Articles Tagged with COVID-19

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Because of the historic economic impact  of COVID-19, economists are predicting a “tsunami” of personal bankruptcy filings.  Well-known businesses like J. Crew, Beall’s, Goody’s, Gold’s Gym and Neiman Marcus recently filed for bankruptcy protection. Most major airlines could face bankruptcy without a government bailout.

Americans who have become used to using credit cards as a stop-gap measure to survive pay-cuts might not be able to rely  on this method since nearly 50 million Americans just had their credit card limits cut.

For centuries, companies have used bankruptcy as a tool to survive, reorganize or to shut-down. Several airlines have filed bankruptcy over the past three decades, primarily to break contracts and modify pensions.

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Nearly two months after Coronavirus exploded on the scene, some states are starting to relax stay-at-home orders, and people are slowly returning to work. It will take a lon time for the economy to recover, and  some White House advisers  are still predicting a 20% unemployment rate.

People are wondering if  the jobs they held prior to the COVID-19 crisis will still be there after things settle down. Economists argue about how many jobs will come back after the pandemic ends.

Prior to the outbreak of COVID-19, the financial press was praising the benefits of the “gig” economy. Uber drivers, Instacart shoppers and other freelancers could set their own hours and get paid in cash daily. Now, gig workers are among those hardest hit by the Coronavirus pandemic. 

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The news these days is all about Coronavirus: from television news to social media, the number one topic of the day is COVID-19.  Our screens and feeds are flooded with news about how Coronavirus has devastated the American economy.   Just this morning, NBC News had the “breaking” news that  U.S. gross domestic product (GDP) fell by 4.8% in the first quarter of the year–the biggest decline since the Great Recession.  This is probably is not much of a surprise to most of us.  Economists predict that  the worst is yet to come. Nearly Americans know that the economy has slowed down since millions of us have been laid off, furloughed, or had our incomes slashed. People without jobs and people worried about losing their jobs don’t have money to spend or are hesitant to spend it .  Because of this uncertainty, consumer confidence plunged in April.

Many Floridians are worried about how they will pay for necessities like housing, food and transportation. By now, most Americans who are eligible to receive the Coronavirus Aid, Relief, and Economic Security (CARES) Act Stimulus payments have received their money. In Jacksonville, there will soon be an additional $1,000 available to each Jacksonville household that earns under $75,000 and can show they’ve taken a 25% income loss due to coronavirus.   This program will be run by the city of Jacksonville, but funded by the Federal Government. The city will be issuing payments cards to 40,000 households. One household member must apply for the assistance online or by phone and then go downtown in person (the Main Library on N. Laura Street or the Ed Ball Building on N. Hogan Street) to an appointment to receive the payment. You will go to an auditorium, while practicing social distancing.

In order to get an appointment, residents must show that they had employment as of February 29, and that the Coronavirus epidemic caused them to lose at least 25% of their income. This test should be easy to meet for “non-essential” workers, who lost jobs or income because of the governor’s or mayor’s mandated shutdown.  City Council President Scott Wilson  said he expects the website to be up and running soon, and that “the goal is to start cutting checks — and what we’re going to do is give debit cards or credit cards, gift card type things — within the next seven days.”

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Last  Friday approximately 140 million American households started  receiving Economic Impact Payments, or Stimulus “checks.” Most Americans will be receiving these payments, of at least $1,200 or more, this week. (The amount of your payment depends on your gross income and whether you have dependents.)  The Treasury Department will be directly depositing the funds into the same bank accounts where it directly deposited your 2019 tax refund. (The Stimulus payments are also being sent to people who don’t usually  file or pay federal income taxes, for example, most people who receive monthly payments from the Social Security Administration.) You can track the status of your payment at this IRS site starting today.

The reason for these payments is that the federal government wants to try to “stimulate” the economy, which COVID-1, or the coronavirus, has wrecked.  Millions of Americans have lost their jobs or seen their pay reduced since March. It has been estimated that nearly 1 out of 5 Americans has lost a job or wages because of the virus.  When consumers don’t have money to spend, the ripple effect causes most businesses to struggle. People are not buying goods and services from brick and mortar businesses, which in turn have to lay off employees who can no longer buy goods and services from other merchants. Goldman analysts see the U.S. economy contracting 24% in second quarter, a rate nearly five times as large as bank’s previous forecast

While the government wants us to spend this money to keep the wheels of commerce rolling, some banks want to seize this money to recover money owed to them by their customers. When Congress passed the CARES Act authorizing these payments, it did not characterize the funds as federal benefits, but as tax credits. This means that private debt collectors may take the money once they are in a bank account.

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Every January 1st, people make resolutions about changes they want to see in the new year; things like hitting the gym, saving money, finishing college or just vowing to be a better person make many lists.  At the beginning of this new decade, no one had any idea that within weeks, something that we cannot even see would change the world—and change it drastically. Just 3 months into 2020, COVID-19, or the Coronavirus,   has already infected over one million people and killed over 50,000, according to Johns Hopkins University.

Americans are now bracing for the worst week since COVID-19 came on the scene. President Trump warned that the upcoming two-week period will be “painful.” However, Dr. Fauci, a key member of President Donald Trump’s Coronavirus Task Force, added: “We should hope that within a week, maybe a little bit more, we’ll start to see a flattening out of the curve and coming down.”

People who still have jobs are worried about how long the virus will stick around and keep businesses shuttered. Tourism is dead in the Sunshine state and the governor finally issued a stay-at-home order. When people are at home, they do not support the local economy.  This lessened demand for products and services has a ripple effect, which impacts all sectors of the economy. People are not only learning how interdependent the economy is, but also that some jobs are more “essential” than others.

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