the overall economy for the eighth month in a row after contraction in March, April, and May. The New Orders Index registered 61.1 percent, down 6.4 percentage points from the seasonally adjusted December reading of 67.5 percent. The Production Index registered 60.7 percent, a decrease of 4 percentage points compared to the seasonally adjusted December reading of 64.7 percent. The Backlog of Orders Index registered 59.7 percent, 0.6 percentage point above the December reading of 59.1 percent. The Employment Index registered 52.6 percent, 0.9 percentage point higher from the seasonally adjusted December reading of 51.7 percent. The Supplier Deliveries Index registered 68.2 percent, up 0.5 percentage point from the December figure of 67.7 percent. The Inventories Index registered 50.8 percent, 0.2 percentage point lower than the seasonally adjusted December reading of 51 percent. The Prices Index registered 82.1 percent, up 4.5 percentage points compared to the December reading of 77.6 percent. The New Export Orders Index registered 54.9 percent, a decrease of 2.6 percentage points compared to the December reading of 57.5 percent. The Imports Index registered 56.8 percent, a 2.2-percentage point increase from the December reading of 54.6 percent.”This was below expectations. This suggests manufacturing expanded at a slower pace in January than in December.
Markit Manufacturing Hits Record High in January — The January US Manufacturing Purchasing Managers’ Index conducted by Markit came in at 59.2, up 2.1 from the 57.1 final December figure. Here is an excerpt from Chris Williamson, Chief Business Economist at IHS Markit in their latest press release: “US manufacturing started 2021 on an encouragingly strong footing, with production and order books growing at the fastest rates for over six years. “Demand from both domestic and export customers picked up sharply in January, buoyed by several driving forces. Consumer demand has improved while businesses are investing in more equipment and restocking warehouses, preparing for better times ahead as vaccine roll outs allow life to increasingly return to normal over the course of 2021.“Manufacturers are encountering major supply problems, however, especially in relation to sourcing inputs from overseas due to a lack of shipping capacity. Lead times are lengthening to an extent not previously seen in the survey’s history, meaning costs are rising as firms struggle to source sufficient quantities of inputs to meet production needs. These higher costs are being passed on to customers in the form of higher prices, which rose in January at the fastest rate since 2008. These price pressures should ease assuming supply conditions start to improve soon, but could result in some near-term uplift to consumer goods price inflation.” [Press Release] Here is a snapshot of the series since mid-2012.
U.S. Manufacturing Growth Continued Early in 2021 – WSJ — U.S. manufacturing continued to recover in January, a bright spot for the U.S. economy as services companies continue to struggle with the coronavirus pandemic. Two purchasing managers surveys on manufacturing activity released Monday pointed to continued growth, adding to evidence a pickup in demand for goods is helping U.S. factories. The Institute for Supply Management’s manufacturing index ticked lower in January, to 58.7 from 60.5 in December, but remained in growth mode. A reading above 50 indicates activity is expanding across the manufacturing sector, while below 50 signals contraction. While the pace of expansion slowed slightly last month, Tim Fiore, who oversees the ISM survey of factory purchasing and supply managers, said he is “feeling really bullish” about 2021, adding “the issue is how long it’s going to take to get the vaccine deployed” to ease strains in attracting and retaining labor at companies and facilities. Meanwhile, a final January IHS Markit manufacturing survey for the U.S. released Monday rose to 59.2, from 57.1 in December. That was the index’s highest reading since the series began in 2007, as output and new orders rose. “Manufacturing sector prospects for 2021 are upbeat, with solid consumer goods demand, inventory restocking, gradual business reopenings, and additional federal pandemic relief all set to keep activity on a firm footing,” said Oren Klachkin, an economist at Oxford Economics, in a note to clients. U.S. industrial production also increased solidly in December, the Federal Reserve reported last month, citing manufacturing as a driving factor. Globally, the manufacturing industry’s pace of expansion cooled slightly in several major economies in January as they continued to battle Covid-19 restrictions. January surveys of factories in Europe showed manufacturing in the eurozone remained in expansionary territory for the seventh consecutive month, although at a slower pace. The eurozone manufacturing purchasing managers index was 54.8 for January, down slightly on December’s 55.2, but still one of the highest figures seen over the past 21/2 years, according to IHS Markit. U.K. manufacturing PMI was 54.1 in January, a three-month low.
GM Joins Nissan & Ford In Suspending Production Due To Semi Shortage – General Motors has announced it is the latest victim of the global semiconductor shortage in the auto industry. Mid-day on Wednesday the U.S. automaker announced that the shortage would “impact production in 2021”, according toStreetInsider. The company said in a statement that “semiconductor supply for the global auto industry remains very fluid”.It continued: “Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM. Despite our mitigation efforts, the semiconductor shortage will impact GM production in 2021.”The automaker said it is “currently assessing the overall impact, but our focus is to keep producing our most in-demand products – including full-size trucks and SUVs and Corvettes – for our customers. The company said the following GM assembly plants will take downtime on all shifts the week of Monday, Feb. 8:
- Fairfax (Kansas)
- CAMI (Ingersoll, Ontario)
- San Luis Potosi (Mexico)
“In addition, we will take downtime at our Bupyeong 2 assembly plant in Korea and operate at half capacity beginning the week of Feb. 8.” the company announced. “Due to the fluidity around the availability of parts, our current plan is to update the plants each week. Our intent is to make up as much production lost at these plants as possible. Importantly, this issue will not impact our commitment to an all-electric future. We will provide further details on this matter when we report our 2020 earnings on Feb. 10.” Recall, we wrote just days ago how the industry was “panicked” about the semi shortage. Major players like VW, Toyota and GM are still suffering from a shortage of chips that are becoming more common in everyday vehicles, we noted. The drain on the supply chain has come from a corresponding rise in the sales of gaming consoles, TVs and computers – mostly as a result of the pandemic. The chips are now being used in everything from vehicle entertainment centers to anti-lock brakes.
Ford F-150 production cut due to semiconductor chip shortage – Ford Motor is significantly cutting production of its highly profitable F-150 pickup trucks due to an ongoing semiconductor chip shortage plaguing the global automotive industry. The automaker said Thursday that its Dearborn Truck Plant in Michigan will drop to one shift from three for a week beginning Monday, while truck production at its Kansas City Assembly Plant in Missouri will drop to two shifts from three. Ford spokeswoman Kelli Felker said both plants are expected to return to three shifts the week of Feb. 15. “We are working closely with suppliers to address potential production constraints tied to the global semiconductor shortage and working to prioritize key vehicle lines for production, making the most of our semiconductor allocation,” she said in an emailed statement. Shares of Ford appeared to be unaffected by the cuts, trading up by about 3% during intraday trading late Thursday morning. The automaker is scheduled to report its fourth-quarter earnings and give guidance for 2021 after the market closes Thursday. Automakers and parts suppliers began warning of a semiconductor shortage late last year after demand for vehicles rebounded stronger than expected following a two-month shutdown of production plants due to the coronavirus pandemic. Semiconductors are extremely important components of new vehicles for areas ranging from infotainment systems to more traditional parts such as power steering. They’re also used in consumer electronics. Ford’s confirmed plans come a day after General Motors said it would take down production next week at four assembly plants in Fairfax, Kansas; Ingersoll, Ontario, and San Luis Potosi, Mexico. GM will also run a plant in South Korea at half capacity that week.
ISM Services Index Increased to 58.7% in January — The December ISM Services index was at 58.7%, up from 57.7% last month. The employment index increased to 55.2%, from 48.7%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management: Services PMI at 58.7%; January 2021 Services ISM Report On Business “The Services PMI registered 58.7 percent, 1 percentage point higher than the seasonally adjusted December reading of 57.7 percent. This reading is the highest since February 2019 (58.8 percent) and indicates the eighth straight month of growth for the services sector, which has expanded for all but two of the last 132 months. This was above expectations, and solid improvement for the employment index.
