Economics in the News – June 22-28

Economics impacts our lives every day. Below are some of the top storylines from this past week related to economics. 

• The International Monetary Fund [IMF] has warned that the global recession stemming from the coronavirus pandemic may be worse than originally believed. The IMF expects the global economy to shrink by 4.9% in 2020 after originally estimating a 3.0% contraction in April. The IMF also lowered its 2021 forecast to 5.4%, from 5.8%. [Reuters]
  
  
• U.S. airlines suffered a major blow in its recovery from the coronavirus pandemic when European Union officials made the decision to bar most Americans from its 27-nation bloc. International flights are more profitable for airlines than domestic flights, with trans-Atlantic flights making up between 11 and 17 percent of revenues for major U.S. airlines. [The New York Times]
  
  
• Federal Reserve chairman Jerome Powell temporarily restricted some of the country’s largest banks from increasing dividend payments or buying back their own stock. The Fed’s objective is for banks to preserve their capital and remain strong enough to a continue lending should the economic downturn worsen. [The New York Times]
  
  
• 1.48 million workers filed for unemployment benefits during the week ending June 20. 47.1 million people have filed for jobless aid over the last 14 weeks, since the coronavirus pandemic began forcing the closures of businesses. The good news is the number of new claims has declined each week since a record 6.9 million sought unemployment benefits the week of March 28. [USA Today]

• As new cases of COVID-19 rise at an alarming rate throughout the United States, many governments and businesses are weighing the option of closing again or pausing reopening efforts. Some states, such as Texas, Florida and Arizona, are scaling back the capacity allowed at restaurants in their reopening efforts. Inconsistent government guidelines have prompted companies to reach their own decisions. Apple and other businesses closed some stores in hotspots. Other companies plan to adjust the number of customers allowed in their stores at one time. [Associated Press]