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President Trump upended a quiet day on Wall Street Tuesday by tweeting that he was ending negotiations over a new economic aid package with Democrats, after accusing Speaker Nancy Pelosi of “not negotiating in good faith.”
…request, and looking to the future of our Country. I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business. I have asked…
— Donald J. Trump (@realDonaldTrump) October 6, 2020
The tweet came just hours after Federal Reserve chair, Jerome H. Powell, urged the government to take action to address the economic pain the pandemic has inflicted on millions of households. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Mr. Powell said in remarks before the National Association for Business Economics.
Since approving nearly $3 trillion in economic relief this spring, Congress and the White House have failed to reach agreement on another package, despite widespread agreement that follow-up round of relief is needed to maintain the country’s economic recovery.
Though talks all but collapsed in early August, Ms. Pelosi and Mr. Mnuchin have resumed discussions in recent days as companies continue to furlough or lay off tens of thousands of Americans and local governments, schools and industries across the country lobby for more congressional relief.
But both sides have remained far apart in their expectations of what a new spending bill should include. Democrats in the House last week approved a $2.2 trillion relief package, but Republicans have balked at Democrats’ relief plans, deeming them far too costly.
Shares of airlines, which have been calling for more aid to prevent more furloughs and layoffs, tumbled. American Airlines was down more than 3 percent, giving up its early gains. Boeing, which had earlier said it was lowering long-term estimates for aircraft sales, fell more than 5 percent.
Other markets were also roiled by the news. Oil prices, for example, were higher Tuesday but well off their highest point of the day.
WASHINGTON — The U.S. trade deficit in goods and services continued to climb in August, growing 5.9 percent from the previous month to $67.1 billion, the highest monthly level since 2006, as American imports outpaced exports.
The United States exported $171.9 billion of goods and services in August, compared with imports of $239 billion, the Commerce Department said. The trade deficit in goods rose to $83.9 billion in August, the highest level on record.
The rising trade deficit comes at an inconvenient moment for the Trump administration, which is eager to declare victory on its trade agenda as the election approaches. Economists caution against using the trade deficit as a measure of the economy’s health, but President Trump views the figure as a measure of his success in rewriting trade deals in the United States’ favor.
So far this year, the overall goods and services deficit has increased $22.6 billion, or 5.7 percent, from the same period in 2019. Exports have fallen $296.1 billion, or 17.6 percent, while imports fell $273.5 billion, or 13.1 percent.
The overall U.S. trade deficit shrank last year for the first time in six years as the American economy cooled and the trade war Mr. Trump waged against China bit into imports. But the trade deficit is once again trending upward this year, as the growth in imported goods outpaces exports.
The hefty tariffs that Mr. Trump placed on more than $360 billion of Chinese products has caused the trade deficit with China to shrink, though Americans have switched to importing products from other countries instead.
In August, the trade deficit with China fell $1.9 billion to $26.4 billion, as exports rose and imports remained flat. But the trade deficit with Mexico hit a record of $12.8 billion.
On Tuesday morning, the World Trade Organization revised its forecast for global trade, projecting a smaller contraction than it had in April as economies begin reopening.
The W.T.O. now expects the volume of global trade in goods to fall 9.2 percent in 2020, compared with its previous forecast of a drop of at least a 12.9 percent. But it said that growth was likely to be weaker next year, rebounding just 7.2 percent in 2021 to leave trade well below pre-pandemic levels.
The Federal Reserve chair, Jerome H. Powell, delivered a message to his fellow policymakers on Tuesday: Faced with a once-in-a-century pandemic that has inflicted economic pain on millions of households, go big.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Mr. Powell said in remarks prepared for virtual delivery before the National Association for Business Economics.
He added that even as the labor market recovers, though, “there is still a long way to go.” Here’s what else he said:
“Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth. By contrast, the risks of overdoing it seem, for now, to be smaller.”
“Taken together, fiscal and monetary policy actions have so far supported a strong but incomplete recovery in demand.”
“A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy. That would be tragic, especially in light of our country’s progress on these issues in the years leading up to the pandemic.”
Several hours after Mr. Powell spoke, President Trump tweeted that he was ending negotiations over a new economic aid package with Democrats, after accusing Speaker Nancy Pelosi of “not negotiating in good faith. Stock markets, which had been higher, immediately fell.
Boeing said on Tuesday that demand for commercial airplanes would be about 11 percent smaller over the next decade than it had predicted last year. But the company expects aerospace and defense sales to hold up much better.
