Old Howard Union

64 – The Economic Turmoil Today, and a Word on the Post Office.

The current crisis that has the United States and many nations around the world in a state of standstill has crippled the economic productivity of many communities. More importantly, the workers of the country are hurting in what may be one of the worst economic downturns in history. During this all, an old political rivalry between the President and the… Post Office?

Show Notes

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1. House Democrats Close In on New Stimulus Proposal https://www.wsj.com/articles/house-democrats-close-in-on-new-stimulus-proposal-11588851736
• The bill being drafted by Democratic leadership is expected to include more than $750 billion in aid to state and local governments, as well as another round of direct support to Americans, according to interviews with lawmakers and aides. Leaders also say they are interested in extending enhanced unemployment benefits, but haven’t provided specifics.
• Senate Majority Leader Mitch McConnell (R., Ky.) has taken a wait-and-see approach on new funding, after Congress passed more than $3 trillion in aid in a matter of months, responding to deep layoffs across the economy. He has called liability protections for businesses his central demand in new talks. Meanwhile, Mr. Trump is seeking payroll-tax cuts and other tax relief, an idea panned by members of both parties in Congress.
• She is calling for guaranteeing workers’ wages for three months, up to an annual salary of $100,000 a worker.
2. Claims Data Point to Record Wave of Unemployment https://www.wsj.com/articles/unemployment-benefits-weekly-jobless-claims-coronavirus-05-07-2020-11588813872
• WASHINGTON—U.S. workers have filed nearly 33.5 million applications for unemployment benefits in the seven weeks since closures were put in place to combat the coronavirus pandemic, showing a wave of layoffs that likely pushed April job losses to record levels.
• Recent layoffs are expected to cause nonfarm payrolls to fall by 21.5 million and the unemployment rate to climb to 16% in the April jobs report
• Thursday’s unemployment benefits data raise the possibility that the worst of virus-related layoffs are in the past, and that job losses will ease in May. Benefits applications filed for the week ended May 2 were less than half the peak of 6.9 million touched in late March. Before March, fewer than 700,000 claims were filed weekly in records back to 1967.
3. The Daily Shot: Nearly a Decade Worth of Job Gains Wiped Out in a Month https://www.wsj.com/articles/the-daily-shot-nearly-a-decade-worth-of-job-gains-wiped-out-in-a-month-01588844292
• According to the ADP private payrolls report, nearly a decade worth of job gains have been wiped out in a month.
• As we saw last week (#6 here), the US fiscal response to the pandemic has been much larger and faster than it was after the financial crisis.
4. North Carolina Businessman Tapped to Head the Postal Service https://www.wsj.com/articles/north-carolina-businessman-tapped-to-head-the-postal-service-11588818025
• The U.S. Postal Service’s governance board tapped a North Carolina businessman and Republican donor to be the next postmaster general, as President Trump seeks to push the organization to raise rates for package delivery.
• The coronavirus outbreak has resulted in plummeting mail volumes and the Postal Service recently predicted that the pandemic will add $22 billion to the agency’s continuing operating losses over the next 18 months.
• stimulus package authorizes the Postal Service to borrow up to $10 billion from the Treasury Department to fund operating expenses, and the group is currently in discussions with the administration over the terms of the loan.
• Mr. Trump has said he doesn’t want to authorize any lending to the Postal Service unless it charges more to deliver packages. The president has long complained that the Postal Service isn’t charging Amazon.com Inc. enough to deliver the products it sells to people all over the country. He has proposed that the Postal Service quadruple its delivery charges.
5. Unemployment Numbers: 3.2 Million New Claims as Layoffs Persist During Pandemic https://nyti.ms/3dmPk8L
• Economists expect the monthly jobs report from the Labor Department, due Friday, to show that the unemployment rate in April was 15 percent or higher — a Depression-era level. The figure will almost certainly understate the damage.
• Many businesses, particularly small ones, may not survive, while others are likely to operate with reduced hours and staff. The job search site Indeed reports that postings are down nearly 40 percent from a year ago.
• Most Americans remain uneasy about reopening, with 67 percent saying they would be uncomfortable going into a store and 78 percent saying they would be uncomfortable eating at a restaurant, according to a survey that The Washington Post and the University of Maryland released Tuesday.
• So far, only 43 percent of the more than one million Floridians filing verified claims have begun to receive benefits.
6. Trump Says His Administration Is Talking to Republican Senators About Work Visa Issue https://nyti.ms/2yA9TzG
• Four Republican senators sent a letter earlier in the day urging Trump to suspend all new guest worker visas for 60 days and certain categories of new guest work visas for at least a year, until unemployment returns to normal levels.
1. US Consumer Borrowing Fell for First Time Since 2011 https://nyti.ms/2SMU1AK
• U.S. consumer borrowing fell in March for the first time in more than eight years, with the category covering credit cards dropping by the largest amount in over three decades, the Federal Reserve reported Thursday.
• Consumer borrowing declined by $12 billion in March, the first time overall debt has fallen since August 2011, according to the central bank. The decline in percentage terms was 3.4%.
• Borrowing in the category that covers credit cards dropped by $28.2 billion or 30.9%, the biggest percentage decline since January 1989.Borrowing in the category that covers auto loans and student loans was up $16.1 billion or 6.2%.
7. US G.D.P. Declined in First Quarter, With Worse Economy to Come https://nyti.ms/3aPRXhM
• U.S. gross domestic product, the broadest measure of goods and services output, fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst quarterly contraction since 2008, when the country was in a deep recession.
• Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that G.D.P. contracted at an annual rate of 30 percent or more, a scale not seen since the Great Depression.
• The Congressional Budget Office last week released projections indicating that the economy will begin growing again in the second half of the year but that the G.D.P. won’t return to its pre-pandemic level until 2022 at the earliest.
• With each month of unpaid bills and rock-bottom sales, more businesses will go bankrupt or decide not to reopen. More workers will drift away from their employers, turning temporary layoffs into permanent job losses. More loans will lapse into delinquency, endangering banks and the broader financial system.
• Those consequences have led President Trump and other elected officials — particularly Republican governors in states with relatively few coronavirus cases — to push to reopen the economy as quickly as possible. Several states have started to do so, and others, including large ones like Texas and Florida, will begin to at the end of the month.
• But economists and epidemiologists say moving too quickly threatens both public health and economic growth.