The U.S. deficit surged to a record monthly high in April.
The United States recorded its largest monthly deficit in history in April as the government began funneling billions of dollars of stimulus funds to cushion the economy from the coronavirus pandemic.
The Treasury Department said on Tuesday that the budget deficit surged to $738 billion last month as the Trump administration deferred tax payments that normally come due in April to mid-July and sent millions of Americans economic relief payments. It was the largest shortfall of any month on record and the deficit for the fiscal year to date topped $1.4 trillion.
The figures show the breadth of the fiscal measures that the government has been taking to support a cratering economy and the deep debt burden that it will be facing as the economy recovers. A Treasury official outlining the release of the date called the numbers “striking.”
The Congressional Budget Office projected last month that the federal budget deficit would hit $3.7 trillion for the 2020 fiscal year, which would be its largest size as a share of the economy since World War II.
Much of the decline in government receipts last month was because of the three-month delay of Tax Day to July 15, while a large proportion of the increase in spending was reflected in the economic impact payments and in additional health care spending. April usually yields a surplus. The largest deficit for the month previously came in 2010.
Although Republicans have been increasingly expressing worry about the deficit, it is likely that more government spending is in store. And most economists argue that the massive spending is necessary to prevent the severe economic downturn from becoming even worse. House Democrats released on Tuesday released a proposal for another $3 trillion economic relief bill.
The Federal Reserve on Tuesday announced additional details on one of its yet-to-open emergency lending facilities, adding that it will provide detailed public disclosures on who is tapping the program.
The so-called Term Asset-Backed Securities Loan Facility, or TALF, will accept bundles of debt backed by a variety of consumer and business debt, including auto loans, student loans, and leveraged loans, as collateral in exchange for loans. The goal is to keep credit markets functioning smoothly.
The Fed did not provide a start date for the program, which was first announced on March 23. It also announced that both the TALF and its Paycheck Protection Program lending facility — which takes small-business loans off bank balance sheets — would provide detailed monthly releases on usage.
Also on Tuesday, lawmakers grilled Randal K. Quarles, the Federal Reserve’s vice chair for banking supervision, on several topics at a Senate hearing, including why the Fed is still allowing banks to pay dividends and whether the central bank is willing to take enough risks to help shore up the economy.
Much of the questioning centered on when the Fed’s Main Street and Municipal Liquidity Facility will get up and running. The programs were first announced in late March and early April, but have yet to get underway, as the Fed takes time to design and put in place efforts they have never tried before.
“I don’t think we’re looking at months, but it would be premature for me to say how many weeks it would be before they’re operational,” Mr. Quarles said during testimony before the Senate Banking Committee on Tuesday.
Early in the coronavirus pandemic, workers spoke up and staged protests to demand that employers provide protective equipment, limit customer traffic or even shut down in the interest of safety. As many companies return to business, workers are pursuing a new goal: that employers not prematurely roll back measures they put in place.
The workers speaking out say they are pressing for many of the measures they have pushed for since the pandemic began: more generous and accessible sick leave policies, more protective equipment and better hazard pay.
Employees of Target, some of whom walked off their jobs on May 1 over working conditions, have raised concerns about the company’s decision to resume accepting returns from customers, a service that had been suspended to reduce potential virus exposure.
Some workers at Amazon, who also joined the May Day protests, said they were upset over the end of the company’s policy of unlimited unpaid time off, which many had used to avoid exposure inside warehouses.
Riley Breakell, a Starbucks barista in Connecticut, was reassured in mid-March when the company sent a letter announcing expanded catastrophe pay for those absent because of the pandemic. She appreciated the company’s effort to do right by its employees. But the company has since said those provisions would cease for those “unwilling to work” as stores reopened last week.
A Starbucks spokeswoman said the company was taking several steps to ensure that only healthy employees went to work, such as fever checks and paid leave for those who may be ill.
It was unclear how advanced the discussions were and whether a deal would come together, said the people, who spoke on the condition of anonymity because the talks were confidential.
Representatives from Uber and Grubhub declined to comment. Bloomberg earlier reported the talks.
The discussions are a sign of how the companies are working to capitalize on people’s shifting behavior. With consumers staying home and many restaurants across the country shut down, more people are turning to food deliveries for meals.
President Trump said California should allow Tesla to restart its electric car factory in the San Francisco Bay Area “NOW.” His remark came a day after the company’s chief executive, Elon Musk, said he was resuming production in violation of a local order prohibiting him from doing so.
Mr. Trump’s comments are in keeping with his effort to push state and local officials to allow businesses to reopen despite the advice of public health officials, who have called for a more gradual reopening to prevent a surge in coronavirus cases and deaths.
But it is not clear what effect the president’s statement would have on California’s governor, Gavin Newsom, a Democrat, and county officials, most of whom are also Democrats. In addition, the Tesla factory in Fremont, Calif., already appears to be making cars and Mr. Musk has dared local officials to arrest him.
“Tesla is restarting production today against Alameda County rules,” he announced on Twitter on Monday. “I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.”
The county’s health officer has said he hoped to work out an agreement with Tesla to open the plant on May 18. The plant is Tesla’s main source of revenue and has been closed since early April. County officials have not yet authorized the resumption of indoor manufacturing over fears that the coronavirus could spread among large groups working in proximity.
