Budget Deficit Crosses $3 Trillion

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Credit…Stefani Reynolds for The New York Times

The United States budget deficit hit a record $3 trillion for the 2020 fiscal year in August, the Treasury Department said on Friday, as the government’s economic rescue and falling tax receipts continued to put huge strain on the nation’s finances.

The extraordinary figures come as the Trump administration and Congress remain deadlocked in negotiations over additional stimulus measures, with Republicans wary of another big fiscal package and Democrats pushing for trillions of dollars in relief.

The budget deficit for the month of August was $200 billion. The coronavirus pandemic has slowed corporate and individual tax receipts, while government spending has surged, widening the gap between what the United States spends and what it earns in taxes and other revenue. Budget outlays topped $6 trillion in the first 11 months of the fiscal year, which ends Sept. 30. The $3.007 trillion shortfall for the year to date was the largest since August 2009.

The Treasury Department noted that deficit has been the result of heavy spending on unemployment insurance benefits, the Paycheck Protection Program and health efforts related to the economic relief legislation that Congress passed in March.

The Congressional Budget Office projected earlier this week a $3.3 trillion deficit for the year. That would be represent 16 percent of the U.S. gross domestic product, the highest level since 1945.

Some Republicans have begun warning about the ballooning deficit, but Treasury Secretary Steven Mnuchin has played down the fiscal situation facing the United States, arguing that the scope of the government spending was necessary for combating the pandemic.

“I think before we got into Covid, I thought the debt was very manageable,” Mr. Mnuchin said on Fox News Sunday this week. “Unfortunately, this China virus has cost us trillions of dollars, and as I’ve said before, this is like a war. In a war, you’ve got to spend whatever you need to spend.”

Credit…Nick Carey/Reuters

Used cars and trucks were the biggest contributor to inflation on consumer prices for August, according to a Bureau of Labor Statistics report. The seasonally adjusted price of pre-owned vehicles rose 5.4 percent from July, the department said.

Demand has been heightened by the desire to avoid public transportation in the pandemic, the search for bargains in an uncertain economy and disruptions in new-car production. The prices of used cars have soared, with data from Edmunds.com showing that the average value jumped more than 16 percent.

In June, the most recent month for which data is available, franchised car dealers sold 1.2 million used cars and trucks, according to Edmunds, up 22 percent from a year earlier. It was the highest monthly total since at least 2007.

Overall, consumer prices in August increased 0.4 percent on a seasonally adjusted basis, slightly more than analysts expected, after rising 0.6 percent in July. Food prices were little changed in August but more than 4 percent higher than a year earlier.

Credit…Clay Enos/Warner Bros., via Associated Press

Warner Bros. announced Friday that its release of “Wonder Woman 1984,” most recently scheduled for Oct. 2, will be pushed back again, this time to Christmas Day.

The move comes the weekend after the company opened the closely watched Christopher Nolan thriller “Tenet” in 2,810 theaters across the country to $20 million. In pre-pandemic times, that number would have likely been closer to $50 million, box office prognosticators estimated, but without key markets like Los Angeles and New York open and with audiences still reluctant to go to theaters, the numbers are depressed. Theaters in North Carolina, New Mexico, New York and Washington D.C. remain closed. Overseas, where the coronavirus is more contained, the film has earned $129 million after two weeks in release.

“Because I know how important it is to bring this movie to you on a big screen when all of us can share the experience together, I’m hopeful you won’t mind waiting just a little bit longer,” Patty Jenkins, the director of “Wonder Woman 1984,” said in a statement. “With the new date on Christmas Day, we can’t wait to spend the holidays with you!”

Many of Hollywood’s largest franchises have been pushed out of 2020, but some studios are hoping that enough theaters will reopen in the next couple of months and that audiences will return. MGM still has James Bond “No Time To Die” scheduled for Nov. 20 and Warner Bros. is still planning on releasing “Dune” from the director Denis Villeneuve on Dec. 20. The studio unveiled its first trailer this week.

Credit…Hiroko Masuike/The New York Times

The New York Stock Exchange said on Friday that it was preparing to move its main data center out of New Jersey, as lawmakers in the state consider a tax on certain financial transactions there.

The exchange sent a memo to traders published on Friday, saying that it is planning to conduct tests of its ability to move its data center to other locations.

The N.Y.S.E. said in a statement that it had received inquiries from member firms who wanted to know the exchange’s plans should lawmakers in New Jersey approve the tax bill introduced in July.

“They are concerned, as are we, that any tax imposed will be passed through to N.Y.S.E. members,” the statement said.

The tax is on trades routed through electronic infrastructure like the exchange’s data center in Mahwah, N.J.

