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    When Can I Apply for a P.P.P. Loan?

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    AdvertisementContinue reading the main storySupported byContinue reading the main storySmall-Business Loan Program Will Restart Monday, but Not for AllA small group of lenders that focus on underserved borrowers will get priority when the Paycheck Protection Program resumes.Businesses that received loans in the first round will be eligible to receive second loans, with stricter eligibility.Credit…Brendan Smialowski/Agence France-Presse — Getty ImagesJan. 8, 2021Updated 4:46 p.m. ETLenders who specialize in working with Black- and minority-owned small businesses will have a head start in tapping Paycheck Protection Program funds when the program reopens next week, a move meant to address complaints that the aid was not distributed equitably the last time around.Starting on Monday, borrowers will be able to apply for new loans through the P.P.P., but only through a small group of community lenders, government officials said on Friday. Community lenders are specially designated institutions that focus on underserved borrowers, including women-led businesses and those run by Black, Latino and Asian owners and other minorities.Government officials did not set a timeline for when larger banks and lenders will be allowed to start processing loans, saying only that it would happen “shortly.”The decision is certain to frustrate many borrowers eager to seek aid through the relief program, which offers small businesses forgivable loans to help them retain and pay their workers. The program closed in August after distributing $523 billion to more than 5 million businesses, but last month’s stimulus package included $284 billion in new funding to restart the relief effort.The move to prioritize community lenders came after criticism that the initial round of Paycheck Protection Program funding was unevenly and unfairly distributed. The program’s structure favored businesses with existing banking relationships, creating unique challenges for some of the most vulnerable business owners.When the program opened in April, the money ran out in just 13 days, inflaming borrowers who were shut out. Congress allocated additional funds, which proved sufficient: When the program ended, more than $120 billion was left unspent.Borrowers were previously limited to just one loan, but the new funding will be available to both first-time and returning borrowers. Businesses will be eligible for a second loan if they suffered a sales drop of at 25 percent or more in at least one quarter of 2020, compared with the previous year. Second loans will be restricted to businesses with no more than 300 employees; initial loans are available to larger companies, generally those with up to 500 workers.An administration official said on Friday that the Treasury Department, which has called the shots on the loan program, is confident there will be enough money to satisfy all qualified borrowers’ needs.“It’s not just that we don’t anticipate the money to run out in a week; we don’t anticipate the money to run out,” the official, speaking on the condition that he not be named, said at a briefing for reporters.The move to resurrect the Paycheck Protection Program — which is explicitly aimed at keeping small business owners from laying off workers — comes as the employment picture is once again darkening. U.S. employers cut 140,000 jobs in December, the first decline since April, the Labor Department said Friday.Banks are expecting heavy demand for the new round of loans, as the virus continues to surge and restrictions on activity are reintroduced.Credit…Mohamed Sadek for The New York TimesThe Small Business Administration, which manages the program, said it will begin accepting applications on Monday from community lenders seeking loans for first-time borrowers. On Wednesday, those lenders will be able to submit applications from people seeking second-round loans.Community lenders make up around 10 percent of the program’s more than 5,000 lenders, according to S.B.A. officials. They include Community Development Financial Institutions, Minority Depository Institutions and Certified Development Companies.Business & EconomyLatest UpdatesUpdated Jan. 7, 2021, 12:58 p.m. ETElon Musk has become the world’s richest person, as Tesla’s stock rallies.Simon & Schuster drops Senator Hawley’s book.Daimler responds: ‘We depend on a reliable and stable political framework.’“We appreciate the effort the S.B.A. is making to ensure that some of the hardest to reach and underserved businesses are first in line,” said José Martinez, the president of Prestamos CDFI, a division of the nonprofit social service group Chicanos Por La Causa. “We’ve been receiving a lot of calls from clients who don’t want to be left behind.”Prestamos lent nearly $27 million to more than 900 borrowers during the relief program’s initial phase. Mr. Martinez said he expects most to return for a second loan.President-elect Joseph R. Biden Jr.’s nominee to head the Small Business Administration — Isabel Guzman, a former top official at the agency during the Obama administration — spoke on Friday about the agency she will inherit.She did not directly mention the Paycheck Protection Program — the largest lending program by far in the agency’s nearly 70-year history — but she acknowledged the turmoil many companies are experiencing.“So many small businesses across the country have been devastated by the pandemic and economic crisis,” Ms. Guzman said. “A disproportionate impact has fallen, as it often does, on our businesses owned by people of color.”Most of the program’s financiers, including some of the country’s largest banks, said they plan to resume lending. Bank of America, JPMorgan Chase, Cross River Bank and Wells Fargo, which collectively made more than one million loans, said they intend to start taking applications as soon as the S.B.A. gives them the green light.Bankers said their borrowers are clamoring to apply for a second loan.“We think we are likely in for a very tough winter until the vaccine is more widely available, and we expect there will be a pretty heavy demand,” said John Asbury, the chief executive of Atlantic Union Bank, in Richmond, Va., which made more than 11,000 loans through the program’s first iteration.The relief loans, which are backed by the government but issued by banks, are designed to be forgiven so long as borrowers use most of the money to pay their workers. The rare offer of essentially free money has been a lifeline for business owners grappling with the pandemic’s forced shutdowns and other economic shocks.Holly Schaffner, the owner of Mrs. Turbo’s Cookies, a bakery in Ohio, received two P.P.P. loans totaling $48,000 for her two stores. Before the pandemic, she had 20 employees; in March, as the crisis took hold and she was briefly forced to close, her staff plunged to six. Her sales dropped as much as 70 percent in some months last year.The relief loans allowed her to rehire several people she had laid off. “If it hadn’t been for that money, I’m not sure I would have had the revenue to be able to make a payroll,” she said. “It was incredibly helpful.”Ms. Schaffner plans to apply for a second loan once her bank starts taking applications. She now has 12 workers and hopes to hire more soon.S.B.A officials said they are making changes to try to avoid a reoccurance of the technical meltdowns and other debacles that plagued the initial lending rounds. When the program opened in April, bankers overwhelmed the system with applications, leading to days of delays and frustrating both lenders and applicants. The problems resurfaced when a second round of funding was released a few weeks later.This time, the agency is using a new system that it hopes will scale to meet demand.It is also abandoning the practice of approving loan applications instantaneously, which allowed some borrowers to receive their loan funds just hours after they applied. In response to concerns about fraud — which some lenders and watchdogs fear was extensive — the agency is adding some automated data-verification steps before applications will be approved. Approvals will generally take at least one day, an agency official said on Friday.AdvertisementContinue reading the main story More

