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US: Yellen Sees Full Employment Next Year

Biden’s $1.9 trillion relief plan could generate enough growth

Treasury Secretary Janet Yellen said Sunday the country was still in a “deep hole” with millions of lost jobs but that President Joe Biden’s $1.9 trillion relief plan could generate enough growth to restore full employment by next year. Republican senators argued that Biden’s proposal was too expensive and they cited criticism from Larry Summers, a treasury secretary under President Bill Clinton, that passage of the measure could run the risk of triggering runaway inflation. Summers also contended that Biden’s plan would make less money available for other initiatives such as improving the nation’s infrastructure.

Yellen, a former Federal Reserve chair who is the first woman to lead the Treasury Department, said the central bank had the tools to handle any potential inflationary threat. She said the urgent need now is to deal with the problems raised by the pandemic-induced recession: joblessness, lost small businesses and reopening schools.

A look at Biden’s first executive orders in office

In his first official acts as president, Joe Biden is signing executives orders on a broad range of issues, from the coronavirus pandemic to climate change and immigration, to fulfill campaign promises. Biden is requiring the use of masks and social distancing in all federal buildings, on federal lands and by federal employees and contractors. Consistently masking up is a practice that science has shown to be effective in preventing the spread of the coronavirus, particularly when social distancing is difficult to maintain. He is challenging all Americans to wear a mask for the first 100 days of his administration. That’s a critical period, since communities will still be vulnerable to the virus even as the pace of vaccination increases in pursuit of Biden’s goal of 100 million shots in 100 days.
Biden also is directing the government to rejoin the World Health Organization, which Donald Trump withdrew from earlier this year after accusing it of incompetence and bowing to Chinese pressure over the coronavirus. Symbolizing Biden’s commitment to a more prominent global role, White House coronavirus coordinator Jeff Zients announced that Dr. Anthony Fauci will deliver a speech Thursday to the WHO as head of a U.S. delegation. Fauci, the government’s top infectious disease expert, will lay out how the administration intends to work with the WHO on reforms, supporting the coronavirus response and promoting global health and health security

Biden will sign an executive orders to rejoin the Paris climate accord, fulfilling a campaign pledge to get back into the global climate pact on Day One. Trump, a supporter of oil, gas and coal, had made a first priority of pulling out of global efforts to cut climate-damaging fossil fuel emissions. It will take 30 days for the U.S. to officially be back in.

Ending ban on Muslim travelers: Biden is ending what is variously known as the “travel ban” or the “Muslim ban,” one of the first acts of the Trump administration. Trump in January 2017 banned foreign nationals from seven mostly Muslim countries from entry into the country. After a lengthy court fight, a watered-down version of the rule was upheld by the Supreme Court in a 5-4 decision in 2018. The new administration says it will improve the screening of visitors by strengthening information sharing with foreign governments and other measures.

Biden is immediately ending the national emergency that Trump declared on the border in February 2018 to divert billions of dollars from the Defense Department to wall construction. He also is halting construction to review contracts and how wall money might be redirected. Despite Trump’s repeated promises that Mexico would pay for the wall, U.S. Customs and Border Protection says Americans have committed $15 billion for more than 700 miles (1,120 kilometers). It is unclear how many miles are under contract and what penalties the government would have to pay for canceling them. The Supreme Court has scheduled arguments Feb. 22 on the legality of Trump’s diverting Defense Department funds for counter-narcotics efforts and military construction projects to wall construction.

Biden will order his Cabinet to work to preserve the Deferred Action for Childhood Arrivals program, which has shielded hundreds of thousands of people who came to the country as young children from deportation since it was introduced in 2012.  Trump ordered an end to DACA in 2017, triggering a legal challenge that ended in June when the Supreme Court ruled that it should be kept in place because the Trump administration failed to follow federal rule-making guidelines in undoing it. But DACA is still facing legal challenges.

In his presidential proclamation, Biden is calling on Congress to adopt legislation that gives DACA recipients permanent legal status and a path to citizenship. There are currently about 700,000 people enrolled. Biden is revoking one of Trump’s first executive orders, which declared that all of the roughly 11 million people in the country illegally are considered priorities for deportation. The Department of Homeland Security will conduct a review of enforcement priorities. Biden’s campaign site says deportations will focus on national security and public safety threats. The order says nothing about a 100-day moratorium on deportations that Biden promised during the campaign. Susan Rice, who is tapped to run the White House Domestic Policy Council, says any decision on moratoriums would come from Homeland Security.

