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| Mnuchin and Powell Warn of Economic Scarring, and Offer Divergent Solutions | Mnuchin and Powell Warn of Economic Scarring, and Offer Divergent Solutions |
| (14 days later) | |
| WASHINGTON — The United States economy faces irreparable damage from the coronavirus, the nation’s top economic policymakers warned on Tuesday, although they offered differing solutions on how to ease the blow to business that has thrown more than 20 million people out of work. | WASHINGTON — The United States economy faces irreparable damage from the coronavirus, the nation’s top economic policymakers warned on Tuesday, although they offered differing solutions on how to ease the blow to business that has thrown more than 20 million people out of work. |
| In a joint appearance before the Senate Banking Committee, Treasury Secretary Steven Mnuchin and the Fed chair, Jerome H. Powell, offered a stark assessment of the fragile state of the economy as lawmakers and the Trump administration grapple with how to restart commerce and whether additional government support is needed. | In a joint appearance before the Senate Banking Committee, Treasury Secretary Steven Mnuchin and the Fed chair, Jerome H. Powell, offered a stark assessment of the fragile state of the economy as lawmakers and the Trump administration grapple with how to restart commerce and whether additional government support is needed. |
| Mr. Mnuchin, who acknowledged a painful month ahead, suggested that an expeditious reopening of states was the key to preventing irreversible economic devastation. | Mr. Mnuchin, who acknowledged a painful month ahead, suggested that an expeditious reopening of states was the key to preventing irreversible economic devastation. |
| “There is the risk of permanent damage” if states delay their reopenings, Mr. Mnuchin told lawmakers. While the Treasury secretary said job losses would get “worse before they get better,” he suggested that conditions would “improve in the third and fourth quarters” as states began reopening and business activity resumed. | “There is the risk of permanent damage” if states delay their reopenings, Mr. Mnuchin told lawmakers. While the Treasury secretary said job losses would get “worse before they get better,” he suggested that conditions would “improve in the third and fourth quarters” as states began reopening and business activity resumed. |
| Mr. Powell sounded a more cautious tone, saying that a full recovery would not take hold until the health crisis was resolved and people felt safe resuming normal activity. He suggested that Congress, the White House and the Fed itself might need to provide more help to carry states, households and businesses through the pandemic. | Mr. Powell sounded a more cautious tone, saying that a full recovery would not take hold until the health crisis was resolved and people felt safe resuming normal activity. He suggested that Congress, the White House and the Fed itself might need to provide more help to carry states, households and businesses through the pandemic. |
| “This is the biggest shock we’ve seen in living memory,” Mr. Powell said, “and the question looms in the air of, is it enough?” | “This is the biggest shock we’ve seen in living memory,” Mr. Powell said, “and the question looms in the air of, is it enough?” |
| Mr. Powell warned that leaving states to fend for themselves could slow the recovery if local governments, many of which have balanced budget requirements, are forced to lay off workers amid budget crunches. | Mr. Powell warned that leaving states to fend for themselves could slow the recovery if local governments, many of which have balanced budget requirements, are forced to lay off workers amid budget crunches. |
| “We have the evidence of the global financial crisis and the years afterward, where state and local government layoffs and lack of hiring did weigh on economic growth,” Mr. Powell said. | “We have the evidence of the global financial crisis and the years afterward, where state and local government layoffs and lack of hiring did weigh on economic growth,” Mr. Powell said. |
| The differing views underscore the competing arguments gripping Washington as Congress and the White House begin debating the outlines of another major economic relief bill and whether to inject trillions of additional taxpayer dollars into the economy. | The differing views underscore the competing arguments gripping Washington as Congress and the White House begin debating the outlines of another major economic relief bill and whether to inject trillions of additional taxpayer dollars into the economy. |
| With an election six months away, President Trump and many Republican lawmakers have begun trying to shift the economic discussion away from more financial support to boosting the economy by reopening states and by additional tax cuts. The Trump administration has said it would veto a $3 trillion bill — which includes aid for hard-hit states — that Democrats proposed last week, and has made clear that any additional legislation must include liability protection to insulate businesses against lawsuits from workers or customers who get sick. | With an election six months away, President Trump and many Republican lawmakers have begun trying to shift the economic discussion away from more financial support to boosting the economy by reopening states and by additional tax cuts. The Trump administration has said it would veto a $3 trillion bill — which includes aid for hard-hit states — that Democrats proposed last week, and has made clear that any additional legislation must include liability protection to insulate businesses against lawsuits from workers or customers who get sick. |
