The United States budget deficit grew to a record $864 billion in June as the federal government continued pumping money into the economy to prop up workers and businesses affected by the coronavirus pandemic, the Treasury Department said on Monday.
The deficit was driven largely by government spending related to the Paycheck Protection Program, which by the end of June had approved more than $500 billion loans to support small businesses. Over all, government outlays topped $1.1 trillion dollars last month, while receipts were down sharply as a result of tax payments that have been deferred until mid-July.
The monthly deficit was the largest since April, when it hit a record gap of $738 billion. For the fiscal year to date, the government is generating red ink at a record clip. So far in fiscal 2020, the deficit is $1.99 trillion, a 267 percent increase from 2019.
The figures underscore the deep fiscal hole facing the United States as it copes with a pandemic that has thrown millions of people out of work and shuttered businesses, resulting in a surge of bankruptcies around the country.
The swelling deficit, while expected, could further complicate talks for another rescue package given Republicans’ concerns about the financial tab. Lawmakers are preparing to resume negotiations over another round of fiscal support as the virus remains resurgent in many parts of the United States.
Trump administration officials have been calling for a payroll tax cut, a capital-gains tax holiday, additional targeted relief to industries that have been hit hardest by the pandemic — such as travel and tourism — and another round of stimulus checks.
The next bill could cost $1 trillion to $3 trillion.
Hong Kong Disneyland will reclose on Wednesday to comply with a government-directed rollback of public activities in the region following an increase in coronavirus infections, the Walt Disney Company said on Monday. Disney called the closure of the theme park “temporary” and said its resort hotels at the Lantau Island complex would remain open.
In closing the Hong Kong outpost again, Disney is complying with new government restrictions on restaurants, gyms, nightclubs, mahjong parlors and other businesses.
Over the weekend, Disney executives in Florida had cited the smooth reopening of Hong Kong Disneyland and other Disney parks in Asia as evidence that Walt Disney World could reopen safely, even as coronavirus cases in Florida surge.
Hong Kong Disneyland, which is partially owned by the local government, initially closed because of the virus on Jan. 26. It reopened on June 18 with limited capacity and other safety measures, including temperature checks for visitors and employees. Hong Kong Disneyland attracted about six million visitors last year, making it the smallest park in Disney’s portfolio.
The International Monetary Fund said on Monday that it was sharply cutting its forecast for economic growth for the Middle East and Central Asia, as Saudi Arabia and other oil exporters in the area are hit by a “double whammy” of oil price and output cuts and the effects of lockdowns.
Oil export revenue in the region is expected to decline by $270 billion, the I.M.F. said. Activities including tourism, transportation and retail are also being hit hard by the lockdowns designed to curb the pandemic, it said.
The fund said it now anticipated that oil exporters like Saudi Arabia, Kuwait, and the United Arab Emirates would experience a 7.3 percent economic contraction on average this year, down from a 4.2 percent contraction predicted in April.
Overall, across the vast region stretching from Mauritania and Algeria in North Africa to Turkmenistan and Uzbekistan in Central Asia, the fund predicted the economy would shrink by 4.7 percent in 2020, a 2 percentage point reduction from its April forecast.
The fund also warned that downward pressure on these economies would bring risks of “social unrest and political instability” and that there could be “potential renewed volatility” in oil markets, which had seen a partial recovery to about $42 for Brent crude, the international benchmark, after some crude futures contracts fell into negative territory in April.
Despite the sluggish economic performance, the fund noted that both higher credit-rated countries, including Saudi Arabia and Qatar, and others with lower ratings, including Bahrain and Egypt, have so far managed to retain access to international capital.
Stocks in the United States climbed on Monday, shaking off the continuing rise in coronavirus cases for another day, as investors instead focused on the coming earnings season and their first chance in months to hear about how businesses were coping with the pandemic.
The S&P 500 rose more than 1 percent, gains that put it close to being back in break-even territory for the year. Stocks in Europe and Asia were also higher.
Many companies, rocked by uncertainties caused by the spread of the coronavirus, have stopped giving guidance on profit projections through the year, so traders will be looking especially closely at the quarterly numbers as they are reported.
