News of the Day

The Commerce Department said Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew 5.6% last month after a record 8.5% jump in May.

The June gain reflected increased spending on new cars and trucks, clothing, gasoline and recreation as the economy largely reopened last month. Economists polled by Reuters had forecast consumer spending would advance 5.5% in June.

“With June’s increase, inflation-adjusted consumer spending has pulled out of April’s deep hole, though it remains below its pre-pandemic level,” CNBC said.

In April, consumer spending plunged a record 13.6%. Spending in June was boosted by a 6.4% rise in purchases of goods while outlays on services increased 5.2%.

Governnor Tony Evers on Thursday issued an order that requires anyone 5 years old or older to wear a face mask in indoor public spaces.

“While our local health departments have been doing a heck of a job responding to this pandemic in our communities, the fact of the matter is, this virus doesn’t care about any town, city, or county boundary, and we need a statewide approach to get Wisconsin back on track,” Evers said in a statement.

The mask requirement means people must wear a mask while inside. That means inside stores, restaurants, shops, office buildings, and all other indoor public spaces. People do not have to wear a mask in their own homes, and masks are not required when people are outside. But masks are required in outdoor seating areas of bars and restaurants.

There are, of course, exceptions for eating and drinking, as well as for speakers at churches and other religious centers. Judges and lawmakers are also exempt.

Milwaukee, Madison, Green Bay, Racine, and a number of other communities have adopted their own mask requirements. The governor says his order is the minimum. Local communities can add more restrictions to their orders. Many other local public health managers asked the governor to step in so they didn’t have to issue orders of their own

The U.S. economy shrank at a dizzying 33% annual rate in the April-June quarter — by far the worst quarterly plunge ever — when the viral outbreak shut down businesses, throwing tens of millions out of work and sending unemployment surging to 14.7%, the government said Thursday.

The Commerce Department’s estimate of the second-quarter decline in the gross domestic product, the total output of goods and services, marked the sharpest such drop on records dating to 1947. The previous worst quarterly contraction, a 10% drop, occurred in 1958 during the Eisenhower administration.

The contraction last quarter was driven by a deep pullback in consumer spending, which accounts for about 70% of economic activity. Spending by consumers collapsed at a 34% annual rate as travel all but froze and shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close.

The Federal Reserve said Tuesday that it is extending its menu of lending programs to businesses, governments and individuals to the end of 2020.

Originally set to expire Sept. 30, the myriad facilities, stretching from credit to small businesses up to the purchase of junk bonds now will stretch to Dec. 31.

The Fed began rolling out the initiatives as market functioning broke down in March. A lack of liquidity stemming from fears over the coronavirus crisis froze markets and pushed the central bank into various credit facilities, a number of which had their origins during the financial crisis.

“The extraordinary Federal Reserve response to the COVID-19 pandemic, supported by Treasury’s equity capital, has played a vital role in improving liquidity and restoring market function,” Treasury Secretary Steve Mnuchin said. “Through this extension, we will continue to support the flow of credit to American workers, businesses and municipalities.”

Senate Majority Leader Mitch McConnell unveiled the Republican coronavirus relief plan on Monday. Here is what we know about the bill, as Republican leaders release the details:

• It would set enhanced federal unemployment insurance at 70% of a worker’s previous wages, replacing the $600 per week which states stopped paying out this week.
• The GOP would set the benefit at a sum of $200 per week on top of what recipients would normally receive from states through September, slashing what they got from April through July. In October, the 70% replacement would take effect up to a maximum of $500 per week.
• The proposal would send direct payments of $1,200 and $2,400 to individuals and couples, respectively. It would set the same qualifications as the checks approved in March: the payments started to phase out at an average of $75,000 in income per person, and individuals or couples making an average of $99,000 or more did not receive one. It would offer an additional $500 per dependent of any age.
• The legislation would shield entities such as businesses, doctors and schools from lawsuits, except for cases of “gross negligence” or “willful misconduct.”
• It would set aside $190 billion for Paycheck Protection Program loans. The bill would allow small businesses with fewer than 300 employees that have seen revenue fall by more than 50% to apply for a second round of aid. It would also authorize $100 billion for loans to seasonal businesses and companies in low-income Census tracts that can show revenue reduction of more than 50%.
• The bill provides $105 billion to help schools reopen in the fall. Roughly $30 billion of that amount would go to colleges, according to Senate Health, Education, Labor, and Pensions Chairman Lamar Alexander, R-Tenn. Most of the money would go to schools physically reopening to help them with the costs associated with safely restarting.
• It includes $16 billion to help states boost Covid-19 testing capacity, according to Senate Appropriations Committee Chairman Richard Shelby, R-Ala.
• Shelby said it would put $26 billion toward the development of Covid-19 vaccines and therapeutics.
• The plan includes 100% deductability of business meals, according to Sen. Tim Scott, R-S.C.
• It includes several tax credits, including an enhanced employee retention credit and a credit for expenses such as upgrades to workplaces and testing that help businesses operate safely.

