Today’s update has the usual Thursday jobs report and we also take a look at an inflation report out that sees prices surging. Also, yet another infrastructure deal has emerged on the federal front. Consider adding your voice to a push for adding funds to the Restaurant Revitalization Fund. Finally, there is an article about the President’s neighborhood revitalization program and some projects in Will County that are listed in the surface transportation bill.
One more day until fully reopened!
*Daily Coronavirus update brought to you by Silver Cross Hospital
U.S. Jobless Claims
Jobless claims declined to a pandemic low last week, a sign companies are hesitant to lay off employees as the U.S. economy quickly recovers. Unemployment claims fell to 376,000 last week from 385,000 a week earlier, the Labor Department said Thursday, bringing claims to the lowest level since the pandemic hit last spring. Claims remain well above weekly filings of just over 200,000 logged before the pandemic shut down large parts of the economy last March. But they have steadily declined in recent weeks as rising vaccination rates and easing business restrictions spur economic activity. Nearly 3.5 million were receiving traditional state unemployment benefits the week of May 29, down by 258,000 from 3.8 million the week before.
There are numerous signs that demand for workers is picking up as the economy further reopens. Job openings continued to grow in May, according to job-search site Indeed.com. That followed an increase of nearly 1 million unfilled positions in April, to 9.3 million, the highest level on records back to 2000, the Labor Department reported Tuesday.
At the same time, there are millions fewer people seeking jobs since Covid-19 hit last spring. Economists say many factors are keeping Americans out of the labor force, including the fear of contracting Covid-19 and early retirements amid the pandemic.
The claims data suggest that millions of potential workers are still actively searching for jobs but unable to land them. In the week ended May 22, 15.3 million Americans received unemployment benefits through regular state aid and federal emergency programs put in place in response to the pandemic. While total claims are down from a recent peak of 20.8 million in February, they are still more than seven times higher than before the pandemic started.
Half of U.S. states plan to end participation in federal supplemental unemployment benefits before the program expires in early September. Four of those states end participation this week, accounting for 470,000 of the 3.8 million people who will lose benefits early, according to forecasting firm Oxford Economics.
Other reasons that many workers aren’t seeking paychecks include a mismatch of skills between unemployed workers and available positions and increased child-care responsibilities during the pandemic.
U.S. Inflation Is Highest in 13 Years as Prices Surge 5%
U.S. consumer prices continued to climb strongly in May, surging 5% from a year ago to reach the highest annual inflation rate in nearly 13 years.
The Labor Department said May’s increase in consumer inflation was the largest since August 2008. The jump followed a 4.2% rise for the year ended in April. The core-price index, which excludes the often-volatile categories of food and energy, rose 3.8% in May from a year before—the largest increase for that reading since June 1992.
Prices for used cars and trucks leapt 7.3% from the previous month, driving one-third of the rise in the overall index. The indexes for furniture, airline fares and apparel also rose sharply in May. On a month-to-month basis, overall prices rose a seasonally adjusted 0.6% and core prices rose 0.7%.
The annual inflation measurements are being boosted by comparisons with figures from last year during Covid-19 lockdowns, when prices plummeted because of collapsing demand for many goods and services. This so-called base effect is expected to push up inflation readings significantly in May and June, dwindling into the fall.
Consumers are seeing many prices climb for numerous reasons as the U.S. economic recovery revs up. Prices for new vehicles have soared because of a computer-chip shortage that has crimped car production. That, in turn, has bolstered prices for used autos. Rental-car prices have soared because companies sold their fleets when demand collapsed along with travel during the pandemic. Airfares and hotel-room rates are rebounding as consumers start traveling again.
More companies have started passing on to consumers the higher costs they are facing for raw materials and wages. Food makers said their costs are climbing at an alarming rate, prompting them to raise some prices. “The inflation pressure we’re seeing is significant,” General Mills Inc. Chief Executive Jeff Harmening said at a recent investor conference. “It’s probably higher than we’ve seen in the last decade.”
The upswing in prices reflects robust consumer demand boosted by widespread Covid-19 vaccinations, relaxed business restrictions, trillions of dollars in federal pandemic relief programs and ample household savings. U.S. gross domestic product rose 6.4% at a seasonally adjusted annual rate in the first quarter. Economists surveyed by The Wall Street Journal in April forecast the economy to grow at an 8.1% annual rate in the second quarter, leaving it poised for its best year since the early 1980s.
