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April Bills Loom. The Economy Hangs on How Many Are Left Unpaid. April Bills Loom. The Economy Hangs on How Many Are Left Unpaid.
(8 days later)
On Wednesday, as on the first day of any month, many companies and households will have bills to pay. This time, a lot will simply pile up.On Wednesday, as on the first day of any month, many companies and households will have bills to pay. This time, a lot will simply pile up.
Angela Rogan is unlikely to make the rent on her apartment in the San Francisco Bay Area. Katherine Anderson, who owns a cafe-bakery in Seattle, isn’t going to pay her $30,000-a-month lease. Even the Cheesecake Factory, a multibillion-dollar company, has told landlords not to expect an April remittance.Angela Rogan is unlikely to make the rent on her apartment in the San Francisco Bay Area. Katherine Anderson, who owns a cafe-bakery in Seattle, isn’t going to pay her $30,000-a-month lease. Even the Cheesecake Factory, a multibillion-dollar company, has told landlords not to expect an April remittance.
The trajectory of the U.S. economy will largely rest on how many payments go unmade, which bills are put ahead of others and the terms on which they are settled.The trajectory of the U.S. economy will largely rest on how many payments go unmade, which bills are put ahead of others and the terms on which they are settled.
The $2 trillion relief package passed by Congress amounts to a grand attempt to flush the economy with cash so that the obligations of corporations and minimum-wage-earning tenants alike can be met as usual.The $2 trillion relief package passed by Congress amounts to a grand attempt to flush the economy with cash so that the obligations of corporations and minimum-wage-earning tenants alike can be met as usual.
But much of the money will take weeks to arrive — too late for many — and once it does, the big question hanging over the economy will be how many unpaid rent notices, water bills and mortgage payments remain after the virus subsides and commerce resumes.But much of the money will take weeks to arrive — too late for many — and once it does, the big question hanging over the economy will be how many unpaid rent notices, water bills and mortgage payments remain after the virus subsides and commerce resumes.
Should a significant portion be curtailed through negotiation or absorbed by the government altogether — such as loans that allow businesses to make payroll the next few months but can be forgiven when traffic returns — a coronavirus recession could be followed by a robust recovery in which commercial life looks something like normal. Should they linger and turn into long-term debt hanging over businesses and households, it will curb future spending and lead to a weaker recovery as the damage produces more layoffs, more spending cutbacks and more unpaid bills.Should a significant portion be curtailed through negotiation or absorbed by the government altogether — such as loans that allow businesses to make payroll the next few months but can be forgiven when traffic returns — a coronavirus recession could be followed by a robust recovery in which commercial life looks something like normal. Should they linger and turn into long-term debt hanging over businesses and households, it will curb future spending and lead to a weaker recovery as the damage produces more layoffs, more spending cutbacks and more unpaid bills.
Consider the metal lockboxes in the 110 apartment buildings owned by Bridge Housing, a nonprofit affordable-housing developer that manages about 12,000 subsidized units in California, Oregon and Washington. On Wednesday, Bridge’s 30,000 tenants, most of them hourly workers with little or no financial cushion, will start dropping their April rent checks in the boxes. The checks will be opened by workers in latex gloves, and scanned into a software program that logs each payment. Those checks, in turn, will be used to pay overhead, maintenance and mortgages.Consider the metal lockboxes in the 110 apartment buildings owned by Bridge Housing, a nonprofit affordable-housing developer that manages about 12,000 subsidized units in California, Oregon and Washington. On Wednesday, Bridge’s 30,000 tenants, most of them hourly workers with little or no financial cushion, will start dropping their April rent checks in the boxes. The checks will be opened by workers in latex gloves, and scanned into a software program that logs each payment. Those checks, in turn, will be used to pay overhead, maintenance and mortgages.
Usually, no more than 3 percent of Bridge’s tenants fail to pay. But in anticipation of a disastrous April, Cynthia Parker, Bridge’s chief executive, had her finance team analyze possibilities that would have seemed unthinkable weeks ago: What if only half the residents pay their rent? What if only a third do?Usually, no more than 3 percent of Bridge’s tenants fail to pay. But in anticipation of a disastrous April, Cynthia Parker, Bridge’s chief executive, had her finance team analyze possibilities that would have seemed unthinkable weeks ago: What if only half the residents pay their rent? What if only a third do?
Bridge is already trimming expenses, like cutting consultants on future projects and putting off computer purchases for the office. But if rent collections lag for long, it will have to look at more severe measures, like laying off workers. Even with a healthy cash cushion, the company can go only so long with such a steep revenue decline.Bridge is already trimming expenses, like cutting consultants on future projects and putting off computer purchases for the office. But if rent collections lag for long, it will have to look at more severe measures, like laying off workers. Even with a healthy cash cushion, the company can go only so long with such a steep revenue decline.
