Tag Archives: Federal aid

U.S. credit card use returning to pre-pandemic patterns, NY Fed report finds

By Jonnelle Marte

(Reuters) – U.S. consumers are spending more and ramping up credit card balances, reversing a shift during the COVID-19 crisis, when they scaled back spending and substantially paid down debt, a Federal Reserve Bank of New York report showed on Tuesday.

After rising by $17 billion in both the second and third quarters, credit card use appears to be returning to pre-pandemic patterns, the researchers said. However, balances were still $123 billion lower than at the end of 2019, according to the quarterly report on household debt and credit.

“As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances,” Donghoon Lee, a research officer at the New York Fed, said in a statement. “At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels.”

Credit cards typically follow a seasonal pattern, in which balances show “modest” increases in the second and third quarters, followed by a more substantial increase in the fourth quarter, researchers said. Consumers then usually reduce those balances in the first quarter as they pay off holiday spending, the report said.

During the pandemic, however, households supported by direct cash payments and forbearance programs that paused payments on mortgages and student loans largely reduced their credit card debt.

With forbearance programs winding down, some of those consumers may be able to use some of their available credit to make ends meet, the Fed researchers said.

The report also found that total household debt increased by $286 billion in the third quarter to $15.24 trillion, driven mostly by a $230 billion increase in mortgage balances. Total debt balances are now $1.1 trillion above where they were at the end of 2019, the report showed.

Auto debt increased by $28 billion in the third quarter and student loan balances grew by $14 billion.

Originations of new mortgage loans, at $1.1 trillion, and auto loans, at $199 billion, both remained near series highs. Rising car prices contributed to the high volume for new auto loans by leading to a higher origination amount per loan, researchers said. The authors did not do a similar breakdown for mortgages but said rising home prices could be having a similar effect on mortgage debt.

Lenders may be offering more credit to borrowers with lower credit scores after clamping down at the start of the pandemic, the report showed. For example, credit card issuance for lower credit score borrowers is back to pre-pandemic levels after declining at the start of the crisis. The median credit score for new mortgages and auto loans declined slightly in the third quarter, but was still high by historic standards, researchers said.

The findings showed that consumer debt delinquencies remain low, thanks in part to forbearance programs and other federal aid.

(Reporting by Jonnelle Marte; Editing by Andrea Ricci and Dan Grebler)

Rapid COVID-19 tests increasingly scarce, pricey as demand from employers jumps

By Carl O’Donnell

(Reuters) – Surging demand for COVID-19 tests from U.S. employers has exacerbated a nationwide shortage of rapid tests in recent weeks and is driving up costs for state and local testing programs, according to industry executives and state officials.

Test makers including Abbott Laboratories, Quidel Corp and LumiraDX Ltd are scaling up production to meet rising demand. But significantly boosting test output will take weeks to months, half a dozen industry executives told Reuters, making the tests harder to procure in the near term.

“Employer demand has gone crazy,” said Quidel Chief Executive Doug Bryant. “We won’t be able to meet all the requests that we’re having.”

Nearly a dozen state governments said they are grappling with shortages of rapid tests, which provide on-the-spot results within minutes and are crucial for COVID-19 surveillance programs.

In Missouri, limited supplies of Abbott’s Binax Now rapid test, which typically sell to states for around $5 each, have forced it to consider other, more expensive options, a spokesperson for the states’ public health agency said.

“We are exploring other rapid antigen tests and finding most are at least three times higher than Abbott’s rapid antigen test,” the spokesperson said, adding that Missouri has not yet had to purchase the pricier tests.

Oklahoma has begun to pay higher prices for tests in recent weeks, said Michael DeRemer, the state’s director of emergency preparedness and response services.

State governments have been struggling to acquire enough rapid tests for several months after a surge in COVID-19 cases fueled by the more contagious Delta variant.

And U.S. employers in recent weeks have been rushing to stockpile tests after the White House in September said it plans to mandate weekly testing for unvaccinated staff at businesses with more than 100 employees.

Emerald Packaging Inc, a plastic bag factory in San Francisco with 250 workers, sees the cost of complying with the government’s testing mandate as a burden and is urging employees to get vaccinated.

Emerald may require vaccination once the federal rule goes into effect, said CEO Kevin Kelly. He said Emerald has spent about $50,000 testing its employees so far and is concerned weekly tests will further drive up costs.

Quidel has had to decline more than half of requests from employers seeking to stock up ahead of the mandate, expected to take effect in October, said CEO Bryant.

It has also had to postpone exports of rapid tests to some foreign governments until next year, Bryant said. Quidel is delivering on existing contracts with countries including Canada.

