Sixty-two percent of U.S. adults are “very” concerned about the coronavirus outbreak, the highest amount since late April.
Funding for $300-a-Week Unemployment Benefits Could Run Out in Six Weeks An extra $300 a week in federal unemployment benefits is likely to take a couple of weeks to reach workers and funding could be exhausted a month and a half later, a senior Labor Department official said.
(…) The Labor Department official said the $300 supplemental unemployment payments would give about 50% of workers at least the same amount of money through benefits that they earned while working. Raising the total to $400 with additional state funds would bring that total to about two-thirds of workers. (…)
So far, no state has said they plan to pay the extra $100, which the senior Labor Department official attributed to states’ need for additional information on Mr. Trump’s memo. (…)
(…) But there are several catches to the order that could leave behind some 6 million Americans who were previously eligible for the extra $600 a week benefit under the $2 trillion CARES Act stimulus package, said Eliza Forsythe, a labor economist and assistant professor at the University of Illinois at Urbana-Champaign. (…)
Unlike traditional salaried workers, self-employed and gig workers often have volatile incomes that are not automatically reported to state workforce agencies. Many of these workers are more likely to receive their state’s minimum unemployment benefit, which is below $100 for the majority of states, according to the Department of Labor.
Forsythe said this could apply to approximately 5 million workers.
Her calculations reveal that nearly 1 million unemployed workers are currently receiving below $100 a week from their respective states and hence would also be ineligible for the extra $300.
Fed to Lower Rates for Cities, States Seeking Short-Term Loans Interest-rate spread on tax-exempt notes will be reduced by 0.5 percentage point
(…) Both the municipal program and a separate Fed program to jump start corporate debt issuance have seen very little takeup. But critics have said the lack of demand for municipal debt is a problem because local governments are already responding to the downturn with layoffs and cutbacks in services that could be avoided if borrowing from the Fed’s program were cheaper. (…)
“Getting liquidity is helpful, but it doesn’t solve their bigger problem, which is they have a fiscal hole,” Dallas Fed President Robert Kaplan said in an interview last month.
“They need grants, and if they don’t get some fiscal relief, they’re going to need to cut back at a time when they’re at the forefront of trying to get schools reopened and…spend more on a whole range of services in their states and in their communities to help fight the virus.”
JULY NFIB SURVEY:
Half of the ten components of the Optimism Index fell, led by a 14 percentage point drop in the share of firms expecting the economy to improve to 25%. Expectations for real sales over the next six months decreased to 5% from 13%. And, only a net 11% of firms felt it was a good time to expand their business down from 13%.
MOVING?
There are many ideas about how the pandemic will affect us over the long term. One of the most common theories is that large cities will be among the biggest losers. Looking beyond any increased health risk related to COVID-19, it seems reasonable to expect many will enjoy more flexible working patterns than before, including the option for increased working from home. That may be enough to persuade some city dwellers to move further afield, knowing that longer commutes may not be a daily requirement. There are signs of that from US rental prices. Data from Zumper show that nine out of ten of the most expensive US cities to rent a one-bedroom apartment have experienced declines in rental prices. However, it is still too early to tell whether this reflects cyclical or structural factors. Moreover, to the extent that any declines are permanent, large cities may actually increase their appeal once more, particularly for the young. (Fathom Consulting)
July Consumer Prices Rise Amid Increased Demand for Range of Goods, Services The consumer-price index climbed a seasonally adjusted 0.6% in July, the Labor Department said Wednesday.
The index also rose 0.6% in June, which was seen as a potential turning point for consumer prices, following declines in March, April and May amid the pandemic’s initial economic fallout. Compared with a year earlier, the gauge increased 1%, after June’s 0.6% rise.
Excluding the often-volatile categories of food and energy, so-called core prices rose 0.6%, compared with a 0.2% increase in June, posting its largest month-to-month increase since January 1991.
On an annual basis, core inflation measured 1.6%, a four-month high, following 1.2% in June.
This big jump in the YoY core CPI has a meaningful impact on the Rule of 20 P/E which is now 24.8, its highest level since June 2002.
Eurozone industrial production recovers, but it’s far from completing the V The mechanical recovery from lockdown remains underway and has not yet lost speed. This is encouraging, but at -11.6% below February levels, it is still unclear how large the lasting damage will be
Industrial production grew by 9.1% in June, confirming that the recovery from lockdown continues to quickly add to production. The recovery can be considered mechanical as mandatory shutdowns and voluntary closures or limited production to curb the virus have been gradually lifted, causing production to automatically increase. The 9.1% increase follows a 12.3% increase in May, meaning that the pace of recovery has fallen only slightly in the second month of reopening. The improvements were widespread across production categories with non-durable consumer goods production even accelerating in June. (…)
Whether the V will be completed in the summer months remains the question. We expect that it will fall short due to a lack of demand in the aftermath of the crisis, supply chain disruptions and even a possible flareup of the trade war. We now have to ask at what point will the mechanical recovery level off, giving a better idea of the lasting damage of the coronavirus crisis.
Even though it is unlikely that the V will be completed soon, recent survey data has been encouraging. Manufacturing businesses indicate that output has continued to recover in July and that new orders have also been returning quickly. Some pent-up demand will likely continue to cause industrial production to trend higher in the coming months, but due to all the downside risks to the manufacturing outlook, concerns about a sustained quick recovery of production remain justified.
China’s Xi Speeds Up Inward Economic Shift With the world in recession and U.S.-China tensions deepening, President Xi Jinping is laying out a major initiative to accelerate China’s shift toward more reliance on its domestic economy.
The new policy is gaining urgency as Chinese companies, including Huawei Technologies Co. and Bytedance Ltd., face increasing resistance in foreign markets, Chinese officials say.
In a series of speeches to senior government officials since May, Mr. Xi has trotted out the new strategy, translated as “domestic circulation,” prioritizing domestic consumption, markets and companies as China’s main growth drivers. Investments and technologies from overseas, though still desirable, would play more of a supporting role. (…)
The goal is to make China far less dependent on foreign firms, technology and markets (…)
A March survey by UBS Group of Japanese, Korean and Taiwanese companies that produce in China and sell to the rest of the world found that 85% had already relocated or intended to shift some capacity out of China. (…)
According to a new survey by the U.S.-China Business Council, 83% of more than 100 member companies in manufacturing, services, energy and agricultural sectors count China as either the top or among the top five priorities for their global strategies. (…)
“Xi has made it imperative to make the state sector bigger, stronger and better,” says a Chinese official involved in policy making. “That will never change.” (…)