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Next level?
New claims for unemployment benefits have remained sustained high in recent weeks, suggesting layoffs remain high and labor market momentum is slowing. According to the Ministry of Labor, initial unemployment benefits have remained almost unchanged since the end of June, at over 1.3 million per week. This halted the rapid decline from a high of 6.9 million in late March when the pandemic and business closings stalled parts of the U.S. economy. Similarly, the number of workers receiving unemployment benefits under regular government programs – which covers the majority of workers – has increased to nearly 17 million in the past few weeks. The stable number suggests that new hires and recalls of workers make up for layoffs, but no longer significantly lower unemployment benefits, reports Eric Morath.
The labor department releases unemployment claims data at 8:30 a.m. ET.
WHAT YOU NEED TO WATCH TODAY
US unemployment claims are expected to hit 1.423 million in the week ending August 1, a slight decrease from 1.434 million the week before. (8:30 a.m. ET)
Robert Kaplan, President of the Dallas Fed talks about the economy at 10 p.m. ET, and Fed Governor Lael Brainard talks about instant payments at 12 p.m. ET.
Japan budget expenditure for June is at 7:30 p.m. ET.
TOP STORIES
Setback in spending
Many economists expect the last week to improve by $ 600 a week Unemployment benefit This results in a sharp drop in household spending and a setback to the near-term recovery of the US economy, even if the default turns out to be temporary. The payments, the economists said, enabled consumers to pay rent, utilities, car loans and credit card bills, and protected the economy from the cascading effects of a sudden drop in consumer demand when the coronavirus pandemic broke out in the US, reports Kate Davidson.
In normal times, the unemployed tend to spend around 7% lessbecause benefits only replace a fraction of their wages. Since Congress approved the increased payments in March, spending among laid-off workers has increased 10% from pre-pandemic, while total spending among people in jobs has decreased 10%, researchers from the University of Chicago and the JPMorgan Chase Institute found firmly.
There’s still no deal to replace the expanded perkswhich expired at the end of July. The White House tried to increase pressure on democratic leaders to gain a foothold in their country Negotiations about coronavirus aidSiobhan Hughes reports that if an agreement can’t be reached by the end of the week, Republicans were willing to leave and rely on President Trump’s executive action.
Chicago Fed President Charles Evans said the US economy would face a much steeper ascent, should Congress not manage to at least partially expand and broadly define the more generous unemployment benefits fiscal measures. “Problems are brewing with the flow of these relief efforts,” Evans told reporters. “If we go very long without somehow addressing the reduction and evaporation of this support, I think that will translate into lower aggregate demand. And that would be very costly for the economy. “
Home Sweet home, office, classroom …
In a world of zero interest rates and bubbling stock markets, your home may offer that best return in every asset class– provided you remember to go back the right way. The total return is made up of capital gains plus income. With stocks and bonds, the income is dividends or interest – cold, hard money. But with your home, it’s the services it provides that may not be redeemable but are very tangible. Traditionally, the most important service your home provided has been accommodation. But since the pandemic, their services have expanded far beyond that: office, classroom, recreation room, writes Greg Ip.
Speaking of services, the Institute for Supply Management The index of activity in industries such as travel, healthcare, restaurants and real estate rose to 58.1 from 57.1 in June. Values above 50 indicate expansion, while values below that indicate contraction. “Respondents remain concerned about the pandemic. However, they are largely bullish about business conditions and the economy as businesses continue to reopen, ”said survey director Anthony Nieves.
Trade disruptions
US Exports and imports both rose in June for the first time in six months. However, trade flows remained well below the pre-pandemic level, which only partially reflected an economic recovery, reports Paul Kiernan.
The US has become dependent on China for essential medicines. Paracetamol, antibiotics, and high blood pressure treatments are among a number of pharmaceutical ingredients that are mostly made in China. Pandemic disruption and high demand have raised concerns about the Delivery of medicines, Reports Chuin-Wei Yap.
Top of the Pops
The Bank of England kept its policy rate stable and said that British economy would take until the end of 2021 to make up for ground lost during the coronavirus pandemic. Officials estimate the economy contracted around 20% in the second quarter when a nationwide lockdown went into effect to contain the outbreak. This compares to estimates of 9.5% for the US and 12% for the euro zone, which highlights the extent of the UK’s economic success, reports Jason Douglas.
Explosion brings Lebanon to the brink
Lebanon was already facing an economic and political crisis. The catastrophic explosion on Tuesday destroyed one of Lebanon’s commercial arteries, the port of Beirut, causing billions in damage. Rebuilding the disintegrating economy will now be much more difficult, report Jared Malsin and Nazih Osseiran.
WHAT WE’LL READ
What if Covid-19 stays here? “We don’t yet know if people who recover from Covid-19 can be re-infected. When immunity wears, the disease becomes endemic, as opposed to a model where recovery confers permanent immunity. This column takes into account the possibility that immunity is in fact temporary and derives a stylized optimal containment guideline to reduce the initial wave of infection and then treat persistent infections. In practice, this means that partial bans and social distancing measures may be the norm in the years to come, ”write Chryssi Giannitsarou and Flavio Toxvaerd on Center for Economic Policy Research.
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