Plans to reopen states are on ice.
Plans to reopen schools are being walked back.
But finding bipartisan agreement on a new round of stimulus is proving much more difficult.
The problem
New jobless claims rose 1.4 million this past week, the first increase in 16 weeks. That suggests the burst of economic activity that accompanied the spring fling is over. (The scale of these figures -- millions of people each week! -- has started to feel normal. It's crazy.)
A resurgence in infections and a rollback of reopening plans in several states is making it difficult for people to re-enter the labor force following the pandemic lockdown -- and it could derail the vulnerable US economic recovery.
Now consider that the additional $600 per week Congress allotted starting in March to the Covid unemployed expires this week. Read it again: A sustained million-plus people per week have been filing for unemployment for months and the safety net is going away.
It's a complicated situation.
The evidence
CNN's Matt Egan surveyed the US economic landscape and came away with hard evidence that the virus is directly tied to the economy until there's a vaccine. Some excerpts:
More turbulence for air travel: The number of air passengers processed through TSA security lines fell during the week ended July 20, compared with the prior week, according to Bank of America. This metric is down more than 70% from a year ago.
Restaurant trouble: As the CNN Business Recovery Dashboard clearly shows, restaurant reservations on OpenTable have weakened in recent weeks. During March and April, as the pandemic wreaked havoc, reservations were down nearly 100% from a year ago. That figure rebounded to down "only" 50% in mid-June, but has since rolled over and stood at -65% as of Monday.
Retail slowdown: In April, US retail traffic declined by a staggering 98%, according to Cowen. Traffic steadily improved, with June traffic down 57%, but that rebound has stalled. US retail traffic fell 47% from a year ago during the second week of July.
Small business shutdowns: As of Sunday, 24.5% of small businesses in the United States were closed, according to Jefferies. That is worse than late June, when only 19% were closed. Jefferies pointed to "particular weakness in COVID hot spots" and noted that small business employment had dropped to levels unseen since the end of May.
Weaker spending: After plunging by as much as 31% year-over-year in early April, purchases on credit cards issued by Synchrony turned positive in late June. However, Synchrony (SYF) said Tuesday that spending during the first two weeks of July was down 2%.
Unemployment website visits: Web traffic to state unemployment portals "leveled off at still-high levels, suggesting labor market momentum has stalled," Jefferies said.
Trick or treat? Not this year. And here's an additional leading indicator that will frighten your local dentist: This Wall Street Journal story about Hershey's prediction for candy sales at Halloween is more evidence that we're a long way from normal.
A lagging indicator. Movie theaters aren't reopening because summer blockbusters, including Christopher Nolan's "Tenet" and Disney's "Mulan," have been indefinitely delayed. Disney is pushing back its next "Star Wars" and "Avatar" movies a year, to 2022.
How to help? Don't ask Congress
Now try to find some of the remarkable bipartisanship from this spring. It's hard to do, even as help for the unemployed expires.
President Donald Trump is fixated on a payroll tax credit to help put cash in people's pockets and keep the economy afloat. Problem is it would put cash in the pockets of people making a wage, and the more immediate problem is people who are unemployed.
Republicans in the Senate have left that proposal out of their plan, although they delayed a release of their proposal until Monday as they sought an agreement with the White House. The holdup is how to address a possible continuation of that $600 in unemployment.
But that's just internal Republican negotiations. It's Republicans trying to agree on an opening bid. They still have to find something Democrats will agree to. And vice versa. The Constitution requires compromise.
Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer, who are unified behind a $3 trillion House-passed proposal of their own, have already panned the emerging GOP plan.
Finding a proposal that can unify Republicans has so far proven a challenge for the Senate GOP conference and the White House with days of public splits within the party on display over the proposal.
It is likely to be far harder to find common ground when bipartisan negotiations get underway, with the two sides trillions of dollars apart on the topline and diametrically opposed on several central components of their respective proposals.
The overall contours of the Republican bill have come into view and include:
- $105 billion for education funding
- $16 billion in new funds for testing
- A second round of forgivable small business loans
- A second round of direct payments
- A series of tax incentives designed to help employers bring people back to work, and do so safely
The Democratic version, passed by the House back in May, would provide:
- Nearly $1 trillion for state and local governments
- A $200 billion fund for essential worker hazard pay
- An additional $75 billion for Covid-19 testing, tracing and isolation efforts
- A new round of direct payments to Americans of up to $6,000 per household
Here's your reminder of how a bill becomes a law. The two sides will have to bring their visions together and get Trump to sign it at a time when a Republican male lawmaker is muttering obscenities at a Democratic woman who is his colleague on the House steps.
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July 24, 2020 at 09:00AM
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Here's what we've squandered by letting the virus strike back - CNN
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