January Markit Services PMI: “Sharp upturn in business activity amid stronger client demand” The January US Services Purchasing Managers’ Index conducted by Markit came in at 58.7 percent, up 3.9 from the final December estimate of 54.8. The Investing.com consensus was for 57.4 percent.Here is the opening from the latest press release:“A strong start to the year for manufacturing was accompanied by a marked upturn in the service sector, driving business activity growth to the fastest rate for almost six years during January. The improving data set the scene for a strong first quarter, and a rise in business expectations for the year ahead bodes well for the recovery to gain traction as the year proceeds. Companies have become increasingly upbeat amid news of vaccine roll-outs and hopes of further stimulus.“The downside is that prices have risen sharply. Rising costs have fed through to higher prices charged for goods and services, which rose in January at a rate not seen since at least 2009. Inflation therefore looks likely to be pushed higher in the near-term. However, some of these price pressures reflect short -term supply constraints, which should ease in coming months as the recovery builds and more capacity comes online.” [Press Release]Here is a snapshot of the series since mid-2012.
Weekly Initial Unemployment Claims decreased to 779,000 -The DOL reported: In the week ending January 30, the advance figure for seasonally adjusted initial claims was 779,000, a decrease of 33,000 from the previous week’s revised level. The previous week’s level was revised down by 35,000 from 847,000 to 812,000. The 4-week moving average was 848,250, a decrease of 1,250 from the previous week’s revised average. The previous week’s average was revised down by 18,500 from 868,000 to 849,500.This does not include the 348,912 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 403,590 the previous week.The following graph shows the 4-week moving average of weekly claims since 1971.The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 848,250. The previous week was revised down.The second graph shows seasonally adjust continued claims since 1967 (lags initial by one week). At the worst of the Great Recession, continued claims peaked at 6.635 million, but then steadily declined.Regular state continued claims decreased to 5,188,141 (SA) from 5,446,993 (SA) the previous week and will likely stay at a high level until the crisis abates. Note: There are an additional 7,217,713 receiving Pandemic Unemployment Assistance (PUA) that decreased from 7,343,682 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.
Unemployment claims topped 1.1 million last week: Congress must pass bold relief measures to keep crucial programs from expiring – EPI Blog – Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 779,000 people who applied for regular state UI and 349,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was a decrease of 88,000 from the prior week, but the four-week moving average of total initial claims ticked up by 51,000 – back to where it was in mid-October.Last week was the 46th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims – because we didn’t have PUA in the Great Recession – initial claims last week were still greater than the third-worst week of the Great Recession.) I should note that throughout this post I use seasonally adjusted data where I can, but for comparisons to the Great Recession I use not-seasonally-adjusted data, since the Department of Labor (DOL)’s improved seasonal adjustments aren’t available before the week ending August 29, 2020.Most states provide just 26 weeks of regular benefits, meaning many workers are exhausting their regular state UI benefits. In the most recent data (the week ending January 23), continuing claims for regular state benefits dropped by 193,000. After a worker exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 24 weeks of regular state UI (theDecember COVID-19 relief bill increased the number of weeks of PEUC eligibility by 11, from 13 to 24).However, in the most recent data available for PEUC, the week ending January 16th, PEUC claims dropped by 290,000. I expect that to rise again in coming weeks. Over 3.5 million people had exhausted the original 13 weeks of PEUC by the end of December (see column C43 in form ETA 5159 for PEUC here). These workers are eligible for the additional 11 weeks, but they need to recertify. PEUC numbers will continue to swell as this occurs.Extended Benefits (EB) is another program that workers in some states can get on after they’ve exhausted PEUC. EB has rose 376,000 between December 26th and January 16th. It appears that some workers who had exhausted the original 13 weeks of PEUC are getting on EB before they get their additional 11 weeks of PEUC. This is likely due to the delays getting PEUC fully operational again after the lapse that occurred while former President Trump delayed signing the December relief bill.Continuing claims for PUA dropped by 126,000 in the latest data, the week ending January 16th. I expect that to rise again in coming weeks. The December bill extended the total weeks of PUA eligibility by 11, from 39 to 50 weeks. As workers who exhausted PUA before the extensions were signed get back on PUA, we can expect the PUA numbers to swell further.
ADP: Private Employment increased 174,000 in January — From ADP: Private sector employment increased by 174,000 jobs from December to January according to the January according to the December ADP National Employment Report. … The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “The labor market continues its slow recovery amid COVID-19 headwinds,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Although job losses were previously concentrated among small and midsized businesses, we are now seeing signs of the prolonged impact of the pandemic on large companies as well.” This was well above the consensus forecast of 45,000 for this report. The BLS report will be released Friday, and the consensus is for 50 thousand non-farm payroll jobs added in January. Of course the ADP report has not been very useful in predicting the BLS report.
January Employment Report: 49 Thousand Jobs, 6.3% Unemployment Rate – From the BLS: The unemployment rate fell by 0.4 percentage point to 6.3 percent in January, while nonfarm payroll employment changed little (+49,000), the U.S. Bureau of Labor Statistics reported today. The labor market continued to reflect the impact of the coronavirus (COVID-19) pandemic and efforts to contain it. In January, notable job gains in professional and business services and in both public and private education were offset by losses in leisure and hospitality, in retail trade, in health care, and in transportation and warehousing. … The change in total nonfarm payroll employment for November was revised down by 72,000, from +336,000 to +264,000, and the change for December was revised down by 87,000, from -140,000 to -227,000. With these revisions, employment in November and December combined was 159,000 lower than previously reported. The first graph shows the year-over-year change in total non-farm employment since 1968. In January, the year-over-year change was negative 9.603 million jobs.Total payrolls increased by 49 thousand in January. Private payrolls increased by 6 thousand. Payrolls for November and December were revised down 159 thousand, combined.The second graph shows the job losses from the start of the employment recession, in percentage terms. The current employment recession is by far the worst recession since WWII in percentage terms, and is still worse than the worst of the “Great Recession”.The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate decreased to 61.4% in January. This is the percentage of the working age population in the labor force.The Employment-Population ratio increased to 57.5% (black line).The fourth graph shows the unemployment rate.The unemployment rate decreased in January to 6.3%.This was below consensus expectations, and November and December were revised down by 159,000 combined. On the annual benchmark revision: The total nonfarm employment level for March 2020 was revised downward by 250,000(on a not seasonally adjusted basis, -121,000 or -0.1 percent). Not seasonally adjusted, the absolute average benchmark revision over the past 10 years is 0.2 percent. The over-the-year change in total nonfarm employment for March 2020 was revised from +808,000 to +577,000 (seasonally adjusted).
January 2021 jobs report: a strong divergence between very weak job gains, but a big drop in unemployment; but the only critical number is the doses of vaccine administered –For the past several weeks, based on the increase in initial jobless claims, I have warned that the December employment report might have a negative number, or at very least a very weak positive. Once again this was an accurate forecast. There was a strong divergence between the household and establishment reports this month. And to cut to the chase, the only real critical number is the amount of vaccinations administered. HEADLINES:
- 49,000 million jobs added, only 5,000 of which were in the private sector and 43,000 in government. The alternate, and more volatile measure in the household report indicated a gain of 201,000 jobs, which factors into the unemployment and underemployment rates below.
- U3 unemployment rate declined 0.4% at 6.3%, compared with the January 2020 low of 3.5%.
- U6 underemployment rate fell -0.6% to 11.1%, compared with the January 2020 low of 6.9%.
- Those on temporary layoff decreased 293,000 to 2,746,000.
- Permanent job losers increased by 133,000 to 3,503,000.
- November was revised downward by 72,000. December was also revised downward by 87,000 respectively, for a net loss of 159,000 jobs compared with previous reports.
