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Markets swell as the economy shrinks
The economy is sputtering, but the markets are thriving — a highly unusual event that shows how the coronavirus has thrown all bets off.
Why it matters: The disconnect adds to the wealth gap. The richest 10% of households — who own 84% of stocks — are getting richer, while millions of out-of-work Americans cross their fingers that pandemic unemployment benefits will be extended.
Driving the news: The equities markets closed Tuesday with their best quarterly performance since 1998 — the type of upswing that usually doesn’t happen when the economy is in as precarious shape as it is now.
- While the jobs numbers releasedThursday seemed like good news — 4.8 million jobs were created in June, and the unemployment rate fell to 11.1% — many of the newly employed were people returning to work at their pre-pandemic jobs.
- And, as Axios’ Felix Salmon points out, the number of “permanent job losers” actually rose 25% in just one month.
Where it stands: After plummeting in March when the World Health Organization declared the coronavirus outbreak a pandemic, the stock markets have been rising — somewhat unexpectedly — for a variety of reasons.
- The Federal Reserve stepped forwardwith aggressive actions to flood the markets with as much cash as possible.
- Congress passed extensive relief programs.
- Investors remain flush with cash and need somewhere to park it (and the bond markets offer meager returns).
- Expectations are that a COVID-19 vaccine will emerge, bringing things back to a new normal.
Yes, but: It’s (still) the economy that matters most.
- U.S. GDP plunged 5% in the first quarter, according to the Commerce Department, personal income decreased 4.2% in May, and consumer confidence — while higher in June than in March, April or May — is still well below pre-crisis levels.
- According to a YouGov/Economist survey, only 10% of Americans think the stock market is the best gauge of the nation’s economic health, while 37% say it’s the jobs report (which — in a welcome dash of very good news — came in far more positive than expected on Thursday).
- Roughly half of Americans own any stocks at all, whether directly or through 401(k)s or other vehicles.
President Trump has taken credit for the exuberant stock market and for what he describes as a burgeoning economy — despite the signs of economic shakiness.
- “Today’s announcement proves that our economy is roaring back,” Trump said on Friday after the June jobs numbers were released.
- “WOW. Record Growth in 2nd Quarter! Under Corrupt Joe Biden and his MASSIVE Tax and Regulation increases, Markets, and your 401k’s, will PLUNGE! Expect a Record 2021!” he tweeted on Wednesday.
Many people in the business world fear a Democratic victory would usher in policies that could dampen the market: wealth taxes, a rollback of corporate tax cuts, climate change mandates for utilities and energy companies.
- “The Democratic Party has a platform that is pretty much anti-growth, but those platforms can change,” Rich Sega, global chief investment strategist at the asset management firm Conning, tells Axios.
- “The stock market is looking toward the future. By next January, I think we could recover virtually everything that we’ve lost this year.”
Between the lines: While many experts say that we seem to be past the worst of the pandemic’s impact on the economy, rising case numbers throw everything into question.
- “The economy’s fate is inextricably linked to the path of the virus,” John C. Williams, head of the New York Federal Reserve, said in a speech this week. “A strong economic recovery depends on effective and sustained containment of COVID-19.”
- Heading into second-quarter earnings season, “Nearly 200 companies in the S&P 500 have withdrawn their customary forecasts for the year, according to FactSet, and half as many companies as usual are providing quarterly earnings guidance,” per the New York Times.
Thought bubble from Axios’ Felix Salmon: The S&P 500 and other big indices comprise the world’s biggest companies with massive balance sheets and easy access to all the liquidity they need. The virus has effectively wiped out their small-business competition, so the giants now have the field to themselves and get to carve it up among them.
What they’re saying: The disconnect between the economy and the stock markets is “extreme,” Vikram Mansharamani, a Harvard lecturer who specializes in financial bubbles and business disruption, tells Axios. “It really does remind me in many ways of 1999.”
- " Markets are not supposed to become inefficient," Mansharamani says. “This is not supposed to exist, according to some academics.”
