Initial unemployment claims jumped 3,000% to 6.6 million last week from 211,000 for the week ending March 7, the Labor Department said Thursday. Businesses have closed in an effort to stop the spread of coronavirus, as millions of Americans practice “social distancing” at home.
“This kind of upending of the labor market in such a short time is unheard of,” said Heidi Shierholz, a senior economist and director of policy at the progressive Economic Policy Institute, a Washington, D.C.-based think tank. She called the latest numbers, “A portrait of disaster.”
The $2 trillion stimulus package, passed by the Senate last week, will help the U.S. through the COVID-19 pandemic, of which New York City is now the epicenter, Shierholz added, but she added, “This kind of upending of the labor market in such a short time is unheard of.”
“The spike at the end shows the unprecedented territory we are in right now,” she said, citing this graph (below), showing labor market trends over the last 50 years. “What the labor market is currently experiencing is far more extreme than anything we’ve ever seen, including the worst weeks of the Great Recession.”
The number of unemployed Americans is likely to surpass the prior record of 15.3 million, also seen during the Great Recession after the subprime-mortgage market crashed. Economists predict 25 million Americans or more could lose their jobs in the next few months, at least temporarily.
Shierholz said initial unemployment claims do not include many workers who are out of work due to the virus, including independent contractors, those who don’t have long enough work histories, those who had to quit work to care for a child whose school closed, so the actual number is higher.
‘The spike at the end shows the unprecedented territory we are in right now.’
“One of the most effective parts of the CARES ACT, the relief and recovery act that Congress passed last week, is a $250 billion expansion of unemployment insurance,” Shierholz said.
The $2 trillion stimulus package includes an increase in the level of benefits and the creation of a Pandemic Unemployment Assistance (PUA) program which would be available to many workers who are not eligible for regular unemployment insurance (independent contractors, for example).
The $2 trillion stimulus bill will pay workers $600 a week on top of whatever sum they receive in their state-level unemployment claim for a period of up to four months, according to provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Coronavirus had infected at least 216,768 people in the U.S. as of Thursday evening and killed at least 5,148 people, with 1,374 deaths occurring in New York City alone, according to Johns Hopkins University’s Center for Systems Science and Engineering. Worldwide, there were 962,977 confirmed cases of the virus and 49,180 reported deaths.
The Federal Reserve, seeking to improve the functioning of a critical market for Treasury securities, announced Wednesday it was relaxing a rule that will free up capital for the biggest banks to lend. The rule change gives banks an incentive to hold Treasurys.
The Fed announced it was relaxing the rule that required banks to set aside cash when it holds Treasury securities. The Fed staff estimated relaxing the rule should free up $76 billion in capital
The rule is aimed at the biggest banks with over $250 billion in assets. This covers 15 banks, which control $15 trillion in assets, said Mark T. Williams, a former Fed staffer and now a lecturer at Boston University’s Questrom School of Business.
“As U.S. Treasuries head to negative territory, to incentivize banks to remain buyers, the Fed has relaxed capital standards of the biggest U.S. banks,” Williams said.
The Fed said the temporary exclusion will allow them to expand their balance sheet as appropriate to serve as financial intermediaries. The banks are not allowed to use the new capital to increase capital distributions, the statement said.
Every time a leverage ratio has threatened to become binding, the Trump Admin has slashed it.
Since early March, the Fed has spent nearly a trillion dollars trying to repair U.S. financial markets, damaged by a flight to safety when the extent of the coronavirus pandemic’s impact to the U.S. economic outlook became better understood.
Investors in all asset classes sought to liquidate positions and accumulate cash.
In an interview with the Wall Street Journal, Boston Fed President Eric Rosengren said it was “critically important” that the Treasury market can operate in a way that investors can trade large volumes.
“We’re not at 100%, but we’ve made an awful lot of progress,” Rosengren said.
The numbers: The pace of home-price appreciation once again ramped up in January, according to a major price barometer.
The S&P CoreLogic Case-Shiller 20-city price index posted a 3.1% year-over-year gain in January, up from 2.8% the previous month. On a monthly basis, the index increased 0.3% between December and January.
Because of the two-month lag in the data included in the price index, the effects of the coronavirus pandemic on the housing market were not yet reflected in the data.