- the average manufacturing workweek increased to 40.4 hours. This is one of the 10 components of the LEI.
- Manufacturing jobs declined by 10,000. Manufacturing has still lost -592,000 jobs in the past 11 months, or 5% of the total. About 60% of the total loss of 10.6% has been regained.
- Construction jobs decreased by 3,000. Even so, in the past 11 months -256,000 construction jobs have been lost, 3% of the total. About 80% of the worst loss of 15.2% loss has been regained.
- Residential construction jobs, which are even more leading, *rose* by 3,600. Since February there have now been actual job *gains,* and employment in this sector is at another new 10 year+ high.
- temporary jobs increased by 80,900. Since February, there have still been 241,100 jobs lost, or 8% of all temporary help jobs.
- the number of people unemployed for 5 weeks or less declined by -626,000 to 2.278 million, compared with April’s total of 14.283 million.
- Professional and business employment rose by 97,000, which is still 825,000, or about 4% below its February peak.
- Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.03 from $25.15 to $25.18, which is a 5.4% YoY gain. This is a level not seen in the past 10 years outside of the first months of this pandemic. Relative gains in this measure reflect that job losses during the pandemic have occurred primarily among lower wage earners.
- the index of aggregate hours worked for non-managerial workers rose by 0.5%. In the past 11 months combined this has nevertheless fallen by about 5.5%.
- the index of aggregate payrolls for non-managerial workers rose by 0.6%. In the past 11 months combined this has nevertheless fallen by about 2.5%. Still, over 90% of the loss from February to April has been made back up.
- Full time jobs gained 301,000 in the household report.
- Part time jobs declined 456,000 in the household report.
- The number of job holders who were part time for economic reasons decreased by 216,000 to 4.567 million. This is still an increase since February of 1,556,000.
- UPDATE: The pandemic has had a singular effect on food and drink establishments. Since October, there have been 446,400 jobs lost. “Only” 19,400 of those were in January – so that is at least “less awful.”
SUMMARY: Once again the household and establishment reports strongly diverged. The household report, from which unemployment rates and the number of full time vs. part time workers are taken, showed strong gains, driven by both increased employment and a slight decrease in the number of people in the jobs market. The establishment report, by contrast, showed weak gains or outright losses, depending on the employment sector. What stands out is the huge gains in temporary employment, which is a leading sector, but also strongly suggests that employers are not willing to make permanent commitments in this volatile environment. But for the vaccines, the December and January reports together would strongly suggest that a “double dip” recession has started, due to the tremendous surge in new COVID cases during the past 3 months. I suspect, however, that competent policy from the Biden Administration and the continuing improvement I the number of vaccines administered daily, plus the onset of warmer weather in spring, will end these week numbers in a month or two.
The economy Trump handed off to President Biden: 25.5 million workers – 15.0% of the workforce – hit by the coronavirus crisis in January — EPI Blog – The unemployment rate rate was 6.3% in January – matching the maximum unemployment rate of the early 2000s downturn – and the official number of unemployed workers was 10.1 million, according to the Bureau of Labor Statistics (BLS). However, these official numbers are a vast undercount of the number of workers being harmed by the weak labor market. In fact, 25.5 million workers – 15.0% of the workforce – are either unemployed, otherwise out of work due to the pandemic, or employed but experiencing a drop in hours and pay. Here are the missing factors:
- Some workers are being misclassified as “employed, not at work” instead of unemployed. BLS has discussed at length that there have been many workers who have been misclassified as “employed, not at work” during this pandemic who should be classified as “temporarily unemployed.” In January, there were 0.8 million such workers. (Wonky aside: Some of these workers may not have had the option of being classified as “temporarily unemployed,” meaning they weren’t technically misclassified, but all of them were out at work because of the virus.) Accounting for these workers, the unemployment rate would be 6.9%.
- The number of officially unemployed is undercounted, even in normal times (and is probably worse now). Rigorous research that addresses issues like the fact that survey nonresponse is nonrandom – and that missing individuals are more likely than the general population to be unemployed – finds that the official unemployment rate was understating the unemployment rate by 1.5 percentage points at the start of 2020. Accounting for that undercount yields 2.7 million unemployed workers who are misclassified as not in the labor force. This is conservative, given that there is good evidence that this problem is likely substantially worse in the coronavirus era. (Another wonky aside: this research also finds that the official labor force participation rate was understating labor force participation by 1.9 percentage points at the start of 2020, or by 4.8 million workers.)
- Some workers who are out of work as a result of the virus are being counted as having dropped out of the labor force instead of as unemployed. In order for a person without a job to be counted as unemployed, they must be available to work and actively seeking work. However, during the COVID-19 crisis, many people who are out of work as a result of the crisis do not meet those criteria. For example, many workers are out of work because of care responsibilities as a result of COVID-19 (e.g., a young child’s school being remote, or an elderly parent’s day care closing), or because potentially being exposed to the virus at work is not safe for them. These workers would not be counted as officially unemployed but are nevertheless out of work because of the coronavirus shock. To calculate how many there are, I estimate what the labor force level would be if the labor force participation rate had not dropped since February 2020 – the month before the pandemic hit the U.S. labor market – by multiplying the February 2020 labor force participation rate by the January 2021 population level. I then subtract this “counterfactual” labor force from the actual labor force. This yields an additional 5.1 million workers out of the labor force as a result of the crisis.
- Millions of employed workers have seen a drop in hours and pay because of the pandemic. BLS reports that 6.8 million people who were working in January had been unable to work at some point in the last four weeks because their employer closed or lost business due to the coronavirus pandemic, and they did not receive pay for the hours they didn’t work. These workers have clearly been directly harmed by the coronavirus downturn.
Adding up all but the last quantity above, that is 10.1 million + 0.8 million + 2.7 million + 5.1 million = 18.7 million workers who are either unemployed or otherwise out of the labor force as a result of the virus. Accounting for these workers, the unemployment rate would be 11.0%. Also adding in the 6.8 million who are employed but have seen a drop in hours and pay because of the pandemic brings the number of workers directly harmed in January by the coronavirus downturn to 25.5 million. That is 15.0% of the workforce.
Comments on January Employment Report – The headline jobs number in the January employment report was below expectations, and employment for the previous two months was revised down significantly. In addition, the annual benchmark revision showed 250 thousand fewer jobs in March 2020 than previously reported. Leisure and hospitality lost 61 thousand jobs in January due to the pandemic. In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and then gained about 60% of those jobs back. However, leisure and hospitality lost jobs in December and January, and is now down 3.9 million jobs since February 2020. Earlier: January Employment Report: 49 Thousand Jobs, 6.3% Unemployment Rate In January, the year-over-year employment change was minus 9.603 million jobs.This graph shows permanent job losers as a percent of the pre-recession peak in employment through the December report. This data is only available back to 1994, so there is only data for three recessions.In January, the number of permanent job losers increased to 3.503 million from 3.370 million in December. Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.The prime working age will be key in the eventual recovery.The 25 to 54 participation rate increased in January to 81.1% from 81.0% in December, and the 25 to 54 employment population ratio increased to 76.4% from 76.3% in December. From the BLS report: “The number of persons employed part time for economic reasons, at 6.0 million, changed little in January. This measure is 1.6 million higher than the February level. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.“The number of persons working part time for economic reasons decreased in January to 5.954 million from 6.170 million in December. These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 11.1% in December. This is down from the record high in April 22.9% for this measure since 1994. This graph shows the number of workers unemployed for 27 weeks or more.According to the BLS, there are 4.023 million workers who have been unemployed for more than 26 weeks and still want a job.This does not include all the people that left the labor force. This will be a key measure to follow during the recovery.Summary: The headline monthly jobs number was below expectations, and the previous two months were revised down 159,000 combined. The headline unemployment rate was declined to 6.3%. This report was worse than it appears. The not-seasonally-adjusted decline in employment was at the usual levels for January – even though employment was already depressed (we’d expect fewer seasonal layoffs than normal). Also, the weather appeared mild in January (the SF Fed will provide weather adjusted employment soon). Overall, this was another disappointing report.