Portfolio managers are taking the long term view, staying put with their money while they wait for a vaccine. “Everyone knows second-quarter earnings are going to be horrific,” Sam Hendel, president of Levin Easterly Partners, tells Axios. “I’m looking toward 2021 earnings already.”
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U.S. Initial Unemployment Claims Edge Lower in Latest Week
Employers added a combined 7.5 million jobs in May and June after shedding 21 million jobs in March and April, separate Labor Department data showed.
Claims fell in most states last week, including California and Florida, on a non-seasonally-adjusted basis, the Labor Department said. Claims did rise by 20,000 in Texas, 18,700 in New Jersey and by nearly 10,000 in Louisiana.
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Ivanka Trump’s latest economic plan displays a new level of chutzpah.
Suggesting people simply find new jobs during an unprecedented economic crisis is a new level of chutzpah.
Are you one of the millions of Americans who’ve lost their job during this unprecedented public health and economic crisis?
Maybe you’re one of the 5.4 million people who no longer has health insurance because you lost employer-provided health care.
Perhaps you’re getting by on expanded unemployment insurance benefits, but stressed because the payments are scheduled to end this month ― and Congress shows little appetite to re-up. Or maybe you’re weighing the health risks of returning to work. Or you’re worried that when the eviction moratorium runs out this month, you might be homeless.
Maybe you’re one of the millions of families struggling to afford food for yourself and for your children?
Well: Have you considered becoming a wind turbine technician?
This is one of several career suggestions from the White House, along with aerospace engineering and operations technician, broadcast and sound engineering technician, computer support specialist, and contact tracer. At a moment of unprecedented economic crisis, with an unemployment rate of 11.1% because of a once-in-a-century pandemic, their latest idea is: Learn a new skill.
On Tuesday, Ivanka Trump ― the 38-year-old daughter of a wealthy man who has never once had to worry about finding the money to pay a bill ― proudly announced an ad campaign called “Find Something New,” which encourages people to get new jobs by learning new skills.
If you visit FindSomethingNew.org, the website created for this effort, you will find a very short list of jobs that are actually growing right now, according to the Labor Department.
One such job is contact tracer, to deal with the worsening spread of the virus that has basically set our economy on fire. Other jobs, like registered nurse, require a serious investment in education ― hard to pull off in a pandemic when schools are shuttered and you might not have the resources to pay tuition. Or when you need work to keep your health insurance and can’t simply go back to school.
Trump cooked up this plan through her role as co-chair of the White House’s American Workforce Policy Advisory Board, created by President Donald Trump in 2018. The board’s other co-chair is Commerce Secretary Wilbur Ross, a multimillionaire who had his own “let them eat cake” moment during the federal shutdown last year, when he expressed confusion over why workers who weren’t getting paid would need to use food pantries.
A bunch of CEOs are on the advisory board, including Tim Cook of Apple and Doug McMillon of Walmart.
Even for this White House, this is a new level of chutzpah. Certainly it’s further evidence that Ivanka Trump profoundly does not understand women’s economic issues ― despite her Lady Boss rhetoric.
It’s also maybe the most extreme example of a certain conservative line of economic thinking, which views all economic crises as problems to be solved at the individual level, rather than through policy. Just pull up those bootstraps, folks!
That’s never really worked out before. These people were arguing about “re-skilling” during the slow recovery from the Great Recession, too, said Heidi Shierholz, director of policy at the progressive Economic Policy Institute and a former chief economist for the U.S. Department of Labor.
In the end, she said, the unemployment rate fell to a historic low without a big “learn to code” revolution. (Some Democrats also go to the well on upskilling, though their rhetoric is usually paired with social programs.)
“Those claims were wrong back then,” Shierholz said. “It’s more blatantly wrong now.”
The argument is even more absurd in this moment because we are not seeing record unemployment due to a skills crisis. We’re in a public health emergency.
Put simply, the reason people don’t have jobs is that businesses shut their doors to help stop the spread of a virus. Then some reopened. Then, the virus got worse and businesses shuttered again. Other businesses are firing people because they’re not selling enough stuff, since it’s a pandemic and Americans are wary of doing a lot of things outside the home.