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    Even With $900 Billion Stimulus, Biden Faces Fragile Economy

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    #masthead-section-label, #masthead-bar-one { display: none }The Presidential TransitionliveLatest UpdatesElectoral College ResultsBiden’s CabinetInaugural DonationsAdvertisementContinue reading the main storySupported byContinue reading the main story$900 Billion Won’t Carry Biden Very FarDespite new pandemic aid, he confronts an economic crisis unlike any since he last entered office in 2009. And political headwinds have only stiffened.The challenges greeting President-elect Joseph R. Biden Jr. rival those of the Great Recession, when he became vice president.Credit…Amr Alfiky/The New York TimesJan. 4, 2021Updated 5:48 p.m. ETWith his presidential inauguration just weeks away, Joseph R. Biden Jr. is confronting an economic crisis that is utterly unparalleled and yet eerily familiar.Millions of Americans are out of work, small businesses are struggling to survive, hunger is rampant, and people across the country fear getting kicked out of their homes. The moment was similarly perilous exactly 12 years ago, when Mr. Biden was the vice president-elect and preparing to take office.“I remember the utter terror,” said Cecilia Rouse, who was an economic adviser in the Obama White House and has been chosen to lead Mr. Biden’s Council of Economic Advisers.The $900 billion pandemic relief plan that moderate lawmakers powered through Congress last month provides the incoming administration with some breathing room. This second tier of aid will deliver $600 stimulus checks, assist small businesses and extend federal unemployment benefits through mid-March.But as Mr. Biden has made clear, it is simply a “down payment” — a brief bridge to get through a dark winter and not nearly enough to restore the economy’s health.Roughly 19 million people are receiving some type of unemployment benefit, and many business owners wonder whether they will be able to survive the year. The coronavirus crisis has worsened longstanding inequalities, with workers at the lower end of the income spectrum — who are disproportionately Black and Hispanic — bearing the brunt of the pain.At the same time, bottlenecks in the Covid-19 vaccines’ rollout as well as fears about a much more transmissible variant of the virus could further delay the revival of large swaths of the economy like restaurants, travel, live entertainment and sports.“We are in for some choppy waters, even as we continue to get to the other side of the pandemic,” Ms. Rouse said.Yet despite the scorched earth left by the coronavirus, the economy is on a more stable footing in several ways than it was at the start of 2009.Instead of hurtling down a hole with no clear view of the bottom, Mr. Biden is taking office when the economy is on an upward trajectory. However anemic the growth, most analysts predict that 2021 will end better than it began even if there are stumbles along the way.While this pandemic-related recession was larger in terms of initial job losses and closings, it is what Ms. Rouse labeled “collateral damage” from a health emergency and not a crack in the underlying global financial system.“Now we know what to do: Provide the kind of social safety net for households, businesses and communities so they can get to the other side of the pandemic intact,” Ms. Rouse said.The Biden administration will also focus on attacking the deep-rooted inequalities that this crisis aggravated, she added.Volunteers distributing food donations in Bradenton, Fla. Four million U.S. workers have been unemployed for at least six months.Credit…Eve Edelheit for The New York TimesA closed flower shop in Tampa, Fla. The pandemic has shut down more businesses than the Great Recession did.Credit…Eve Edelheit for The New York TimesAdding to the positive side of the ledger, many households have socked away money, lifting the savings rate to a 40-year high. In contrast, the Great Recession razed storehouses of wealth, in retirement accounts and homes, virtually overnight.