Chamber Members:
A little bit of good news to share today rather than reporting the record number of tests (over 50,000) administered and most new cases since late May (2,295). Positivity rates remain steady however, slightly above 4% statewide and as a region we’re still hanging in there within guidelines before a reversal back to certain restrictions. Let’s focus on the positives mentioned below regarding the stock market and the real estate market. First though, some updates about ongoing topics.
Businesses Warn They Won’t Follow Payroll Tax Plan
The U.S. Chamber of Commerce, National Retail Federation and the National Association of Manufacturers have urged policymakers to return to negotiating a coronavirus relief package after hearing that an overwhelming number of companies do not plan to follow the recent Presidential plan. The groups are calling it “unworkable.” They have sent a letter to Treasury Secretary Steven Mnuchin stating that it risks saddling their workers with large postponed tax bills they could have trouble paying back.
We have heard the same from area businesses. Here is a breakdown of what employees could face if follow the withholding: Someone earning $35,000 would see their biweekly pay go up by $83 this year but would owe $751 next year. People earning $75,000 would see a $178-per-paycheck bump now but would face a $1,609 tax bill next year.
Many businesses are apprehensive about the plan, in part because it comes with some financial risk to them. They could potentially be on the hook for paying back deferred taxes for workers who later quit, for example. It would also likely be difficult to administer.
Today’s (Brief) Update on Federal Funding from Speaker Pelosi
House Speaker Nancy Pelosi said that she hopes all sides can come to an agreement on Covid relief before the end-of-September government-funding fight. “I don’t want to have to wait until the CR at the end of September, for that more people will die. More jobs will be lost. We have to try to come to that agreement. Now, all they have to do is recognize the need.
The Skinny Proposal Draft
Senate Republicans on Tuesday began circulating text of a narrow coronavirus relief package that would revive extra unemployment benefits at half the original rate, shield businesses from lawsuits related to the virus and provide funding for testing and schools.
The draft measure appears to be an effort to break through the political stalemate over providing another round of economic stimulus to Americans during the pandemic. But it is unlikely to alter the debate in Washington, where Democrats have repeatedly rejected previous Republican offers as insufficient. The new bill would spend less money, in fewer areas, than those earlier offers.
Speaker Pelosi and Senate Minority Leader Chuck Schumer have consistently rejected a small version of the COVID relief bill. There’s an added dynamic worth considering, though, and we don’t know yet whether this will play out in the leadership’s thinking: Nearly 100 Democrats have signed a letter urging a vote on an enhanced unemployment plan that seeks to tie payments to a series of triggers.
S&P 500 Sets First Record Since February
With just 126 trading days between peaks, the index has made its fastest-ever recovery from a bear market. The S&P 500 closed at its highest level ever Tuesday, capping a remarkable rebound fueled by unprecedented government stimulus and optimism among investors about the world’s ability to manage the coronavirus pandemic.
The benchmark U.S. stock index rose 0.2% to close at 3389.78, surpassing its prior record of 3386.15 from Feb. 19 and erasing a historic plunge during February and March that ended the longest-running bull market in history. The S&P 500 is now up 4.9% this year. Could these be the reasons why this is occurring?
- The stock market is forward-looking: Investors are betting on what the world and the economy look like in 12 to 18 months from now, not what they look like today, tomorrow or this fall
- The big get bigger: Much of the stock market’s success has been the result of a run-up in value for a few big technology companies — including Apple, Amazon and Microsoft — that make up a large share of the index. And retailers like Walmart and Home Depot are growing in part because small businesses have closed, allowing the bigger companies to take even more market share.
- Betting on a vaccine: Given the daily headlines about the potential for a vaccine, investors want to be invested in the market when the news comes that there is a genuine vaccine, on the assumption that it will send stocks even higher.
- The only game in town: With the Federal Reserve planning to print money for the foreseeable future, investors do not want to be in cash or bonds, which are steadily losing value. So where else can they put their money? The stock market has become a default.
- Help from Washington: As dysfunctional as Congress has proved to be, investors are betting that Republicans and Democrats will find a way to keep plying the economy with stimulus. (Anecdotal stories suggest some Americans have even taken their $600 unemployment checks and invested them in the stock market.)