Other people are out of work ― particularly women ― because their children are home all the time and they need to care for them. They can’t train to work in elevator installation and repair right now (one of the jobs on Ivanka’s list), because they can’t send their kids to day care or summer camp, and soon enough they’ll be home-schooling them.
Millions of others are sick, and cannot work.
What’s most disheartening is that the campaign is coming from the White House, which actually has the power to help unemployed people on a widespread scale.
“This is just terrible economics. It’s absolutely offensive,” Shierholz said. “You have actual power to influence policy that could really make a difference in working people’s lives. To come up with this, which will not, is just a slap in the face.”
“It just shows such a lack of understanding about running a government,” she added.
The advisory board that Ivanka Trump sits on was created in 2018, when unemployment was low and a push to help people learn new skills made some sense. The Find Something New campaign was created by the Ad Council, a nonprofit that works on marketing campaigns for social issues.
Here’s the core problem with trying to solve a huge macroeconomic problem on a person-by-person basis: At an individual level, it makes sense to try and learn a new skill to get work. For example, a reporter who loses their job at a newspaper could find work in, say, digital content production. Others could go back to school and become lawyers or nurses. Someone who lost their job at a bar or restaurant can get work at an Amazon warehouse or grocery store, sure.
But on a national scale, the strategy is flawed because it doesn’t do anything about the actual number of jobs available. If everyone goes out and learns new skills at the urging of Ross and Trump, you’ll simply have a bunch of unemployed workers with new skills.
All the new openings at Instacart and Uber Eats won’t employ all the out-of-work service workers in the U.S.
And though the jobs on the list are growing, there certainly won’t be enough growth to absorb all the displaced workers out there. Take wind turbine technicians. That occupation is expected to see 57% growth, according to data from the U.S. Bureau of Labor Statistics. But that only means an additional 3,800 new jobs between 2018 and 2028.
There aren’t enough jobs for the people who need them. Period. Re-skilling is sort of like playing musical chairs: People are racing to grab a job and sit down, and not everyone will get a seat.
What the government should be doing is encouraging demand ― making sure people have money, so they can spend it on stuff. The more stuff they buy, the more businesses will benefit, and thus jobs are created.
Right now, the government can encourage demand by making sure people keep getting unemployment insurance ― and by giving financial help to badly ailing state and local governments, which need the money because there is a huge public health emergency and they need to do things like safely reopen schools.
The answer doesn’t lie in giving people information about community college programs.
There is a kernel of reality somewhere in this Find Something New effort, however. If the pandemic goes on much longer, without any kind of real treatment or vaccine, it’s quite possible the U.S. economy will be very different for the long term.
The jobs in this new COVID economy might be different than before. Workers will need to adapt. There simply won’t be as many openings for bartenders, service workers, or retail workers who work in places most at risk for spreading the disease.
Instead, we would need an army of contact tracers, and a huge influx of child care workers and teachers to handle a greatly revamped education system, retooled for a pandemic.
But the way to create those jobs is not going to come from the private sector, Shierholz points out. You could imagine a huge federal push to hire for this kind of work.
“This approach,” she said, “is not it.”
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Cross posting 
and also YIKES! 
FYI, guys the CARES act benefits end July 31st. What happens to all these people?
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Trump’s Hot-Button Fed Pick Faces Senate Committee Vote This Week
Judy Shelton, a nominee for the powerful Federal Reserve Board who has unorthodox economic views, could advance to the full Senate.
WASHINGTON — Judy Shelton, an unorthodox economist who was an adviser to President Trump’s 2016 campaign, could move one step closer to a seat on the Federal Reserve’s Board of Governors this week.
While her fate is far from guaranteed, the Senate Banking Committee is expected to approve Ms. Shelton’s nomination on Tuesday, putting her one simple-majority vote in the full Senate away from confirmation at a moment when the central bank is employing vast powers that she has a track record of questioning.
