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As federal relief funds work their way through bureaucratic pipelines to banks and other agencies that will distribute them, the damage the funds are targeting continue to mount.
More than 16 million Americans are out of work, with more destined to be laid off before federal money can reach the companies that were to use the money to keep them employed.
Restaurant review site Yelp has shelved more than 2,000 workers after its web visits declined by 40 percent. Cameron Mitchell Restaurants, with outlets across the U.S., has laid off all but six of its 4,000 employees.
Mitchell said the economic freeze could cost the U.S. a quarter of its restaurants.
Many employers had the option of keeping workers on at sharply reduced hours or cutting their pay. But a large number reportedly decided that their employees would fare better by being laid off and collecting the federal unemployment benefit of $600 a week in addition to state jobless benefits.
Almost $350 million targeted to small business is stumbling on bureaucratic and technological glitches as many of the companies that need it are poised for bankruptcy.
Commercial banks will make the loans but are waiting for the overwhelmed Small Business Administration to give them details about how to fund and close the loans.
Banks offering loans guaranteed by the Fed are running out of money and must wait for the Fed to buy the loans they have made before they have the cash to make new loans. But the Fed has yet to provide procedural details.
The rescue payments of $1,200 for most adults will start being delivered about now, weeks after millions of workers have lost their jobs and begun missing payments on bills.
The federal government is not equipped to structure funding programs and disburse money quickly.
“They’re trying to do it quickly,” said Tony Fratto, deputy press secretary in the second Bush administration, “but they weren’t early enough and there’s going to be a lot of damage because of that.”
Pandemic’s Legacy: Massive Debt for All

The political response to the COVID-19 pandemic will leave governments, businesses, and households in debt for years and probably, in many cases, decades to come – what has been called “transferring economic activity from the future into the present.”
The U.S. government’s deficit this year had edged over $1 trillion early this year and is now slated to reach $3.4 trillion, according to Goldman Sachs, and $2.4 trillion next year.
By then, the federal debt already had reached $17.9 trillion, or 89 percent of U.S. GDP, driven by steady spending increases in military and social programs and 2017’s unfunded tax cut.
The next federal stimulus package is likely cost at least $1 trillion and perhaps twice that.
Many economists believe the debt is manageable because much of it is being bought by the U.S. Federal Reserve – in effect, the government buying its own debt. But that creates money out of thin air, which led to inflation after the two world wars when the U.S. government did the same thing.
The Fed has bought trillions of dollars’ worth of treasury securities since the Great Recession and inflation, however, has remained modest. Japan’s national debt is twice its GDP and inflation has been subdued there while the central bank has been buying government bonds for years.
Government isn’t alone in borrowing. Businesses are issuing bonds and drawing down lines of credit, and many households already are turning to loans and credit cards to meet expenses.
The growing piles of debt are likely to slow any recovery from the economic shutdown as governments, businesses, and households will devote more of their income to repaying loans than to spending, saving, or investing.
Moody’s Analytics sees $90 to $125 billion in state budget cuts looming, with Louisiana, Michigan, Missouri, New York, North Dakota, West Virginia, and Wyoming especially vulnerable.
Some analysts worry the Fed’s consolidation of the U.S. national debt will increase its, and Washington’s, power over the U.S. economy.
Economic Shutdown Impacts All Income Levels

The monthly FT-Peterson Economic Monitor survey finds that Americans at all income levels are being pinched by the nation’s economic shutdown.
About 73 percent of respondents reported their household incomes had been changed by the shutdown.
Households reporting being damaged “somewhat” or “very significantly” by the crisis include 74 percent of those with annual incomes of $50,000 or less and 71 percent of those with incomes above $100,000 a year.
Almost half of those polled said they would have no income at all if forced out of work by illness or layoffs.
The poll found 71 percent of respondents had altered their personal or business activities, 48 percent had canceled travel plans, and 35 percent had postponed a major purchase.
The poll was taken between 24 and 29 March; the unemployment rate and economic conditions have worsened since then.
More than 30 percent of respondents said the global economic paralysis was the biggest threat to the U.S. economy; only 12 percent had said so in February.
The survey found that two-thirds of Americans are more worried about the virus pandemic than about the economic shutdown, although only 10 percent reporting having had the virus or knowing someone who did.
About 45 percent of Republicans ranked the economic crisis above public health concerns; 22 percent of Democrats and 33 percent of independents did so.
Almost 75 percent of New York State residents fear the economic freeze will cause them serious financial problems, according to a March survey by the Siena College Research Institute. About 51 percent are worried they won’t be able to pay their monthly bills, and 37 percent are concerned they will be laid off.
Millennials Hit Hardest by Economic Shutdown

