This briefing is no longer updating. Read the latest developments in the economic fallout from the coronavirus outbreak here.
Here’s what you need to know:
The hit to the U.S. economy could last for a decade.
The Congressional Budget Office projected on Monday that the coronavirus pandemic could cost the United States economy $16 trillion over the next 10 years. When adjusting for inflation, the pandemic is projected to cause a $7.9 trillion, or 3 percent, loss in “real” G.D.P. through 2030.
The projections reflect the steep long-term toll that the pandemic is likely to take on the economy, which could experience dampened consumer spending and business investment in the years ahead. Much of the diminished output is projected to be the result of weaker inflation, as prices for energy and transportation increase more slowly than they otherwise would have as Americans pull back on travel.
Phillip L. Swagel, the director of the budget office, acknowledged that “an unusually high degree of uncertainty surrounds these economic projections” because of what remains unknown about the pandemic’s trajectory, as well as the impact of social distancing and the legislation enacted by the federal government.
“If future federal policies differ from those underlying C.B.O.’s economic projections — for example, if lawmakers enact additional pandemic-related legislation — then economic outcomes will necessarily differ from those presented here,” Mr. Swagel wrote in a letter to Senators Chuck Schumer of New York, the minority leader, and Bernie Sanders, the Vermont independent. The two senators had asked the budget office on Wednesday to examine the impact of the pandemic and the shuttering of local economies to combat the spread of the virus as lawmakers look to negotiate another round of economic aid.
In a joint statement following the release of the report, Mr. Schumer and Mr. Sanders said the estimate undercut Republican arguments that Congress should wait to approve another relief package, as well as President Trump’s call to include a tax cut in the next measure. “In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads,” the two senators said. “The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now.”
New regulator warns that health measures, like masks, may hurt banks.
The new head of a powerful banking regulator is not letting his first full week on the job pass quietly, warning that measures meant to contain the spread of the coronavirus — including mandates for the use of masks in public — could endanger the financial system.
Brian P. Brooks took over on Friday as the acting head of the Office of the Comptroller of the Currency, the federal agency that oversees the country’s largest banks. Mr. Brooks, a former banker, sent letters to the country’s mayors and governors about the negative effects of restrictions on public activity. Among them, he said: Face masks could lead to more bank robberies.
Mr. Brooks’s letter was unusual in its tone and scope; banking regulators tend to keep their communications fairly abstract. But Mr. Brooks pointed to what he said were specific risks associated with “continued state and local lockdown orders.”
“Certain aspects of these orders potentially threaten the stability and orderly functioning of the financial system,” he wrote.
The Centers for Disease Control and Prevention recommends that everyone wear a cloth face covering when they leave their home, to stop the spread of the coronavirus.
Airlines say it’s safe to travel. But is it?
Airlines and airports around the world are doing everything they can to instill confidence that it is safe to fly again, despite the coronavirus pandemic.
Airlines are requiring face masks for passengers and staff, imposing new aircraft cleaning procedures, using social distancing to board flights, blocking middle seats on planes and, in one case, even prohibiting passengers from lining up to use plane bathrooms.
As to the airports, they are screening passengers’ temperatures through high- and low-tech means; using biometric screening to speed check-in, security and customs and immigration processes; and using autonomous robots to clean terminal floors.
But none of it is consistent. And it’s unclear whether the measures are enough.
“So much is uncertain right now,” said Henry Harteveldt, founder of Atmosphere Research Group, a San Francisco travel analysis firm. “Do airports and airlines need to invest in something long-term that will be permanent, like airport security, or are these short-term, tactical responses?”
Dr. Joshua Schiffer, an infectious disease physician at the Fred Hutchinson Cancer Research Center in Seattle, said, “It’s next to impossible to have complete confidence you won’t get infected” on flights. But he added that he hoped that airlines would provide travelers “publicly available information on what the projected risk would be to a certain destination, so you could choose your airline based on the quality of this information.”
Here’s how businesses that took Paycheck Protection Program loans are faring.
The Paycheck Protection Program, the federal government’s ambitious effort to keep workers at small businesses off the unemployment rolls, was a lifeline for many businesses.
But with many cities still shut down, consumers’ habits have changed and recharging the economy may take years. Small companies, which employ nearly half of America’s workers that don’t work in government, typically have thin margins and scant savings. Some fear they won’t survive without further help.
Just one week after A&J Transportation, a Frac-sand shipper based in Oklahoma, got its paycheck loan, its entire staff of truckers was out of work because producers shut down their wells when oil prices plunged in April.
“We lived through the 2014 oil crash, the 2008 economic crash. This one is worse,” said Dana Sanford, the office manager for the family-run business, which worked exclusively on oil fields.
The loan arrived right as the work disappeared, so A&J used it to keep paying all of its 72 employees, even though most had nothing to do but stay home. The money kept those workers off the unemployment rolls, Ms. Sanford said.
She does not expect a quick recovery. A&J hopes to return one of its crews — about a third of its workers — to the oil fields in June, but Ms. Sanford thinks it will be months before the company’s full fleet is needed. Its eight weeks of payroll support will run out in mid-June.
“The drivers are getting a little more scared as that last week approaches, wondering, ‘Am I going to have a job when this is done?’” she said. “I wish we could apply again. Even four more weeks would be really helpful.”
Target, Walmart and CVS shut stores amid protests.
A number of retailers, still reeling from the economic impact of the coronavirus shutdown, have temporarily closed some stores as protests and looting spread across the United States in the wake of the death of George Floyd.