Biden is reversing a Trump plan to exclude people in the country illegally from being counted in the 2020 Census. The once-a-decade census is used to determine how many congressional seats and Electoral College votes each state gets, as well as the distribution of $1.5 trillion in federal spending each year. Biden’s team says the new administration will ensure the Census Bureau has time to complete an accurate count for each state and that the apportionment is “fair and accurate.” Biden is also proposing legislation that would grant green cards and a path to citizenship to anyone in the United States before Jan. 1, 2021, an estimated 11 million people. Most would have to wait eight years for citizenship but people enrolled in the Deferred Action for Childhood Arrivals program for young immigrants and with Temporary Protective Status for fleeing strife-torn countries would only wait three years. Other provisions lessen the time that many people have to wait outside the United States for green cards, provide development aid to Central America and reduce the 1.2-million-case backlog in immigration courts.

Biden is asking the Education Department to extend a pause on federal student loan payments through at least Sept. 30, continuing a moratorium that began early in the pandemic but was set to expire at the end of January. Borrowers, who owe a collective $1.5 trillion, would not be required to make payments on their federal student loans, their loans would not accrue any interest, and all debt collection activity would halt through September. Congress paused student debt payments last March as part of a virus relief package, and the Trump administration extended it twice.
Biden’s order does not include the type of mass debt cancellation that some Democrats asked him to orchestrate through executive action. He has said that action should come from Congress.Housing foreclosures and evictions would be delayed until at least March 31, 2021. Almost 12 percent of homeowners with mortgages are, while 19 percent of renters are behind, according to a Census Bureau survey of households. The federal moratoriums would ensure that people could stay in their homes even if they cannot afford their monthly bills. Biden is also calling on Congress to extend assistance to renters. While the moratoriums have aided several million Americans during the pandemic and helped to contain the disease, they have also meant that billions of dollars in housing costs have gone unpaid.

https://www.pbs.org/

New fiscal support will set up an economic boom in the second half of 2021

 300,000 jobs per month created

Fiscal support will bolster US consumers and lead to an economic boom in the second half of 2021, according to a team of Evercore analysts led by Dennis DeBusschere.

“Despite what angry twitter folks and some news outlets are suggesting, the current fiscal package is large enough to make a significant difference for individuals,” the analysts said in a note to clients on Thursday.

The current proposed fiscal package will be roughly 3.5% of GDP in the first quarter, and could potentially add up to 300,000 jobs per month, Evercore said. This could occur even if direct payments to individuals are only $600, but Evercore predicts that amount will increase before a bill is passed.

https://markets.businessinsider.com/

$900 billion stimulus package in US

Jobless benefits, aid to small businesses, stimulus checks and money for vaccine distribution

Congressional leaders brokered a deal on an approximately $900 billion relief bill Sunday night, with lawmakers rushing for a vote as soon as possible.

The bill extends aid to millions of struggling households through stimulus checks, enhanced federal unemployment benefits and money for small businesses, schools and child care, as well as for vaccine distribution. It also repurposes $429 billion in unused funds provided by the Cares Act for emergency lending programs run by the Federal Reserve.

The bill comes at a critical time for the recovery as the coronavirus pandemic is overwhelming the nation’s health-care system and scores of Americans were set to lose federal aid by the end of the year. Bill text released Monday afternoon, as well as earlier reporting by The Washington Post, breaks down what’s in and what’s out of the bill.

https://www.washingtonpost.com/

The potential impact of Brexit without a trade deal

Financial markets to tumble and huge economic costs

Britain and the European Union are seeking a post-Brexit trade deal, with failure likely to result in increased chaos in mutual trade, financial markets tumbling and huge economic costs. Here are some of the potential pressure points of a failure to reach agreement on trade.

Investors and banks have long predicted a trade deal would be done, so a no-deal would hit the British pound, foreign exchange traders say. But investor sentiment was hit by the sides saying on Saturday that there was still no agreement covering annual trade worth nearly $1 trillion, and sterling has fallen against the U.S. dollar since then. The shock result of Britain’s referendum on leaving the EU in 2016 sent the pound down 8% against the dollar, its biggest one-day fall since the era of free-floating exchange rates began in the 1970s.