Good News if You’re Looking to Sell
Suburban homes are suddenly selling fast as agents say the long-lingering pandemic has people thinking their homes are too small and have too little outdoor space to suit the new all-at-home lifestyle.
All over the suburbs, homes have been selling fast in recent weeks, at assorted price levels. Historically low interest rates are also a big factor. It is not only that the spring market shifted to summer, but the prolonged crisis has shaken even more households out of the space that worked for them before the crisis.
Fueling the fast sales is the lack of inventory at a time when buyers are stalking the market. Many potential sellers fear either having virus-carrying strangers walk through their homes or going to check out homes for sale that might be infected, so they have postponed putting their homes on the market.
HUD Extends Eviction Ban
The Department of Housing and Urban Development will extend a ban on evictions and foreclosures for homes backed by the Federal Housing Administration through the end of the year. The ban applies to the roughly 8.1 million homeowners with single-family mortgages insured by the FHA, a HUD agency that backs loans to low- and moderate-income borrowers.
HUD’s move only covers FHA mortgages, not those backed by Fannie Mae and Freddie Mac, the government-run companies that guarantee about half of the U.S. residential mortgage market. Thus, it involves far fewer homes than did the four-month eviction moratorium that lapsed at the end of last month.
This move comes a little over one week from the President’s executive order. Trump’s executive order also provides no direct money to aid struggling tenants, who will eventually have to pay months of back rent but directed Treasury and HUD to identify potential sources of funding. Interestingly enough, these homeowners with FHA loans already have some protections in place and are already covered by the Protecting Tenants in Foreclosure Act. Existing law requires that renters in these properties be given a 90-day notice to vacate.
SBA Online Training
The Illinois office of the SBA and SBDC’s around the state have teamed up to offer several conferences over the next few weeks. Here is a list that will cover the PPP loan forgiveness topic and for COVID assistance moving forward.
Thursday, Aug. 20
Paycheck Protection Program Loan Forgiveness | Hosted by the Illinois SBDC at Champaign County EDC | 10 a.m. | Register here
Monday, Aug. 24
Paycheck Protection Program Loan Forgiveness | Hosted by the Illinois SBDC at Champaign County EDC | 3 p.m. | Register here
Wednesday, Aug. 26
Paycheck Protection Program Loan Forgiveness | Hosted by the Illinois SBDC at Champaign County EDC | 10 a.m. | Register here
Friday, Aug. 28
COVID-19 Financial Assistance for Illinois Small Businesses and Nonprofits | Hosted by the Illinois SBDC at Champaign County EDC | 10 a.m. | Register here
Monday, Aug. 31
COVID-19 Financial Assistance for Illinois Small Businesses and Nonprofits | Hosted by the Illinois SBDC at Champaign County EDC | 3 p.m. | Register here
Tuesday, Sept. 1
Paycheck Protection Program Loan Forgiveness | Hosted by the Illinois SBDC at Champaign County EDC | 10 a.m. | Register here
Finally, are you feeling overwhelmed, anxious and abandoned? A new survey from the New Yok Times has found that the vast majority of parents across America have resigned themselves to the idea that school will be remote for some time. That means some degree of online learning for most children after a disastrous end to the last school year that largely took place remotely.
With school from home looking like the default for the foreseeable future, here are three ideas to make it go more smoothly.
Emphasize interaction. Educators should lead videoconference sessions that give students face time with teachers and their peers, argues Sal Khan, the founder of Khan Academy, a nonprofit online education organization. “Lesson plans designed for in-person classes don’t work in this coronavirus world,” he writes in a Times Op-Ed.
Keep lessons short. Live instruction should be broken up into smaller chunks spaced throughout the day, the education researchers Benjamin Cottingham and Alix Gallagher write in The Los Angeles Times. “Even adults have trouble videoconferencing for long stretches. For the youngest students, it is nearly impossible.”
Support parents. In the spring, “too many of our students and our young students were left home to navigate the virtual learning on their own with no support at home,” Marnie Hazelton, a New Jersey superintendent, told NJ.com. The Times survey found that one in five parents was considering hiring an in-person private teacher or tutor, though that option is largely limited to those with sufficient financial means. Ideally, schools would assign virtual counselors and tutors to ease the burden for the rest.
Stay well,
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Mike Paone
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct