Day: July 1, 2020

CityWatch: No indoor dining when New York City reaches Phase 3 next Monday

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Restaurants across New York City had already rehired more workers and scheduled training to go over new hygiene protocols when officials made a last-minute decision on Wednesday to postpone indoor dining. 

Indoor dining, which was expected to open at 50% capacity starting on Monday as part of Phase 3 of reopening, will be postponed in New York City until it poses less of a public health risk, said Mayor Bill de Blasio at his morning briefing Wednesday. The sentiment was later echoed by Gov. Andrew Cuomo.

The decision comes as COVID-19 cases have resurged across other states, many of which have recorded clusters linked to bars and restaurants. Many California bars and indoor restaurants will close back down as part of new restrictions announced Wednesday; Texas closed bars and limited restaurant seating last week; and New Jersey also decided this week to postpone indoor dining.

See: Florida coronavirus cases surge 46% over the last week — but Gov. DeSantis says he won’t delay state’s reopening plans

“We cannot go ahead, at this point in time, with indoor dining in New York City,” de Blasio said. “Even a week ago, honestly, I was hopeful we could, but the news we have gotten from around the country gets worse and worse all the time.”

It was a whiplash decision for some dining establishments, especially those that cannot take full advantage of outdoor dining, which has been allowed since Phase 2 began on June 22. Roughly 6,600 bars and restaurants have opened up outdoor seating so far, the mayor said on Wednesday—about 22% of the city’s 27,000 dining establishments. 

At the upscale Lebanese restaurant ilili, located near Manhattan’s Washington Square Park, owner and chef Philippe Massoud had spent the last three days rehiring staff and scheduled training sessions for Monday and Tuesday, he said.

“We’ve had to announce to our staff that they are no longer hired and put everything on hold,” Massoud said. “Even allowing us to open at 50% capacity by no means would have saved us. But it would have given us a better pulse.” 

The restaurant has created new options for takeout customers and relaunched its catering, but outdoor seating hasn’t been a boon to all venues. A handful of tables along Fifth Avenue hardly compare to the 300-plus seats ilili’s cavernous, two-level space could fill pre-pandemic. 

Also see: How COVID-19 could spread on college campuses. Will students be safe?

“Outdoor dining doesn’t treat everyone equally; some of it is the luck of geography,” said Randy Peers, president and CEO of the Brooklyn Chamber of Commerce. But Brooklyn’s restaurant owners are understanding of the public health concern, and are putting their focus on optimizing for delivery and outdoor expansion, he said.

“It’s disappointing for sure because we did get our hopes up,” Peers said, adding that he wishes the city will be as flexible as possible with outdoor dining and that the state liquor authority will extend a special rule allowing restaurants with licenses to sell booze to go. That allowance is pegged to expire on July 26. 

The mayor said the city will double down on outdoor dining in the meantime, including an outreach effort to get more businesses to put tables outside and potentially opening up more streets to restaurants.

For now, there’s no timeline for when the city’s restaurants will be allowed to welcome diners back inside. Some businesses have told staff in emails that the delay could be a matter of two to three weeks. Others, like Massoud, said his optimistic scenario is one month. 

See: Why is indoor dining so dangerous?

Cuomo, who made the final decision, said three factors will determine how soon diners can eat indoors. One is how quickly the nation’s viral resurgence gets under control. But New Yorkers could help speed up the return to indoor dining by showing better compliance with social distancing and mask wearing, and if the city can show its doing a better job enforcing the rules, he said. 

“Go to the East Village, go to the West Side, go to Brooklyn, go to Queens, go to the Bronx. Citizen compliance is slipping,” Cuomo said. “If citizens comply, if businesses help us with it, if government helps us with enforcement, then we’ll be in good shape.”

The coronavirus crisis is costing states and locals hundreds of billions, analysis finds

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Just how bad is the economic impact of the COVID-19 pandemic?

On the national and international level, things are tough, but perhaps a little more manageable than many analysts had feared at the onset of the crisis. Corporations are reporting earnings that are better than Wall Street expected, jobs were added, not lost, in May, and central banks and fiscal policymakers stepped up with robust aid packages.

On the state and local level, it’s a whole different ballgame, and observers of public finance and the municipal bond market are bracing for a long, slow burn. States, counties, cities and towns are on the hook for most of the costs associated with the pandemic — health care, emergency responses, and so on — even as their tax revenues, mostly from income and sales taxes, dwindle. Even revenue streams often seen as safe, like usage fees for things like airports, toll roads, arena ticket charges, and so on, have swooned in line with economic activity.

Related:Amid the coronavirus pandemic, how healthy are hospitals backed by municipal bonds?

On Monday, Stephan D. Whitaker, a policy economist at the Cleveland Federal Reserve, released a fresh analysis of just how bad the budget situation is for state and local governments. Whitaker reckons that they’ve lost $141 billion in revenue from all sources in fiscal year 2020 — that is, through June 30.

The table below shows national aggregate estimates for the hit in fiscal year 2020, as well as two scenarios for 2021: a “slow recovery,” similar to the years following the Great Recession of 2007-2009, and a “second-wave” outcome, in which economic shutdowns are re-imposed in the fall. (Whitaker’s analysis, which can be found here, also includes calculations for a “V-shaped” recovery scenario.)

Declines in State and Local Revenue, billions of dollars
FY20 FY21, Slow recovery FY21, Second wave
State 84.9 122.1 238.1
Local 56.3 48.7 111.8
State + Local 141.2 170.8 349.9
States splitting RDF between 2020/21 40 68.6 182.6
Local + states splitting RDF btw 2020/21 96.3 117.3 294.4
Source: Cleveland Fed

More to the point, Whitaker estimates that states and locals will have to cut expenditures by anywhere from $59 billion to $350 billion in the coming fiscal year. Why such a wide range? Some state and local governments built up budget cushions during the expansion, Whitaker notes. But those funds vary widely, and most so-called “rainy day funds” aren’t equipped to handle the 100-year-storm that hit in 2020.

The table above shows an analysis of the declines in revenues if states chose to split their current rainy day funds equally between fiscal years 2020 and 2021. Many local governments also have such funds, Whitaker notes, but there’s no reliable data source that aggregates them all.

While the numbers above are sobering, it’s worth pointing out that numbers in municipal finance may carry more meaning than other areas of the financial markets. When states and locals cut their budgets, it means essential services that touch the lives of most Americans: schools, libraries, road repair, emergency services, garbage disposal, transportation systems, and more.

It’s also important to note that there’s enormous disparity among the states, not to mention the local governments, across the country. For some regional economies, the collapse in oil prices CL00, +1.07% in March and April was just as devastating, if not more so, than the coronavirus crisis.

Revenue losses as share of state’s own revenue
FY21, Slow recovery FY21, Second wave
Alabama 3.7 12.3
Alaska 14.9 27.3
Arizona 7.5 13.8
Arkansas 8.3 15.3
California 7.8 14.3
Colorado 7.1 13.1
Connecticut 7.8 14.4
Delaware 12.3 22.5
Florida 11 20.2
Georgia 8.1 14.8
Hawaii 10.1 18.6
Idaho 8.6 15.7
Illinois 9.4 17.2
Indiana 8.5 15.5
Iowa 8.4 15.4
Kansas 8.7 16
Kentucky 8.7 16
Lousiana 9.5 17.4
Maine 9.2 16.9
Maryand 9.1 16.7
Massachusetts 9.1 16.6
Michigan 3.9 13
Minnesota 7.5 13.7
Mississippi 9.6 17.6
Missouri 7.9 14.5
Montana 7.4 13.5
Nebraska 7.7 14.2
Nevada 12.2 22.3
New Hampshire 8.2 15
New Jersey 9.4 17.3
New Mexico 10.3 18.8
New York 7.4 15.9
North Carolina 8.3 15.2
North Dakota 15.5 28.4
Ohio 8 14.7
Oklahoma 7.4 13.6
Oregon 7.2 13.1
Pennsylvania 9.2 16.9
Rhode Island 8.1 14.8
South Carolina 7.7 14
South Dakota 10.1 18.5
Tennessee 11.7 21.5
Texas 5 16.5
Utah 8.1 14.8
Vermont 5 9.1
Virginia 7.3 13.5
Washington 9 16.5
West Virginia 8.4 15.5
Wisconsin 8.1 14.9
Wyoming 9.7 17.7
Source: Cleveland Fed

Whitaker’s analysis takes into account dozens of revenue sources, including general sales taxes, tolls, severance taxes, parking facility fees, lottery revenues, and much more.

