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The next stimulus bill will help save our economy — it should transform it, too | TheHill – The Hill

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As work begins on a near-term aid package, no resource should be spared to support Americans in the fight against COVID-19. We will also face critical choices on the needed investments to bring tens of millions of people on unemployment back into the workforce.

How will we decide to rebuild our economy? Will we attempt to simply rebuild what we had, an economy with long stagnant wages and a widening wealth gap, powered by fossil fuels that threaten our planet? Or will we use this opportunity to try and build an economy more resilient, safer and more sustainable for the American people?

This is a unique moment and we must make bold choices. I believe we must choose to make a transformational investment in a green economy that not only delivers an economic recovery, but also serves as a down payment on our efforts to tackle the climate and environmental crises we face.

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The oil and gas industry is drowning in all-time high debt. Coal is already in steep decline. The fracking and oil shale booms were fueled by cheap debt and years of easy credit, dependent on expensive oil and access to international markets. That bill comes due when those markets return to cheaper energy from countries such as Russia and Saudi Arabia, leading to waves of layoffs and bankruptcies.

The recent steps taken by the Trump administration to waive environmental enforcement during a pandemic, roll back fuel economy standards, and initiate a fire sale of cheap oil and gas leases will not put the economy on a firm footing. The boom and bust nature of the fossil fuel industry is not sustainable. Not even the Fed can bail out the planet.

No ordinary spark will restart the economy. We need a lightning bolt. Our stimulus must focus on shovel-ready projects in job intensive industries that can create jobs quickly for people out of work, bend the carbon curve, and cut air pollution that threatens the public health of frontline communities.

There are many infrastructure needs: ports, water utilities, the electric grid, mass transit, homes, buildings, and manufacturing. The good news is there is no shortage of ideas that members of Congress have put forward to invest in our infrastructure while reducing pollution and creating green jobs.

Take our homes and buildings, which account for almost 40 percent of America’s carbon emissions. A combination of weatherization and decarbonization can create millions of green jobs.

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The U.S. energy efficiency industry already directly supports 2.38 million jobs, more than the oil, gas, and coal industries combined. More than half of these jobs are in the construction industry. Households spend $230 billion annually on home energy consumption. Small businesses spend $60 billion. A massive investment in weatherizing millions of homes and buildings can create hundreds of thousands of jobs in communities and put billions of dollars back into the hands of households and businesses. It would also boost small business, since businesses with less than 20 employees make up 79 percent of energy efficiency employers.

Millions of our homes and buildings are also dependent on gas for appliances and heating, which is untenable for seriously addressing climate change. Explosive gas is piped through decades old, often leaky, pipelines and burned in our stoves and heaters. Children living in a home with a gas cookstove have a 42-percent increased risk of asthma. Analysis has found that electrifying 100 percent of all buildings in California could support more than 100,000 fulltime workers in the construction industry. A national electrification effort would support hundreds of thousands more.

A program of Apollo-level ambition to reach 100 percent clean energy in the electric sector by 2035 would complete the decarbonization of our buildings and create millions of jobs. The solar, wind, geothermal, and battery storage industries already collectively support 437,498 jobs, despite accounting for only 9.5 percent of our energy generation in 2019. The entire electric sector, including fossil fuels, employs 896,800 people. Vastly increasing the amount of clean energy generation would have a tremendous economic impact from the coasts to the heartland.

Providing these examples is only scratching the surface. A stimulus can focus on advanced vehicle manufacturing, modernization of our power grid, micro-grids to strengthen communities from disasters, the electrification of our ports, regenerative agriculture by small farmers and much more. We can tie this infrastructure funding to the creation of prevailing wage and union jobs that provide good health care and benefits. We can strategically invest in distressed and underserved communities.

Rather than trying to force jobs back into the declining fossil fuel economy as the president is doing, a green stimulus can provide the necessary support to transition workers who have lost their jobs into job intensive green industries that won’t go boom and bust based on the whims of the Saudis and Russians. This next stimulus bill – tasked with putting millions of Americans back to work – presents the once-in-a-generation opportunity to do it.

We have to get this right. There are no do overs. We know the importance of listening to our scientists. We must understand the consequences of acting too late. This cannot be a lost decade for our economy or our planet.

Congress must lead.

Congresswoman Nanette Diaz Barragán represents the 44th District of California in the U.S. House of Representatives. She is a member of on the House Energy and Commerce Committee, and serves as the Co-Chair of the United for Climate and Environmental Justice Task Force. 

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The extreme impacts from the lockdown economy: Morning Brief – Yahoo Canada Finance

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Employment down, savings up, and an uncertain summer for the U.S. economy

June is here.

And as summer has arrives across the country, so too does something resembling a resumption of economic activity.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="We’ve noted recently that economic data has stopped getting worse, building the case that the most severe impacts of the lockdown-related economic stoppage are behind us.” data-reactid=”22″>We’ve noted recently that economic data has stopped getting worse, building the case that the most severe impacts of the lockdown-related economic stoppage are behind us.

