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Livelihoods will be crushed in this vice of disease and Brexit | Economics

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It may come as an unpleasant surprise to my remaining Brexiter readers, but if it had not been for a suggestion by the late Sir Samuel Brittan, I might never have embarked on a life as an economics commentator – a role which most certainly involves keeping up the attack on the folly of Brexit and of all Brexiters.

Sir Samuel, who died peacefully last Monday at the age of 86, was the senior economics commentator of the Financial Times for many years, and it was he who asked me to assist him in coverage of economic news. He was a mentor towards whom I have always been extremely grateful.

What particularly led Sam to get involved in economics journalism was the desire to understand why there was such a phenomenon as unemployment. In these strange times when the Bank of England, the International Monetary Fund and the Organisation for Economic Co-operation and Development are vying with one another to analyse the impact of the Covid-related clampdown on output and employment – the Office for Budget Responsibility’s “central scenario” is for unemployment to peak at 4 million (12%) by the end of December – younger readers may be surprised to learn that in the 1950s and early 1960s one of the big debates was about whether it was necessary to run economic policy with an unemployment rate of 1.5-2.5% to contain wage inflation and afford the room for maximum economic growth.

We used to divide unemployment into three categories: seasonal unemployment (for instance fruit pickers out of work in the winter, or ski instructors in the summer); “frictional” unemployment (people moving voluntarily between plentifully available jobs); and “structural” unemployment (declining industries shedding workers, who became temporarily unemployed while seeking new jobs).

Levels of unemployment would vary with the vagaries of the business cycle, and the way governments responded with policy. But the present employment catastrophe has nothing to do with the business cycle or the patterns of “boom and bust” famously, or notoriously, identified by my good friend Gordon Brown. It has the unique feature of being the consequence of a clampdown on economic activity imposed by a government panicked – for, I think, understandable reasons – by the pandemic. One of the big concerns is that a lot of long-term structural change looks like being compressed into a very short space, with horrific consequences for jobs and livelihoods.

Businesses are being closed and people are being made unemployed through no fault of their own. Concern about the impact of the pandemic on health may be the justification for the lockdown, but the fact that businesses and people are suffering as a result is most certainly a justification for government to spend – that is, borrow – hundreds of billions to compensate them.

Now, everywhere I go I encounter a recrudescence of the fallacy of applying “household economics” to the nation at large. Who is going to pay for this spending, people ask.

Well, the answer is: the government, by borrowing at next-to-zero interest rates, and the economic growth that will revive the government’s coffers in due course, just as it did after the second world war.

After being greeted with great enthusiasm for his furlough scheme, the chancellor is being firmly told by many experts that the government is now not doing nearly enough, and many victims of the pandemic face destitution. This comes, I fear, on top of the Cameron-Osborne policy of austerity and deliberate slashing of the local authority funds that are needed to counteract such threats of poverty. I recall quoting my friend John le Carré some years ago: even before this current catastrophe, he said that the coalition’s policy – yes, the Liberal Democrats too were in it up their necks – amounted to “planned penury”.

As if this were not bad enough, this cabinet of Brexiters is intent on leaving the single market and customs union, irrespective of whether or not a trade deal is eventually negotiated with the EU. Let us recapitulate: an advisory referendum was won by a gang of Brexiters who broke the rules for financing their campaign. Not to put too fine a point upon it, they conned a fair proportion of the electorate with a pack of lies about the virtually nonexistent benefits of Brexit. They are now faced with guaranteed losses of anything from 5% of economic output upwards, at a time when the pandemic – for which they cannot be blamed – has completely altered the prospects for the economy.

At some stage, public opinion will turn on the Brexit gang. If I were one of them, I should be running for cover pretty soon – preferably to a haven in the EU.


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Bed Bath & Beyond plans to scale back coupons to boost profits

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Soon, you might not be seeing as many Bed Bath & Beyond coupons showing up in your mailbox.

For better or for worse, the big-box retailer is known for its frequent coupons, sent in the mail and via email, to lure customers into stores by promising 15% or 20% discounts off bedding and other home accessories.

But in a bid to boost profits and be more competitive on pricing with competitors, the company is planning to scale that back.

“Today, we have an overreliance on the coupon,” Chief Merchandising Officer Joe Hartsig said Wednesday during a virtual meeting with investors.

Bed Bath & Beyond said it has studied 405 million shoppers’ baskets and 285,000 items, and found that 40% of its promotions were deemed “ineffective” and unnecessary.

It said it has seen 1.4 million new customers this year — in large part due to the coronavirus pandemic and people looking to stock up on cleaning supplies or to spruce up their homes. It said those new customers are six years younger, on average, and are 20% less likely to use a coupon, giving the company even more reason to scale its promotions back.

One analyst, though, cautioned that the retailer needs to be careful not to upset those people who are the most dependent on the coupons.

“Financially, this is a necessary move as coupons erode margins,” said Neil Saunders, managing director of GlobalData Retail. “However, many Bed Bath & Beyond customers love coupons, so scaling them back may have an impact on shopper numbers and sales.”

“This is very much like ending an addition: It’s sensible and brings benefits in the longer term, but it may hurt in the short term,” Saunders added.

The shift is part of Bed Bath & Beyond’s broader turnaround strategy, to boost sales and profits in the coming years. In laying out a three-year road map Wednesday, the company offered fresh financial targets. It expects same-store sales — which track revenue online and at stores open for at least 12 months — to be “stable” in fiscal 2021, and rise in the low-to-mid single digits by 2023.

