US Recovery? Some Americans Spent Stimulus Money on Toys While 4 Million Skipped Mortgage Payments

U.S. stimulus checks were supposed to be spent on basic needs such as groceries, mortgage or rent. However, there is evidence that many Americans also spent their money on non-essentials including electronics, clothes and toys, according to major retailers. At the same time, the Mortgage Bankers Association reported that more than 4.1 million homeowners are temporarily skipping their mortgage payments.

Americans Stocked Up on Essentials Initially

During the first wave of stimulus checks, Americans used the money to stock up on essentials. In mid-April when the number of coronavirus cases was still climbing and the payments were initially distributed, “most people immediately spent on groceries,” said Stuart Sopp, CEO and founder of Current, a New York City-based mobile-banking startup.

In the next wave of payments, which occurred towards the end of April, more people used the funds “for everyday means.” That includes ordering more food delivery and takeout, and gas.

Some Americans Spent Stimulus Money on Non-Essentials

Both Walmart and Target saw increased consumer demand for discretionary goods in mid-April as the stimulus payments from the $2.2-trillion CARES Act flowed into Americans’ bank accounts, the companies’ CEOs said this week. Apple saw an uptick in demand for its products “across the board,” CEO Tim Cook said April 30.

At Walmart and Target, shoppers bought more TVs, electronics, gaming equipment and apparel. Walmart also saw increased demand for adult-sized bikes, MarketWatch reported.

“Call it relief spending, as it was heavily influenced by stimulus dollars, leading to sales increases in categories such as apparel, televisions, video games, sporting goods and toys,” Walmart CEO Doug McMillon said during the company’s earnings call Tuesday.

Target Corp. also experienced “a rapid increase in traffic and sales” for discretionary goods driven by the distribution of stimulus checks, CEO Brian Cornell said on the company’s Wednesday earnings call. “We certainly saw an uptick as we reported starting on April 15, as those checks arrived across America,” Cornell said on the company’s call.

Customers, he said, are “still seeing the benefits of the stimulus check.” People are shopping across all categories including apparel, which has been especially hard hit by the coronavirus-driven economic downturn.

Over Four Million Americans Skip Mortgage Payments as Coronavirus Hammers Finances

More than 4.1 million homeowners are temporarily skipping their mortgage payments as the coronavirus pandemic batters Americans’ finances, but the number of people needing assistance is beginning to slow.

A weekly survey from the Mortgage Bankers Association released Monday found that 8.16 percent of total loans are now in forbearance plans, up from 7.91 percent as of May 3. It was the smallest increase in forbearance since March 10, when the outbreak of the virus first paralyzed the nation’s economy.

Half of Working-Age Americans Might Not Have a Paycheck in May as Layoffs Surge

Fewer than half of working-age Americans could earn a paycheck in May as the coronavirus pandemic triggers millions of job losses.

Layoffs in April alone could push the unemployment rate to 16 percent, James Knightley chief international economist at ING, wrote in an analyst note last week. If an additional 10 million Americans file for benefits in May, that would push the unemployment rate to 22 percent – just below the peak of 25 percent in 1933 during the Great Depression.

How Will This Affect the Recovery

The past is the past and how Americans want to spend their money is nobody’s business, but the data may offer clues as to what the U.S. recovery will look like once the entire country ends its lockdown restrictions.

The current price action in the stock market suggests that investors are betting on a swift recovery. The fact that some consumers spent their stimulus checks on non-essentials suggests they were prepared for unemployment and all the other economic issues being caused by the spread of the virus.

If investors guessed right and the economy recovers quickly then it will look as if the government was right when it issued $2.2 trillion in stimulus. This may have actually stabilized the economy.

This implies that a second stimulus package, currently being debated in Congress, may be enough to solidify the economy and could put it on path for the widely anticipated swift recovery.

https://finance.yahoo.com/news/us-recovery-americans-spent-stimulus-074346591.html

Silver lining for apparel sector.

38 Million people become jobless.

Malls and retail  is doing horribly in US so far. ( except Amazon and Walmart)

Even the famous JC Penny   ( sells apparel too) is filing for bankruptcy.
Victoria Secret is closing 250 stores!

Several surviving mall based apparel stores are on the verge of
collapsing.