Policy makers are watching May’s reading to gauge the magnitude of what many expect to be several months of stronger inflation after a year of very weak price pressures during the worst of the pandemic. Whether the pickup in inflation proves temporary is a key question for the U.S. economy and financial markets as the Biden administration, Congress and the Federal Reserve continue to support the economy with fiscal and monetary policy measures.
The Fed expects the inflation rate to rise temporarily this year. A sustained, large increase in inflation could compel the central bank to tighten its easy-money policies earlier than it had planned, or to react more aggressively later, to achieve its 2% average inflation goal.
The central bank’s inflation goal is based on the Commerce Department’s price index of personal-consumption expenditures, which tends to run a bit below the CPI. The Fed has said it would hold rates near zero until PCE inflation is averaging 2% and full employment has been achieved.
Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, said the Fed intends for inflation to overshoot its 2% target moderately because that could be good for the economy. Higher inflation would mean higher interest rates, which would give the Fed more room to cut rates in the next economic downturn, she said.
Stronger demand has spurred employers to try to hire more workers, but many businesses are raising wages as they struggle to hire people. Job openings reached 9.3 million in April, the highest number since records began in 2000, as the gap widened between open positions and workers taking the roles.
Chipotle Mexican Grill Inc. recently raised its menu prices by roughly 4% across many markets to help cover the costs of wage increases as well as higher commodity prices, Jack Hartung, chief financial officer, said at an investor conference earlier this week.
Some 48% of small businesses indicated that they raised average selling prices in May, the highest share since 1981, according to a survey conducted by the National Federation of Independent Business, a trade association.
The unique dynamics of reopening an economy that is powered by consumer spending are at play, Ms. Bostjancic said. Consumers are willing to shell out more than they might be normally, thanks to a year of being cooped up at home and the extra savings many households have amassed.
“That type of price increase won’t be with us next year because consumers will balk at it. We may even see prices revert back to a lower level,” she said, referring to the sharp rise in car-rental prices. “There’s only so much time people are going to be willing to say, ‘OK, I’ll pay a little more. I’ve gotten government assistance, and I’ve built up savings. I haven’t been out in a while. Whatever it takes, I’ll pay for it.’”
Romney: Bipartisan group has tentative infrastructure deal
Republican senators who are negotiating within a bipartisan group of 10 senators say they have reached a tentative deal on the size of an infrastructure package and how to pay for it. The emerging deal would spend only a fraction of the $4.1 trillion investment President Biden has called for and would not raise taxes, which could make it a tough sell within the broader Senate Democratic caucus.
Members of the bipartisan group cautioned Thursday that the tentative deal still needs to be presented to the Senate Republican conference and the White House to see if there’s broader buy-in. “We have a tentative agreement on the pay-fors, yes, but that’s among the five Democrats and the five Republicans. It has not been taken to our respective caucuses or the White House so we’re in the middle of the process. We’re not at the end of the process, not at the beginning but we’re in the middle,” said Sen. Mitt Romney (R-Utah), a member of the group.
Romney said there’s also a tentative agreement to the overall top-line spending number. “I believe it’s complete but others may have a different point of view,” he said.
Sen. Susan Collins (R-Maine), another member of the group, confirmed there is a tentative deal and called it a “significant” sign of progress. “Among the ten of us there is a tentative agreement on a framework but obviously there’s a long ways to go. I would not say that we have the leaders on board or we have started negotiating with the White House but I think having 10 senators come together and reach an agreement on a framework is significant,” she said.
Senate Minority Leader Mitch McConnell (R-Ky.) said earlier on Thursday that Republicans “haven’t given up hope” for a bipartisan infrastructure deal with the Biden administration. “We haven’t given up hope that we’ll be able to reach a deal on something really important for the country that we really need to accomplish, and that is a major infrastructure bill,” McConnell said during an interview with Fox News. “Yeah, I think it’s clearly possible. We haven’t given up on reaching an agreement on infrastructure. … I think there’s a good chance we can get there,” he added.
Other members of the bipartisan group weren’t quite willing to say they’ve agreed to the overall spending number until they’ve had a chance to bounce it off more of their colleagues. “We’re continuing to get input from people. Nothing’s final,” said a senator involved in the talks.
Sen. Shelley Moore Capito (R-W.Va.) said she knew members of the bipartisan group were very close to a deal on the broad outlines of a scaled-down infrastructure spending package and predicted it would be similar to what she offered to Biden in recent weeks. “They were pretty close, I think, the last time I talked to them,” she said. “I haven’t seen the details of their report but I think a lot of what they have is a lot of what I had in terms of definitionally what infrastructure is,” she added.
