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WASHINGTON – The US budget deficit hit a record $ 3 trillion for fiscal year 2020 in August, the Treasury Department said Friday, as the government’s economic bailout and declining tax revenue continued. to strain the nation’s finances.
The staggering figures come as the Trump administration and Congress get stuck in negotiations on further stimulus measures, with Republicans wary of another big tax package and Democrats pushing for trillions of dollars in aid.
The the budget deficit for August was $ 200 billion. The coronavirus pandemic has slowed corporate and personal tax revenues, while government spending has increased, widening the gap between what the United States spends and what it earns in taxes and other income. Budget expenditures exceeded $ 6 trillion in the first 11 months of the fiscal year, which ends September 30. The $ 3,007 trillion deficit for the year to date was the largest since August 2009.
The Treasury Department noted that the deficit was the result of heavy spending on unemployment benefits, the Wage Protection Program, and health care efforts related to the economic benefit legislation passed by Congress in March.
The Congressional Budget Office predicted a $ 3.3 trillion deficit for the year earlier this week. This would represent 16% of the gross domestic product of the United States, the highest level since 1945.
Some Republicans began to warn about the rising deficit, but Treasury Secretary Steven Mnuchin downplayed the US fiscal situation, arguing that the scale of government spending was necessary to fight the pandemic.
“I think before I joined Covid, I thought the debt was very manageable,” Mr. Mnuchin told Fox News on Sunday this week. “Unfortunately, this Chinese virus has cost us trillions of dollars and, as I said before, it’s like a war. In a war, you have to spend everything you have to spend.”
According to a report from the Bureau of Labor Statistics, used cars and trucks were the biggest contributors to consumer price inflation for August. The seasonally adjusted price of used vehicles has increased by 5.4% since July, the department said.
Demand was fueled by a desire to avoid public transport during the pandemic, the search for bargains in an uncertain economy and disruptions in the production of new cars. Used car prices have soared, with data from Edmunds.com showing the average value jumped more than 16%.
In June, the most recent month for which data is available, franchise car dealers sold 1.2 million used cars and trucks, according to Edmunds, up 22% from the previous year. It was the highest monthly total since at least 2007.
Overall, consumer prices in August rose 0.4% seasonally adjusted, slightly more than analysts expected, after rising 0.6% in July. Food prices changed slightly in August, but more than 4% higher than the previous year.
Warner Bros. announced on Friday that her release of “Wonder Woman 1984”, last scheduled for October 2, will be postponed again, this time to Christmas Day.
The move comes the weekend after the company opened Christopher Nolan’s thriller “Tenet” in 2,810 screens nationwide for $ 20 million. In pre-pandemic times, that number would likely have been closer to $ 50 million, box office predictions estimate, but with no key markets like Los Angeles and New York open and with audiences still reluctant to go to the movies, the numbers are depressed. . Theaters in North Carolina, New Mexico, New York and Washington DC remain closed. Overseas, where the coronavirus is most contained, the film earned $ 129 million after two weeks of release.
“Because I know how important it is to bring this movie to a big screen when we can all share the experience together, I hope you won’t mind waiting a little longer,” Patty Jenkins, the director of “Wonder Woman 1984,” said in a declaration. “With the new date of Christmas Day, we can’t wait to spend the holidays with you!”
Many of Hollywood’s biggest franchises have been retired since 2020, but some studios are hoping enough theaters will reopen in the next couple of months and audiences will return. MGM still has James Bond’s “No Time To Die” scheduled for November 20 and Warner Bros. is still planning to release director Denis Villeneuve’s “Dune” on December 20. The studio unveiled its first trailer this week.
Britain said on Friday it had “agreed in principle” on a trade deal with Japan, the first since Brexit. This is an important milestone for Prime Minister Boris Johnson’s government amid a potential disruption of negotiations with the European Union, Britain’s largest trading partner.
Since it officially left the European Union at the end of January, Britain has been able to conclude its own trade deals. Liz Truss, the international trade secretary, said this agreement “goes far beyond the current European Union. deal “with Japan.” Ensures new victories for British companies in our large manufacturing, food and beverage and technology sectors, “he said.
Britain is still included in the bloc agreement with Japan as part of a transition agreement until the end of this year. The new agreement, once ratified, will allow Britain and Japan to maintain their trade relations after December. Britain would benefit from duty-free trade on 99% of exports to Japan and increase trade by around £ 15.2 billion ($ 19.4 billion) over 15 years, the trade department said.
Details of the deal have not yet been released, but David Henig, a trade policy expert at the European Center for International Political Economy, said he expects the deal to mostly replicate the deal that the Grand Britain already had within the European Union.
While continuing to have access to the world’s third largest economy is important to British officials, it will not make up for what could be lost if the country fails to reach an agreement with the European Union.
Japan accounts for around 2% of British exports and imports. Compared to the no deal with Japan, the overall UK economy would grow by 0.07%, or £ 1.5bn, over the next 15 years under the deal announced on Friday, according to the government’s analysis.
The economic benefits of the deal are “negligible,” according to Mr. Henig. It proves that Britain can strike a trade deal on its own, he said, but it doesn’t add much more economic value.