“We’re running models right now to look at how long we can last on operating reserves,” Ms. Parker said in an interview. “We’re in the middle of it, but it’s anywhere from three to six months before this starts impacting loans.”“We’re running models right now to look at how long we can last on operating reserves,” Ms. Parker said in an interview. “We’re in the middle of it, but it’s anywhere from three to six months before this starts impacting loans.”
That the United States is careening toward recession is now a given. That this recession will be brutal is also a given: Economists are projecting that gross domestic product could fall as much as 30 percent in the second quarter, which would rival the worst months of the Great Depression.That the United States is careening toward recession is now a given. That this recession will be brutal is also a given: Economists are projecting that gross domestic product could fall as much as 30 percent in the second quarter, which would rival the worst months of the Great Depression.
The depth and suddenness of that fall have forced swift decisions by businesses and households about which payments to make. Those decisions set off their own economic ripples, as laid-off workers cut back spending and landlords struggle to pay their mortgages.The depth and suddenness of that fall have forced swift decisions by businesses and households about which payments to make. Those decisions set off their own economic ripples, as laid-off workers cut back spending and landlords struggle to pay their mortgages.
“These are cascades that, once they get going, are very hard to stop,” said Claudia Sahm, director of macroeconomic policy for the Washington Center for Equitable Growth, a progressive think tank. “You’re already seeing it.”“These are cascades that, once they get going, are very hard to stop,” said Claudia Sahm, director of macroeconomic policy for the Washington Center for Equitable Growth, a progressive think tank. “You’re already seeing it.”
You can see it with Owen Rice, a commercial real estate broker who runs the Seattle office of Hughes Marino and is furiously negotiating to lower his clients’ rent bills or get deferrals and extended payment plans.You can see it with Owen Rice, a commercial real estate broker who runs the Seattle office of Hughes Marino and is furiously negotiating to lower his clients’ rent bills or get deferrals and extended payment plans.
“It’s about ‘How do I survive, how do I keep people employed?’ and they’re looking to renegotiate so they can get through the next 90 days,” he said.“It’s about ‘How do I survive, how do I keep people employed?’ and they’re looking to renegotiate so they can get through the next 90 days,” he said.
To blunt the economic pain, governments of all sizes have proposed some measure of relief to households and businesses. Several cities have put moratoriums on evictions of both residential and commercial tenants, while dozens of banks including JPMorgan Chase and Wells Fargo have agreed to halt new foreclosures and temporarily waive mortgage payments for borrowers whose finances have been affected by the virus outbreak.To blunt the economic pain, governments of all sizes have proposed some measure of relief to households and businesses. Several cities have put moratoriums on evictions of both residential and commercial tenants, while dozens of banks including JPMorgan Chase and Wells Fargo have agreed to halt new foreclosures and temporarily waive mortgage payments for borrowers whose finances have been affected by the virus outbreak.
On top of all this is the congressional move to address the crisis. It gives cash to most American households and extra help to those who have lost jobs, though not in time for next month’s rent. Treasury Secretary Steven Mnuchin has said most people will get their money within three weeks.On top of all this is the congressional move to address the crisis. It gives cash to most American households and extra help to those who have lost jobs, though not in time for next month’s rent. Treasury Secretary Steven Mnuchin has said most people will get their money within three weeks.
For businesses, the package aims to create a lifeline by delaying at least some decisions about which bills to pay and which debts to forgive. For instance, it gives small businesses access to forgivable loans that they can use to pay their rent and workers. And the potential forgiveness, not just the funds, may be crucial for many to survive.For businesses, the package aims to create a lifeline by delaying at least some decisions about which bills to pay and which debts to forgive. For instance, it gives small businesses access to forgivable loans that they can use to pay their rent and workers. And the potential forgiveness, not just the funds, may be crucial for many to survive.
“Everyone is resisting the word bailout, but how about nobody has to pay rent for the months they were closed?” said Ms. Anderson, owner of the London Plane in Seattle. “It’s not as if you’re going to make up the money for that rent that you didn’t get.”“Everyone is resisting the word bailout, but how about nobody has to pay rent for the months they were closed?” said Ms. Anderson, owner of the London Plane in Seattle. “It’s not as if you’re going to make up the money for that rent that you didn’t get.”
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
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.
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 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.
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.
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.
There is wide agreement that the crisis demands a unique solution — not a traditional stimulus that would spur people to go out and spend, but the economic equivalent of a medically induced coma, a way to prevent permanent damage until the underlying health crisis can be solved.There is wide agreement that the crisis demands a unique solution — not a traditional stimulus that would spur people to go out and spend, but the economic equivalent of a medically induced coma, a way to prevent permanent damage until the underlying health crisis can be solved.