Opponents of Ms. Shelton’s nomination say confirming her would place the Fed at risk of politicization while it tried to rescue the pandemic-hit economy. Democrats on the committee have called for a second confirmation hearing in light of the crisis so that they can get her views on the current response.
While her nomination seemed shaky in the wake of her mid-February Banking Committee hearing, Republican opposition has slowly crumbled. Senators Patrick J. Toomey of Pennsylvania, Richard C. Shelby of Alabama and John Kennedy of Louisiana were initially skeptical. Mr. Toomey has since said she allayed his concerns, and Mr. Shelby has said he will go along with his Republican colleagues. While Mr. Kennedy has not publicly made up his mind, many analysts saw the scheduling of the vote as a sign of his likely support.
Ms. Shelton’s bid can advance to the full Senate without any support from the 12 Democrats on the committee so long as all 13 Republicans back her. Her nomination will come to a vote alongside Christopher Waller’s. Mr. Waller, the research director at the Federal Reserve Bank of St. Louis, was also nominated by Mr. Trump to the seven-seat Fed board. Mr. Waller, a more traditional nominee, is expected to clear the committee easily.
Ms. Shelton has become the focus of criticism in part because she flip-flopped on key policy positions after Mr. Trump was elected, moving quickly from supporting higher interest rates to favoring lower ones, in line with the president’s view. She has also questioned the basis of central bank independence.
While nominees with close political ties have landed on the Fed board before, Ms. Shelton faces enhanced scrutiny given widespread speculation that Mr. Trump may try to promote her to Fed chair when Jerome H. Powell’s term expires in early 2022.
Ms. Shelton also has a long record of supporting a return to the gold standard, which mainstream economists see as a nonstarter because it would be so economically harmful. She recently backed partly away from that position.
Sarah Bloom Raskin, a former Fed governor and top Treasury official, said in an email: “The economic moment right now is too precarious to be rolling the dice on a person who has not wrestled with the current challenges of managing an economy that has been shocked by a pandemic, and whose views have not been fully articulated or reconciled with prior views.”
Ms. Shelton has at times questioned the Fed’s basic functions.
In an opinion piece written for The Wall Street Journal in the middle of the 2008 financial crisis, she criticized the practice of allowing interest rates “to be fixed by a central committee in accordance with government objectives.”
“We might as well resurrect Gosplan, the old Soviet State Planning Committee, and ask them to draw up the next five-year plan,” she continued. Months later, in early 2009, she led a column with the sentence: “Let’s go back to the gold standard.”
At her Senate committee hearing in February, Ms. Shelton said that she “would not advocate” going back to a “prior historical monetary arrangement.” She said that she had looked at historical monetary systems for valuable insights, but that “money only ever moves forward.”
She said, however, that having a “stable, level, international monetary playing field” would support free trade.
Ms. Shelton was previously confirmed as the United States director of the European Bank for Reconstruction and Development, though she regularly missed the overseas meetings for the international body. She said during her February hearing that she had done so because she had been in Washington for other meetings.
Ms. Shelton’s supporters say she would add intellectual diversity to the Fed, with some implying that she might lean against growth in the central bank’s balance sheet — which has expanded as the Fed buys securities and rolls out credit programs to keep markets calm. While she has kept a low profile since the February hearing, Ms. Shelton has occasionally posted comments on Twitter, including on the importance of price stability and on issues related to cryptocurrency.
One question that analysts are pondering is what version of Ms. Shelton will show up for work at the Fed if she gets the job: A gold standard proponent, or not? A supporter of low rates, as she has been during Mr. Trump’s administration, or an inflation hawk?
“It leaves open the question of what exactly she’d be like on the Fed,” said Sarah Binder, a Brookings Institution senior fellow who has written a book on the politics of the central bank. She pointed out that Ms. Shelton’s out-of-the-mainstream ideas were likely to find little purchase among her colleagues, and that individual governors couldn’t make much of an impact on their own.
“You can really imagine her tilting at windmills,” Ms. Binder said.
The question of whether Ms. Shelton would become Fed chair-in-waiting seems to be key. Mr. Trump spent 2018 and 2019 publicly criticizing Mr. Powell, though those critiques have tapered off during the current crisis. Should Mr. Trump win re-election, Ms. Shelton could be a potential replacement for Mr. Powell, since governors are often promoted to the leading position.
“She could do real damage all on her own as chair,” said David Wilcox, a former research director at the Fed.
He also said he worried that she might get in the way of the coronavirus crisis response. “In the moment of crisis, there simply isn’t time to revisit ideas that have been consigned to the dustbin of history,” Mr. Wilcox said.
Ms. Shelton would fill a seat that formerly belonged to Janet L. Yellen; the unexpired term would be up for renewal in 2024. Mr. Waller would fill a seat formerly held by Ms. Bloom Raskin, with a term expiring in 2026.
While neither nominee would exert much influence as an independent governor, their confirmations would give Mr. Trump his handpicked choices for six of the board’s seven spots. Lael Brainard was appointed governor by President Barack Obama, and although Mr. Powell was named to the board by Mr. Obama, Mr. Trump elevated him to the chair.
That stocking of the Fed could also have significant implications for bank regulation, which tends to break more along party lines than does monetary policy. The Powell Fed has been tweaking the rules for the biggest banks around the edges to make them more industry friendly.
Ms. Shelton has a long history of pushing for limited regulation. In one 2009 interview, she blamed government intervention in mortgage markets, rather than bad behavior by banks, for the 2008 financial crisis.
Mr. Trump previously toyed with nominating Stephen Moore, one of his outside economic advisers, and Herman Cain, a former presidential candidate, to the Fed board, but decided not to after their past comments on and actions toward women came to light.
He had earlier nominated a former Fed official, Nellie Liang, to the job, but she faced opposition from the banking industry and eventually withdrew her name. Another nominee, Marvin Goodfriend, also failed to secure the votes necessary for confirmation.
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" On Tuesday, Ivanka Trump ― the 38-year-old daughter of a wealthy man who has never once had to worry about finding the money to pay a bill ― proudly announced an ad campaign called “Find Something New,” which encourages people to get new jobs by learning new skills.
If you visit FindSomethingNew.org, the website created for this effort, you will find a very short list of jobs that are actually growing right now, according to the Labor Department.
One such job is contact tracer, to deal with the worsening spread of the virus that has basically set our economy on fire."
This is ironic, isn’t it? The United States’ response to the Coronavirus/COVID-19 pandemic has been among the worst in the world, Ivanka “Barbie Doll” Trump says being a Contact Tracer would be a great career opportunity, and meanwhile, what’s her father say?
Sorry, I’m venting a little. Some pandemic days go better than others, but today was worse than usual. At least I finally found my house & car keys.
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Economic fallout from pandemic will hit women hardest
IMF says 30 years of gains for women could be erased as recession deepens
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Welcome to Mitch’s graveyard, we all just live here now.
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Fed’s Powell: Recovery Depends On Stopping Virus, Government Relief
The resurgence in coronavirus cases in recent weeks is weighing on US economic activity, and a recovery will depend on both checking the virus and governmental aid, Federal Reserve Chair Jerome Powell said Wednesday.
Halting the spread of COVID-19 is key as American consumers will not start spending again until they feel it is safe to do so, Powell said, but in the meantime some additional support will be needed to make it through the worst crisis in recent memory.
With the United States’ case count on the rise and recent indicators showing the tentative rebound from the downturn may be stalling, the policy-setting Federal Open Market Committee (FOMC) held the benchmark lending rate at zero as expected.
The committee stressed the “tremendous human and economic hardship” caused by the pandemic, and the uncertainty about the coming months.
Powell told reporters the outlook "will depend in large part on our success in keeping the virus in check."
"The path forward will also depend on policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed," he said.
The comments came as Republicans and Democrats in Congress are locked in debate over their dramatically different views on the next emergency spending package.
