MNI INTERVIEW: Regional Fed Turns to Informal Data Amid Virus

--Minneapolis Fed Seeks Informal Data on Impact

By Greg Quinn

     (MNI) - Business activity turned "like the flick of a switch" this month as

COVID-19 forced shutdowns and layoffs, so the Minneapolis Fed's outreach

director is using spot surveys and nontraditional measures like Lotto sales to

reassess the outlook.

     Ron Wirtz is in touch with hospitality groups in the Fed's Ninth District

and another ad hoc survey has gathered about 800 responses, showing a reversal

of optimism and the tight job markets reported through the end of February. 

     "I don't think you could point to a single industry right now that would

say we aren't affected, because if you aren't immediately in harm's way, you're

only a ripple or two away from harm's way, and businesses understand that,"

Wirtz said Thursday. 

     "There has been a notable decline in the overall outlook to more

pessimism," he said.

     There are clear signs already of a "dramatic increase" in applications for

jobless benefits, he said. "I don't think there's any question there are going

to be some shocks in the labor market."

     Minnesota Governor Tim Walz ordered a 10-day closure of many bars and

restaurants, and Wirtz published a paper Wednesday saying state unemployment

insurance trust funds face solvency pressures as claims rise. 

     Some 42% of states and jurisdictions are short of solvency, and among the

worst are California, New York, Texas, and Illinois, he wrote. States that run

out of money must borrow from the U.S. Treasury and repay the debt within three

years or risk higher federal unemployment taxes for their employers.

     On the other side of the Fed's dual mandate, it's much less clear if the

disruptions will alter pricing power or consumer price trends. "What we're

hearing from most retailers and distributors is that there is not a shortage of

goods," he said. 

     Wirtz has been asking state governments on an informal basis for figures or

anecdotes about sales tax collection and business activity, and sought to track

lottery ticket sales. Even before the outbreak it was hard to find good

real-time data.

     "Our data systems aren't really designed to pick up that quick a change in

activity," Wirtz said. 

     Even airline passenger activity and permits "were really quite positive

even through the end of February," he said, "and it really has been kind of the

flick of the switch."

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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