Summary : Apparels   have not picked up  

~~~~~~~~~~~~

Stimulus given is not enough  ( in a country like USA) to  pay  even
1 month rent in certain areas.

Many SS people still have not got that stimulus even.

It going take a longer time for USA ( and many countries)
to get back to normal.

ස්තුතියි slstock,
මෙය එකවර නොවුනත්, අපි වගේ කුඩා රටවල ආර්ථිකයට ලොකු බලපෑමක් ඉදිරියේදි පෙන්වයි නේද ? මට හිතෙන හැටියට ඇමරිකන් ආර්ථික පසු බැස්ම ලංකාවට තාම හරියට දැනෙන්න පටන් ගත්තේ නැහැ කියලා.

This is what I have warned some time back. I was very upset about President Trump's attitude on controlling Covid 19. From the very beginning where Covid 19 starts spreading in USA DT was keen only on approving economic stimulus packages to turn economy to normal rather than investing heavily and quickly on the country's healthcare system. There very many criticisms on lack of testing and test kits in hospitals. Lack of ventilisers and beds etc. But the President wanted to turn the economy back. As a result Covid 19 breeds strongly in USA and paralyzing the economy more than it could sending economic shivers across the world. DT at least could have followed what China had done and if close down the initial states where Covid starts spreading fast such as NY then by now situation in USA could be much much better.

Congressional Republicans and White House fear pandemic unemployment benefits are ‘a barrier to getting people back to work’

Effort to phase out coronavirus-related unemployment benefits is viewed as a means to encourage Americans to go back to work, although it’s not clear when there will be jobs to return to.

“Republicans and the White House are reaching consensus on the need for redesigning the unemployment benefits so they are not a barrier to getting people back to work,” Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, told reporters on a conference call.

President Donald Trump and Senate Majority Leader Mitch McConnell huddled at the White House to discuss the issues.


The flurry of activity comes after House Speaker Nancy Pelosi ushered a new $3 trillion aid package through the House last week, amid opposition from moderate Democrats. The Senate, under McConnell, says there is no urgency to act, and senators are expected to reconsider more aid only in June.

Ohio Democrat Sherrod Brown voiced outrage that McConnell kept the Senate in session for three weeks before Thursday’s recess, requiring legislative staff, Capitol police and cafeteria and custodial workers and others to report for work, contrary to public health guidance, as he and his fellow Republicans pursued their own Senate priorities, notably the confirmation of Trump nominees, and not the needs of American families and communities facing public health and economic crises.




With the nation’s death toll poised to hit 100,000 this weekend and layoffs surpassing 38 million, some lawmakers see a failure by Washington to act as untenable. Yet Congress has moved beyond the political consensus reached at the outset of the crisis and is now splitting along familiar party lines.

The difference in approach and priorities between Democrats and Republicans reflects the partisan split that is defining both parties before the 2020 election.

At least one Republican, Sen. Cory Gardner of Colorado, urged the Senate not to recess unless it considered more aid. “Now is not the time for the Senate to go home,” tweeted Gardner, who is among the most politically endangered GOP senators running for re-election in the fall.

But senators nonetheless left town for a Memorial Day recess slated to last through next week.


Gardner wanted agreement to extend the small business Paycheck Protection Program and pushed for more funds for state and local governments facing layoffs. He told reporters he had called Trump to express his concerns.

As a result, senators were trying to fast-track a proposal to extend the Paycheck Protection Program’s expiration. The proposed fix would double from eight to 16 weeks the window for business owners absorbing losses because of the COVID-19 pandemic to spend their federally backed loans and still qualify to have them forgiven. The program was established in March under an earlier coronavirus response bill.




While the House works remotely, the lights-on Senate has the legislative stage to itself. But the chamber that considers itself the world’s greatest deliberative body spent May debating almost anything but the pandemic. It confirmed several of Trump’s executive and judicial nominees, including John Ratcliffe on Thursday as director of national intelligence.

“You wouldn’t even know there’s a COVID crisis,” Senate Democratic leader Chuck Schumer of New York told ABC’s “The View.” “Crazy. It’s just so wrong.”

See:Democrats remain skeptical that Ratcliffe will operate independently as Texas Republican wins confirmation as intelligence chief

McConnell argued that his side of the Capitol led passage of the earlier $2 trillion package. Better to assess how that money is being spent, he said, before approving more. He rejected the new $3 trillion package approved by the Democratic-led House last week as a “liberal wish list,” a phrase that has emerged as a Republican talking point over the past weeks.

On Thursday, McConnell mocked the House for working remotely and voting by proxy while senators in masks show up like other Americans returning to work. The District of Columbia has been under stay-at-home orders, but Mayor Muriel Bowser said Thursday the numbers are pointing to the start of a gradual reopening process at the end of May.




“The self-described ‘People’s House’ has been suspiciously empty of people,” McConnell said. “Every one of my Senate colleagues should be proud of how we’ve helped our nation win this first battle.”

Pelosi shot back: “We have the Heroes bill,” she said about the House-passed aid measure. “He has the zeroes bill.”

McConnell questioned whether votes the House has recorded remotely are constitutional.

Unemployment insurance, though, was quickly becoming a new priority for Republicans staking out the next aid package.

Brady warned that generous benefits, with a $600 weekly boost during the pandemic approved under the earlier aid bill, would “handcuff” workers and discourage them from returning to work.

Sen. Rand Paul, R-Ky., said, “It was a mistake to make it so high to begin with. It would be a mistake to extend it.”

Republicans are hopeful that as states reopen, the economy will improve, lessening the need for more federal funds. But if workers refuse to return to work, they worry companies can’t begin to rebound.