It plans to make $1 billion to $1.5 billion in capital investments over the next three years, to remodel stores and upgrade its e-commerce operations, among other initiatives.

Bed Bath & Beyond shares were falling more than 11% Wednesday, amid a broader market sell-off. Its stock has run up more than 38% this year, giving it a market cap of $2.7 billion.


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Covid cases, hospitalizations continue to surge as U.S. reaches ‘critical point’ in pandemic

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Emergency Medical Technicians (EMT) arrive with a correctional patient at North Shore Medical Center where the coronavirus disease (COVID-19) patients are treated, in Miami, Florida, U.S. July 14, 2020.

Maria Alejandra Cardona | Reuters

The United States is reporting another record-high average number of new cases of the coronavirus as a top health official warned Wednesday that the country is at a “critical point.”

The U.S. reported 73,240 new cases on Tuesday, bringing the seven-day average of new cases up to about 71,832, a fresh record and an increase of more than 20% compared with a week ago, according to a CNBC analysis of data collected by Johns Hopkins University.

Three dozen states reported that the average number of people currently hospitalized with Covid-19 rose by at least 5% over the past week, according to data from the Covid Tracking Project, which tracks testing, hospitalization and other data on the outbreak. Cases are up by at least that amount in 45 states, according to Johns Hopkins data.

“As the nation did after Memorial Day, we are at another critical point in the pandemic response,” Adm. Brett Giroir, assistant secretary of health who leads the government’s testing effort, said Wednesday on NBC’s “TODAY” show. “Cases are going up in most states across the country. Hospitalizations are up, although we’re still tens of thousands of hospitalizations below where we were in July, but that is rising. And we are starting to see the increase in deaths.”

Giroir acknowledged that increased testing alone cannot explain the surge in cases, even as President Donald Trump attributes the surge to testing and continues to downplay the outbreak.

Giroir went on to emphasize that “we can control the virus” by following public health measures like social distancing, mask wearing, avoiding crowded gatherings and with the frequent washing of hands.

The surge in cases and hospitalizations is beginning to overwhelm some hospitals in parts of the country. The Salt Lake Tribune reported over the weekend that the Utah Hospital Association is asking the governor to allow its members to ration care. And in Texas, El Paso County Judge Ricardo Samaniego issued a curfew on Sunday to protect “overwhelmed and exhausted” hospitals and workers.

Public health specialists and epidemiologists have warned for months that the virus would likely surge as the weather turned colder in the fall and winter. That’s largely because people are more likely to stay indoors in colder weather and because some epidemiologists believe the virus can spread more easily through colder, drier air.

Dr. Bill Schaffner, an epidemiologist at Vanderbilt University, told CNBC this week that the outbreak will likely worsen this winter.

Giroir said the administration is “taking this very seriously,” adding that if people fail to abide by public health guidance, “it may force local officials or government officials in the states to have more draconian measures, because cases will go up if we don’t make a change.”

“We have the tools to combat this,” he said. “We can control it. This is a very important time to do it.”

His comments come days after White House chief of staff Mark Meadows said Sunday that the U.S. is not going to contain the pandemic.

“We’re not going to control the pandemic,” Meadows told CNN. “We are going to control the fact that we get vaccines, therapeutics and other mitigations.”

Pressed on why the U.S. can’t make efforts to control the pandemic, Meadows said, “Because it is a contagious virus just like the flu.”

Giroir emphasized on Wednesday that the U.S. has more tools to lessen the weight of the virus, such as additional testing that can help catch cases earlier, before people become severely sick. Scientists have also found a number of drugs to be helpful in the treatment of Covid-19, including the antiviral remdesivir and the steroid dexamethasone.

No vaccine has been authorized by the Food and Drug Administration yet, but Giroir said one is coming this year and it will help end the pandemic. Public health specialists, though, say a vaccine will not bring an abrupt end to the outbreak, especially as it’s not known how effective one might be.

“There is the sense in the general population that if we get a vaccine and get vaccinated, that’s like putting on a suit of armor,” said Schaffner, the epidemiologist at Vanderbilt. “That’s not going to be the case.”


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Boeing CEO says ‘very close to finish line’ on getting 737 Max flight ban lifted

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Dave Calhoun, Chairman of Boeing.

Adam Jeffery | CNBC

Boeing‘s CEO, Dave Calhoun, on Wednesday said the company is “getting very close to the finish line” of the worldwide grounding of its 737 Max plane, which hasn’t flown passengers since March 2019 following two deadly crashes.

Boeing in July said it expected regulators to sign off on the plane in the fourth quarter. One of its biggest U.S. customers, American Airlines, has the jet in its schedule for several flights at the end of the year but other customers don’t expect to fly it until next year.

Regulators are at the tail end of their review of the planes, but they have not yet formally signed off. Once that happens, airlines will have to train 737 pilots, a process that is expected to include computer-based training and aircraft simulator sessions.

“The Max has cost us a lot of money and we’ve had to sort of up the ante with respect to liquidity to make up for the fact that we couldn’t ship the world’s most popular airplane,” Calhoun told CNBC in an interview.

The ban has prevented Boeing from shipping the planes, devastating its sales as manufacturers get the bulk of aircrafts’ cost upon delivery.


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