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The federal budget deficit will be nearly $4 trillion in 2020, the C.B.O. says.
The Congressional Budget Office said Friday that it expected the federal budget deficit to hit $3.7 trillion for the 2020 fiscal year, which would be its largest size as a share of the economy since World War II.
In a new round of forecasts that officials cautioned were highly uncertain amid the coronavirus pandemic, the budget office said it expected the economy to shrink by 5.6 percent over the course of this year, ending 2020 with an unemployment rate of nearly 12 percent.
The budget office said it expected a historic drop in economic activity to be recorded this spring, but that recovery will begin to set in as social distancing measures are relaxed but not eliminated at the end of June.
Still, it forecast a slow climb back from the damage the virus caused the economy and the federal budget. It projected growth of 2.8 percent in 2021 — which would be nowhere close to the sharp rebound that some Trump administration officials have said they expect — and a budget deficit of more than $2.1 trillion for the 2021 fiscal year.
By the close of the 2020 fiscal year, which ends in September, the budget office now expects the size of the national debt to exceed the annual output of the economy, with debt to gross domestic product at 101 percent.
Stocks on Wall Street climb as tumultuous week comes to a close.
Stocks rallied on Friday, as a week of dramatic turns in the financial markets came to a close.
The S&P 500 rose more than 1 percent by Friday afternoon, bucking a global decline. Shares in Europe and Asia had fallen earlier.
The focus among traders in the United States this week has been oil prices after the American benchmark for crude crashed into negative territory on Monday — a move that broke through the relative calm that had settled over financial markets. On Tuesday, stocks suffered their sharpest drop in three weeks after the dive in oil prices, and even after rebounding slightly the S&P 500 is still on track to end the week with a loss.
Oil prices also rose on Friday adding to a sharp rebound earlier in the week. Still, they remain near historic lows amid concerns about oversupply.
Stocks are of course subject to sudden changes in sentiment or reversals in efforts to reopen economies. Economic and corporate data continues to outline the toll the coronavirus has taken on the global economy, and American officials emphasized that recovery would be difficult. On Friday, new data showed that the near-shutdown of the economy has pushed U.S. manufacturing into a free-fall.
And even as some companies begin to consider reopening factories, they face opposition in some quarters. For example, the United Automobile Workers union said on Thursday that it was opposed to companies restarting auto production next month, saying it was not yet safe for its members to return to work.
AutoNation returned $77 million in small-business loans.
AutoNation, the country’s largest chain of new-car dealerships, said it gave back $77 million it had received from a federal government loan program aimed at helping small businesses, the latest large corporation to do so.
Congress initially allocated $349 million to help small businesses keep workers on their payrolls, but the funds were used up quickly. That left thousands of small businesses unable to get help while assistance had already been given to publicly traded companies, including Shake Shack and Ruth’s Hospitality Group, owner of Ruth’s Chris steakhouses.
AutoNation applied for loans through dozens of its individual dealerships. The company said in a statement that the money was intended to go to the 7,000 employees it had furloughed, and that it was “clearly eligible” for the loans under the original guidelines set for the fund, known as the Paycheck Protection Program.
“From the beginning, AutoNation decided that all P.P.P. funds would be used only for our employees and nothing else,” the company said.
The rules for the program were changed on Thursday, as criticism of the program mounted. Following the change, AutoNation’s board voted to return the money by May 7.
The news of AutoNation’s acceptance and return of the funds was first reported by The Washington Post. AutoNation has 26,000 employees and operates 325 dealerships in 18 states. It reported 2019 revenue of $21.4 billion.
Trump tells Postal Service to raise prices if it wants a bailout.
President Trump said on Friday that he would not authorize any financial assistance for the struggling United States Postal Service if it does not agree to enact substantial price increases for shipping packages.
It is the latest threat in a long-running saga between Mr. Trump and the Postal Service that stems from his belief that Amazon and other online retailers have been profiting from low prices that have left it asking for a government bailout. The Postal Service has experienced a surge of demand with more Americans increasingly relying on delivery amid the coronavirus pandemic but is facing a $54 billion shortfall over the next decade.