| In a sharp exchange during the hearing on Tuesday, Senator Sherrod Brown of Ohio, the top Democrat on the Banking Committee, accused Mr. Mnuchin of prioritizing the stock market over public health. | In a sharp exchange during the hearing on Tuesday, Senator Sherrod Brown of Ohio, the top Democrat on the Banking Committee, accused Mr. Mnuchin of prioritizing the stock market over public health. |
| “How many workers should give their lives to increase our G.D.P. by a half-percent?” Mr. Brown asked. “You’re pushing people back into the workplace.” | “How many workers should give their lives to increase our G.D.P. by a half-percent?” Mr. Brown asked. “You’re pushing people back into the workplace.” |
| The Treasury secretary fired back, calling the characterization “unfair.” | The Treasury secretary fired back, calling the characterization “unfair.” |
| Congress has already approved trillions in financial support to help businesses and workers, including $500 billion for the Treasury Department, which is using most of those funds to backstop Fed programs aimed at keeping credit flowing through the economy. | Congress has already approved trillions in financial support to help businesses and workers, including $500 billion for the Treasury Department, which is using most of those funds to backstop Fed programs aimed at keeping credit flowing through the economy. |
| But with 20 million people already out of work and new infections continuing, there are growing concerns that the economy could need another financial boost to prevent businesses from failing and more workers from losing their jobs. | But with 20 million people already out of work and new infections continuing, there are growing concerns that the economy could need another financial boost to prevent businesses from failing and more workers from losing their jobs. |
| The nonpartisan Congressional Budget Office released new projections on Tuesday that illustrated the protracted downturn facing the United States and the uncertainty about how quickly it may recover. | The nonpartisan Congressional Budget Office released new projections on Tuesday that illustrated the protracted downturn facing the United States and the uncertainty about how quickly it may recover. |
| The budget office predicts gross domestic product will contract by 11 percent in the second quarter and the jobless rate will hit 15 percent, with industries like travel, hospitality and retail bearing the brunt of the losses. The recovery is expected to be gradual, and by the end of next year, the C.B.O. expects the unemployment rate to be 8.6 percent. | The budget office predicts gross domestic product will contract by 11 percent in the second quarter and the jobless rate will hit 15 percent, with industries like travel, hospitality and retail bearing the brunt of the losses. The recovery is expected to be gradual, and by the end of next year, the C.B.O. expects the unemployment rate to be 8.6 percent. |
| The agency notes that the policy responses to the virus in the United States and around the world are evolving quickly, and the prospects of a second wave of infections or a successful vaccine are difficult to predict. | The agency notes that the policy responses to the virus in the United States and around the world are evolving quickly, and the prospects of a second wave of infections or a successful vaccine are difficult to predict. |
| “Output, employment, inflation, interest rates and many other macroeconomic variables will be greatly influenced by the course of the pandemic and the social distancing measures implemented to contain it,” the C.B.O. said. “The range of uncertainty about social distancing, as well as its effects on economic activity and implications for the economic recovery over the next two years, is especially large.” | “Output, employment, inflation, interest rates and many other macroeconomic variables will be greatly influenced by the course of the pandemic and the social distancing measures implemented to contain it,” the C.B.O. said. “The range of uncertainty about social distancing, as well as its effects on economic activity and implications for the economic recovery over the next two years, is especially large.” |
| Republicans are still trying to determine their next steps. Mr. Mnuchin started his day meeting at the Capitol with Vice President Mike Pence; Senator Mitch McConnell of Kentucky, the majority leader; and Representative Kevin McCarthy of California to discuss liability protections and possible changes to a new small-business loan program. | Republicans are still trying to determine their next steps. Mr. Mnuchin started his day meeting at the Capitol with Vice President Mike Pence; Senator Mitch McConnell of Kentucky, the majority leader; and Representative Kevin McCarthy of California to discuss liability protections and possible changes to a new small-business loan program. |
| Mr. Trump then went across town to join Republican senators for lunch, where, according to lawmakers who attended, he was coy about what provisions he would like to be included in an upcoming bill, dimming hopes of imminent action. | Mr. Trump then went across town to join Republican senators for lunch, where, according to lawmakers who attended, he was coy about what provisions he would like to be included in an upcoming bill, dimming hopes of imminent action. |
