Coronavirus Economic Weekly News 18July 2021

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 prospects for an infrastructure bill, stimulus checks, government funding, the Fed, the latest employment data, housing market reports, mortgage delinquencies & forbearance, travel, layoffs, lockdowns, and schools, as well as infrastructure and GDP. The bulk of the news is from the U.S., with a few more articles from overseas at the end. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.

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This week there are still a few articles on the infrastructure bill negotiations, but a lot on the $3.5 trillion budget bill, which is a much broader package. On inflation, it seems like about half of the big price increases we’re seeing are covid-rebound related. There are also a fair number of articles on Europe, where they’re dealing with a big pandemic surge.

The news:

Frontline Investigates the Federal Reserve: Is It a Captured Regulator that’s Wrecking the U.S. Economy with Asset Bubbles? Pam Martens – Fed Chair Jerome Powell will take his seat before the House Financial Services Committee on Wednesday at noon and before the U.S. Senate Banking Committee on Thursday at 9:30 a.m. for his semi-annual testimony on monetary policy. Some embarrassing questions may come up for Powell based on an investigative report on the Fed that’s airing earlier in the week.This Tuesday evening, the PBS investigative program, Frontline, will broadcast a documentary covering its year-long investigation of the Federal Reserve’s bailouts of Wall Street, from the financial crisis of 2008 to the present.According to the information about the program that Frontline has released, the documentary, titled “The Power of the Fed,” will include interviews with multiple people who believe that the Fed has been captured by Wall Street and is creating dangerous asset bubbles.Legendary investor Jeremy Grantham will tell viewers this about the Fed’s policies:”They have the housing market, the stock market and the bond market all overpriced at the same time. And they will not be able to prevent, sooner or later, the asset prices coming back down. So we are playing with fire because we have the three great asset classes moving into bubble territory simultaneously.”Grantham characterizes what the Fed has created on Wall Street as a “giant bloodsucker,” that is “sucking more than twice the blood out of the rest of the economy.” Andrew Huszar, a former insider at the Federal Reserve Bank of New York, where the Federal Reserve has a serial habit of outsourcing its bailout programs for the mega banks on Wall Street (likely because it is literally owned by those same banks) will explain to viewers how he was “single-handedly responsible for directing the deployment of $1.25 trillion of Fed funds, and we did not see the knock-on benefits that we had hoped for the average American.”Huszar is talking about the $1.25 trillion the Fed spent in buying up agency Mortgage-Backed Securities (MBS) following the 2008 financial crash on Wall Street. Despite the fact that the Fed saw no benefits accrue from that program to the average American, it doubled down on the same program during the pandemic, buying up $40 billion a month in agency MBS. The Fed’s current total of agency MBS on its balance sheet stands at $2.3 trillion as of last Wednesday. The custodian of the securities purchased in the Fed’s MBS program has been, from the outset, JPMorgan Chase, one of the largest owners of the New York Fed. The fact that the bank has received an unprecedented five felony counts from the Department of Justice since 2014 hasn’t changed the Fed’s mind about entrusting the bank with $2.3 trillion of its assets. (JPMorgan Chase admitted to all five felony counts.) The illusion that when the Fed pumps money into the banks it will somehow trickle down to the average American is back in full swing this time around. Powell states at every press conference that the Fed is working to benefit the American people. The reality is that the banks that received the almost zero interest rate loans from the Fed since September 17, 2019 (before there was any pandemic anywhere in the world) have continued to gouge consumers on credit cards. (See Citigroup Has Made a Sap of the Fed: It’s Borrowing at 0.35 % from the Fed While Charging Struggling Consumers 27.4 % on Credit Cards.)

The Federal Reserve Has Radically Changed from a Central Bank to a Bailout Kingpin. Americans Just Haven’t Paid Attention – Until Tonight – Pam Martens -This evening, the PBS program, Frontline, will do something that corporate broadcast media has failed to do since the financial crash of 2008. Frontline will air the results of its year-long investigation of the most powerful financial institution in the world – the central bank of the United States – known as the Federal Reserve, or simply “the Fed.” The Fed’s radical makeover of itself began in December of 2007 when the Fed decided, on its own, that it had the authority to secretly pump out trillions of dollars in cumulative loans to prop up the mega banks on Wall Street, as well as to the foreign banks that were on the other side of Wall Street’s hundreds of trillions of dollars in derivative trades. The Fed secretly ran that program through at least July of 2010 according to the eventual audit that was conducted by the Government Accountability Office. (That audit only came about because Senator Bernie Sanders attached an amendment to the Dodd-Frank financial reform legislation of 2010.) The Fed’s latest massive bailout operation began on September 17, 2019, months before there was a case of COVID-19 anywhere in the world. The full scope of this operation and other bailout programs remain a dark secret at the Fed, casting a pall over investors’ confidence in the transparency and stability of the U.S. financial system. Frontline writers and producers James Jacoby and Anya Bourg, who are the force behind tonight’sFrontline documentary, The Power of the Fed, will now become part of a rarefied group of individuals who have mustered the determination to cut through the Fed’s insidiously cultivated armor of Fed-speak and its preposterous structure that allows it to create trillions of dollars of money electronically out of thin air for bailouts, with only feigned oversight by Congress. We have not yet seen the Frontline program but we have high hopes given the past work of Frontline. (See here and here.) The Frontline team has the opportunity tonight to significantly build on the herculean work of two other journalists who spent years investigating the Fed and advancing Americans’ understanding of its kleptocratic nature: Mark Pittman and Nomi Prins….

Despite inflation, Fed will not pull back on present monetary policies -Fed chair Jerome Powell has again reassured financial markets that, despite the significant rise in US inflation, the central bank is not going to pull back its ultra-loose monetary policies that have seen Wall Street reach record highs. Powell’s assurances came in his testimony to the House Financial Services Committee yesterday in the wake of inflation data which showed that prices had jumped at an annual rate of 5.4 percent in the year to June. The rise of 0.9 percent for last month was the highest since 2008. Federal Reserve Board chairman Jerome Powell testifies before Congress on Tuesday, June 22, 2021. (Graeme Jennings/Pool via AP) Powell insisted that, while inflation had “increased notably” and the price rises were higher and more persistent than the Fed had anticipated, the rises were “transitory” and inflation would begin to decline. However, he said, the Fed was prepared to “adjust monetary policy as appropriate if we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal.” In the face of comments from House representatives that price rises were becoming entrenched, Powell called on lawmakers to have “faith” in the Fed’s judgment that it was riskier to tighten monetary too early than too late. “We really do believe and virtually all forecasters do believe that these things will come down of their own accord as the economy re-opens – it would be a mistake to act prematurely.” There is always as element of shadow boxing on the issue of inflation. The central concern is not prices rises as such, but whether inflation is going to lead to an upsurge in the wages struggles of the working class. This issue was touched on by David Scott, a Democrat representative from Georgia, who said a return to a more stable inflation rate would be advantageous. He pointed out that “wage increases will not keep pace” and price rises would create real hardship for low-income households as well as people on fixed incomes and retirees. As Powell was giving his testimony, the Fed’s own Beige Book, an anecdotal survey of economic conditions, reported that inflationary pressures were increasing. It stated that while some respondents “felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months.” Powell said the Fed policy of keeping interest rates at virtually zero and financial asset purchases at $120 billion a month – an amount of more than $1.4 trillion a year – would continue and the goal of “substantial further progress” in the economy was “still a ways off.”

Beige Book: Majority Of Contacts Say Inflation Not Transitory Amid Record Shortages Of Everything- There were no big surprises in the latest Fed Beige Book, at least at the token summary level: the July 14 edition of the Fed’s assessment of the economy starts with the following summary of the national economic situation: “The U.S. economy strengthened further from late May to early July, displaying moderate to robust growth.” With the economy still overheating we’d hate to see what less than moderate is these days.But while the boilerplate verbal assessment was to be expected, what we found especially interesting is that the Beige Book itself contradicted the Fed’s own contention that inflation is transitory. Specifically, in the Beige Book section discussing pricing pressures, we read that:

• prices increased at an above-average pace, as seven Districts reported strong price growth and the rest saw moderate gains.
• Pricing pressures were broad-based and grew more acute in the hospitality sector, as the reopening of hotels and restaurants confronted limited supplies of materials and workers.
• Construction costs remained high, but lumber prices reportedly eased a bit.
• Container prices returned to very high levels after having moderated in the spring.
• Some contacts reported that high end-user demand enabled them to increase their prices and others said that input price pressures had reduced their profit margins.

And the punchline: “While some contacts felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months.” Translation: only “some” believe inflation is transitory; the “majority” expect non-transitory inflation, as in longer and higher for much longer. Which is generally in line with the even Wall Street analysts are now telling us.

The WSJ July Survey of Economists – CPI and GDP Forecasts – by Menzie Chinn – The forecasted price level (CPI) has been moved up, as near term expected inflation has increased. Near term GDP growth forecasts upwardly revised, but downside risks remain. Projected output gap small positive at year’s end.Note the actual CPI data and the CBO and SPF forecast are for quarter averages of monthly data, while the Michigan and Wall Street Journal forecasts are for end-of-quarter.Showing these in comparable time series: Figure 2: CPI – all urban, end-of-quarter monthly data (black bold), CBO projection for quarterly average of monthly data (red), WSJ July survey mean for end-of-quarter (pink square), Michigan survey of consumers for end-of-quarter (blue triangle), Brian Wesbury, Robert Stein/First Trust Advisors (green +), Bill Diviney/ABN Amro (blue +). June CPI actual and Michigan survey implied level for June 2022 uses Bloomberg consensus for June 2021 CPI as of 7/12. NBER peak at dashed line. Source: BLS via FRED, WSJ July survey, Michigan survey of consumers, Bloomberg as of 7/12, and author’s calculations.The forecasts imply a deceleration in inflation (the index is on a log scale, so a flattening of the slope implies a slowing of growth rate). There is a considerable spread in the expectations of price increase. At the 90% lower bound (for inflation over the next year) is Diviney/ABN Amro, while Wesbury and Stein at First Trust is at the top.The Wall Street Journal article stresses the jump up in inflation expectations:Americans should brace themselves for several years of higher inflation than they’ve seen in decades, according to economists who expect the robust post-pandemic economic recovery to fuel brisk price increases for a while. Economists surveyed this month by The Wall Street Journal raised their forecasts of how high inflation would go and for how long, compared with their previous expectations in April.Notice that the Michigan y/y inflation estimate (4% for June) implies a CPI level above the 90% upper bound for CPI from the professional forecasters.On GDP, the forecast for Q1 GDP growth has been moved up again relative to April (the WSJ moved to quarterly surveys from monthly). The July, April, January and October 2020 forecasts for Q1 were 9.11%, 8.15%, 4.91%, and 3.72% (SAAR), respectively.There’s a fairly wide dispersion of forecasts, particularly on the downside. That is, most respondents agree on rapid growth in the next quarter (Q2) and in the near future, but there’s a view that downside risks to growth remain. Figure 5: GDP as reported (bold black), WSJ July survey (pink), CBO (red), Administration (blue triangle), IMF Article IV for US (green +), FT-IGM survey (light green triangle), all in billions Ch.2012$ SAAR. Source: BEA, 2021Q1 3rd release, WSJ survey of economists, July 2021, IMF, FT-IGM June survey, and author’s calculations. All of the forecasts save the Administration’s imply a small positive output gap (using the CBO estimate of potential) by year’s end.

The return of stagflation? —Lachman -Today, there is a real risk that we will return to the stagflation of the past but for a different reason than in the 1970s. This time around it might be the result of excessively loose budget and monetary policies combined with continued supply disruptions both at home and abroad. Those supply disruptions might intensify as a result of the spread of the Delta COVID-19 variant that is already wreaking havoc in several countries.The stagflation risk is underlined by recent economic data. Consumer price inflation has risen to 5 percent, its highest level since 2008, even as unemployment remains stuck at around 6 percent, far from its full employment level. The main risk that today’s inflation will prove to be anything but transitory stems from the unusually easy stance of budget and monetary policy. It also stems from the likely release of the considerable amount of pent-up demand that was built up during the pandemic’s lockdown phase.One way to gauge this risk is to consider the size of the budget stimulus in relation to the gap between the current U.S. output level and its full employment level. Combining the December 2020 bipartisan stimulus package with the March 2021 Biden American Rescue Plan, it turns out that this year the U.S. economy will receive a record peacetime budget stimulus amounting to a staggering 13 percent of GDP. That stimulus is around four times the Congressional Budget Office’s estimate of the current output gap, which must raise the specter of economic overheating by yearend. Adding to the specter of overheating is the continued extraordinarily easy monetary policy stance. As a result of the Federal Reserve’s continuing to buy $120 billion a month in Treasury Bonds and mortgage-backed securities, interest rates remain at ultra-low levels, housing and equity prices are soaring and the broad money supply continues to grow at by far its fastest rate in the past 40 years. Adding fuel to the rapidly increasing aggregate demand is the fact that households are now beginning to draw down the $2.6 trillion in excess savings that they are estimated to have built up during the lockdown phase.The key risk that higher inflation will continue to be accompanied by high unemployment is that the Delta variant might spread rapidly both at home and abroad. Underlining this risk are the facts that this variant is much more infectious than the earlier COVID strains and that the vaccines seem to be less effective in protecting the vaccinated public against this particular strain than against the original strain.