What happened: Phoenix led the nation once more with a 6.9% annual price gain in January. Close behind were Seattle, Tampa, Fla., and San Diego, where prices rose by 5.1%. In total, 14 of the 20 cities in the index reported higher price increases year-over-year in January versus December.
On a regional basis, home price growth was strong in the West and the South, while comparatively weak in the Midwest and the Northeast, said Craig J. Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
The big picture: The Federal Housing Finance Agency released its own monthly home-price index last week, which showed a 5.2% year-over-year gain in January. While home-price growth has accelerated in recent months, a year ago the pace of appreciation was actually slightly higher in most regions across the U.S., the FHFA report showed.
As the low supply of homes on the market has been met with high demand, home prices have been pushed higher. Low mortgage rates in recent months have encouraged that trend, because the low rate environment can make higher prices more palatable to buyers who might otherwise find them too expensive.
The question for the market now is whether home prices will take a hit as a result of the coronavirus pandemic. While real-estate economists broadly expect sales volume to plummet, it’s unclear what effect the COVID-19 national health emergency will have on prices. A recent report from Zillow
that analyzed what happened to the economy of regions affected by past disease outbreaks suggests that home prices may not fall along with sales.
What they’re saying: “Home prices increased nearly every month in 2019 and continued to push upward in early 2020 with strong demand,” said Bill Banfield, executive vice president of capital markets at Quicken Loans. “It’s yet to be seen how home prices will react through, and after, the current health crisis. I suspect once the stay-at-home orders are lifted, homebuyer demand will regain its footing, provided employment rebounds quickly.”
COMO, Italy — Our world has been turned outside in.
It’s now almost six weeks since the university in Milan has been closed, and three weeks since the official lockdown was announced. We have daily music lessons in the bedroom, English lessons in the kitchen and high-school classes in the living room.
As a language teacher, I have been literally run off my fingers. Moving courses online has been a mammoth task, and there have been barely enough hours in the day to get things done. But now, six weeks in, the workload is finally easing off.
In a few short weeks, everything has changed — people’s habits, their hobbies, their social life, their reality. School corridors lie empty. Paintings in art classes are left unfinished.
The number of coronavirus contagions here in Italy, on the other hand, is not.
My area of Lombardy is still the worst affected, accounting for over a third of the 97,689 nationwide cases to date, with 969 deaths reported in just one day. The peak we had been expecting two weeks ago has yet to arrive and, according to Silvio Brusaferro, Commissario Straordinario of the Istituto Superiore di Sanità, warned Friday, “We have neither reached it, nor surpassed it.”
There are the faintest glimmers of hope. The number of confirmed cases reached 97,689 on Sunday, up from 92,472 the day before. That was the lowest increase in infections since last Wednesday. The rise in the number of deaths from COVID-19, the disease caused by the novel coronavirus, slowed on Sunday for the second consecutive day. As of Sunday, the virus has killed 10,779 people in Italy, accounting for one-third of the worldwide total number of fatalities (33,968), and is more than three times the number of deaths from the virus in the U.S. (2,489).
“The measures that were due to expire on April 3 inevitably will be extended,” Regional affairs minister Francesco Boccia told Sky TG24 television on Sunday. Prime Minister Giuseppe Conte will ultimately make that decision, he said.
People are, for the most part, resigned to the fact that they have to wait the lockdown out. Some people who have relatives who tested positive or are in high-risk groups are going into extended quarantine, so still having to rely on friends and family to replenish their supplies.
We are now experiencing the aftershock. In a few short weeks, everything has changed — people’s habits, their hobbies, their social life, their reality. School corridors lie empty. Paintings in art classes are left unfinished. The buzz of everyday life has been silenced and it feels like we have entered a new and unwelcome dimension.
The more affected a person or their family, the deeper the sense of distress and detachment. It’s like Russian roulette. Some have paid a heavier price and have lost people close to them. Others have been luckier and seem to be escaping with no casualties.
As the days have stretched into weeks and maybe even beyond, older people who are now cut off from their adult children and grandchildren are feeling the void. They are counting down the days until the lockdown is lifted, hoping for a return to normality or at least a family lunch, and worried this will continue to be put off.
