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| The Fed Has No Tools for an Outbreak. Here’s Why It Acted Anyway. | The Fed Has No Tools for an Outbreak. Here’s Why It Acted Anyway. |
| (about 13 hours later) | |
| The list of reasons that the Federal Reserve shouldn’t have cut interest rates on Tuesday is long. | The list of reasons that the Federal Reserve shouldn’t have cut interest rates on Tuesday is long. |
| Lower rates will do nothing to address the root cause of potential economic distress, namely supply disruptions and halted economic activity because of the novel coronavirus. It comes as the Fed is already low on firepower to offset an economic slump, because of perpetually low interest rates. | Lower rates will do nothing to address the root cause of potential economic distress, namely supply disruptions and halted economic activity because of the novel coronavirus. It comes as the Fed is already low on firepower to offset an economic slump, because of perpetually low interest rates. |
| And the evidence that the overall economy is already suffering because of the virus is thin to nonexistent. There hasn’t been so much as a single week of elevated claims for jobless benefits, for example, usually an early warning sign of economic trouble. | And the evidence that the overall economy is already suffering because of the virus is thin to nonexistent. There hasn’t been so much as a single week of elevated claims for jobless benefits, for example, usually an early warning sign of economic trouble. |
| Oh, and the action comes after a week of plunging stock prices and public pressure for rate cuts from President Trump. That means that by taking action, the Federal Reserve chair, Jerome Powell, creates at least the appearance that he is reacting to the latest market sell-off or to presidential pressure. | Oh, and the action comes after a week of plunging stock prices and public pressure for rate cuts from President Trump. That means that by taking action, the Federal Reserve chair, Jerome Powell, creates at least the appearance that he is reacting to the latest market sell-off or to presidential pressure. |
| But the thinking behind the decision by Mr. Powell and his colleagues to cut their target interest rate half a percent despite all of this is not complicated. It was a judgment that just because you don’t have the right tools for a job doesn’t mean you shouldn’t use the tools that you do have. | But the thinking behind the decision by Mr. Powell and his colleagues to cut their target interest rate half a percent despite all of this is not complicated. It was a judgment that just because you don’t have the right tools for a job doesn’t mean you shouldn’t use the tools that you do have. |
| When the Fed cuts interest rates, it tends to support financial markets and overall activity in the economy. The speed and magnitude of that effect are always subject to debate, as is how to trade off the desire for a hotter economy with other concerns like avoiding inflation or financial bubbles. | When the Fed cuts interest rates, it tends to support financial markets and overall activity in the economy. The speed and magnitude of that effect are always subject to debate, as is how to trade off the desire for a hotter economy with other concerns like avoiding inflation or financial bubbles. |
| In this case, bond market prices had moved in ways that suggested investors viewed additional interest rate cuts as a near certainty. The question was not so much whether to cut rates to stimulate the economy, but whether to resist that signal, holding interest rates steady and thus tightening the money supply. | In this case, bond market prices had moved in ways that suggested investors viewed additional interest rate cuts as a near certainty. The question was not so much whether to cut rates to stimulate the economy, but whether to resist that signal, holding interest rates steady and thus tightening the money supply. |
| When Fed officials looked around at the evidence that the economy was heading for a meaningful slowdown because of the spread of the virus, at a time when inflation was not a worry, they reacted with the imperfect tool that they have. | When Fed officials looked around at the evidence that the economy was heading for a meaningful slowdown because of the spread of the virus, at a time when inflation was not a worry, they reacted with the imperfect tool that they have. |
| Think of their role in this by imagining a town with a looming crisis: a major hurricane. | Think of their role in this by imagining a town with a looming crisis: a major hurricane. |
| Everybody in town would have a job to do. The most important of those jobs involves directly protecting the town from the storm. Civil engineers would want to check on and shore up sea walls. The local government would set to work putting sandbags in place. | Everybody in town would have a job to do. The most important of those jobs involves directly protecting the town from the storm. Civil engineers would want to check on and shore up sea walls. The local government would set to work putting sandbags in place. |
| Then there is a second rung of those with less visible but equally urgent tasks. The local hardware store would stock up on emergency supplies. Churches and community centers might prepare to shelter people who lose their homes. | Then there is a second rung of those with less visible but equally urgent tasks. The local hardware store would stock up on emergency supplies. Churches and community centers might prepare to shelter people who lose their homes. |