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 7-day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red). The dashed line is the percent of 2019 for the seven day average. The 7-day average is down 20.9% from the same day in 2019 (79.1% of 2019). (Dashed line) There was a slow increase from the bottom – and TSA data has picked up in 2021. The second graph shows the 7-day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities. This data is updated through July 10th, 2021. This data is “a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. Dining picked up during the holidays, then slumped with the huge winter surge in cases. Dining is generally picking up, but was down 15% in the US (7-day average compared to 2019). Florida and Texas are above 2019 levels. -This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue). Movie ticket sales were at $115 million last week, down about 61% from the median for the week. This graph shows the seasonal pattern for the hotel occupancy rate using the four week average. Occupancy is now above the horrible 2009 levels and weekend occupancy (leisure) has been solid. This data is through July 3rd. Hotel occupancy is currently down slightly compared to same week in 2019 (a timing issue with July 4th helped)). Note: Occupancy was up year-over-year, since occupancy declined sharply at the onset of the pandemic. However, the 4-week average occupancy is still down from normal levels. This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019. As of July 2nd, gasoline supplied was up 2.9% compared to the same week in 2019. This is the second week this year when gasoline supplied was up compared to 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.” This data is through July 9th for the United States and several selected cities. The graph is the running 7-day average to remove the impact of weekends. According to the Apple data directions requests, public transit in the 7 day average for the US is at 97% of the January 2020 level and moving up.Here is some interesting data on New York subway usage. This graph is from Todd W Schneider. This is weekly data since 2015. Most weeks are between 30 and 35 million entries, and currently there are over 11 million subway turnstile entries per week – and generally increasing.This data is through Friday, July 9th.

Infrastructure bill: Schumer and Pelosi face leadership test as legislative push kicks into high gear – Democrats will face a critical month on infrastructure in July as they reckon with deep schisms in their ranks and questions over legislative strategy and policy specifics of a bill the party wants to position itself with ahead of the midterm elections.The busy July will test Democratic congressional leaders — Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi — both of whom govern diverse caucuses and control narrow majorities where just a handful of members could bring the President’s legislative agenda to a screeching halt.Schumer and Pelosi are navigating a delicate balancing act over President Joe Biden’s agenda amid calls from moderates for quick passage of a bipartisan bill, while progressives are focused on securing a more sweeping measure that can pass the Senate with only Democratic votes under a process known as budget reconciliation.The infrastructure push is set to kick into high gear in the Senate when the chamber returns to Washington after the July 4 holiday recess.Schumer has set an ambitious goal during the next session: pass the bipartisan infrastructure bill on the floor — a product that currently has the backing of 11 Republicans but still faces resistance from liberal members in the Senate — and advance a massive budget resolution, a blueprint that will guide what gets included in the Democrats’ broader infrastructure package. “My intention for this work period is for the Senate to consider both the bipartisan infrastructure legislation and a budget resolution with reconciliation instructions, which is the first step for passing legislation through the reconciliation process,” Schumer wrote in a dear colleague letter on Friday. Lobsters, cruises and scotch: One Cabinet secretary’s push to sell Biden’s agenda Lobsters, cruises and scotch: One Cabinet secretary’s push to sell Biden’s agenda Over the recess, aides worked around the clock to turn a legislative framework from the bipartisan infrastructure group into legislative text. Sources tell CNN the work is ongoing, but a source also tells CNN that it’s possible Schumer could put the bill on the floor for a vote as soon as the week of July 19. At the same time, Democrats are still trying to find consensus on a budget resolution, which will set the parameters for how big their own infrastructure and social agenda bill will ultimately be as the White House has been working closely to make it clear what their priorities are for that legislation.

Rep. Ocasio-Cortez: Progressives May Sink Bipartisan Infrastructure Bill Without Reconciliation Deal | Democracy Now! (video & transcript) As lawmakers return to Washington, D.C., following a two-week recess, we speak with Democratic Congressmember Alexandria Ocasio-Cortez about efforts to pass major infrastructure funding that could address child care, climate change, education and poverty. President Joe Biden has already struck a $1 trillion infrastructure agreement with a centrist group of lawmakers concentrated on roads, bridges and highways, but a fight is brewing over a larger package that Democrats want to pass in the Senate using the budget reconciliation process, which can pass with just 50 votes and avoid a filibuster. “The Progressive Caucus is rather united in the fact that we will not support bipartisan legislation without a reconciliation bill, and one that takes bold and large action on climate, drawing down carbon emissions, but also job creation and increasing equity and resilience for impacted communities, particularly frontline communities,” says Ocasio-Cortez, who represents New York’s 14th Congressional District. “That’s where we’ve drawn a strong line.”

Brewing battle over tax hikes to test Democratic unity – An emerging proposal from the White House and Senate Democratic leaders to pay for President Biden’s infrastructure agenda is setting the stage for a major battle in Congress that will test the support of moderates concerned about hiking taxes. Key centrists such as Sens. Joe Manchin (D-W.Va.), Kyrsten Sinema (D-Ariz.), Jon Tester (D-Mont.), Maggie Hassan (D-N.H.) and Mark Kelly (D-Ariz.) have largely avoided questions about Biden’s tax agenda, which is focused on raising hundreds of billions of dollars from corporations and wealthy Americans. To date, much of the debate in Congress has focused on how to pay for a scaled-down $1.2 trillion bipartisan infrastructure package and the contours of a more expensive measure that Senate Majority Leader Charles Schumer (D-N.Y.) plans to pass under a budget reconciliation process allowing Democrats to sidestep a GOP filibuster. But the brewing battle over tax policy is starting to heat up as lawmakers return to Washington for a crucial work period when Democrats will begin hashing out the budget resolution that sets in motion the legislative vehicle Democrats intend to use to pass some of the party’s biggest priorities, without any GOP support. Schumer and Democrats on the Senate Budget Committee have discussed a $6 trillion reconciliation package that would include $2.4 trillion in tax increases and legislation to lower the price of prescription drugs that would save the federal government an estimated $600 billion over 10 years. “They’re all trying to figure out what the bottom line is,” said a person familiar with the internal negotiations. “Schumer had $2.4 trillion [in tax revenues] plus $600 billion from the Medicare drug-price negotiation. He’s trying to figure out: ‘What can I get my caucus to support? What’s the revenue number?’ It’s not clear to me he can get $3 trillion.” “There’s a lot of pressure on these people, pressure from both sides. Manchin has been very clear he wants it all paid for,” the source added, meaning no deficit spending. Manchin dealt an early blow against Biden’s tax plans by declaring months ago that he wouldn’t support raising the corporate tax rate to 28 percent, proposing a compromise target of 25 percent instead. That 3 percentage point difference would cost Biden’s plan more than $300 billion in revenue, as the White House envisions raising $858 billion over a decade by hiking the rate to 28 percent. Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, said Manchin has changed expectations on where the corporate tax rate will end up. “Biden hasn’t explicitly said he’s changing the plan to 25 percent, which is what Joe Manchin wants … but the hard reality of narrow majorities in both houses is that if Manchin says 25 percent that’s kind of the [limit]. So that seems like the most likely thing where you can say it’s going to be different from what [Biden] proposed initially.” Manchin has further complicated the political calculus by insisting that Congress pay for as much of the budget reconciliation package as possible.

Sanders, Schumer reach deal on Biden budget – Senate Majority Leader Chuck Schumer and Senate Budget Committee Chairman Bernie Sanders announced late Tuesday that they had reached agreement on the broad outlines of a budget resolution for the fiscal year that begins October 1, setting a $3.5 trillion ceiling on new social spending by the Biden administration.White House legislative affairs director Louisa Terrell and National Economic Council Director Brian Deese attended the discussions, and Biden reportedly signed off on the deal. The agreement is only the initial sketch of what would become dozens of specific appropriations to be consolidated into a single, massive “budget reconciliation” bill.There are numerous twists and turns ahead in the congressional wrangling over the budget deal, which is aimed at producing companion legislation to the bipartisan infrastructure bill being negotiated by a group of 11 Republicans and 10 Democrats in the Senate. Neither bill is assured of passage in either house of Congress, and a handful of the most conservative House and Senate Democrats are likely to have a major say over the outcome.A few critical observations can be made at this stage. First, whatever passes will provide only a minute fraction of what is required to meet the vast social needs of American working people. Second, it will impose only the slightest of burdens, if any at all, on the vast incomes and wealth of the super-rich.The latter point can be grasped immediately by comparing the size of the total package, $3.5 trillion over 10 years, with the increase in wealth of the top one percent of the American population, $10 trillion in a single year.The $3.5 trillion top-line number, presented in the media – and by the Democrats themselves – as a huge commitment of resources, amounts to an average of $350 billion a year, or 3.5 percent of the additional wealth accumulated by the top one percent just this year alone. And that assumes that the social spending package passes in full. There is no reason to believe that, since the figure agreed on by Schumer and Sanders represents only the starting point for negotiations by the Democratic leadership with their own most right-wing elements and with the Republicans, who will inevitably demand a lower figure.

Senate Democrats announce $3.5 trillion budget deal – Senate Democrats on the Budget committee announced late Tuesday night that they have reached a deal on a $3.5 trillion package to address “human” infrastructure, which they plan to pass via reconciliation.The price tag for the proposal – which is expected to include bold provisions on climate change, Medicare and education – comes in far below the $6 trillion figure Budget committee Chair Sen. Bernie Sanders (D-Vt.) and other progressive Democrats have pushed for.Senate Majority Leader Chuck Schumer (D-N.Y.) told reporters after the meeting that President Biden will join Senate Democrats at their caucus lunch on Wednesday – his first in-person meeting with lawmakers on the Hill as president – to discuss the package.Schumer said the budget plan will cover all of the major Biden administration proposals on human infrastructure, including the president’s families, climate and housing programs. He added that the plan will also include “a robust expansion of Medicare, including … money for dental, vision and hearing.” While negotiators are still finalizing details, the proposal is expected to fully offset with new revenues, among other pay-fors. How to pay for the package remains a key sticking point in passing the bill.Democrats have their work cut out for them in order to pass this bill.Democratic leaders will need to get all 50 Senate Democrats on board – a huge feat in the current makeup of the party. timing comes as several key moderate Democrats are simultaneously working on a $1 trillion bipartisan package on “hard” infrastructure. Schumer has been clear for weeks that he wants the Senate to consider this package on a “dual track” with the bipartisan proposal – but time is running out if they want to meet their self-imposed deadline of getting this done by August recess.

Democrats Propose $3.5 Trillion Budget to Advance with Infrastructure Deal – The New York Times The measure, which would include money to address climate change, expand Medicare and fulfill other Democratic priorities, is intended to deliver on President Biden’s economic proposal. – Top Democrats announced on Tuesday evening that they had reached agreement on an expansive $3.5 trillion budget blueprint, including plans to pour money into addressing climate change and expanding Medicare among an array of other Democratic priorities, that they plan to advance alongside a bipartisan infrastructure deal. Combined with nearly $600 billion in new spending on physical infrastructure contained in the bipartisan plan, which omits many of Democrats’ highest ambitions, the measure is intended to deliver on President Biden’s $4 trillion economic proposal. The budget blueprint, expected to be dominated by spending, tax increases and programs that Republicans oppose, would pave the way for a Democrats-only bill that leaders plan to push through Congress using a process known as reconciliation, which shields it from a filibuster. To push the package – and the reconciliation bill that follows – through the evenly divided Senate, Democrats will have to hold together every member of their party and the independents aligned with them over what promises to be unified Republican opposition. It was not clear if all 50 lawmakers in the Democratic caucus, which includes centrists unafraid to break with their party like Senator Joe Manchin III of West Virginia and Senator Kyrsten Sinema of Arizona, had signed off the blueprint. The package is considerably smaller than the $6 trillion some progressives had proposed but larger than some moderates had envisioned. The agreement, reached among Senator Chuck Schumer of New York, the majority leader, and the 11 senators who caucus with the Democrats on the Budget Committee, came after a second consecutive day of meetings that stretched late into the evening. Louisa Terrell, Mr. Biden’s head of legislative affairs, and Brian Deese, his National Economic Council director, were also present for the meeting. “We are very proud of this plan,” Mr. Schumer said, emerging from the session flanked by the other Democrats in the corridor outside his office just off the Senate floor. “We know we have a long road to go. We’re going to get this done for the sake of making average Americans’ lives a whole lot better.” Senator Bernie Sanders of Vermont, the liberal chairman of the Budget Committee, and Senator Mark Warner of Virginia, a key moderate who is negotiating the details of the bipartisan framework, also confirmed their support for the agreement, in impassioned remarks. “This is, in our view, a pivotal moment in American history,” proclaimed Mr. Sanders, who had initially called for a package as large as $6 trillion. Details about the outline were sparse on Tuesday evening, as many of the specifics of the legislative package will be hammered out after the blueprint is adopted. Mr. Warner said the plan would be fully paid for, though Democrats did not offer specifics about how they planned to do so. Discussions of how to raise that money are expected to continue in the coming days, one aide said. “I make no illusions how challenging this is going to be,” said Mr. Warner, who made a point of thanking both the committee and the bipartisan group he had been negotiating with. “I can’t think of a more meaningful effort that we’re taking on than what we’re doing right now.”

Senate Democrats announce plans for $3.5 trillion budget package to expand Medicare, advance Biden priorities – Senate Democrats on Tuesday reached an early agreement to pursue a sweeping $3.5 trillion reconciliation package that would expand Medicare benefits, boost federal safety net programs and combat climate change, aiming to sidestep Republican opposition and deliver on President Biden’s top economic priorities. The wide array of planned health, education and social programs would represent a historic burst of federal spending if lawmakers ultimately adopt it, as Democrats aim to seize on their slim but powerful majorities in Washington to expand the footprint of government and catalyze major changes in the economy. Party leaders plan to fashion their agenda using a process known as reconciliation, a move that only requires them to stick together to turn their vision into law. It does not require the traditional 60 votes to advance. To help rally support and keep the caucus together, Biden plans to visit with congressional Democrats on Wednesday. Democrats see the still-forming package as a critical companion piece to the roughly $1 trillion infrastructure deal that lawmakers from both parties are assembling to improve the nation’s roads, bridges, pipes, ports and Internet connections. Biden has sought both tranches of funding as part of jobs- and families-focused plans he released earlier this spring that totaled roughly $6 trillion. But the fate of the two in many ways are unsettled, and politically intertwined, with some Democrats insisting on votes on both – even as Republicans line up in opposition to some of Biden’s plans to spend big sums and expand the role of government. Senate Majority Leader Charles E. Schumer (D-N.Y.) joined top lawmakers on the chamber’s foremost budget committee in announcing the agreement at a news conference late Tuesday evening. He said “every major program” Biden had endorsed in past economic packages would be “funded in a robust way.” Schumer added that the Senate measure would also feature a robust expansion of Medicare, adding more federal money for seniors to obtain dental, vision and hearing coverage. Flanking Schumer, Sen. Mark R. Warner (D-Va.), one of the centrist lawmakers involved in the crafting of the package, said the budget measure would be fully financed. Democrats previously have said they planned to pay for much of their package using tax increases on wealthy Americans and corporations. Otherwise, the plan will not raise taxes on people making less than $400,000 per year, nor small businesses, in keeping with Biden’s prior commitments, according to a Democratic aide familiar with the discussions who spoke on the condition of anonymity to discuss the package.