In the case of a “no deal” on trade , Britain would lose zero-tariff and zero-quota access to the European single market of 450 million consumers overnight. Britain would default to World Trade Organization (WTO) terms in its trade with the 27-state bloc. It would impose its new UK global tariff (UKGT) on EU imports while the EU would impose its common external tariff on UK imports. Non-tariff barriers could hinder trade, with prices widely expected to rise for British consumers and businesses

Borders risk disruption, especially the main crossing points, with experts saying shortages of certain foods are possible in Britain as it imports 60% of its fresh food, with disruptions in British lamb exports to the EU also possible. Any disruption would be felt most keenly by sectors that rely on just-in-time supply chains, including autos, food and beverages. Other sectors likely to be affected would include textiles, pharmaceuticals, and chemical and petroleum products.

https://fr.reuters.com/

Elizabeth Warren To Joe Biden: Cancel Student Loans

Donald Trump support ending the Public Service Loan Forgiveness program

Sen. Elizabeth Warren (D-MA) tweeted today that President Elect Joe Biden and Vice President Elect Kamal Harris can cancel “billions of dollars of student loan debt.” According to Warren’s tweet, student loan forgiveness would be the most effective option for an economic stimulus: Biden-Harris can cancel billions of dollars in student loan debt, giving tens of millions of Americans an immediate financial boost and helping to close the racial wealth gap. This is the single most effective executive action available for massive economic stimulus.”

Warren, and Sen. Bernie Sanders (I-VT) championed student loan forgiveness on the presidential campaign trail. Sanders advocated for a full cancellation of student loan debt. For example, Sanders proposed that the federal government forgive all $1.6 trillion of student loans, including both private and federal student loans. Warren proposed student loan forgiveness for 95% of Americans and would have capped student loan forgiveness based on income. Both Sanders and Warren also support continuation of the Public Service Loan Forgiveness program—a federal program that forgives federal student loans for borrowers who work full-time for a qualified non-profit or public service employer.

In contrast, President Donald Trump and U.S. Secretary of Education Betsy DeVos support ending the Public Service Loan Forgiveness program. Trump and DeVos support student loan forgiveness through income-driven repayment plans, which are available for borrowers to repay federal student loans. However, they do not support a separate student loan forgiveness plan only for public servants.

https://www.forbes.com/

Uber and Lyft drivers to remain independent contractors

California voters approve Prop. 22

Californians sided with the $200-million Proposition 22 campaign led by Uber and Lyft, voting to pass the measure and grant ride-hail and delivery companies an exemption from California employment law to continue treating workers as independent contractors.

The fight was one of the most closely watched ballot measure contests in the country and the costliest in state history. A win for the app-based companies has the potential to create a new campaign paradigm, with companies sidestepping government and spending large sums of money to sway voters with traditional advertisements and more unconventional direct marketing to customers. The measure’s passage also deals a blow to California’s powerful labor unions, underdogs in the race with far fewer financial resources than their foes.

https://www.latimes.com/

 

U.S. Jobless Rate Set to Return to Single Digits

Two months before the U.S. election

America’s labor market probably extended its rebound in August to push the unemployment rate below 10% for the first time since the pandemic struck. With little more than two months before the U.S. election, reattaining that milestone in this week’s jobs report could provide ammunition for President Donald Trump to claim the economy is sustaining a recovery under his leadership. His Democratic opponents, led by Joe Biden, are likely to question whether such improvement can durably continue as America struggles to control the coronavirus.

U.S. employers projected to have added another 1.4 million jobs in August

https://www.bloomberg.com/

Paul Krugman: “Stocks Are Soaring. So Is Misery.”

“Optimism about Apple’s future profits won’t pay this month’s rent”

“On Tuesday, the S&P 500 stock index hit a record high. The next day, Apple became the first U.S. company in history to be valued at more than $2 trillion. Donald Trump is, of course, touting the stock market as proof that the economy has recovered from the coronavirus; too bad about those 173,000 dead Americans, but as he says, “It is what it is.”

But the economy probably doesn’t feel so great to the millions of workers who still haven’t gotten their jobs back and who have just seen their unemployment benefits slashed. The $600 a week supplemental benefit enacted in March has expired, and Trump’s purported replacement is basically a sick joke.

Even before the aid cutoff, the number of parents reporting that they were having trouble giving their children enough to eat was rising rapidly. That number will surely soar in the next few weeks. And we’re also about to see a huge wave of evictions, both because families are no longer getting the money they need to pay rent and because a temporary ban on evictions, like supplemental unemployment benefits, has just expired” (Extract from an Op-ed written by The Nobel Prize Paul Krugman in the New-York Times).

https://www.nytimes.com/

5% of Nordic citizens wear face coverings in public

 The rest of Europe orders their use

The Nordic nations are continuing to hold out against face masks even as most of the world either orders or recommends their use.  Masks are a rare sight in supermarkets, on buses and along the streets in Stockholm, Copenhagen, Oslo, Helsinki and Reykjavik, and most who do wear them are tourists.