In its annual market outlook report, Boeing predicted that airlines and others would buy 18,350 airplanes over the next decade, spending about $2.9 trillion. The market for all aerospace products and services over the next decade would be worth about $8.5 trillion, it said, down from last year’s estimate of $8.7 trillion and buoyed by demand for the defense, space and services businesses.
“While this year has been unprecedented in terms of its disruption to our industry, we believe that aerospace and defense will overcome these near-term challenges, return to stability and emerge with strength,” Marc Allen, Boeing’s chief strategy officer, said in a statement.
Airplane sales are expected to be driven by demand for single-aisle planes like the 737 Max, which is close to flying again after it was grounded in March 2019 following two fatal crashes. Such planes are projected to be in greater demand because people who are traveling are taking primarily short trips.
Across the world, airlines are experiencing very different recoveries, with China leading the way. In the United States, air travel is down about two-thirds from last year, according to Transportation Security Administration data, and airlines are cutting flights ahead of an expected decline in travel this winter.
American Airlines said on Tuesday that its flight schedule for November would be 50 percent smaller than it was for the same time last year. The airline said it was seeking to “match low demand resulting from coronavirus,” noting that it would operate more than 104,000 flights next month.
Southwest Airlines last week cut its November schedule by 36 percent, according to Airline Data, a firm that tracks the industry. Delta Air Lines and United Airlines are expected to make similar cuts soon, said Jeff Pelletier, the firm’s managing director. Because it has become harder to predict demand, airlines are adjusting schedules far closer to the day of travel.
“It’s becoming the new normal for a passenger to go out and say I want to fly from Dallas to Cancun and even if they want to fly in November, they still might book a flight that may not exist next week,” he said.
U.S. airlines are reeling from an impasse between lawmakers in Washington over further economic stimulus. American Airlines and United Airlines said last week that they would furlough more than 32,000 workers — cuts that they have promised to reverse if Congress and the Trump administration reach a deal that included aid for the industry.
Some airlines have been able to avoid such cuts, but not without concessions from employees. At Delta Air Lines, more than 40,000 people volunteered for unpaid leave to prevent sweeping cuts. On Monday, Southwest said it would cut executive compensation and hopes to put in place a broader pay cut to avoid furloughs next year.
Gillian Freidman contributed reporting.
The European Central Bank’s chief economist warned Tuesday that the eurozone might not recover from the pandemic until 2022 and that countries that depended on tourism would suffer the most as infection rates rose again.
“Countries have been differently affected by the pandemic,” Philip Lane, a member of the central bank’s executive board responsible for economics, told the National Association for Business Economics in an online speech.
The countries most vulnerable are those that rely on service jobs, Mr. Lane said, “including the tourism, travel and entertainment sectors that are especially affected by social distancing and containment measures.”
Mr. Lane did not name individual countries, but Spain and Greece spring to mind.
The relatively pessimistic assessment will reinforce expectations that the European Central Bank will take additional measures to stimulate the eurozone economy when its Governing Council meets on Oct. 29, for example by stepping up purchases of government and corporate bonds to drive down market interest rates.
Mr. Lane argued that steps taken by the bank so far had been successful in avoiding a credit crunch, but he reiterated that “the Governing Council continues to stand ready to adjust all of its instruments, as appropriate.”
Despite a sharp rebound in recent months, he said, “the euro area economy is still operating far below its pre-pandemic level.”
Hollywood studios are delaying blockbuster films, and its taking a big toll on the cinema business.
On Monday, Cineworld, the parent company of Regal Cinemas, one of the largest theater chains in the country, said it would temporarily close its 663 theaters in the United States and Britain this week. The decision affects 40,000 employees in the United States and 5,000 more in Britain, and raises questions about what other chains will do if Hollywood’s release schedule remains barren.
AMC said on Tuesday that it would not be following Regal’s lead. More than 80 percent of the chain’s theaters in the United States are open, and the company plans to open additional theaters, particularly in New York and California, when allowed to by state and county officials. “Fortunately for AMC, our groundbreaking agreement with Universal Studios announced earlier this summer puts AMC in a position where we can open our theaters when others may feel the need to close,” said AMC’s president and chief executive, Adam Aron.
Here are just a few of the movies that have been delayed.
Late last week, MGM/Universal announced that it was delaying the release of the new James Bond film, “No Time to Die,” until next year, the latest in a slew of big-budget movies that have been moved out of 2020 by Hollywood studios.
Christopher Nolan’s “Tenet,” whose Labor Day weekend release was intended to herald the return of movie theaters, continues to struggle at the U.S. box office, at least in part because audiences are wary of theaters.
Warner Bros. is postponing releasing the remake of “Dune,” once scheduled for December, until Oct. 1, 2021, according to two people familiar with the studio’s plans who spoke on condition of anonymity because they had not been made public. Warner Bros. declined to comment.
Still hopeful for 2020 is “Wonder Woman 1984,” though Warner Bros. has already delayed its release from October to Christmas Day. “Soul,” the latest from the Walt Disney Company’s Pixar animation studio, is scheduled for a Nov. 20 release.
Across the country, as the hospitality industry grapples with a severe downturn, hotels have been trying to reinvent themselves — as schools, emergency housing, wedding halls or homeless shelters — even as the new uses may come up short on revenue.
There are signs of financial distress. In New York, 44 hotel loans backed by bonds totaling $1.2 billion are delinquent, according to September data from Trepp, an analytics firm. In second place was Houston, with 39 delinquent loans at $682 million, followed by Chicago with 29 at $990 million.
Though a foreclosure would not necessarily cause a hotel to close, many analysts do not expect the industry to fully recover till 2023. Many hotels are doing what they can to hang on:
The 607-room InterContinental Times Square in New York transformed into housing for doctors and nurses treating coronavirus patients.
Five hotels in Miami, including the Doral Inn and Suites, were designated as housing for doctors, the homeless and Covid-19 patients, for a total of more than 2,100 people from July to September, officials said.
At London West Hollywood at Beverly Hills, a 226-unit property in Los Angeles, beds were removed to create work spaces more like boardrooms.
Five families rented a conference room at a Courtyard by Marriott in suburban Elmhurst, Ill., so their first-grade students could comfortably engage in remote learning.
But the money can be a pittance compared with what came before. “For some properties, just keeping the lights on could cost $1 million a month,” said Jeffrey Davis, a broker with the commercial real estate firm JLL and co-head of its hospitality group.
American Airlines said on Tuesday that its flight schedule for November would be 50 percent smaller than it was for the same time last year. The move is in an effort to “match low demand resulting from coronavirus,” the airline said, adding that it plans to operate more than 104,000 flights next month.
Macy’s has invested in the Swedish payments company Klarna and will become the first major U.S. department store to offer the firm’s “buy now, pay later” online shopping option, an increasingly popular payment method among younger shoppers. The size of the investment hasn’t been disclosed. Klarna said it was part of a five-year partnership that would allow Macy’s shoppers to pay for their purchases in four equal, interest-free installments
The European Union’s top court on Tuesday said the mass collection of electronic communication data was illegal in the bloc except during urgent risks to national security. It is the latest ruling to limit the ability of governments to gather electronic information on European citizens.
The decision by the European Court of Justice is part of a global debate about the balance governments should strike between preserving individual privacy while protecting national security. In July, the court invalidated a trans-Atlantic data-transfer agreement between the United States and European Union after concluding the accord did not do enough to protect European citizens from snooping by American intelligence agencies.
The ruling on Tuesday affects France, Belgium and other European countries where governments see the collection of data as a necessary tactic to thwart terrorist attacks and other threats. But privacy advocates said the bulk collection of information was excessive and violated fundamental privacy rights guaranteed in the European Union.
In its ruling, the court said broad surveillance laws that forced companies to share internet data and location information with government authorities presented “particularly serious interferences with the fundamental rights guaranteed” by the European Union. It said some collection of data was permissible if there was a “serious threat” to national security, and there were safeguards in place to have the actions reviewed by a court or other independent body.
In 2015, following terrorist attacks in Paris, France granted authorities broad domestic spying capacity, allowing intelligence services to gather vast amounts of electronic data. The policy set off a bitter debate, and was compared to the Patriot Act that passed in the United States after the Sept. 11 attacks.
Privacy International, a London-based organization that brought one of the cases involved in the decision, cheered the ruling.
“It serves as a reminder that no government should be above the law,” said Caroline Wilson Palow, the group’s legal director, said in a statement. “Democratic societies must place limits and controls on the surveillance powers of our police and intelligence agencies.”
Liz Alderman contributed reporting.
California and its $3 trillion economy are confronting a profound question: After the coronavirus pandemic and a fierce wildfire season that shows the intensifying effects of climate change, how much has been permanently changed?
Companies may increasingly ask whether the high cost of California cities is worth it if their employees can work remotely, and the spate of wildfires has brought new scrutiny to the spread-out development patterns that have accommodated an expanding population — and pushed people to cheaper inland areas most exposed to fire.
The reason that companies move jobs out of the state is lower-priced housing and the lower labor costs that go with it. Economists and planners have long counseled that the best way to relieve this pressure is to build more housing near the coastal job centers, but California has continued to sprawl, a pattern that has undermined the state’s own emission-reduction goals by encouraging longer commutes, while placing more homes in fire zones.