Sales of new U.S. single-family homes raced to a near 13-year high in June as the housing market outperforms the broader economy amid record low interest rates and migration from urban centers to lower-density areas because of the COVID-19 pandemic.

New home sales rose 13.8% to a seasonally adjusted annual rate of 776,000 units last month, the highest level since July 2007. May’s sales pace was revised upward to 682,000 units from the previously reported 676,000 units.

New home sales have now recouped losses suffered when non-essential businesses were shuttered in mid-March to slow the spread of the respiratory illness. New home sales are counted at the signing of a contract, making them a leading housing market indicator.

The Centers for Disease Control and Prevention (CDC) late Thursday released new guidelines with a heavy focus on reopening schools in the fall, saying children are less likely to experience severe symptoms or spread the virus in schools.

Under the new guidelines, the CDC recommends that schools follow a certain level of precautions based on the amount of community transmission in their area. The CDC advises that unless there is substantial, uncontrolled community transmission in an area, schools should reopen to some extent.

“It is critically important for our public health to open schools this fall,” CDC Director Robert Redfield said in a statement announcing the guidelines. “School closures have disrupted normal ways of life for children and parents, and they have had negative health consequences on our youth. CDC is prepared to work with K-12 schools to safely reopen while protecting the most vulnerable.”

The CDC’s recommendations include socially distancing school children through cohorting or pods as well as a number of other measures to limit possible transmission of the coronavirus.

According to the CDC, there are few reports of children being the driving force of transmission within families. It said that as of July 17, children and adolescents account for under 7 percent of COVID-19 cases and less than 0.1 percent of COVID-19-related deaths.

“The best available evidence indicates that COVID-19 poses relatively low risks to school-aged children,” the guidelines read.

The unemployment rate fell in all 72 of Wisconsin’s counties from May to June, according to new data released Wednesday that was compiled by the U.S. Bureau of Labor Statistics.

Counties with the highest June unemployment rate include Menominee County with 20 percent, Forest County with 18.5 percent, and Iron County at 14.2 percent. The counties with the lowest rates were Lafayette with 5.7 percent, Clark at 6.1 percent, and Taylor with 6.2 percent.

Dennis Winters, chief economist at the state Department of Workforce Development, which released the federal data, said the numbers make sense given the historic impact the COVID-19 outbreak has had on all levels of the economy. But Winters added that he’s encouraged to see unemployment trending in the right direction.

“These numbers are certainly higher than we like, but they’re down substantially from where they were,” Winters said. “The trend seems to be going that way, so we’re taking that as good news.”

Wisconsin’s statewide unemployment rate dropped to 8.5 percent in June, an improvement of more than 3.5 percentage points from May’s unemployment rate of 12.1 percent, but a number still in line with Great Recession levels.

Pfizer and BioNTech, a German biotech company, announced Wednesday that the U.S. has reached a $1.95 billion deal with them for an initial order of 100 million doses of their coronavirus vaccine.

According to the announcement Americans will receive the vaccine for free. The United States, which has a population of over 300 million people, could get up to 500 million more doses of the vaccine.

Earlier this month BioNTech CEO Ugur Sahin said several hundred million doses could be produced even before approval, up to 1.2 billion by the end of 2021.

Their vaccine is set to begin the final stage of the testing process, known as phase three trials, at the end of the month. It is one of more than a dozen companies that has had positive results while working on a vaccine.

Moderna, a company working with the National Institute of Allergy and Infectious Diseases, is set to begin the phase three testing stage this month as well. AstraZeneca PLC, a company developing a vaccine with the University of Oxford, will also enter phase three trials in August.

Wisconsin’s housing market performed far better than expected in June, with existing home sales down just 4.5% compared to that same month in 2019, and median prices rose 3.6% to $222,000 over the same 12-month period, according to the most recent analysis of the state housing market by the Wisconsin REALTORS® Association (WRA).

On a year-to-date basis, home sales for the first half of 2020 were 4.9% lower than the first six months of 2019, and median prices were up 7.6% to $209,900.

“This is better than we expected given the COVID-induced slide in sales we saw last month,” said WRA Chairman Steve Beers. Sales slid sharply in May, dropping 24.3% compared to May 2019, so being down just 4.5% is a big improvement.

Beers qualified the comparison by noting that sales in June last year were actually somewhat weak, dropping 7.7% from June 2018. “It’s important to remember that we’re comparing closed sales with the same month a year earlier, so the weak performance in June 2019 makes this past month’s drop in sales smaller,” he said.