There’s a lot more to say about the pain facing state and local governments. For one thing, most localities derive much of their revenues from property taxes. It’s likely that any impact to the real estate market, and thus the assessments that drive property tax calculations, won’t show up for a few years, elongating the downturn.

See:A tax break to hasten gentrification? Housing market’s Opportunity Zones may miss their target

Florida coronavirus cases surge 46% over the last week — but Gov. DeSantis says he won’t delay state’s reopening plans

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Florida is stuck between a surge and a hard stance on reopening.

On Wednesday, Florida’s Department of Health announced 6,563 additional cases of COVID-19, the disease caused by the novel coronavirus also known as SARS-CoV-2, and 45 new deaths as the state moves into its fifth month of the pandemic.

The state reported its highest number of new cases in a 24-hour period of 9,585 last Saturday. Florida has thus far reported 158,997 cases, most of which do not account for those who are asymptomatic or pre-symptomatic, and 3,550 confirmed deaths from the virus.

While COVID-19’s progress has slowed in major cities such as New York, where most cases in the U.S. are centered, confirmed coronavirus cases have risen in 35 U.S. states, with some of the most populace states such as Florida, Texas and California a key cause for concern.

‘We’re not going back, closing things. I don’t think that that’s really what’s driving it.’

— Florida Gov. Ron DeSantis, a Republican on his refusal to close many businesses.

Unlike California and Texas, however, Florida Gov. Ron DeSantis has said the state will not delay its reopening plans. New cases in Florida are up 46% over the past week, new cases in Texas are up 27%, and up 17% California over the same period, according to this tally in the Washington Post.

“We’re not going back closing things,” DeSantis, a Republican, said on Tuesday, according to Axios. “I don’t think that that’s really what’s driving it, people going to a business is not what’s driving it. I think when you see the younger folks, I think a lot of it is more just social interaction.”

“We’re open, we know who we need to protect, most of the folks in those younger demographics, although we want them to be mindful of what’s going on, are just simply much, much less at risk than the folks who are in those older age groups,” the governor added.

DeSantis instructed bars, which are allowed to open to half of their usual capacity, to stop selling alcohol as one concession to the spike in coronavirus cases, but the state does not have restrictions on the number of people who can gather in stores and gyms.

Tattoo artist Caio Chermont gives a customer a tattoo at Atomic Tattoos in the Ybor City neighborhood in Tampa, Fla.

Getty Images

In California, meanwhile, Gov. Gavin Newsom, a Democrat, would take a “dimmer switch” approach to reopening. “Many people are not being as responsible as we’d like them to be,” he said. Last weekend, he ordered seven counties in California to shut down bars, and is reviewing others.

And in Texas, Gov. Greg Abbott, a Republican, said the spread must be corralled.” Last week, he paused the state’s reopening, and ordered bars to close and restaurants to reduce seating capacity. Bars in the state have filed suit against this, the second closure since the pandemic began.

Thus far, New York has had the most deaths from COVID-19 in the U.S. (32,032), followed by New Jersey (15,035), Massachusetts (8,053), Illinois (6,923), Pennsylvania (6,649), Michigan (6,193) and California (6,089). Texas has reported 2,455 deaths from the virus.

‘I would not be surprised if we go up to 100,000 a day, if this does not turn around.’

— Anthony Fauci, National Institute of Allergy and Infectious Diseases

The COVID-19 pandemic, which was first identified in Wuhan, China in December, had infected 10,512,383 people globally and 2,638,338 in the U.S. as of Wednesday. It had claimed at least 512,331 lives worldwide, 127,485 of which were in the U.S., according to Johns Hopkins University.

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases for three decades and one of the leading experts on pandemics in the U.S. for the last four decades, on Tuesday made a dire warning for the U.S. in the ongoing battle to control the spread of COVID-19.

