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| Trump Administration Faces Economic Test as Coronavirus Shakes Markets | Trump Administration Faces Economic Test as Coronavirus Shakes Markets |
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| WASHINGTON — The global spread of the deadly coronavirus is posing a significant economic test for President Trump, whose three-year stretch of robust growth could be shaken by supply chain delays, a tourism slowdown and ruptures in other critical sectors of the American economy. | WASHINGTON — The global spread of the deadly coronavirus is posing a significant economic test for President Trump, whose three-year stretch of robust growth could be shaken by supply chain delays, a tourism slowdown and ruptures in other critical sectors of the American economy. |
| The outbreak of the virus in China has already disrupted global trade, sending American companies and retailers that rely on Chinese imports scrambling to repair a temporary break in their supply chains. Its spread to South Korea, Italy and beyond has hindered global travel. Economic forecasters say that the effects will hurt growth in the United States this year even if they do not intensify — and that if the virus becomes a global pandemic, it could knock the world economy into recession. | The outbreak of the virus in China has already disrupted global trade, sending American companies and retailers that rely on Chinese imports scrambling to repair a temporary break in their supply chains. Its spread to South Korea, Italy and beyond has hindered global travel. Economic forecasters say that the effects will hurt growth in the United States this year even if they do not intensify — and that if the virus becomes a global pandemic, it could knock the world economy into recession. |
| Stock markets have plunged this week on fears about the virus, with companies such as Apple and Microsoft among the most prominent businesses that have warned that supply chain disruptions could slow sales. Analysts said this week’s declines were on track to be the steepest since the 2008 financial crisis. | Stock markets have plunged this week on fears about the virus, with companies such as Apple and Microsoft among the most prominent businesses that have warned that supply chain disruptions could slow sales. Analysts said this week’s declines were on track to be the steepest since the 2008 financial crisis. |
| The market’s fall presents a challenge for Mr. Trump, whose presidential success has been deeply tied to the economy and a rising stock market that is now experiencing pronounced jitters. For now, Mr. Trump has publicly played down the potential economic fallout, saying woes at the aerospace giant Boeing, a strike last year at General Motors and the Federal Reserve’s reluctance to slash interest rates have done more to hurt the economy. | The market’s fall presents a challenge for Mr. Trump, whose presidential success has been deeply tied to the economy and a rising stock market that is now experiencing pronounced jitters. For now, Mr. Trump has publicly played down the potential economic fallout, saying woes at the aerospace giant Boeing, a strike last year at General Motors and the Federal Reserve’s reluctance to slash interest rates have done more to hurt the economy. |
| “We have been hurt by General Motors,” Mr. Trump said on Wednesday. “We’ve been hurt by Boeing. And we’ve been hurt by — we’ve been hurt, in my opinion, very badly, by our own Federal Reserve.” | “We have been hurt by General Motors,” Mr. Trump said on Wednesday. “We’ve been hurt by Boeing. And we’ve been hurt by — we’ve been hurt, in my opinion, very badly, by our own Federal Reserve.” |
| Health officials expect a spike in coronavirus cases in the United States, though it remains unclear how soon and how severe an outbreak might occur. Officials have warned the nation to be prepared for the virus to spread. | Health officials expect a spike in coronavirus cases in the United States, though it remains unclear how soon and how severe an outbreak might occur. Officials have warned the nation to be prepared for the virus to spread. |
| If the infection gains a big foothold in the United States, it could disrupt the economy, which has been expanding steadily with an unemployment rate that has hovered near a 50-year low for more than a year. In an extreme scenario where the virus severely hits the United States, it could keep workers at home and grind production to a halt, hurting revenue streams and tanking even highly leveraged corporations as they fall behind on debt payments. In the least severe case, the current slowdown in China could cause a short-lived growth blip. | If the infection gains a big foothold in the United States, it could disrupt the economy, which has been expanding steadily with an unemployment rate that has hovered near a 50-year low for more than a year. In an extreme scenario where the virus severely hits the United States, it could keep workers at home and grind production to a halt, hurting revenue streams and tanking even highly leveraged corporations as they fall behind on debt payments. In the least severe case, the current slowdown in China could cause a short-lived growth blip. |
| Economists at Goldman Sachs already expect to shave 0.8 percentage points off the United States gross domestic product in the first three months of 2020 because of slumping tourism from China and trade slowdowns. But they expect a quick rebound in the second quarter that will help to make up for the downturn. | Economists at Goldman Sachs already expect to shave 0.8 percentage points off the United States gross domestic product in the first three months of 2020 because of slumping tourism from China and trade slowdowns. But they expect a quick rebound in the second quarter that will help to make up for the downturn. |
