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What hasn't been done to save the global economy

Central banks have unleashed trillions of dollars in stimulus, using their full recession toolkits to fight what could be the...

Posted: Jun 21, 2020 10:42 AM

Central banks have unleashed trillions of dollars in stimulus, using their full recession toolkits to fight what could be the worst peacetime downturn in 100 years. Governments have followed suit with trillions of additional dollars. In the face of an uncertain future, what's left for policymakers to do?

It's a question economists and investors are asking with increased urgency, even as the recovery kicks in and stocks continue to rise, thanks in large part to existing levels of policy support.

Central banks, for their part, have fired much of their ammunition, and political leaders are still debating what comes next. But there are options left.

One is negative interest rates, a controversial tactic that has already been employed in Europe and Japan. Chatter is growing about whether the Federal Reserve and the Bank of England could follow suit should the crisis drag on longer than expected, though Bank of England Governor Andrew Bailey has appeared more receptive to the idea than Fed Chair Jerome Powell.

"The need to continue supporting the economy will undoubtedly fuel further discussion about whether negative rates are on the horizon," James Smith, developed markets economist at ING, told clients after the Bank of England's announcement last week that it would expand its bond-buying program but hold its key interest rate at 0.1%.

Negative interest rates charge banks to park their money with the central banks, theoretically encouraging greater lending. But critics note that the policy penalizes savers and banks, and may not do much good at a time when interest rates are already near zero.

Another idea: The Fed could "lower interest rates on loans offered to state and local governments, extend these loans' maturities, and make them more broadly available to cities and counties," Josh Bivens of the Economic Policy Institute, a progressive think tank, wrote in a blog post earlier this month.

More fiscal stimulus is also possible. In fact, many economists and market watchers consider it necessary.

"The Fed can do more at the margins — but its existing tools are too weak to provide the help typical families need," Bivens wrote. "It's up to Congress and the president now."

The White House is reportedly working on a hefty infrastructure package, which Bloomberg reported last week could carry a $1 trillion price tag. But such plans are still very much in flux.

The House of Representatives passed a $3 trillion stimulus bill in May that allocates funding for state and local governments, coronavirus testing and a new round of direct payments to Americans, but Republicans made clear it was dead on arrival in the GOP-controlled Senate.

Watch this space: In a note to clients last week, Goldman Sachs raised its outlook for US economic growth in the second half of the year. However, the investment bank said that if Congress fails to agree on a fourth round of spending, its outlook could be at risk.

Apple's developer conference enters the virtual era

A new fitness app. Fresh bets on augmented reality. And improved battery life for Mac computers.

These are just some of the updates that could be announced at Apple's Worldwide Developers Conference, a multi-day event that kicks off Monday, my CNN Business colleague Samantha Murphy Kelly reports.

Apple will hold the conference virtually for the first time due to the pandemic, and will stream all sessions online from its Cupertino, California, headquarters.

Why it matters: WWDC is closely watched by customers and developers looking for a peek at new software coming to iPhones, iPads, Macs and the Apple Watch. Expect investors to tune in, too.

Many of the key features unveiled at WWDC will relate to Apple's upcoming iPhone operating system, iOS 14. But these announcements will come amid some uncertainty about when the next iPhone will be released.

Some reports indicate the pandemic could delay the production and launch of the iPhone 12, which was expected to debut in September, by a few weeks.

Hardware announcements could be on the table, too, according to Bank of America analysts. They note that Apple could use the event to launch new products like a redesigned iMac computer, over-the-ear headphones or a long-rumored object tracker called "Tag."

Investor insight: Shares of Apple have surged 19% this year, handily beating the broader market as fears about the company's supply chain and closed retail stores have subsided amid optimism about the recovery.

But investors are keeping close watch for any signs of strain. Shares fell Friday after Apple said it would shutter 11 stores across Florida, North Carolina, South Carolina and Arizona because of a spike in coronavirus cases.

Up next

Monday: Apple's Worldwide Developers Conference kicks off; China interest rate decision; US existing home sales; EU-China virtual summit

Tuesday: Global PMI readings; US new home sales

Wednesday: Germany business climate

Thursday: IMF economic outlook; US initial and continuing unemployment claims; US durable goods orders; Nike earnings

Friday: US personal income and spending

New York Coronavirus Cases

County data is updated nightly.

Cases: 1279811

Reported Deaths: 41587
CountyCasesDeaths
Queens1600187889
Kings1568738092
Suffolk1298042624
Nassau1160652581
Bronx1069555302
Westchester857231819
New York765463456
Erie524731390
Richmond455161388
Monroe44631780
Rockland32137817
Orange29078656
Onondaga27948535
Oneida16976352
Dutchess16963322
Albany16521260
Niagara12229248
Broome11255260
Saratoga937583
Schenectady8770128
Ulster7822196
Rensselaer6965106
Putnam657675
Chautauqua566064
Chemung5643108
Oswego496169
Ontario477082
Steuben4632131
Cayuga447471
Sullivan388749
Wayne372254
Genesee3689100
St. Lawrence368563
Herkimer368259
Cattaraugus342761
Jefferson327224
Madison317376
Livingston273742
Tompkins270724
Cortland266854
Columbia252472
Allegany237575
Montgomery226575
Tioga222854
Wyoming221244
Clinton220918
Fulton214053
Warren211942
Greene207860
Orleans194569
Chenango179544
Otsego173823
Washington154224
Lewis154024
Seneca123946
Franklin11649
Delaware102923
Essex98819
Schoharie9145
Yates83519
Schuyler72410
Hamilton1471
Unassigned53122
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