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Senior Senate Republicans, including the top Republican on the Senate Appropriations Committee, say they do not support the Biden administration’s request for another $22.5 billion to fight the COVID-19 pandemic, The Hill reported. Sen. Richard Shelby (R-Ala.), the ranking member of the Appropriations panel, yesterday said that he doesn’t support doling out another $22.5 billion for COVID-19 relief when billions of dollars in federal aid remain unspent. “No, I don’t,” he said when asked if he thought the administration’s request is warranted. “I think that we ought to determine — and we’ve asked the administration — how much unspent money is there. There are billions of dollars unspent. Shelby made his comments a day after the acting White House budget director, Shalanda Young, sent a letter to Capitol Hill requesting $22.5 billion to address “immediate needs to avoid disruption to ongoing COVID response efforts over the next few months.” Senate Republican Whip John Thune (S.D.) said Shelby’s view is “very widely” held in the Senate GOP conference and predicted there would be strong Republican resistance to adding $22.5 billion in new COVID-19 relief to a $1.5 trillion omnibus spending package negotiators are trying to wrap up by March 11.

California, whose recovery of jobs lost during the height of the pandemic lags that of the U.S. overall, said low labor market force growth and supply chain disruptions pose risks to its municipal-bond investors, Bloomberg News reported. In documents circulated to potential buyers of its $2.2 billion general-obligation deal on March 9, the state added the threats to its list of dangers they should consider. The administration of Governor Gavin Newsom expects the labor force to recover to pre-pandemic levels in the third quarter this year. “If current labor market frictions (impediments to employers and job seekers agreeing on employment, e.g., disagreements on appropriate wages, workplace safety or ability to work remotely) persist longer than projected, then low labor force growth would constrain job growth, which in turn would lead to less consumption and spending,” the state said in the documents. California has regained 72% of the jobs lost during the onset of the pandemic, while the nation has recovered 87%, according to federal data. Its unemployment rate of 6.5% in December was the highest among U.S. states.

Americans with student loans are about to get a stark wake-up call on their borrowings as government relief programs phase out, according to a blog post by the Federal Reserve Bank of St. Louis, Bloomberg News reported. While federal stimulus programs have kept many low-to-moderate income households afloat during the pandemic, most student-loan payments are scheduled to resume after May 1. That will usher in a transition period of consumer-debt relief in which defaults are poised to rise, the regional Fed bank said. “Serious delinquency rates for student debt could snap back from historic lows to their previous highs in which 10% or more of the debt was past due,” Lowell Ricketts, a data scientist for the Institute for Economic Equity at the St. Louis Fed, said in the post. Most borrowers have been financially stronger during the pandemic thanks to government-relief programs, the New York Fed said in a separate report Tuesday. Median credit scores were higher for all income groups as of the third quarter of 2021 compared with before the pandemic, it said in its report, based on data derived from Equifax. Bankruptcies also declined substantially. However, student-loan default rates remain more than three times higher among borrowers in low- and moderate-income areas than their wealthier counterparts. Low-wage workers lost jobs at five times the rate of middle-wage workers in 2020, while high-wage employment increased, the report said.

President Biden used his State of the Union address to refocus the nation on how far the economy has come since the pandemic recession. But he also highlighted his plans to help slow rapid price gains, underscoring the challenge Democrats face ahead of the midterm elections: Inflation is painfully high, voters are unhappy about it, and the most tried and true way to cool price increases involves hurting growth and the labor market, the New York Times reported. Biden struck a defiant tone in the face of that glum outlook, insisting that his administration can take steps — including encouraging corporate competition and strengthening a supply chain that has struggled to keep up with consumer demand — to slow price increases without dragging down employment and pay. The challenge is that White House policies have historically served as a backup line of defense when it comes to containing inflation, which is primarily the Federal Reserve’s job. The central bank is prepared to move swiftly in the coming months to raise interest rates, making money more expensive to borrow and spend. Higher rates are meant to slow hiring, wage growth and demand enough to tamp down price increases. It is possible that inflation could ease up so much on its own this year that the Fed will be able to gently slow the economy toward a sustainable path. But if price gains remain rapid, the Fed’s playbook for combating overheating is by inflicting economic pain. That makes inflation — which is running at the fastest pace in 40 years — a major liability for the Biden administration, one that the president addressed repeatedly Tuesday night and called his “top priority.” It is undermining consumer confidence by chipping away at paychecks and causing sticker shock for consumers trying to buy groceries, couches or used cars. Biden said his administration would begin a “crackdown” on ocean shipping costs, which have soared during the pandemic. He suggested that the administration wanted to cut the cost of prescription drugs, an ongoing push of his.