Fauci said SARS-CoV-2, the official name for the novel coronavirus that causes the disease known as COVID-19, new cases will continue to appear unless lawmakers and the U.S. public start to take social-distancing rules seriously. He said the recent surges were “disturbing.”

“I would not be surprised if we go up to 100,000 a day, if this does not turn around,” he said. The number of confirmed coronavirus cases hit a new daily high of 40,000 last week, the highest number of daily cases since they reached 36,400 in a 24-hour period in April.

The Dow Jones Industrial Index DJIA, +0.04% and the S&P 500 SPX, +0.63% were slightly higher Wednesday, despite the surge in coronavirus cases in some of the most populous states in the U.S., including California, Florida and Texas.

The coronavirus pandemic is “not even close to being over,” according to the head of the World Health Organization, and the worst is still to come, in what was a grim assessment of the state of affairs some six months after the first cases were reported in China.

How COVID-19 is transmitted

In latest dark twist of the pandemic, companies appear to be cutting wages

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In the latest unpleasant twist of the coronavirus pandemic, many businesses have begun cutting worker take-home pay, said Mark Zandi, chief economist of Moody’s Analytics on Wednesday.

In the past, businesses shied away from cutting “nominal” pay, which is the amount of money earned per hour. Firms didn’t even cut wages during the 2008 financial crisis. Real wages, or pay adjusted for inflation, was different. Firms often didn’t react if a rise in consumer prices ate away at worker pay.

Cutting nominal worker pay is unpopular for a simple reason. It has often backfired for firms. Morale tends to plummet and workers stop being productive, thus pay cuts have been seen as counterproductive for companies, Zandi said, during a telephone call with reporters to discuss the ADP employment data for June.

But the pandemic has had a way of changing long-standing economic practices as firms struggle to stay afloat.

“The fact that we’re seeing more nominal wage cutting now may simply reflect the fact that we’ve got a number of firms that are in survival mode,” Zandi said.

The drop in worker pay was something he “felt” while looking at the ADP data, Zandi said. It is not yet apparent in the U.S. government data. The private sector rehired 2.37 million workers in June, Wednesday’s ADP report said.

One measure, average hourly earnings data, will be published by the Labor Departmnet on Thursday as part of the June unemployment report. Average hourly earnings has not been a reliable indicator during the pandemic, as it was hit by cross currents such as the loss of many entry-level jobs. This made it look like overall wages went up for people who remained in the workforce.

A drop in nominal wages, if realized, would be a worry for the Federal Reserve because it would raise the prospect of “deflation,” or falling prices, as consumers would have less to spend, lowering demand and encouraging retailers to discount prices. This can be just as damaging as high inflation.

Deflation also makes debt burdens harder to bear for households who may have to pay back loans with lower earnings.

In this scenario, the Fed may have has limited power to spark economic growth because its benchmark interest rate is now already at zero.

“The Fed has tools to play defense, they don’t have tools to play offense,” Zandi said. He said the Fed can make sure the economy doesn’t overwhelm the financial system, but will have a harder time stimulating growth so firms would raise wages.

That puts the onus on Congress and the executive branch, Zandi said.

In a recent speech, Chicago Fed President Charles Evans said he was worried about the inflation outlook. The central bank had a hard time hitting its 2% target even before the pandemic hit the economy in mid-March.

Read:Fed’s Evans says low inflation may require more monetary easing

Stocks were marginally higher in mid-day trading with the S&P 500 index SPX, +0.59% up 0.6%.

Retire Better: On a fixed income? Here are some ideas to save money

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I’m always talking about Social Security and how it’s a life vest for tens of millions of Americans. But the average monthly benefit this year is just $1,503. And yet, notes the Washington Post, “forty percent of Americans over age 60 who are no longer working full time rely solely on Social Security for their income.”

If you’re that average retiree, I don’t have to tell you how difficult it is to live on $1,503 a month, or $18,036 a year. Every dollar counts. Every single one.

Divorce inspired this woman to learn about money and she retired early

You’ve probably cut your expenses to the bone. Or have you? I’ve been gathering some ideas, that perhaps you haven’t thought of that could save a few bucks. In this column, I’ll focus on two areas: Your electric bill and your water bill.