BIDDING WARS, SIGNIFICANT MARKUPS

U.S. test makers manufacture more than 50 million rapid COVID-19 tests each month, not enough for regular surveillance testing at schools and workplaces across the country, said Evercore ISI analyst Vijay Kumar.

Rapid antigen tests can cost as little as $2 each to make, according to Mologic, one of the largest British test makers. But in the United States, bidding wars between health systems, state governments, and employers have contributed to much higher prices.

South Carolina, for example, is paying as much as $130 each for some of its rapid tests, a state spokesperson said.

That contrasts sharply with the UK and European countries. In Germany, large government purchases allow it to offer rapid tests to residents for less than $1 each, and it is not experiencing severe shortages.

Abbott and Quidel said they do not plan to raise test prices for customers. However, retailers and test providers often purchase tests and resell them at significant markups.

Walgreens Boots Alliance Inc and CVS Health Corp sell Abbott’s Binax Now rapid tests – which Abbott lists for around $5 – for $12 per test at pharmacies. Walmart Inc, Kroger and Amazon.com Inc charge nearly $8 per test even after they slashed prices temporarily to cost.

States largely have been using the $10 billion the White House set aside primarily for school testing programs. Some states including Missouri said their federal aid is running out.

Meanwhile, employers and consumers must pay for rapid test purchases themselves.

In an effort to ramp up production, Abbott reopened a plant in Illinois it had shuttered earlier this year, putting it back on track to produce upwards of 50 million Binax Now tests per month by the end of October, a person familiar with the matter told Reuters.

Quidel is building a new plant that will boost its rapid test output from around 20 million per month to as much as 70 million, but it will not be operational until year-end, Bryant said. LumiraDX is planning to nearly double its test production by year end.

On Monday, U.S. regulators authorized a rapid test made by ACON Laboratories, which plans to produce as many as 100 million per month by the end of the year.

“There’s definitely a supply chain squeeze on the rapid antigen side,” said Matthew McKnight, an executive at Ginkgo BioWorks, which manages surveillance testing programs for employers. “It will take a couple months (before) production catches up.”

(Reporting by Carl O’Donnell in New York, Additional reporting by Tim Aeppel in New York; Editing by Caroline Humer and Bill Berkrot)

Transportation chief says aid needed by November to avoid big NYC subway and bus cuts

By Axel Threlfall

(Reuters) – New York’s coronavirus-hit Metropolitan Transportation Authority (MTA) will have to start implementing a dramatic job and service reduction plan in November if it does not receive billions of dollars in federal aid, the agency’s chairman said on Thursday.

Speaking in a virtual Reuters Newsmaker event, Patrick Foye said the MTA’s upcoming board meeting in November was the cutoff date for pulling the trigger on a plan to lay off 8,400 workers and cut city subway and bus service by up to 40 percent.

“That is the point at which we would have to begin implementing the service reductions and layoffs,” Foye said, adding that the MTA would also shelve a $51.5 billion capital plan to fix and upgrade North America’s biggest transportation system.

“If we are not able to make those investments, there will be a deterioration in service, as occurred in New York City in the 70’s and 80’s, and we don’t want to go back there,” Foye said.

Foye and John Samuelsen, international president of the Transport Workers Union of America, warned in an opinion article this week in the New York Times that the MTA faced a “five-alarm fire” and called on the U.S. Senate to approve funds to save it.

In July, the MTA unveiled a four-year financial plan that estimated a $16.2 billion deficit by 2024, with more than a third of those losses coming next year, a signal that it does not see ridership, hard hit by the coronavirus pandemic, rebounding significantly anytime soon.

The agency, which runs New York City buses and subways and two commuter railroads that connect the city with suburbs, is losing $200 million in revenue a week and estimates it needs another $3.9 billion in federal aid to get through the end of this year and a total of $10.3 billion through 2021.

In addition to the plunge in revenue, the MTA has had to spend more to clean subway cars, stations and buses to curb the spread of the coronavirus. Subway service, which formerly ran for 24 hours, was closed down from 1 a.m. to 5 a.m. to make that cleaning possible, another hit to ridership.

Even with congressional negotiations on further federal assistance at a standstill, Foye said he still held out hope that the Republican-controlled Senate would approve additional funding for the MTA before the Nov. 3 national election.

“If reason prevails and the national interest is pursued by the Senate, the Republican leadership in the Senate and Washington, the MTA will be financed,” Foye said.

Foye said he was not optimistic there would be any progress this year on congestion pricing, a program that charges vehicles entering Manhattan a fee. The program was supposed to account for $15 billion of the MTA’s capital spending plan, but its rollout has been slowed by the federal government not determining what environmental review is needed.

Foye described the withholding of aid from the MTA and the New York City region as a “punitive” act by Washington, echoing concerns by cities and states run by Democrats that they are being targeted by Republican President Donald Trump.

Foye suggested that the election of Democratic presidential nominee Joe Biden, who has been a frequent rider on Amtrak passenger trains and a supporter of public transportation, might lead to better outcomes for the MTA.

“I believe that he’s got a different view of the importance of mass transit and public transit,” Foye said.

(Reporting by Axel Threlfall; additional reporting by Nathan Layne and Tina Bellon; editing by Jonathan Oatis)

White House says Senate Republicans may take up COVID-19 bill next week

WASHINGTON (Reuters) – Senate Republicans are likely to take up their COVID-19 relief bill next week offering $500 billion in additional federal aid, White House chief of staff Mark Meadows said on Tuesday, adding that the administration was still weighing help for U.S. airlines.

In an interview on CNBC, Meadows said he expected Senate Republicans’ legislation would be “more targeted” than House Democrats’ offer and could either be used as a building block or be passed on its own while negotiations continue.

Congressional negotiations on further federal intervention amid the novel coronavirus pandemic remain at a standstill after the Democratic-led U.S. House of Representatives passed its $3.4 trillion measure back in May.

Republican President Donald Trump and his administration have said they could support a $1 trillion bill. Democrats offered to split the difference with a roughly $2 trillion compromise, but there has been little movement.

Meadows told CNBC the administration “was nowhere close” to Democrats’ $2 trillion offer but added: “We’ll get there in the end.”

It was unclear whether Senate Republican Leader Mitch McConnell planned to take up the bill next week. Republican Senator John Barrasso said a conference call with Treasury Secretary Steven Mnuchin and the White House was scheduled for later on Tuesday to discuss the matter.

Asked about efforts to aid airlines, which have furloughed or laid off thousands of workers and curtailed flights as the outbreak had upended travel, Meadows said any aid “remains an open question” and that the administration is “looking closely at a number of executive actions.”

Meadows said he and Mnuchin met with Trump late on Monday and that the president tasked them “to get as creative as we can within the confines of the law to put forth as much money as we can so we can keep this economy going.”

(Reporting by Susan Heavey and David Morgan; Editing by Chizu Nomiyama and Jonathan Oatis)

Subdued by Harvey, Congress reconvenes facing fiscal tests

Church Volunteers work to remove Hurricane Harvey flood damage from a home in Houston, Texas, U.S. September 2, 2017.

By Susan Cornwell

WASHINGTON (Reuters) – Hurricane Harvey devastated Texas, but could bring some fiscal order to Washington where Republicans and Democrats will need to put political differences aside in order to approve spending to repair the damage from flooding in and around Houston.

Lawmakers returning to Washington after a month-long break are expected to swiftly agree to an initial request for nearly $8 billion in disaster aid. More requests will follow from the Trump administration, with the fractious Republicans who control the House of Representatives and the Senate determined to look capable of governing in a crisis.

Some estimates say Harvey could cost U.S. taxpayers almost as much as the total federal aid outlay of more than $110 billion for 2005’s record-setting Hurricane Katrina.

That sobering cost and the urgent needs of Harvey’s victims have helped to calm a fiscal storm that had threatened to engulf Congress and President Donald Trump ahead of Oct. 1. The rancor revolves around the deadline for lawmakers to approve a temporary spending measure to keep the government from shutting down, as well as the need to raise the nation’s debt ceiling.

“There’s reason to hope that in the wake of the tragedy in Texas … there will be a renewed sense of community and common purpose that can help get things done,” said Michael Steel, a Republican strategist who once worked as spokesman for former House Speaker John Boehner.

Before Harvey, Trump had threatened to veto such spending and trigger a shutdown if Congress refused to fund his proposed U.S.-Mexico border wall. He has dropped his threat, the Washington Post reported on Friday, making a shutdown less likely.

As of the Labor Day holiday weekend, approval by Congress was widely anticipated in late September of a stopgap bill, or continuing resolution, to continue current spending levels for two to three more months.

The need to help Hurricane Harvey victims “creates another reason as to why you’d want to keep the government open,” Republican Senator Roy Blunt said on NBC’s “Meet the Press” Sunday.

 

FRESH START WITH TRUMP

With much of Washington distracted by tensions with North Korea over its nuclear program, Congress must also raise the federal debt ceiling by the end of September or early October to stave off an unprecedented U.S. government debt default, which would shake global markets.