A new decree is expected from the prime minister’s office in the coming week, which will likely confirm the measures currently in force until April 18. Although the state of emergency has been officially declared until July 31, the government is hopeful that there is light at the end of the tunnel. It is basing that decisions on the epidemiological trend and government ministers have expressed their appreciation for the majority of Italians who are respecting the rules.
It’s like Russian roulette. Some have paid a heavier price and have lost people close to them. Others have been luckier and seem to be escaping with no casualties.
Despite the signs that the spread is slowing down, the government maintains that the real weapon against the virus is first and foremost how people behave in the face of this emergency. And to their credit, most Italians are abiding by the measures imposed by the government. Yet there will always be the defiant few who fight against it.
According to the Italian Home Office, of 183,578 people stopped by police recently in one day, 1,515 were reported for not respecting travel restrictions, 69 for making false statements to the authorities and 129 for violating quarantine.
Consequently, there are new and stiffer fines of up to 3,000 euros ($3,328) for those who continue to leave their house for an undocumented reason, and an extension of up to five years’ imprisonment for people who are infected and refuse to stay in isolation. The latter is considered a crime against public health — and will be punished as such.
And nobody, it appears, is exempt. There are 55,000 homeless people living on Italy’s streets, so obviously with no homes to go to. Not only are their problems accentuated by the closure or limitation of essential services, the President of the Italian Federation of Organizations for Homeless People, Cristina Avonto, has felt it necessary to make an appeal against adding further to their humiliation by imposing charges or fines on them.
So for now, the only outing that most people have is to the supermarket. The queues outside have been getting longer as online shopping deliveries can take too long for many families, and better left to those who really have no other option. Security guards are now not only armed with sanitizing gel and plastic gloves, they also aim a thermometer at your forehead before allowing you to enter. If your body temperature is above the norm, you don’t go inside.
Most people are wearing masks, although I still haven’t managed to get my hands on one. Although not officially necessary, the Lombardy region has recommended them for shopping, to avoid contaminating products on the shelves and the shopping cart. Apparently, the official green surgical masks are the best to get. Those with valves seemingly only protect the wearer.
Those in Bergamo feel like they have become the Italian Wuhan. So many have been affected there and it’s showing no signs of relenting just yet.
Snorkeling masks are being adapted to fill an eventual shortfall of respiratory equipment in sub-intensive care units, as are Cpap or “continuous positive airway pressure” masks used for sleep apnea. Adaptors for theses are being studied and patented with the aid of 3-D printers. For now, they remain non-certified medical equipment and would be used only in the case of extreme emergency and with the patient’s consent.
Many Italian firms have stepped up to the plate, along with fashion designer Georgio Armani who announced the conversion of his production plants to produce disposable gowns for the protection of health-care professionals. And those much sought-after masks are being produced by a consortium of Italian manufacturers to try to cover 50% of what’s needed. The priority is to protect health workers, of whom at least 6,414 have tested positive for COVID-19. Fifty-one doctors have died since the outbreak, ten of those in just one day.
The people of Bergamo feel like they have become the Italian Wuhan. So many have been affected there and it’s showing no signs of relenting just yet. To cope, hotels have been turned into convalescing homes and authorities there are building a new hospital. It will have an emergency team of 32 Russian military health workers specialized in intensive care. This should take some of the pressure off local hospitals which are at the limit of their capacity and manpower.
There have been complaints about a lack of testing in Bergamo and the city’s mayor, Giorgio Gori, has appealed for more testing equipment. He has acknowledged that the official figures of those who have tested positive with the virus are only the tip of the iceberg, given that many people who are asymptomatic or have light symptoms.
And then there’s the parallel epidemic of job loss and uncertainty. Companies have closed. Workers have been let go. There have been grim warnings of a long and profound economic depression, the very idea of which is sending shivers down the spine of the Licia Mattioli, vice president of Confindustria, the General Confederation of Italian Industry.
Admittedly, health comes before the economy, but she has also turned her thoughts to what could be described as a “post-war” reconstruction, which will be very much dependent on businesses and workers pulling together. Better again if it were to involve the whole of Europe.
Even if a return to the classroom is hypothetically possible, it is realistically unlikely, even after the Easter vacation. The Mayor of Milan, Giuseppe Sala has also been surmising on social media about possible scenarios when the city gradually gets back to business as usual — from remodeling infrastructures to changing how we access public spaces like stadiums, cinemas and theatres.
