WASHINGTON — Federal Reserve Chairman Jerome Powell says the outlook for the U.S. economy is “extraordinarily uncertain” and the success of the recovery effort will depend in large part on the country’s ability to contain the spread of the coronavirus.
“A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities,” Powell says in testimony he is scheduled to deliver Tuesday in an appearance with Treasury Secretary Steven Mnuchin before the House Financial Services Committee.
In the testimony released Monday by the Fed, Powell repeats a pledge that the central bank will keep interest rates at their current ultra-low levels until it is sure the economy has weathered the pandemic crisis.
His comments come as parts of the country are experiencing a surge in coronavirus cases that have prompted governors to backtrack some of their steps to reopen their states’ economies.
Powell said the re-opening occurred sooner than expected, with hiring and consumer spending both picking up in May.
“While this bounceback in economic activity is welcome, it also presents new challenges, notably, the need to keep the virus in check,” Powell said.
Both Powell and Mnuchin were expected to face questions from lawmakers on topics including how much more support Congress will need to provide to bolster the economy.
That question has gained new urgency as the surge in cases in states including California, Texas and Florida have raised concerns about possible setbacks to efforts to rebound from the downturn that was brought on by measures to control the spread of the virus.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” Powell says in the prepared remarks, stressing that a successful outcome will depend on policy actions taken by all levels of government.
The Trump administration has indicated it would be willing to back further economic support on top of the nearly $3 trillion in support already approved. But Democrats and Republicans are split on the size of any new rescue package and what elements it should contain.
The Fed has slashed its key interest to near zero and pumped $2 trillion into purchases of Treasury securities and mortgage-backed securities plus providing additional support through 11 special programs to facilitate the functioning of credit markets for businesses and consumers and borrowing by state and local governments.
“We expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum employment and price-stability goals,” Powell said.
Martin Crutsinger, The Associated Press
New security law starts to break down Hong Kong's pro-democracy economy – TheChronicleHerald.ca
By Yanni Chow and Carol Mang
HONG KONG (Reuters) – As soon as Hong Kong’s new national security law came into force last week, Ivan Ng removed all the protest-themed paintings, posters and flags from the list of items for sale at his Onestep Printing shop.
Sandra Leung at Wefund.hk, which sells protest-themed artwork and accessories, said she has suspended sales of protective gear worn by protesters, flags with the slogan “Liberate Hong Kong,” and other items carrying popular chants.
Jeffrey Cheong, owner of Hair Guys Salon, said he closed his shop down for a few days last week to remove pro-democracy decorations.
Ng, Leung and Cheong are three of the 4,500 or so small businesses in Hong Kong’s “yellow economy,” which supports pro-democracy protesters and vice versa. That circle of support is showing signs of weakening in the face of the new law.
“We took down all the protest-related products right after the law was implemented, because the law doesn’t have very clear boundaries of (what constitutes) subversion,” Ng said. In the past week, he said his overall sales are down as much as 80%.
Leung said she had withdrawn items for sale she described as “sensitive,” such as gas masks used by protesters and items with anti-police slogans.
The new law prohibits what China describes broadly as secession, subversion, terrorism and collusion with foreign forces, with up to life in prison for offenders. It came into force late last Tuesday, about an hour before the 23rd anniversary of China taking back control of the former British colony.
The Hong Kong government went further on Friday, declaring the popular protest slogan “Liberate Hong Kong! Revolution of our times” illegal. Public libraries have started to review books written by pro-democracy activists to see whether they violate the new law.
LENNON WALLS GO
Hong Kong and Beijing authorities insist the city retains a “high degree of autonomy” but critics say the law effectively brings Hong Kong under the control of China’s Communist Party and violates China’s promise to safeguard Hong Kong’s freedom for 50 years after the 1997 handover.
Some businesses told local media they had been visited by the police who warned them that pro-democracy decorations were against the new law. Hong Kong police declined to disclose details of any such visits. In a statement to Reuters, a police representative said the objective of any enforcement action was not to target flags or slogans, but to “interdict people’s behavior on inciting and/or abetting others for the commission of secession or subversion.”