The debt ceiling caps how much money the U.S. government can borrow, and some conservatives are loath to raise it without spending reforms. U.S. Treasury Secretary Steven Mnuchin on Sunday said Congress should act quickly to increase the debt limit, otherwise relief funding for hurricane-ravaged areas of Texas might be delayed.

“Without raising the debt limit, I am not comfortable that we will get money to Texas this month to rebuild,” Mnuchin said on Fox News Sunday.

Blunt, a junior member of Senate Republican leadership, said it was possible lawmakers could tie legislation raising the debt ceiling to measures providing financial aid for recovery from Harvey. “That’s one way to do it,” he said on Meet the Press.

Montana Republican Senator Steve Daines said Friday he would prefer to see spending reforms attached to the borrowing ceiling. “We need to do something to reduce the debt.”

Senior Republicans were warning Trump not to anger Democrats by carrying through with his threat to curtail the Deferred Action for Childhood Arrivals (DACA) program for immigrant children, which Democrats widely support. Democratic votes will likely be needed to both raise the debt ceiling and prevent a shutdown.

Trump might have listened to them. Sources said on Sunday that he has decided to scrap the program that shields the young immigrants from deportation, but he will give Congress six months to craft a bill to replace it.

With his tendency to send conflicting policy signals and attack fellow Republicans, Trump may present the biggest uncertainty as Congress gets back to work.

The four top Republican and Democratic leaders of the Senate and House are set to hold a rare bipartisan meeting with Trump on Wednesday to chart a path forward for the multiple fiscal issues.

Senate Republican leader Mitch McConnell, who will attend the meetings, spent much of August feuding with Trump, who attacked the Kentuckian repeatedly on Twitter.

One Republican strategist said the Senate leader would not dwell on those tensions. “Basically every Republican senator is looking to put whatever nonsense happened on Twitter in August in the rear view mirror and focus on all the important work that needs to get done in September,” said Josh Holmes, a former chief of staff and campaign manager for McConnell.

 

(Additional reporting by David Morgan and Chris Sanders; Editing by Kevin Drawbaugh and Mary Milliken)

 

West Virginia’s worst flooding in a century kills 24

Emergency crews take out boats on a flooded I-79 at the Clendenin Exit, after the state was pummeled by up to 10 inches of rain on Thursday, causing rivers and streams to overflow into neighboring communities, in Kanawha County, West Virginia, June 24, 2016.

By David Bailey

(Reuters) – West Virginia’s three most devastated counties and possibly others will receive federal assistance after the state’s worst flooding in more than a century killed at least 24 people, officials said on Saturday.

President Barack Obama declared a major disaster for West Virginia and ordered federal aid to affected individuals in Kanawha, Greenbrier and Nicholas counties that could include grants for temporary housing, repairs and other programs.

Obama spoke with West Virginia Governor Earl Ray Tomblin on Saturday afternoon to give his condolences and make sure the governor has the federal resources he needs, White House spokesman Eric Schultz said.

West Virginia’s death toll from flooding is the highest for any U.S. state this year, with 16 deaths reported in Greenbrier County in southeast West Virginia, where the heaviest rain fell, and six in Kanahwa County, officials said.

The Federal Emergency Management Agency and state officials were assessing damage in at least six other counties and the state may ask for additional assistance, Tomblin said. Ohio and Jackson counties also reported one death each.

The death toll in West Virginia is the highest in any state from flooding this year. At least 16 people, including nine U.S. soldiers, were killed in flooding in Texas earlier in June.

Up to 10 inches (25.4 cm) of rain fell on Thursday in the mountainous state, sending torrents of water from rivers and streams through homes and causing widespread devastation.

Tomblin has declared a state of emergency in 44 of 55 counties and expects 400 members of the West Virginia National Guard to help rescue efforts on Saturday. About 32,000 homes and businesses remained without power on Saturday.

Hundreds of people have been rescued and search and rescue teams were looking for more people on Saturday, said Tim Rock, spokesman for the state Division of Homeland Security and Emergency Management.

Some towns were completely surrounded by water and hundreds of houses and buildings have been lost, Rock said.

The Greenbrier resort was closed indefinitely and PGA Tour officials said on Saturday the Greenbrier Classic golf tournament due to begin on July 7 had been canceled because of extensive flood damage.

West Virginia received one-quarter of its annual rainfall in a single day and multiple rivers surged to dangerous levels, including the Elk River, which broke a record at one stage that had stood since 1888.

(Reporting by David Bailey in Minneapolis and Jon Herskovitz in Austin, Texas; Editing by David Gregorio and Tom Brown)