As expanded unemployment payments and a moratorium on evictions are set to expire, Senate Republicans this week unveiled a $1 trillion proposal that slashes additional weekly jobless benefits to $200 a week from $600, but also would offer a second round of $1,200 payments to individuals and give funding to schools, provided they reopen.
But Democrats are pushing for a $3 trillion plan that retains the higher unemployment payments.
Powell has been careful to avoid treading into the dangerous area of advising legislators, but he again made clear that more spending would be appropriate.
"The current economic downturn is the most severe in our lifetimes… and it will take continued support from both monetary and fiscal policy" to achieve a recovery, he said.
Economists expect GDP in the second quarter to have contracted more than 35 percent, but the Fed chief said the initial rounds of support from Congress "made a critical difference to families, businesses and communities across the country."
But he warned, "we have seen some signs in recent weeks that the increase in virus cases and the renewed measures to control it are starting to weigh on economic activity."
Authorities in states like California, Texas and Arizona have had to reimpose restrictions and close businesses, and data show the rebound in employment has slowed.
Powell said the economy in May and June recovered about a third of the more than 20 million jobs lost in the early weeks of the pandemic shutdown, but those gains are now at risk.
The FOMC repeated its intention to hold rates near zero "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."
But it refrained from making a more explicit commitment to allowing inflation to rise beyond the Fed’s longstanding 2.0 percent target before tapping the brakes on the stimulus it is providing to the economy.
Many economists are expecting a change in this “forward guidance” but few thought it might happen before September given the growing uncertainty around the economic outlook.
Powell said central bankers discussed “possible enhancements to our statement on longer-run goals and monetary policy strategy,” but declined to go into detail until the review is complete.
"In short, this is a holding operation, pending developments with both the virus itself and fiscal policy," said Ian Shepherdson of Pantheon Macroeconomics.
The Fed also extended a facility to provide US dollars to nine foreign central banks through March 2021 to “ease strains in global dollar funding markets” caused by COVID-19.
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Almost 30 Million in U.S. Didn’t Have Enough to Eat Last Week
Food insecurity for U.S. households last week reached its highest reported level since the Census Bureau started tracking the data in May, with almost 30 million Americans reporting that they’d not had enough to eat at some point in the seven days through July 21.
In the bureau’s weekly Household Pulse Survey, roughly 23.9 million of 249 million respondents indicated they had “sometimes not enough to eat” for the week ended July 21, while about 5.42 million indicated they had “often not enough to eat.” The survey, which began with the week ended May 5, was published Wednesday.
The number of respondents who sometimes had insufficient food was at its highest point in the survey’s 12 weeks. The number who often experienced food insufficiency was at its highest since the week ended May 26.
Food insecurity will continue to rise as the pandemic, the largest humanitarian crisis in living memory, further impacts the US economy.
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U.S. Economy Contracted at Record Rate Last Quarter; Jobless Claims Rise to 1.43 Million
The U.S. economy contracted at a record rate last quarter and weekly jobless claims rose for the second straight week, amid signs of a slowing recovery as the country continues to struggle with the coronavirus pandemic.
The Commerce Department said U.S. gross domestic product—the value of all goods and services produced across the economy—fell at a 32.9% annual rate in the second quarter, or a 9.5% drop compared with the same quarter a year ago. Both figures were the steepest in records dating to 1947.
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Did a third of the economy really vanish in just three months?
That 32.9 percent represents the loss of a third of the economy. Let that sink in. Now let it wriggle back out again — it is not exactly true. Why? The Commerce Department reports quarterly GDP at an annual rate to allow easy comparisons to other time periods. Remove the annualization, and we see the economy contracted a still-abysmal 9.5 percent.
In other words, 32.9 percent is how much the economy would shrink if the business closures and spending cuts of the second quarter increased at a compounding 9.5 percent for an entire year, after adjusting for seasonality.
Think of what an apocalypse that would be. Annualization assumes the businesses closed this quarter would remain closed and that just as many more would close for the first time in the third quarter. And we’d expand the closures again in the fourth quarter and again in the first quarter of next year.