| What role, in this scenario, would you expect the local bankers to play? Their job isn’t as important as that of the civil engineer or the people installing sandbags or the hardware store proprietor. | What role, in this scenario, would you expect the local bankers to play? Their job isn’t as important as that of the civil engineer or the people installing sandbags or the hardware store proprietor. |
| But that doesn’t mean they can’t help things. They could make affordable loans available to anyone who needs extra cash to stormproof equipment, and promise to be patient with repayment terms for businesses that are affected by the storm. | But that doesn’t mean they can’t help things. They could make affordable loans available to anyone who needs extra cash to stormproof equipment, and promise to be patient with repayment terms for businesses that are affected by the storm. |
| These aren’t the first, second or third most important things to happen to get ready for the storm, but they are constructive, responsible actions the bankers can take that reflect the depth of the looming crisis. | These aren’t the first, second or third most important things to happen to get ready for the storm, but they are constructive, responsible actions the bankers can take that reflect the depth of the looming crisis. |
| That is the Fed’s role in trying to contain the economic fallout of coronavirus. It can’t stop supply chains from being disrupted or the freeze-up of certain types of business activity, like travel and tourism. Mr. Powell said so explicitly in his news conference on Tuesday. And reasonable people can disagree on the scale of the economic risk in this situation. | That is the Fed’s role in trying to contain the economic fallout of coronavirus. It can’t stop supply chains from being disrupted or the freeze-up of certain types of business activity, like travel and tourism. Mr. Powell said so explicitly in his news conference on Tuesday. And reasonable people can disagree on the scale of the economic risk in this situation. |
| What rate cuts from the Fed can do, however, is try to help prevent those disruptions from spiraling into an economywide recession. The central bank will most likely take other actions, some of them beneath the radar, to try to encourage a steady flow of lending to businesses and consumers in the event of coronavirus disruptions. | What rate cuts from the Fed can do, however, is try to help prevent those disruptions from spiraling into an economywide recession. The central bank will most likely take other actions, some of them beneath the radar, to try to encourage a steady flow of lending to businesses and consumers in the event of coronavirus disruptions. |
| Updated June 16, 2020 | |
| 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. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| 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. | 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. |
| 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.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| 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. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| There has been a recurring idea ever since the financial crisis that the central banks are the only game in town in economic policy — that they’ve used their interest rate and quantitative easing policies to try to stabilize the economy because political authorities will not. | There has been a recurring idea ever since the financial crisis that the central banks are the only game in town in economic policy — that they’ve used their interest rate and quantitative easing policies to try to stabilize the economy because political authorities will not. |
| There are rumblings that the United States and other world governments will consider fiscal stimulus to pair with the easier monetary policy to try to keep major economies afloat. Of course, an effective response by public health authorities can do more than either fiscal or monetary policy alone. | There are rumblings that the United States and other world governments will consider fiscal stimulus to pair with the easier monetary policy to try to keep major economies afloat. Of course, an effective response by public health authorities can do more than either fiscal or monetary policy alone. |
| Back to the analogy of the town facing a hurricane: We are in an unusual situation in which the local government doesn’t seem to be laying sandbags effectively, and many of the local businesses in charge of the top priority response are moving slowly and failing to inspire confidence. | Back to the analogy of the town facing a hurricane: We are in an unusual situation in which the local government doesn’t seem to be laying sandbags effectively, and many of the local businesses in charge of the top priority response are moving slowly and failing to inspire confidence. |
| So people in this town might put more focus on the actions of the bankers than is warranted. | So people in this town might put more focus on the actions of the bankers than is warranted. |
| That is exactly where the Federal Reserve found itself Tuesday morning — doing what central bankers do, and hoping that public health authorities and fiscal policymakers in Congress do their jobs as well. | That is exactly where the Federal Reserve found itself Tuesday morning — doing what central bankers do, and hoping that public health authorities and fiscal policymakers in Congress do their jobs as well. |