Senate Democrats unveil details of $3.5 trillion budget deal – Senate Democrats revealed on Wednesday key details of their $3.5 trillion budget framework, a starting point for a Democrat-only bill for “human” infrastructure that would enhance federal safety net programs, expand Medicare and tackle climate change. The release of the FY2022 budget deal formally kicks off the process for getting a pair of infrastructure bills across the finish line.Democratic leaders need to hold all 50 of their senators together to pass this budget framework, which they plan to usher through the budget reconciliation process. Details:

• Extend the child tax credit under the American Rescue Plan, the earned income tax credit, and separate child and dependent care tax credits.
• A senior Senate Democratic aide said the duration of each credit’s enactment will be determined by congressional scoring and committee input.
• Create 80% clean electricity and 50% economy-wide carbon emissions by 2030.
• More funding for the clean energy standard, clean energy and vehicle tax incentives, “climate-smart agriculture,” wildfire prevention, federal procurement of clean technologies, and the weatherization and electrification of buildings.
• The resolution will also propose a new methane reduction and polluter import fees “to increase our emissions reductions,” per the aide.
• Universal pre-K for 3- and 4-year-old children, child care and community college.
• Increased funding for historically black colleges and universities (HBCUs), pell grants, paid family and medical leave, nutrition assistance and affordable housing.
• The package would add a new dental, vision, and hearing benefit to Medicare, extend expansions of the Affordable Care Act, expand home care, reduced prescription drugs costs and expand Medicaid coverage to states that haven’t done so yet.
• Increased funding for housing investments and manufacturing and supply chains.
• Improve green cards and pro-worker incentives and penalties.
• Increasing corporate and international taxes, as well as taxes on the wealthy.
• Increased funding for the IRS to crack down on tax enforcement.
• Through new language on prescription drugs and by repealing the Trump rebate.
• The framework would prohibit tax increases on families making under $400,000 per year, small businesses and family farms.

During Senate Democrats’ caucus lunch on Wednesday, Majority Leader Chuck Schumer (D-N.Y.), Budget Committee Chair Bernie Sanders (I-Vt.) and Sen. Mark Warner (D-Va.) briefed their colleagues on these top-line details. President Biden also attended the lunch in an attempt to keep Democrats unified in their support for both infrastructure bills. The Senate will continue to work on the massive budget reconciliation package while it takes up a $1.2 trillion bipartisan infrastructure, with a goal of passing both by August recess.

What’s in Democrats’ $3.5 Trillion Budget Plan – and How They Plan to Pay for It – WSJ -Senate Democrats have unveiled a $3.5 trillion price tag for their antipoverty, education and climate plan. Here are details on the proposal and the steps needed to turn their broad budget framework into actual legislation and law, according to lawmakers and aides.The $3.5 trillion in spending and tax credits – which the lawmakers hope to offset with tax increases and savings elsewhere – will determine the specific policy priorities that Democrats can fit into their antipoverty, education and climate legislation. They will seek to codify the agreement on the top-line spending figure into a budget resolution in the coming weeks and get it approved by Congress. The number marks a middle ground between the $6 trillion package some progressives were seeking and the roughly $2 trillion figure backed by some centrists.The legislation Democrats are preparing is expected to include paid family and medical leave, subsidized child care, an extension of an expanded child tax credit, universal prekindergarten for three and four-year-olds and affordable housing, among other issues. It would alsoextend expanded Affordable Care Act subsidies approved earlier this year in the Covid-19 aid package.The plan would broaden Medicare benefits to cover dental, vision and hearing – and would aim to reduce the cost of prescription drugs by allowing Medicare to negotiate prices, among other steps. Democrats are proposing a series of ideas, including tax credits for clean energy investments and a clean electricity standard, aimed at reducing carbon emissions in the electricity sector by 80% and economywide by 50% by 2030. Democrats are also proposing polluter import fees. Such fees could help lower emissions globally while generating revenue for the U.S., effectively acting as an emissions-based tariff. President Biden has proposed increasing the corporate tax rate to 28% from 21%, tightening the net on U.S. companies’ foreign earnings andraising the top capital-gains tax rate to 43.4% from 23.8% to cover the cost of his roughly $4 trillion overall spending agenda over 15 years, which includes enhanced spending on infrastructure. Some Democrats have balked at the scale of the proposed tax increases, however. It is far from clear that Democrats will be able to coalesce behind the $3.5 trillion number.Democrats will need to pass identical budget resolutions in both the House and Senate. The budget will likely face amendment votes in the Senate, requiring Democrats to be unified behind it. This doesn’t actually approve any spending, but it marks a needed step before committees then craft the details of the legislation within the overall framework. Later, likely this fall, Democrats plan to use their narrow control of the 50-50 Senate to advance the legislation through a budget maneuver called reconciliation, an exception to the 60-vote threshold required for most legislation.Democratic leaders need to keep every single senator in line, as no GOP support is expected. Vice President Kamala Harris would cast the tiebreaking vote. In the House, Democrats have a very slim margin as well. The party will need to bridge gaps both on the spending side and on the revenue side, where lawmakers have aired disagreements over the capital-gains and corporate taxes proposed by Mr. Biden. They will also have to reach agreement on whether the plan increases budget deficits or not. Also, complicating matters, Democrats are hoping to move their partisan plan alongside a bipartisan infrastructure agreement. They plan to pass that proposal, which provides roughly $600 billion in funding above expected federal spending on infrastructure, through the normal Senate process requiring 60 votes.

Centrist Democrats Take Wait-and-See Stance on $3.5 Trillion Budget Plan – WSJ – Several centrist Democrats took a neutral stance Wednesday on a new $3.5 trillion budget agreement, saying they needed to review details of a sweeping plan to fund expanded access to preschool and affordable child care, broader Medicare benefits and programs aimed at combating poverty and climate change. Senate Majority Leader Chuck Schumer (D., N.Y.) and Democratic members of the Budget Committee on Tuesday night announced the $3.5 trillion agreement, which will be used to craft a budget resolution setting the parameters of legislation containing much of President Biden’s legislative agenda. Democrats hope to use a process tied to the budget known as reconciliation to pass the package without GOP support, but will have to maintain total unity in their ranks to advance it through the evenly divided Senate. “We’re gonna get this done,” Mr. Biden said Wednesday in the Capitol, pumping his fist as he entered a lunchtime meeting with Senate Democrats where he endorsed the $3.5 trillion plan and stressed the importance of unity, according to lawmakers.The $3.5 trillion agreement was bigger than some centrist Democrats had sought, but marked a softening in the stance of Senate Budget Committee Chairman Bernie Sanders (I., Vt.), who had originally pursued a $6 trillion package. Many moderate Senate Democrats pivotal to the package’s chances of passage, including Sens. Jon Tester of Montana, Jeanne Shaheen of New Hampshire and Kyrsten Sinema of Arizona, said they were still reviewing details of the agreement. Sen. Joe Manchin (D., W.Va.) said he raised concerns about the package’s impact on inflation and its climate-change provisions during the lunch meeting.The bill is expected to include broad tax credits for clean energy investments and liberal Democrats are pressing to end subsidies for fossil fuels.”I’m concerned also about maintaining the energy independence the United States of America has, and with that you cannot be moving towards eliminating the fossil,” Mr. Manchin said. “Hopefully we can come to an agreement that they understand fossil is going to play a part.”Another central concern for Mr. Manchin is covering the full cost of the $3.5 trillion bill. Democrats on the Budget Committee said Tuesday night the package would be fully paid for with tax increases and other sources of revenue.”Look, I’m open to it,” Mr. Tester said Wednesday, noting that he thought it was appropriate for the federal government to invest in housing, child care and workforce training. “I just need to know what’s in it, how it’s paid for.”The White House has proposed raising the corporate tax rate from 21%, tightening the tax net on U.S. companies’ foreign earnings, and raising the capital-gains rate for high-income households, among other changes. The plan will also rely on capturing revenue from enhanced enforcement at the Internal Revenue Service, which is also an idea lawmakers are looking at in a separate, bipartisan infrastructure effort.A spokesman for Ms. Sinema said she would “give careful consideration to any idea that can strengthen Arizona’s economy and help Arizona families get ahead.”

Democrats face daunting hurdles despite promising start – President Biden and Democratic leaders face daunting hurdles as they fight to preserve a fragile bipartisan coalition crucial to the success of Biden’s legacy-defining economic agenda. Party leaders are treading a minefield as they seek to adopt both a massive infrastructure bill with Republican support, and a second, even larger Democratic package expanding social benefits and environmental programs demanded by liberals – all without spooking moderate Democrats leery of deficit spending. Losing any one of those groups would likely sink the entire project. This week, they passed the first test by adhering to a simple rule: alienate no one. The $3.5 trillion budget outline unveiled by Senate Democrats on Tuesday is winning praise from progressives, despite their initial demands for a much larger figure. Centrist Republicans are still determined to move a $1.2 trillion infrastructure deal, despite reservations about its ties to the separate social spending bill. And moderate Democrats remain open to supporting both, despite apprehensions about the mammoth costs. To be sure, there’s still a long way to go to get the proposals to Biden’s desk, with plenty of obstacles standing in the way – any one of which could tank the whole agenda. Those perils were highlighted Thursday, when Senate and White House negotiators scrambled back to the table after Republicans balked at a provision of the infrastructure bill designed to raise roughly $100 billion by empowering the IRS to go after tax cheats. Still, the simple fact that all the major players remain engaged – and none of them were scared off by the $3.5 trillion proposal – represents an auspicious, if early, signal that Democrats have a solid shot of enacting Biden’s top domestic priority over the next several months – a massive expansion of government programs that has drawn comparisons to former President Franklin Roosevelt’s New Deal. “This is a good start … and it’s excellent momentum,” said Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus. Moderate Democrats haggling over the infrastructure portion of the two-pronged agenda are sounding similarly optimistic. Although they’re demanding that the cost of Biden’s plans be paid for with changes elsewhere in the budget – an ultimatum complicated by the Republicans’ revolt over the IRS provision – they’re still expressing confidence that those offsets can be worked out with Republicans and the White House. “We’ve just gotta find the pay-fors. That’s it,” Sen. Jon Tester (D-Mont.) told reporters Thursday in the Capitol. “We’re gonna keep moving forward – try to keep moving forward,” echoed Sen. Mark Warner (Va.), another moderate Democrat. “I’m gonna stay confident.” Republicans, meanwhile, have remained engaged in the infrastructure talks, despite grumbling over the Democrats’ plan to link the new public works spending to the bigger social benefits package, which GOP lawmakers unanimously oppose. The top Republican negotiator on infrastructure, Ohio Sen. Rob Portman, predicted lawmakers would get to the finish line, even as he dismissed pressure by Senate Democratic leaders to speed things along. “We’re gonna get it done,” Portman said. “I don’t know if we’ll make anybody’s arbitrary timeline. That’s not the point. The point is to get it right. We’re moving as fast as we possibly can.” The willingness of all sides to remain at the table reflects the enormous stakes of the current debate. Infrastructure is among those rare issues that’s enormously popular across ideological lines, largely because it would benefit every district in the country. Yet a major overhaul of the nation’s aging public works systems has eluded leaders in both parties for decades.

Homeland Security begins administering Johnson & Johnson shots at ICE facilities. – In an effort to increase vaccination rates at detention centers, the Department of Homeland Security has begun administering Johnson & Johnson vaccines to people being held in Immigration and Customs Enforcement lockups.The department said it has received 10,000 doses of the vaccine, with more expected in the future on a rolling basis.”DHS remains committed to a public health guided, evidence-based approach to vaccine education that ensures those in our care and custody can make an informed choice during this global pandemic,” the agency said in a statement.The new push to scale up vaccine distribution comes after the agency has drawn criticism for its previous efforts. As of May, according to ICE’s latest available data, only about 20 percent of detainees passing through its facilities had received at least one dose of vaccine while in custody.Since testing for the virus began at ICE facilities in 2020, more than 19,000 detainees have tested positive, according to the agency.On July 11, there were 906 detained immigrants at ICE facilities who had tested positive for the coronavirus and were being monitored or under isolation. Those positive cases were out of about 27,000 detainees, according to ICE.Lagging vaccination rates have not just been an issue at ICE facilities, but at prisons, jails and detention centers across the United States, which have seen some of the worst outbreaks.Throughout the pandemic, prison inmates have been more than three times as likely as other Americans to become infected, according to a New York Times database. The virus has killed prisoners at higher rates than the general population, according to the data.In May, the American Civil Liberties Union sent a letter to the homeland security secretary, Alejandro Mayorkas, calling for detained immigrants to have access to Covid-19 vaccines.”ICE’s failure to ensure a coordinated strategy for vaccination continues to endanger people in detention nationwide,” the A.C.L.U. said in its letter.