By comparison, roughly half of Britain’s trade is with the European Union, but talks about the future of that relationship ran into turmoil this week after the UK government said it would introduce legislation that ran counter to the deal. Brexit already reached with Brussels and breaking international law.
The UK economy grew 6.6% in July from the previous month, according to an initial estimate from the Bureau of National Statistics, as the country continued to open after the lockdown.
Although slower than the 8.7% growth rate in June, the recovery has spread to even more sectors of the economy with the recovery of education, the reopening of pubs and hairdressers and the increase in auto sales.
After three consecutive months of growth, Britain’s gross domestic product was 11.7% lower in July than before the February pandemic. “Even though it has continued steadily on the road to recovery, the UK economy is yet to make up nearly half of the GDP lost since the start of the pandemic,” said Darren Morgan, the agency’s director of economic statistics.
Earlier this week, Andy Haldane, chief economist of the Bank of England, said the speed and scale of the recovery did not receive enough credit and that economic data justified his optimism. But other central bankers have taken a more cautious note, worried that the window of rapid economic recovery is already closing.
In Britain, coronavirus infections are on the rise and new restrictions on social gatherings have been announced as tax support for businesses and residents is on the decline. This suggests that the country is moving into a second phase of recovery where it will be more difficult to recover the rest of the economic output lost by the national bloc. A group of lawmakers on Friday urged the government to extend the layoff program, which helps pay employee wages, for certain sectors of the economy beyond the current end-October date.
“The rise in Covid cases and the resumption of public health restrictions means we are nearing the end of the easy economic victories of restarting business,” James Smith, director of research at the Resolution Foundation, She said. “With the withdrawal of emergency support for businesses and workers, times are much more difficult this fall.”
Stocks on Wall Street it fell on Friday, giving up previous gains on another unstable trading day. The S&P 500 is on track to end the week with a loss of more than 2%.
Global stocks were mixed. The UK FTSE 100 rose while the German DAX was slightly lower. In Asia, Hong Kong’s Hang Seng Index rose 0.8%, while South Korea’s Kospi ended the day unchanged. Oil futures were slightly higher.
The euro continued to grow against the dollar, up 0.4 percent to $ 1,186. Christine Lagarde, the head of the European Central Bank, said Thursday that policymakers would “closely monitor” the euro exchange rate, but her comments were not enough to stem the rise of the currency, which has risen by about 10 percent since March.
A rise in the euro hurts European exporters, whose goods become more expensive when purchased in other currencies. It also mitigates inflation in the euro area; too low inflation can hold back economies.
On Thursday, Wall Street shares had ended the day sharply lower, the fourth drop in five trading sessions for the S&P 500, which closed 1.75% lower for the day, as the Nasdaq composite slipped. 2%. Apple, Amazon, Microsoft is Google parent Alphabet they were all lower, after giving up early earnings.
The top executives of Rio Tinto, one of the largest mining companies in the world, said it would step down after a shareholder revolt over the company’s intentional destruction of prehistoric rock shelters, sacred to two indigenous Australian groups. Stock trading in Australia fell 0.6%.
President Trump congratulated JPMorgan Chase after the bank on Thursday asked senior executives to return to their offices at the end of the month.
“Congratulations to JPMorgan Chase for ordering everyone to RETURN TO THE OFFICE on September 21st. It will always be better than working from home! “Mr. Trump said in a tweet Friday morning.
However, JPMorgan did not order “everyone” to return to the office. The bank has asked top executives to return to Midtown Manhattan and London offices starting September 21, according to two employees familiar with the matter.
The request applies to perhaps 600 senior managers, according to one of the people, who was not authorized to speak publicly. But it’s unclear how many will actually return right away: the bank, like other institutions that are starting to reopen, said it would make exceptions for employees who faced health problems or childcare obstacles.
The request, which was previously reported by the Wall Street Journal, was directed at the top management of the investment bank, but the hope is that other executives will follow up if the transition goes smoothly and virus infection rates in New York remain low. . (Jamie Dimon, chief executive officer of JPMorgan, worked out of the office for the second half of the summer, after recovering from heart surgery earlier this year.)
Other large organizations, including Goldman Sachs and the National Football League, have begun to encourage workers to return to the office at various levels. But even for workers who want a return to the office, logistical hurdles abound, including irregular school hours. The New York City plan includes in-person sessions, but some students may be in class for one day in a given week.
American Express on Thursday it said it was reopening its New York and London offices with 10% capacity, but has extended the deadline for employees to return to the office to June 30, 2021.
Major Wall Street bosses have taken different approaches.
David Solomon, CEO of Goldman Sachs, has worked from the office almost every day since March and has encouraged partners and other senior executives to return this summer. But James Gorman, the Morgan Stanley the boss who recovered from the virus took a more conservative stance. He didn’t go back to the office until early July and then only for part of the week. His fear, employees say: his presence could put unspoken pressure on workers to return to the office before they are ready.