Slash your electric bill

The U.S. Energy Information Administration (EIA) says the average monthly electric bill in the United States in 2018 was $117.65. That’s 8% of the average Social Security benefit!

You’ve got all sorts of things plugged in right now. You might think that because the TV or coffee maker are turned off, they’re not using any electricity. Actually they are. These devices are called “energy vampires” because they drain electricity around the clock, whether they’re being used or not.

“These phantom energy suckers can account for as much as 20% of your monthly electricity bill,” North Carolina-based Duke Energy, says. One-fifth of that average $117.65 electric bill is an extra $23.53 a month. Not huge, but again, if you’re on a fixed income, every dollar counts.

What can you do? Some tips:

Unplug things. I know you won’t do this for the clock radio you might have on your nightstand, but if you have devices that are used infrequently—maybe a TV in your bedroom that you watch only a little bit at night—yank the cord.

Use “smart power” strips. These automatically cut off power when devices aren’t in use.

Some devices, like computers, have built-in “sleep modes” that save energy when they’re idle.

Fluorescent lightbulbs cost more up front, but can save energy and money over the long run.

Cut your water bill

The average monthly water bill in the U.S. is $70.39 a month, according to the Environmental Protection Agency (EPA). It says the typical family uses 300 gallons of water a day.

That 70 bucks is nearly 5% of your monthly Social Security check. The Volusia County, Fla., water conservation department offers some money-saving tips:

A typical shower uses up to 10 gallons of water a minute. Consider limiting your showers to the time it takes to soap up, wash down and rise off.

Your toilet could be wasting thousands of gallons of water a month. Find out by putting a few drops of food coloring in the tank. If, without flushing, the coloring begins to appear in the bowl, you have a leak—and are literally flushing money away (though you’d have to balance fixing this against the cost of a plumber).

Don’t run the water while shaving and brushing your teeth. Before brushing, fill a water glass to rinse. Before shaving, fill the sink with an inch or two of warm water in which to rinse your razor.

Use your dishwasher and washing machines only when there’s a full load. And setting your washing machine to cold wash and rinse saves energy and gets your clothes just as clean.

Plant trees and plants that thrive without water. And surround them with mulch, which slows evaporation.

There are many more good ideas here.

Exercise

But you know the single biggest thing—by far—you can do to save money? Stay healthy. Keeping fit—both mentally and physically—for as long as you can will not only add more enjoyment to your life, but save incalculable amounts of money.

Fidelity Investments estimated last year that a couple retiring at age 65 would have to spend—get this—$285,000 on health care over the rest of their lives. A single man can expect to spend $135,000, but a single woman, because of longer life expectancies—could spend $150,000. Fidelity has yet to offer a 2020 estimate, but you can be sure it’ll be higher.

Coming back to what I said up top—that the average Social Security recipient currently gets $18,036 a year—it’s easy to see how big of a burden this will be.

You don’t me to tell you that exercise is good for you. But I am here to tell you the cost of NOT exercising could be significant. Also: people think that doing the crossword puzzle is the way to keep your brain sharp. It helps, but you know what really helps? Exercise, because it increases the flow of oxygenated blood to your head. As usual, talk to a doctor about what’s best for you given your age and circumstances.

I’m obviously just scratching the surface on money-saving ideas. In future columns, I’ll offer more. Meantime, tell me how YOU save money during these tough times; I may share your tips with fellow readers. Please write me at: RetireBetterMarketWatch@gmail.com.

Where Should I Retire?: We’re looking for a place that’s not too hot, not too cold, and accepting of different races — where should we retire?

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Dear MarketWatch,

We are an Asian Indian couple with about $50,000 a year to spend. We can also afford to buy a house in addition to this. Please help us find places where it doesn’t get too hot in the summer (or colder than Boston in the winter). We also want to live in a place where people are used to and accept different races of people — maybe a college town?

Please help us retire!

Victor

Dear Victor,

Not too hot, not too cold, plus acceptance of whoever we are — that Goldilocks scenario is what so many people are looking for.