“Walking in this time, there is at least a cushion,” said Jason Furman, who led President Barack Obama’s Council of Economic Advisers and is now an economist at Harvard University’s John F. Kennedy School of Government.The Presidential TransitionLatest UpdatesUpdated Jan. 4, 2021, 6:43 p.m. ETSenator Kelly Loeffler of Georgia says she will join the vote to overturn Biden’s electors.The leader of the far-right Proud Boys was arrested in Washington.In Georgia, Jon Ossoff warns Trump not to ‘mess with our voting rights.’But if the Biden administration will have a bit more running room on the economy, it is likely to have a lot less politically than Mr. Obama did in the first two years of his presidency, when his party controlled both houses of Congress.If the Democrats retake control of the Senate by winning both seats in the Georgia runoff election on Tuesday, Mr. Biden’s path will be much easier. Otherwise, the new president will have to deal with a Republican Senate led by Mitch McConnell of Kentucky, who has stymied legislation from the Democratic-controlled House.In that case, the administration will have an uphill slog persuading lawmakers to approve more aid when this round ends. With a Democrat headed for the Oval Office, many Republicans who put aside their concerns about debt when it came to cutting taxes in 2017 have rediscovered their inner deficit hawk.Mr. McConnell successfully resisted President Trump’s calls — echoed by Democrats — to increase the latest stimulus payments to $2,000 from $600.The failure to extend or expand federal aid when it expires this spring not only would cause significant hardships and needless suffering but could seriously scar the economy, said Joseph Stiglitz, a Nobel Prize-winning economist.Even though economic activity will most likely be on an upswing, the economy will remain weakened, Mr. Stiglitz said. Eviction moratoriums and mortgage forbearance have prevented families from losing their homes, but their housing debt has been accumulating even if it has not yet shown up on household balance sheets.Covid-19 vaccinations are crucial to getting the economy back on track.Credit…Alex Welsh for The New York TimesA coronavirus testing site in Los Angeles. Cities and states also have a big role to play in distributing vaccines. Credit…Alex Welsh for The New York TimesMany small businesses, particularly in the hard-hit service sector, which has been a source of low-wage jobs, will not survive. Economic inequality will increase.“There’s been a lot of long-term damage,” Mr. Stiglitz said.At the same time, the ranks of workers who have been unemployed for six months or longer have swelled to more than four million, increasing the chances that they may never find another job. Growing numbers of men and women are also dropping out of the labor force altogether.None of those problems can really begin to be addressed without widely distributing the vaccines and reopening the schools so that parents, particularly mothers, can return to the work force.That is why economists say that funneling direct aid to state and local governments is so crucial.“That sector has been gutted,” said Abigail Wozniak, a labor economist at the Federal Reserve Bank of Minneapolis, but it “is the sector that allows all the other sectors to operate.”States and localities will play a critical role in the vaccine rollout and in providing emergency medical personnel. They will also be responsible for sending teachers back to classrooms that are safe, and helping disadvantaged students regain lost ground.Senate Republicans have been dead set against providing that kind of direct aid. Mr. McConnell has criticized it as a “blue-state bailout,” even though many red and blue states — and rural areas in particular — have lost revenues and public sector jobs.Senator Mitch McConnell, the Republican majority leader, has opposed direct aid to state and local governments.Credit…Stefani Reynolds for The New York TimesEconomists say Congress and the White House must recognize the differences as well as the similarities between the pandemic and the Great Recession.Credit…Stefani Reynolds for The New York TimesEconomists on the right and left agree that while there are echoes from the Great Recession, there are also important distinctions. Restoring the economy this time, they warn, will require a kind of economic serenity prayer: recognizing the similarities, identifying the contrasts, and having the wisdom to know the difference.For Michael R. Strain, an economist at the conservative American Enterprise Institute, the economy has repaired itself more quickly than expected. He worries that some aid proposals, particularly those that prop up specific industries, would keep some dying businesses alive and “slow down the process of adjustment to a new post-virus economy.“The faster that process happens, the faster the economy heals,” Mr. Strain said.Many liberal economists, though, including those on the Biden team, warn against ignoring a crucial lesson from the last recession: Failing to move quickly to provide sufficient money to the people and businesses that need it can damage the economy far into the future.Brian Deese, whom Mr. Biden has picked to lead the National Economic Council, where he worked as an assistant during the Obama administration, said making public investments was necessary to ensure economic growth.“We’re in a moment where the risk of doing too little outweighs the risk of doing too much,” he said.AdvertisementContinue reading the main story More