Federal bill would ban vaccine database in response to Biden’s ‘door-to-door’ pledge – U.S. Sen. Ted Cruz, R-Texas, has introduced a bill that would prohibit the federal government from creating and maintaining a federal database of every American who has received COVID-19 vaccines. Cruz introduced the bill after White House officials announced a plan to use taxpayer dollars to pay individuals to go door-to-door in regions of the country where there are relatively low vaccination rates. In response to statements made by President Joe Biden and White House press secretary Jen Psaki about the door-to-door outreach initiative, Cruz tweeted, “When the Biden admin calls for ‘targeted’ ‘door-to-door outreach’ to get people vaccinated, it comes across as a g-man saying: ‘We know you’re unvaccinated, let’s talk, comrade.’ My bill to ban federal vaccine passports prohibits the feds from maintaining a vaccine database.” The bill states: “To the extent any federal department or agency has received, obtained, collected, aggregated, stored, or is otherwise in possession of any data or records from officials, including public health officials, in any state, the District of Columbia, or any territory, or any third party who administered or has information related to the administration of any COVID-19 vaccinations, including health care providers and insurers, such data and records about any individuals’ vaccination status shall be destroyed by the federal department or agency and, if in digital form, that data record shall be deleted in its entirety within 30 days of the enactment of this act.” Biden said, “We need to go community by community, neighborhood by neighborhood, and often times door by door – literally knocking on doors to get help to the remaining people.” Neither Biden nor Psaki provided details about the initiative, including who it would target, how long it would last, and what type of outreach the teams would engage in or what kind of data they would collect, or how and where this data would be stored.

Twitter Says Government Demands To Remove Tweets From Journalists, News Outlets Jump 26% – Twitter on Wednesday announced that government demands to remove content posted by journalists and news outlets jumped 26% worldwide in the second half of 2020 vs. the first half of the year, Reuters reports. According to the company’s transparency report, 199 ‘verified’ journalists and news outlets on its platform were subject to 361 legal demands to remove content – though the social media giant refused to say which countries had submitted them.Meanwhile, Twitter received over 14,500 requests for information between July 1 and Dec. 31, of which 30% of the requests were honored. India is “the single largest source of all information requests from governments during the second half of 2020, overtaking the United States, which was second in the volume of requests,” according to the report. Such information requests can include governments or other entities asking for the identities of people tweeting under pseudonyms. Twitter also received more than 38,500 legal demands to take down various content, which was down 9% from the first half of 2020, and said it complied with 29% of the demands. – Reuters After engaging in several conflicts with countries – primarily India – over rules regulating social media content, Twitter announced last week that it had hired an interim chief compliance officer in India, as well as other executives tasked with ensuring that the company adheres to international laws.In April, Twitter admitted to censoring criticism of the Indian government amid widespread reports that the official government death toll during the pandemic was misrepresented – and the actual figure could be as much as 30 times higherthan reported. As Jonathan Turley noted at the time:With the support of many Democratic leaders in the United States, Twitter now regularly censors viewpoints in the United States and India had no trouble in enlisting it to crackdown on those raising the alarm over false government reporting. Buried in an Associated Press story on the raging pandemic and failures of the Indian government are these two lines:“On Saturday, Twitter complied with the government’s request and prevented people in India from viewing more than 50 tweets that appeared to criticize the administration’s handling of the pandemic. The targeted posts include tweets from opposition ministers critical of Modi, journalists and ordinary Indians.”The article quotes Twitter as saying that it had powers to “withhold access to the content in India only” if the company determined the content to be “illegal in a particular jurisdiction.” Thus, criticism of the government in this context is illegal so Twitter has agreed to become an arm of the government in censoring information. Keep in mind that this information could protect lives. It is not “fake news” but efforts by journalists and others to disclose failures by the government that could cost hundreds of thousands of lives. This is the face of the new censors. The future in speech control is not in the classic state media model but the alliance of states with corporate giants like Twitter. Twitter now actively engages in what Democratic leaders approvingly call “robust content modification” to control viewpoints and political dissent.

Democrats take Powell to task for easing regulation of big banks – With Federal Reserve Chair Jerome Powell’s term slated to end in February, many in the nation’s capital are calling for him to be reappointed. But two key Democrats signaled Thursday they may have reservations about prolonging his tenure. During Powell’s regularly scheduled appearance before the Senate Banking Committee, Sens. Sherrod Brown of Ohio – who chairs the panel – and Elizabeth Warren of Massachusetts strongly criticized regulatory relief provided to large banks.”Strong financial regulation enables the Fed to be more aggressive and helping workers, and that should be your mission,” Brown said during the in-person hearing. “It’s time, Mr. Chair, respectfully, you change the way you think about regulating the biggest banks.”

Regulators propose joint guidance on managing third-party risk – Three federal bank regulators are requesting industry input on a set of interagency guidelines to help financial institutions navigate the risks of third-party relationships. The proposed guidance, released jointly on Tuesday afternoon by the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corp., centers on the responsibilities of banks when practicing risk management with business partners. Rather than eliminate the need for rigorous compliance, the agencies wrote in the guidance, “the use of third parties may present elevated risks to banking organizations and their customers.”

FHFA to end fee meant to cover Fannie, Freddie’s COVID-related losses – The Federal Housing Finance Agency will eliminate a fee that lenders have paid since December to offset potential losses caused by the coronavirus pandemic, the agency said Friday. The agency mandated the “adverse market fee” last year on loans sold to Fannie Mae and Freddie Mac to address economic uncertainty from COVID-19. The fee was similar to one implemented by the two mortgage companies during the 2008 financial crisis.The refinance fee will end Aug. 1, the FHFA said in a letter to lenders.

Mortgage distress drops annually, small share of borrowers lack equity – It’s been a year-plus since widespread forbearance arrived and it’s gone a long way toward reducing distress, but a recent estimate for the equity held by borrowers with hardships suggests the financial duress remaining is likely to create some limited hot spots.The drop in the forborne-payment rate to nearly 5% earlier this year from a peak of 7% in May 2020 is promising when it comes to future mortgage performance, a Government Accountability Office report f inds. But roughly 1.9% of distressed borrowers may be at risk of eventual foreclosure because not only were they late on an average of a total $8,300 in payments for eight months but also equity is lacking. Borrowers with equity might still lose their homes if they can’t resume normal payments or modify loans when forbearance ends. But if the property is worth more than the borrower owes, they may avoid a long foreclosure process by selling and exiting with clean credit and/or even a profit. Given that home prices are skyrocketing, many houses have equity, but exceptions do exist.

MBA Survey: “Share of Mortgage Loans in Forbearance Decreases to 3.76%” -Note: This is as of July 4th. From the MBA: Share of Mortgage Loans in Forbearance Decreases to 3.76% The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 11 basis points from 3.87% of servicers’ portfolio volume in the prior week to 3.76% as of July 4, 2021. According to MBA’s estimate, 1.9 million homeowners are in forbearance plans.The share of Fannie Mae and Freddie Mac loans in forbearance decreased 8 basis points to 1.91%. Ginnie Mae loans in forbearance decreased 32 basis points to 4.78%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 2 basis points to 7.94%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 13 basis points to 3.87%, and the percentage of loans in forbearance for depository servicers also decreased 13 basis points to 3.98%.”Forbearance exits increased in the week of the July 4th holiday to the fastest pace since early April,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “New requests stayed very low, resulting in a large drop in the share of loans in forbearance, particularly for Ginnie Mae loans, which also continue to be impacted by buyouts of delinquent loans. These loans are tracked as portfolio loans after a buyout.” “The mortgage delinquency rate across the entire servicing portfolio declined in June compared to May. However, the delinquency rate slightly increased for homeowners who have completed a workout. Borrowers who are exiting forbearance now are likely to have been in relief for over a year, with almost 60 percent of borrowers in forbearance extensions of longer than 12 months. These borrowers may face more challenges getting back to making regular payments.”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 2020, and has trended down since then.The MBA notes: “Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.04%.”. Note: Deferral plans are very popular. Basically when the homeowner exits forbearance, they just go back to making their regular monthly payments, they are not charged interest on the missed payments, and the unpaid balanced is deferred until the end of the mortgage.

Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Declined Slightly -Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance. This data is as of July 13th.From Andy Walden at Black Knight: Forbearance Volumes Essentially Flat This Week After last week’s roughly 190,000 reduction in the number of active forbearance plans, a decline of just 1,000 plans may feel miniscule. It may indeed be, but it’s also very much in line with what we’ve seen month after month since the recovery began – namely, the well-documented, mid-month lull in activity.As of July 13, 1.86 million borrowers remain in COVID-19 forbearance plans, making up 3.5% of all active mortgages and 2.1% of GSE, 6.2% of FHA/VA and 4.0% of Portfolio/PLS loans.What little weekly improvement was seen was found among FHA/VA forbearance plans (-5,000). This was partially offset by a 4,000 rise among portfolio/PLS forbearances while at the same time plan volumes among GSE loans held steady from last week. All in, this puts the number of loans in active forbearance down 196,000 (-9.5%) from the same time last month. With nearly 400,000 plans still scheduled to be reviewed for extension/removal this month, there is still a chance for moderate recovery towards the end of this month and the beginning of August.Removal volumes returned to mid-June levels as the number of loans being reviewed for extension/removal trailed off after the first week of the month, while plan starts edged higher, driven by an increase in restart activity.This too is a familiar phenomenon; one we’ve seen following large volumes of quarterly plan reviews over the course of the pandemic. As in the past, the increase in restarts is most likely a counter to last week’s large number of exits.

Black Knight Mortgage Monitor for May; Highest Annual Home Price Increase on Record –Black Knight released their Mortgage Monitor report for May today. According to Black Knight, 4.73% of mortgage were delinquent in May, up from 4.66% of mortgages in April, and down from 7.76% in May 2020. Black Knight also reported that 0.28% of mortgages were in the foreclosure process, down from 0.38% a year ago.This gives a total of 5.01% delinquent or in foreclosure.Press Release: Black Knight: Home Prices Surge Nearly 18% Annually as May Sees Greatest Single-Month Acceleration on Record; eMBS Securities Issuance Data Suggests Borrower Behavior Changing in Response: Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. This month’s report looks at the continued, unprecedented levels of home price growth, and the impact that growth is having on mortgage lending and borrower behavior. According to Black Knight Data & Analytics President Ben Graboske, home price appreciation continues to break records, with ramifications that stretch across the real estate and mortgage markets. “The Black Knight HPI shows home prices in May up nearly 18% from the same time last year,” said Graboske. “Frankly, home values are appreciating at rates we’ve simply never seen before, as low interest rates, ultra-scarce inventory and increasingly competitive homebuyers combine to create a truly unprecedented market.”Indeed, the rate of growth has been accelerating by more than 2% in each of the past two months, and May’s 2.1% rise marked the sharpest monthly jump on record. Single-family home prices are up more than 18% from last May – also a record. And the growth has been widespread – home price appreciation accelerated in each of the nation’s 100 largest metros in May, with even the slowest appreciating metro area now seeing at least 10% annual growth. Data from our Collateral Analytics Group suggests even further acceleration may be on tap, as the median sales price of single-family homes in the first three weeks of June was already up 25% year-over-year. Here is a graph on delinquencies from Black Knight:

Early-stage delinquencies (30 or 60 days past due) rose by 110K in May, while the number of seriously delinquent mortgages (90+ days but not yet in foreclosure) improved for the ninth consecutive month<

And on monthly payments (affordability) from Black Knight:

Factoring income into the equation, it now requires 21.3% of the median household income to make the monthly payment on the average priced home purchase assuming a 20% down payment

Even with the average 30-year interest rate hovering at just over 3%, that payment-to-income ratio is up from 18.1% at the beginning of 2021

In areas like Los Angeles, the ratio has climbed as high as 46.5%, an unsettling number for buyers hoping to make the leap into homeownership.

A Few Excerpts from a Local Commercial Real Estate Report: “Good news is construction activity has all but stopped” –Voit Real Estate Services released their Q2 reports on Commercial Real Estate (CRE) in SoCal. Here are a few excerpts from the Orange County Office report: “The Orange County office market struggled again in 2Q. It had already been slowing before the pandemic hit, and by virtue of the higher employee density and multi-tenant configuration of office product, the office sector was hit harder by COVID than other sectors. Vacancy and availability both moved higher, and net absorption remained in negative territory. Average asking lease rates were relatively flat, but they alone do not tell the full story, as landlord concessions have risen sharply and are not reflected in market metrics. Office tenants are still trying to sort out how to fold their workforces back into the office, and that has delayed decision-making regarding relocations and renewals….The vacancy rate in Orange County rose to 13.76%, up 61 basis points in 2Q. That came on top of a 116-basis-point spike in 1Q. The increase was expected given how many moves have been put on hold to re-evaluate space utilization. Class A product is under the most stress. Vacancy in those buildings rose to 18.28% in 2Q, compared with 10.96% for Class B and just 8.75% for Class C….Fewer relocations and an increase in short-term renewals significantly impacted net absorption in 1Q, and the same held true in 2Q. Net absorption was in negative territory again in 2Q, posting a net loss of 512,502 SF, after recording a loss of more than 1.2 MSF in the opening quarter. Consistent negative absorption points to afuture increase in vacancy….The good news is that construction activity has all but stopped for the moment, which gives the market a chance to reabsorb existing unoccupied space and clear off some of the lower-priced sublease space. Just 439,206 SF of office space was in the construction queue as 2Q ended, all of it in one project in Costa Mesa, The Press. Another 1.7 MSF of space is in the planning stage but is not expected to get underway until market conditions improve.”

Hotels: Occupancy Rate Down 9% Compared to Same Week in 2019 -Note: The year-over-year occupancy comparisons are easy, since occupancy declined sharply at the onset of the pandemic. So STR is comparing to the same week in 2019.The occupancy rate is down 9.3% compared to the same week in 2019.From CoStar: STR: US Weekly Hotel Occupancy Improves; Average Daily Rate Sets New Record: U.S. hotel occupancy improved week over week, while average daily rate (ADR) was the highest on record, according to STR’s latest data through July 10.July 4-10, 2021 (percentage change from comparable week in 2019*):

Occupancy: 67.2% (-9.3%)

Average daily rate (ADR): US$139.84 (+5.4%)

Revenue per available room (RevPAR): US$93.99 (-4.4%)

Inflation aside, STR analysts note that hoteliers are taking advantage of pent-up leisure demand and higher spending travelers while trying to counter staffing shortages and rising operational costs in some regions. Additionally, with demand mostly transient, there is not the usual lowering effect of discounted group rates at the higher end of the market. Most of the higher ADR performances are outside of the major metro markets. 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, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020). Occupancy is well above the horrible 2009 levels and weekend occupancy (leisure) has been solid.. With solid leisure travel, the Summer months should have decent occupancy – but it is uncertain what will happen in the Fall with business travel.