However premature his predictions might be, there’s no doubt that until a vaccine is found, restrictive measures will be ongoing.
There is no escaping the fact that we are all in this for the long haul and those who get to stay at home, and continue to work, can consider themselves fortunate. Conte has said that when the restrictions are eventually lifted, it will be a gradual process, to ensure that all of the efforts made so far won’t have been in vain.
Alison Fottrell is a teacher and writer living in Como, Italy.
If ever there were doubts about how the superaffluent are faring amid a pandemic for the ages, media mogul David Geffen wants to make it abundantly clear that, for his part, he’s doing just fine — and he wishes us all the best.
Geffen, whose net worth is estimated at $7.5 billion, according to Forbes, tweeted a number of images of his resplendent $400 million superyacht, Rising Sun, apparently adrift off the coast of the Grenadines, a chain of small Caribbean islands in the lesser Antilles, about 2,085 miles south of New York, which has emerged as the epicenter of the U.S. coronavirus outbreak.
“Sunset, last night,…isolated in the Grenadines avoiding the virus,” read the tweet, associated with Geffen’s verified Twitter handle.
“I’m hoping everybody is staying safe,” added the founder of the Geffen record label and a co-founder of DreamWorks SKG with fellow moguls Steven Spielberg and Jeffrey Katzenberg.
At last check, Saturday afternoon, there were some 105,470 confirmed cases of the deadly pathogen COVID-19 in the U.S., making the country by far the hottest spot on the globe for the infection that was first identified in Wuhan, China, in December. The contagion has now sickened more than 600,000 people and killed more than 28,000 worldwide, according to data compiled by Johns Hopkins University.
In New York state and city, citizens are bracing for an explosion of cases in the coming weeks that are likely to overwhelm city and state health-care systems.
More than a third of the U.S.’s cases are in the Empire State, which has been on lockdown — limiting the movement of citizens and business activity — for weeks.
On Friday, President Donald Trump signed into law a roughly $2 trillion stimulus package, hours after lawmakers in the House of Representatives hustled back to the Capitol to pass the legislation intended to help millions of Americans and businesses deal with the crisis.
The Wall Street Journal described the relief package as the largest in U.S. history and some experts speculate that it won’t be enough as businesses remain fallow for weeks and workers are furloughed indefinitely.
Geffen was born in Brooklyn, and he owns expensive pads in Manhattan and California, which is also under a statewide lockdown in its attempt to mitigate the spread of the viral outbreak.
The self-made billionaire doesn’t owe the rest of the world anything, presumably, but his tweets and tone may underscore the yawning chasm between how the 1% can cope with isolation amid a pandemic that has deeply altered the normal patterns of society — perhaps, permanently.
A recent New York Times article published on March 5 highlighted the lifestyles of the rich and famous amid the pandemic, which featured the likes of Gwyneth Paltrow en route to Paris Fashion Week wearing a pricey black face mask, while many health-care workers are struggling to obtain lifesaving masks for their jobs.
“The rich are sparing no expense when it comes to minimizing their experience with the coronavirus,” the Times story observed.
The Guardian wrote that the wealthy are taking to private jets to escape the virus, while other affluent folk are fleeing to places like the Hamptons and Cape Cod, taking refuge in their posh summer homes or ensconcing themselves in luxurious rental properties, Barron’s Penta reports.
The expanding distance between the haves and the have-nots, however, isn’t sitting well with many. There were nearly 10,000 (and growing) responses to Geffen’s tweet and few, if any, were laudatory.
Can billionaires do more? Should they? Has music-label-founder Geffen been exhibiting tone-deafness on social media?
Those are questions for history to answer.
A March 9 article in the Atlantic suggested that wealthy investors are contributing funds, including the Bill and Melinda Gates Foundation and billionaire Michael Bloomberg’s charitable arm, which have donated money to help address the coronavirus pandemic. Still, in confronting one of the bigger challenges to have faced our globalized society, barring climate change, perhaps ever, ought not the wealthiest Americans, and other 1%-ers the world over, behave more proactively rather than hiding, or sailing, away?
“I do think that capital could play a role in helping some of this production. That is where they could come in,” Andrew Stettner, a senior fellow who studies manufacturing at the Century Foundation, a progressive think tank, was quoted by the Atlantic as having said.
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