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    Why Markets Boomed in a Year of Human Misery

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyWhy Markets Boomed in a Year of Human MiseryIt wasn’t just the Fed or the stimulus. The rise in savings among white-collar workers created a tide lifting nearly all financial assets.Neil Irwin and Jan. 1, 2021, 5:00 a.m. ETThe central, befuddling economic reality of the United States at the close of 2020 is that everything is terrible in the world, while everything is wonderful in the financial markets.It’s a macabre spectacle. Asset prices keep reaching new, extraordinary highs, when around 3,000 people a day are dying of coronavirus and 800,000 people a week are filing new unemployment claims. Even an enthusiast of modern capitalism might wonder if something is deeply broken in how the economy works.To better understand this strange mix of buoyant markets and economic despair, it’s worth turning to the data. As it happens, the numbers offer a coherent narrative about how the United States arrived at this point — one with lessons about how policy, markets and the economy intersect — and reveal the sharp disparity between the pandemic year’s haves and have-nots.Income More

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    Will an Overdraft Balance Impact Your Stimulus Check?

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyTheir Finances Ravaged, Customers Fear Banks Will Withhold Stimulus ChecksBanks have the power to decide whether to let overdrawn customers gain access to the stimulus money being deposited into their accounts, but they have taken different approaches.Morgan Banke was hoping her bank would waive her overdraft fees so she could tap her stimulus funds, but the bank’s officials said they would not.Credit…Narayan Mahon for The New York TimesDec. 31, 2020Updated 5:52 p.m. ETSince August, Morgan Banke has had just enough money in her bank account every month to pay either her rent or her car insurance. The unemployed mother of two has relied on her bank, the Dupaco Community Credit Union in Dubuque, Iowa, to cover the difference. But each time she makes that choice, the bank charges her $28 in overdraft fees. Her account is $780 in the red.When she heard that the federal government was working on a fresh stimulus package, Ms. Banke called Dupaco to ask whether it would waive the outstanding fees. If it did so, she hoped, she could tap the stimulus funds. Bank officials said no.Ms. Banke, who has been selling her possessions on Facebook to make ends meet, doesn’t know if she will get any of the money. “When we were told we were getting another stimulus, I was excited,” she said. Now, she is dejected.As 2020 comes to an end, the $600 promised by the federal government — poised to begin appearing in bank accounts this week — is welcome news to millions of needy Americans whose finances have been devastated after nine months of economic crisis wrought by the coronavirus pandemic.But for people whose bank accounts are overdrawn, whether they get their hands on the money depends on what the country’s banks — which, as in Ms. Banke’s case, also are the creditors on overdrawn accounts — decide to do. Banks hold this power because, for a vast majority of people, the stimulus money will be deposited in the same bank accounts in which they also receive tax refunds.In the past week, the largest United States banks have pledged to temporarily zero out their customers’ negative balances so they can get access to their stimulus money and put it toward whatever expense seems the most pressing. Negative balances typically include the various fees that banks tack on to customers’ accounts for letting the customers withdraw more money than they have.Representatives of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo said the banks would be crediting customers’ accounts for roughly a month after the money arrived. After that, the banks will revert the accounts to their previous overdrawn status. It was a reprise of the relief they offered their customers when the first round of stimulus money was distributed in April.Large regional banks, including Fifth Third Bancorp, Truist (the institution formed by the combination of SunTrust and BB&T), PNC Financial Services and US Bank, are following suit.However, some regional and community banks — which often serve areas where there is little competition, including poor neighborhoods and rural communities — are pursuing different approaches. Some smaller banks say they are considering customers’ requests on a case-by-case basis.Citizens Bank, a regional bank catering to customers mostly in the Northeast, said it would temporarily zero out all customers’ accounts, but only if the customers called and specifically requested it. A Citizens spokesman said the bank would email customers a reminder that the option was available to them.Some banks, including Chase, have pledged to temporarily zero out their customers’ negative balances, so they can get access to their stimulus money.Credit…John Taggart for The New York TimesThe disparate approaches of smaller banks often put the onus on customers to figure out what options they have — when many are already stressed out by the enormous financial challenges they face. Consumer income fell in November; layoffs