On Monday, Pepsico shares rose after the company reported better than expected results, in part because of a jump in sales of snack foods. On Tuesday, JPMorgan, Citigroup and Wells Fargo will all report their results, and a range of other companies from Netflix to Delta Air Lines will also provide updates later in the week.
The gains recently have come despite the unrelenting spread of the coronavirus in many parts of the world, but the market has also proven itself susceptible to a sudden downdraft if sentiment shifts and investors choose to focus on the risks to the economy profits — something that could happen if corporate results come in far weaker than expected.
The recent gains in the S&P 500, in fact, have only served to recoup losses from early in June.
Florida on Sunday reported more than 15,000 new cases, the highest single-day total by any state since the start of the pandemic. The economic crisis is prompting a growing coalition in the United States — including Democrats and Republicans, labor and business — to push for a new training effort to upgrade the skills of American workers, creating what one proponent called “a Marshall Plan for ourselves.”
But lifting sentiment on Monday was news from Pfizer that its candidates for a potential Covid-19 vaccine, being developed with BioNTech, have received “Fast Track” designation from the Food and Drug Administration that could enable the potential vaccines to be developed more quickly. Shares of both companies rose.
Oil futures reversed earlier losses to climb slightly, beginning a week when major producers are meeting to consider market trends; OPEC+, the group that includes Saudi Arabia and Russia, is likely to increase their output in August, as coronavirus lockdowns ease and demand begins to rise again.
The plunge in oil prices caused by the coronavirus pandemic is forcing American oil and gas companies into bankruptcy. That is bad news for the environment — and for employees of those companies who were injured on the job.
Some companies are claiming in court filings that they are so broke they can no longer afford to clean up the environmental messes they caused while in operation: methane leaks, oil spills and other chemical contaminations. At least one bankrupt firm, Chesapeake Energy, also said it could no longer pay to engage in a lawsuit brought by injured employees.
Only one group has remained protected: the exiting chief executives. Impending financial ruin did not stop the companies from paying their top executives millions of dollars during their final days.
🏦 America’s biggest banks report second-quarter earnings this week, with analysts expecting loan-loss provisions to eat into profits in a major way. Trading and fee income will help those with strong investment banking divisions, but the probable drop in earnings could put pressure on dividends. Citigroup, JPMorgan Chase and Wells Fargo report on Tuesday, Goldman Sachs is up on Wednesday, and Bank of America and Morgan Stanley round things out on Thursday.
🗣 Other companies reporting earnings this week: Delta Air Lines on Tuesday, kicking off what’s expected to be the worst quarter ever for airlines; Netflix on Thursday, giving an update on how lockdowns have lifted subscriptions; and Johnson & Johnson, also on Thursday, providing news on its coronavirus vaccine. BlackRock, Burberry, Charles Schwab, Domino’s Pizza and UnitedHealth are also due to release results.
🛢 OPEC members and Russia will hold a virtual meeting on Wednesday, in which the major oil-producing states are expected to reverse production cuts. But a resurgence in coronavirus infections may scuttle those plans.
💰 Officials at central banks around the world will debate economic stimulus. The Bank of Canada and Bank of Japan are to announce their latest moves on Wednesday, and the European Central Bank on Thursday.
🛍 Key gauges of U.S. consumers will come on Thursday, with the data on retail sales, and Friday, with a reading of consumer confidence. Both are expected to improve, but not by as much as last month.
Now that Independence Day is behind us, tax day is fast approaching.
Because of the coronavirus pandemic, the Treasury Department postponed the traditional April 15 federal tax filing deadline until July 15. And this time, there’s no wiggle room. Last month, the Internal Revenue Service announced that there would not be another blanket filing delay.
So if you haven’t filed your return yet — or if you’ve filed but haven’t yet paid the taxes you owe for 2019 — the deadline is Wednesday.
“It’s just like April 15, but in July,” said Cindy Hockenberry, director of tax research and government relations for the National Association of Tax Professionals, a trade group.
About 142 million taxpayers had filed returns as of July 3, according to I.R.S. statistics, but the agency has struggled to process returns because of reduced staffing during the pandemic. The agency had processed about 131 million returns as of July 3 — 10 percent fewer than the same time last year.
And some taxpayers are facing long delays in getting the refunds they’re owed, according to a report from Erin Collins, the new national taxpayer advocate, who represents filers.