Sen. Bill Cassidy (R-La.), one of the Republican negotiators in the bipartisan group, said a key difference between what Senate Republicans outlined last month and what the group of ten Democrats and Republicans are putting together is the new package would include energy provisions that Biden wants. “This will go back through committees, it will go through Finance [Committee] for the pay-fors, we still have to interact with the president but as far as the group’s concerned, we have a final offer,” Cassidy said Thursday.
The Louisiana Republican said the next step is to sell the bipartisan deal to the White House and the Senate Republican and Democratic caucuses. “We’d have to, again, have our colleagues, whichever party you’re in, buy into it,” he said, adding the group has to “make sure the White House is OK with it.”
Cassidy said the Senate group’s top-line spending number is similar to the $1.25 trillion infrastructure spending framework the bipartisan House Problem Solvers Caucus unveiled earlier in the week. That group’s plan would provide $762 billion in new spending over eight years. “The Problem Solvers passed something which [is] pretty similar to ours in terms of top line and with the same categories and roughly the same everything else,” he said. “It’s all positive.”
Asked why Biden would accept the deal after he rejected Capito’s proposal, which was not drastically different, Cassidy pointed to a new energy section. “We have an energy section in ours that in my conversation with the president said he really wanted,” he said.
Another part of the bipartisan Senate group plan that stands out is taking tax increases off the table as lawmakers try to craft an infrastructure proposal after GOP talks with the White House collapsed Tuesday. Raising taxes on high-income earners and corporations has been a key part of President Biden’s infrastructure plan, making it nearly impossible to garner enough GOP support for legislation that can clear the Senate.
Sen. Jon Tester (D-Mont.), who is in the bipartisan group, said tax increases are not under consideration as senators attempt to reach consensus on how to pay for their plan. When asked Wednesday if tax hikes were out, Tester responded: “That’s my understanding. I think there’s ways to do that; hopefully it won’t be smoke and mirrors. Bottom line, this is probably the hardest part from my perspective, is how you get it paid for.”
The Montana Democrat stopped short of saying whether he thought the White House would support a proposal that ruled out tax increases, adding “if it’s paid for, I think they would be.”
Replenish the Restaurant Revitalization Fund
The Restaurant Revitalization Fund (RRF) has been an incredibly effective recovery tool for the restaurant industry, but for too many owners, the $28.6 billion in funding won’t last long enough for them receive a dollar in disaster funding. The SBA estimates that they need at least an additional $50 billion just to fund the applications submitted before the application portal was closed.
We’re anticipating that the RRF Replenishment Act will be introduced today or tomorrow. This new legislation will direct $60 billion in funding to the SBA, allowing them to complete the mission and provide sorely needed recovery dollars for the restaurant industry.
The work of these sponsors, Senator Kyrsten Sinema (D-AZ), Senator Roger Wicker (R-MS), Representative Earl Blumenauer (D-OR), and Representative Brian Fitzpatrick (R-PA) has been critical. But they need our help. This bill will not be brought to the floor for debate unless there is broad bipartisan support.
Congress heard our voice when they created the RRF – they need to hear from us again to ensure it receives more funding. Many in Washington think that the return to indoor dining means that the restaurants will be fully back to normal within a few months. The truth is that this industry is incredibly vulnerable and faces a long path to recovery. We need this bill.
President Biden’s Neighborhood Revitalization Plan
The Biden administration is looking to a small housing program in Detroit as a possible solution to a big problem: Many crumbling homes in blighted neighborhoods remain vacant because the cost of renovations exceeds the potential selling price. The program, Rehabbed and Ready, aims to help solve the problem by covering the gap, so renovations are feasible. Seeking to break the cycle of depressed property values and urban decay, the program has renovated about 90 homes since it began in 2015 with plans for 200 more.
Rehabbed and Ready is a rough model for a Biden administration proposal to renovate 500,000 dwellings in a decade by offering $20 billion in tax credits to developers. The plan, aimed at easing the nationwide shortage of affordable single-family homes, is part of President Biden’s broader $1.7 trillion infrastructure proposal.
“It’s a similar approach to a problem that is particularly acute in Detroit but you can actually see it in almost every geography,” said Julia Gordon, an advocate of the Biden plan who is president of the National Community Stabilization Trust, a nonprofit that focuses on neighborhood revitalization.
Much of the Biden administration’s agenda—from two years of tuition-free community college to subsidized day care—faces opposition from Republicans in Congress. But the tax-credit initiative has broad bipartisan support. It started as a stand-alone bill now backed by five Republicans and five Democrats in the Senate, and 11 Democratic and six Republican co-sponsors in the House.
