coronavirus and the economy
April 1, 2020

A lot of countries around the world are grappling with the COVID-19 coronavirus pandemic. The U.S. has a special challenge, though: Unlike most developed nations, health insurance is mostly tied to jobs. As millions of Americans suddenly lose their employment, several Democratic-leaning states have reopened their Affordable Care Act marketplaces to let people affected by the pandemic sign up for health coverage. Health insurers expected a similar announcement Friday from the Trump administration, which oversees ACA enrollment in about two-thirds of states, Politico reports, but the White House had rejected the proposal.

A White House official told Politico Tuesday evening that after considering a reopening for a special enrollment period, the administration is instead "exploring other options." Americans who lose their job can opt for COBRA coverage for up to 18 months, an especially expensive option, and lower-income people in the states that expanded Medicaid under the ACA can get coverage under that federal program. The ACA also allows enrollment under certain circumstances outside the normal registration window.

But reopening the enrollment window during the COVID-19 outbreak had support from both the health insurance industry and Democrats. President Trump "confirmed last week he was seriously considering a special enrollment period, but he also doubled down on his support of a lawsuit by Republican states that could destroy the entire Affordable Care Act, along with coverage for the 20 million people insured through the law," Politico notes. "It wasn't immediately clear why the Trump administration decided against the special enrollment period." Peter Weber

March 31, 2020

Goldman Sachs' outlook for the United States economy in the short-term has grown bleaker.

The investment bank is now estimating the U.S. GDP will contract 34 percent from the previous quarter between April and June because of the effects of the novel coronavirus pandemic. That's a pretty significant shift from it's previous 24 percent projection, which, as CNN notes, was already a shockingly severe estimate.

Goldman switched things up because it now thinks the U.S. labor market is bracing for a heavier-than-anticipated collapse — it expects unemployment to rise to 15 percent by the middle of the year, rather than 9 percent as earlier estimates showed.

But a harsher fall also means a stronger rebound. The bank now thinks the economy will rebound even more sharply between July and September, though that likely comes with the caveat that the U.S. continues to manage and suppress the pandemic, allowing people to get back to work so commerce can start revving again. Read more at CNN. Tim O'Donnell

March 30, 2020

Economists at the Federal Reserve's St. Louis District are now projecting the unemployment rate in the United States could hit 32.1 percent, placing 47 million people out of work amid the COVID-19 pandemic, CNBC reports.

That estimate is up from the 30 percent figure previously publicized by St. Louis Fed President James Bullard. In a research paper published last week, St. Louis Fed economist Miguel Faria-e-Castro said "these are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years."

The numbers presented by the economists may be an overestimate, though, because they don't account for people who may drop out of the workforce altogether or for the possible effects of Congress' stimulus package. Still, the numbers would likely top the unemployment peak during the Great Depression.

The outlook is bleak, but Bullard previously issued some reassuring words, arguing that this moment in history won't necessarily mirror the depression, in terms of length. If the U.S. is able to mitigate the pandemic, people will have the chance to get back to work before too long. Read more at CNBC. Tim O'Donnell

March 27, 2020

The Labor Department provided the material Thursday for what Axios' Felix Salmon called "the most stunning chart of this crisis yet — the number of people filing for unemployment spiked to 3.3 million last week, a number unprecedented in U.S. history." The actual number of workers affected by the coronavirus crisis is much larger — lots more Americans took pay cuts or reductions in work hours, and the numbers don't count gig workers. But it's a stunning jump the same, with huge, unknown ramifications, and The New York Times found an arresting way to illustrated it on the cover of Friday's newspaper.

The Wall Street Journal had the same idea, executed with slightly less aplomb.

The New York Daily News, meanwhile, did its Daily News thing. Peter Weber

March 26, 2020

Senate and White House negotiators threw together the largest economic rescue bill in modern U.S. history in less than a week, and the final version of the $2.2 trillion package — passed unanimously in the Senate late Wednesday — has a lot of money for a lot of businesses and institutions. The goal of the legislation is to shore up the U.S. economy and civil society during the COVID-19 coronavirus pandemic. Here's where some of that money will go:

Direct cash payments: Most Americans will get checks of up to $1,200 plus $500 per child, at a cost of about $290 billion.

Hospitals: $100 billion is for grants to hospitals and health care providers struggling to purchase critical supplies and losing money from postponed elective surgeries. There's also money for community health centers, Medicare, telehealth, and public health agencies.

Unemployment: The bill sets aside $260 billion to expand unemployment payments to a broader group of workers affected by the pandemic, add 13 weeks of coverage for the unemployed, and boost weekly payments by up to $600.

State and local governments: $150 billion will go to help state and local governments weather the outbreak, including a minimum of $1.5 billion per state and $8 billion for tribal governments. There's another $25 billion in state infrastructure grants.

Small businesses: $377 billion is set aside for zero-interest loans and other payments for businesses with fewer than 500 employees — including nonprofits and individual hotels and restaurants from large chains. The loans will be forgiven if the companies retain their employees and meet other conditions.

Big businesses: The bill has $500 billion for industries hit especially hard by the pandemic. This includes $50 billion for passenger airlines — $25 billion in loans, $25 billion in grants — $8 billion for cargo carriers, and $17 billion for "businesses critical to maintaining national security" (read: Boeing). The other $425 billion is loans allocated through Federal Reserve programs, with some limits on executive compensation and stock buybacks, new oversight mechanisms, and a ban on participation by companies significantly controlled by President Trump, other top administration officials, members of Congress, or their families.

Miscellaneous: The Pentagon receives $10.4 billion, FEMA gets $45 billion, $25 billion goes for food stamps, $25 billion for public transit systems, $31 billion for local schools and colleges, and states get $400 million to prepare for the 2020 elections, including expanding vote-by-mail and polling locations.

Find more details at Politico, The Associated Press, and The Washington Post, and learn more about the fine print at The New York Times. Peter Weber

March 26, 2020

The Cheesecake Factory has notified its landlords that it will not be able to make any rent payments in April, Eater Los Angeles reports.

In a letter dated March 18, Cheesecake Factory Chairman and CEO David Overton said he was "asking for your patience, and frankly, your help." Because of the coronavirus pandemic, several Cheesecake Factories have had to close or can only serve takeout and delivery, and as such the "severe decrease in restaurant traffic has severely decreased our cash flow and inflicted a tremendous financial blow to our business," Overton said. The company hopes to "resume our rent payments as soon as reasonably possible" but "cannot predict the extent or the duration of the current crisis."

The first Cheesecake Factory opened in 1972 in Beverly Hills; today, there are 294 locations in the United States and Canada. The company, which employs 38,000 people, has had to temporarily close 27 restaurants because of the coronavirus pandemic. A Cheesecake Factory representative told Eater Los Angeles the company has "very strong, longstanding relationships with our landlords. We are certain that with their partnership, we will be able to work together to weather this storm in the appropriate manner." Catherine Garcia

March 25, 2020

"Ladies and gentlemen, we are done," White House legislative affairs director Eric Ueland said early Wednesday, after five days of intense talks with congressional leaders about a coronavirus economic rescue bill. "We have a deal." The $2 trillion deal includes money for most Americans, $367 billion for small businesses who continue to pay employees forced to stay home, $130 billion for hospitals, and a $500 billion loan program for corporations, states, and local governments. If passed, this will be the third bill Congress has passed to stem the economic fallout of the COVID-19 pandemic. It will also be the largest economic rescue bill ever passed by Congress.

The deal was negotiated by Ueland, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell (R-Ky.), and Senate Minority Leader Chuck Schumer (D-N.Y.), who was in frequent contact with House Speaker Nancy Pelosi (D-Calif.). At the insistence of Democrats, the legislation includes an independent inspector general and an oversight board for the $500 billion loan program, as well as other protections.

Democrats also secured a provision to expand unemployment insurance with broader eligibility, including for gig-economy workers, and an extra $600 a week for four months. As with McConnell's draft, U.S. adults will get $1,200 with an extra $500 for each child. The Senate is expected to pass the legislation swiftly, but the House is on recess and that timeline is less clear.

Pelosi, who will shelve the House's more generous package in favor of the Senate bill, is hoping to pass the legislation by unanimous consent, sparing members a trip back to Washington. But any House member can derail that plan, and the likely alternative is a floor vote held open for several days so lawmakers wary of contracting COVID-19 can vote in socially distanced shifts. Peter Weber

March 17, 2020

The coronavirus pandemic already sounds like it's wreaking havoc on people's worklife, a new poll from NPR, PBS NewsHour, and Marist College shows.

When asked in the survey if they, or someone in their household, had seen their work hours reduced or been let go because of the coronavirus, 18 percent said that was indeed the case. And for people with a household income of less than $50,000 per year, the number jumped up to 25 percent.

The rate also appears to be higher among college graduates, people under 45, women, and for those who live in small cities or suburban areas.

The poll also reveals that only 56 percent of Americans — and 40 percent of Republicans — consider the pandemic a "real threat," which is actually 10 percent lower than last month, even as it spreads across a greater and greater swath of the country.

The NPR/PBS NewsHour/Marist College poll was conducted across March 13 and 14 over the phone and includes response from 835 U.S. residents. The margin of error is 4.9 percentage points. Tim O'Donnell

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