“The Postal Service is a joke because they’re handing out packages for Amazon and other internet companies, and every time they put out a package, they lose money on it,” Mr. Trump told reporters in the Oval Office.
Earlier this month, the Postal Service appealed to lawmakers for an $89 billion lifeline and warned that it could run out of money by the end of September without help.
Treasury Secretary Steven Mnuchin scuttled a bipartisan effort to provide aid to the Postal Service in the economic relief package that passed last month. He insisted instead that his department be given new authority to lend up to $10 billion to the Postal Service on terms it helps set.
Mr. Mnuchin said on Friday that the Treasury Department was working on a plan to put certain criteria for a Postal Service overhaul as a condition for offering the loan. He also noted that a search was underway for a new postmaster general to put the changes in place.
The president has feuded publicly with Jeff Bezos, Amazon’s chief executive, over coverage of him by The Washington Post, with Mr. Bezos also owns.
The Postal Service is projecting a $13 billion revenue shortfall this fiscal year because of the pandemic. In fact, it makes money from its business with Amazon, which is likely to shift to alternatives such as UPS or FedEx if the Postal Service raised prices substantially.
Media companies announce more pay cuts and furloughs.
Media company employees continue to be harmed by the loss in advertising revenue brought on by the pandemic, the shutdown of businesses and the economic downturn, a weekly roundup from The New York Times found.
Three thousand employees at Meredith, the magazine publishing giant based in Des Moines, Iowa, whose titles include Better Homes & Gardens and People, will be subject to pay cuts under cost-saving measures announced this week.
At Tribune Publishing, a second series of cutbacks were announced after the permanent pay cuts for those making more than $67,000 that were put forth earlier this month. This week, the chief executive, Terry Jimenez, said those making $40,000 to $67,000 at newspapers like The Chicago Tribune, The Baltimore Sun and The New York Daily News would need to take three-week furloughs over the next three months. (Management says it will negotiate with relevant unions over cuts.)
There is already anxiety at many of these newspapers, where some journalists have sought wealthy local benefactors to purchase them, after the hedge fund Alden Global Capital revealed late last year that it has bought roughly one-third of the company’s stock.
If there is a bright spot, it is the Payroll Protection Program, the $349 billion small-business stimulus Congress authorized. Executives at several companies on this list, including Schneps Media, Seven Days and The Times-Picayune of New Orleans, said they had received loans that would either be forgiven or be repayable on generous terms. In turn, this may allow them to restore jobs and wages.
One small business has filed 13 applications for aid, with little success.
In 17 years, Graceann Dorse and her husband, Christopher Webb, have built their cinematography and special effects firm, FX WRX, into a significant creative and economic force in New York, navigating natural and financial disasters along the way.
They weathered the Great Recession in 2007-9 and Hurricane Sandy in 2012, which wiped out their first studio in the Gowanus section of Brooklyn. They made it through the city’s labyrinthine building permit process to open its state-of-the-art studio in the fall.
But now the coronavirus crisis is endangering their business, potentially wiping out hundreds of thousands of dollars in personal investment and guaranteed small-business loans, jeopardizing about $1 million in special effects equipment in the studio and harming the dozens of film professionals they work with.
In the last month, Ms. Dorse and Mr. Webb, a cinematographer, have applied for more than a dozen grants or low-interest loans from federal, state, city and private groups. So far, they have been denied, deferred and ignored.
Workers at a Smithfield pork plant say their conditions present a health hazard.
Coronavirus infections are a significant problem at meatpacking plants in the United States. Several workers have died, and many plants have closed or reduced output. Now a complaint on behalf of workers at a Smithfield Foods pork plant in Milan, Mo., has brought a renewed focus to working conditions in the industry.
It also seeks to test a novel legal question: whether health hazards at the plant present a public nuisance.
The complaint says workers are typically required to stand almost shoulder to shoulder, must often go hours without being able to clean or sanitize their hands, and have difficulty taking sick leave. Workers say they are reluctant to cover their mouths while coughing or to clean their faces after sneezing because they might miss a piece of meat as it goes by, creating a risk of disciplinary action.