The problem for many Republican supporters is that the measure has been folded into Mr. Biden’s infrastructure plan, which Republicans say is too broad and shouldn’t be financed with corporate tax increases, as the president proposes.
“I don’t like that it’s been thrown into something much bigger, much more invasive when it comes to taxpayers,” said Rep. Mike Kelly (R., Pa.), who backed the stand-alone version of the tax-credit bill.
“It’s not partisan at all,” said Sen. Ben Cardin (D., Md.), one of the bill’s main authors in the Senate. “It’s mainly for older communities, where you have housing that needs some help, to be attractive and safe and affordable.”
Rising housing prices nationwide are providing a boost to some stagnant neighborhoods in rust-belt cities that have suffered from a lack of investment. But in many areas, the low potential resale value remains a barrier to renovating homes. “If you can’t sell the home at a price big enough to cover the cost of development, then you can’t develop it in the first place,” said Buzz Roberts, president of the National Association of Affordable Housing Lenders. “It’s a chicken-and-egg problem.”
Proponents say the home rehabilitation initiative would represent the only federal program on a national scale aimed specifically at boosting the supply of single-family homes. New-home construction hasn’t kept up with demand in recent years, as builders took years to recover from the financial crisis and faced shortages of land and skilled labor. Lumber costs have shot up, too.
Rather than rely on philanthropic support, the White House plan would create a federal tax credit to cover the gap between construction costs and sales prices. Credits would be available to developers after they sell renovated or newly built homes in neighborhoods with high poverty rates, low median family incomes and low home values. Home sales prices would be limited to a maximum of four times the area’s median annual income, among other restrictions.
Brett Theodos, a senior fellow at the Urban Institute, said the proposal has potential to significantly reduce the country’s deficit of low- and moderately priced homes. Data and analytics firm CoreLogic Inc. puts that deficit at about 1.1 million units. “We don’t actually do much in this country to help people buy their first home,” Mr. Theodos said.
While some existing programs such as Community Development Block Grants help fund affordable homeownership, just $374 million, or 11%, of such grants were used for single-family rehabilitation in the fiscal year ending Sept. 30, according to the Department of Housing and Urban Development. That is much less than the $2 billion envisioned annually for a decade through the creation of the new tax-credit.
Another existing program, Low-Income Housing Tax Credits, provides incentives for the construction of affordable rental housing, not homeownership. A creation of the 1986 tax law during the Reagan administration, the $12 billion program helped finance about 132,000 units in 2019, according to the Joint Committee on Taxation.
Now, the fate of Mr. Biden’s home-rehabilitation initiative may depend on the president’s ability to strike a compromise with congressional Republicans on his infrastructure plan—or to pass it without Republican support through a budget process known as reconciliation. If all else fails, some supporters say they hope the bipartisan tax-credit idea can pass on its own.
Surface Transportation Draft Bill Included Will County Projects
Four major road construction projects in Will County are one step closer to potentially receiving federal money for completion. The funding was included in a draft of the INVEST in America Act, a surface transportation bill aimed at modernizing roads, bridges, transit and more throughout the country, area members of Congress announced this week.
Projects included in the bill:
• $6.2 million for the eastward extension of 143rd Street in Plainfield from Illinois Route 59 to Route 126
• $2.7 million for the reconstruction of Gougar Road in New Lenox from Laraway Road to Francis Road
• $2.1 million for the widening of Weber Road in Romeoville from 135th Street to Airport Road
• $1.5 million for lane improvements on 80th Avenue in Tinley Park from 191st Street to 183rd Street
Will County officials have been advocating for these local projects to be included in the bill for weeks. On Tuesday, the county’s federal lobbyist, Smith Dawson &Andrews, told the Will County Board’s Legislative & Judicial about the bill’s status. Brett Garson, the managing director of Smith Dawson &Andrews, told board members that while it was significant the projects were included in the draft bill, Congress still needs to pass it. “There’s still a lot of steps in this process,” he said. Garson added it was helpful that county officials took the time to pitch members of Congress directly on the need for support on the projects.
This year’s process differed from previous years as individual members of Congress were able to request funding for transportation and infrastructure projects that would benefit the areas they represent. Will County spans six congressional districts, so it sometimes had more than one member pushing for the same project to receive funding.