DealBook newsletter editors and reporters go through many company reports and hear many earnings conference calls. These are some of the things that caught our attention this week:
🚲 “Data sharing is a very complicated thing in this world and something we take very seriously. So as far as our customer data is concerned, we are not going to share it in a scary way. “ – John Foley, CEO of Peloton
🍔 “There’s nothing worse than watching a home run get hit at Citi Field or the Nationals baseball field where we have Shake Shacks right in the middle of the field. And I look at that, and I say, ‘Oh, what would I give for selling a Shack burger right there right now. ‘ But those cardboard fan cutouts, they don’t need much. ” – Randy Garutti, Shake ShackThe C.E.O.
🦠 “I would like to say that there is never a dull moment in our magical realm. But seriously, Covid has really thrown a wrench into many of our businesses.” – Christine McCarthy, Disney’s head of the finance department
🏖 “One of the things we’re likely to see if there is remote work is that it allows us to travel while we work for personal reasons as well. So if I have a remote week that’s happening, or if I have a week that has a few days off, I might as well go to the beach and work from there. ” – Arne Sorenson, MarriottThe C.E.O.
📉 “Not all clutter is ‘bad’. Indeed, if world economy issues swing like a pendulum, then it may be that some have strayed too far from a ‘sensitive center’ and have to go back. This can have a cleansing effect. “ – the German bank strategist Jim Reid and colleagues on a research note
China is still most likely months away from mass-producing a vaccine that is safe for public use. But the country is using the prospect of the drug’s discovery in a charm offensive aimed at repairing damaged ties and bringing friends together in regions China deems vital to its interests.
Latin American and Caribbean nations will receive loans to purchase the drug, and Bangladesh will receive over 100,000 free doses from a Chinese company.
In the Philippines, where China is competing with the United States for flu, President Rodrigo Duterte told lawmakers in July that he had “made a request” to Chinese leader, Xi Jinping, for help with vaccines. He also said he would not stand up to China for its claims on the South China Sea.
The next day, Wang Wenbin, a spokesman for the Chinese foreign ministry, said China was willing to give the Philippines priority access to a vaccine.
China’s vaccination promises, in addition to previous shipments of masks and ventilators around the world, help it project itself as a responsible actor as the United States withdraws from global leadership. Beijing’s moves could also help it dismiss accusations that the ruling Communist Party should be held responsible for its initial missteps when the coronavirus first surfaced in China in December.
The ability to develop and deliver vaccines to poorer countries would also be a powerful signal of China’s rise as a scientific leader in a new post-pandemic global order.
“People are very willing to get a Chinese vaccine,” said Ghazala Parveen, a senior official at the National Institute of Health in Pakistan, where two Chinese vaccine manufacturers are conducting trials. “In fact, people are asking us to have the vaccine ready as soon as possible.”
As the global economy absorbs the most punishing reversal of fortune since the Great Depression, hunger is on the rise.
According to the United Nations World Food Program, those facing potentially life-threatening levels of so-called food insecurity in developing countries are expected to nearly double this year, reaching 265 million.
Worldwide, the number of children under 5 years of age involved in so-called wasting – their weight is likely to be so below normal that they face a high risk of death, along with health problems and of long-term development – will increase by nearly seven million this year, or 14 percent, according to a recent article published in The Lancet, a medical journal.
The largest number of vulnerable communities is concentrated in South Asia and Africa, especially in countries that are already facing problems, from military conflict and extreme poverty to climate-related afflictions such as drought, floods and soil erosion.
The ongoing tragedy falls short of a famine, which is typically brought about by a combination of war and environmental disaster. Food remains widely available in most of the world, although prices have risen in many countries.
Rather, with the world economy expected to contract by nearly 5% this year, households are slashing spending. Among those who entered the pandemic in conditions of extreme poverty, hundreds of millions of people are suffering a growing crisis on how to guarantee their basic food needs.
The pandemic has reinforced basic economic inequalities, none more crucial than access to food.
“I am increasingly concerned about the socioeconomic impacts of the pandemic on the nutritional situation of children,” said Victor Aguayo, UNICEF’s head of nutrition programs in New York. “It is a perfect storm to see malnutrition rates rise if appropriate measures and programs are not put in place.”
The fitness company Peloton, which sells expensive exercise bikes and treadmills, said Thursday it had $ 607 million in revenue in the three months ended June 30, a 172% increase over the same period last year, exceeding industry expectations. . The company made a profit of $ 89 million, compared to a loss of $ 47 million at the same time in 2019.
Century 21, the popular New York-based discount chain, said Thursday it was forced to file for bankruptcy and would close all 13 of its locations after its insurance providers refused to pay the company about $ 175 million. . Raymond Gindi, co-CEO and son of a founder, said that unlike in the aftermath of the 9/11 attacks, “our insurers, to whom we have paid significant premiums each year for protection from unforeseen circumstances such as those that we are experiencing today “. , they have turned their backs on us in this critical moment. “
JPMorgan Chase’s Market and sales managers have asked their top managers to return to their Midtown Manhattan and London offices starting Sept. 21, according to two employees familiar with the matter. The request applies to perhaps 600 senior managers, according to one of the people, who was not authorized to speak publicly. But it’s unclear how many will actually return right away: The bank said it would make exceptions for employees who faced health problems or childcare obstacles.