The US economy is in peril and this time it’s Main Street in trouble, more than Wall Street. The largest economy in the world is shutting down with increasing speed as federal and state officials issue new guidelines and requirements on individuals and businesses to curb the spread of this menacing virus.
To avoid a deep and long-lasting recession, Washington has to get this right, and so do we. The usual Federal Reserve tools and tax cuts for stimulating the economy simply are not going to work to help those most impacted. This time it’s not a top-down problem like in the Great Recession of 2007 and ’08, it’s a bottom-up problem and the numbers are staggering. Nearly every person in America is impacted in some way this time: from millions of employees sent home without pay, small to mid-sized businesses closing down without options, and large corporations, like the travel industry virtually at a standstill.
As Americans seem to always do when faced with overwhelming adversity, we come together. Just when it was looking like this time was going to be different, Washington surprised us and did the right thing. Whether you agree with the prescription or not, Congress and the President are working together efficiently to mitigate the spread of the virus and potential financial ruin for so many people.
Wednesday, the Senate passed the Families First Coronavirus Response Act Wednesday 90-8 to provide free testing for the Covid-19 disease caused by the virus and require smaller employers to provide at least two weeks of paid sick leave to many of those affected by the crisis. It also provides additional Medicaid funding, expands unemployment insurance and provides more money for food stamps, aiming to provide an initial safety net as layoffs begin and coronavirus cases hit every state.
The Congress is now working on a trillion dollar package that includes direct payments to individuals up to $1,200 each beginning on April 6 and May 18 to the tune of $500 billion each. Treasury Secretary Steve Mnuchin said the IRS has the ability to deliver payments directly to many people through direct deposit and is working with electronic payment providers on other ways to deliver the payments electronically. The proposal also includes $50 million specifically aimed at the airline industry and another $150 billion for “other severely distressed sectors of the economy.”
Europe has now become the epicenter of the virus where Italy’s death toll has surpassed that of China’s. Meanwhile, as of yesterday, China, if they can be believed, reported no new domestic coronavirus infections in Wuhan for the first time since the outbreak surfaced. Frederick W. Smith, CEO of FedEx, interviewed on Fox News, said that “90% of the big manufacturing companies in China are ‘back to work,’ smaller manufacturers see probably 60-65%,” implying that large backlogs will begin working down.
Declaring himself a ‘wartime president,’ President Trump can now evoke increased executive powers to move quickly to address this two-front war; virus and economy. His task force and the CDC are getting help from governors, state and local officials and hospitals on the virus front. What seemed to work well in China and other Asian countries to contain the spread of the virus was a rapid mandated physical separation of people. Here in the US, we have been gradually doing the same. What started as ‘social distancing’ in every-day life is quickly evolving to more stringent measures. California’s governor Gavin Newsom is the first to require that all 40 million residents of his state must stay home to fight the spread.
While the federal government was getting up to speed, the private sector stepped-up in partnership to face the challenge. Roche had already started on their own high-volume test in January and got a fast-track approval from the Food and Drug Administration to meet the crisis. Google offered to build a website advising people on symptoms. Walmart and CVS are converting parking lots for drive-through testing and private labs are standing by to process them.
As board member of NeighborHealth Center, a local primary healthcare clinic focused on those who cannot afford healthcare, I’ve learned from CEO Sue Ellen Thompson that testing is available through our affiliate the UNC health system for any patient meeting the required symptoms. Patients are screened via phone, their information is entered into Epic (our electronic medical records system), and UNC takes them from there. Sue Ellen says the system is working well.
Congress is moving quickly to mitigate the damage to small businesses and their employees. But, Washington is not capable or responsible for solving all of our problems. Despite these unprecedented threats to our social fabric, we see people ‘coming together’ in creative new ways to help and encourage.
Two of our neighbors, Marget and Frank Ballard, owners of Hayes Barton Cafe told me that their “business has been brisk the last few days, “thanks to the support of their awesome fan base.” Wednesday night, immediately after the governor closed restaurants for inside dining, Marget said “all our regulars who eat dinner at the bar on the first seating, grabbed their to-go boxes and had a tailgate in the ‘parking lot,'” which of course, is Fairview Road – physically- but not socially-distanced.
David Clappier, chair of our Five Points Business District Association continues to provide excellent feedback and tips to local businesses as he stays in close touch with the City of Raleigh, which is doing a great job to keep as much running as safely possible and to take care of those who cannot.
A Raleigh classic, the Rialto reminds all to Stay Safe, Healthy, and to Be Kind.
Ryan reached out a couple of days ago to check on and encourage his 82-year old clients, John and Sally Smith (we’ll call them), who live in a local retirement community. “Sally, how are you and John doing with all this,” Ryan asked. “Ryan, we are having the best time, dancing and singing to some wonderful music from the 20’s. Just last evening, all of our cul-de-sac neighbors sat in our garages, doors open, and had the nicest time just visiting.” Sally, Ryan said “I called to encourage you, but you have encouraged me so much more – thank you.”
Here’s another way that people are visiting their loved ones in nursing homes and retirement communities as seen on the news last night.
None of us knows how long this virus will hold us captive, but we will do all we can to ensure your financial well being. Please don’t hesitate to call us if you have questions or concerns.