Happy Monday and welcome back to On The Money, where we’ve never been more eager for Opening Day. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL– Trump: US economy ‘may be’ sliding into recession: President Trump on Monday said the U.S. economy could be slowing into a recession as businesses across the country shutter to slow the spread of the coronavirus pandemic.
“It may be,” Trump said during a Monday press conference, adding he was focused more on the virus than the economy.
Trump acknowledged that the virus could continue to spread through August and hinder economic activity through the summer.
“I don’t, number one, determine recession,” Trump said. “I just say this: We have an invisible enemy. We have a problem that, a month ago, nobody ever thought about.”
But he expressed optimism that a pandemic-driven recession would be short-lived.
“I think there’s a tremendous pent-up demand both in terms of the stock market and in terms of the economy,” Trump continued. “Once this goes away, once it goes through and we’re done with it, I think you’re going to see a tremendous surge.”
Why it matters: Trump is far from the first person to say the U.S. could be heading into a recession. Gary Cohn, who was Trump’s National Economic Council from 2017-18, said last week that the U.S. was already in a recession. And Kevin Hassett, who chaired the White House Council of Economic Advisers from Sept. 2017 until 2019, said April could be the worst month of job losses in U.S. history.
But that Trump was willing to acknowledge the economic damage facing the U.S. and the steep human suffering it could inflict along the way showed how much more seriously he’s addressing the pandemic after facing criticism for repeatedly downplaying it.
Stocks take worst losses since 1987 crash as Dow plunges nearly 3,000 points: Stocks plummeted even further after a Monday morning plunge following Trump’s comments, with the Dow Jones Industrial Average closing roughly 3,000 points down, a 12.9 percent drop. The S&P 500 fell 11.9 percent, and the Nasdaq composite sunk 12.3 percent.
The Dow’s Monday loss was it’s steepest drop by points and its second-steepest drop by percentage in the index’s history. The Dow’s drop shattered records set on March 12, when the average sunk 2,352 points for a loss of 10 percent.
- The steadily rising number of confirmed cases of COVID-19 in the U.S. and the pandemic’s economic impact have crashed U.S. stocks, sent shockwaves through financial markets and raised the risk of recession to a near certainty.
- Millions of Americans employed in the dining and hospitality, retail, travel, and entertainment industries are likely to lose their jobs or face severe reductions in hours, economists say, while other workers may be forced to stay at home to care for sick loved ones or children whose schools have closed.
As the economy craters, Trump and lawmakers are under growing pressure to pass a massive economic rescue plan that would support workers and businesses facing financial peril due to the pandemic. We’ve got more on that ahead in the newsletter.
LEADING THE DAY
Coronavirus package hits roadblocks amid GOP opposition: The House-passed coronavirus package is quickly running into roadblocks, throwing into question the bill’s timeline for reaching President Trump’s desk.
- House lawmakers passed the bipartisan deal early Saturday morning after around-the-clock negotiations between Treasury Secretary Steve Mnuchin and Speaker Nancy Pelosi (D-Calif.) and a late endorsement from Trump.
- But that’s done little to guarantee its smooth path to the White House as it faces eleventh-hour fixes and opposition from some Republican senators, either of which could complicate and slow the bill’s arrival and passage in the Senate.
The challenges facing the House bill are two fold: First, House Democratic leadership and the Trump administration had to iron out technical changes to the legislation. They had hoped to clear those in the House on Monday, but as of 7 p.m. were still waiting.
The Hill’s Jordain Carney explains the impasse here.
As the Senate struggles to clear the second House-passed bill to bolster the government’s coronavirus response, senators are already piecing together ideas for a third, more ambitious package.
- Senate Minority Leader Charles Schumer (D-N.Y.) is set to propose at least $750 billion to combat the coronavirus.
- Sen. Mitt Romney (R-Utah) on Monday proposed giving $1,000 to every American adult as lawmakers scramble to try to bolster the U.S. economy amid growing concerns over the coronavirus.
- Treasury Secretary Steven Mnuchin is expected to propose up to $800 billion in fiscal stimulus in a meeting with Senate Republicans on Tuesday, according to Politico.
While Congress faces its own hurdles, the Federal Reserve is moving swiftly to unload a flood of stimulus into the economy.
Fed unleashes arsenal amid coronavirus pandemic: The Federal Reserve has nearly unloaded its available arsenal of weapons to avert a recession as the coronavirus pandemic unleashes chaos on the global economy.
- The Fed slashed its baseline interest rate range to 0 to 0.25 percent Sunday, which financial firms use to set rates on home and auto loans, credit cards, and other consumer financial products.
- The Fed also announced it would purchase at least $700 billion in bonds to stabilize financial markets and keep credit flowing to households and businesses.
The central bank’s emergency action could help the financial sector weather the unprecedented shutdown of crucial industries and support the economy’s rebound when the pandemic subsides.
Even so, the escalating closures of restaurants, bars, schools, and retail stores across the country may cause a surge in unemployment and a nosedive in consumer spending that the Fed may have little power to fight. I explain why here.
Reactions:
- “This is a multifaceted problem and it requires answers from different parts of the government.” –Federal Reserve Chairman Jerome Powell
- “The Fed did its job. Now it is up to members of Congress to do theirs.” — Diane Swonk, chief economist at Grant Thornton.
- “The Fed’s emergency actions Sunday appear to have scared investors into thinking that the Fed knows something they don’t. We think the latter is unlikely, but we do think that markets have been slow to grasp the scale of the problem.” — Ian Shepherdson, chief economist at Pantheon Macroeconomics.
GOOD TO KNOW
- Lawmakers should allocate at least another $1 billion in emergency funding for the coronavirus response, according to a letter from health care provider groups to congressional leaders.
- The U.S. Chamber of Commerce called on Congress and the Trump administration Monday to cancel payroll taxes, streamline loan programs for small businesses and enable the creation of credit facilities to provide loans in an effort to mitigate coronavirus economic effects.
- Since the end of the Great Recession, experts warned policymakers that excessive deficits could make it difficult for the government to address the next economic crisis. The coronavirus pandemic is proving them right, and pointing to a precarious road ahead for the nation’s finances.
- Amazon says it plans to hire thousands of new warehouse employees following a “significant” increase in workload and demand for online delivery services amid the coronavirus outbreak.
ODDS AND ENDS
- Gun sales have surged throughout the country as the coronavirus outbreak grips the U.S.
- Celebrity chef and activist José Andrés and the Clinton Foundation announced Monday that they would team up to feed children in Arkansas who are going without meals usually provided by public schools due to the coronavirus outbreak.