Brady has proposed giving workers a one-time $1,200 bonus to get back to work. He said conversations were happening at the highest levels.

But polling shows Americans are concerned about a second wave of the virus as shops and workplaces reopen. A poll by the Associated Press–NORC Center for Public Affairs Research found 83% of Americans are at least somewhat concerned that lifting restrictions in their area will lead to additional infections, with 54% saying they are very or extremely concerned.

America Has Opted for a Bad Recession


(Bloomberg Opinion) -- People keep saying that the coronavirus crisis has presented America with a difficult choice: the lives of our parents and grandparents versus the economic well-being of our children. I beg to differ. The real choice is, and has always been, between a sane national strategy for containing the pandemic and economic disaster.

I don’t like getting sick. If you have a bad cold, I’d rather not shake your hand. Similarly, I’ll do a lot to avoid getting Covid-19, even if I’m pretty sure it won’t kill me. As a 45-to-64-year-old, my odds of being hospitalized if infected look to be about 1 in 25.(1) No thanks! I’ll pass on getting on a plane or going to a crowded restaurant.

I’m not the only one. Millions of Americans are engaging in self-imposed austerity to stay on the safe side. As Federal Reserve Chairman Jerome Powell put it on Sunday, “for the economy to fully recover, people will have to be fully confident.” This is the challenge policymakers face: how to give people the level of security needed to support a real recovery.

One option, which Powell emphasized, is to develop a vaccine for SARS-Cov-2, the virus that causes Covid-19. But this takes time. No vaccine for any disease has ever been rolled out in less than four years. It might never happen: SARS-Cov-2 is one of seven known human coronaviruses, none of which has a vaccine.

The other option is herd immunity, in which so many people get the virus and develop antibodies that there aren’t many people left to infect. But, for you fans of Sweden out there, it’s not clear that infection confers immunity. Four of the known human coronaviruses can re-infect people relatively quickly. Scientists don’t know about the rest.

This leaves policymakers with two paths. The first, and best, is to devise an effective and comprehensive national testing, tracing and quarantining program, which would enable us all to feel a lot more confident that we’re not going to run into people with Covid-19.. So far, though, the U.S. remains wedded to its local vision of public health governance, in which states largely do their own thing. The result will be a patchwork approach to contact tracing. Connections that cross state or even county lines will likely be missed, allowing recurring outbreaks to undermine consumers’ confidence.

The second path: Let the economy evolve organically to provide the assurance that people demand. This would entail a vast transformation, as both workers and consumers demand considerably more space to ensure their safety. The process would probably be very slow, involving persistent unemployment and sluggish growth. Consider, for example, how long the U.S. economy struggled to adjust to high-priced oil in the 1970s.

On the merits, the decision would seem a no-brainer: a vigorous national public health response versus a horrific recession. I hope for the former. Sadly, given the evidence so far, I expect the latter.

(1) See: https://www1.nyc.gov/site/doh/covid/covid-19-data.page, which shows that 836.12 out of 100000 people in New York City aged 45-64 were hospitalized. The state reported that about a fifth of all New Yorkers have had the disease: https://www.governor.ny.gov/news/amid-ongoing-covid-19-pandemic-governor-cuomo-announces-results-states-antibody-testing-survey. Hence, over 4% of those aged 45-64 who got the disease were hospitalized.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Narayana Kocherlakota is a Bloomberg Opinion columnist. He is a professor of economics at the University of Rochester and was president of the Federal Reserve Bank of Minneapolis from 2009 to 2015.

https://forum.lankaninvestor.com/t11811-us-recovery-some-americans-spent-stimulus-money-on-toys-while-4-million-skipped-mortgage-payments#106487

Trump just declared houses of worship essential. Mounting evidence shows they're super-spreader hotspots.


•President Trump designated churches and other houses of worship as essential services on Friday.


•There have been multiple reports of super-spreader events at US churches and synagogues, as well as a South Korean temple.


•During these events, an infected person passed the coronavirus to an unusually high number of others, sparking local outbreaks.


•The CDC warns that large indoor gatherings, particularly church events, can be potential disease hotspots.


•Visit Business Insider's homepage for more stories.


President Donald Trump just declared in-person worship an essential service.

"I call upon governors to allow our churches and places of worship to open right now," he said during a Friday announcement at the White House. Trump added that he wouldn't hesitate to "override" state governors that refused to comply.

Although many people want to return to houses of worship, especially during a scary and stressful time, mounting evidence shows these places to be among the riskiest for coronavirus spread.

Clusters of infections can often be traced back to a super-spreader event, in which one person infects an atypically large number of people. So far, these events have shared a few key characteristics: They've mostly been indoors and put lots of people from different households in close, extended contact. That's precisely the type of gathering that churches, mosques, and synagogues facilitate.

"You can't have a super-spreading event unless there are a lot of people around, so you have to be very careful still about gatherings of people of any size — that includes religious services," William Schaffner, an infectious-disease expert from Vanderbilt University, told Business Insider.

"The virus doesn't respect any religions," he added.

Houses of worship are coronavirus transmission hotspots

Research has found time and again that the risk of coronavirus transmission is much higher indoors, in poorly ventilated spaces where lots of people have sustained contact. That's because it primarily spreads via droplets that fly through the air when an infected person coughs, sings, talks, or sneezes.

https://forum.lankaninvestor.com/t11811-us-recovery-some-americans-spent-stimulus-money-on-toys-while-4-million-skipped-mortgage-payments#106490