But this still leaves the economy a long way from healed.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As Bank of America outlined in a note last month, the current recovery is likely to play out in three phases: lockdown, transition, recovery. We are now in the transition phase. But what this phase might look like continues to be informed by some of the jarring data coming out of the economy’s March-April lockdown phase.” data-reactid=”24″>As Bank of America outlined in a note last month, the current recovery is likely to play out in three phases: lockdown, transition, recovery. We are now in the transition phase. But what this phase might look like continues to be informed by some of the jarring data coming out of the economy’s March-April lockdown phase.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="What we know is that tens of millions of workers have lost jobs. Last Thursday, initial jobless claims data brought total filings for unemployment insurance since this crisis began to north of 40 million.” data-reactid=”25″>What we know is that tens of millions of workers have lost jobs. Last Thursday, initial jobless claims data brought total filings for unemployment insurance since this crisis began to north of 40 million.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="And on Friday, the April data on personal income, outlays, and savings served as another stunning entry in the history books. In response to mass unemployment, we know that consumers saved at a record rate, cut spending at a record rate, and saw incomes rise due to enhanced unemployment benefits passed through the CARES Act.” data-reactid=”26″>And on Friday, the April data on personal income, outlays, and savings served as another stunning entry in the history books. In response to mass unemployment, we know that consumers saved at a record rate, cut spending at a record rate, and saw incomes rise due to enhanced unemployment benefits passed through the CARES Act.

Taken together, this data really tells the simplest story of what happened in the U.S. economy during the most severe stage of this crisis — millions of people lost jobs and saved every penny they could as a result. How we go forward from here will be informed by fiscal policy, the spread of the virus, and how many workers are re-employed quickly.

“Consumer spending fell off a cliff in April, collapsing by 13.6% [month-over-month] while the annual momentum plunged to its weakest pace on record,” Lydia Boussour, senior U.S. economist at Oxford Economics, said in a note to clients. “Meanwhile greater benefit payments temporarily lifted income momentum to its strongest pace on record.”

The CARES Act boosted personal income in April while spending rose at a record pace amid massive job losses during the most severe stage of shelter-at-home policies hurting economic activity. (Source: Oxford Economics)
The CARES Act boosted personal income in April while spending rose at a record pace amid massive job losses during the most severe stage of shelter-at-home policies hurting economic activity. (Source: Oxford Economics)

Boussour added that, “Amid extreme uncertainty, the savings rate spiked from 12.7% to 33.0% — the highest rate ever. This underscores how the global coronavirus recession is leading to more frugal consumer behavior which will dampen the recovery. This is particularly true as the boost from social benefits will gradually erode over time leaving households more financially constrained.”

And so it seems that Congress was able to keep U.S. consumers afloat while shelter-at-home policies and fears about the future kept most of those excess dollars coming into consumer stashed away. Savings during this initial phase of the pandemic and the recession could, it seems, help boost the economy into the second half of the year.

Michael Gapen at Barclays said in a note published Friday that, “under the assumption households have not spent the entirety of safety net payments already, the potential good news in the report on April personal income is that households have, on net, likely accumulated sizeable cash savings that could be spent in upcoming quarters should the U.S. economy successfully emerge from economic lockdowns.”

April’s personal income and spending data, then, serves as evidence of the consumer holding what amounts to economic dry powder as we emerge from shelter-at-home policies.

How quickly the labor market heals, however, is likely to be more important in shaping how eager consumers are to resume consumption in the months ahead.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This coming Friday, the May jobs report is expected to show the unemployment rate rose to 19.6% last month with another 8 million Americans losing their jobs, according to estimates from Bloomberg. In the view of some economists, the stubbornly high level of initial jobless claims shows that businesses which initially closed on a temporary basis early in this crisis are now closing permanently.” data-reactid=”45″>This coming Friday, the May jobs report is expected to show the unemployment rate rose to 19.6% last month with another 8 million Americans losing their jobs, according to estimates from Bloomberg. In the view of some economists, the stubbornly high level of initial jobless claims shows that businesses which initially closed on a temporary basis early in this crisis are now closing permanently.

The more time that passes without answers for businesses and consumers, the more these temporary disruptions become permanent. Which is the whole story of the “transition” economy and the summer of 2020 — how many temporary changes can be prevented from becoming permanent.

The fewer the better. And the clock is ticking.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="By&nbsp;Myles Udland, reporter and co-anchor of&nbsp;The Final Round. Follow him at&nbsp;@MylesUdland” data-reactid=”52″>By Myles Udland, reporter and co-anchor of The Final Round. Follow him at @MylesUdland

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  • 10 a.m. ET: ISM Manufacturing, May (43.5 expected, 41.5 in April)

  • 10 a.m. ET: ISM Prices Paid, May (40.0 expected, 35.3 in April)

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South Korea Unveils $62 Billion 'New Deal' to Reshape Post-Virus Economy – BNNBloomberg.ca

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(Bloomberg) — The South Korean government unveiled a 76 trillion won ($62 billion) ‘New Deal’ spending plan to reshape the economy in the aftermath of the pandemic after slashing its growth forecast for the year.