Retail Sales Increased 0.6% in June – On a monthly basis, retail sales were increased 0.6% from May to June (seasonally adjusted), and sales were up 18.0 percent from June 2020. From the Census Bureau report: Advance estimates of U.S. retail and food services sales for June 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $621.3 billion,an increase of 0.6 percent from the previous month, and 18.0 percent above June 2020. … The April 2021 to May 2021 percent change was revised from down 1.3 percent to down 1.7 percent. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 0.4% in June. The stimulus checks boosted retail sales significantly in March and April. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 16.6% on a YoY basis. Sales in June were above expectations, however sales in May were revised down.

US Consumers So Far Completely Undeterred By Delta Variant –Despite the recent jump in Delta variant covid cases in the US, economic data continues to show that consumers are actively spending on services and remain undeterred despite the media’s best efforts to spark a fresh pre-lockdown panic.First, a quick update on the current state of the virus in the US. Average daily virus cases jumped by 28.3% to 17.4k during the week ending July 9, and the 7-day moving average of virus cases increased to 17.4k during the week ending July 9. This is the highest level since May 31 and a 28.3% increase from the week ending July 2. As BofA note this morning, from July 2 to July 9, forty states have recorded growth in daily cases and states where vaccine rates are lower are experiencing faster case growth. As shown in the chart below, the bank finds that growth in virus cases and vaccination rates at the state level exhibit a negative relationship.Along with low vaccine rates, the Delta variant, which is more infectious than earlier strains, has driven the rise in cases of late. Outbreak.info estimates that the variant accounted for 20% of virus cases over the 60 days ending July 7.Meantime, vaccine rates have slowed appreciably with the 7-day average of jabs dropping to just about 500k. This was likely due in part to the July 4 holiday; however, shots have been on a downward trend since April.Regardless, the US remains one of the most vaccinated countries, with 67.7% of its adult population and 88.7% of those 65 and older having received at least one shot to date. This, BofA concedes, should limit the spread of the Delta variant. However, the bank warns that the uneven vaccination rates across states and within states means that there are areas that have little protection against this highly infectious variant. Moreover, the longer the virus lingers the greater the risk for a vaccine-resistant variant to develop. In short: whether be decree or due to simple population dynamics, Covid-19 could be with us for the foreseeable future.In light of this data, BofA thinks we will continue to see a surge in cases over the near-term, but does not expect restrictions on activity to be broadly imposed again. This means that while the downside risk to the economy is relatively low, the bank’s economists will continue to reevaluate this view as things can change in a matter of days when it comes to the virus.

BLS: CPI increased 0.9% in June, Core CPI increased 0.9% — From the BLS: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in June on a seasonally adjusted basis after rising 0.6 percent in May, the U.S. Bureau of Labor Statistics reported today. This was the largest 1-month change since June 2008 when the index rose 1.0 percent. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment; this was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008. The index for used cars and trucks continued to rise sharply, increasing 10.5 percent in June. This increase accounted for more than one-third of the seasonally adjusted all items increase. The food index increased 0.8 percent in June, a larger increase than the 0.4-percent increase reported for May. The energy index increased 1.5 percent in June, with the gasoline index rising 2.5 percent over the month.The index for all items less food and energy rose 0.9 percent in June after increasing 0.7 percent in May. Many of the same indexes continued to increase, including used cars and trucks, new vehicles, airline fares, and apparel. The index for medical care and the index for household furnishings and operations were among the few major component indexes which decreased in June.The all items index rose 5.4 percent for the 12 months ending June; it has been trending up every month since January, when the 12-month change was 1.4 percent. The index for all items less food and energy rose 4.5 percent over the last 12-months, the largest 12-month increase since the period ending November 1991. The energy index rose 24.5 percent over the last 12-months, and the food index increased 2.4 percent. CPI and core CPI were well above expectations.

Consumer Price Index: June Headline at 5.4% – The Bureau of Labor Statistics released the June Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 5.49%, up from 4.99% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 4.47%, up from 3.80% the previous month and above the Fed’s 2% PCE target.Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in June on a seasonally adjusted basis after rising 0.6 percent in May, the U.S. Bureau of Labor Statistics reported today. This was the largest 1-month change since June 2008 when the index rose 1.0 percent. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment; this was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.The index for used cars and trucks continued to rise sharply, increasing 10.5 percent in June. This increase accounted for more than one-third of the seasonally adjusted all items increase. The food index increased 0.8 percent in June, a larger increase than the 0.4-percent increase reported for May. The energy index increased 1.5 percent in June, with the gasoline index rising 2.5 percent over the month.The index for all items less food and energy rose 0.9 percent in June after increasing 0.7 percent in May. Many of the same indexes continued to increase, including used cars and trucks, new vehicles, airline fares, and apparel. The index for medical care and the index for household furnishings and operations were among the few major component indexes which decreased in June.The all items index rose 5.4 percent for the 12 months ending June; it has been trending up every month since January, when the 12-month change was 1.4 percent. The index for all items less food and energy rose 4.5 percent over the last 12-months, the largest 12-month increase since the period ending November 1991. The energy index rose 24.5 percent over the last 12-months, and the food index increased 2.4 percent. Read more Investing.com was looking for a 0.5% MoM change in seasonally adjusted Headline CPI and a 0.4% in Core CPI. Year-over-year forecasts were 4.9% for Headline and 4.0% for Core.The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve’s Core inflation target for the CPI’s cousin index, the BEA’s Personal Consumption Expenditures (PCE) price index.

Inflation! by Menzie Chinn – Reuters – “U.S. consumer prices post largest gain in 13 years; inflation has likely peaked”. Surprises on the upside, put in context. Stripping out volatile components, inflation is up; focusing on sticky prices, inflation is down. The CPI surprise was 0.4%, while that for Core CPI was 0.43% (relative to Bloomberg consensus as of yesterday). To place these in context, the variability of m/m changes in the (log) CPI and Core CPI is about 0.2%. Figure 1: CPI all urban (bold blue line), Bloomberg consensus (blue +), 2016-19 stochastic trend (blue gray line), CPI less food and energy (“core”), (bold dark red), Bloomberg consensus (red square), and 2016-19 stochastic trend (red gray line), both on log scale. Source: BLS, Bloomberg, and author’s calculations. In addition, the price level as of June was above the 2016-19 linear trend, as shown above. Prices have caught up, and more (both are about 1.5% above trend). On the other hand, while headline m/m inflation is up, a measure that focuses on infrequently changed prices – the sticky price CPI – has declined, suggesting easing pressures. The trimmed CPI – which excises highly volatile components – kept on rising indicating it’s not outliers driving June increases. Figure 2: Month-on-month annualized inflation from CPI-all urban (blue), from personal consumption expenditure (PCE) deflator (black), chained CPI, nsa (brown), sticky price CPI (green), and 16% trimmed mean CPI (red). Source: BLS, Atlanta Fed, Cleveland Fed, via FRED, and author’s calculations. What about core measures? These are shown in Figure 3 (no trimmed core shown). Figure 3: Month-on-month annualized inflation from CPI-all urban (blue), from personal consumption expenditure (PCE) deflator (black), chained CPI, nsa (brown), and sticky price CPI (green). Source: BLS, Atlanta Fed, Cleveland Fed, via FRED, and author’s calculations.The pandemic has made it more important to examine the role of specific components. CEA notes that excluding “cars and pandemic-affected services, core inflation rose 0.22 percent month-over-month, relative to 0.28 percent in May and 0.31 percent in April”. This is shown in this graph:Source: CEA (7/13/2021).

Consumer inflation rises the most in over a decade; will it draw the Fed’s attention? — Let me start my take on this month’s inflation report with my concluding remarks last month: “this is not a big deal if it only lasts another month or two. But if the trend continues longer than that, it will begin to impact consumer spending, and it will get the Fed’s attention.” Well, it has definitely lasted another month. In spades. The 0.9% increase in June was the highest since June 2008’s 1.0% increase (driven by $4+ gas).(red in the graph below) More importantly, the 5.3% YoY increase is also the highest since summer 2008, and well in excess of the YoY average wage increase for nonsupervisory workers of 3.7% (blue): This is going to get the Fed’s attention. They may not even wait another month. Be that as it may, the primary driver of this inflation is not wage increases, it is first and foremost a supply bottleneck in the production of new cars, which is driving insane demand for used cars (blue in the graph below), the prices of which are up 45.2% YoY. Secondarily it is the demand driven increase in gas usage, which has caused those prices to increase 44.8% YoY (red): The spike in prices in used cars alone is responsible for about 1/3 of the total increase in prices last month. Used car prices, which are about 3.2% of the total weighting in the inflation index, rose 10.8% in just the past month! That nets out to over 0.3% of the total inflation number being just used cars. On the other hand, rent continues to be somnolent (as is “owners’ equivalent rent,” which is how the Census Bureau tries to measure house prices): By the way, ultimately the house price spike has been driven by the fact that during the pandemic last year, existing homes placed on the market (which are about 90% of the typical housing market) declined precipitously compared with the typical year: I expect both house prices and gas prices to work themselves out. Not only have home sales declined, but I expect most of the houses that were going to be placed on the market in 2020 to go to market over the next 12 to 24 months. This surge in existing home inventory is going to drive house prices down. Similarly, the travel bug from being cooped up at home during the pandemic is going to pass as well. That leaves motor vehicles. As I wrote last month, I have no special insight into vehicle part supply chains, and in particular microchips, which have been fingered as a primary shortage. But, hypothetically, would the Fed raising rates do anything about that shortage? The answer seems a pretty clear “NO,” so why deliberately slow down the rest of the economy to deal with a bottleneck that is beyond their control? Beyond that, as I wrote last month, there have been a number of 10%+ spikes in commodity prices in the past several decades that were brief in nature and worked themselves out without causing a recession: Ironically, the only way I can see the Fed “helping out” with inflation, is in the area of their “blind spot” – actual house prices. If they were to raise rates just enough to trigger an increase in mortgage rates of 0.5%-0.75%, which would serve to cool down the housing market in a very substantial way without necessarily causing the economy as a whole to stall.

Record inflation in US leads to double digit increases in basic consumer goods – On Tuesday the Bureau of Labor Statistics (BLS), released the latest consumer price index (CPI) data from June, which showed that prices for basic consumer goods and services continue to rise at historic rates. The BLS reported that the CPI rose 0.9 percent from May, nearly double what Wall Street analysts had predicted, leading to a year-over-year CPI increase of 5.4 percent, the highest in 13 years.The core inflation growth statistic, which just measures the increase in consumer goods, minus energy and food, showed a 4.5 percent year-over-year increase, which is the highest since 1991.Driving the soaring increase in the CPI is the rising cost for energy commodities such as fuel oil and gasoline, which the BLS recorded rising 44.2 percent in the last year. Used car prices are also showing an unprecedented rise in prices, jumping 10.5 percent in June, which follows a 7.3 percent increase in May and 10 percent in April. New car prices also rose 2 percent in June, the biggest increase since May 1981.The meteoric rise in car prices is being driven by two main factors: a global semiconductor shortage, components used in nearly every modern electronic device and a so-called labor shortage. Major car companies, such as General Motors, have lamented the fact that workers are unwilling to work in COVID-19-infested factories for the $16.67 an hour offered to new hires under its agreement with the United Auto Workers (UAW) union. The labor contracts signed by the unions have long included raises at or below the rate of inflation and lump sum payments instead of increases in hourly wages. The contract proposed by the UAW at Volvo Trucks would provide an average annual raise of only 2 percent over six years for the top-paid workers at the factory. With the annual rate of inflation at over 5 percent, this would result in a nearly 20 percent cut in real wages over the life of the contract.As the corporatist trade unions and companies conspire to depress wages and increase profits, workers are finding it difficult just to afford basic food items, leading to an increase in food insecurity across the US. Some 20 million adults are without enough to eat as of mid-June, according to data collected by the Center on Budget and Policy Priorities, while the latest US Census Bureau survey found that 42 million US adults reported not being able to afford the types of food they want to eat last month.

LA Area Port Traffic: Solid Imports, Weak Exports in June -Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic. The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average. On a rolling 12 month basis, inbound traffic was up 1.5% in June compared to the rolling 12 months ending in May. Outbound traffic was down 0.5% compared to the rolling 12 months ending the previous month. The 2nd graph is the monthly data (with a strong seasonal pattern for imports).Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year. 2021 started off incredibly strong for imports.Imports were up 23% YoY in June (collapsed last year due to pandemic), and exports were down 6.2% YoY.

Industrial Production Increased 0.4 Percent in June –From the Fed: Industrial Production and Capacity Utilization – Industrial production increased 0.4 percent in June after moving up 0.7 percent in May. In June, manufacturing output edged down 0.1 percent, as an ongoing shortage of semiconductors contributed to a decrease of 6.6 percent in the production of motor vehicles and parts. Excluding motor vehicles and parts, factory output increased 0.4 percent. The output of utilities advanced 2.7 percent, reflecting heightened demand for air conditioning, as much of the country experienced a heat wave in June. The index for mining increased 1.4 percent.For the second quarter as a whole, total industrial production rose at an annual rate of 5.5 percent. Manufacturing output increased at an annual rate of 3.7 percent despite a drop of 22.5 percent for motor vehicles and parts.At 100.1 percent of its 2017 average, total industrial production in June was 9.8 percent above its year-earlier level but 1.2 percent below its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.3 percentage point in June to 75.4 percent, a rate that is 4.2 percentage points below its long-run (1972 – 2020) average.This graph shows Capacity Utilization. This series is up from the record low set in April 2020, but still below the level in February 2020.Capacity utilization at 75.4% is 4.2% below the average from 1972 to 2020. Note: y-axis doesn’t start at zero to better show the change. The second graph shows industrial production since 1967.Industrial production increased in June to 100.1. This is 1.2% below the February 2020 level.The change in industrial production was below consensus expectations.

