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--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
"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."
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