The daily business briefing: May 13, 2020

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1. April federal deficit reaches record $738 billion

The federal government on Tuesday reported a record $738 billion budget deficit in April, more than triple the previous monthly record of $235 billion set in February. The 12-month deficit widened to $1.94 trillion, nearly doubling compared to the 12 months through March. The gap widened after Congress passed a $2.3 trillion rescue package to help individuals and businesses get through the coronavirus crisis, which shut down much of the economy. April marked the first month reflecting the massive stimulus spending, which came as tax revenue fell. The federal government normally runs a surplus in April, as Americans send income tax payments by April 15, but this year the filing deadline was pushed back to July 15 because of the public-health crisis.
[Reuters, The Wall Street Journal]

2. House Democrats unveil new $3 trillion coronavirus relief bill

House Democrats on Tuesday released their latest proposed coronavirus relief package to help stimulate the economy and support the health-care system during the coronavirus crisis. The proposal includes nearly $1 trillion in relief for state and local governments, and a second round of direct payments to Americans of $1,200 per individual and up to $6,000 for households. The bill also seeks to extend the $600 per week federal unemployment insurance benefit, and provide $200 billion in hazard pay for essential workers who have been required to continue reporting to their jobs despite stay-at-home orders. Even if the legislation passes the House, it is expected to face a challenge in the Republican-led Senate due its more than $3 trillion cost.

3. Grocery prices made their biggest jump since 1974 in April

Grocery prices rose by 2.6 percent overall in April, their biggest one-month jump since February 1974, the Bureau of Labor Statistics reported Tuesday. As the coronavirus crisis disrupted supply chains and shoppers stocked up on essentials, prices for meats, poultry, fish, and eggs increased by 4.3 percent in April. Prices for fruits and vegetables increased by 1.5 percent, while those of cereals and bakery products rose by 2.9 percent. The increase in food prices increased food insecurity as more than 20 million people lost their jobs as the pandemic forced businesses nationwide to shut down under stay-at-home orders. The cost of many other goods fell, driving down the U.S. consumer price index by 0.8 percent in April, the biggest monthly decline since 2008.
[The Washington Post]

4. Stock futures little changed after Tuesday’s selloff

U.S. stock index futures edged higher early Wednesday, shaking off a slight overnight dip after Tuesday’s selloff. Futures for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were up by roughly 0.2 percent as investors expressed caution as states gradually let some businesses reopen despite the ongoing coronavirus crisis. The Dow fell by 1.9 percent on Tuesday, reversing earlier gains after a top public official told senators states risk unnecessary coronavirus deaths if they reopen too soon. The S&P 500 and the Nasdaq fell by about 2.1 percent on Tuesday. Shares of Simon Property Group, the nation’s biggest mall owner, gave up a 10 percent gain after reporting plans to reopen half of its properties over the coming week, closing down by nearly 1 percent.

5. California county grants Tesla permission to reopen plant

The Alameda County, California, Public Health Department announced early Wednesday that Tesla’s Fremont electric-car plant could start making vehicles again, provided the company confirms that it is providing workers with safety precautions it promised. The announcement appeared to mark an end to a dispute between public health authorities and Tesla CEO Elon Musk, who ordered employees to return to the plant on Monday despite the county’s continuing shelter-in-place order to curb the spread of the novel coronavirus. The health department’s release on Twitter said that Fremont police would verify that Tesla was following through on physical distancing requirements and other safety measures.
[The Associated Press]

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