American Airlines Warns It Will Cut Another 13,000 Jobs As It Burns Through Latest Bailout In Just One Month – If you thought that in exchange for the billions in taxpayer funds that Congress gave to the largest US commercial airlines, these same companies would put layoffs on hold for at least a few months, you’d be wrong, because in a letter from American Airliens CEO Doug Parker, the largest US carrier warned that starting this Friday, the company which has now received two rounds of bailouts, will begin issuing aptly titled “Worker Adjustment and Retraining Notification” (WARN) notices covering approximately 13,000 team members. As a reminder, WARN notices may be required by law in advance of potential furloughs in certain locations, and while American is quick to note that “these notices do not necessarily equate to furloughs” the reality is that another 13,000 American airlines are about the be let off. Why the sudden reversal from the company which in December was so giddy about the bright future, it had to wear shades? Because as it lays out in the letter “we are nearly five weeks into 2021, and unfortunately, we find ourselves in a situation similar to much of 2020. As we closed out last year with the successful extension of the Payroll Support Program (PSP), we fully believed that we would be looking at a summer schedule where we’d fly all of our airplanes and need the full strength of our team. Regrettably, that is no longer the case. The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative COVID-19 test have dampened demand.” Translation: “we need another few billion in PPP aid, because we already burned through the money we received just two months ago.”
Kroger grocery chain closes Southern California stores due to new “hero pay” laws leading to worker protests -About 20 grocery store workers rallied in Long Beach, California recently to protest the closure of two Kroger supermarkets. Management at the supermarket chain announced that, in response to a $4-an-hour pay raise to all supermarket employees, it would close those two markets in mid-April and lay off and/or transfer the 200 workers employed at both stores. At the rally, workers carried homemade signs denouncing corporate greed, demanding hazard pay and calling on all workers to speak out. Long Beach is an industrial port and logistics city in Los Angeles County. As of last weekend, the city had reported 48,824 cases and 698 deaths from the coronavirus. It lies directly southwest of the city of Los Angeles, which for several weeks has been the worldwide epicenter of the coronavirus pandemic with more than 17,000 deaths and more than one million positive cases as of this writing. The Long Beach City Council mandated the $4-an-hour “hero pay” wage supplement two weeks ago, in response to the pandemic. The order will last 120 days. Similar ordinances are being proposed in other California cities. The LA City Council is discussing a $5-an-hour hazard pay as are other Los Angeles suburbs. Last week, the board of supervisors in Santa Clara County also voted to draft a $5-per-hour measure. Similar measures are being considered in San Jose and the San Francisco Bay Area. The Long Beach wage supplement applies to supermarkets and all grocery stores with at least 300 employees nationally or more than 15 employees at each store. Kroger management denounced the Long Beach rule, charging the city with interfering in the wage-bargaining process, and for treating other large retailers unequally. Long Beach exempted retail giants Target and Walmart from the rule, even though both those chains sell groceries. A company statement declared that both stores had been “long-struggling.” A company spokesperson indicated that underperforming stores in other cities would also close if forced to pay the extra amount.
U.S. chicken industry accused of conspiring to keep immigrant wages down –Companies producing more than 90% of America’s chicken have conspired to depress wages for a largely immigrant workforce in some of the nation’s most dangerous jobs, according to a lawsuit.The case filed last week is mostly based on interviews with former employees, and it alleges that a conspiracy among 18 companies, their subsidiaries and affiliates and two consulting firms continues today. It was filed on behalf of three former workers but seeks class-action status for hundreds of thousands, many with limited language skills and few other prospects for employment.Since 2009, leaders of the firms’ human resources and compensation departments have held annual secret meetings at a Destin, Fla., hotel to discuss pay and benefits for line and maintenance workers at about 200 plants, according to the complaint in federal court in Baltimore. Using consulting agencies as intermediaries, the suit says, they share detailed wage information. It says plant managers also cooperate, for example, by calling each other when one announces an expansion to find out what new positions will pay. Chicken producers aren’t new to being on the receiving end of litigation. Three years ago, a class-action lawsuit filed by Maplevale Farm, a food distributor, accused them of price fixing enabled by the Indiana-based data company Agri Stats Inc. Lawsuits from consumers, distributors, grocery chains and food companies followed, and this summer the Justice Department intervened. It asked the court to halt proceedings while it pursued its own criminal investigation.
Amazon will pay $61.7 million to settle claims it withheld tips from delivery workers – Amazon will pay $61.7 million to settle allegations by the Federal Trade Commission that it failed to pay Flex delivery drivers the full amount of tips received from customers. The commission voted 4-0 in favor of the settlement, which was announced Tuesday. In the complaint, the FTC alleges that Amazon in 2016 shifted from paying drivers the promised rate of $18 to $25 per hour, plus tips, to paying drivers a lower hourly rate. Amazon “intentionally failed” to notify drivers of this change and used the tips to make up the difference between the promised rate and the new lower hourly rate, according to the FTC. “Rather than passing along 100% of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, in a statement. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”
The Super Bowl super-spreader and holding a mirror up to American society — With the death toll in the COVID-19 pandemic approaching half a million in the US, the holding of the National Football League (NFL) Super Bowl championship game this Sunday between the Tampa Bay Buccaneers and the Kansas City Chiefs and its manufactured “festive” atmosphere are grotesquely and staggeringly inappropriate. One would be hard pressed to exaggerate the callousness of the organizers of this event, with its attendant inanities and pre-packaged “Super Bowl Experience.” The NFL website suggests, “While things will look a little different this year, we’re committed to delivering the ultimate fan experience in the safest way possible.” People wait in line for an exhibit at the NFL Experience, Feb. 4, 2021, in Tampa, Florida [Credit: AP Photo/Charlie Riedel] The pretense that things are merely “a little different,” along with the apparent hope that the population will forget the country is in the midst of social tragedy without precedent, tells one more about the character of the NFL owners and corporate America in general than anything else. By any rational standard that takes public health into account, the game should not be held at all. Raymond James Stadium in Tampa Bay, which ordinarily seats 65,000 spectators, will still have 25,000 people in the stands. The crowd Sunday will include some 7,500 vaccinated health care workers provided free tickets by the NFL. The tickets are intended as a thank you gift. The best way by far to reward such workers would be to cancel the unnecessary and hazardous event. Stephen Kissler, an epidemiologist at Harvard University, told CNBC, “My biggest concern for when COVID-19 might spread at the stadium is not necessarily when people are sitting in their seats… It’s actually when they are mixing in other parts of the stadium.” Not only are the 25,000 fans in danger of contracting a lethal virus, along with the players, coaches, staff and stadium employees, and all those with whom they come into contact during their travels, but the event will spawn thousands of parties across the country (and, indeed, internationally) that will also no doubt lead to further illness and misery. This has been the outcome of every major holiday or special event that has occurred over the course of the pandemic so far.
Unpaid Energy Bills Bring Calls for Utility Relief – When the pandemic hit in March, as millions lost jobs and struggled to pay their bills, 34 states ordered mandatory moratoriums on utility shutoffs – measures that were all more critical as families were asked to stay home. The lockdowns translated into higher utility bills: One economist estimated that residential electricity use spiked 10% on average between April and July 2020, leading to households spending nearly $6 billion on extra usage. Another home energy monitoring company reported that April demand increased 22% from 2019.Yet despite the need never dissipating, most states eventually lifted their utility shutoff moratoriums; by the end of October, just 16 states and Washington, D.C., had active moratoriums in place, covering 40 percent of the U.S. population, according to the National Energy Assistance Directors’ Association. Other states regularly halt utility shutoffs in winter, or when the temperature reaches a particularly cold level. NEADA estimates that 13 states are now relying primarily on these annual seasonal respites. Even in households that still have their heat on and water running, millions of customers are racking up significant debts as unpaid bills mount. And advocates worry that shutoffs, like evictions, are just being kicked down the road. A new economics working paper from Duke University released last week underscored the public health dimension of their concerns: Researchers estimated that, had Congress implemented a nationwide moratorium on utility shutoffs between March and November, Covid-19 infections could have been reduced by 8.7%, and Covid-19 related-deaths by almost 15%. The patchwork of shutoff moratoriums that did exist during that time, the economists found, reduced infections by nearly 4%, and mortality rates by 7.4% by making it easier for people to shelter at home. Without water or electricity, households can be forced to stay with relatives or other families, exacerbating crowding and disease transmission. “Ensuring that people have access to housing and essential services for water and electricity within their housing is necessary in any adequate government response to the housing precarity created by the COVID-19 pandemic,” the researchers wrote.
Epidemic of Despair Could Haunt America Long After COVID – – Long before the virus, many Americans were sinking under waves of despair. Without transformative policies, that despair, with the added fuel of the pandemic, may turn into a tsunami. The aftermath could leave communities under rubble for decades to come.Just in the 21st century, Americans have been threatened by everything from foreign and domestic terrorism to an increasingly aggressive and militarized police. Unable to count on jobs, adequate safety nets, or health care, they have watched the affluent make a killing on Wall Street. They have been spoken down to by politicians and the media, sensing that unless they are rich, the political system will ignore their voices. As research has shown time and time again, they were right. Accused of being bitterly divided, when Americans agreed on something, like a single national program to provide health care coverage run by the government, their preferences were dismissed by their representatives (including the new president) as radical or impossible. Things that make life worthwhile and bearable, like an affordable education or a dignified retirement, grew increasingly out of reach. The middle class was turning into a relic. The people watched America devolve into what looked like a third-world country, with two separate economies in which experiences, prospects and even life spans diverged. Life expectancy in America dipped for the first time in decades in 2015. Experts hoped it was a fluke. It wasn’t. It happened again in 2016. And again in 2017. Not since the Spanish flu had such a decline lasted so long. Many suspected economic inequality was a driving factor, noting that while poor and middle-class Americans were dying younger, the richest were not only living it up, but living longer. A recent Danish study shows that from 2001 to 2014, the life expectancies of wealthy Americans grew 140% faster than those in low-income groups – an outlier among nations.
Milwaukee school board approves plan to reopen schools – Milwaukee Public School Board unanimously approved a plan to begin the phased reopening of schools at their board meeting last Tuesday. The plan allows for 300 special needs students and their teachers to voluntarily return to in-person instruction on February 8. Further, it sets tentative return dates in mid-April for roughly 4,300 teachers and 75,000 students. Under the proposal, 23,000 Pre-Kindergarten through 2nd grade students will return on April 12, 32,000 3rd through 8th graders on April 19, and finally 19,000 high school students will return on April 26. A similar tiered reopening schedule was utilized in Chicago and other districts to divide educators and attempt to stifle opposition. In Chicago, Pre-Kindergarten and Special Education teachers were ordered back into the classroom on January 4th while the rest of the district is remote. The proposal is incredibly reckless and unnecessary, as it would have students back for little over a month before the school year ends. The board will meet again in March to determine whether to fully reopen in April or postpone based on the prevalence of COVID-19 and the state of vaccination of the population. The Wisconsin Department of Health will allow educators to begin receiving the vaccine on March 1. However, it could be weeks before the vaccine is available. The slow nationwide roll-out of vaccines is particularly sluggish in Wisconsin. According to data from the Centers for Disease Control and Prevention (CDC), only 0.8 percent of the state’s overall population has received the first dose of the vaccine. Last week Milwaukee received 2,200 doses, only 44 percent of its weekly request. Wisconsin is receiving 70,000 doses per week, approximately one-third of the amount needed to achieve the state’s goal of vaccinating 80 percent of the population by June. At the current rate, it will take roughly two and a half years to reach this goal. The Board’s decision comes after an outpouring of support to continue remote learning. In a district-wide survey last week, 39 percent of parents stated that they “would prefer to continue with virtual learning this school year for my child.” A petition against reopening received over 3,800 signatures.
Washington D.C. public schools begin in-person instruction as Virginia teachers resist return -Public school teachers in Washington D.C. have been ordered back to in-person classes this week after an arbitration court on Saturday ruled against a last-minute complaint filed by the teachers union. On Sunday, a major snowstorm forced the city to backtrack on its plans for Monday in-person classes. With consummate cynicism, Democratic Mayor Muriel E. Bowser resisted canceling classes until the last moment, even as the city declared a citywide emergency, which will last until Tuesday. Students and teachers have been told to be in class Tuesday. As many as 15,000 pre-kindergarten and elementary school students will begin returning to classes in the nation’s capital this week, which marks the beginning of the DC Public School (DCPS) system’s third quarter. In addition, 4,200 school staff workers are obligated to report in-person this week. While DCPS teachers have been cleared to receive doses of the vaccine, last week DC health director LaQuandra Nesbitt told reporters that the city’s vaccination program was operating at a “dismal” level. As of Saturday, only 1,330 DCPS teachers and 800 charter staff have received the vaccine, which could take weeks before providing full protection. Even if timely vaccinations of school staff were possible, children could still become infected and pass COVID-19 to their parents and each other. The Washington Teachers Union (WTU) filed a last-minute claim against the District last month alleging that the city administration had failed to honor conditions in the plan struck in December between the WTU and DCPS. The WTU stated that DCPS had not provided proof that it had repaired its ailing HVAC systems, or conducted satisfactory walkthroughs at each school. In its ruling, the city arbitration panel found that DCPS had failed to honor its agreement in certain instances, but it did not justify delaying the re-openings. The panel ruled that two schools, Calvin Coolidge High School and Watkins Elementary, would have to delay their openings to provide satisfactory walkthroughs for city staff before reopening.
Chicago educators call for a strike as district begins partial lockout — The struggle of Chicago educators to prevent the deadly reopening of schools is intensifying each day and continues to be the focal point of the class struggle in the United States. In defying the dictates of the Chicago Democratic Party political machine headed by Mayor Lori Lightfoot, teachers and school workers are giving voice to the strivings of millions of workers across the US and globally to implement measures to contain the pandemic and save lives. With schools slated to reopen Monday, Democratic Mayor Lori Lightfoot and Chicago Public Schools (CPS) CEO Janice Jackson held a press conference Sunday evening in which they falsified science and threatened teachers to try to cow them into submission. Due to widespread opposition, including from parents and students, city and school officials acceded to teachers’ demands to restrict classes to remote-only on Monday but insisted they conduct online instruction from school buildings or face retribution. The 62,000 K-8 students district officials said would return to in-person classes Monday are being taught remotely today. The district has threatened to take punitive action against teachers who did not show up at buildings, locking them out of their Google Classroom accounts to prevent them from teaching remotely. Lightfoot and Jackson no doubt have a direct line of communication with the White House, which is acutely aware of the importance of reopening the third largest district in the US to help Biden implement his stated goal to reopen all schools across the country. The Democratic president is pursuing this policy at the worst stage of the pandemic, as hospitals are saturated and more dangerous variants of COVID-19 spread largely undetected throughout the country. After falsely claiming that CPS schools are “safe,” Lightfoot menacingly declared Sunday, “We expect all of our teachers who have not received a specific accommodation to come to school tomorrow. Those who do not report to work, and I hate to even go there, but we’re going to have to take action.”