In other words, take the devastation you saw in the past three months and multiply it by four. That is essentially what annualizing does, though compounding means the actual mathis a bit more complicated.
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The economic recovery depends on a healthy nation, and getting the Coronavirus under control, which at this juncture seems like a far off notion unfortunately given the lack of leadership, and lack of adherence to wearing masks, keeping distanced etc. The one specific deadline which Congress should be especially wary of would be the umemployment relief - with R’s offering to do a week’s patch for unemployment benefits and Dems saying no, we won’t work piecemeal.
The bigger picture, beyond the nation stricken with the rising numbers of Covid-10 is of course is huge unemployment now with the Senate now negotiating at the 11th hour over umemployment benefits, the $600 addition to them, liability issues for companies and institutions, how much to spend towards testing, tracing etc and a way back.
Congress is now in recess officially with a few leaders negotiating now for a final bill.
Read where they are…some happy talk, with some read blockades towards resolving it.
Washington (CNN)The US economy, plagued by a resurgent pandemic, is showing signs of sliding backwards.
Key deadlines on extending a federal eviction moratorium and federal unemployment benefits have come and gone. Yet lawmakers and the White House, sources say, are as far apart as they’ve ever been in talks on the next emergency aid package.
As one person involved told CNN on Sunday night: “No clue how we get this done at this point. Just so much outstanding.”
Bottom line
Negotiators on both sides emerged from a three-hour-plus meeting on Saturday with by far the most positive words about where things stood. What that really underscored was just how much of a mess these talks have been. The meeting was productive because negotiators left with a better understanding of the full scope of disagreements (and areas of potential agreement), according to two sources. Not because they’d made headway toward an actual deal.
What to read
Very good recap of a day that underscored Saturday’s optimism was short-sighted.
What to watch
Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows will be back on Capitol Hill to meet with Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer.
The framing
Pelosi and Mnuchin dig in on stimulus positions ahead of scheduled Monday talks
To understand why the two sides remain so far apart, it’s worth comparing how each is framing the scale of the crisis. Mnuchin, during the talks over the initial $2.2 trillion CARES Act, dismissed concerns about deficits due to historically low borrowing costs and the urgency of the moment. That has shifted – on Sunday he made a point of noting concerns about adding to much to the national debt in the next round.
This, on the other hand, was how Pelosi framed things in a letter to her House Democratic colleagues on Saturday night:
“All parties must understand the gravity of the situation in order to reach an agreement that protects Americans’ lives, livelihoods and the life of our democracy.”
There are a large number of policy differences here, but the biggest issue throughout the first week-plus of real negotiations has been the lens through which the two sides view the scale of the current crisis. And until that starts to merge, at least somewhat, there is no deal to be had.
The timing
The policy deadlines, at least up to this point, didn’t spark a deal. The Senate is scheduled to leave for August recess at the end of this week, but there’s zero sense something will come together before then. Neither side wants to leave town for the month without reaching an agreement, but at this point, that agreement – and then the process of actually getting it through both chambers – is a long way off.
"I’m not optimistic that there will be a solution in the very near term," Meadows said on CBS’s “Face the Nation.”
…
Addressing the “unilateral” idea
There has been chatter for several weeks that the White House may look to pursue unilateral options to address the economy if it feels a deal with Democrats is out of reach. On Capitol Hill, those who were aware of the talk mostly just laughed it off. But it spilled into public view Monday with The Washington Post reporting it was becoming a very real option given how far apart the two sides remain.
Let’s go ahead and address this head on: there is nothing the White House can do on unemployment benefits unilaterally. There is nothing they can do in terms of sending out another round of stimulus checks. There is nothing they can do on liability protections. There are limits to what they can do regarding an eviction moratorium. There is nothing they can do in terms of allowing hard-hit small businesses to access a second Paycheck Protection Program loan.
