Daily Briefing – 127
New York Conducts Nearly 88,000 Tests Tuesday, an All Time High
Governor Cuomo today announced that 87,776 COVID-19 tests were reported to New York State Tuesday—a new record high for tests in a single day. “We’re continuing to move forward protecting New Yorkers.” Governor Cuomo said. “New York is reaching new heights in its ability to track and trace the virus, and that’s evidenced by the record number of tests—nearly 88,000—that were reported yesterday. As we prepare for the fall, I urge everyone to wear masks, socially distance and wash their hands, and I urge local governments to enforce state guidance on reopening.”
Pelosi, Schumer: “White House Isn’t Budging” No Deal On the Horizon.
The joint statement comes nearly a week after talks between congressional Democrats, Treasury Secretary Mnuchin and White House chief of staff Mark Meadows derailed amid sizable policy and political differences. Democrats had offered to reduce their $3.4 trillion price tag by $1 trillion if GOP negotiators agreed to increase their roughly $1 trillion package by the same amount, but the offer was rejected.
The two sides are also far apart on issues like unemployment insurance, Senate Majority Leader Mitch McConnell’s (R-Ky.) red line of liability protections, and more money for state and local governments, a top priority for Democrats. It’s unclear what, if anything, could break the stalemate. Most lawmakers have left Washington and aren’t expected to return until September, absent an agreement.
Half of U.S. Elementary and High School Students Will Study Virtually Only this Fall, Study Shows
The study by Burbio, which aggregates school and community calendars nationwide, found that 52% of students will go to school virtually only and just 25% will attend every day. The remaining 19% will have some form of hybrid schooling, combining online and in-person learning. Four percent of districts remain undecided.
The situation is fluid, with new decisions announced daily and school districts often changing their minds as the virus spreads or comes under control, and as parents, teachers and politicians debate what is safest for kids, teachers and the broader community. But Burbio found a decided trend toward more virtual learning.
Wholesale Prices Rise
Producer prices in the United States surged 0.6% in July, the largest jump in almost two years. Meanwhile, core prices—what you get when you take out food, energy and trade margins—rose 0.3%. That was the third month of an upward trajectory.
“Even with sharp increases in raw material costs in July, overall costs remain in check for now, especially on a year-over-year basis,” said NAM Chief Economist Chad Moutray. “Given the deflationary pressures seen in the economy in the spring months, it should not be a surprise that prices would bounce back strongly at some point.
IEA Lowers 2020 Oil Consumption Forecast
The International Energy Agency revised down its forecasts for oil consumption in 2020 and 2021, expecting that global demand will fall due to the pandemic. Much of the reduction is due to the contraction of the aviation industry. The inter-governmental agency predicted demand of 91.9m barrels a day this year, down 8.1m barrels from actual consumption in 2019.
Coronavirus-Hit State Budgets Create a Drag on U.S. Recovery
Spending cuts by state and local governments grappling with the coronavirus pandemic pose a headwind to the U.S. economic recovery as lawmakers consider how much federal aid to provide. State and local governments reduced spending at a 5.6% annual rate in the second quarter as they laid off workers and pulled back on services to offset plunging tax revenues. More cuts are on the way.
Moody’s Analytics estimates that without additional federal aid, state and local budget shortfalls will total roughly $500 billion over the next two fiscal years. That would shave more than 3 percentage points off U.S. gross domestic product and cost more than 4 million jobs.
The Possible Tax Consequences of PPP Loans
The IRS has stated that expenses paid with proceeds of PPP loans can’t be deducted, because the loans are forgiven without you having taxable COD income. Therefore, the proceeds are, in effect, tax-exempt income. Expenses allocable to tax-exempt income are nondeductible, because deducting the expenses would result in a double tax benefit. However, the IRS’s position on this issue has been criticized and some members of Congress have argued that the denial of the deduction for these expenses is inconsistent with legislative intent. Congress may pass new legislation directing IRS to allow deductions for expenses paid with PPP loan proceeds.
PPP – Potential Tax Consequences from RBTCPAs
Manufacturing Tech Orders Spike in June
Orders of manufacturing technology rose 56% from May to June, although June orders were down 6% year over year, according to AMT – The Association For Manufacturing Technology. “Manufacturers of HVAC and commercial refrigeration equipment more than tripled orders for manufacturing technology,” AMT says.
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