continue, particularly in hard-hit industries like restaurants; and the unemployment rate remains high.Dupaco, the credit union where Ms. Banke, 25, has had an account for six years, ever since she started working as a bartender in Dubuque, doesn’t have a blanket policy for customers. “We work with members on an individual basis to address whatever situation they might have,” Dave Klavitter, a Dupaco spokesman, said. He declined to address Ms. Banke’s case.Having waived Ms. Banke’s overdraft fees on three earlier occasions, bank officials were unwilling to grant her a waiver yet again when she called them recently to ask for one, Ms. Banke said. Although the bank hasn’t said she won’t get the $600 in stimulus funds, Ms. Banke, who lives in Madison, Wis., remains worried. She can’t work because her 5-month-old son has a respiratory illness. She plans to ask Dupaco if it can zero out her balance temporarily.Temporary forgiveness from banks might not be enough, especially for those in the worst financial straits. Since the coronavirus outbreak hit, one in four people in the United States has struggled to pay monthly bills, according to a study released in late September by the Pew Research Center. One in three has dipped into savings or retirement accounts. One in six has borrowed from family or friends to cover bills.Bank fees are adding extra pain to some Americans’ pandemic-induced woes. In 2019, according to the Center for Responsible Lending, big banks collected more than $11 billion in overdraft fees from their customers, with 9 percent of customers paying more than 80 percent of the fees. For the first nine months of 2020, customers of big banks paid $6 billion in overdraft fees, according to Rebecca Borné, a researcher at the nonprofit, which advocates better treatment of consumers by financial institutions.The total amount of penalty fees that bank customers paid in 2020 could end up being lower than last year, but because such a large amount of the penalties are paid by such a small subset of customers, the impact of those fees on their finances will most likely be far worse this year.Aside from the temporary truces some banks have made with their customers around the stimulus checks, banks have not modified their overdraft policies during the pandemic, Ms. Borné said. “Charging unreasonably high fees, multiple fees per day, extended fees and other practices that manipulate the charges to maximize the fees — those practices hurt those struggling the most,” she said.On Christmas Eve, Andrew Shorts, an artist living in Ogden, Utah, was scrambling to pay his electricity bill so that he would not lose power and heat. Mr. Shorts, who makes murals and graphic design projects for local businesses, has been locked out of his account at Zions Bank, a Salt Lake City-based lender, since a rapid fire of automatic deductions for household bills this fall pushed his balance $150 into negative territory.When he called Zions two days before Christmas, a representative told him that he would probably have to pay the bank what he owed it and settle for the remainder. The bank changed its policy after President Trump signed the stimulus bill on Tuesday. A spokesman said Zions would zero out all negative balances of up to $2,000 for 30 days to let customers get their stimulus money.Mr. Shorts described the $600 stimulus payment as “the equivalent of a pool noodle while my wife, child, myself and my now crippled business are drowning in the open sea.” But he still wants the money. In the meantime, he scraped together just enough to pay his electricity bill.On the day Congress passed the latest stimulus legislation last week, Misha Roberts, a 26-year-old student at Ohio State University, could not bring herself to sign into her PNC online account and look up the balance. She knew it was somewhere between $1,200 and $1,700 in the negative, thanks to a combination of bills for basic expenses she could not afford, which were automatically deducted from her account, and overdraft fees.Some banks have closed accounts that have overdrawn balances. A PNC spokeswoman said in cases where accounts had recently been closed, either the I.R.S. would mail the customer a check or PNC would let the customer use a different existing account to receive the money.Ms. Roberts, who wants to be a nurse, is working to pay for college and has already had to drop out several times after running out of money. For two years, she worked overnight shifts as a home health aide, earning $10.50 an hour. But when the pandemic hit, the company sending her out to care for elderly people started to lose clients.“Less hours to go around means less money to go around, and it made my work environment really tense at times,” Ms. Roberts said.She recently quit and now spends weekends cleaning the common spaces, including the gym, communal kitchens, stairwells and lobby, in the apartment building where she lives, making $15 per hour. In an email on Monday, she said of the $600 stimulus: “I really need it or I might be forced to leave school again.”Late on Tuesday, after learning PNC would temporarily zero out customers’ overdrafts, Ms. Roberts finally worked up the courage to look at her balance. But when she tried to sign in, she said, she was blocked. PNC had closed her account.AdvertisementContinue reading the main story More

