/Newsletter: Incentives, the Fed and Oil

Newsletter: Incentives, the Fed and Oil

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Good morning. Jeff Sparshott here with the latest on unemployment benefits, a bigger and bolder Federal Reserve, reopening plans, economic data, and a secret group of scientists and billionaires working to end the pandemic.

Money for Nothing

Roughly half of all U.S. workers stand to earn more in unemployment benefits than they did at their jobs before the coronavirus pandemic shut down wide swaths of the U.S. economy. The package of coronavirus stimulus laws Congress passed in March included a $600 boost to weekly unemployment benefits through July 31. As that support is added to state benefits, the average weekly payment to a laid-off worker should rise to about $978—more than many workers received before the crisis hit, Eric Morath reports.

The stimulus measure means many low-wage workers will avoid significant harm to their finances in the coming months, it puts money in consumers’ pockets, and puts the U.S. economy on firmer footing to rebound. But enhanced benefits also create disincentives that might hamper efforts by employers to recall workers at a time when some states are trying to reopen their economies.


U.S. advance trade figures for March are out at 8:30 a.m. ET.

The S&P/Case-Shiller home-price index for February is out at 9 a.m. ET.

The Conference Board’s consumer confidence index for April is expected to drop to 92.0 from 120 a month earlier. (10 a.m. ET)

The Richmond Fed’s manufacturing survey for April is out at 10 a.m. ET.

Note: This is a partial list of events and subject to change.


Not Your Father’s Federal Reserve

The Federal Reserve is redefining central banking. By lending widely to businesses, states and cities in its effort to insulate the U.S. economy from the coronavirus pandemic, it is breaking century-old taboos about who gets money from the central bank in a crisis, on what terms, and what risks it will take about getting that money back, Nick Timiraos and Jon Hilsenrath report.

Among the risks: that some programs won’t work, that officials won’t be able to unwind them, that politicians will grow accustomed to directing the central bank to fix problems its tools aren’t designed to solve, and that public discontent about the central bank’s choices will erode its authority over time.

Ask WSJ: Join three of The Wall Street Journal’s top economics writers for a conversation on the Fed and its historic actions in the wake of the coronavirus pandemic. Begins Friday at 12 p.m. ET.


Texas, Ohio and other states took steps to ease lockdown orders and reopen their battered economies. Retail stores, restaurants, malls, movie theaters, museums and libraries in Texas will be allowed to open Friday at 25% capacity, Republican Gov. Greg Abbott said. He will allow a stay-home order now in place to expire Thursday. Many are watching Texas’s phased reopening as a test. The country’s second most populous state has relatively low rates of Covid-19, but among the lowest testing rates, leading critics to say there is no way to know how prevalent the virus really is, Jennifer Calfas, Elizabeth Findell and Newley Purnell report.

Even if its reopening goes smoothly, Texas is facing a tremendous economic challenge. Plunging oil prices are crushing the state’s energy industry. The most popularly traded U.S. oil price fell to its lowest level since at least 1986. That’s spilling over into other parts of the economy and compounding the effects from coronavirus-related disruptions. The Dallas Fed’s Texas Manufacturing Outlook Survey fell to a record low this month.

Along the West Coast, Democratic governors, who were among the first in the nation to issue stay-at-home orders, are facing pressure and defiance from some counties to relax uniform stay-at-home policies.

The Trump administration is prepared to send all 50 states enough tests to screen at least 2% of residents for the new coronavirus, with the aim of rapidly expanding supplies in the coming weeks.

Detroit’s car companies are targeting May 18 to resume some production at their U.S. factories. Executives from General Motors, Ford and Fiat Chrysler in recent days tentatively settled on the timeline after talks with United Auto Workers leaders and Michigan Gov. Gretchen Whitmer’s office, Mike Colias and Ben Foldy report.

Boeing’s CEO doesn’t expect air traffic to bounce back for two or three years. The coronavirus pandemic’s toll on the industry so far: Global airline revenues are set to drop by $314 billion this year. In the U.S., more than 2,800 planes are idled. Passenger demand is down 95% from last year, Andrew Tangel and Doug Cameron report.

Reversal of Fortune

The U.S. entered March riding an 11-year economic expansion. It exited the month heading into what is expected to be one of the sharpest downturns on record. We’ll get a taste of that Wednesday, when the Commerce Department releases first-quarter gross domestic product. To underscore how rapidly the outlook changed, IHS Market’s model tracking economic output started last month with same-old same-old 2% growth. As of yesterday, it’s on track for the biggest drop since the end of 2008.

The bigger hit will come in the second quarter. The sudden downturn is likely to leave the U.S. economy $1 trillion smaller at the end of 2020 than it was at the end of 2019, the Congressional Budget Office forecasts.


Most nations of Europe’s north are set to recover faster from their medically induced economic comas than those in the south, exacerbating a divergence of fortunes in the eurozone and feeding political tensions over how to pay for the fallout of the coronavirus pandemic.

Some countries are squashing the coronavirus curve—at least so far. Vietnam is one. New Zealand is another. In Vietnam, stores and restaurants began reopening Thursday after the government eased three-week-old restrictions on movement.

A secret group of scientists and billionaires is pushing a Manhattan Project for Covid-19. They call themselves Scientists to Stop Covid-19, are working to cull the world’s most promising research on the pandemic, and passing on their findings to policy makers and the White House, Rob Copeland reports.


Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.

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