According to a recent survey by YouGov, only five to 10 per cent of respondents in the Nordic countries said they used a mask in public settings, a figure that has remained stable since the start of the crisis in March. At the same time, the corresponding figures have risen to between 70 and 80 per cent for most of the other 20 countries polled, including India and the United States.

https://www.dailymail.co.uk/

IMF Projects 5% Global Economic Decline in 2020

The dire outlook is worse than the IMF’s last forecast in April

Global economic growth will decline nearly 5% this year, International Monetary Fund officials announced on Wednesday, a much grimmer forecast than their last projections in April as the coronavirus pandemic triggers the world’s worst recession since the Great Depression.

The IMF’s latest dire World Economic Outlook update is nearly 2 percentage points worse than its last forecast in April, representing a slower-than-expected global recovery. The organization also downgraded its 2021 growth projections from 5.8% to 5.4%, which would leave global gross domestic product next year about 6.5 percentage points lower than pre-pandemic projections from January.

https://www.usnews.com/

V-shaped recovery or not?

The three months to June is set to be one of the best quarters for the S&P in 45 years

Global stocks resumed their march higher on Tuesday as investors took heart that better-than-expected surveys on business sentiment indicated companies were emerging from the worst of the global lockdowns. Equity, bond and currency markets shrugged off early concerns that a planned trade deal between the US and China was in doubt. The S&P 500 index closed up 0.4 per cent and the tech-heavy Nasdaq Composite was 0.7 per cent higher, closing for a fresh all-time high.

The moves extended a rally that began in March, driven in part by central banks’ aggressive plans to stimulate the economy. The three months to June is set to be one of the best quarters for the S&P in 45 years, according to Bespoke Investment Group, a New York analysis company. European stocks had their best day in a week, as the regional Stoxx 600 index rose 1.3 per cent. Germany’s Dax was the best performer, gaining 2.2 per cent.

Surveys of business executives in Europe’s three largest economies suggested they were markedly more upbeat in June than in the previous months. So-called purchasing managers’ indices, surveys of business confidence, across Europe were better than forecasts but most businesses were reporting a contraction in activity compared to the previous month.

https://www.ft.com/

Amazon, Google, Twitter, speak out against Trump H-1B visa freeze

Work visas H-1B widely used in the IT industry

The tech giants of the world are not pleased with Donald Trump’s decision to suspend all foreign work visas including H-1B, widely used in the IT industry, till the end of the year.

Hours after the proclamation was issued by the US President, Google CEO Sundar Pichai took to Twitter to express his disappointment.

The India-born tech head stressed on the importance of immigration and how it has contributed to America’s economic success. “Disappointed by today’s proclamation – we’ll continue to stand with immigrants and work to expand opportunity for all,” he wrote.

https://economictimes.indiatimes.com/

 

Just Eat Takeaway to Acquire Grubhub for $7.3 Billion

A foothold in the United States

Just Eat Takeaway, a European food delivery service, said on Wednesday that it had agreed to buy Grubhub for $7.3 billion, a deal that would give it a foothold in the United States.

In the all-stock deal, Just Eat Takeaway said it would value Grubhub at $75.15 per share, a 27 percent premium to Grubhub’s closing price of $59.05. Grubhub’s founder and chief executive, Matt Maloney, will join Just Eat Takeaway’s board and oversee its business in North America, the companies said.

http://www.nytimes.com

U.S. layoffs ease in April

Hiring slumps to record low

Layoffs in the United States fell in April, but remained the second highest on record, while hiring hit an all-time low, suggesting the labor market could take years to recover from the COVID-19 crisis despite a surprise rebound in employment in May. The report from the Labor Department on Tuesday also showed a decline in job openings as the economy battles a recession triggered by the pandemic. The National Bureau of Economic Research, the arbiter of U.S. recessions, declared on Monday that the economy slipped into recession in February.

The monthly Job Openings and Labor Turnover Survey, or JOLTS, showed layoffs and discharges dropped 3.8 million in April to 7.7 million. That was second highest level since the government started tracking the series in 2000.

Prior to the pandemic, layoffs hovered around 1.8 million. They are nearly three times the worst month of the Great Recession. The layoffs and discharge rate fell to 5.9% in April from a record high 7.6% in March.

https://www.reuters.com/