Many Americans in their mid-30s and younger are facing the first major economic crisis of their working lives and have scarce savings and too much debt to cope with it effectively.
Most younger workers haven’t had time to rise in their careers to senior, well-paid positions. They also tend to be saddled with student and credit card debt.
Those factors have left them with little money saved and few other assets, such as stock portfolios or home equity, on which they can draw to meet monthly expenses during the current crisis.
When the Great Recession began in 2008, Generation X was about the same age that Millennials are now. But Gen X’ers had about twice the assets then that Millennials have now.
Today, Gen X’ers have about four times the assets and twice as much money saved as workers in their 20s and ten times the stock market assets as Millennials now do.
Millennials who did invest in stocks have seen those investments lose a third or more of their value in recent weeks, leading many to question the wisdom of buying stocks again.
Millennials also have a greater presence in part-time jobs and gig work, which pay no benefits.
“Over time, it’s become more difficult for young families to accumulate wealth,” said William Emmons, an economist at the St. Louis Federal Reserve Bank. “We thought maybe they’d catch up later but the current situation doesn’t give me much reason to believe that’s going to happen.”
One young woman reports that after losing her job and spending her savings, she made some money selling photos of her feet online to people with fetishes. “It feels like I’m never going to have a stable job that has benefits and health insurance,” she said.
U.S. Economy Loses Its Busiest Season

The second quarter of the year is usually the busiest for several key economic sectors. This year, it could be the least busy.
In the second quarter of 2019, real estate sales were 32 percent greater than in the quarter before; construction gained 20 percent more projects during the same period. The leisure and hospitality industry added 1.3 million jobs during that quarter.
Analysts now forecast that all three industries will contract this quarter.
Some see the housing market losing 10 percent this quarter, compared to 8.4 percent during the Great Recession in 2008. The Congressional Budget Office reports that leisure and hospitality spending typically drops 80 percent during a pandemic.
Alaska and Maine have suspended all construction not related to critical infrastructure; Facebook has halted progress on its $750-million Alabama data center. Michigan has banned construction not related to public health and public infrastructure. In Las Vegas, work on a $1.5-billion expansion of the Venetian Hotel is on hold.
Figures are not available, but lost projects could total well into the tens of billions.
Can Brick-and-Mortar Stores Hang On?

The retail industry has been going through a bone-shuddering shakeout for years as more shoppers migrate to online stores and consumer tastes become more specialized.
Iconic chains such as Sears & Roebuck and Montgomery Ward had already disappeared before national leaders closed the world’s economy to defend against the coronavirus.
Now things are getting even harder.
Thousands more stores are now shut, hundreds of thousands of retail workers unemployed, and executive salaries and perks slashed to conserve cash.
The Neiman Marcus Group has $120 million in debt coming due this week; J. Crew Group needs to repay $4 million by May; and J.C. Penney Co. owes $147 million in June.
All are asking creditors to delay those payment deadlines.
But Moody’s and Fitch Ratings recently downgraded Penney’s bonds, along with those of Macy’s and Gap Inc., among others, to junk status, which may make it harder for the 859-store chain to find flexibility in its creditors.
Retailers drew about $27 billion from their credit lines last month, more than any other industry except vehicle manufacturing.
RapidRatings, an analysis firm, recently ran “stress tests” on 40,000 companies to see how they would fare if revenues fell 15 percent. Retailers’ ratings were among the worst.
Ratings below 40 signal a higher risk of default.
In the test, Nordstrom’s fell from 78 before the economic shutdown to 34 now. Macy’s dropped from 65 to 34; Gap Inc. slid from 72 to 45.
“Companies we weren’t worried about a month ago, we are now worried about,” said Mickey Chadha, an analyst with Moody’s Investors Service.
TREND FORECAST: The “Greatest Depression” has begun. Any economic recovery will be short lived. Closed stores are stocked with high levels of seasonal inventory that has not been sold. In addition, with a nation of which two thirds of its Gross Domestic Product is consumer based, on lockdown and with consumers down and out with no real income, retail sales will continue to fall and prices of clothing, autos, appliances, etc., will rapidly decline.
Lacking Buyers, U.S. Farmers Throw Out Food