Economists, business leaders and labor experts have warned for years that a coming wave of automation and digital technology would upend the work force, destroying some jobs while altering how and where work is done for nearly everyone.
In the past four months, the coronavirus pandemic has transformed some of those predictions into reality. By May, half of Americans were working from home, tethered to their employers via laptops and Wi-Fi, up from 15 percent pre-pandemic, according to a recent study.
The rapid change is leading to mounting demands for training programs for millions of workers. On their own, some of the proposals are modest. But combined they could cost tens of billions of dollars, in what would be one of the most ambitious retraining efforts in generations.
A group of mainly corporate executives and educators advising the Trump administration on work force policy called for “immediate and unprecedented investments in American workers,” both for training and help in finding jobs. And even before the pandemic, former Vice President Joseph R. Biden Jr. had proposed investing $50 billion in work force training.
In Congress, there is bipartisan support for giving jobless workers a $4,000 training credit.
“This is the moment when we should make a significant public investment,” said David Autor, a labor economist at M.I.T., “when we should have a Marshall Plan for ourselves.”
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The owner of New York & Co., the women’s apparel chain that traces its roots to 1918, filed for Chapter 11 bankruptcy on Monday in U.S. Bankruptcy Court for the District of New Jersey. RTW Retailwinds, which also owns the brands Fashion to Figure and Happy x Nature, said in a statement that it had about 378 retail and outlet locations and “expects to close a significant portion, if not all, of its brick-and-mortar stores.” The company blamed its bankruptcy on “the combined effects” of a difficult retail environment and the coronavirus pandemic.
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Consumers continued to snack on Tostitos and Cheetos during the pandemic, boosting revenues for snacks at the food giant PepsiCo during the second quarter. Total revenues fell 3.1 percent in the second quarter to $15.9 billion due largely to a steep drop in sales in Latin America and a falloff of revenues in beverages in North America. But those declines were somewhat offset by strong sales in chips and snacks as well as a double-digit climb in the company’s Quaker Oats cereals and other foods. The company also said it hopes to grow that business this fall with the release of Cheetos Mac ‘n Cheese.
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REI, the outdoor equipment chain, confirmed on Friday that it would lay off 400 retail employees by Wednesday as the industry continues to struggle through the pandemic. The company’s cuts follow the elimination of 25 percent, or 300 employees, at its headquarters in Kent, Wash., in April.
After agreeing this spring to drastically cut back on oil production to keep prices stable in the face of widespread lockdowns imposed to contain the coronavirus pandemic, the world’s major oil producers, including Saudi Arabia and Russia, are considering reversing some of the cuts.
Representatives for the oil-exporting countries will meet to discuss the plan on Wednesday. Their decision is being complicated by the surge in cases of the Covid-19 virus in the United States and Brazil.
Even if they do loosen up production somewhat in August, the new output will be far lower than it was before the coronavirus crisis struck. In April, the producers agreed to cut production by 9.7 million barrels a day, a level that was set to last to the end of July. The new output level will still represent a reduction of 7.7 million barrels a day.
If you have a mortgage and can’t afford to pay it because of fallout from the coronavirus, you may be able to push off your payments for several months, or even into next year. But if you’re struggling to pay your rent, your options are probably much more limited.
Local, state and federal governments have laid out a patchwork of programs to pause certain eviction proceedings, but some of those have already expired — and one eviction protection component set out in the CARES Act is scheduled to expire by July 25.
If you’re having trouble paying your rent, your situation might feel hopeless. It may not be — and experts have these suggestions for what to know and what to do.
Act First If you’ve lost your job or part of your income, your instinct may be to avoid your landlord. But it’s probably better to make contact and explain what’s going on.
Don’t Just Leave In most areas, you don’t have to move until there has been some sort of legal finding against you and an officer of the law arrives to carry out any order of eviction.
Get Legal Help Contacting your local Legal Aid office is a good start.
Consider the Landlord They have to pay utilities, taxes, maintenance and insurance, too.
Review the Rules Depending where you live and the details of the mortgage for the property you occupy, you might be protected from eviction.
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U.S. Budget Deficit Surges to a Record $864 Billion: Live Market Updates - The New York Times
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