The claims appear in a complaint filed Thursday in federal court by an anonymous Smithfield worker and the Rural Community Workers Alliance, a local advocacy group whose leadership council includes several other Smithfield workers.
Smithfield said the complaint was without merit. “The health and safety of our employees is our top priority,” said Keira Lombardo, executive vice president for corporate affairs and compliance.
Jennie-O Turkey Store, owned by Hormel Foods, said on Friday that it would close two processing facilities in Willmar, Minn., after 14 workers tested positive for the virus.
Dyson won’t have to make ventilators for Britain after all.
Several weeks ago, the British government made a plea to companies across the country to help fill an expected shortfall of ventilators needed to treat patients with coronavirus.
Among the first to say they would help was Dyson, the maker of vacuums and hair dryers founded by James Dyson. The company promptly designed its own ventilator that would be battery-powered and pledged to make thousands for the country.
But on Friday, after investing nearly 20 million pounds (or $25 million) in the project, Dyson announced that it had been told that its ventilators would no longer needed. Demand for ventilators ended up not being as high as originally feared, the company said.
Mr. Dyson, the company’s founder, said he would not seek a refund from the government for the investment.
“I have some hope that our ventilator may yet help the response in other countries, but that requires further time and investigation,” he said.
Catch up: Here’s what else is happening.
Amazon said it would no longer offer unlimited unpaid time off after the end of April, but that it would extend extra pay for its warehouse workers until mid-May. Workers who do not show up for work in May will accrue unexcused absences unless they qualify for a leave of absence under certain circumstances, such as if they are high-risk for complications from the coronavirus. The extra pay, including $2 an hour raise and double the hourly wage for overtime, will run through May 16.
Metro-Goldwyn-Mayer laid off about 50 employees, or roughly 7 percent of its work force. In a companywide memo, MGM’s executive team said the “permanent reductions” were needed “to operate more effectively in a changing media landscape, both during this pandemic and beyond.”
Amazon has given a sizable donation to a British charity that supports people in the book trade whose business has been hurt by the coronavirus pandemic. David Hicks, chief executive of the Book Trade Charity, said Friday his organization had received a donation of 250,000 pounds, or $309,000, from Amazon.
The manufacturing sector was struggling even before the pandemic; now the near-shutdown of the economy has pushed it into free-fall. New orders for durable goods like cars and washing machines fell 14.4 percent in March, one of the biggest declines on record, the Census Bureau reported Friday. Orders for nondefense capital goods, a measure of business investment, fell 33.4 percent, mostly because of a huge drop in orders for aircraft including Boeing’s troubled 737 MAX jet.
Reckitt Benckiser, the maker of the disinfectants Lysol and Dettol issued a statement on Friday warning against the improper use of their products after President Trump theorized about the possible medical benefits of disinfectants in the fight against the virus. “As a global leader in health and hygiene products, we must be clear that under no circumstance should our disinfectant products be administered into the human body (through injection, ingestion or any other route),” the company said.
The mood among German business managers is more pessimistic than ever. The Ifo Institute’s monthly survey of business sentiment, a reliable indicator of the direction of Europe’s largest economy, plunged to its lowest level ever, the research organization in Munich said on Friday.
The ratings agency Standard & Poor’s issued a more pessimistic view of about two dozen major European banks, meaning that the lenders face a higher risk of downgrades that would make it more expensive for them to raise money on capital markets. Among the banks now regarded by S&P as having a negative outlook are Deutsche Bank and Commerzbank in Germany; ING Group in the Netherlands; Barclays, Royal Bank of Scotland and Lloyds Bank in Britain; and BNP Paribas and Crédit Agricole in France.
Reporting was contributed by Alan Rappeport, Karen Weise, Brooks Barnes, David Yaffe-Bellany, Adam Satariano, Noam Scheiber, Liz Alderman, Alexandra Stevenson, Nicholas Kulish, David Gelles, Sapna Maheshwari, Neal E. Boudette, Mohammed Hadi, Livia Albeck-Ripka, Niraj Chokshi, Ben Dooley, Jack Ewing, Ben Casselman, Jeanna Smialek, Peter Eavis, Emily Flitter, Carlos Tejada, Kevin Granville and Daniel Victor.