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    Unemployment Claims Expected to Have Remained High Last Week

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyUnemployment Claims Expected to Have Remained High Last WeekThe weekly report, which will be published Thursday morning, might show a drop in claims because of the Christmas holiday.Victor Lopez-Lucas plays with his daughter Kenya, 1, as they wait in line to receive food donations in Bradenton, Fla., on Tuesday.Credit…Eve Edelheit for The New York TimesDec. 31, 2020, 7:00 a.m. ETNew clues to the economy’s trajectory heading into 2021 will come Thursday morning when the government reports the latest data on initial claims for jobless benefits.While the Christmas holiday might cause a dip in the numbers, with state unemployment offices that process claims closed for at least one day last week, new filings are expected to stay at a very high level, in the range of more than 800,000 per week, said Greg Daco, chief economist at Oxford Economics. “That’s very elevated and we are facing an economy that has slowed down significantly.”Applications for benefits declined during Thanksgiving week, only to move higher later, and a similar catch-up phenomenon could happen after Christmas and New Years, too.In California, widening restrictions on restaurants and other businesses and an uptick in coronavirus infections may cause filings to jump, said Scott Anderson, chief economist at Bank of the West in San Francisco.“California has locked down even more, and there is no end in sight in terms of cases and hospitalizations,” he said. “We’re seeing more layoffs and that hasn’t shown up in the numbers yet.”The $900 billion stimulus package that President Trump signed into law Sunday comes too late to affect the jobless claims data. It will take months for the impact of the aid to be felt, and most economists expect the rate of layoffs to remain high.When fresh monthly jobs data is released by the Labor Department next week, Mr. Anderson expects that it will show a rise in the unemployment rate to 6.9 percent in December, up from 6.7 percent last month. The unemployment rate has fallen sharply since peaking at 14.7 percent in April but hiring has slowed as the economy has faltered in recent months.What’s more, the pace of layoffs has been persistently high, as sectors like dining, travel and entertainment are struggling while the pandemic has kept many people at home.The introduction of vaccines is a bright spot, as are positive economic signs, like surging stock prices and a booming housing market. But it will be months before enough Americans can be inoculated to allow people to go to restaurants, events and movie theaters without fear of being infected.“The trend is not good with the additional closures implemented around the country,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago.AdvertisementContinue reading the main story More

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    Most Americans Are Expected to Save, Not Spend, Their $600 Check