Empire State Mfg Survey: Record Setting Growth in July -This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 43 was an increase of 25.6 from the previous month’s 17.4. The Investing.com forecast was for a reading of 18. The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.Here is the opening paragraph from the report. Business activity grew at a record-setting pace in New York State, according to firms responding to the July 2021 Empire State Manufacturing Survey. The headline general business conditions index shot up twenty-six points to 43.0. New orders and shipments increased robustly. Delivery times continued to lengthen substantially, and inventories expanded. Employment grew strongly, and the average workweek increased. Input prices continued to increase sharply, and selling prices rose at the fastest pace on record. Looking ahead, firms remained optimistic that conditions would improve over the next six months, with the index for future employment reaching another record high. [Full report] Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Philly Fed Mfg Index: “Current Indicators Remain Elevated” – The Philly Fed’s Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed’s National Activity Index.The latest Manufacturing Index came in at 21.9, down 8.8 from last month’s 30.7. The 3-month moving average came in at 28.0, down from 33.6 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 48.6, down 20.6 from the previous month’s 69.2.The 21.9 headline number came in below the 28.0 forecast at Investing.com.Here is the introduction from the survey: Manufacturing activity in the region continued to expand this month, according to firms responding to the July Manufacturing Business Outlook Survey. The indicators for general activity, shipments, and new orders all declined but remain elevated. The firms continued to report increases in employment and prices. Most of the survey’s future indexes tempered but continue to indicate overall optimism about growth over the next six months. (Full Report) The first chart below gives us a look at this diffusion index since 2000, which shows us how it has behaved in proximity to the two 21st century recessions. The red dots show the indicator itself, which is quite noisy, and the 3-month moving average, which is more useful as an indicator of coincident economic activity. We can see periods of contraction in 2011, 2012, and 2015, and a shallower contraction in 2013. The contraction due to COVID-19 is clear in 2020.

U.S. Producer Prices Rose More Than Forecast in June – Prices paid to U.S. producers rose in June by more than expected, indicating pressure is mounting on companies to pass along higher costs to consumers. The producer price index for final demand increased 1% from the prior month and 7.3% from June of last year, Labor Department data showed Wednesday. Excluding volatile food and energy components, the so-called core PPI also rose 1%, the most on record, and was up 5.6% from a year ago. Producer prices surged in June amid supply chain bottlenecks The median forecasts in a Bloomberg survey of economists called for a 0.6% month-over-month advance in the overall PPI and a 0.5% increase in the core figure. The annual increases were the largest in data back to 2010. The PPI, which tracks changes in the cost of production, has accelerated at a faster pace than expected in recent months due to higher commodity prices and complications with global supply chains. Challenges in hiring skilled workers have also put upward pressure on wages. The increases in production and labor costs help explain why the pace of consumer inflation has exceeded economists’ estimates in each of the last four months. A report Tuesday showed the consumer price index surged in June by the most since 2008. The increase was primarily in categories associated with reopening, including hotel stays, car rentals and airfares. Federal Reserve officials have said upward pressure on prices is likely to be transitory, but some investors worry the recent gains will lead to more persistent inflation. “Strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind,” Fed Chair Jerome Powell said Wednesday in prepared remarks to lawmakers. The PPI report showed prices for goods increased 1.2% after a 1.5% advance in the prior month, while the cost of services rose 0.8%, the most since the start of the year. Almost 60% of the overall PPI advance was due to services, according to the Labor Department. The increase in the costs of services reflected growth in margins received by wholesalers and retailers. Liquefied petroleum gas, plywood, aluminum base scrap were among goods that climbed by double digits from a month earlier. Producer prices excluding food, energy, and trade services — a measure often preferred by economists because it strips out the most volatile components — rose 0.5% from the prior month and increased 5.5% from a year earlier. The annual gain was the largest on data back to 2014.

Weekly Initial Unemployment Claims decrease to 360,000 — The DOL reported: In the week ending July 10, the advance figure for seasonally adjusted initial claims was 360,000, a decrease of 26,000 from the previous week’s revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week’s level was revised up by 13,000 from 373,000 to 386,000. The 4-week moving average was 382,500, a decrease of 14,500 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised up by 2,500 from 394,500 to 397,000.This does not include the 96,362 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 100,590 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 392,750.The previous week was revised up.Regular state continued claims decreased to 3,241,000 (SA) from 3,367,000 (SA) the previous week.Note: There are an additional 5,687,188 receiving Pandemic Unemployment Assistance (PUA) that decreased from 5,824,831 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. And an additional 4,710,359 receiving Pandemic Emergency Unemployment Compensation (PEUC) down from 4,908,107.Weekly claims were higher than the consensus forecast.

Real wages decrease sharply – at least, if you include used vehicle prices – As I pointed out yesterday, the big increase in inflation over the past few months has made the YoY change in real wages for nonsupervisory workers negative. Let’s take a little closer look.Here is a graph of wages for nonsupervisory workers taking overall inflation into account, normed to 100 as of January 1973 (its peak previous to the pandemic):Wages had been gradually increasing in real terms for several decades before the pandemic. The big surge in spring 2020 was due to the massive layoffs in the low wage sectors of the economy. Much of the decline since then has been attributable to their being rehired.Here is a close-up over the past 2 years:Average wages are still 2.4% higher than before the pandemic.The same data YoY shows a decline of -3.9%:But when we take used vehicles out of the inflation equation, YoY inflation is less explosive than the total number appears, at +3.9%:So now here is the YoY% change in wages, leaving out used vehicles: If you’re not in the market for a used vehicle, YoY real wages have risen ever so slightly (less than 0.1%).I do expect the issue with vehicle prices to work itself out as microchips for vehicle manufacture become more available, but I have no insight as to how short or long a period of time that will be.And of course, if you are looking to buy a house as well, you are really up the creek without a paddle.

NFIB Small Business Survey: “Labor Shortage Remains a Challenge for Small Businesses as Inflation Increases” -The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for June came in at 102.5, up 2.9 from the previous month. The index is at the 84th percentile in this series.Here is an excerpt from the opening summary of the news release.“Small businesses optimism is rising as the economy opens up, yet a record number of employers continue to report that there are few or no qualified applicants for open positions,” said NFIB Chief Economist Bill Dunkelberg. “Owners are also having a hard time keeping their inventory stocks up with strong sales and supply chain problems.”The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis and now the COVID-19 pandemic. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009 and today’s figures.

Bureau of Labor Statistics (Non) Reporting Tallies 8 Strikes in 2020 Versus Payday Report’s >1200 –Earlier this year, the Bureau of Labor Statistics (BLS) revealed that 2020 was the third-lowest year for strikes in the United States since they started collecting data on strikes in 1947. The Bureau of Labor Statistics claimed that there were just eight “major work stoppages” in the US in 2020.Payday Report’s COVID-19 Strike Wave Interactive Map, launched at the beginning of the pandemic in March 2020, began using news and social media accounts of workers walking off the job in protest as a measure of strike activity. By this measure, the map indicates at least 1,200 strikes in 2020 as reported in news and social media reports. These labor strike activities were counted as strikes even without regard to workplace size or union authorization.Early on in the pandemic, Payday Report began to notice a massive strike wave brewing as workers, fearful of losing their lives, simply refused to work.Almost immediately, strikes were on the move. In late March of 2020, hundreds of mostly Black sanitation workers in Pittsburgh, members of Teamsters Local 249, engaged in an illegal wildcat strike to protest their working conditions during the pandemic. Days later on March 27, a group of Black members of Teamsters Local 667 went on strike after a worker contracted COVID-19.That same week poultry workers at Perdue Farms in Georgia went on strike to protest their working conditions during the pandemic.One week later, another 1,000 meatpackers walked off in Greely, CO, requesting better personal protective safety gear and complaining how social distancing at the plant was all but nonexistent; they were working elbow to elbow.In April, dozens of nurses in Beaver County, PAwalked off the jobat the Brighton Rehab and Wellness Center after 36 of their residents and six health care workers tested positive for the virus. While the pandemic continued, so did the strikes.

Norwegian Cruise Line sues Florida over prohibition on vaccine requirements. – The fight over requiring vaccinations for travel is heating up. Norwegian Cruise Line Holdings sued Florida’s surgeon general on Tuesday, accusing the state of preventing it from “safely and soundly” resuming trips by barring it from requiring customers to be vaccinated against the coronavirus. The filing represents the latest twist in a months long fight over the resumption of cruises from Florida, a hub for the industry. Under Gov. Ron DeSantis, the state has fought vaccine requirements by cruises and other businesses, claiming that such policies are discriminatory. Supporters of vaccine requirements have argued that requiring vaccines is necessary to protect public health. Under a state law approved in May, businesses that force customers to provide proof of vaccination could face fines of up to $5,000 per violation. In its lawsuit, filed in the U.S. District Court for the Southern District of Florida, Norwegian said it was forced to sue Scott Rivkees, the state’s surgeon general, “as a last resort.” “One anomalous, misguided intrusion threatens to spoil N.C.L.H.’s careful planning and force it to cancel or hobble upcoming cruises, thereby imperiling and impairing passengers’ experiences and inflicting irreparable harm of vast dimensions,” the company said in the lawsuit. Norwegian is claiming that Florida’s ban is not valid because it pre-empts federal law and violates various provisions of the Constitution, including the First Amendment. Neither Norwegian nor the Florida Department of Health immediately responded to requests for comment. After banning cruises nearly a year and a half ago, the Centers for Disease Control and Prevention said in the fall that it would allow cruises to set sail again. The agency later developed a set of stringent conditions that cruise lines are required to follow. Florida sued the C.D.C., arguing that the health agency had overstepped its authority in setting those standards. In June, a federal judge temporarily blocked the agency from enforcing the rules in the state while the case proceeds. Later that month, Celebrity Cruises, a subsidiary of Royal Caribbean Group, began the first major cruise from a U.S. port since the pandemic began, sailing from Fort Lauderdale, Fla. Norwegian hopes to restart cruises from Miami on Aug. 15. The industry was devastated by the pandemic, with ridership falling 80 percent last year compared with 2019. The three major cruise companies – Carnival Corp., Royal Caribbean and Norwegian – have lost a combined $900 million each month since March 2020, according to a recent report by Moody’s, the credit rating firm.

Missouri festival called off as coronavirus cases rise. A rise in the coronavirus cases has prompted the city of Springfield, Mo., to cancel this year’s Birthplace of Route 66 Festival, which features musical acts, car shows and other exhibitions.The festival, which was scheduled for Aug. 13 – 14, drew 65,000 attendees in 2019 over two days, and it was expected to draw more than 75,000 this year, said Cora Scott, the city of Springfield’s director of public information and civic engagement.”Obviously, we are very disappointed. After having to cancel the 2020 festival, we were so looking forward to 2021,” Ms. Scott said in a statement. “With our region’s low vaccination rate against Covid-19, the resulting surge of infections are overwhelming our hospitals and making our community sick. We feel it is just not safe to bring tens of thousands of people from all over the world to this community for any reason. “The cancellation of the festival comes after Mercy Hospital in Springfield ran out of ventilators earlier this month as a rise in cases drove an increase in hospitalizations.About 46 percent of Missourians have received at least one dose of the vaccine, and 40 percent are fully vaccinated, according to a New York Times tracker. The state’s vaccination rates fall behind the national average of 56 percent of Americans who have received at least one shot, and 48 percent who are fully vaccinated.In some parts of Missouri, vaccination rates are even further behind, such as Greene County – home to Springfield – where only about 35 percent of residents have been fully vaccinated.The cancellation of the Birthplace of Route 66 Festival is a blow to Springfield, which like other Missouri cities counts on tourism dollars.Cases are also up in other tourist cities such as Branson, Mo., which is home to attractions such as Dolly Parton’s Stampede dinner show and the Titanic Museum Attraction. Infections also appeared to be up in the counties around the Lake of the Ozarks area, a popular tourist destination in the state. Over Memorial Day weekend 2020, viral videos of large crowds at Lake of the Ozarks grew sharp criticism from state officials, who urged those at the lake that weekend to get tested for the virus or quarantine for two weeks.

A top Tennessee health official says she was fired over vaccines for teenagers. – First came public service ads alerting teenagers in Tennessee that they were eligible to get vaccinated for Covid-19. Then, the state’s top immunization leader, Dr. Michelle Fiscus, distributed a memo that suggested some teenagers might be eligible for vaccinations without their parents’ consent.By this week, Dr. Fiscus said she was fired – a circumstance she attributed to pushback among Republican lawmakers in the state, who have complained that the Tennessee Department of Health had gone too far in its efforts to raise awareness of the shot among young people.Dr. Fiscus, the health department’s medical director for vaccine-preventable diseases and immunization programs, is one of scores of public health officials across the United States who have quit or been forced from their jobs in a pandemic that was unlike anything they had tackled before and in a political climate that has grown increasingly split over the coronavirus and the vaccines.A review published in December by Kaiser Health News and The Associated Press found that at least 181 state and local public health leaders in 38 states had resigned, retired or been fired since April 1, 2020.”It’s just a huge symptom of just how toxic the whole political landscape has become,” Dr. Fiscus said in an interview on Tuesday. “This virus is apolitical – it doesn’t care who you are or where you live or which president you preferred.”The Tennessean, the Nashville newspaper that earlier reported Dr. Fiscus’s dismissal, also reported on Tuesday that the health department was pulling back its vaccination outreach efforts to children for all diseases – not just the coronavirus – amid the backlash from lawmakers. The tumult comes as virus cases are rising in Tennessee, as vaccinations have slowed, and as concerns about the Delta variant are emerging in parts of the country.

