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$1 Trillion Stimulus
The Trump administration backed a plan to send checks directly to Americans as part of a $1 trillion stimulus package to help households and businesses, a dramatic step designed to cushion the economy from a sudden slowdown. Treasury Secretary Steven Mnuchin pitched Senate Republicans on a plan that would include an initial $250 billion for direct payments, part of a wide-ranging fiscal and monetary effort, Andrew Restuccia, Andrew Duehren and Lindsay Wise report.
All of government stepped up its response. The Federal Reserve said it would start making loans to American corporations, the Pentagon said it would provide up to five million respirator masks to safeguard front-line responders, while the Treasury Department said it wouldn’t penalize late tax payments by many Americans.
Mr. Mnuchin told GOP senators that the unemployment rate, which was at 3.5% in February, could potentially climb as high as 20% absent any intervention by policy makers to safeguard the U.S. economy.
WHAT TO WATCH TODAY
U.S. housing starts for February are expected to fall to an annual pace of 1.49 million from 1.567 million a month earlier. (8:30 a.m. ET)
President Trump’s schedule focuses on the federal coronavirus response, including a 10 a.m. ET call with airline executives, a Business Roundtable teleconference at 10:45 a.m., a 1:30 p.m. call with physicians and a 3:30 p.m. briefing with nurses.
The White House coronavirus task force holds a press briefing at 11:30 a.m. ET.
Japan’s consumer-price index for February is out at 7:30 p.m. ET.
Please note, this isn’t a comprehensive list and, especially given the fast-moving nature events right now, is more subject to change than usual. Follow our live coverage here.
The coronavirus pandemic is devastating global travel, causing business to evaporate and forcing companies to slash payroll. Longer term, the crisis could permanently reshape attitudes toward travel, fundamentally changing the landscape for hotels, airlines and cruise companies, and the millions of smaller businesses that make up the industry. In the U.S. alone, hundreds of hotels are preparing to shut down this week, and cruise ships and jets are idled, Craig Karmin, Katherine Sayre and Costas Paris report.
Marriott International, the world’s largest hotel company with nearly 1.4 million rooms world-wide, said it is starting to furlough what it expects will be tens of thousands of employees as it ramps up hotel closings across the globe. The U.S. hotel industry has asked the Trump administration for a $150 billion bailout.
Nevada Gov. Steve Sisolak ordered the temporary closure of casinos and other nonessential businesses amid the coronavirus spread.
United Airlines is grounding half its planes, and expects the ones that fly will be just a quarter full. U.S. air carriers are in talks with the Trump administration to secure $50 billion in aid.
Boeing said it was seeking at least $60 billion to aid the U.S. aerospace industry.
The U.S. Travel Association projected total spending on travel in the U.S., including transportation, lodging, retail, attractions and restaurants, would plunge by $355 billion for the year—and that 4.6 million American jobs would be lost.
One challenge for politicians: Saving the economy without unleashing the backlash that accompanied the last such rescue operation in 2008. Economists and policy makers say the massive bank and auto bailouts of that time were vital in preventing the Great Financial Crisis from turning into a 21st century Great Depression. But the moves also stoked public anger over taxpayer funds helping companies and their executives at a time of mass unemployment and widespread hardship. Already there are signs of popular agitation over some likely moves, especially regarding the airline industry. Some critics say the airlines symbolize flaws in the modern American economy: the rising concentration of economic power in a handful of businesses, and executives ostensibly favoring shareholders over workers and other stakeholders by using their cash to buy back stock and boost its price, Jacob M. Schlesinger and Jon Hilsenrath write.
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Hear more from reporter Jon Hilsenrath on today’s What’s News podcast.
Ready or Not
State unemployment insurance systems across the U.S. aren’t ready for a likely surge in worker claims. States, which administer unemployment insurance programs, rely on employer taxes for trust-fund money that they use to pay unemployment benefits. Despite a historically long economic expansion, 22 states and jurisdictions’ unemployment trust funds—including heavyweights California, Texas and New York—are unprepared to pay out enough in unemployment benefits in the event of a recession, Sarah Chaney and David Harrison report.
Already, several state unemployment-benefits sites are malfunctioning amid a rise in claims from Americans who are out of work because of the novel coronavirus. New York, Oregon and Kentucky are among the states whose websites to register for unemployment benefits have experienced problems this week tied to unusually high traffic. Kentucky normally processes 2,000 jobless claims a week but received more than 9,000 claims on Tuesday alone. Jobless claims are a proxy for layoffs, Sarah Chaney and Amara Omeokwe report.
Real Time Data
Official government data isn’t yet capturing the full economic fallout from the coronavirus. What is private-sector data telling us? City street traffic and subway ridership around the country plummeted last week as people hunkered down to wait out the pandemic. Rush-hour congestion in some hard-hit cities like Seattle and Boston was down by almost half on some days last week, David Harrison reports.
Nationwide spending on ride-hailing services Uber and Lyft has plunged.
Job openings posted on employment and recruiting site Glassdoor were increasing during the first two months of the year. They started falling at the beginning of March, economist Daniel Zhao found. Travel and tourism has been especially hard hit, with postings in the week ending March 13 down 17.7% from the prior week. Transportation and logistics openings jumped 12.9%, underscoring strong demand for online shopping.
WHAT ELSE WE’RE READING
A recession is likely. What should Congress do? “Considering the difficulty of identifying the truly needy and the problems inherent in trying to do so, sending every American a $1000 check asap would be a good start. A payroll tax cut makes little sense in this circumstance, because it does nothing for those who can’t work. There are times to worry about the growing government debt. This is not one of them,” Greg Mankiw, a Harvard professor and former adviser to President George W. Bush, writes at his blog.
More advice for lawmakers as consumers pull back to avoid catching or spreading the coronavirus: “The proper fiscal policy response in this situation is not necessarily to try to replace or stimulate that demand, given that the fall in demand is a natural byproduct of the caution,” St. Louis Fed economist Bill Dupor writes. Instead, fiscal stimulus should incentivize people to follow the recommendations from health authorities—essentially to stay home. That could include boosting unemployment benefits, subsidizing COBRA health-insurance premiums, direct payments to individuals, sending money to state governments and penalty-free withdrawals from IRAs.
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