In an email that was sent on Monday and was reviewed by The New York Times, the company’s head of human resources in North America, Valerie Workman, told employees they would be contacted within 24 hours about when to report for work.
The state has authorized a resumption of manufacturing, Mr. Newsom said Monday, but that “we recognize localism” and “if a county doesn’t want to go as far,” local orders would prevail.
In her email, Ms. Workman said employees who were uncomfortable returning to work could stay home on unpaid leave.
Jack Dorsey tells Twitter employees they can work from home forever.
Jack Dorsey, Twitter’s chief executive, told employees on Tuesday that they would not be expected to return to the company’s offices and could work from home forever if they wanted to.
Twitter sent its employees home in early March to help stop the spread of the coronavirus, but Mr. Dorsey had previously said he wanted Twitter’s work force to be more diversified around the world and that he welcomed remote work.
Twitter will reopen its offices no sooner than September, said Jennifer Christie, a vice president of human resources at Twitter.
“If our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen. If not, our offices will be their warm and welcoming selves, with some additional precautions, when we feel it’s safe to return,” Ms. Christie wrote in a blog post.
The Fed jumps into the corporate bond market, buying exchange-traded funds.
The Federal Reserve will make its first foray into corporate bond markets on Tuesday, buying exchange-traded funds, which trade like stocks and provide broad exposure to company debt.
The Fed, which announced on March 23 that it would start buying corporate debt, has said that it will purchase newly issued investment grade bonds and those that trade on the secondary market. It will buy the debt of recently downgraded companies and will tiptoe into junk bonds more broadly via E.T.F.s.
Outright corporate bond buying will start “in the near future,” the Federal Reserve Bank of New York said Monday night. The Fed bought short-term corporate debt known as commercial paper during the 2008 financial crisis, but buying longer-dated debt is new territory for the central bank.
Both the primary- and secondary-market bond-buying programs exist as part of the Fed’s emergency lending authorities, which can keep credit flowing in the economy during times of crisis. The central bank has rolled out several emergency programs since coronavirus lockdowns began, but this will be the first one backed by new congressional funding to get up and running.
Lawmakers earmarked $454 billion for such programs as part of the so-called CARES package, which President Trump signed at the end of March. The Treasury administers those funds, and must sign off on the Fed’s facilities.
U.S. stocks fell and global markets were mixed on Tuesday as reports from China, South Korea and the United States offered sobering reminders to investors of how long and difficult the coronavirus recovery is likely to be.
The S&P 500 rose about half a percent in early trading before turning negative. European markets were broadly higher after a drop in the Asia-Pacific region.
Investors had reasons for concern. Dr. Anthony S. Fauci, a central figure in the U.S. government’s coronavirus response, was expected to warn lawmakers on Tuesday that “needless suffering and death” would result if the country opened up too quickly. In China, the city of Wuhan, which seemed to have tamed its outbreak, has reported six new infections in recent days, while cases have also risen in the northern part of the country.
And fresh data on consumer prices was released, showing that the Labor Department’s index fell 0.8 percent in April, the largest monthly decline since December 2008. The index was weighed down by the collapse in oil prices as airlines canceled flights and drivers stayed home.
Oil prices rose slightly on Tuesday, after Saudi Arabia said it had instructed Saudi Aramco, the world’s largest oil company, to deepen production cuts to help with the world’s glut of crude.
Catch up: Here’s what else is happening.
Walmart said on Tuesday that it would give another round of bonuses to its workers in the United States: $300 for full-time workers and $150 for part-time and temporary workers, for a total of more than $390 million. The retailer said it had committed more than $935 million in bonuses for its workers so far this year.
The theatrical distribution company Solstice Studios said Tuesday that it would release the thriller “Unhinged,” which stars Russell Crowe, in theaters nationwide on July 1. That’s two weeks before Warner Bros. release date for Christopher Nolan’s “Tenet” and three weeks before Disney’s planned release of “Mulan.”
The Transportation Department warned airlines for a second time on Tuesday that they must refund passengers for canceled tickets after receiving about 20,000 consumer complaints in April, up from the 1,500 it receives in a typical month.
Saudi Aramco, the world’s largest oil company, reported Tuesday that its net income fell by 25 percent in the first quarter of 2020 compared with a year earlier. Still, Aramco said it earned $16.7 billion — an amount that may allow it to retain the title of world’s most profitable company. Amin H. Nasser, the company’s president and chief executive, said in a statement that the coronavirus pandemic “impacted” the results, which he called “exceptionally strong” given the situation.
Ryanair, Europe’s largest low-cost carrier, said it would resume 40 percent of its flight network beginning July 1, and institute safety measures like requiring passengers to wear face masks and to request access to the bathroom to prevent lines in the aisles.
Reporting was contributed by Jeanna Smialek, Ben Dooley, Alan Rappeport, Kate Conger, Mike Isaac, Michael J. de la Merced, Noam Scheiber, Kai Schultz, Geneva Abdul, Stanley Reed, Niraj Chokshi, Alexandra Stevenson, Cao Li, Damien Cave, Matt Phillips, Gregory Schmidt, Carlos Tejada, Daniel Victor, Katie Robertson and Kevin Granville.