The plan, first outlined by Moon in April, aims to refocus the economy through 2025 by supporting job growth and new industries. It will partly be funded by a third extra budget now being drafted, according to a statement on the policy outlook for the second half.

The extra spending will help an economy forecast to grow by just 0.1% this year, the slowest expansion since the 1998 Asian financial crisis. The latest projection was more optimistic than the contraction expected by the Bank of Korea and private economists, but the government acknowledged downside risks to its view should a second virus wave emerge.

South Korea’s trade-dependent economy is suffering as the pandemic hits overseas markets. New virus clusters have also sprung up at home, raising fear among the public and potentially hindering a domestic recovery. President Moon Jae-in’s administration has so far announced 250 trillion won in measures to prop up the economy, including direct support, loans and funds to stabilize financial markets.

While previous measures have been focused on helping the economy ride out the pandemic, the government’s long-term spending plan envisions the creation of 550,000 jobs by 2022. The plan seeks to have 100,000 specialists in artificial intelligence and software programming.

Some 31 trillion won will be spent on the project by 2022, when Moon’s term ends. Another 45 trillion won will be spent by 2025.

The focus is to promote the use of fifth generation wireless networks and artificial intelligence across industries and foster digitalization in South Korea’s least developed areas. Investment will also support startups focusing on green technologies, while the country seeks to make its manufacturing sector more energy-efficient.

South Korea to Make 5G, AI Centerpieces of ‘Korean New Deal’

Part of the new-deal fund will be used to retrain workers and expand employment insurance for universal coverage.

To accelerate South Korea’s economic recovery this year, the government said it will use funds from the upcoming extra budget to issue discount coupons to encourage spending. It will also lower the consumption tax on car purchases during the second half of the year. Tax incentives will be offered to companies that increase investment by more than their average in the past three years, the statement said.

The government said inflation will probably slow to 0.4% this year, slightly better than the BOK’s 0.3% estimate. It sees zero job growth, down from 300,000 in 2019. Exports are expected to fall 8% this year while imports drop 8.7%.

©2020 Bloomberg L.P.

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South Africa partly lifts lockdown to try to fix battered economy – The Guardian

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By Tim Cocks

JOHANNESBURG (Reuters) – South Africa partly lifted a two month-old coronavirus lockdown on Monday, letting people outside for work, worship, exercise or shopping, and allowing mines and factories to run at full capacity to try to revive the economy.

President Cyril Ramaphosa was widely praised when he ordered one of the world’s strictest lockdowns at the end of March, confining people to their homes, forcing miners and manufacturers to slash operations by half, and banning the sale of alcohol and cigarettes.

But the measures have battered the economy of Africa’s most industrialised nation, which was already in recession before the virus, owing mostly to power cuts at its dysfunctional state provider, Eskom.

The central bank expects it to contract by 7% this year.

The government hopes Monday’s move to “level 3” lockdown will sputter businesses to a start. It will inevitably increase the number of coronavirus infections, which over the weekend jumped past 30,000.

“The move to level 3 … marks a significant shift in our approach to the pandemic,” Ramaphosa was quoted in South Africa’s Independent as saying on Sunday at an editors’ forum.

South Africa has so far had fewer than 700 COVID-19 deaths, while vastly more people – half of whom live below the official poverty line – are at risk from hunger because of the shutdown.

Industry officials said the outlook for the manufacturing sector remained bleak, despite the opening up. Output fell for the ninth consecutive month in February.

Philippa Rodseth, executive director of the Manufacturing Circle association, said she expected demand to come “first and foremost in medical textiles and equipment and PPE (personal protective equipment), although that’s not going to contribute to overall aggregate demand”.

Ramaphosa’s move to re-open so quickly, long before new COVID-19 infections reach their peak, has been controversial.

Schools had been ordered to open on Monday for the last years of primary and secondary school, but teachers’ unions and governing associations urged their staff to defy the order, saying schools were not equipped to keep staff and pupils safe.

The education ministry backed down late on Sunday, saying pupils would only return the week after next. Teachers will report this week for training and to receive protective gear.

However, Western Cape province, which is run by the opposition Democratic Alliance, announced that its schools would re-open for those grades as planned on Monday, because they were well-equipped.

The province is the main coronavirus hotspot, with two thirds of cases.

The Marxist main opposition Economic Freedom Fighters (EFF) have meanwhile accused authorities of sacrificing poor and vulnerable workers to the interests of a wealthy elite.

The EFF and others have also criticised the government’s decision to re-open churches and other places of worship if they limit to 50 people, despite the risks of spreading the virus.

(This story corrects to make clear central bank expects economy to contract by 7%, not 4%).

(Additional reporting by Nqobile Dludla and Alexander Winning; Editing by Nick Macfie)

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