Statistics show it’s time to ring the alarm on early childhood education – –With the U.S. fully reopening, life for many Americans has begun to feel more normal than it has at any time since the COVID-19 crisis began. But for young children, families, and the early educators who serve them, the crisis is still very real. Young children have disproportionately borne the educational burden of the crisis because of remote and hybrid scheduling and through sitting out kindergarten, preschool and early education altogether. And they will not be eligible for vaccines until fall at the earliest, meaning the crisis is on track to last longest and cause the greatest disruptions for those in their critical early years of development. A real return to normal will require smart new investments in finally building a coherent, robust early care and education (ECE) system in the U.S. That’s the key finding from a new summary of the best available evidence completed by our team of 16 early childhood experts and 10 early childhood policy leaders. The message across our work is clear: we’re worried. The studies we reviewed in depth – 16 national, 45 in 31 states, and 15 local – told a consistent story of learning setbacks and unmet needs. Across the country, children experienced setbacks in the quality of instruction they experienced in-person, hybrid, and remote along with substantial setbacks in their learning. For instance, literacy assessment data from 41 states show that nearly half of kindergarteners were falling well below grade-level benchmarks midway through the 2020-2021 year, versus around a quarter of students in previous years. Learning setbacks were larger for children of color, dual language learners, and children from families with low incomes.

As the C.D.C. relaxes guidelines for schools, New York City and California are sticking with their mask rules. — The Centers for Disease Control and Prevention issued new school guidance on Friday, calling for a full return to classrooms in the fall and recommending that masks be optional for fully vaccinated students and staff.But the guidance left a lot of details up to state and local governments, advising districts to use local coronavirus data to guide decisions about when to tighten or relax prevention measures like masking and physical distancing. It also recommended that unvaccinated students and staff members keep wearing masks.In New York City, the nation’s largest public school district, Mayor Bill de Blasio said on Monday that masks will still be required for everyone in the upcoming school year, though he added that officials would continue to evaluate the decision.“For now, assume we’re wearing masks, but that could change as we get closer,” Mr. de Blasio said at a news conference. “But we’ll be driven by, you know, the data we see and, and the science as always.”California also announced that it will continue requiring masks in public schools, a policy that has been in place since February and was reiterated in newly issued guidance released on Monday for K-12 public schools.But on Monday, California officials briefly went a step further when it was announced that “schools must exclude students from campus if they are not exempt from wearing a face covering under California Dept. of Public Health guidelines and refuse to wear one provided by the school.”The announcement created confusion about whether it marked a change in how mask rules would be enforced in schools and what the state’s role might be in that enforcement, the state’s health and human services secretary, Mark Ghaly, said in an interview.Within hours, that language was removed, and updated guidelines were released again, omitting the reference that schools “must exclude” students who refuse to wear masks.Mr. Ghaly said masks will continue to be required in school settings, but how that mandate will be enforced will be up to schools’ own discretion, a continuation of a policy from the previous academic year.

California Relaxes Over Unmasked Students After Policies Conflict With CDC Guidance – California has walked back a rule banning unmasked students and teachers from school campuses this fall. While a state mandate requiring masks will remain in effect, the Newsom administration will leave enforcement in the hands of local districts when it comes to those who refuse to mask up.”Update: California’s school guidance will be clarified regarding masking enforcement, recognizing local schools’ experience in keeping students and educators safe while ensuring schools fully reopen for in-person instruction,” the California Department of Public Health tweeted on Tuesday.This comes after the department’s initial July 12 update stated that “Schools must exclude students from campus if they are not exempt from wearing a face covering under California Dept. of Public Health guidelines and refuse to wear one provided by the school.”Yet, despite the update leaving enforcement in the hands of local officials, the state’s mandate still breaks with guidance from the Centers for Disease Control (CDC), which on Friday said that students and faculty who are fully vaccinated no longer need to wear masks in school.”Masks should be worn indoors by all individuals (age 2 and older) who are not fully vaccinated, reads the CDC’s announcement. “Consistent and correct mask use by people who are not fully vaccinated is especially important indoors and in crowded settings, when physical distancing cannot be maintained,” (via Just The News).School officials are said to be preparing specific guidelines in response, according to the Epoch Times.

Arizona’s governor says schools cannot force exposed, unvaccinated students to quarantine. – The Arizona governor’s office has said that school districts in the state cannot require unvaccinated students to quarantine for 10 days if they have been exposed to the coronavirus, prompting a standoff with some local education officials. A senior adviser to Gov. Doug Ducey, a Republican, sent letters to two large school districts, asserting that their policies requiring unvaccinated students to quarantine was illegal under state law. Governor Ducey’s office posted the letters on Twitter on Wednesday evening. “Parents are the sole decision makers in the State of Arizona when it comes to the health and well-being of their children,” the letters said, adding that “children of parents who choose not to have their children get the Covid-19 vaccine should not be discriminated against for such decisions.” The two districts – the Catalina Foothills Unified School District of Pima County and the Peoria Unified School District in Maricopa County – disputed the Ducey administration’s position in a joint response sent to the governor’s education policy adviser, Kaitlin Harrier. The districts said their policies complied with state law, arguing the statute only bans districts from requiring students to wear masks or to get vaccinated but does not address the 10-day quarantine policy. They also said they were following the guidance of federal and local officials. “While parents in Arizona are empowered to decide whether and where their children attend public school, they are not permitted to dictate which of the school’s otherwise lawful health and safety procedures their children will follow,” the districts wrote.

Educators angered over scrapping of COVID-19 mitigation measures in schools -Last Friday, the US Centers for Disease Control and Prevention (CDC) released new guidelines on reopening K-12 schools, encouraging the reckless repudiation of all safety measures. A note in the “Summary of Recent Changes” section of the guidelines stated that the CDC “Added language on the importance of offering in-person learning, regardless of whether all of the prevention strategies can be implemented at the school.” The first bullet point in the “Key Takeaways” section reads, “Students benefit from in-person learning, and safely returning to in-person instruction in the fall 2021 is a priority.” The corporate media has wholeheartedly supported the CDC’s revisions, with the New York Times noting in an article, “The country’s two major teachers’ unions, which have close relationships with the Biden administration, praised the guidance. Randi Weingarten, the president of the American Federation of Teachers, whose members in some cases fought the reopening of schools this past school year, said the recommendations are ‘grounded in both science and common sense.'” The CDC’s repudiation of safety measures takes place while summer school is still in session, with a majority of districts having opened their doors to as many students as possible. In most districts, large numbers of teachers have opted out of teaching this summer, meaning that understaffed classrooms will be packed with students. In New York City, the largest school district in the US with roughly 1.1 million students, 200,000 have enrolled in summer school. Los Angeles United School District, the second largest with 660,000 students, has roughly 100,000 students enrolled in summer school. Numerous other districts have 5-10 times their normal summer school enrollment, while major outbreaks have already happened in summer school programs. The school reopening campaign orchestrated by the CDC, Democratic and Republican politicians, the teachers unions and the corporate media has been met with outrage among educators who oppose this reckless endangerment of millions of children, educators, parents and the broader population. They recognize the enormous dangers posed, as this takes place under conditions in which the highly infectious and lethal Delta variant is already the dominant strain in the US and is causing a major surge in infections.

Scores die in Iraq COVID hospital fire for second time in three months – Protests erupted in Iraq Tuesday as the death toll from a horrific fire that tore through a makeshift COVID-19 isolation ward in the southern city of Nasiriyah climbed to 93. The blaze left at least another 100 people injured. The fire began at 10:30 p.m. Monday night, reportedly as the result of an electrical short in an air-conditioning system, which in turn touched off the explosion of improperly stored oxygen tanks. The fire quickly spread through the facility, which had been hastily constructed from a fleet of trailers made of cheap and highly flammable sandwich panels topped with a tin roof to house COVID patients outside Nasiriyah’s al-Hussein Teaching Hospital. The facility was equipped neither with fire extinguishers nor smoke alarms. Hundreds of relatives and young men from surrounding neighborhoods rushed to the scene of the fire in a desperate attempt to rescue patients, many of them unable to breathe without oxygen and incapable of getting out of their beds, where they died from burns and asphyxiation. Some of the rescuers died carrying patients when the roof collapsed on them, blocking an entrance. In one incident, a young man succeeded in pulling out his father and carrying him to a waiting ambulance, only to see him die because the vehicle had no oxygen. Angry crowds gathered outside the hospital and the nearby morgue. Distraught family members searched through the still smoking rubble for remains of their loved ones, while many of the recovered bodies were burned beyond recognition. One youth was seen collapsing in tears while searching for his grandfather, father, uncle and aunt, all of them lost in the fire. Demonstrators outside the hospital chanted “revolution” and “The political parties burned us,” while setting police cars on fire. Protesters later set up tents and occupied Nasiriyah’s central al-Habboubi Square, the scene of mass protests during the nationwide anti-government protests that shook the country beginning in 2019. Nasiriyah was at the center of this rebellion and hundreds were killed and wounded there. Demonstrations were also reported spreading to other Iraqi cities. The outrage provoked by the entirely preventable fire has been intensified by the fact that this is the second such massive criminal tragedy in the space of barely three months. On April 24, a similar fire ravaged the COVID intensive care unit of the Ibn al-Khatib hospital in a poor neighborhood of southeastern Baghdad, killing 82 people, including patients on ventilators, and injuring another 110. That fire was triggered by an accident causing improperly stored oxygen tanks to explode and, as in the blaze in Nasiriyah, the hospital had no fire protection system and its shoddy construction allowed flames to spread rapidly. At the time, investigators had warned that the same conditions that led to the Baghdad hospital fire existed throughout the country.

China GDP Growth Disappoints As Credit Impulse Crashes Following Q1’s record-breaking surge in China’s YoY GDP (thanks to base-effect malarkey and a massive credit impulse), tonight’s Q2 GDP was expected to slow drastically (especially given the crackdown on investment/real estate deleveraging and the collapse in the credit impulse)… Source: Bloomberg The question is how much? Consensus estimates called for an 8.0% YoY GDP rise, but whisper numbers were notably lower with Bloomberg Economics’ Shu noting that various early indicators are consistent in pointing to some weakening in consumption in June. “On balance, these indicators suggest production growth – after base effects are taken into account – may have slowed, but only a touch.” The official services PMI fell to 52.3 in June from 54.3 in May, while its Caixin counterpart showed a much steeper slide from a strong reading to just slightly above 50 – the line between expansion and contraction. The headline GDP growth figure printed a very slightly disappointing +7.9% YoY

Dutch PM sorry for early reopening as France tightens Covid rules –As governments in multiple EU states struggle to curb an increasingly alarming surge in Covid-19 cases, the Dutch premier, Mark Rutte, has apologised and conceded that restrictions reinstated this weekend were lifted too soon. Meanwhile France’s president, Emmanuel Macron, unveiled a raft of new measures on Monday, including making health certificates mandatory in cafes, bars and restaurants and on planes and long-distance trains from next month. While cases are rising, hospital admissions in most EU countries have not so far followed the same curve, prompting officials to suggest that as vaccination campaigns advance, hospital data should become a bigger factor in responding to the pandemic. Rutte last week reimposed curbs on bars, restaurants and nightclubs in the Netherlands and cancelled all events involving large crowds until at least 14 August as new cases rose almost sevenfold, from a rolling seven-day average of 49 for every million people on 4 July to nearly 330 at the weekend. “What we thought would be possible turned out not to be in practice,” he said on Monday. “We had poor judgment, which we regret and for which we apologise.” At least 30 event organisers have launched joint legal proceedings over the U-turn. The Dutch health minister, Hugo de Jonge, said last week that holidays could be affected by the surge but he was hopeful that other EU countries would look at hospital data rather than infections when debating quarantine or test requirements on Dutch travellers. “Two weeks ago all the signals were green,” De Jonge said. “Now there is reason to intervene. This is unprecedented.” However, Dutch hospital admissions remain low at 2.7 a million, down from a peak of more than 100 in early April. Macron said in a televised address on Monday that French health workers who had not been vaccinated by September would face sanctions, and health certificates proving vaccination, a negative test or Covid immunity would be required in cinemas, theatres and at concerts from this month. From August the certificate will also be required in cafes, bars and restaurants. New infections in France have surged by 65% in a week, from an average of 34 to 56 for every million people. Macron said PCR tests, which have been free in France until now, would have to be paid for from the end of the summer holidays, as part of a concerted drive to encourage “the entire population to get vaccinated – the only sure path out of this crisis”.

Protests in France continue to grow after Macron enacts new COVID-19 measures – – Protesters took to the streets in France on Saturday following new COVID-19 measures that French President Emmanuel Macron announced on Monday in an effort to curb the spread of the coronavirus. Macron said earlier this week that all health care workers had to be fully vaccinated by Sept. 15 or would face suspension without pay. Additionally, he said all residents had to start using a health pass showing proof they had been vaccinated, had a recent negative test or were recovering from COVID-19 before going to certain public places such as shopping malls, restaurants and planes. Protesters marched in the cities of Paris, Marseille, Lyon, Lille and elsewhere, and some argued that the government was encroaching on their ability to choose whether they wanted to get the vaccine, Reuters noted. According to data from the World Health Organization, France had 3,616 confirmed cases of COVID-19 on Friday and had reached a particularly high number of cases on Thursday, with 8,748 cases confirmed. The country last saw fewer than a thousand cases on July 6, though COVID-19 cases had been trending upward more so at the beginning of July. As of Friday, 55 percent of people in France have had at least one dose of the COVID-19 vaccine and 44 percent have had both doses, Reuters reported. Saturday’s protests come after demonstrators on Wednesday, coinciding with France’s Bastille Day, set mechanical diggers on fire and tipped over garbage cans, prompting police to use tear gas, Reuters reported. Greece had announced similar measures on Monday, saying that health care workers will face suspension if they do not get vaccinated, The Associated Press reported. Starting Aug. 16, nursing home staff will face suspension if they have not made an appointment to get vaccinated. Staff at hospitals will face a similar dilemma in September. The decision in Greece also prompted protests earlier this week, Reuters reported.