U.S. manufacturing activity picked up more than expected in February as COVID-19 infections subsided, though hiring at factories slowed, contributing to keeping supply chains snarled and prices for inputs high, Reuters reported. The Institute for Supply Management (ISM) said yesterday that its index of national factory activity increased to a reading of 58.6 last month from 57.6 in January, which was the lowest since November 2020. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index rising to 58.0. Manufacturing is regaining momentum in line with the broader economy after hitting a speed bump as coronavirus infections, driven by the Omicron variant, surged across the country. The ISM survey's forward-looking new orders sub-index increased to 61.7 last month from 57.9 in January, which was the lowest reading since June 2020. Goods spending has surged as the pandemic curbed demand for services like travel. Even if spending reverts back to services as the health situation improves, economists expect demand for goods to remain strong. The survey's measure of factory employment slipped to a reading of 52.9 last month from a 10-month high of 54.5. It had increased for five straight months.

Rising inflation is driving up expenses for many large U.S. pension funds that have promised retirees cost-of-living raises, the Wall Street Journal reported. About half of states link pension benefits for some or all of their retired workers to changes in the consumer-price index, according to the National Association of State Retirement Administrators. With inflation reaching 7% in December, some retirement funds are now looking at increasing pension checks by 3% or more for the first time in a decade. At others, board members or state officials are approving one-time cost-of-living raises. “It’s a hot topic,” said Keith Brainard, the association’s research director. “A cost-of-living adjustment can be an expensive plan provision.” Pension funds are confronting a challenge shared by institutions and household savers alike: Just as expectations for public market investment returns are dimming, everyday costs are going up. This year, many retirement systems will book a loss on cost-of-living adjustments, rather than the annual windfall they have been seeing for years when those inflation-linked increases came in below expectations.

The pandemic-era forbearance on federal student loans saved U.S. borrowers $37.8 billion in interest payments through 2021, according to data released yesterday by the Bureau of Economic Analysis, Bloomberg News reported. Payments were frozen in March 2020 as part of an unprecedented package of COVID-19 measures, providing relief to about 43 million of Americans who owed an estimated $1.6 trillion in student debt as of the end of last year. The BEA estimate focuses on interest payments. Borrowers have had the option to continue making payments — in which case they were applied to the principal. Others have spent, invested or used the funds to pay down other debts like credit cards. Student-debt payments are due to resume May 1, after several extensions of the freeze. Read more.

In related news, a group of Democrats sent a letter to Secretary of Education Miguel Cardona this week pressing for further information about how the administration plans to resume federal student loan payments and ensure borrowers receive adequate support, The Hill reported. Sen. Elizabeth Warren (D-Mass) and Reps. Lauren Underwood (D-Ill.) and Colin Allred (D-Tex.) led their colleagues in a letter to Cardona on Wednesday, seeking “additional detail on the scheduled resumption of federal student loan payments following the expiration of the payment pause on May 1, 2022.” In their letter to Cardona this week, the lawmakers wrote that, while they “appreciate the Biden administration’s actions to extend the payment pause,” they are concerned that “with less than 70 days until the scheduled expiration, borrowers may lack clarity about the timeline associated with the resumption of payments.” Read more.

Stirrings of a recovery in global travel are bringing airlines back from the brink, but the rebound may come too late for several carriers still facing a heightened risk of bankruptcy, a Bloomberg News analysis shows. COVID-19 paralyzed international aviation as nations locked their borders and imposed other restrictions that are only now being dismantled in some parts of the world. Asia is lagging, with China and Hong Kong almost completely walled off, and the financial positions of some airlines in the region have deteriorated since Bloomberg did the same analysis in March and November 2020. And while governments in Europe and the U.S. injected billions of dollars in aid into carriers, state help wasn’t as forthcoming elsewhere, leaving cash-strapped airlines to work out restructures in court or directly with creditors. Using the Z-score method developed in the 1960s by American finance professor Edward Altman to predict bankruptcies, Bloomberg studied publicly-listed major commercial airlines to identify those most under threat. Scores of 1.8 or below indicate bankruptcy risk, while above 3 suggests sound footing. This doesn’t take into account sources of potential additional funding.