“Delivering federal resources to the 11th District will always be one of my top priorities, and funding for important transportation and infrastructure projects is no exception,” U.S. Rep. Bill Foster, D-Naperville, said in a statement. “It’s beyond time we make critical investments in the local transportation infrastructure that our communities rely on every day.”
Both county and federal officials said they tried to advance projects which would bring the most benefit to the most people. If ultimately included in an approved bill, the funding would help complete improvements to major roadways around Will County.
For example, the widening of about two miles of Weber Road, along with the construction of a new interchange by Interstate 55, would bring additional capacity to the corridor, which has seen significant traffic growth over several years.
Traffic in this project area is expected to increase almost 62% by 2050, according to a news release. Will County and the villages of Romeoville and Bolingbrook have been collaborating on the improvements along Weber Road. Romeoville Mayor John Noak said it was “so logical” to push for federal funds to use for the improvements. He praised Will County Executive Jennifer Bertino-Tarrant and other county officials for their work advocating for funding. “There’s no doubt that all of these are good projects [for the county],” Noak said.
Plainfield Mayor John Argoudelis said the money for the 143rd Street extension would be “pretty significant” to alleviate traffic through the village on Route 59. The extension also would increase the efficiency of public transportation through Pace’s Bus Rapid Transit system along I-55, according to a news release.
If the $6.2 million for the 143rd Street extension is approved, that would be added to the nearly $42 million in federal funding already assigned to the project. The total cost for the project is around $60 million, according to Traci Pleckham, Plainfield’s interim village administrator.
While inclusion in the draft bill language is a significant step for these projects, officials stressed it was just one of many steps for anymore federal help coming to Will County.
Congress is also in the process of drafting a separate, massive infrastructure bill pushed by President Joe Biden, although Will County’s federal lobbyists didn’t have a clear sense of how that process will turn out. Garson said he was unsure about how willing Republicans and Democrats in Washington were to work together on a bill.
“Right now, it’s hard to say whether that’s going to move forward in a bipartisan fashion,” he said. “They’re still trying to do that, but it just seems like there may be some hurdles the two parties may not agree on.”
Program Notices & Reminders – Expanded Information
|Small Business Tax Credit Programs
Did you know that the American Rescue Plan extends a number of critical tax benefits, particularly the Employee Retention Credit and Paid Leave Credit, to small businesses?
Small Disadvantaged Business Contracting Goal News
On June 1, 2021, the centennial of the Tulsa Race Massacre, the Biden-Harris Administration announced new steps to help narrow the racial wealth gap and reinvest in communities that have been left behind by failed policies. Specifically, the Administration is expanding access to two key wealth-creators – small business ownership and homeownership – in communities of color and disadvantaged communities.
Federal Contracting Webinar Series
Do you need help with federal contracting? The ChallengeHER webinar series offers education and training on the federal contracting system. Below is a list of upcoming webinars.
8(a) Orientation Workshop/SAM Registration
This webinar will provide an overview of the 8(a) Business Development program, eligibility requirements, program benefits and training, steps to registering in the System for Award Management (SAM) database in order to do business with the federal government. Wednesday, June 16, 9:30 a.m.
CDC Mask Guidance
The CDC still recommends that unvaccinated people continue to take preventive measures, such as wearing a mask and practicing social distancing. In their latest guidance, the CDC now reports that indoor and outdoor activities pose minimal risk to fully vaccinated people and that fully vaccinated people have a reduced risk of transmitting SARS-CoV-2 to unvaccinated people.
Fully vaccinated people can:
• Resume activities without wearing masks or physically distancing, except where required by federal, state, local, tribal, or territorial laws, rules and regulations, including local business and workplace guidance
• Resume domestic travel and refrain from testing before or after travel or self-quarantine after travel
• Refrain from testing before leaving the United States for international travel (unless required by the destination) and refrain from self-quarantine after arriving back in the United States
• Refrain from testing following a known exposure, if asymptomatic, with some exceptions for specific settings
• Refrain from quarantine following a known exposure if asymptomatic
• Refrain from routine screening testing if feasible
For now, fully vaccinated people should continue to:
• Get tested if experiencing COVID-19 symptoms
• Follow CDC and health department travel requirements and recommendations
Governor Pritzker Mask Changes:
Finally, join us in June for our re-scheduled luncheon with Police Chief Dawn Malec and Fire Chief Greg Blaskey on Wednesday, June 16 at Harrah’s Joliet Casino & Hotel. You may make reservations here: http://jolietchamber.chambermaster.com/events/details/2021-member-lunch-june-16-meet-greet-with-joliet-police-fire-chiefs-6060
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry