Business Briefs – June 10, 2020

Europe Reopens Borders Amid Worst Global Recession In Memory

PARIS (AP) – The world faces the worst global recession in nearly a century, a key economic body warned Wednesday, while in Europe, restrictions to fight the spread of coronavirus portend a bleak summer tourism season even as more nations announced plans to welcome visitors again.

Beginning June 16, Austria will open up to all European neighbors with the exception of Spain, Portugal, Sweden and Britain, meaning that visitors from 31 countries will no longer be required to undergo a two-week quarantine upon arrival. Greece will allow tourists to fly to Athens or the main northern city of Thessaloniki beginning on June 15.

Mnuchin Says Businesses Will Need More Help

WASHINGTON (AP) – Treasury Secretary Steven Mnuchin believes the U.S. economy will need more help to pull out of the recession, but said the next round of support should be more targeted to the hardest hit parts of the economy.

Mnuchin, testifying Wednesday before the Senate Small Business Committee, said the administration planned to spend the next 30 days looking at what measures should go in the next relief bill. Congress has already approved close to $3 trillion in support to deal with the impact of the coronavirus, which has resulted in millions of layoffs and has pushed the country into recession.

Backlash Over George Floyd Tweet Forces Out CrossFit Founder

(AP) – The founder and CEO of CrossFit is stepping down after his tweet about George Floyd sparked a social media backlash and a wave of affiliated gyms cut ties with the company.

Greg Glassman wrote on CrossFit’s website late Tuesday that he would retire. Glassman had apologized earlier for tweets that sparked online outrage by connecting Floyd, an African American man who died at the hands of the Minneapolis police, and the coronavirus pandemic. He said he had made a mistake and should have been more sensitive, but denied being racist.

U.S. Deficit Racks Up Record Deficit With 4 Months Still to Go

WASHINGTON (AP) – The federal government recorded a budget deficit of $1.88 trillion for the first eight months of this budget year, larger than even any annual shortfalls in U.S. history.

The sea of red ink grew as government spending shot up to deal with the coronavirus pandemic and tax revenue shrank when millions lost their jobs. The deficit for the October-May period was more than double the $738.6 billion booked for the same period last year, according Treasury Department numbers released Wednesday.

The Congressional Budget Office is forecasting that this year’s deficit will hit $3.7 trillion, which would be more than double the record $1.4 trillion deficit set in 2009.

Starbucks Takes $3 Billion Hit To Revenue During Pandemic

(AP) – Starbucks expects to lose more than $3 billion in revenue in its fiscal third quarter due to the coronavirus, but said the disruption to its business should subside through the rest of the year.

The Seattle-based coffee giant said in a regulatory filing Wednesday that the virus outbreak will also slash its operating income between $2 billion and $2.2. billion for the quarter, which ends June 28. Starbucks plans to report its third quarter results on July 28.

U.S. Consumer Spending Sinks by Record 13.6% in Face of Virus

WASHINGTON (AP) – U.S. consumer spending plunged by a record-shattering 13.6% in April as the viral pandemic shuttered businesses, forced millions of layoffs and sent the economy into a deep recession.

Last month’s spending decline was far worse than the revised 6.9% drop in March, which itself had set a record for the steepest one-month fall in records dating to 1959. Friday’s Commerce Department figures reinforced evidence that the economy is gripped by the worst downturn in decades, with consumers unable or too anxious to spend much.

May Consumer Prices Fall 0.1%, The Third Consecutive Month

WASHINGTON (AP) – U.S. consumer prices dropped in May for the third straight month. The Labor Department said Wednesday that its consumer price index fell 0.1% last month after tumbling 0.8% in April and 0.4% in March. Excluding food and energy prices, which bounce around from month to month, so-called core inflation fell 0.1%, tumbling for the third consecutive month for the first time ever.

Another Big Mall Deal Implodes As Pandemic Shakes Retail

NEW YORK (AP) – The nation’s largest mall owner is backing out of a $3.6 billion deal to buy a major rival as the coronavirus pandemic shakes the retail industry.

Simon Property Group announced it would buy Taubman in early February, just weeks before the Centers for Disease Control and Prevention announced the first known case of coronavirus in the U.S. Clothing stores and malls nationwide were ordered to close the following month.

In its legal complaint Wednesday, Simon said that Taubman is uniquely vulnerable as stores reopen because most of its properties are indoor malls “that many consumers will avoid.” Simon also said Taubman broke its contract obligations by taking on more debt during the pandemic rather than cutting costs.