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The White House, seeking to revive stimulus talks that President Trump called off just days ago, planned on Friday to put forward its largest offer for economic relief yet, as some Republicans worried about being blamed by voters for failing to deliver needed aid ahead of the election.
The new proposal, for Treasury Secretary Steven Mnuchin to present to congressional Democrats, would increase the White House’s plan for coronavirus stimulus to $1.8 trillion.
The president “would like to do a deal,” Larry Kudlow, director of the National Economic Council, said on the Fox Business Network on Friday, in the latest head-snapping turn in the on-again-off-again negotiations. The overall price tag of the offer was confirmed by two people familiar with the discussions, who spoke on condition of anonymity to disclose details of the talks.
Fanning the sense of optimism, Mr. Trump wrote on Twitter: “Covid Relief Negotiations are moving along. Go Big!”
The prospects of a compromise remained remote, however, given the opposition of many Republicans to another large infusion of federal virus aid. Speaking to reporters in Kentucky, Senator Mitch McConnell, the majority leader, cast doubt on the chances of a deal, saying political divisions remained too deep less than a month before Election Day.
“The situation is kind of murky and I think the murkiness is a result of the proximity to the election and everybody kind of trying to elbow for political advantage,” Mr. McConnell said. “I’d like to see us rise above that like we did back in March and April, but I think that’s unlikely in the next three weeks.”
Yet the White House was working to resuscitate negotiations that Mr. Trump himself cut off in a series of indignant tweets on Tuesday, amid deep concern among some vulnerable Republicans that his abrupt abandonment of the talks would hurt them politically.
Mr. Kudlow said that the president met with Mr. Mnuchin and Mark Meadows, White House chief of staff, on Friday and that the Treasury secretary would speak with Speaker Nancy Pelosi of California later Friday afternoon.
Without an agreement, the collateral damage across the country has continued to mount in the absence of federal funding, with more than 800,000 Americans filing new applications for state benefits, before adjusting for seasonal variations.
Even if Ms. Pelosi were to accept the administration’s latest proposal, which is lower than the $2.2 trillion package she pushed through the House this month, Senate Republicans remain divided over the scope of another coronavirus relief package.
Most of them opposed the original $1 trillion offer Mr. McConnell presented in July, after days of haggling with the White House, in part because they were concerned about adding to the national debt. Mr. McConnell has since scaled back the offer considerably, proposing a $350 billion “skinny” plan that Democrats blocked, calling it inadequate.
A White House official said that Mr. Trump was calling Republican senators on Friday to drum up enthusiasm for a last-minute deal. Mr. Mnuchin’s offer is expected to include measures that Republicans have previously rejected, the official said, suggesting an increase in state in local funding is likely to be included in the proposal.
House Democrats on Friday accused the Treasury Department of undermining a provision in the March stimulus law aimed at saving aviation jobs.
Democrats on the Select Subcommittee on the Coronavirus Crisis said in a report that the Treasury delayed distributing money lawmakers had authorized for the aviation industry, which resulted in more than 16,500 job cuts that could have been avoided.
“Congress appropriated billions of dollars to keep aviation workers employed at least through September 30, 2020,” the report’s authors wrote. “Unfortunately, Treasury’s poor implementation of the Payroll Support Program meant that thousands of workers lost their jobs well before that date — even though their former employers received taxpayer assistance to cover the cost of their paychecks.”
Under the CARES Act, Congress authorized the Treasury to provide the aviation industry up to $32 billion to pay wages and benefits, as long as the companies receiving those funds committed to refraining from broad cuts through September. The industry has been pushing for a second round of aid, but that effort has faltered in recent weeks.
The law required the Treasury to start distributing the aid in early April, but initial payments didn’t go out until May 15 and many catering, cargo and other industry contractors didn’t finalize agreements until well into the summer. Because of that delay, many smaller contractors were forced to furlough or layoff workers, the report noted.
At the same time, the Democratic report said that the Treasury allowed the businesses to cut jobs until the funding was sent out without requiring the affected workers to be rehired. That provided companies an incentive to layoff or furlough workers before they had completed the formalities of securing federal assistance, according to the report.The lawmakers said that some companies received funds for employees they no longer employed.
The report’s authors recommend that any further funding come with stronger job protections and a requirement that the Treasury expedites payments. They also said that the CARES Act should be amended to ban job cuts for any business that has yet to spend all of the federal aid it received.
Stocks ended higher on Friday, after a turbulent week in which President Trump injected confusion into talks between the Treasury Department and Congress on the prospects of a broad stimulus bill to aid small businesses, local governments and out-of-work Americans, halting them and then restarting them again.
The S&P 500 climbed 0.9 percent, and ended the week with a gain of nearly 4 percent.
The gains on Friday came as Speaker Nancy Pelosi said in a television interview that she hoped a deal would be reached soon, and Larry Kudlow, who advises the president on economic policy, said Mr. Trump had “approved a revised package.”
And the White House was preparing a new proposal for a $1.8 trillion stimulus, for Treasury Secretary Steven Mnuchin to present to congressional Democrats. Democrats in the House have already passed a plan for $2.2 trillion of spending, and the White House had previously said it was seeking to spend $1.6 trillion.
But also on Friday, the Senate Majority leader, Mitch McConnell, cast doubt on the likelihood for a deal when he said the prospects for more aid were unclear, with the election just weeks away.
The mixed messages were just the latest in a tumultuous week in which Mr. Trump called off talks only to reverse himself two days later. That has left investors hopeful, but uncertain about the prospects for a deal.
Instead, some investors have begun to look past the short-term uncertainty of whether an agreement will be reached before the election, instead focusing on the potential for a “blue wave” that sweeps Democrats into power and enables former Vice President Joseph R. Biden Jr. to enact a much larger stimulus spending plan.
“Any near-term fiscal deal looked unlikely this close to the election. Hopes of a deal post-election hinge on the outcome of the race,” Michael Pearce, senior U.S. economist with Capital Economics, wrote in a note to clients Friday. “The bigger factor driving markets this week was the continued swing in both betting odds and polling averages, which show the Democrats are increasingly favored to not only win the presidency but take control of the Senate too.”
The focus on another round of support from Washington comes as the number of virus cases around the world rises, and the recovery in major economies — including the United States — show signs of losing steam. Britain on Friday said its gross domestic product rose 2.1 percent in August over the month before, less than expected and the smallest monthly increase since the economy started expanding again in late spring. The British economy is still 9 percent smaller than it was before the pandemic.
Microsoft will allow its employees to work from home permanently, as coronavirus cases continue to climb in the United States and companies struggle to figure out how to arrange offices in a way that keeps workers socially distanced and safe.
Microsoft this week issued guidelines for its planned “hybrid model” of working after pandemic restrictions are lifted. Some employees could work from home less than half the time and still retain their company offices, the company said in a staff memo. Other options, with company approval, would include permanently working from home and relocating to other states or even countries.
The new guidelines, first reported in The Verge, are “guided by employee input, data, and our commitment to support individual workstyles and business needs,” Microsoft said in a statement. Microsoft previously said that its offices will not reopen until January 2021 at the earliest.
The news comes a day after Target and Ford Motor said that they would allow employees to continue to work from home through June 2021.
Target’s decision, announced in a letter to staff, applies just to employees at its headquarters in Minneapolis. The company said that a small number of employees who rely on the headquarter facilities would continue to work on-site. The retailer also said it was using this time as an opportunity to reimagine the role of its office in a post-pandemic era.
“As we look to the future, our headquarters environment will include a hybrid model of remote and on-site work,” Target wrote in the letter. “This will allow for the flexibility many of you have come to value, while also providing opportunity for the in-person connection and collaboration that’s central to our team and culture.”
Ford also said its decision would apply to its roughly 32,000 employees in North America who are already working remotely.
The announcements by Microsoft, Ford and Target come after several other companies, including Google, Uber and Slack, have decided that employees need not return to the office until at least next summer.
Some companies have tried bringing employees back to the office, but not always successfully. Last month, Goldman Sachs and JPMorgan Chase had to send some workers back home after employees tested positive for the virus.
What hopes remained that Europe was recovering from the economic catastrophe delivered by the pandemic have all but disappeared as the lethal virus has resumed spreading rapidly.
France, Europe’s second-largest economy, this week amplified the concern as the government downgraded its forecast pace of expansion for the last three months of the year from an already minimal 1 percent to zero. Overall, the statistics agency predicts the economy will contract by 9 percent this year.
The diminished expectations are a direct outgrowth of alarm over the revival of the virus. France reported nearly 19,000 new cases on Wednesday — a one-day record, and nearly double the number seen the day before. The surge prompted President Emmanuel Macron to announce new restrictions, including a two-month shutdown of cafes and bars in Paris and surrounding areas.
In Spain, the central bank governor this week warned that the accelerating spread of the virus could force the government to impose restrictions that would produce an economic contraction of as much as 12.6 percent this year.