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyMost Americans Are Expected to Save, Not Spend, Their $600 CheckWhile lawmakers debate increasing the stimulus payments to $2,000, experts say it would make far more sense to give more money to the unemployed.Galen Gilbert, a 71-year old lawyer who lives in a Boston suburb, plans to deposit his stimulus check into savings. “I’m not really suffering financially,” he said.Credit…Katherine Taylor for The New York TimesNelson D. Schwartz and Dec. 30, 2020Updated 4:49 p.m. ETGalen Gilbert knows just what he will do with the check he gets from Washington as part of the pandemic relief package, whatever the amount: put it in the bank.“I’ve got more clients than I can handle right now and I’ve made more money than I usually do,” said Mr. Gilbert, a 71-year-old lawyer who lives in a Boston suburb. “So I’m not really suffering financially.”Cheryl K. Smith, an author and editor who lives in Low Pass, Ore., isn’t in a rush to spend the money, either. She plans to save a portion, too, while donating the rest to a local food bank. “I’m actually saving money right now,” Ms. Smith said.President Trump’s demand to increase the already-approved $600 individual payment to $2,000, with backing from congressional Democrats, has dominated events in Washington this week and redefined the debate for more stimulus during the pandemic. Mitch McConnell, the Senate majority leader, said on Wednesday he would not allow a vote on a standalone bill increasing the checks to $2,000, dooming the effort, at least for now.Whatever the amount, the reality is that most Americans right now are much more likely to save the money they receive.Of course, the money will be a lifesaver for the roughly 20 million people collecting unemployment benefits and others who are working reduced hours or earning less than they used to. Yet, for the majority of the estimated 160 million individuals and families who will receive it, spending the money is expected not to be a high priority.After an earlier round of $1,200 stimulus checks went out in the spring, the saving rate skyrocketed and remains at a nearly 40-year high. That largely reflects the lopsided nature of the pandemic recession that has put some Americans in dire straits while leaving many others untouched.Economists on the right and left of the political spectrum said that when otherwise financially secure people receive an unexpected windfall, they almost invariably save it. The free-market economist Milton Friedman highlighted this phenomenon decades ago.Many experts said a truly stimulative package would have earmarked the payments for those who need it most — the unemployed.“We know where the pockets of need are,” said Greg Daco, chief economist at Oxford Economics. “Putting it there would be a much more efficient use of the stimulus.”And because the money will immediately be put to work — the jobless don’t have the luxury of saving it — it would also have a much bigger impact on the overall economy, through what experts refer to as the multiplier effect. In essence, each dollar given to a person in need is likely to benefit the economy more because it would be used to pay for, say, groceries or rent.“Providing $2,400 to a family of four in the same financial situation as they were at the end of 2019 doesn’t do much to boost the overall economy right now,” Mr. Daco said. “It’s not whether it’s a positive or not. It’s their potency that’s in question.”Individuals with an adjusted gross income in 2019 of up to $75,000 will receive the $600 payment, and couples earning up to $150,000 a year will get twice that amount. There is also a $600 payment for each child in families that meet those income requirements. People making more than those limits will receive partial payments up to certain income thresholds.A more effective approach, experts say, would have raised unemployment insurance benefits to the jobless by $600 a week, matching the supplement under the stimulus package Congress passed last spring, rather than the $300 weekly subsidy the new legislation provides. Democrats had pushed for larger payments to the jobless and included it in legislation that passed the House, which they control. But the measure met stiff resistance from Republicans, who control the Senate, and was not included in the final compromise bill.The Coronavirus Outbreak More

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    Kentucky Hurting While Awaiting Federal Pandemic Aid