…
The biggest holdups
(Again, these are the biggest picture items. There are dozens of smaller-bore issues that will also create disagreement or problems that the negotiators haven’t really gotten to yet, sources say.)Federal unemployment benefits State and local funding Liability protections Postal Service fundsThe areas of agreement
Paycheck Protection Program Direct Payments
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The Trump administration is reportedly considering unilateral action on enhanced unemployment benefits and an eviction moratorium if no deal is struck with Congress
- The Trump administration is considering taking unilateral action on measures like enhanced unemployment insurance and a moratorium on evictions if it can’t agree with Congress on an economic relief bill, The Washington Post reported on Monday.
- But the White House would still rather get a bill through Congress, The Post reported, and President Donald Trump has said his priorities are boosted unemployment checks and an eviction moratorium.
- Negotiations between the White House and Democrats are at an impasse over unemployment insurance.
The Trump administration is weighing whether to take unilateral action if it doesn’t come to an agreement with Congress on another economic relief bill, The Washington Post reported on Monday, citing two sources who were granted anonymity to discuss the deliberations.
No final decisions were made, and the administration would still rather get legislation through Congress, the sources told The Post.
President Donald Trump said last week that his biggest priorities in negotiations over another stimulus bill were an extension of enhanced unemployment insurance and another moratorium on evictions.
Both measures were implemented under the economic relief package enacted in March. But they expired in late July, and Congress has not moved to extend them.
It’s not clear how the White House could circumvent Congress on the matter, but the administration has pushed the boundaries of executive power over the past three years.
The White House did not immediately respond to a request for comment.
Discussions on a spending package between White House officials and top congressional Democrats are at an impasse on unemployment insurance, The New York Times reported on Sunday.
Republicans unveiled their $1 trillion spending package four days before the $600 federal unemployment benefit ended on Friday. They proposed cutting the benefit to $200 a week for two months and designing a 70% wage-replacement program to start in October.
But Democrats want to extend the $600 supplementary payments — that was part of their $3 trillion spending package that the House passed in mid-May.
Nearly 30 million Americans are receiving unemployment benefits, per the Labor Department.
GOP lawmakers proposed a skinny bill that would deal only with unemployment benefits and the moratorium on evictions. Democrats rejected it and are pushing to pass their more expansive legislation to address a range of healthcare and economic priorities like emergency fiscal aid to states.
Senate Minority Leader Chuck Schumer, House Speaker Nancy Pelosi, Treasury Secretary Steven Mnuchin, and the White House chief of staff, Mark Meadows, met on Saturday to continue the talks. But a deal remains elusive, Pelosi told ABC News on Sunday.
“The fact is we will be close to an agreement when we have an agreement,” Pelosi said.
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Congress holds the purse strings, I don’t know where he thinks he can get this kind of money. This announcement must be for PR purposes. 
Ok this was in the WaPo article linked in the BI piece
Stephen Moore and Phil Kerpen, two outside economic advisers to the White House, published a Wall Street Journal opinion piece on Sunday urging Trump to declare a “national economic emergency” and announce that the Internal Revenue Service would temporarily defer the collection of payroll taxes. The effect would be to cut payroll taxes for workers, something Trump has long sought, although the legality of such a maneuver could come under immediate attack.
Here’s that WSJ op-ed
This is way more of a convoluted plan than just what either side of the Senate have proposed. Not sure how this would help people who are unemployed or underemployed right now, as they already don’t have money to pay taxes.
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Mortgage rates pulled down to lowest levels in history
The 30-year fixed mortgage rate, the most popular home loan product, sank to its lowest level on record. It fell to 2.88 percent with an average 0.8 point, according to the latest datareleased Thursday by Freddie Mac. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 2.99 percent a week ago and 3.6 percent a year ago. Since November 2018, when it was 4.94 percent, it has fallen more than two percentage points.
The 30-year fixed rate has never been this low since Freddie Mac began tracking mortgage rates in 1971. It surpassed the previous low of 2.98 percent, set last month. This is the eighth time since March that the 30-year fixed rate has fallen to a new low.
This is good for those who can afford it but inventory is still low. It’s still a sellers market for the most part.
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