With or without police visits, many shops run by pro-democracy sympathizers have in the past week taken down their so-called Lennon Walls, the mosaics of colored Post-it notes with protest messages left by customers, named after the John Lennon Wall in communist-controlled Prague that was covered with Beatles lyrics and messages of political grievance.
The absence of these eye-catching features will make it harder to spot which shops support the pro-democracy movement. The same is true on the web.
An online platform called “Eat With You” that compiles lists of yellow shops and blue shops – whose owners are perceived to be pro-Beijing – deactivated last week. Another, hkshoplist.com, has taken down the reasons why it listed shops as yellow.
Some are finding new ways to stay in touch with their pro-democracy customers, such as putting up mosaics of blank Post-its and replacing posters with plain A4 sheets of paper.
One shop selling ice cream and drinks has taken down protest-themed decorations and updated its menu with fake patriotic slogans, hoping customers will appreciate the satire. “We must drink for the members of the Communist Party and people who love our country!” and “Special drinks for socialism with Chinese characteristics!” are two examples.
“The national security law is suppressing our freedom of speech,” said Selina Leung, 26, the manager of the shop called Talk 2 DeCream. “Rather than violating the law, we are trying to have fun during this hardship.”
(Reporting by Yanni Chow and Carol Mang in Hong Kong; Writing by Marius Zaharia; Editing by Bill Rigby)
Rethinking the boundaries between economic life and coronavirus death – TheChronicleHerald.ca
As governments around the world begin to reopen their borders, it’s clear that efforts to revive the economy are redrawing the lines between who will prosper, who will suffer and who will die.
Emerging strategies for restoring economic growth are forcing vulnerable populations to choose between increased exposure to death or economic survival. This is an unacceptable choice that appears natural only because it prioritizes the economy over people already considered marginal or expendable.
The management of borders has always been central to capitalist economic growth, and has only intensified with neoliberal reforms of the last several decades. Neoliberal economic growth has increasingly become tied to opening up national borders to the flow of money and the selective entry of low-wage labour with limited access to rights.
Read more: What exactly is neoliberalism?
Nation-state borders regulate this flow, and in so doing, reconstitute the borders between people: those whose lives must be safeguarded and those who are considered disposable.
COVID-19 has brought heightened visibility to these border-making practices, with the pandemic intensifying the decisions between economic and social life.
Exceptions made for seasonal workers
Anxious to avert the potential loss of as much as 95 per cent of this year’s vegetable and fruit production, temporary farm workers were deemed the essential backbone of the agri-food economy. For the health and safety of Canadians and seasonal farm workers, farmers required the farm workers to self-isolate for 14 days in order to prevent the spread of the virus.
But the deaths of two farm workers in Windsor, Ont., and serious outbreaks of COVID-19 infections among migrant workers on farms across the country, have revealed systemic forms of racism that reveal the priority given to profit maximization over the health and safety of Black and brown migrant farmers.
Under the Temporary Foreign Worker Program, migrant farmers are not entitled to standard labour rights such as a minimum wage, overtime pay or days off, and federal oversight over housing conditions has been notoriously inadequate.
With worker welfare left largely to the discretion of employers, it is not altogether surprising that reports of crowded and unsanitary housing, an inability to socially distance, delays in responding to COVID-19 symptoms and threats of reprisals for speaking out have become rife throughout the agri-food economy. Even as COVID-19 cases soar in Ontario, provincial guidelines make it possible for infected farm workers to continue working if they are asymptomatic.
It is a tragic irony that the quest for a better life among migrant workers should be one that demands levels of exposure to abuse, threats, infection and premature death that few citizens are likely to face.
Choosing between health and the economy
Now, as governments speak of opening borders more widely due to the economic costs of COVID-19, countries are beginning to make new, challenging decisions between public health and economic growth.
For example, across the Caribbean, the abrupt closure of international borders decimated the region’s tourism industry overnight. Estimating a contraction of the industry of up to 70 per cent, Standard & Poor has already predicted that some islands will experience significantly deteriorated credit ratings.
