On The Money: Economy faces grueling road to recovery | Anger mounts after corporations tap small business relief funds | Oil trades at lowest price in history

On The Money: Economy faces grueling road to recovery | Anger mounts after corporations tap small business relief funds | Oil trades at lowest price in history
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Happy Monday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL—Economy faces grueling road to recovery from coronavirus: President TrumpDonald John TrumpJoe Arpaio loses bid for his old position as sheriff Trump brushes off view that Russia denigrating Biden: 'Nobody's been tougher on Russia than I have' Trump tees up executive orders on economy but won't sign yet MORE is pushing to loosen coronavirus restrictions to help revive a devastated economy, a move he hopes will lead to a quick recovery before Election Day.

  • The Trump administration last week rolled out guidelines for states to follow starting May 1, as some governors gradually allow businesses to reopen and scaled-down social gatherings to take place. 
  • The president also convened nearly a dozen advisory panels tasked with figuring out how to reboot every sector of the economy.

As Trump nudges Americans out of isolation, he’s expressed confidence that the economy can swiftly return to its pre-pandemic strength. With the presidential election just over six months away, Trump is eager for a return to the economy that was seen as his strongest argument for a second term

“We really think with all of the stimulus and all of the pent-up demand, we're going to have an economy that really comes back quickly,” Trump said at the White House this week. “What we had before was a miracle, and we think this is going to be even more than a miracle.”

But economists warn that the recovery will be long, grueling and far from anything close to normal.

“I don’t see the economy being back to full strength by the end of the year. It’s going to take us longer to get us back to where we want to be,” said John Williams, president of the Federal Reserve of New York, in a Friday interview with CNBC.

I explain why here.

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Digging out from unprecedented damage: More than 20 million people have applied for unemployment benefits in the past four weeks, according to the Labor Department, nearly wiping out more than a decade of job gains after the 2007-09 recession. Millions more are believed to have lost their jobs but have been unable to apply for or are disqualified from receiving unemployment insurance.

“The more unemployment, the more workers lose their jobs, the harder and slower the recovery is going to be,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth, a think tank. “That is an incredible amount of damage we have to unwind,” she said, adding that the real-time unemployment rate is likely above 20 percent.

Lack of sufficient testing: While trading partners such as South Korea and Taiwan were able to avoid widespread closures by quickly identifying and isolating coronavirus cases, the severe lack of testing capacity in the U.S. forced Americans into quarantine to prevent an outbreak from spiraling out of control.

“What we did was the responsible thing to keep people from dying. But as soon as we went down that path, you took a V-shaped recovery off the table,” Sahm said.

Lingering fears: The level of economic pain inflicted during social distancing means the U.S. will likely emerge from the pandemic with millions of debt-saddled workers chasing fewer and fewer jobs.

“We might see one brief shining moment of stronger economic activity as businesses reopen because we're going to go from zero to something and that will feel good,” said Mark Zandi, chief economist at Moody’s Analytics. “But after that temporary burst of activity, people will see we're still in the soup. It's going to take a while to kind of work through all the problems created during the shutdowns.”

LEADING THE DAY

Anger mounts after corporations tap small business relief funds: Congress is under increasing pressure to ensure an extension of the popular Payment Protection Program (PPP) gets desperately needed funds to the small businesses it’s intended to help, not to big corporations.

  • Nationwide chains and companies recently revealed they received funds from the program designed for businesses with under 500 employees, before the $349 billion in funding ran out last week.
  • Ruth's Chris Steak House, which has 150 locations and $468 million in revenue, received $20 million in loans. The sandwich chain Potbelly, which has over 400 locations, and Shake Shack, with more than 200 branches, each received $10 million from the fund.
  • At least 17 companies with more than 500 employees — the threshold for PPP eligibility — have received a total of $143 million in relief loans, according to data compiled by the progressive group Accountable.US and public filings reviewed by The Hill.

The Hill’s Niv Elis and I tell you why here.

Read more: Sen. Rick Scott (R-Fla.) said Monday that Congress needs to make changes to a program that provides aid to small businesses, arguing that larger companies and those that have not been hurt by the coronavirus are receiving assistance.

And a lawsuit filed on behalf of small-business owners Sunday accuses Wells Fargo of unfairly allocating small-business loans under the federal Paycheck Protection Program (PPP).

Oil trades at lowest price in history after slipping into negative pricing: Oil prices sunk to their lowest level in history Monday, dropping into negative pricing as oil supplies overwhelm the globe’s storage capacity.

Oil hit $0.01 a barrel before falling as low as negative $40 and eventually settling at negative $37.63, the lowest level recorded since the New York Mercantile Exchange began trading oil futures in 1983.

The low prices for West Texas Intermediate oil come as demand for oil has fallen 30 percent as people quarantine because of the coronavirus, leading to a massive surplus of unneeded oil and fuel. The Hill’s Rebecca Beitsch fills us in here.

What’s going on? 

  • Oil is traded through monthly contracts and the Monday drop in oil prices came on the last day to purchase oil to be delivered in May. 
  • A steep and sudden plunge in travel caused by the widespread adoption of social distancing practices created a glut of oil, filling up warehouses and leaving suppliers with no place to keep the unwanted fuel.
  • Prices for oil to be delivered later in the year remained in line with normal historic levels, paving the way for a likely rebound on Tuesday. But Monday’s historic sell-off reflects the depth of the economic devastation caused by the coronavirus pandemic.

GOOD TO KNOW

  • The Treasury Department is looking into whether it has the authority to prevent coronavirus relief checks from being seized by private debt collectors, a source familiar with the situation confirmed to The Hill.
  • The shortage of key medical supplies and equipment in the coronavirus pandemic has shined a light on President Trump's trade policy, which critics say lacks a clear strategy and has exacerbated an already difficult situation.
  • The Government Accountability Office (GAO) is poised to launch a series of probes into the federal government’s handling of various aspects of the coronavirus pandemic, ranging from testing to the distribution of stimulus funds, Politico reports