A shaken U.S. agriculture industry already “stressed” by a profitability squeeze in a pandemic year may see little relief in 2021, according to a survey of industry lenders, Bloomberg News reported. Agricultural lenders reported that “just under” 51 percent of their borrowers were profitable this year and about half those lenders don’t expect borrower profitability to improve next year, according to the Fall 2020 Agricultural Lender Survey from the American Bankers Association and Federal Agricultural Mortgage Corporation, also known as Farmer Mac. That’s down from 2019, when lenders said about 57 percent of borrowers were profitable. Almost a quarter of lenders expect bankruptcies to increase this year, similar to 2019, though 57 percent expect a rise next year due to a marked increase in strain. Such a view “may be due to expectations that the damages of 2020 will take time to lead to bankruptcies, uncertainty in government program support, and expectations for weak markets in 2021,” the report said.
Deadlines set by Congress early in the pandemic will result in about 12 million Americans losing unemployment insurance by the year’s end, according to a report released today, the Washington Post reported. According to the report from unemployment researchers Andrew Stettner and Elizabeth Pancotti, those Americans will lose their unemployment benefits the day after Christmas — more than half of the 21.1 million people currently on the benefits — due to deadlines Congress chose when it passed the Cares Act in March amid optimism the pandemic would be short-lived. Another 4.4 million people have already exhausted their benefits this year, according to Stettner and Pancotti, who wrote the report for the Century Foundation, a public policy research group. The “benefits cliff” on Dec. 26 includes an additional 7.3 million workers on Pandemic Unemployment Assistance, the supplemental insurance for gig and self-employed workers, which ends that day, as well as 4.6 million people on Pandemic Emergency Unemployment Compensation, the unemployment insurance extension available for people who have exhausted regular benefits after what is typically about six months, depending on the state. A nationwide eviction moratorium expires on Dec. 31, raising concerns that jobless Americans could fall into homelessness. Read more.
In related news, the Business Roundtable, a group of CEOs from major U.S. companies, is calling for a slew of immediate government actions to address the rapidly growing COVID-19 pandemic and its economic consequences, including a national mask mandate and action on a relief bill, The Hill reported. “It’s not as though it’s either safety or economic recovery. There is no economic recovery without safety,” the group's president, Joshua Bolten, said yesterday. In remarks that were critical of the Trump administration’s response to the pandemic without directly mentioning the president, Bolten laid out a slew of priorities to get the pandemic under control and boost businesses. In addition to a national mask mandate, Bolten said the government needs to issue clear safety guidelines for businesses, implement a national testing strategy and reengage with the World Health Organization. Bolten also said yesterday that one of the most critical things for the economy would be immediate action by Congress on another relief measure. “We’re in the ‘it should be enacted now’ camp,” he said when asked whether such a bill could wait until after the new year. Read more.
House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) yesterday asked Senate Majority Leader Mitch McConnell to resume talks on a multi-trillion-dollar stimulus package for the U.S. economy, Bloomberg News reported. “We were encouraged by your comments shortly after the election that you believe the Congress needs to act on another COVID-19 relief package and that ‘it’s a possibility we will do more for state and local governments,’” they wrote in a letter to the Republican leader. “We agree with you.” Pelosi and Schumer asked that McConnell join them at the negotiating table this week “so that we can work towards a bipartisan, bicameral COVID-19 relief agreement to crush the virus and save American lives.” The letter comes as the White House and President Donald Trump have pulled back from their involvement in the stalled stimulus negotiations after offering to back a $1.9 trillion package before the Nov. 3 election. Democrats have been demanding a $2.4 trillion package, and McConnell has called for “targeted” relief in the $500 billion range. Read more.
In related news, President-elect Joe Biden on Monday urged Congress to immediately pass an economic relief package as he warned that the coronavirus pandemic will worsen in the coming months, the Washington Post reported. Federal help can ease the pain for workers and employers as the virus surges across the country, Biden said as he and Vice President-elect Kamala D. Harris expressed optimism that businesses and labor unions are ready to work together to reboot the economy. The holdup is Congress, Biden said, as he criticized Democrats along with Republicans for inaction this fall. Biden called on Congress to pass a large package approved by House Democrats earlier this year and said they cannot wait any longer to act. He suggested that the economic relief needs to be approved during the lame-duck session of Congress while Trump is still in the White House. Read more.