Target is temporarily closing or shortening the hours of about 200 stores, a spokesman, Joshua Thomas, confirmed on Sunday morning. The Target store on Lake Street in Minneapolis, the location nearest to where Mr. Floyd died, was badly damaged and looted last week. Images of the battered store have featured prominently in news coverage of the unrest in Minneapolis, where Target has its headquarters.
Target has nearly 1,900 stores in the United States. The decisions to temporarily shutter or shorten store hours at roughly 200 locations, Mr. Thomas said, were being made “out of an abundance of caution” to ensure “the safety of our teams.”
Walmart and CVS also shuttered a number of stores. Amazon said it would scale back deliveries in some cities. Adidas is temporarily closing all of its U.S. stores, The Wall Street Journal reported.
Stocks on Wall Street edge higher.
U.S. stocks posted modest gains on Monday, continuing a recent climb that had left the S&P 500 with its best two-month gain in 11 years.
The gains were small though, and came after a weekend of violence and unrest in the United States in the wake of the death of George Floyd in police custody. The S&P 500 rose less than half a percent. Shares of some retailers who said they were temporarily closing some stores in response to protests took a hit. Target was down more than 2 percent.
European markets closed about 1 percent higher on Monday, though markets in Germany and a number of other countries were closed for a holiday. Asian markets rose strongly, paced by an increase of more than 3 percent in Hong Kong and more than 2 percent in mainland China shares.
The rally in stocks has come as investors have bet the worst of the economic damage caused by the coronavirus pandemic could be over. In another sign of optimism on Monday, an index of U.S. manufacturing activity rose in May. The index was 43.1 last month, up from 41.5 in April, which was the lowest level in more than a decade, the Institute for Supply Management said. However, it was still below 50, which connotes an economy still in contraction.
Publishers sue the Internet Archive over book lending.
A group of publishers sued the Internet Archive on Monday, saying that the nonprofit group’s trove of free electronic copies of books is robbing authors and publishers of revenue at a moment when it is desperately needed.
The Internet Archive has made about 1.3 million books available for free online, according to the complaint, which were scanned and available to one borrower at a time for 14 days. The group said in March that it would lift all restrictions on its book lending until the end of the public health crisis, creating what it called “a National Emergency Library to serve the nation’s displaced learners.”
But many publishers and author have called it something different: theft.
“There is nothing innovative or transformative about making complete copies of books to which you have no rights and giving them away for free,” said Maria A. Pallante, president of the Association of American Publishers, which is helping to coordinate the industry’s response.
Traditional libraries pay licensing fees to publishers and agree to make them available for a particular period or a certain number of times. Internet Archive, on the other hand, acquires copies through donated or purchased books, which are then scanned and put online.
The lawsuit, which accused the Internet Archive of “willful mass copyright infringement,” was filed in federal court in Manhattan on behalf of Hachette Book Group, HarperCollins Publishers, John Wiley & Sons and Penguin Random House.
Brewster Kahle, the founder and digital librarian of the Internet Archive, defended his organization and said it was functioning as a library during the coronavirus pandemic, when physical libraries have been closed.
Tenants are staying current on their rent payments, for now.
Since April, landlords have looked to the first of the month fearing that tenants will stop paying their rent. For the most part, that has not happened, writes Conor Dougherty.
Despite a 14.7 percent unemployment rate and millions of new jobless claims each week, collections are only slightly below where they were last year, when the economy was booming.
How can this be? The answer is a little negotiation and a lot of government money. The $2 trillion CARES Act, which backstopped household finances with stimulus checks and extended unemployment benefits, has kept a surprising number of tenants current on their monthly balances. At the same time, many landlords have reduced rents or are forgiving overdue payments in full or in part.
The trend cannot continue without a swift and robust recovery, which is becoming increasingly unlikely, or without another big injection of government money, which Senate Republicans say is not happening anytime soon.
American households were struggling with rent long before the economy went into free fall, and there are signs — from an increase in partial payments to surveys that show many tenants are putting rent on their credit cards and struggling to pay for essentials like food — that this pressure is building.
Here’s the business news to watch this week.
🗣 All eyes will be on Zoom, the videoconferencing company that has seen its user base explode during the lockdowns; it reports earnings Tuesday. Others releasing earnings this week include Tiffany on Tuesday, Campbell Soup on Wednesday and Gap on Thursday.
🎶 Warner Music prices its I.P.O. on Tuesday, aiming for a valuation of up to $13 billion. China’s Tencent is reportedly considering taking a stake in the record company as part of the listing on Nasdaq.
🇪🇺 The European Central Bank meets on Thursday, and it could unveil more monetary stimulus measures to tide over the region’s struggling economy as its members negotiate a huge fiscal package.
📉 On Friday, U.S. employment data for May is expected to show a decline of nine million jobs in the month, with the official unemployment rate rising to just under 20 percent.
Catch up: Here’s what else is happening.
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Marriott International’s chief executive, Arne M. Sorenson, said all of its Chinese hotels had reopened and occupancy levels were more than 40 percent, Reuters reported. Mr. Sorenson, speaking at the Goldman Sachs Travel and Leisure Conference on Monday, said the company’s open hotels in the United States had crossed the 20 percent occupancy threshold.
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Nasdaq said Monday that it would postpone the planned reopening of its trading floor in Philadelphia, which had been closed because of the coronavirus pandemic, as protests in the city continued.
Reporting was contributed by Jane L. Levere, Elizabeth E. Harris, Emily Cochrane, Alan Rappeport, Conor Dougherty, Steve Lohr, Matt Richtel, Ron Lieber, Nellie Bowles, Carlos Tejada, Jason Karaian, Katie Robertson and Jeanna Smialek.
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