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyKentucky Is Hurting as Its Senators Limit or Oppose Federal AidUrban and rural fortunes diverge in the state, with the pandemic compounding troubles that predated it.A line for food being given out in Owensboro, Ky., this fall. As hunger and poverty have spread in the state, Senator Mitch McConnell has opposed broad-based aid to state and local governments.Credit…Alan Warren/The Messenger-Inquirer, via Associated PressBen Casselman and Dec. 28, 2020Updated 7:17 p.m. ETIn Perry County, Ky., the local government is cutting back on garbage pickup. Magoffin County is laying off public safety workers. And in Floyd County, where food pantries are reporting that demand has tripled over the past month, officials are trying to figure out how to avoid cuts to a program distributing food to families.“A lot of these kids, this is the only meal they get in a day,” said Robert Williams, Floyd County’s judge-executive, the chief elected official. “I can’t ask a kid to sit on a computer all day with nothing to eat.”In cases and deaths, Kentucky hasn’t been hit as hard by the coronavirus as some other states. Like most of the country, it has experienced a surge this fall, but one less severe than in neighboring Tennessee. Kentucky’s economy is reeling all the same, particularly in rural areas already struggling.“We were in dire need of help economically to start with, before Covid,” said Matthew C. Wireman, the judge-executive of Magoffin County, an Appalachian county where the unemployment rate was 16.7 percent in October, one of the highest in the country.The relief package passed by Congress this month and signed by President Trump on Sunday should provide help. The $600 payments to individuals, criticized by the president and many progressives as too small, would go a long way where the typical household earns less than $40,000 a year. So would the $300 weekly supplement to unemployment benefits. And the bill includes provisions meant to help rural areas, including subsidies for broadband infrastructure and help for small farmers.But the aid would come over the objection of one of Kentucky’s Republican senators, Rand Paul, who was one of just six to vote against the package in the Senate, on the grounds that it amounted to handing out “free money.” And it would be smaller and later than it might otherwise have been because of the work of the state’s other senator, Mitch McConnell, who as majority leader fought to limit the package.Mr. McConnell in particular worked to exclude broad-based aid to state and local governments — help that many local officials in his state say they desperately need.A spokesman for Mr. McConnell, however, said the lawmaker had not been a hindrance and had helped lead the multitrillion-dollar federal response to the pandemic.“The compromise bill is not perfect, but it will do an enormous amount of good for struggling Kentuckians and Americans across the country who need help now,” Mr. McConnell said in a statement Sunday evening.In an email, Mr. Paul blamed Kentucky’s economic problems on orders issued by the state’s governor, Andy Beshear, a Democrat.“The best way for Kentucky to recover is to repeal Governor Beshear’s lockdown edicts that have caused massive unemployment,” the senator said. “I support extending unemployment and paying for it by reducing foreign aid and nation-building expenditures in Afghanistan.”Unemployment rates in some rural counties are in the double digits. Rates of hunger and poverty, high before the crisis, have soared. Kentucky has lost more than 20,000 state and local government jobs since February, and with budgets crippled by falling tax receipts, officials must choose between raising taxes and cutting services.“It’s frustrating that our own senator won’t support local governments,” Mr. Wireman, a Democrat, said. “These are extraordinary times, and we need to be taking extraordinary measures on the national level from our federal government to help folks out.”Like many rural areas across the country, Magoffin County depends heavily on the public sector. State and local government jobs account for nearly a third of all employment in the county, versus an eighth of all jobs nationally. Elliott County, two counties to the north, is even more reliant: Nearly two-thirds of all jobs are government jobs, including more than 200 at a state prison.“In many rural communities, state and local government is the major employer,” said Janet Harrah, executive director of outreach at Northern Kentucky University’s business school.The Coronavirus Outbreak More

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    A Look at What’s in the Stimulus Package Trump Signed

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyA Look at What’s in the Stimulus Package Trump SignedThe $900 billion package provides more relief beyond the $600 checks that have become the focus in Washington.President Trump finally signed a $900 billion stimulus bill that includes much more than just direct payments to households.Credit…Al Drago for The New York TimesDec. 28, 2020Updated 6:31 p.m. ETWASHINGTON — The $900 billion stimulus bill that President Trump finally signed into law on Sunday evening goes well beyond providing the $600 checks that became a huge sticking point in getting the legislation across the finish line.The relief package casts a wide net with a variety of measures aimed at addressing the needs of millions of Americans, including those who have lost their jobs, as well as small businesses, nursing homes, colleges, universities and K-12 schools.The package extends some provisions of the original stimulus package that was passed in the spring, while adding new measures to help working families who have continued to suffer amid the pandemic.The full text of the bill ran almost 5,600 pages. Here’s a look at what’s included.Individual paymentsAmong the most anticipated components of the legislation is the direct payment, with $600 going to individual adults with an adjusted gross income of up to $75,000 a year based on 2019 earnings. Heads of households who earn up to $112,500 and a couple (or someone whose spouse died in 2020) who make up to $150,000 a year would get twice that amount.Eligible families with dependent children would receive an additional $600 per child.In a change from the last round, payments will not be denied to citizens married to someone without a social security number, allowing some spouses of undocumented immigrants to claim the benefit this time around.On Tuesday night, President Trump threatened to veto the bill because he said the payments were too low. He is advocating payments of $2,000. House Democrats planned to bring up an amendment to the bill on Thursday, an aide who was familiar with the proposal said. It is not clear how the House and Senate will act.Unemployment benefitsWith millions of Americans still unemployed, Congress acted to extend multiple programs to help those out of work, albeit at less generous levels than in the spring.The agreement would revive enhanced federal jobless benefits for 11 weeks, providing a lifeline for hard-hit workers until March 14. The new benefit, up to $300 per week, is half the amount provided by the original stimulus bill in the spring.The legislation also extends Pandemic Unemployment Assistance — a program aimed at a broad set of freelancers and independent contractors — for the same period, providing an additional $100 per week.Education resourcesSchool budgets have been severely crippled by the pandemic and left some of the most vulnerable students in dire academic and financial straits. The bill provides $82 billion for education, including about $54 billion for K-12 schools and $23 billion for colleges and universities.The Coronavirus Outbreak More