EXPLAINER: Suez Canal block could hit product supply chains
This satellite image from Cnes2021, Distribution Airbus DS, shows the cargo ship MV Ever Given stuck in the Suez Canal near Suez, Egypt, Thursday, March 25, 2021. Lloyd’s says more than 50 ships traverse the canal on an average day, carrying 1.2 billion tons of cargo. The Suez situation could compound issues for a supply chain already under pressure from the pandemic and a surge in buying. AdJim Burkhard, who heads crude oil research at IHS Markit, said the impact on the global oil market will be limited if the canal is cleared soon. Wood Mackenzie analyst Lucas Schmitt said only a few LNG shipments were near the canal when the blockage occurred.
Government revises 4th quarter GDP up slightly to 4.3%
GDP in the October-December quarter rose from an estimated rate last month of 4.1%, the Commerce Department reported Thursday. AdEconomists believe all the government relief measures will boost GDP in the current January-March quarter to 5% or higher. Boussour forecast GDP growth for the full year of 7% with annualized growth rates close to 10% in the spring and summer. GDP fell at an annual rate of 5% in the first quarter of 2020, as the COVID-19 pandemic ended the country's record-long economic expansion, which was in its 11th year. GDP plunged by a record 31.4% rate in the April-June quarter and then rebounded by a record rate of 33.4% in the third quarter before slowing to the 4.3% gain in the fourth quarter.
US economy shrank 3.5% in 2020 after growing 4% last quarter
That gain had followed a record-shattering 31.4% annual plunge in the April-June quarter, when the economy sank into a free-fall. The damage from the virus caused GDP to contract at a 5% annual rate in last year's January-March quarter. Housing grew at a sizzling 33.5% annual rate, business investment at a 13.8% rate. That was the deepest annual setback since the economy shrank 11.6% in 1946, when the economy was demobilizing after World War II. That was lower than the 1.6% annual GDP gains during the Obama administration, a period that also included a recession.
Fed confronts a shaky US economy that likely needs more help
Fed officials themselves, including Chair Jerome Powell, have sounded a similar message. In mid-March, when the virus first hit hard, the Fed accelerated its bond purchases to try to ease disruptions in the Treasury bond market resulting from the outbreak. The central bank later modified the rationale for its bond purchases by saying they would help support the economy — the same reason it gave during earlier bond purchases that it engineered to bolster the weak recovery from the 2008 financial crisis. In the past, critics have asserted that the Fed's aggressive bond buying risked destabilizing financial markets and triggering runaway inflation. “Fed officials have made it pretty clear they need help from Congress at this point.”
US economy grew at 33% rate in Q3 but recovery is incomplete
With no further federal aid in sight this year, Goldman Sachs has slashed its growth forecast for the current fourth quarter to a 3% annual rate from 6%. Gregory Daco, chief U.S. economist at Oxford Economics, noted that the record-high third quarter growth in the nation's gross domestic product “tells us little, if anything, about momentum heading into” the current quarter. In the January-March quarter this year, GDP had contracted at a 5% annual rate before a record-setting 31.4% annual tumble in the spring. Americans began shopping again after the spring shutdown, which had sent consumer spending sinking by a record 31.4% annual rate. Business investment rose a strong annual rate 20.3%, reflecting a 70.1% surge in investment in equipment.
Trump's suggestion to eliminate payroll tax doesn't add up
Well be paying into Social Security through the general fund.But aides to the president on Thursday sought to walk back Trumps comments. In comments Wednesday to reporters, Trump said at least four times that he would end the payroll tax. The 12.4% payroll tax split between employers and workers funds Social Security. It is highly unlikely that economic growth would be enough to offset the loss of the payroll tax. Payroll tax cuts are among the least effective ways to promote growth during a recession, said Mark Zandi, chief economist at Moody Analytics.
US is expected to report a record-breaking economic plunge
That would be more than triple the previous worst quarterly economic fall, a 10% drop set in 1958. On Thursday, the government will issue its first of three estimates of economic activity, as measured by the gross domestic product, for the April-June quarter. Sohn noted that the economy needed 6 years to regain the ground it had lost in the 2007-2009 Great Recession. Were trying to do everything we can, day by day, to keep the health of our business, Farish said. ___AP Business Writer Joyce M. Rosenberg in New York contributed to this report.
Mnuchin, Pelosi talk virus relief; GOP slashes jobless aid
While Senate Republicans struggled to roll out their own $1 trillion proposal, Pelosi implored the White House and GOP lawmakers to stop the infighting and come to the negotiating table with Democrats. Our priority, our objective, should be restarting the economy.As bipartisan talks unfold, the White House is now suggesting a narrower relief package may be all that's possible with Friday's approaching deadlines. Pelosi has resisted tackling a relief package in piecemeal fashion, arguing that broader aid is needed for Americans. She panned the Trump administrations desire to reduce the $600 weekly unemployment aid to ensure no more than 70% of prepandemic wages. Friday is also the end of a federal eviction moratorium on millions of rental units that the White House said it wants to extend in some fashion.
By the numbers: Trump reads economic boom into jobs data
CHICAGO President Donald Trump has always been a big numbers guy. )The presidents premature claim to economic victory reflects an artful relationship with numbers that Trump has long displayed. Left unsaid by the president was that African American unemployment inched up to 16.8% last month, the highest its been in more than a decade. Asian American workers' unemployment rate also rose from 14.5% to 15%. Trump scoffed at an African American reporter who noted the disconnect between Trumps comments and what minority workers are enduring.
Survey: 2.76 million layoffs in May, far fewer than expected
BALTIMORE U.S. businesses shed 2.8 million jobs in May, significantly less than the 9.3 million job losses that were expected. The payroll company ADP reported Wednesday that businesses have let go of a combined 22.6 million jobs since March, with the bulk of the layoffs occurring in April. Other sectors that suffered as part of April's 19.6 million job losses saw their layoffs slow sharply. The leisure and hospitality industrywhich includes hotels and restaurantsshed 105,000 jobs last month, down from a revised 7.7 million losses in April. Economists expect the Friday report will show 8 million job losses in May as the unemployment rate approaches 20%.