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Jobless Claims Hit Record 3 Million Due to Wuhan Virus

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Americans displaced by the coronavirus crisis filed unemployment claims in record numbers, with the Labor Department reporting Thursday a surge to 3.28 million. CNBC reports:

The number shatters the Great Recession peak of 665,000 in March 2009 and the all-time mark of 695,000 in October 1982. The previous week, which reflected the period before the worst of the coronavirus hit, was just 282,000.

Consensus estimates from economists surveyed by Dow Jones showed an expectation for 1.5 million new claims, though individual forecasts on Wall Street had been anticipating a much higher number. The surge comes amid a crippling slowdown brought on by the coronavirus crisis.

Businesses across the country have shut down amid a policy of social distancing aimed at keeping the virus’s growth in check. Individual states have reported websites crashing amid a rush to file.

Coronavirus Reveals Financial Irresponsibility of Americans

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How long could you sustain your household if you were to stop earning income? If you are like most Americans, the answer is not for long. Only 40 percent of Americans can afford an unexpected $1,000 expense with their savings. The Hill reports:

In fact, nearly 80 percent of workers are living paycheck to paycheck. It is no surprise that the probability of an economic recession brought on by the coronavirus pandemic caused many to worry.

In major cities such as Boston, New York, Los Angeles, and San Francisco, restaurants and businesses have been ordered to close. For many hourly workers, this means no paychecks in the coming weeks. Almost one in five Americans have already lost their jobs or have reduced hours. At the same time, salaried workers are concerned about job security, as mass layoffs at numerous companies loom. While the situation is understandably stressful for every person affected, it serves as a sobering reminder that Americans must learn to live within their means and regularly save money.

The need for all Americans to be able to sustain themselves for at least a few months on savings is accentuated during a time of crisis. This means planning ahead when times are good.

IRS to Delay the April 15 Tax Payment Deadline by 90 Days

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The IRS will postpone the April 15 tax deadline by 90 days for millions of individuals who owe $1 million or less and corporations that owe $10 million or less, Treasury Secretary Steven Mnuchin said Tuesday in a press conference. USA Today reports:

To be sure, Americans still have to meet the April 15 deadline if they are expecting a refund or are requesting a six-month extension, but they can defer payment for up to 90 days beyond that.

“We encourage those Americans who can file their taxes to continue to file their taxes on April 15 because for many Americans, you will get tax refunds and we don’t want you to lose out on those tax refunds,” Mnuchin said. “We want you to make sure you get them.”

“All you have to do is file your taxes,” Mnuchin said. “You’ll automatically not get charged interest and penalties.”

Federal Reserve Cuts Interest Rates to Zero

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The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus. CNBC reports:

The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0% to 0.25% down from a previous target range of 1% to 1.25%.

Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 basis points to 0.25%, and lengthened the term of loans to 90 days…

The quantitative easing will take the form of $500 billion of Treasurys and $200 billion of agency-backed mortgage securities. The Fed said the purchases will begin Monday with a $40 billion installment…

The Fed added in its statement that it “is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.”

Trump to Waive Interest on Federal Student Loans ‘Until Further Notice’

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President Donald Trump on Friday said that he wouldeliminate the intereston federal student loans “until further notice” as part of a package of emergency executive actions designed to address the economic fallout from the coronavirus pandemic. Politico reports:

The unprecedented move will provide relief to the more than 42 million Americans who owe more than $1.5 trillion in outstanding federal student loans…

It’s not clear how much money the interest waiver will save borrowers, but it could be billions of dollars, depending on how long the Trump administration keeps the policy in place. In fiscal 2019 alone, the Education Department reported that it charged more than $100 billion in interest on all federal student loans…

The Education Department on Friday was still determining the mechanics of how to carry out Trump’s announcement.