The bill would impose a quarter-of-a-cent tax per transaction on entities that process 10,000 or more financial transactions a year through electronic infrastructure in New Jersey. The state has been hard hit by the coronavirus pandemic, and projects a revenue shortfall of nearly $6 billion in its budget.

Credit…Andrew Testa for The New York Times

The British economy grew 6.6 percent in July from the previous month, according to an initial estimate from the Office for National Statistics, as the country continued to open up after the lockdown.

Although slower than June’s 8.7 percent growth rate, the recovery was spread across even more sectors of the economy as education resumed, pubs and hairdressers reopened, and car sales surged.

After three consecutive months of growth, Britain’s gross domestic product was 11.7 percent lower in July than it was before the pandemic in February. “While it has continued steadily on the path towards recovery, the U.K. economy still has to make up nearly half of the G.D.P. lost since the start of the pandemic,” Darren Morgan, the agency’s director of economic statistics, said.

Earlier this week, Andy Haldane, the chief economist at the Bank of England, said the speed and scale of the recovery had not been given enough credit and that the economic data justified his optimism. But other central bankers have struck a more cautious note, concerned that the window of fast economic recovery is already closing.

In Britain, coronavirus infections are increasing and new restrictions on social gatherings have been announced as fiscal support for businesses and residents is winding down. This suggests the country is moving into a second stage of recovery in which it will be harder to make up the rest of the lost economic output from the national lockdown. A group of lawmakers on Friday urged the government to extend the furlough program, which helps pay employees’ wages, for some sectors of the economy beyond its current October end date.

“The rise in Covid cases and return of public health restrictions means we are coming towards the end of the easy economic wins from restarting activity,” James Smith, research director at the Resolution Foundation, said. “With emergency support to firms and workers being withdrawn, far tougher times lie ahead this autumn.”

  • A volatile day on Wall Street ended with major benchmarks mixed as technology stocks fell again. The S&P 500 was essentially unchanged, while the Dow Jones industrial average was slightly higher and the Nasdaq composite fell.

  • Apple, Amazon, Microsoft and Google’s parent Alphabet were all lower, after giving up early gains.

  • Global equities were also mixed. The FTSE 100 in Britain rose, while in Germany, the DAX was slightly lower. In Hong Kong, the Hang Seng Index rose 0.8 percent, while the Kospi in South Korea ended the day unchanged. Oil futures were slightly higher.

  • The euro continued rising against the dollar, up 0.4 percent to $1.186. On Thursday, Christine Lagarde, the chief of the European Central Bank, said policymakers would “monitor carefully” the euro exchange rate, but her comments were not enough to stem the currency’s rise, which is up about 10 percent since March.

  • A rising euro hurts European exporters, whose goods become more expensive when purchased in other currencies. It also dampens inflation in the eurozone; too-low inflation can put the brakes on economies

  • The top executives of Rio Tinto, one of the world’s largest mining companies, said they would step down after a shareholder revolt over the company’s willful destruction of prehistoric rock shelters, sacred to two Australian Indigenous groups. Shares trading in Australia dropped 0.6 percent.

Credit…EPA, via Shutterstock

Britain said on Friday that it had “agreed in principle” to a trade agreement with Japan, the first since Brexit. It’s an important milestone for Prime Minister Boris Johnson’s government amid a potential breakdown in negotiations with the European Union, Britain’s largest trading partner.

Since formally leaving the European Union at the end of January, Britain has been able to make its own trade agreements. Liz Truss, the international trade secretary, said this agreement “goes far beyond the existing E.U. deal” with Japan. “It secures new wins for British businesses in our great manufacturing, food and drink, and tech industries,” she said.

Britain is still included in the bloc’s deal with Japan as part of a transition agreement until the end of this year. The new agreement, once it is ratified, will allow Britain and Japan to preserve their trading relationship after December. Britain would benefit from tariff-free trade on 99 percent of exports to Japan and increase trade by about 15.2 billion pounds ($19.4 billion) over 15 years, the trade department said.

The details of the deal have not been published yet, but David Henig, a trade policy expert at the European Centre for International Political Economy, said he expects the deal to mostly replicate the agreement Britain had already under European Union.

While continuing to have access to the world’s third largest economy is important to British officials, it won’t make up what could be lost if the country fails to come to an agreement with the European Union.

Japan makes up about 2 percent of British exports and imports. Compared with having no deal with Japan, the overall British economy would grow by 0.07 percent, or £1.5 billion, over the next 15 years under the agreement announced Friday, according to the government’s analysis.

The economic benefits of the deal are “negligible,” according to Mr. Henig. It proves Britain can strike a trade deal on its own, he said, but it doesn’t add much more economic value.

