A brief update on some of the important tidbits from Thursday:
It’s scary to consider, but government estimates indicate a severe underestimation of coronavirus cases. The Centers for Disease Control and Prevention says only about 1 in every 10 Covid-19 cases in the U.S. has been identified.
“This outbreak is not over. This pandemic is not over,” CDC Director Dr. Robert Redfield told The Wall Street Journal. “Greater than 90% of the American public hasn’t experienced this virus yet.”
Texas has halted and is re-evaluating its reopening plan after a state-record-high 4,389 hospitalizations were recorded Wednesday, according to the Texas Department of Health and Human Services. Gov. Greg Abbot responded by issuing an executive order requiring hospitals in several counties to halt nonessential surgeries and cede the space for coronavirus patients.
“The last thing we want to do as a state is go backwards and close down businesses,” Abbott said in a statement. “This temporary pause will help our state corral the spread until we can safely enter the next phase of opening our state for business.”
With Chinese telecom giant Huawei Technologies Co. possessing a considerable advantage in the 5G market, the Trump administration is weighing strategies to build competition. Among the ideas:
- “Prodding” U.S. Tech firms like Cisco Systems Inc. to acquire European Companies Ericsson AB or Nokia Corp.
- Shoring up Ericsson and Nokia with tax breaks, export bank financing or supporting a private equity group to take one of them private.
- Supporting “open” network technology that would make it easier for U.S. startups to develop 5G tech.
“Some see this as an opportunity to facilitate the creation of an industrial base inside the United States,” Brian Hendricks, Nokia’s policy chief for the Americas, told The Wall Street Journal. “The U.S. has been out of the game for a while.”
According to the U.S. Department of Labor, weekly unemployment claims have held steady around 1.5 million so far in June. It’s an indication of a slow recovery, as the rising number of infections around the country could stifle hiring and consumer spending. Overall, the number of people receiving benefits landed just under 20 million, a slight decline from previous weeks.
“We’re seeing a slowdown in layoffs, but hiring hasn’t picked up a tremendous amount,” Nick Bunker, economist at the job site Indeed, told The Wall Street Journal. “The recovery from this is going to potentially be a very long slog if we can’t get the virus under control quickly.”
The headline is deceiving, though. Yes, the Fed’s annual stress revealed banks are on steady financial footing. But if the economy reaches a worst-case scenario, where unemployment remains high, and there’s no bounce back after a few quarters, the 33 largest U.S. banks would endure severe loan losses, creating a similar picture to 2008.
Lael Brainard, the Fed’s lone holdover from the Obama administration, has been critical of some of the U.S. Central Bank’s recent decisions. Notably, the Fed’s decision to allow banks to keep paying dividends during the crisis.
“This is a time for large banks to preserve capital, so they can be a source of strength in a robust recovery,” Brainard said in a statement. “This policy fails to learn a key lesson of the financial crisis, and I cannot support it.”