Wuhan Coronavirus Could Financially Cripple Many Americans

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Americans’ health may not be the only thing at stake as the coronavirus continues its unrelenting spread in the U.S. The virus could also prove financially crippling for many individuals. Uninsured patients could expect to pay at least $500-$1,000 just to get tested for the virus, and a 10-day hospital stay could amount to a bill of at least $75,000, according to one expert. CNBC reports:

One of the most acute financial strains for Americans if they get the coronavirus will be related to cash flow — the loss of a paycheck for those who can’t go to work or dramatic reductions in revenue for business owners whose foot traffic evaporates, according to experts.

The U.S. is one of the only developed countries that doesn’t require workers to get paid time off when they’re sick…

Further, 54% of Americans report not being financially prepared to manage a contagious disease outbreak that furloughs them for several weeks, according to Prudential Financial.

The Rich Are Preparing for Coronavirus Differently

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The new coronavirus knows no national borders or social boundaries. That doesn’t mean that social boundaries don’t exist. The New York Times reports:

“En route to Paris,” Gwyneth Paltrow wrote on Instagram last week, beneath a shot of herself on an airplane heading to Paris Fashion Week and wearing a black face mask. “I’ve already been in this movie,” she added, referring to her role in the 2011 disease thriller “Contagion.” “Stay safe.”

Business executives are ditching first class for private planes. Jet-setters are redirecting their travel plans to more insular destinations. And wealthy clients are consulting with concierge doctors and other V.I.P. health care services. Why spend $3.79 on a bottle of hand sanitizer from Target when Byredo, a European luxury brand, makes one with floral notes of pear and bergamot for $35 (although that, too, is sold out)?…

At a time when every stray cough from three rows back sounds like a ghostly greeting from Typhoid Mary, those who can afford it are paying extra to sidestep crowded security lines and jampacked planes and flying private — which might be an attractive option for those who wish to flee the teeming cities for, say, a safe house in Telluride, Colo. Some wealthy people say they have been staying in their Hamptons homes and are prepared to jet off to cabins in Idaho if things get worse. And The Guardian reported that executives have chartered jets for “evacuation flights” out of China and other affected areas. For some private jet companies, fear equals opportunity. Southern Jet, a charter jet company in Boca Raton, Fla., recently sent out a limited test marketing email with the tag line: “Avoid coronavirus by flying private … Request a quote today!”…

In certain pockets of Silicon Valley, where tech-elite survivalists drool over abandoned missile silos that were converted into luxury bunkers, coronavirus is precisely the doomsday scenario they’ve been preparing for. Marvin Liao, a partner at the venture capital firm 500 Startups, has been stocking up on canned food, water, hand sanitizer and toilet paper in anticipation of an outbreak, and has lately been scoping out a high-end air purifier called Molekule Air, which costs $799. “I don’t know if you’re ever ready for this,” Mr. Liao said of coronavirus. “But I think that you’re probably better prepared than a lot of people, because at least you’ve thought about it and at least you’ve stocked up. Worse comes to worse you’ll have a lot more cushion than a lot more people out there.”

Preparing for Coronavirus to Strike the U.S.

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Preparing for the almost inevitable global spread of this virus, now dubbed COVID-19, is one of the most pro-social, altruistic things you can do in response to potential disruptions of this kind. Zeynep Tufekci writes for Scientific American:

We should prepare, not because we may feel personally at risk, but so that we can help lessen the risk for everyone. We should prepare not because we are facing a doomsday scenario out of our control, but because we can alter every aspect of this risk we face as a society.

That’s right, you should prepare because your neighbors need you to prepare—especially your elderly neighbors, your neighbors who work at hospitals, your neighbors with chronic illnesses, and your neighbors who may not have the means or the time to prepare because of lack of resources or time.

Prepper and survivalist subcultures are often associated with doomsday scenarios and extreme steps: people stocking and hoarding supplies, building bunkers and preparing to go off the grid so that they may survive some untold catastrophe, brandishish weapons to guard their compound while their less prepared neighbors perish. All this appears both extreme and selfish, and, to be honest, a little nutty—just check the title of the TV series devoted to the subculture: Doomsday Preppers, implying, well, a doomsday and the few prepared individuals surviving in a war-of-all-against-all world.

It also feels like a scam: there is no shortage of snake oil sellers who hope stoking such fears will make people buy more supplies: years’ worth of ready-to-eat meals, bunker materials and a lot more stuff in various shades of camo. (The more camo the more doomsday feels, I guess!)

The reality is that there is little point “preparing“ for the most catastrophic scenarios some of these people envision. As a species, we live and die by our social world and our extensive infrastructure—and there is no predicting what anybody needs in the face of total catastrophe.

In contrast, the real crisis scenarios we’re likely to encounter require cooperation and, crucially, “flattening the curve” of the crisis exactly so the more vulnerable can fare better, so that our infrastructure will be less stressed at any one time.

TurboTax Owner Intuit to Buy Credit Karma for $7 Billion

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Intuit Inc. is nearing a deal to buy personal-finance portal Credit Karma Inc. for about $7 billion in cash and stock, in a move that would push the bookkeeping-software giant further into consumer finance, according to people familiar with the matter. USA Today reports:

The TurboTax owner Intuit may acquire the personal-finance portal Credit Karma in a $7 billion deal this week, The Wall Street Journal reported.

Intuit is expected to announce the acquisition as early as Monday, sources familiar with the arrangement told the Journal. The move would be the largest purchase Intuit has made in its 37-year history. 

Credit Karma would still function as a standalone business with its CEO Kenneth Lin remaining at the helm, sources told the Journal.

More than 85 million Americans use Credit Karma to better understand and improve their credit scores. The startup makes money through credit cards and loan referral commissions. Intuit is the maker of TurboTax, the online tax filing service used by millions of Americans to file taxes.

U.S. Household Debt Exceeds $14 Trillion for the First Time

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Total U.S. household debt rose by $601 billion in the fourth quarter from a year earlier, or 1.4%, surpassing $14 trillion for the first time, the New York Fed’s quarterly household credit and debt report showed. Bloomberg reports:

That’s $1.5 trillion above the previous peak in the third quarter of 2008. Overall household debt is now 26.8% above the second-quarter 2013 trough.

Mortgage borrowing rose by $120 billion to $9.56 trillion. The rate for a 30-year mortgage has fallen by about 100 basis points over the past year, adding to home purchasers’ buying power. For example, a $500,000, 30-year loan costs about $300 less per month.

“Mortgage originations, including refinances, increased significantly in the final quarter of 2019,” Wilbert Van Der Klaauw, vice president at the New York Fed, said in a statement.

Record 90% of Americans Satisfied With Personal Life

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Nine in 10 Americans are satisfied with the way things are going in their personal life, a new high in Gallup’s four-decade trend. The latest figure bests the previous high of 88% recorded in 2003. Gallup reports:

These results are from Gallup’s Mood of the Nation poll, conducted Jan. 2-15, which also recorded a 20-year high in Americans’ confidence in the U.S. economy. The percentage of Americans who report being satisfied with their personal life is similar to the 86% who said in December that they were very or fairly happy — though the happiness figure, while high, is on the low end of what Gallup has measured historically for that question.

Despite some variation, solid majorities of Americans have reported being satisfied with their personal life over the past few decades, with an average of 83% satisfied since 1979. The historical low of 73% was recorded in July 1979, as the effects of that year’s oil crisis took a toll on U.S. motorists. During that poll’s fielding dates, then-President Jimmy Carter delivered his “malaise speech,” which was interpreted by some as placing blame on Americans themselves for the rough economic spot the country was in.

A 2019 survey on 10 aspects of Americans’ lives found that they are most satisfied with their family life, their education and the way they spend their leisure time — and least satisfied with the amount of leisure time they have, their household income and their job.

