coronavirus fallout
September 9, 2020

There's no question the coronavirus pandemic has forced many Americans into financial hardship, but a new NPR/Harvard T.H. Chan School of Public Health/Robert Wood Johnson Foundation survey provided a clearer picture of the extent of the struggles in the United States' four largest cities.

At least half of all households in those cities — 53 percent in New York City, 56 percent in Los Angeles, 50 percent in Chicago, and 63 percent in Houston — reported facing serious financial problems, including depleted savings, problems paying credit card bills, and affording medical bills.

Black and Latino households in all four cities were particularly vulnerable. In New York, 62 percent of Black households and 73 percent of Latino households reported struggles. In Los Angeles those numbers are 52 and 71 percent, respectively, while 69 percent of Black households and 63 percent of Latino households in Chicago have faced the same. And, most drastically, in Houston, 81 percent of Black households and 77 percent of Latino households said their financial issues were serious.

Interviews for the poll were conducted online and via telephone between July 1-Aug. 3 among 3,454 adults in New York, Los Angeles, Chicago, and Houston. The overall margin of error was 3.3 percentage points, while it was 5.4 percent for New York, 7.1 percent for Los Angeles, 5.4 percent for Chicago, and 6.3 percent for Houston. Read the full results here. Tim O'Donnell

August 1, 2020

While the Federal Reserve has earned praise for many of its actions aimed at stabilizing the economy in the United States since the coronavirus pandemic began, its "Main Street" lending program — which is designed to rescue companies that are struggling to stay afloat during the crisis — has sputtered, Politico reports.

The main reason for that, Politico notes, is because the companies that need the Fed's help the most, like hotels with big mortgages, aren't eligible because their debt levels are too high. The Fed, which can't provide grants, is legally prohibited from lending to insolvent companies, and the central bank has subsequently remained cautious about when and where to step in. "It's just too hard to do this through the constraints the Fed has on it by law," David Beckworth, a senior research fellow at George Mason University's Mercatus Center, told Politico.

At the moment, borrower demand reportedly isn't especially high, but if the pandemic doesn't slow down going forward, it won't be a "very rosy picture," said Brian Crawford, executive vice president of government affairs at the American Hotel and Lodging Association. Read more about the program at Politico. Tim O'Donnell

July 28, 2020

As many would expect, the coronavirus pandemic has greatly affected the global tourism industry, the United Nations World Tourism Organization said Tuesday.

The latest UNWTO World Tourism Barometer revealed that lockdowns have led to a 98 percent fall in international tourist numbers in May compared to 2019. Dating back to January, the year-over-year drop was 56 percent.

That, in turn, led to a big drop in revenue. Since the beginning of the year, $320 billion in international tourism receipts have been lost, a figure more than three times the decline that occurred in the wake of the 2008 financial crisis. That's not entirely surprising considering there wasn't a major public health that deterred people from traveling, but it still highlights the extreme nature of the current struggles in the tourism industry.

"The latest data makes clear the importance of restarting tourism as soon as it is safe to do so," UNWTO Secretary-General Zurab Pololikashvili said. "The dramatic fall in international tourism places many millions of livelihoods at risk, including in developing countries." Read more about the latest tourism data here. Tim O'Donnell

July 27, 2020

As part of a broader $1 trillion coronavirus relief bill, Republican lawmakers are proposing to cut weekly emergency unemployment benefits established in the previous CARES Act from $600/week to $200/week, people familiar with the unreleased plan told The Washington Post.

Democrats want to extend the $600 figure, which is set to expire this week, until January while the unemployment rate remains high, and many economists think keeping things as they are or even raising the total a bit makes more sense than slashing. But the Senate GOP isn't on board.

The cut would be temporary, however, and is meant to fill the gap between now and until states implement a Republican-favored approach that involves paying workers 70 percent of the income they earned before losing their jobs due to the pandemic. In that scenario, the weekly unemployment boost wouldn't be tied to a specific number, but would vary for individuals. Read more at The Washington Post. Tim O'Donnell

July 26, 2020

Jari Stehn, chief European economist at Goldman Sachs, told Bloomberg "it's pretty rare that the euro area would outgrow the U.S. over a horizon of one to two years," yet that's exactly what Stehn and other economists anticipate will happen as both economies try to emerge from the coronavirus pandemic.

JPMorgan Chase & Co. predicts the euro area's economy to shrink more than the U.S.'s this year — 6.4 percent to 5.1 percent, respectively — but, subsequently, the bank anticipates a 6.2 percent rebound for the Euro area, which is more than double the 2.8 percent growth expected for the U.S. That's because the euro area has "broken the link," meaning that mobility numbers are increasing, but the virus has not been resurgent. The success is largely the result of initially aggressive lockdowns followed by good contact tracing programs, mask-wearing, and continued social distancing measures as things open up, Bloomberg reports.

In the U.S., meanwhile, where the economy didn't ground to such an extreme halt, several states in the South and West have had to reimpose some lockdown measures as cases continue to spike, likely leading to a more prolonged recovery. Read more at Bloomberg. Tim O'Donnell

July 21, 2020

Republican lawmakers have cast doubt on extending the $600 per week boost to unemployment insurance during ongoing coronavirus relief bill negotiations, but economists think it should remain at least for the rest of year, a new survey shows.

The FiveThirtyEight survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago Booth School of Business, polled 33 economists on whether the federal benefits should continue at the same rate, increase, decrease, or lapse completely for the rest of year. A plurality think it should stay the same, and a majority support keeping it as is or increasing, while only 7 percent back getting rid of the benefits altogether.

Going forward, though, the most popular idea among the surveyed economists was to tie the unemployment insurance rate to key economic indicators, so that the benefit gradually decreases as the economy improves. Read the full results here and check out more analysis of the study at FiveThirtyEight. Tim O'Donnell

June 23, 2020

The European Union is preparing to open its borders on July 1, but Americans probably shouldn't book any vacations in the near future, The New York Times reports. The United States is expected to remain on a list of countries whose citizens are barred entry from the bloc because COVID-19 infection rates remain too high.

The EU is reportedly debating over two potential lists of countries — one that only includes nations with an infection rate lower than the EU average of 16 per 100,000 people over the past two weeks, and the other which includes some that are slightly higher (the U.S. is at 107), although that's not the sole criteria. Either way, the U.S. seems likely to join Russia, Brazil, and China has some of the countries that will be denied entry.

The U.S. exclusion could ruffle some feathers, especially since Brussels and Washington have had a few more ups and downs than usual since President Trump took office, but the Times notes the EU is more concerned with internal politics at the moment; Brussels wants to completely reopen borders within the bloc to restore free trade and travel between the 27 member states. The EU can't force its members to adopt the list, but it can reintroduce internal borders, which would likely discourage many individual governments from bucking the trend, even if they're concerned about missing out on the economic boost provided by U.S. travelers.

Nothing is permanent, of course. If the U.S. is indeed initially barred, Brussels will reportedly be revising the list every two weeks. Read more at The New York Times. Tim O'Donnell

June 8, 2020

In April, the World Bank estimated the coronavirus pandemic would push somewhere between 40 million and 60 million people into poverty worldwide. On Monday, that figure increased to between 70 million and 100 million, The Financial Times reports. The bank also now anticipates the global economy will shrink by 5.2 percent, up from its three percent prediction in April.

"This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges," said Ceyla Pazarbasioglu, World Bank Group's vice president for equitable growth, finance, and institutions.

Emerging and developing economies, including Russia, Brazil, and India, are expected to shrink for the first time in 60 years, with a 2.5 percent contraction in emerging markets' GDP, and a 3.6 percent decrease in global income per capita. The World Bank expects nations in Latin America and the Caribbean to suffer the hardest blow, forecasting that the region will experience a 7.2 percent GDP decline.

Even regions that could see an expansion, like East Asia and Pacific, would have their smallest economic growth since 1967, per the bank. Read more at The Financial Times. Tim O'Donnell

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