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The U.S. government expects to borrow a record $4.5 trillion this fiscal year as it steps up spending to battle what is likely to be the deepest economic downturn since the Great Depression. The borrowing is needed to cover a fast-growing budget deficit as businesses close and millions of Americans lose their jobs, squeezing government tax revenue, and as Congress authorizes trillions of dollars in emergency relief for workers, businesses and hospitals. The anticipated new debt for the year ended Sept. 30 is more than triple last year’s $1.28 trillion. The government’s needs are likely to grow even larger as lawmakers on Capitol Hill take aim at the next round of fiscal relief, Kate Davidson reports.
As Congress considers further aid, battles are emerging over protecting businesses from liability and the ballooning national debt.
WHAT TO WATCH TODAY
The U.S. trade deficit for March is expected to widen to $44.4 billion from $39.93 billion a month earlier. Read our preview here. (8:30 a.m. ET)
IHS Markit’s services index for April is out at 9:45 a.m. ET.
The Institute for Supply Management’s nonmanufacturing index for April is expected to fall to 40 from 52.5 a month earlier. (10 a.m. ET)
Chicago Fed President Charles Evans speaks to the media at 10 a.m. ET, St. Louis Fed President James Bullard speaks on the pandemic at a National Association for Business Economics webinar at 1 p.m. ET, and Atlanta Fed President Raphael Bostic speaks at an Enterprise Community Partners webinar at 2 p.m. ET.
Note: This is a partial list of events and subject to change.
U.S. researchers and officials warned about the possibility of a new surge in coronavirus cases as more states and countries begin to open their economies and relax social-distancing rules.
New York state is expected to begin reopening businesses after May 15. In the first phase, construction and manufacturing in certain regions will be permitted to resume operations, along with select retail stores. State officials will determine which regions of the state will start reopening first based on coronavirus-related data, including infection rates and the availability of testing for the disease, Ben Chapman and Joseph De Avila reports.
Several FedEx workers at the company’s Newark, N.J., air hub have died due to complications of the coronavirus, a sign of the toll that the outbreak has taken on front-line delivery workers, Paul Ziobro reports.
Carnival Cruise Line said it plans to resume sailings on eight ships departing from Florida and Texas beginning Aug. 1.
California has become the first state to borrow money from the federal government so it can continue paying out rising claims for unemployment benefits. The Golden State borrowed $348 million in federal funds after receiving approval to tap up to $10 billion for this purpose through the end of July, Sarah Chaney reports.
Good Time to Buy a House?
The economy is shrinking, businesses are closing and jobs are disappearing. But in the housing market, prices keep chugging higher. Home values could start to erode, especially when mortgage forbearances end, some economists warn. But that hasn’t been the case so far. While buyer demand has softened and sales are down, the supply of homes on the market is contracting even faster, Nicole Friedman reports.
Around the World
Australia and New Zealand are working on a plan to ease restrictions on travel between the neighboring countries. The tentative plan shows how countries that have controlled spread of the virus could club together to help their economies recover, Stephen Wright and Rachel Pannett report.
Hong Kong is beginning to ease restrictions after two weeks of no new, locally transmitted coronavirus infections. The city hopes to revive its economy without a relapse.
Italy is trying to reboot its economy. The country on Monday allowed factories, construction sites and wholesale commerce to reopen. Much of the consumer economy remains suspended. Most shops can reopen only starting May 18. Restaurants, bars and hairdressers have to wait until June 1. The gradual reopening will test whether Italy’s battered economy, the third-largest in continental Europe, can restart without igniting a new surge in coronavirus infections and deaths, Eric Sylvers and Marcus Walker report.
Covid-19 now is hammering Brazil. Despite more than 100,000 cases and more than 7,000 deaths, testing is still scarce, its president, Jair Bolsonaro, is an outspoken coronavirus skeptic, and in a country where tens of millions live day to day, stay-at-home measures are seen by many as unrealistic, Luciana Magalhaes and Christiana Sciaudone report.
Sweet Child o’ Mine
Big question for working parents: What are your kids doing this summer? Many camps and recreational programs are still deciding how—and whether—to reopen. The vast majority of camps say they are in limbo as they figure out head counts, refunds and budgets—and if they can offer a genuine summer-camp experience. Parents are considering alternatives—and also rethinking finances, summer schedules and if they are ready for their children to swim and share bunks with others, Anne Marie Chaker reports.
Some big and little economic questions: How to pay if you’ve been out of work, who can go to work if there’s no summer programs for children, who handles the bulk of unpaid child care and how do child care providers survive?
Ask WSJ: Managing Debt and Bills During the Pandemic. Join The Wall Street Journal’s Personal Finance Bureau Chief, Bourree Lam, for a conversation on managing personal debt and negotiating bills during the coronavirus crisis. Begins Friday at 12 p.m. ET.
WHAT ELSE WE’RE READING
A New York Fed paper finds the 1918 influenza pandemic fueld the Nazi rise to power in Germany.
The coronavirus is causing three new hires for every 10 layoffs.* “The extraordinary scale of recent job losses commands attention, and rightly so. But there’s more to the story of recent labor market developments: quite a few firms are also hiring new workers in response to pandemic-induced demand increases,” Atlanta Fed and university economists write at the Atlanta Fed’s Macroblog.
*Correction: The coronavirus is causing three new hires for every 10 layoffs. This post originally and incorrectly said, “The coronavirus is causing three new hires for every layoff.”
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