The single-family house on Forestview Avenue in Euclid, Ohio, a suburb of Cleveland, shows no signs of farming activity. The only things growing on the one-eighth-acre plot are trees, shrubs and grass. But 20 companies registered at that address, with names like Organic Ohio Berries LLC and Garlic Farming LLC, have won government approval for loans and grants intended to support small businesses hurt by the pandemic, Bloomberg News reported. In all, the owner of the Forestview home and his family members created 72 companies with agrarian-sounding names at three Cleveland-area addresses and then used them to get approval for loans and grants totaling $7.2 million from the Small Business Administration’s Economic Injury Disaster Loan program, state and federal records show. There’s no sign of agricultural activity at any of the locations, or that any of the companies were active before Feb. 1, a requirement for pandemic aid. None of them was registered with the Ohio Secretary of State’s office before May. A lawyer for Zaur Kalantarli, the owner of the Forestview house, acknowledged in an interview this week that at least some of the loans were questionable and may have to be repaid. The lawyer, Edward La Rue of Cleveland, said that he contacted federal prosecutors in Ohio on Monday and brought the matter to their attention. La Rue said Kalantarli hired him on Nov. 12 after an inquiry from Bloomberg News. The disaster-relief program has distributed 3.6 million loans worth $192 billion to small businesses since March, as well as 5.8 million grants that don’t have to be repaid totaling $20 billion. It’s distinct from the SBA’s $525 billion Paycheck Protection Program, which relied on banks to distribute forgivable loans meant to cover payroll. A $750 million computer program set up by the SBA in April was supposed to flag suspicious disaster-aid applications before they were approved, but last month Bloomberg News quoted current and former SBA workers and outside fraud investigators describing widespread fraud that the computers had failed to catch.
U.S. retail sales increased less than expected in October and could slow further, restrained by spiraling new COVID-19 infections and declining household income as millions of unemployed Americans lose government financial support, Reuters reported. Retail sales rose 0.3 percent last month, the smallest gain since the recovery started in May, after increasing 1.6 percent in September, the Commerce Department said. They account for the goods component of consumer spending, with services such as healthcare and hotel accommodation making up the other portion. Sales were supported by Amazon.com's "Prime Day" event, with online receipts surging 3.1 percent. "Prime Day" is normally in July and some economists said this could have thrown off the model that the government uses to strip seasonal fluctuations from the data, leading to the modest sales gain. Consumers bought motor vehicles at a much slower pace than in previous months. There were increases in sales of electronics and appliances, as well as building materials and garden equipment. But households cut back spending on sporting goods and hobbies, clothing, furniture, drinking and dining out.
U.S. manufacturing production accelerated in October, though exploding new COVID-19 infections across the country could cause disruptions at factories and leave the recovery in jeopardy, Reuters reported. Manufacturing output increased 1.0 percent last month, the Federal Reserve said yesterday. Data for September was revised up to show production at factories gaining 0.1 percent instead of decreasing 0.3 percent as previously reported. Factory production remains below its pre-pandemic level.
About 300 companies that received as much as half a billion dollars in pandemic-related government loans have filed for bankruptcy, according to a Wall Street Journal analysis of government data and court filings. Many of the companies, which employ a total of about 23,400 workers, say that the funds from the Paycheck Protection Program weren’t enough to keep them going as the coronavirus and lack of additional stimulus payments weighed on their businesses. The total number of companies that failed despite getting PPP loans is likely far higher. The Journal only analyzed the big borrowers from the program, which accounted for about half of the overall loans though only about 13.5 percent of the total participants. And many small businesses simply liquidate when they run out of cash rather than file for bankruptcy. The government awarded a total $525 billion in PPP loans to 5.2 million companies since April, according to the Small Business Administration. The SBA has only released data on the largest borrowers, which the Journal linked to bankruptcy filings. The total amount lent to companies that went bankrupt is between $228 million and $509 million—the government publishes a range for the loan amounts. Half of the 285 firms identified by the Journal have filed for bankruptcy since August. Dozens of recipients, which come from nearly every state, cited the pandemic as a primary reason for entering bankruptcy.
In just a matter of days, America’s long effort to revive its virus-battered economy has been put on pause across much of the country as new infections soar at the fastest pace since the pandemic’s earliest days, Bloomberg News reported. California yesterday reinstituted bans on many indoor businesses across the state, and its governor warned he may impose a curfew. Michigan has ordered a three-week partial shutdown, while states including Oregon, Washington and New Jersey tightened curbs. Even the governor of Iowa, long resistant to virus rules, issued a limited mask mandate yesterday. The new restrictions follow a rapid surge in cases -- with the country adding a million infections in the first 10 days of November alone -- that has led health officials to issue dire warnings about the prospect of uncontrollable outbreaks as the Thanksgiving holiday approaches. In a call with governors yesterday, Deborah Birx, a key member of the White House’s coronavirus task force, said the increase is showing no signs of a plateau and that nursing homes, in particular, are being hard-hit.