Europe struggles to break free of Covid restrictions as delta variant surges – Europe is struggling to contain a surge in Covid-19 cases caused by the delta variant, but while several countries reimpose measures to control the spread, the U.K. is taking the plunge and lifting restrictions. From residual vaccine skepticism in some countries, to surges in infections linked to nightlife resuming, Europe is having to contend with competing needs: the reopening of crucial economic sectors this summer, while at the same time, curbing surging cases. It’s not an easy balance to strike and, erring on the side of caution, a number of countries – including France, the Netherlands, Greece and Spain – announced new restrictions on Monday in a bid to curb the rise in infections, particularly among younger people who are the last in the queue to be vaccinated against Covid. In France, President Emmanuel Macron announced that for health and care workers, vaccines would be mandatory, and that a “health pass” (an app showing one’s vaccination status or recent negative test) would soon be required to access culture or leisure venues of a larger capacity. From August, the pass will be mandatory to access cafes, restaurants, malls, planes and trains in France. Lastly, in a bid to encourage vaccination take-up, PCR tests will stop being free from the fall unless they’re part of a prescription. “If we do not act today, the number of cases will continue to rise sharply, and will inevitably lead to increased hospitalizations from the month of August,” Macron told the public in a televised address. Similarly, Greece’s Prime Minister Kyriakos Mitsotakis also gave a televised address Monday in which he announced that Covid shots would be mandatory for nursing home and healthcare workers and that only vaccinated people will be allowed indoors in bars, cinemas, theaters and enclosed spaces. Greece, like France, has struggled to encourage vaccine take up among more skeptical members of the public. Imploring people to take up Covid shots, Mitsotakis said: “The country will not be shut down again by the attitude of some. It will give freedom to many. And protection for all. Because it is not Greece that is in danger, but the unvaccinated Greeks.”

The spreading Delta variant is hampering Europe’s economic recovery. – The relaxation of pandemic restrictions and the growing ranks of people vaccinated against the coronavirus have propelled Europe’s economy forward in the past few months. And the European Commission even upgraded its forecasts for the region.But the rapid spread of the more contagious Delta variant has made the path of the recovery much more unpredictable and uneven.In Britain, the final lifting of restrictions on Monday is expected to add fresh momentum to the economic recovery. But the surge in infections presents a new hurdle to businesses trying to operate at full capacity. Sectors like hospitality, theater and trucking are having to temporarily shut as workers go into self-isolation because they have either caught the virus or have been told they have come into contact with someone who has.In Spain, which once again has one of the highest infection rates in Europe, some regional governments have reintroduced restrictions. Portugal has reintroduced a curfew in Lisbon, Porto and other popular tourism spots, dampening a second summer travel season. The Netherlands also announced new measures this week.The German economy has been bouncing back quickly, and the country’s unemployment rate, at 5.9 percent, is almost back to the pre-crisis level.But Germany’s recovery has also been bumpy. The number of new cases has doubled in the last week, and three-quarters of those were attributed to the variant. Although there is no talk of renewed lockdowns in Germany so far, quarantine rules for returning travelers may discourage tourism. That is bad news for the rest of Europe: Germans are among the continent’s most avid travelers.

Music banned on Greece’s Mykonos in new COVID-19 restrictions (Reuters) -Greece banned music in restaurants and bars and imposed a nighttime curfew on its popular holiday island of Mykonos on Saturday after a rise in new coronavirus infections there.Known as the party island of the super-rich, Mykonos is one of Greece’s most popular destinations, attracting more than a million visitors each summer, among them Hollywood stars, models and world-famous athletes.Following a “worrying” local outbreak, the Civil Protection Ministry said it was banning music on the island around the clock, including in shops, cafes and beach bars. It also said it would restrict movement between 1 a.m to 6 a.m except for those going to and from work or to hospital.Greece depends on tourism for a fifth of its economy and desperately needs a strong season this year following a disastrous 2020 when visitor numbers and revenues collapsed.The number of infections has been rising in Greece in recent weeks, forcing the government to mandate the vaccination of healthcare workers and nursing home staff, and to introduce new restrictions across the country, including allowing only vaccinated customers indoors at restaurants and clubs.Mykonos’s Mayor Konstantinos Koukas said imposing measures at the heart of the tourism season was “unfair” and “misguided.””Mykonos cannot be the only island where music won’t be heard… the only thing this will achieve is that visitors will go to another island,” he wrote on Facebook (NASDAQ:FB).The government banned music in restaurants and bars across the country in May to avoid people having to get close to one another to be heard, increasing the chances of transmitting the virus. It lifted that measure when infections dropped.

England will lift most Covid restrictions on July 19, Johnson says. – With coronavirus infections surging yet again, Prime Minister Boris Johnson on Monday urged Britons to keep wearing face masks in crowded, indoor spaces even as he promised to unlock England’s economy next week and lift almost all virus-related restrictions. Mr. Johnson’s admonition on masks, while not compulsory, represents the latest swerve from a government that delayed the imposition of several lockdowns and then promised the “irreversible” lifting of restrictions, culminating in what British tabloid newspapers called “freedom day.”Having delayed that moment once, Mr. Johnson on Monday confirmed plans to proceed with the removal of most legal curbs in England on July 19, allowing pubs and restaurants to operate at full capacity and nightclubs to open their doors. Curbs on the number of people who can meet indoors, generally limited to six, will also be lifted.Despite the spread of the highly transmissible Delta variant, the government believes that Britain’s successful vaccination program has weakened the link between cases and hospital admissions. The government now argues that there is no better time to end lockdown restrictions than in the summer when the virus tends to spread more slowly and schools take a vacation break, eliminating one source of transmission.Still, the landmark once hailed boldly as “freedom day” by libertarian lawmakers is now being given much more cautious billing by the government as Britain records around 30,000 cases a day, a number that the health secretary, Sajid Javid, on Monday said could climb to 100,000 during the summer.”Whether we like it or not, coronavirus is not going away,” Mr. Javid said in Parliament.The government decision to recommend the continued use of face masks in crowded indoor spaces is a shift, in tone at least, from a week ago when Mr. Johnson outlined his thinking at a news conference.When asked then whether he would wear a mask, he said, “it would depend on the circumstances,” before clarifying later that he would wear one on a crowded train.On Monday, Mr. Johnson struck a decidedly cautious tone. “I cannot say this powerfully or emphatically enough,” he said at a news conference. “This pandemic is not over. This disease, coronavirus, continues to carry risks for you and your family. We cannot simply revert instantly from Monday, 19 July to life as it was before Covid.”Mr. Johnson added that the government strongly recommended that people wear a face covering in crowded and enclosed spaces such as on public transportation.The government plans to work with organizers of large indoor events to encourage the use of certification for those who have been vaccinated or recently tested. Mr. Johnson said he wanted a gradual return to the workplace rather than a mass move back to offices next week. And Britain’s border restrictions would remain in place, including hotel quarantine for those arriving from countries deemed to be in the highest risk category.

Amid warnings of 4,800 daily hospitalisations: UK prime minister Johnson green lights July 19 lifting of all COVID-19 restrictions – Prime Minister Boris Johnson has confirmed that all coronavirus restrictions in England will be removed on July 19. Social distancing, already reduced to 1 metre plus, is being ditched and mask wearing will be voluntary. This takes place as 218,503 new COVID-19 cases have been recorded in the last seven days, up from 170,856 the previous week. 203 lives were lost to COVID-19 in the last week, a 66 percent increase on 122 the week prior. What is being enforced is an upscaling of the social murder carried out by the Conservative government, which has already taken the lives of over 152,000 people. New modelling released yesterday from the London School of Hygiene and Tropical Medicine estimates that an 80 reduction in all protective measures, including mask-wearing and social distancing, could lead to 46,000 deaths by the end of the year. Authorising the end of safety controls, under conditions in which the virus is surging in Britain, Johnson told a Downing Street press conference that “it is absolutely vital that we proceed now with caution, and I cannot say this powerfully or emphatically enough – this pandemic is not over.” People should be cautious and not “tear the pants out of it” on July 19, and he would “expect and recommend” people still wear masks in crowded indoor spaces. Ending legal coronavirus restrictions “should not be taken as an invitation by everybody simply to have a great jubilee and freedom from any kind of caution or restraint.” Nothing could be more grotesque than Johnson’s pose of restraint. He was speaking the day after his government authorised the largest super spreader event held anywhere in the world since the onset of the pandemic. Tens of millions were given the go-ahead to freely mix to watch the European Championship final between England and Italy. Well over 60,000 mainly unmasked people were in Wembley Stadium in London. Thousands massed around the stadium and hundreds broke down security fences and forced entry into the stadium. Many thousands more filled the capital’s main squares and other city centre “fan zones”, and pubs, while millions gathered in homes.

UK Educators Rank-and-File Safety Committee holds online forum as Johnson government lifts all safety restrictions – The UK Educators Rank-and-File Safety committee held an online meeting Saturday, to outline a response to the pandemic based on science and the need to protect the health, livelihoods and lives of working people. It proposed a programme on which to oppose Prime Minister Boris Johnson’s herd immunity policies that have sacrificed 150,000 lives to protect profit. As the global death toll surpasses four million, public health restrictions are being scrapped in one country after another while more transmissible variants such as Delta spread exponentially. Alex Dickerson the reception class teacher, left leads the class at the Holy Family Catholic Primary School in Greenwich, London, Monday, May 24, 2021. (AP Photo/Alastair Grant) Tania Kent, a Socialist Equality Party member, special needs teacher and chairperson of the Educators Rank-and-File Safety Committee, explained the aim of popularising “the call made by the International Committee of the Fourth International for the establishment of an International Workers Alliance of Rank-and-File Committees to organise the global fight back.” She explained how UK prime minister Johnson had declared, in ending Covid restrictions, “I want to stress from the outset that this pandemic is far from over. There could be 50,000 cases per day.” Support group Long Covid Kids reports 59 paediatric deaths due to COVID and 9,000 children with long COVID extending beyond 12 months. “A government that claims to be acting in the interests of children,” said Kent, “is allowed to oversee the deaths and suffering of young children, with no challenge from what passes as the official organisations of the working class.” Labour Shadow Health Secretary Jonathan Ashworth has complained that the government’s announcement “isn’t a guarantee that restrictions will end – only what it will look like.” The National Education Union (NEU) released a press statement asking the government, “Are there any thresholds on case numbers, or hospitalisation or deaths that mean the DfE would do something different in schools in September? We all know the results of dither and delay.” “To call a social crime of unprecedented scale ‘dither and delay’,” said Kent, “exposes the unions as nothing but an arm of the government in imposing social murder. Their main concern is the reopening of schools being jeopardised, not the threat to lives.”

London’s mayor says masks will remain mandatory on public transport. -Face masks will continue to be mandatory on London’s subways and buses even after the government lifts the legal requirement to wear them on July 19, the city’s mayor, Sadiq Khan, said on Wednesday.Mr. Khan’s announcement puts the London rules at odds with those announced by Prime Minister Boris Johnson, who is pushing ahead with a plan to lift almost all Covid restrictions in England, even as coronavirus infections surge and hospital admissions begin to mount.Adding to the messaging confusion, Mr. Johnson has encouraged people to continue wearing masks in crowded and confined places even though, under the relaxed rules he announced, it will no longer be a legal requirement.Mr. Khan, who is in the opposition Labour Party, said that wearing a face mask would be a condition of using London’s sprawling public transportation system, which includes the Tube, buses, overground trains, and light rail networks. Passengers who refuse to put one on will be ordered to leave the system.”The wearing of face coverings helps reduce the spread of Covid, and crucially gives Londoners confidence to travel – vital to our economic recovery,” Mr. Khan said on Twitter. “My mask protects you, your mask protects me.”Mr. Khan said that masks would also remain mandatory in taxis and ride-hailing services.Mr. Khan expressed optimism in television interviews that people would abide by the rules. Most riders on the subway and buses wear masks, but some public-health officials worry that behavior could change quickly if they were no longer compulsory.Officials in other cities have expressed fears that the government’s relaxed rules will contribute to a further surge in infection rates. In Manchester, the city’s Labour mayor, Andy Burnham, is also weighing a legal requirement to continue wearing masks on the public transportation system.Mr. Johnson has argued that, with vaccines widely deployed in the adult population, England must stick with plans to reopen its economy fully and shift the emphasis from legal restrictions to personal responsibility.

Britain will continue to require vaccinated travelers from France to quarantine, citing Beta variant concerns. – British medical officials announced Friday that fully vaccinated travelers returning to England from France must continue to quarantine because of the threat posed by the Beta variant.Travelers arriving from France must quarantine for five to 10 days, at home or elsewhere, the British health ministry said.Beginning on Monday, vaccinated travelers from other European nations that Britain had placed on its medium-risk amber list no longer have to quarantine. Most virus-related restrictions in England will be lifted, allowing pubs and restaurants to operate at full capacity and nightclubs to open their doors. Curbs on the number of people who can meet indoors, generally limited to six, will also be removed.”With restrictions lifting on Monday across the country, we will do everything we can to ensure international travel is conducted as safely as possible, and protect our borders from the threat of variants,” Health Minister Sajid Javid said in a statement.While attention has been focused on the threat from the Delta variant, which is now dominant in Britain and France as well as the United States, scientists are also concerned about the Beta variantbecause clinical trials of vaccines are showing that they offer less protection against it. The Beta variant was first identified in South Africa in December.The presence of Beta in France remains relatively low, according toGISAID, an international open source database; it accounts for 3.4 percent of new cases over the past four weeks. Some research has shown that the AstraZeneca-Oxford vaccine, the backbone of Britain’s inoculation campaign, has been less effective in preventing mild and moderate Beta cases. In February,South Africa halted use of the vaccine over those concerns.

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