The European Central Bank’s chief economist on Tuesday cautioned that the 19 countries that share the euro currency may not recover from the disaster until 2022, with those that are dependent on tourism especially vulnerable.
Summer increasingly feels like a distant memory.
In August, with infection rates down, lockdowns lifted, and many Europeans indulging in the sacred ritual of the summer holiday, signs of revival were abundant. Many European economies expanded dramatically as people returned to shops, restaurants and vacation destinations.
Hopes had also been buoyed by a landmark agreement forged by the European Union to raise a $750 billion ($883 billion) euro relief fund through the sale of bonds backed collectively by all members. That move transcended years of resistance from debt-averse northern European countries.
But most economists assumed that better times would last only so long as the virus could be contained.
“Consumer activity slowed at the end of September,” said Moritz Degler, a senior economist at Oxford Economics in London, in a recent report. “With the health situation unlikely to improve in the near term, we expect the recovery to slow again over the next few weeks.”
Fall has also brought a realization that complex hurdles remain before the European Union’s relief fund can be administered, limiting prospects in the worst-hit countries like Spain and Italy.
Spanish Prime Minister Pedro Sánchez on Wednesday announced a stimulus spending plan worth 72 billion euros ($85 billion), with four-fifths of the money slated to come from the European fund.
Spain may have to wait for that money. The fund is supposed to be operational by January, yet almost certainly will confront delays as European Union members debate conditions on its distribution — especially rules aimed at forcing Hungary and Poland to abide by the democratic norms of the bloc.
The continent’s prospects for recovery are further restrained by rules that limit debts by members of the European Union and curb spending. Those strictures have been suspended, but they will return eventually, limiting growth prospects.
Italy is counting on receiving 209 billion euros ($246 billion) from the European relief fund, but the government is also pledging to bring down its public debt, which exceeded 134 percent of annual economic output at the end of last year. Such austerity, just as the pandemic increases costs for medical care, will almost certainly plunge Italy into a longer and deeper recession.
The Trump administration levied tariffs on $1.96 billion of imported aluminum sheet from 18 countries on Friday, saying that foreign producers were selling their products at unfairly low prices and undercutting American manufacturers.
In an interview on Fox Business Network on Friday morning, Wilbur Ross, the secretary of commerce, called the move “the largest and most far-reaching case that our department has brought in more than 20 years.” He said Germany would feel the largest impact, followed by Bahrain.
Mr. Ross traced part of the problem back to China. He said China was dumping its excess capacity into other markets, which would then find its way into the United States. “The net effect is a lot of dumping in the U.S., and that’s what we’re clamping down on,” he said.
The United States, which imported $15.9 billion of aluminum in 2019, has already imposed a 10 percent tariff on imported aluminum from many countries, though Canada, Mexico and others have earned certain exemptions. Some American aluminum makers support the tariffs, but the levies have angered many manufacturers that make cars, boats, recreational vehicles, washing machines and other products, and now have to pay higher prices for their raw materials.
The U.S. government typically brings dozens of trade cases against foreign countries every year for unfairly subsidizing and pricing their products. But the Trump administration has been particularly aggressive in pursuing and welcoming such cases from various industries, and has initiated 286 of them so far during its term.
The tariffs, which went into effect immediately, apply to products from Bahrain, Brazil, Croatia, Egypt, Germany, Greece, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, South Korea, Spain, Taiwan and Turkey. The tariff rates vary by country and range up to 353 percent of the cost of the good.
Several U.S. aluminum manufacturers requested the tariffs, including Arconic, Novelis Corporation, Texarkana Aluminum and Constellium Rolled Products Ravenswood.
The Commerce Department will begin collecting the levies immediately, but they could still be struck down and retroactively reimbursed. The U.S. International Trade Commission will make its final decision on the case on April 5, 2021, the Commerce Department said.
Britain’s economic recovery from the coronavirus pandemic has already lost its momentum as the country faces a challenging winter. According to data published Friday, gross domestic product rose 2.1 percent in August from the previous month, far below economists’ expectations and the slowest increase since the recovery began in late spring.
More than half the economic gains came from the hospitality sector, including hotels and restaurants, as people vacationed closer to home and the government’s “Eat Out to Help Out” program of meal discounts seemed to really help growth. Still, the overall economy was 9 percent smaller than it was in February before the pandemic.