| Other economists, including those at Moody’s Analytics, foresee more drastic fallout if widespread infections appear in other countries. A global recession “is likely” if the virus “becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea,” Mark Zandi, Moody’s chief economist, wrote on Wednesday. | Other economists, including those at Moody’s Analytics, foresee more drastic fallout if widespread infections appear in other countries. A global recession “is likely” if the virus “becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea,” Mark Zandi, Moody’s chief economist, wrote on Wednesday. |
| Chang-Tai Hsieh, an economist at the University of Chicago’s Booth School of Business who tracks Chinese economic data, said in an interview Thursday that the effects on American growth will be “huge” even in a best-case scenario with the virus. Chinese business activity, he said, is running at about 20 percent of normal levels. | Chang-Tai Hsieh, an economist at the University of Chicago’s Booth School of Business who tracks Chinese economic data, said in an interview Thursday that the effects on American growth will be “huge” even in a best-case scenario with the virus. Chinese business activity, he said, is running at about 20 percent of normal levels. |
| “The economic consequences are, everything is down” in China, he said. “Everything is down tremendously.” | “The economic consequences are, everything is down” in China, he said. “Everything is down tremendously.” |
| As forecasts worsen, investor expectations of a Fed cut are quickly increasing. As of Thursday, investors were betting on a March rate cut, a move that seemed highly unlikely as recently as a week ago. Many now expect two cuts by June, market pricing suggests. | As forecasts worsen, investor expectations of a Fed cut are quickly increasing. As of Thursday, investors were betting on a March rate cut, a move that seemed highly unlikely as recently as a week ago. Many now expect two cuts by June, market pricing suggests. |
| Democrats on the House Financial Services Committee sent a letter on Thursday to Jerome H. Powell, the chairman of the Federal Reserve, asking for more information about whether an outbreak of the virus in the United States could cause a recession and what tools the central bank had to combat a supply shock to the economy. | Democrats on the House Financial Services Committee sent a letter on Thursday to Jerome H. Powell, the chairman of the Federal Reserve, asking for more information about whether an outbreak of the virus in the United States could cause a recession and what tools the central bank had to combat a supply shock to the economy. |
| Central bank policymakers said on Thursday that they were closely monitoring viral developments, though they did not yet signal a coming cut. | Central bank policymakers said on Thursday that they were closely monitoring viral developments, though they did not yet signal a coming cut. |
| “It really depends on: What are the medium-term implications for the U.S. economy?” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in an interview. “If people are temporarily staying home, not traveling, not interacting and purchasing things, that could be a short-term hit. Or it could develop into something broader — and that’s the kind of calculus you have to do when you’re thinking about monetary policy.” | “It really depends on: What are the medium-term implications for the U.S. economy?” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in an interview. “If people are temporarily staying home, not traveling, not interacting and purchasing things, that could be a short-term hit. Or it could develop into something broader — and that’s the kind of calculus you have to do when you’re thinking about monetary policy.” |
| But rate cuts may have a limited effect: They work by stimulating demand, which could help if consumers and investors get spooked and stop spending. But cuts will do little to restart factories and correct supply problems. | But rate cuts may have a limited effect: They work by stimulating demand, which could help if consumers and investors get spooked and stop spending. But cuts will do little to restart factories and correct supply problems. |
| “We’d absolutely expect to see a response from the Federal Reserve, not least to shore up confidence,” said Paul Ashworth, an economist at Capital Economics, a research consultancy. But he pointed out that monetary policy worked on the economy with a six- to nine-month lag, and “it doesn’t deal with the supply-side impact of, say, one-third of your work force catching this.” | “We’d absolutely expect to see a response from the Federal Reserve, not least to shore up confidence,” said Paul Ashworth, an economist at Capital Economics, a research consultancy. But he pointed out that monetary policy worked on the economy with a six- to nine-month lag, and “it doesn’t deal with the supply-side impact of, say, one-third of your work force catching this.” |
| The more critical response may come from Congress and the Trump administration, which have done little thus far to script a fiscal response. | The more critical response may come from Congress and the Trump administration, which have done little thus far to script a fiscal response. |
| Updated June 30, 2020 | |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | |
| Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. | Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| Perhaps the most important thing the government can do to insulate the economy is to stem the outbreak, keeping Americans on the job and spending. If that fails, though, fiscal responses are an option; Hong Kong and China, both hit hard, have rolled out packages to help bolster growth. Tax and spending policies might also encourage demand more than fixing supply, but they can also work more quickly than monetary policy. | Perhaps the most important thing the government can do to insulate the economy is to stem the outbreak, keeping Americans on the job and spending. If that fails, though, fiscal responses are an option; Hong Kong and China, both hit hard, have rolled out packages to help bolster growth. Tax and spending policies might also encourage demand more than fixing supply, but they can also work more quickly than monetary policy. |