| During the lunch, Senator Lindsey Graham, Republican of South Carolina, asked Mr. Trump to reject an extension of the $600 unemployment benefit that lawmakers approved in March and that expires in late July. | During the lunch, Senator Lindsey Graham, Republican of South Carolina, asked Mr. Trump to reject an extension of the $600 unemployment benefit that lawmakers approved in March and that expires in late July. |
| “He agreed that it’s hurting the economic recovery,” Mr. Graham said. But he said that while the president agreed it was a concern, he did not commit to refusing any legislation that contained such an extension. | “He agreed that it’s hurting the economic recovery,” Mr. Graham said. But he said that while the president agreed it was a concern, he did not commit to refusing any legislation that contained such an extension. |
| “He didn’t say that,” Mr. Graham added. “He just said that’s a problem.” | “He didn’t say that,” Mr. Graham added. “He just said that’s a problem.” |
| Although they generally present a united front, Mr. Powell’s and Mr. Mnuchin’s views on the recovery have at times been at odds. Mr. Mnuchin has been more of an economic cheerleader, promoting the prospects of a “V”-shaped recovery, with growth and job creation returning during the second half of the year. He has taken a wait-and-see approach to more fiscal measures and has been reluctant to offer more support for states. | Although they generally present a united front, Mr. Powell’s and Mr. Mnuchin’s views on the recovery have at times been at odds. Mr. Mnuchin has been more of an economic cheerleader, promoting the prospects of a “V”-shaped recovery, with growth and job creation returning during the second half of the year. He has taken a wait-and-see approach to more fiscal measures and has been reluctant to offer more support for states. |
| Mr. Powell has repeatedly suggested that a full economic recovery could take months, even once states reopen, potentially stretching through the end of 2021. | Mr. Powell has repeatedly suggested that a full economic recovery could take months, even once states reopen, potentially stretching through the end of 2021. |
| “The No. 1 thing, of course, is people believing that it’s safe to go back to work, and that’s about having a sensible, thoughtful reopening of the economy, something we all want — and something that we’re in the early stages of now,” Mr. Powell said. “It will be a combination of getting the virus under control, development of therapeutics, development of a vaccine.” | “The No. 1 thing, of course, is people believing that it’s safe to go back to work, and that’s about having a sensible, thoughtful reopening of the economy, something we all want — and something that we’re in the early stages of now,” Mr. Powell said. “It will be a combination of getting the virus under control, development of therapeutics, development of a vaccine.” |
| Updated June 2, 2020 | |
| 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. | |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | |
| 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. | |
| 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. | |
| 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.) | |
| More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said. | |
| 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. | |
| 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. | |
| Fed officials generally try to steer clear of fiscal policy, leaving it to Congress and the White House. But Mr. Powell has repeatedly cautioned that the recovery could take longer, particularly in certain sectors that involve large group gatherings, like restaurants, sporting events and airplanes, suggesting that policymakers must be ready to do more. | Fed officials generally try to steer clear of fiscal policy, leaving it to Congress and the White House. But Mr. Powell has repeatedly cautioned that the recovery could take longer, particularly in certain sectors that involve large group gatherings, like restaurants, sporting events and airplanes, suggesting that policymakers must be ready to do more. |
| “We have 20-some million people out of work; we want to do everything we can to create a world where they can go back to their jobs or find new jobs,” Mr. Powell said. “That’s something all of us as policymakers should be strongly focused on.” | “We have 20-some million people out of work; we want to do everything we can to create a world where they can go back to their jobs or find new jobs,” Mr. Powell said. “That’s something all of us as policymakers should be strongly focused on.” |
| Mr. Powell’s colleague, the president of the Federal Reserve Bank of Boston, Eric Rosengren, went a step further in a separate speech on Tuesday, saying that opening the economy was not a “panacea” and that lifting restrictions prematurely would carry risks, potentially leading to worse health outcomes and higher unemployment. | Mr. Powell’s colleague, the president of the Federal Reserve Bank of Boston, Eric Rosengren, went a step further in a separate speech on Tuesday, saying that opening the economy was not a “panacea” and that lifting restrictions prematurely would carry risks, potentially leading to worse health outcomes and higher unemployment. |