Progressives, including Representative Alexandria Ocasio-Cortez of New York, have called for moratoriums on rent and other financial obligations. And even conservatives, despite concern about government initiatives already costlier than those in the 2008-9 financial crisis, have said this is a case where it makes sense to provide grants — not merely loans — to individuals and businesses.Progressives, including Representative Alexandria Ocasio-Cortez of New York, have called for moratoriums on rent and other financial obligations. And even conservatives, despite concern about government initiatives already costlier than those in the 2008-9 financial crisis, have said this is a case where it makes sense to provide grants — not merely loans — to individuals and businesses.
Michael R. Strain, director of economic policy studies at the right-leaning American Enterprise Institute, said that corporations might be able to afford to take on extra debt to carry them through a period of lost revenue, but that most small businesses, particularly in the service sector, could not.Michael R. Strain, director of economic policy studies at the right-leaning American Enterprise Institute, said that corporations might be able to afford to take on extra debt to carry them through a period of lost revenue, but that most small businesses, particularly in the service sector, could not.
“A manufacturing company could come back to a backlog of orders, but if you’re a services business, you’ve just lost this revenue,” he said. “People are not going to go out to eat six times as often when this is over.”“A manufacturing company could come back to a backlog of orders, but if you’re a services business, you’ve just lost this revenue,” he said. “People are not going to go out to eat six times as often when this is over.”
If businesses have to take on huge debt burdens to survive the crisis, Mr. Strain said, “that situation leads to a much more prolonged downturn.”If businesses have to take on huge debt burdens to survive the crisis, Mr. Strain said, “that situation leads to a much more prolonged downturn.”
For workers, weathering more than a few weeks without pay may be a challenge. The 11-year economic expansion left record low unemployment, but it did less to ensure financial stability. The Federal Reserve reported last year that four in 10 Americans would have difficulty covering an unexpected expense of $400.For workers, weathering more than a few weeks without pay may be a challenge. The 11-year economic expansion left record low unemployment, but it did less to ensure financial stability. The Federal Reserve reported last year that four in 10 Americans would have difficulty covering an unexpected expense of $400.
Cori Aitken, 34, lost one job as a sales representative at Temescal Brewing, a small brewery in Oakland, Calif., and another job tending bar. Now she’s looking to cut her $1,900 monthly expense budget, which includes about $1,000 in rent and $300 for utilities, along with a phone bill, car insurance and loan payments.Cori Aitken, 34, lost one job as a sales representative at Temescal Brewing, a small brewery in Oakland, Calif., and another job tending bar. Now she’s looking to cut her $1,900 monthly expense budget, which includes about $1,000 in rent and $300 for utilities, along with a phone bill, car insurance and loan payments.
The first thing she did was cancel her $90-a-month membership at the Y.M.C.A. When her credit card bill arrives, she’s going to make the minimum payment to preserve cash. With about $1,000 in savings and the expectation of $1,500 a month in unemployment benefits, Ms. Aitken can pay April’s bills easily enough.The first thing she did was cancel her $90-a-month membership at the Y.M.C.A. When her credit card bill arrives, she’s going to make the minimum payment to preserve cash. With about $1,000 in savings and the expectation of $1,500 a month in unemployment benefits, Ms. Aitken can pay April’s bills easily enough.
“I’m worried about May 1 and June 1,” she said.“I’m worried about May 1 and June 1,” she said.
As restaurant and retail traffic have come to a near standstill nationwide, many small businesses have tried to bring in revenue by selling their services online or recasting themselves as delivery and takeout businesses. Bars are selling to-go cocktails. Exercise studios are conducting fitness classes over the internet. Restaurants that used to require reservations are delivering to doorsteps.As restaurant and retail traffic have come to a near standstill nationwide, many small businesses have tried to bring in revenue by selling their services online or recasting themselves as delivery and takeout businesses. Bars are selling to-go cocktails. Exercise studios are conducting fitness classes over the internet. Restaurants that used to require reservations are delivering to doorsteps.
But for most, it’s not enough. Ms. Anderson, from the London Plane, started delivering popular items like pasta Bolognese with a bottle of red wine and a loaf of bread. After a week of haphazardly sending out boxed meals that generated about 10 percent of normal sales, she decided to stop and lay off the rest of her employees.But for most, it’s not enough. Ms. Anderson, from the London Plane, started delivering popular items like pasta Bolognese with a bottle of red wine and a loaf of bread. After a week of haphazardly sending out boxed meals that generated about 10 percent of normal sales, she decided to stop and lay off the rest of her employees.
With a $20,000 tax payment and a $30,000 rent bill coming due, she had to decide how to spend what little was left.With a $20,000 tax payment and a $30,000 rent bill coming due, she had to decide how to spend what little was left.
“We’re prioritizing our employees and offering them an extra week of pay,” she said. “The landlord can probably wait.”“We’re prioritizing our employees and offering them an extra week of pay,” she said. “The landlord can probably wait.”