By comparison, about half of Britain’s trade is with the European Union, but talks on the future of that relationship fell into crisis this week after the British government said it would introduce legislation that was at odds with the Brexit agreement already reached with Brussels and would break international law.

Credit…Chang W. Lee/The New York Times

President Trump congratulated JPMorgan Chase after the bank on Thursday asked some top executives to return to their offices later this month.

“Congratulations to JPMorgan Chase for ordering everyone BACK TO OFFICE on September 21st. Will always be better than working from home!” Mr. Trump said in a tweet on Friday morning.

However, JPMorgan has not ordered “everyone” back to the office. The bank asked top managers to return to offices in Midtown Manhattan and London starting Sept. 21, according to two employees familiar with the matter.

The request applies to perhaps 600 senior managers, according to one of the people, who was not authorized to speak publicly. But it’s not clear how many will actually come back right away: The bank, like other institutions that are beginning to reopen, said it would make exceptions for employees who faced health problems or child-care hurdles.

The request, which was reported earlier by The Wall Street Journal, was directed at the investment bank’s top echelons of management, but the hope is that other executives will follow if the transition goes smoothly and virus infection rates in New York remain low. (Jamie Dimon, JPMorgan’s chief executive, has been working from the office for the latter half of the summer, after recovering from heart surgery earlier this year.)

Other large organizations, including Goldman Sachs and the National Football League, have begun encouraging workers to return to the office to varying degrees. But even for workers who long for a return to the office, logistical hurdles abound, including erratic school schedules. New York City’s plan includes in-person sessions, but some students might be on the classroom for one day in a given week.

American Express on Thursday said it was reopening its New York and London offices at 10 percent capacity, but extended its deadline for employees to return to the office to June 30, 2021.

Top Wall Street bosses have taken differing approaches.

David Solomon, Goldman Sachs’s chief executive, has worked from the office nearly every day since March, and encouraged partners and other senior executives to return this summer. But James Gorman, the Morgan Stanley chief who has recovered from the virus, has taken a more conservative stance. He did not return to the office until early July and then only for part of the week. His fear, say employees: His presence could place tacit pressure on workers to return to the office before they are ready.

The editors and reporters for the DealBook newsletter sift through a lot of company reports and listen to many earnings conference calls. These are some of the things that caught our notice this week:

🚲 “Sharing data is a very tricky thing in this world and something we take very seriously. So with respect to our customers’ data, we do not have any plans to share it in any scary way.” — John Foley, the chief executive of Peloton

🍔 “There’s nothing worse than watching a home run get hit in Citi Field or Nationals ballpark where we have Shake Shacks right in center field. And I look at that, and I’m just like, ‘Oh, what I would give to be selling a Shack burger right there right now.’ But those cardboard fan cutouts, they don’t need much.” — Randy Garutti, Shake Shack’s C.E.O.

🦠 “I’d like to say there’s never a dull moment in our magic kingdom. But seriously, Covid has really thrown a wrench into a lot of our businesses.” — Christine McCarthy, Disney’s chief financial officer

🏖 “One of the things that we’re likely to see if there is remote work is it allows us to travel while we work for personal reasons as well. So, if I’ve got a remote week that’s happening, or if I’ve got a week that’s got a remote few days, I might as well go to the beach and work from there.” — Arne Sorenson, Marriott’s C.E.O.

📉 “Not all disorder is ‘bad.’ Indeed, if the themes of the world economy swing like a pendulum, then it may be that some have swung too far from a ‘sensible center’ and are due to revert. This can have a cleansing effect.” — the Deutsche Bank strategist Jim Reid and colleagues in a research note

  • The fitness company Peloton, which sells expensive exercise bicycles and treadmills, said Thursday that it had $607 million in revenue in the three months that ended June 30, a 172 percent increase from the same time last year, outpacing industry expectations. The company made $89 million in profit, compared with a loss of $47 million at the same time in 2019.

  • Century 21, the famous New York discount store chain, said Thursday that it had been forced to file for bankruptcy and would close all 13 of its locations after its insurance providers refused to pay about $175 million to the business. Raymond Gindi, a co-chief executive and a son of a founder, said that unlike the period after the Sept. 11 attacks, “our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time.”

  • JPMorgan Chase’s heads of markets and sales asked their top managers to return to offices in Midtown Manhattan and London starting Sept. 21, according to two employees familiar with the matter. The request applies to perhaps 600 senior managers, according to one of the people, who was not authorized to speak publicly. But it’s not clear how many will actually come back right away: The bank said it would make exceptions for employees who faced health problems or child-care hurdles.

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