Coronavirus is Now a Public Health Emergency in the United States; Avoid Traveling to China

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The Donald Trump administration declared the coronavirus outbreak to be a public health emergency in the United States on Friday, setting quarantines of Americans who have recently been to certain parts of China. USA Today reports:

Centers for Disease Control and Prevention officials said it was the first quarantine order issued by the federal government in over 50 years. Marty Cetron, director of CDC’s Division of Global Migration and Quarantine, said the last time a quarantine was used was in the 1960s for smallpox.

U.S. citizens who have been in China’s Hubei province during the past 14 days and are returning to the U.S. States will undergo health screenings and be monitored during mandatory quarantines of up to 14 days, officials said.

Alex Azar, secretary of Health and Human Services, also announced a temporary suspension of entry into the United States of foreign nationals who pose a risk for the transmission of the coronavirus.

New Safety Gizmos Are Making Car Insurance More Expensive

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American car insurance rates are going up up up. In the past decade, they climbed 29.6 percent, to an average of $1,548 in 2019 from $1,194 in 2011. Wired reports:

The surge, detailed in a new report from insurance shopping site The Zebra, outpaced both inflation (by far) and the increase in average car prices (more narrowly). And it came even as the rate of crashes has fallen year over year…

It turns out that new features designed to keep vehicles in their lanes and out of trouble are contributing to rising insurance rates.

That’s because the sensors that power those systems make cars much more expensive to fix when they do crash. Dent a steel bumper, and a few hammer blows gets you back on the road. Smash one on a new car, and it could mean replacing a radar, a camera, and ultrasonic sensors, then calibrating them so they work properly. Replacing a cracked windshield now comes with the extra cost of having someone readjust any cameras that look through the glass.

While some studies have shown the effectiveness of emergency braking, insurance companies haven’t yet seen enough evidence to justify a break in rates for most of these features. That’s not to say lane keeping, parking assist, and the rest don’t work. They’re all relatively new, and the actuaries aren’t yet confident that their benefits outweigh the extra costs they incur to repair. Complicating the picture is the fact that each automaker offers its own version of each feature, and that drivers may not keep the systems engaged.

American Households Waste Nearly A Third Of Their Food, Study Finds

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According to research led by agricultural economics professor Edward Jaenicke of Penn State University, the average American household wastes nearly a third of its food. The value of that waste is estimated at $240 billion annually. When divided among the 128.6 million American households, that’s an average of $1,866 being wasted per household on a yearly basis. Study Finds reports:

Jaenicke says all that wasted food has far-reaching consequences, and negatively impacts overall American health, food marketing, climate change, and food security.

“Our findings are consistent with previous studies, which have shown that 30% to 40% of the total food supply in the United States goes uneaten — and that means that resources used to produce the uneaten food, including land, energy, water and labor, are wasted as well,” Jaenicke says in a university release. “But this study is the first to identify and analyze the level of food waste for individual households, which has been nearly impossible to estimate because comprehensive, current data on uneaten food at the household level do not exist.”

Over 40% of Americans Don’t Have $1,000 for an Emergency!

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Many of us would be in trouble if we had to foot the bill for an unplanned expense. Bankrate’s January Financial Security Index survey reveals that just four in 10 U.S. adults (41 percent) would cover the cost of a $1,000 car repair or emergency room visit using savings. Bankrate reports:

The findings echo what previous Bankrate studies and others — including the Federal Reserve and the Pew Charitable Trusts — have found about Americans’ lack of rainy-day savings.

The higher your household income, the more likely you would be to use savings to pay for unanticipated costs. That’s true for nearly six in 10 (59 percent) households earning $75,000 or more annually.

Men (45 percent) were more likely than women (38 percent) to say they would draw from savings when faced with the unexpected. And when their backs are against the wall, just 36 percent of younger millennials would turn to emergency funds to pay $1,000 (compared with 41 to 44 percent of older folks who would say the same).