For example, with tourism accounting for half of Jamaica’s foreign exchange earnings and more than 350,000 jobs, it is not entirely surprising that the tourism minister has justified re-opening as “not just about tourism. It is a matter of economic life or death.” It’s also not surprising that resort chains like Sandals and airlines alike have been eager to resume business as usual.
But assurances that “vacations are back,” even as new cases emerge, ring hollow given that most Caribbean countries have long struggled with overburdened health-care systems. And even with new protocols for screening, isolating or restricting the mobility of infected visitors, it is likely that the region’s poorer citizens — many of whom are women in front-line hospitality services — will bear the brunt of the costs of new infections.
The dependence of Caribbean and Latin American governments on tourism and remittance dollars, and Canada’s dependence on Black and brown people to carry out low-paid essential work, are unequal dependencies that are intimately tied. For the most vulnerable, these dependencies mark the stark overlap between economic life and COVID-19 death.
Yet COVID-19 has also presented us with a unique opportunity to rethink the border inequalities that have governed our lives and the primacy of the economy within it.
It forces us to ask: Who does “the economy” serve? What types of activities are valued or dismissed when we prioritize economic growth? Whose life is valued, and whose continues to be expendable?
Prioritizing the economy over the lives of the poorest and most vulnerable should never be an acceptable fix.
This is a collaborative article written by members of the Global Economies and Everyday Lives Lab at Queen’s University, Canada. Nathalia Ocasio Santos, Grace Adeniyi Ogunyankin, Priscilla Apronti, Hilal Kara and Tesfa Peterson co-authored this piece.
Carolyn Prouse, Assistant Professor of Human Geography, Queen’s University, Ontario; Beverley Mullings, Professor of Geography, Queen’s University, Ontario; Dairon Luis Morejon Perez, Phd Student in Geography and Urban Planning, Queen’s University, Ontario, and Shannon Clarke, PhD Student in Geography, Queen’s University, Ontario
Ukraine economy likely fell 10% in second quarter, full recovery not seen this year: Reuters poll – The Guardian
By Natalia Zinets
KYIV (Reuters) – Ukraine’s economy will be shown to have fallen 10% in the second quarter year-on-year due to restrictions to tame the coronavirus outbreak, and it will not be able to recover fully in the next six months, according to a Reuters monthly poll of analysts.
It would mark the deepest decline since the economic aftermath of Russia’s annexation of Crimea and the outbreak of military conflict in the industrial east, which led to a 14.5% year-on-year fall in the second quarter of 2015.
“Economic activity figures are likely to reveal the full extent of the crisis; we expect the decline to deepen to 10% year-on-year in the second quarter,” analysts for the ICU investment company said in written comments.
Ukraine has secured a $5 billion loan deal with the International Monetary Fund to fight the economic slump, but the market was rattled last week by the shock resignation of the central bank governor.
A robust performance in the farming sector, which has started the grain harvest, may offset some of the damage to the economy from the coronavirus pandemic, but consumer demand and investor activity will remain weak in 2020, analysts said.
They forecast Ukraine’s gross domestic product to shrink 5.5% year-on-year in the third quarter and 3.0% in the fourth quarter.
The State Statistics Service will publish its second-quarter GDP data in mid-August. In the first quarter, the economy declined by 1.3% compared to 2.9% growth in the first quarter last year.
The twelve analysts polled by Reuters see the economy shrinking 6.5% for the full year compared to growth of 3.2% in 2019. The government expects a -4.8% drop in 2020.
“We project GDP to start recovering from 3Q20, but at a slow pace due to lower incomes and precautionary behaviour of consumers and investors,” the ICU said.
The government began imposing restrictions on businesses and people’s movement in March. It began easing those restrictions in May, allowing the operations of public transport, shops, hotels and open-air terraces of restaurants to resume.
But a sharp daily rise of new cases since then has prevented the government from relaxing more restrictions. Ukraine has reported 49,043 coronavirus cases, including 1,262 deaths.
(Editing by Matthias Williams)
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