Wall Street Journal demands Biden crack down on Chicago teachers – In a statement by its editorial board Tuesday, the Wall Street Journal angrily criticized President Joe Biden for being too soft on Chicago teachers, who are defying Democratic Mayor Lori Lightfoot’s order to resume in-person classes even as the pandemic continues to spread in the city of nearly 3 million residents. The newspaper complains that any vacillation by the Democratic president will only encourage educators across the country to resist his administration’s plans to reopen schools by mid-April. The angry broadside by the Journal, the mouthpiece of America’s financial oligarchy, exposes the feigned concern about the educational and emotional needs of children as the motivation for reopening schools as so much hot air. The newspaper is filled with anxiety because the reopening of schools is seen as critical to reopening the economy and putting parents back to work, where they can continue pumping out profits for Wall Street and the major corporations. While the Journal complains about the perceived timidness of the new administration, Biden, a capitalist politician with decades of experience, shares the same basic aim. He spelled this out in a news conference last week, during which he said opening schools would have the “added advantage” of “putting millions of people back to work. All those mothers and fathers that are home, taking care of their children rather than go to work, even when they can work. So, this is about generating economic growth overall as well.” The editorial board statement is headlined “Where’s Biden on Opening Schools?” and includes the underline “So far he’s buckling to the unions that won’t return to classrooms.” The newspaper, which was an early proponent of Trump’s “herd immunity” policy and opponent of any lockdowns, writes: “Perhaps you’ve heard, a few thousand times, that the Biden Administration will listen to the science. Well, the science says schools can safely reopen, but the White House is still listening, make that bowing, to the non-scientists who run the teachers unions.” The assertion that “science says schools can safely open,” has been repeated ad nauseam by the New York Times, Washington Post and virtually every other corporate media outlet. On Wednesday, Biden’s new Centers for Disease Control and Prevention (CDC) director, Dr. Rochelle Walensky, told reporters, “There is increasing data to suggest that schools can safely reopen and that safe reopening does not suggest that teachers need to be vaccinated.” Only last week, as the Journal editorial board complained, White House Press Secretary Jen Psaki “wobbled” about the results of the widely publicized study by CDC researchers, which was based on small rural Wisconsin districts where all children wore three-layered cloth masks and were supervised by researchers. The findings, Psaki admitted, were “not reflective of every school district and community in the country.”
Omaha Public Schools pushes for fully in-person learning despite widespread opposition – As COVID-19 test positivity rates in Omaha, Nebraska hit over 25 percent and deaths approach 600, Omaha Public Schools (OPS) Superintendent Dr. Cheryl Logan recently announced that schools will resume fully in-person learning this month. OPS is Nebraska’s largest school district, with over 50,000 students. A smaller school district adjacent to Omaha, Ralston Public Schools (RPS), will resume fully in-person schooling this month. These moves force educators and students into deadly working conditions coincides with the news that Nebraska’s teachers are not likely to get vaccines until as late as April, according to WOWT 6 News. OPS was remote at the beginning of the semester in August, but since September the district has been following a hybrid model. Groups of students come to school based on their last names, with Wednesday being an alternating day for the two halves of the alphabet. The model is not based on numbers of students, so if the first or second half have an especially large number of students, this is not taken into consideration. The district began its second semester virtually and went back to this hybrid model on January 19. Within the first two weeks of this semester, the dashboard of COVID-19 cases on the OPS website reported 38 staff and 60 students with active cases, and 110 staff and 354 students in quarantine. This only accounts for the cases that get reported and documented and is likely a significant undercount. In the 2020 fall semester, COVID-19 outbreaks were severe enough to temporarily shut down multiple schools. The Omaha World Herald reported that at least three of OPS’ schools had to close due to major outbreaks. As a district, OPS serves some of the poorest and most vulnerable students in the city, with 75 percent receiving free or reduced lunch. RPS followed a similar hybrid model, but the Omaha World Herald reports that Superintendent Mark Adler wrote to parents that the district “decided to return to full classroom learning for several reasons, among them to improve upon student academic performance and growth.” The reopening of Omaha and Ralston schools has been pushed forward despite enormous opposition and protests from students and teachers since last summer, including some who put together an open letter and a petition clearly stating the dangers posed. The petition by students and teachers has over 3,400 signatures. In the open letter, which has been signed by hundreds of students and educators, they note the long-term damage of COVID-19 and concerns for educators’ and students’ safety. One of the student signatories, senior Micah Gilbert, states, “I’ve thought about the school districts’ plans to reopen school and what the results may be. There’s a simple fact that I don’t really think I had internalized until today: Teachers will die.” One teacher says in the letter, “I miss my kids. I miss my classroom. I miss my colleagues. But going back to school puts my kids, my colleagues, and myself at risk. I am immunocompromised, and I’m scared I’m going to die. In preparation for my return to school, I have filled out a Living Will as well as a Medical Power of Attorney. These things should not be on my ‘Back to School’ list … We are teachers, not martyrs.”
CDC director: Vaccinating teachers ‘not a prerequisite’ for safe school reopening – Centers for Disease Control and Prevention (CDC) Director Rochelle Walensky emphasized Wednesday that vaccinating teachers is not required for safely reopening schools, citing data from her agency to say it is possible to return to in-person classes as long as other precautions are taken. “Vaccination of teachers is not a prerequisite for safe reopening of schools,” Walensky said during a press briefing. She added that while a CDC advisory committee has put teachers in the “1B” category for getting vaccines – the second priority group for vaccination – “I also want to be clear that there is increasing data to suggest that schools can safely reopen and that … safe reopening does not suggest that teachers need to be vaccinated in order to reopen safely.” The comments come as a fierce debate plays out over returning students to in-person learning. Some teachers unions are calling for teachers to be vaccinated before they return to school. Republicans have seized on the issue to argue the Biden administration is not following the science, and is instead caving to their political allies, by not urging an immediate return to in-person classes. “Apparently Big Labor’s talking points have already displaced Dr. Fauci as the White House’s go-to source,” Senate Republican Leader Mitch McConnell (Ky.) said on the Senate floor Wednesday. The White House argues that more funding is needed to allow schools to safely reopen. “President Biden has been very clear that he wants schools to reopen, and actually to stay open, and that means that every school has the equipment and the resources to open safely,” Jeff Zients, the White House coronavirus response coordinator, added after Walensky’s comments during the press briefing. “Congress has to do its part to make sure that we can safely reopen schools and keep them open,” he added, calling for Congress to pass Biden’s coronavirus response plan, which includes an additional $170 billion for items like testing in schools, better ventilation and allowing for smaller class sizes. Republicans point out Congress already passed $82 billion for schools in the package approved in December. The CDC said in an article last week there is “little evidence” of widespread coronavirus transmission in schools if proper precautions like universal masking, spreading students out and ensuring proper ventilation are taken.
Indian government presents budget amid economic crisis, swelling social opposition – India’s Narendra Modi-led Bharatiya Janata Party (BJP) government yesterday tabled its budget for the 2021-2022 fiscal year, which begins April 1. India’s economy is beset by multiple crises – all of which have been greatly exacerbated by the government’s calamitous mishandling of the COVID-19 pandemic. These include: a banking system that is mired in bad loans; a massive unemployment and underemployment crisis; falling consumer demand and shrinking capital investment. No less troubling for India’s far-right BJP government and ruling class is a groundswell of popular opposition to the raft of pro-big business measures Modi has implemented since August 2019 in a desperate bid to revive investment and capitalist growth. Tens of millions of workers across India joined a one-day general strike on Nov. 26 to protest the government’s class war policies, including a labour law “reform” that would illegalize most strikes and further casualize the labor force. A more than two-month long mass agitation by farmers has disrupted implementation of the three pro-agribusiness laws the government rushed through parliament last September at the same time as it amended the labor code. In presenting her budget, Finance Minister Nirmala Sitharaman nevertheless blithely claimed, “India is well well-poised to be the land of promise and hope.” Having promised a budget like “no other,” Sitharaman attempted a fiscal and political high-wire act. In an attempt to kick-start the economy, she raised government outlays, particularly infrastructure spending, and injected additional funds into the troubled banking sector. At the same time, she tried to appease the international credit-rating agencies, which have threatened to reduce India’s rating to junk bond status, by slashing subsidies and pressing forward with other pro-investor policies, long demanded by international and domestic capital. To the delight of big business, despite the government’s rapidly deteriorating fiscal position it announced no tax increases for business or the rich. This included dropping plans to introduce a “pandemic cess” – what would have been a temporary charge to fund measures to fight the COVID-19 pandemic, which has infected more than 10 million Indians and killed over 150,000. Underscoring the budget’s sharp right-wing thrust, the government also did not (as had been suggested in many press previews of the budget) introduce any measures to mollify farmers’ anger, and it ignored the unemployment crisis altogether. In fact, it is slashing spending on the Mahatma Gandhi National Rural Employment Guarantee in the coming budget, which is supposed to provide 100 days of menial, minimum wage work per year to one member of any rural household that needs it. For years, the program has been massively over-subscribed, meaning millions go hungry because they cannot access the “guarantee.”