Britain’s difficulties are echoed across Europe, where a benign summer has given way to a rapid increase in coronavirus cases and new social restrictions that are likely to curtail economic growth. In anticipation of more restrictions from the government, Britain’s Treasury on Friday introduced more job support measures, just two weeks after the latest plans were announced. Starting next month, the government will pay two-thirds of staff wages at companies that are legally required to close their doors, for example if bars and restaurants are told to shut again. The government also announced increased grants to these businesses.
The National Institute of Economic and Social Research in London said it now expected growth to stall in September. Analysts at Citigroup and Bank of America also cut their forecasts for economic growth for the rest of the year.
“August now seems to have been, ‘as good as it gets’ with respect to either formal restrictions or levels of virus fear,” Citigroup’s economists wrote. “During the latter part of the year, we expect lingering virus concerns and ongoing restrictions to preclude any further rebound.”
Thursday, Oct. 8
Pelosi rules out airlines-only aid plan as President Trump claims stimulus talks are back on.
Speaker Nancy Pelosi of California on Thursday said she would not agree to stand-alone aid package for airlines unless the Trump administration committed to a broader pandemic relief plan to help struggling Americans, declaring that “there is no stand-alone bill without a bigger bill.”
Her comments cast doubt on the prospects for a compromise just hours after President Trump had given an upbeat assessment, saying in an interview that he had reconsidered his decision to pull the plug on bipartisan negotiations on a stimulus plan until after the election.
“I shut down talks two days ago because they weren’t working out,” Mr. Trump said during a wide-ranging interview on Fox Business. “Now they’re starting to work out.”
The U.S. budget deficit topped a record $3 trillion for the 2020 fiscal year.
The federal budget deficit was $3.1 trillion for the 2020 fiscal year, the Congressional Budget Office estimated on Thursday. The deficit is a record for the United States in terms of total dollars and is a direct result of the federal response to the coronavirus pandemic.
Federal spending from April through the end of September was $4.2 trillion, nearly double the same period in 2019, the budget office reported. Individual and corporate income tax receipts fell by $191 billion, or about 17 percent, in April through September, compared with the year before.
Wednesday, Oct. 7
Fed officials warned of slower growth without more stimulus, minutes show.
Federal Reserve officials were counting on Congress and the White House to pass additional aid for households and businesses hit by the pandemic when they released their latest economic forecasts, minutes from their Sept. 15-16 meeting showed. Many “noted that their economic outlook assumed additional fiscal support and that if future fiscal support was significantly smaller or arrived significantly later than they expected, the pace of the recovery could be slower than anticipated,” according to notes from the meeting.
More than 100 million are at risk of poverty, the World Bank says.
The World Bank warned on Wednesday that the coronavirus pandemic could push more than 100 million people into extreme poverty this year, elevating the global poverty rate for the first time in more than two decades. In a new report, the bank said that 88 million to 115 million people will be living on less than $1.90 a day, lifting the poverty rate — which had been projected to decline this year before the pandemic hit — as high as 9.4 percent.
Tuesday, Oct. 6
Powell warns of prolonged economic pain without more aid.
The Federal Reserve chair, Jerome H. Powell, delivered a message to his fellow policymakers on Tuesday: Faced with a once-in-a-century pandemic that has inflicted economic pain on millions of households, go big.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Mr. Powell said in remarks prepared for virtual delivery before the National Association for Business Economics.
Nearly 16,000 cases in the U.K. weren’t counted because of a spreadsheet glitch.
Nearly 16,000 positive coronavirus cases recently went unrecorded in England’s tracking system, officials said on Monday. The glitch led to an undercount of the country’s tally and a delay in tracing infected people’s contacts, leaving tens of thousands of people in the dark about their potential exposure.
The culprit was a spreadsheet snafu, explains the DealBook newsletter. Specifically, the system relied on files formatted for an older version of Microsoft Excel, which can only handle a certain number of cells. When key files got too big, thousands of entries were skipped. To fix the problem, large files are now split before feeding them into the system — in other words, more spreadsheets.
Monday, Oct. 5
The owner of Regal Cinemas is closing its U.S. theaters, with 40,000 jobs at stake.
The plight of the entertainment industry deepened on Monday as the British company Cineworld, which owns Regal Cinemas in the United States, said it would temporarily close all 663 of its movie theaters in the United States and Britain. The move was expected to affect 40,000 employees in the United States and 5,000 in Britain.
The company said it could not entice viewers back without a pipeline of new films. The news came after Metro-Goldwyn-Mayer announced on Friday it would push back the release date of the latest James Bond film, “No Time to Die,” to April from this fall — the second time its release date has been delayed because of the pandemic.