U.S. farmers are throwing out fertilized chicken eggs, turning pork bellies into lard instead of bacon, and dumping hundreds of thousands of gallons of milk a day, all because the schools, restaurants, and other outlets that bought their products are no longer open.
Mississippi chicken-grower Sanderson Farms says that its sales to restaurants have shrunk to a third of its pre-pandemic level. The company is now breaking fertilized eggs instead of letting them hatch into chickens that would flood the market this summer and drive down prices.
The price of chicken breasts rose more than 30 percent early in the pandemic, but soon fell 25 percent as restaurants closed down.
The company also is considering euthanizing some chicks to save the cost of feeding them because there is unlikely to be a market for the birds when they mature.
Prices for pork bellies, from which bacon is made, have hit record lows as McDonald’s and other restaurants are selling a fraction as many breakfasts as they did before the pandemic.
Other growers are plowing under fields of grains and vegetables.
About 10 percent more milk is being produced every day than can be sold, according to dairy industry estimates.
In early April, dairy industry groups proposed a “dairy crisis plan” to the U.S. agriculture department, outlining steps the government could take to help dairy farmers survive. The measures include paying farmers to cut milk production and buying more milk for government-funded food programs.
Dairy Farmers of America, one of the largest organizations that buys milk from farmers, has asked about 10 percent of its members to dispose of their milk.
“DFA is continuing to work with our customers to explore additional options to retain as much value from our farm families’ milk, increase demand for dairy and exhaust all possible avenues to find a home for their milk,” said Kristen Coady, a vice president at Dairy Farmers of America.
TRENDPOST: In the last four weeks, more than a third of U.S. parents have reduced meal portions for their children and a quarter of adults are eating less or skipping meals because they can’t afford to buy adequate food, according to a study by the nonprofit Hunger Free America released on 13 April.
The American Farm Bureau Federation, the U.S.’s largest farm trade group, and a nationwide network of 200 food banks have called on the U.S. agriculture department to create a voucher system that would pay farmers to deliver their unmarketable food directly to food banks without working through middlemen.
“We need a massive, coordinated federal, state, and local government response that dramatically expands government food safety net programs,” said Joel Berg, Hunger Free America’s CEO, “and uses National Guard units and national service participants to ramp up home meal deliveries.”
Other nonprofits are beginning to mobilize to collect unsold food from farmers and channel it to food banks and other outlets where jobless people can pick it up.
TREND FORECAST: As witnessed by miles-long car backups of people going to food banks, the worst is yet to come as the impact of the “Greatest Depression” hits Wall Street and Main Street.
As Gerald Celente has frequently noted, “When people lose everything, and have nothing left to lose, they lose it.” Thus, as economic conditions deteriorate and people sink into poverty and desperation, robberies of all types – from robbing banks to stealing food and stealing from employers – will rapidly increase.
Don’t Fly With Me

Passenger airlines, destitute because of the world’s economic shutdown, are slashing itineraries and negotiating changes to federal rules governing their routes and schedules.
For example, a carrier that had been serving a city less than five times a week now will be permitted to reduce the schedule to one flight a week through 30 September. A company that had been flying to a city 25 or more times weekly can cut back to five.
An airline visiting a city at least once a day for five days each week, however, is still required to maintain at least one daily flight.
Airlines have been flying virtually empty planes to comply with federal regulations at a time when the number of passengers has fallen by 90 percent or more.
On 7 April, the number of U.S. air passengers fell below 100,000, a plunge of 95 percent from the date a year previous.
Summer is typically airlines’ busiest and most profitable season. But domestic air carriers, collectively losing an estimated $20 billion a month during the economic shutdown, already are collapsing their schedules.
Southwest Airlines has cut its number of daily flights in half, at least until 27 June. JetBlue has cut its daily departures from New York City and Los Angeles from 492 to 70 through 10 June.
The shrunken schedules could mean a complete loss of passenger air service to smaller cities.
If a city loses service, it can appeal to the U.S. transportation department before an airline will be allowed to cut it off.

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