| House Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the Democratic leader, on Thursday morning called for Congress and Mr. Trump to fashion a spending bill meant to “address the spread of the deadly coronavirus in a smart, strategic and serious way.” A response should include interest-free loans for “small businesses impacted by the outbreak.” | House Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the Democratic leader, on Thursday morning called for Congress and Mr. Trump to fashion a spending bill meant to “address the spread of the deadly coronavirus in a smart, strategic and serious way.” A response should include interest-free loans for “small businesses impacted by the outbreak.” |
| Such a program would represent targeted relief but not an effort to dramatically increase consumer demand in the economy. | Such a program would represent targeted relief but not an effort to dramatically increase consumer demand in the economy. |
| But such a plan seems far-off, if not improbable. Democratic and Republican leaders in Congress have not opened talks with the White House or between the House and Senate over any possible package of tax cuts and spending increases that would be meant to stimulate the economy in the event of a virus-related downturn. Top Senate aides said on Thursday that it was too soon for such conversations, with Mr. Trump’s allies noting the persistence of low unemployment and continued economic growth. | But such a plan seems far-off, if not improbable. Democratic and Republican leaders in Congress have not opened talks with the White House or between the House and Senate over any possible package of tax cuts and spending increases that would be meant to stimulate the economy in the event of a virus-related downturn. Top Senate aides said on Thursday that it was too soon for such conversations, with Mr. Trump’s allies noting the persistence of low unemployment and continued economic growth. |
| Michael Zona, a spokesman for the Senate Finance Committee and its chairman, Charles E. Grassley of Iowa, said on Thursday that “at this point, the coronavirus has not had a broad impact on the U.S. economy, and its effects have been limited.” But Mr. Zona said Mr. Grassley and the committee were “ready to consider appropriate tax relief responses if that becomes necessary and the extent of the problem can be determined.” | Michael Zona, a spokesman for the Senate Finance Committee and its chairman, Charles E. Grassley of Iowa, said on Thursday that “at this point, the coronavirus has not had a broad impact on the U.S. economy, and its effects have been limited.” But Mr. Zona said Mr. Grassley and the committee were “ready to consider appropriate tax relief responses if that becomes necessary and the extent of the problem can be determined.” |
| Mr. Trump’s economic advisers had already been working on a package of tax cuts intended to serve as a centerpiece of his 2020 campaign. That package, which is still in flux and probably months away, could include new tax cuts for the middle class and for start-up businesses, along with extensions of some expiring provisions of the 2017 tax cuts. Tax experts who have spoken with the administration do not see the effort as an immediate stimulus package, but more as an attempt to build on the 2017 law and offer voters a contrast between Mr. Trump and his Democratic opponent. | Mr. Trump’s economic advisers had already been working on a package of tax cuts intended to serve as a centerpiece of his 2020 campaign. That package, which is still in flux and probably months away, could include new tax cuts for the middle class and for start-up businesses, along with extensions of some expiring provisions of the 2017 tax cuts. Tax experts who have spoken with the administration do not see the effort as an immediate stimulus package, but more as an attempt to build on the 2017 law and offer voters a contrast between Mr. Trump and his Democratic opponent. |
| On Thursday, the White House added Treasury Secretary Steven Mnuchin and Larry Kudlow, the director of the National Economic Council, to the president’s coronavirus task force. Both officials have been working on the tax plan. The Financial Banking and Information Infrastructure Committee, chartered under the president’s Working Group on Financial Markets and chaired by Treasury, is in regular communication and is also monitoring the economic fallout from the virus. | On Thursday, the White House added Treasury Secretary Steven Mnuchin and Larry Kudlow, the director of the National Economic Council, to the president’s coronavirus task force. Both officials have been working on the tax plan. The Financial Banking and Information Infrastructure Committee, chartered under the president’s Working Group on Financial Markets and chaired by Treasury, is in regular communication and is also monitoring the economic fallout from the virus. |
| With Democrats controlling the House, there has been little expectation of major tax legislation before the November election. There was no sign on Thursday, from inside or outside the White House, that the coronavirus had changed that. | With Democrats controlling the House, there has been little expectation of major tax legislation before the November election. There was no sign on Thursday, from inside or outside the White House, that the coronavirus had changed that. |
| “The bipartisan consensus on Capitol Hill is that substantive tax policy is not happening before the lame duck” session after the election, said George Callas, the managing director at Steptoe & Johnson LLP, who was tax counsel to former House Speaker Paul D. Ryan of Wisconsin. “I haven’t seen that change in thinking happen yet.” | “The bipartisan consensus on Capitol Hill is that substantive tax policy is not happening before the lame duck” session after the election, said George Callas, the managing director at Steptoe & Johnson LLP, who was tax counsel to former House Speaker Paul D. Ryan of Wisconsin. “I haven’t seen that change in thinking happen yet.” |