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March 17, 2020 | $1,000 in Free Money Won’t Go Far

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
The hotel, airline, and travel-related industries are reeling. Marriott alone will lay off tens of thousands of workers.
The Wall Street Journal reports Marriott Begins Furloughing Tens of Thousands of Employees.

Marriott International Inc., the world’s largest hotel company with nearly 1.4 million rooms world-wide, said it is starting to furlough what it expects will be tens of thousands of employees as it ramps up hotel closings across the globe.

The company began shutting down some of its managed properties last week, a Marriott spokeswoman said. The employees at these properties won’t be paid while on furlough but the bulk will continue to receive health-care benefits that are ultimately paid by the hotel owner, she added, which for the vast majority of the brand’s properties isn’t Marriott. Marriott is also trimming staff through furloughs at properties that are still operating.

In the U.S., about 130,000 employees are on the Marriott payroll, the company said.

Occupancy levels at Marriott’s and other hotels throughout the U.S. have plummeted to 20% or lower, and many hotels are in single digits, hotel owners say. As a result, hundreds of hotels across the U.S. are expected to close their doors Tuesday or later this week, and many have already started the process by giving employees notice, owners said.

Fiscal Hit

Bloomberg reports From NYC to San Francisco, America’s Shutdown Brings Fiscal Hit

In New York City, the virtual shutdown from the coronavirus pandemic is threatening to create massive holes in the budget as billions of dollars in tax revenue disappears.

No one has a handle on how vast the toll will be on the nation’s local governments as much of the U.S. economy grinds to a halt, leaving it a near certainty that the economy is heading into the first recession in over a decade.

But the unprecedented uncertainty of how long and severe it will be is wreaking havoc in the $3.9 trillion municipal-bond market, which is usually a haven from financial market turmoil. Investors are pulling out their cash, bond prices are sliding, and even the potential for states and cities to raise funds is temporarily drying up as Wall Street banks put new debt deals on hold.

Even before the stepped-up directives to reduce crowds to curb the spread of the virus, ridership was down nearly 19% on New York City subways on March 11 compared with a year earlier, while morning commuters on the Metro-North Railroad fell 48% on March 12, according to the Metropolitan Transportation Authority.

Rush for Jobless Benefits Crashes New York State Website

The New York Times reports Rush for Jobless Benefits Crashes New York State Website

The sudden flood of laid-off workers seeking unemployment benefits swamped New York’s Labor Department on Monday.

After Mr. Cuomo waived the usual seven-day waiting period to apply, workers who had been let go over the weekend immediately tried to replace some of their lost income. Within hours, frustrated applicants were complaining on social media about not being able to apply online. Some said that the state’s system was crashing throughout the day.

“We are seeing a spike in volume that is comparable to post 9/11 but make no mistake, anyone entitled to these benefits is going to receive them in a timely manner,” department spokesperson Deanna Cohen said.

How Far Does $1,000 Go?

The stock market is surging this afternoon on news the Trump administration might start sending out $1,000 checks as part of an $850 Billion Stimulus Package.

But how far does $1,000 go?

For those laid off for three weeks or longer, that $1,000 will be used up pronto.

Three Weeks Without Pay

For example, San Francisco legally prohibits residents from leaving their homes except to meet basic needs including visiting the doctor, or buying groceries or medicine, until at least April 7.

That’s three weeks without pay.

The San Francisco minimum wage is $15.59 per hour.

Wage Math

$15.59 per hour * 40 hours per week * 3 weeks = $1,870.80.

How long will the hotel workers be furloughed? Casino workers? Airline employees?

Boeing employees (and they make far more than $15.59 per hour).

If You Need to Be Somewhere, Get There Before You Can’t

In regards to the San Francisco shutdown, please consider If You Need to Be Somewhere, Get There Before You Can’t.

Mike “Mish” Shedlock

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March 17th, 2020

Posted In: Mish Talk

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