Nearly 40,000 Australians still stranded overseas because of government indifference – A year after the COVID-19 crisis commenced, almost 40,000 Australian citizens are still registered with the Department of Foreign Affairs and Trade (DFAT) seeking assistance to return home from overseas. They have experienced extortionate airline ticket prices, endless delays and cancellations. Many face personal destitution and impoverishment, with the heightened risk of infection in countries severely affected by the pandemic. Among them, 4,800 have been classified as vulnerable. For purely financial reasons – the refusal of Australian federal, state and territory governments to provide adequate quarantine facilities – these citizens are being denied their basic legal, constitutional and democratic right to enter and live in the country. They are also being offered little financial assistance. Perth Airport in Western Australia [Wikimedia Commons] Government caps limiting the number of returning passengers have resulted in airlines routinely favouring first class and business class tickets over economy passengers. A first-class air ticket from London to Sydney can be priced as high as $36,895 and a business-class flight from Paris to Melbourne $25,352. However, even these enormous prices do not guarantee a seat on a flight. Many people whose flights are cancelled have to wait 30 days for a refund so they can book a new ticket. This situation has been exacerbated by the announcement on January 8, that the governments leaders, meeting as the bipartisan “national cabinet,” had further reduced the number of international arrivals. New South Wales (NSW), Queensland and Western Australia halved their numbers of arrivals until at least February 15. The number of people allowed to enter the country dropped from 6,700 a week to just 4,200. There is no lack of air transport capacity. According to a Senate COVID-19 inquiry, the number of empty airline seats coming into the country stood at 30,000 per week last November. Kym Bramley, who has been stranded in Mexico since March, told the New Daily: “They say ‘we don’t have enough spots’ but they seem to be able to create them for celebrities, cricket teams [and] tennis players … They are allowing tennis players from the same countries we can’t get home from.” She added, “for us,” it costs “$10,000 for a flight home – if you’re lucky.”
Major hospital in Chile goes up in flames amid near collapse of public health system -The fire that engulfed San Borja Hospital, one of the major hospitals in Santiago this past Saturday, bears the hallmarks of decades of underfunding and under-resourcing of the public health system by right-wing and “left” governments alike. Amid an alarming escalation of COVID-19 cases that has national intensive care units at 92 percent occupancy, such avoidable catastrophes can only speed up the collapse of an already debilitated health system. It is due both to good fortune as well as the decisive action and dedication of health professionals and emergency services that no one was injured. Around 300 firefighters, 40 fire engines and emergency vehicles battled the blaze after the alert was raised at around 7 a.m. In less than two hours, health staff evacuated the majority of patients, some 300 in total, to safe areas of the hospital to determine who could be discharged and to transfer others, including ICU patients, to already stretched health facilities across Santiago. It remains unclear the exact trigger for the fire that started in the boiler room; an investigation is ongoing. The initial report indicated an electrical fault. What is certain is that with years of financial neglect, insufficient maintenance and obsolete equipment, such incidents are bound to happen. This is the conclusion that millions in the country have drawn. A video has gone viral of an angry San Borja worker confronting the Health Minister Enrique Paris while he was giving a press conference in the vicinity. “You have done nothing! You come for the TV and for the photo op, nothing else,” he said as he was moved along. Film of four hospitals being inundated with rainwater only 24 hours later also went viral. The worst hit was the El Pino Hospital, located in the San Bernardo district. A hospital communique stated that the “facility suffered several incidents in its installations. For the most part, these are minor leaks and filtrations. But around 4:00 p.m. there was a major incident in the Maternal Emergency Service (where) the false ceiling broke due to the accumulated water that exceeded the capacity of the rainwater filtration systems.”
Europe’s Economy Falls Further Behind U.S. and China. ‘It’s Getting Desperate.’ – WSJ — The eurozone’s economy is diverging sharply from the U.S. and China, as stubbornly high coronavirus infections, extensive Covid-19 restrictions and a painfully slow vaccine rollout delay Europe’s recovery from last year’s historic economic downturn. Fresh data Tuesday highlighted an economic gap between the eurozone and the U.S. and China that is likely to widen this year, given that the U.S. is proceeding more quickly than the European Union in rolling out vaccines and China remains largely free of the virus. The eurozone’s gross domestic product contracted by 0.7% in the three months through December from the previous quarter, resulting in an annual decline of 6.8% for the bloc in 2020, the EU’s statistics agency said on Tuesday. That compares with a 3.5% decline for the U.S. economy last year, supported by a strong rebound in the fourth quarter. China’s economy grew by around 2.3% last year. Since the start of the pandemic, European policy makers have sought to balance saving lives and supporting businesses, but have generally pursued more draconian restrictions to stop the virus’s spread than has the U.S. Nonetheless, the death toll in Europe is approaching that of U.S., while its economic performance – already lagging behind the U.S. before the pandemic – has been much worse than other advanced economies. Now, a sluggish rollout of vaccines, the threat of highly contagious new variants of the virus and the possibility of weeks or months of continued restrictions bode ill for the near term and could delay a recovery. EU countries have administered vaccines to less than 3% of their populations compared with 9% in the U.S. and 14% in the U.K., according to OurWorldInData. Many economists expect the eurozone to re-enter recession in the coming months. “The eurozone will be the last major economy to return to pre-pandemic levels and will suffer continued substantial output gaps for at least the next two years,” said Erik Nielsen, chief economist at UniCredit. The International Monetary Fund expects the eurozone economy to end this year 3.3 percentage points smaller than it was at the start of 2020, while the U.S. economy will be 1.5% larger. At the current pace, the U.K. should have administered at least one dose of vaccine to 60% of its population by June, and the U.S. could follow by October, according to Berenberg Bank. France and Spain won’t reach that threshold until summer 2022, and Germany and Italy will take until 2023, the bank said. At Lindner Hotels AG, a German family-owned company, up to 90% of staff have been on furlough since November, with some furloughed for the past 10 months, said Chief Executive Otto Lindner. The company’s revenue declined by roughly two-thirds last year. “The second lockdown is much more brutal than the first. It’s getting desperate,” Mr. Lindner said.
As COVID Rages, Bankruptcy Cases Fall … ..For Now – Bankruptcies have fallen sharply in OECD economies because of the array of COVID-related support available to businesses, as well as imposed moratoria on bankruptcy filings. This column argue that this situation won’t last, and that governments should start planning for a surge by the end of 2021 – ideally by reforming their bankruptcy laws, as the UK has done, and lessening the burden on courts.
Commerzbank cuts 10,000 jobs in Germany, with union support – Commerzbank’s share price jumped 6 percent when CEO Manfred Knof announced last week that 10,000 full-time jobs would be cut and 340 of the bank’s 790 branches would be closed. The jobs massacre is the price Commerzbank staff are expected to pay for the bank to achieve a return on equity of about 7 percent by the end of 2023 through cost savings of euro 1.4 billion. Anyone who thought this would provoke an outcry from the trade union Verdi has been taught better. “We can largely support this strategy because it is correct in terms of the target picture,” Verdi representative Stefan Wittmann told the Deutsche Presse-Agentur. His only objection was that “the timeline for staff reductions until the end of 2023 provided for in the new strategy is far too short.” The supervisory board is to vote on the new plans this week. It is already becoming apparent that the job cuts will be approved there – perhaps in a somewhat longer time frame. The trade union and its representatives on the supervisory board have already proven to be reliable co-managers of the financial institution in the past, to the delight of the shareholders. The chairman of the General and Group Works Council, Uwe Tschage, who is also deputy chairman of the Supervisory Board, told finance daily Handelsblatt at the time that he was not opposed to the job cuts if they were “socially accommodated.” “There must be no compulsory redundancies, we will fight for that,” Tschage said. He added that Commerzbank must choose a “reasonable period of time” and provide enough money for partial retirement models and similar devices. He wanted to be able to understand why and where management was cutting jobs. He expected support from the federal government as a major shareholder to ensure that employees were “dealt with decently.” What was important to him, Tschage said, was “that the bank is in a stable position even after restructuring and that it can continue to develop.” In other words, that it makes more profit again! No wonder business magazine Capital then proposed Tschage as interim head of the supervisory board. It reassured shareholders, “That a works council representative – in this case, by the way, a trained banker – heads the supervisory board may frighten arch-capitalists, but there are examples of this working smoothly.”
Swiss march in lakeside tax haven to protest COVID-19 lockdown (Reuters) – Some 500 protesters marched through the Swiss tax haven of Zug on Saturday, wearing white protective suits and chanting dystopian slogans to voice displeasure with rules aimed at limiting the spread of the COVID-19 pandemic. The demonstration was reminiscent of a rally a week ago in Vienna, where thousands opposed to that country’s even-stricter lockdown faced off against police. Though Switzerland’s restrictions have been less severe than those in Germany, Austria or Italy — restaurants and non-essential shops are closed but ski areas are open — there is still a steady buzz of opposition. In Zug, police watched but did not intervene as a group of protesters filed from the train station to the centre of the lakeside city known for shell companies with letter-box addresses and attractive tax rates. Marchers wore placards that read “Wearing a mask is modern slavery”. A loudspeaker droned, “Closeness is dangerous” and “Denounce those you love”. “I want to make a statement, that the citizens are the ones who are in control, and the state should be there to serve its citizens,” one man said, without giving his name. A woman said she was there for the next generation.
Alcohol deaths hit record high during Covid pandemic – BBC – Deaths caused by alcohol hit a new high during the first nine months of 2020, provisional figures for England and Wales show. Between January and September, 5,460 deaths were registered with this cause – up 16% on the same months in 2019. It is the biggest toll recorded since records began in 2001. The high rates spanned the period during and after the first Covid lockdown, the Office for National Statistics figures show. It reached a peak of 12.8 deaths per 100,000 people in the first three months of 2020 and remained at this level through to September – higher than in any other time on record. As in past years, rates of male alcohol-specific deaths were twice those seen for women. Experts say the coronavirus pandemic will have had little effect on how the data was gathered and recorded. But it is not clear how much it may have contributed to the deaths. ONS spokesman Ben Humberstone said: “Today’s data shows that in the first three quarters of 2020, alcohol-specific deaths in England and Wales reached the highest level since the beginning of our data series, with April to September, during and after the first lockdown, seeing higher rates compared to the same period in previous years.” “The reasons for this are complex and it will take time before the impact the pandemic has had on alcohol-specific deaths is fully understood.”
15,000 students involved in rent strikes in 55 UK universities – UK students are engaged in the largest rent strike in decades, in protest against their mistreatment and exploitation throughout the pandemic. There are currently strikes ongoing in at least 55 universities, with over 15,000 students nationwide now signed up to withhold their next rent payment and new rent strikes starting almost daily. The strike wave began last term, after the Conservative government encouraged students to travel from all over the country, and the world, to gather in universities, as part of its criminal programme of reopening all education settings and the economy. Inevitably, huge outbreaks of COVID-19 ripped through campuses, forcing thousands of students to self-isolate.More and more universities had to switch to fully online learning. However, this was done on an ad-hoc basis, resulting in a significant deterioration in the quality of education, which was plagued by issues such as Wi-Fi problems, lack of equipment to attend online classes and lack of contact with lecturers. Students organise rent strike at University of Manchester. The banner on the Owens Park Tower reads “Put Students and Staff before Profit” (Credit: Twitter/@rentstrikeUofM and tke.media)University administrations also failed to provide adequate mental health or quarantine support, with reports of some students going hungry as they were not allowed to leave their accommodation and were only provided one meagre meal a day. Several universities took the confinement of their students as an opportunity for profiteering, charging those self-isolating extortionate amounts for low-quality food packages.The contempt with which students were treated was summed up at the University of Manchester, where metal fencing was erected around student residences in the middle of the night and a student occupation was met with a mob-handed police response.Rent strikes at dozens of universities began to swell, as students refused to pay full accommodation fees for such reduced services and abusive treatment. Actions at Bristol University and the University of Manchester won rent rebates of 30 percent, in Manchester’s case for the whole first term, inspiring strike plans at dozens of other universities.Most groups have a similar set of demands, including a reduction in rent of between 30 and 50 percent, no repercussions for rent strikers, and better wellbeing and mental health support plans for students. Many rent strike movements have established links of solidarity between staff and students, demanding a no-redundancies policy for all staff and PhD students.
UK universities step up jobs cull in collaboration with the trade unions — As the COVID-19 pandemic worsened last March, the University and College Union (UCU) fell in line behind the government and employers’ insistence that “we are all in it together”. Its negotiators in the pensions and pay dispute, the largest UK university strike in history, put an offer on the table which they admitted “fall[s] short of our original demands” and pledged, “[w]e won’t escalate our disputes during the pandemic – but we won’t abandon them either”. This spirit of generosity was not shared by the universities, who announced plans to make compulsory redundancies, or opened “voluntary” redundancy schemes with the blessing of the UCU, citing projections that income from the inflated fees paid by international students would fall due to deferred or declined offers. This expected fall failed to materialise, with UCAS figures released in September revealing that the number of students from outside the UK and EU starting a course in 2020 increased 9 percent on the previous year. However, between March and September, over 3,000 university staff were made redundant, according to information obtained by Edvoy. Even without the excuse of a fall in student numbers, university management continue to use the room to manoeuvre provided by the UCU to force through job losses and restructuring plans, in some cases after previous attempts had failed due to staff and student opposition. These major attacks mirror the mass job losses in the higher education sector which followed the 2008 financial crash, and the response of the UCU has been identical. It is happy for jobs to be lost, as long as it can contain the anger of workers by “negotiating” slightly improved terms and maintaining its position at management’s side. Last November, the WSWS reported on the hundreds of redundancies being planned at the universities across the UK. The response of the UCU to the attack on jobs, and the continued reopening of campuses during the pandemic, with many university staff classified as “critical workers”, has been to isolate each dispute and oppose calls for unified national action. The pattern for the UCU’s betrayals was the dispute at Heriot-Watt University in Edinburgh, which was called off on the basis of a management commitment to make no compulsory redundancies. This was hailed by UCU Scotland President and Socialist Workers Party member Carlo Morelli as a “magnificent victory” – even as the Socialist Worker admitted “many workers at the university have come forward to take voluntary redundancy”. At the University of East London (UEL), where 441 staff have been notified they may be made redundant, 92 staff have already been affected by the restructuring, according to the Guardian. The majority of these are “voluntary”.
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