| The Fed has been trying to put a floor under the economic collapse and accommodate a recovery by rolling out emergency lending programs, many of which are backed by Treasury Department funding and all of which are aimed at keeping credit flowing. Mr. Powell testified at length about those efforts and said all of the Fed’s remaining programs would most likely be up and running by the end of the month, including one that should help states, big cities and large counties issue debt to temporarily fund themselves. | The Fed has been trying to put a floor under the economic collapse and accommodate a recovery by rolling out emergency lending programs, many of which are backed by Treasury Department funding and all of which are aimed at keeping credit flowing. Mr. Powell testified at length about those efforts and said all of the Fed’s remaining programs would most likely be up and running by the end of the month, including one that should help states, big cities and large counties issue debt to temporarily fund themselves. |
| Yet the Fed’s efforts — along with the Treasury Department’s programs — have been controversial, and lawmakers have been increasingly critical of the design, scope and efficacy of the vehicles. Some lawmakers want the Fed and the Treasury to be more aggressive and take more risk, while others said the efforts would reward companies that did not deserve to be helped. | Yet the Fed’s efforts — along with the Treasury Department’s programs — have been controversial, and lawmakers have been increasingly critical of the design, scope and efficacy of the vehicles. Some lawmakers want the Fed and the Treasury to be more aggressive and take more risk, while others said the efforts would reward companies that did not deserve to be helped. |
| The Fed and the Treasury have faced criticism for being too timid in creating their programs, especially after Mr. Mnuchin told reporters in April that he did not expect to lose money on the emergency lending facility. On Tuesday, he seemed to change that position, saying that “our intention is that we expect to take some losses on these facilities.” | The Fed and the Treasury have faced criticism for being too timid in creating their programs, especially after Mr. Mnuchin told reporters in April that he did not expect to lose money on the emergency lending facility. On Tuesday, he seemed to change that position, saying that “our intention is that we expect to take some losses on these facilities.” |
| “That is our base-case scenario,” Mr. Mnuchin added. | “That is our base-case scenario,” Mr. Mnuchin added. |
| While that distinction may seem semantic, it could have big practical implications. If the Treasury Department is comfortable losing money, it might be more willing to accept Fed facilities that are intended to extend credit to riskier counterparts, like more heavily indebted companies. | While that distinction may seem semantic, it could have big practical implications. If the Treasury Department is comfortable losing money, it might be more willing to accept Fed facilities that are intended to extend credit to riskier counterparts, like more heavily indebted companies. |
| Many of the questions asked on Tuesday highlighted the political tightrope that Mr. Powell and Mr. Mnuchin are walking. | Many of the questions asked on Tuesday highlighted the political tightrope that Mr. Powell and Mr. Mnuchin are walking. |
| Although the $2 trillion CARES Act passed with bipartisan support in late March, Democratic lawmakers have seized on the Trump administration’s carrying out of the law to accuse Mr. Trump of corporate cronyism. | Although the $2 trillion CARES Act passed with bipartisan support in late March, Democratic lawmakers have seized on the Trump administration’s carrying out of the law to accuse Mr. Trump of corporate cronyism. |
| Senator Chris Van Hollen, Democrat of Maryland, pressed Mr. Powell about how having the central bank buy junk bonds helped people on Main Street. Mr. Powell said that the Fed was assisting only a narrow set of “fallen angels” that were healthy before the crisis through a credit facility. The Fed is also buying a limited amount of high-yield exchange traded funds, which trade like stocks but are backed by a basket of corporate debt. | Senator Chris Van Hollen, Democrat of Maryland, pressed Mr. Powell about how having the central bank buy junk bonds helped people on Main Street. Mr. Powell said that the Fed was assisting only a narrow set of “fallen angels” that were healthy before the crisis through a credit facility. The Fed is also buying a limited amount of high-yield exchange traded funds, which trade like stocks but are backed by a basket of corporate debt. |
| In another tense exchange with Mr. Mnuchin, Senator Elizabeth Warren, Democrat of Massachusetts, asked why the administration was not forcing companies that take government-supported loans to not fire their employees. She also pressed him, to no avail, to hold executives criminally liable for misusing bailout funds. | In another tense exchange with Mr. Mnuchin, Senator Elizabeth Warren, Democrat of Massachusetts, asked why the administration was not forcing companies that take government-supported loans to not fire their employees. She also pressed him, to no avail, to hold executives criminally liable for misusing bailout funds. |
| “You’re boosting your Wall Street buddies and you are leaving the American people behind,” Ms. Warren said. | “You’re boosting your Wall Street buddies and you are leaving the American people behind,” Ms. Warren said. |
| Emily Cochrane contributed reporting. | Emily Cochrane contributed reporting. |