With $50,000 to spend in addition to housing, there are many places that can work for you. There also are many other factors you may want to consider that reflect your own interests, so please take these suggestions as a starting point. If you’re looking for a substantial South Asian community, search for an Indian grocery store. Cary, N.C., and Ann Arbor, Mich., both came up when I looked at a list of Patel Brothers supermarkets, for example. This list of affluent and diverse communities with more than 60,000 residents may inspire other possibilities.

You don’t say where you live, unless that reference to Boston weather is my hint. If so, the high property values there could leave you with more money than most for your next house and give you a wider list.

I assume you’ve considered and ruled out the New York tri-state area, which certainly fits for diversity but has the downside of cost. I’m ruling out Florida, Texas and other southern states because of the heat.

Here are three college towns to consider. An added bonus: none of these states tax Social Security benefits.

As always, make sure you see these places at their worst as well as at their best, whether that reflects the weather, an empty campus or something else. Consider a short-term rental to better explore the area, interact with more residents and decide whether it’s truly a good fit. Talk to a tax pro if that’s a big concern.

Moves are costly; you don’t want to make a big mistake.

Winding walking path in Pullen Park, Raleigh, N.C.

Getty Images/iStockphoto
The Research Triangle area in North Carolina

You have three major universities anchoring this region. I’m not going to take sides given the college sports rivalries down there or even try to pick which city is better — I’ll leave that to readers in the comments section.

Gentrifying Raleigh, the state capital, is home to North Carolina State University and is the biggest with 1.4 million people, “rough-cut gem” Durham, with close to 285,000 people, has Duke University, and Chapel Hill has the University of North Carolina and about 60,000 residents. Don’t forget fast-growing, suburban Cary as well as Wake Forest (just don’t look for Wake Forest University here) and Carrboro, where the heart of downtown is … the mostly organic food co-op.

Homes are most expensive in Chapel Hill and cheapest in Raleigh and Durham. Using Realtor.com, which like MarketWatch is owned by News Corp., here’s what’s on the market now in Raleigh, Durham, Cary and Chapel Hill.

Summers may get a bit hot, but the mountains and the coast are just a few hours away. The flip side is that the average low in January is 30 degrees. As for travel, the region boasts a large airport.

Downtown Ann Arbor.

Getty Images
Ann Arbor, Mich.

Here’s a quintessential college town: the University of Michigan and its 43,000 students permeate this city of 121,000. The university is ranked third among public universities by U.S. News & World Report, and it has a large, walkable downtown.

Livability.com, which called Ann Arbor the best place to live in America in its 2018 rankings, praised it as a “bustling, progressive, park-filled paradise” and described it “nothing if not eclectic.”

When you’ve had enough of a college town, you can always head to Detroit just 45 minutes away, eventually cross the border to Canada or grab a flight from Detroit Metropolitan Wayne County Airport.

Take a look at the housing market, using current listings on Realtor.com.

Weather-wise, this won’t be that different from Boston. But when you’re retired, you can always choose to travel during the winter.

A vineyard in Oregon’s Willamette Valley.

iStockphoto
Corvallis, Ore.

Would you go west? This city of about 60,000 is cheaper than hipster Portland and has been ranked as one of America’s best college towns (Oregon State University, with about 29,000 students, is here). It’s walkable, has free public transportation, is one of the most bike-friendly communities in the country and offers plenty of outdoor possibilities.

Winters are warmer than Boston — the average lows are just 36 degrees. Average summer highs are in the lower 80s. The rap on Oregon weather, though, is rain. You’ll certainly get plenty of that in the winter, but this town is drier than Eugene less than an hour to the south. And is rain a fair trade-off for minimal snow?

Corvallis isn’t as diverse as either Raleigh or Ann Arbor, but it’s one of the more liberal areas in this state. It’s at the center of the Willamette Valley, an area surrounded by mountains and home to Oregon’s wine country. Livability.com says “it’s like living in a national park.” Plus you’d be an hour from Oregon’s rocky coast and less than two hours from Portland.

Homes are pricier than much of the Triangle and similar to Ann Arbor. Here’s what properties are on the market now.

Readers, where should this couple move?

Outside the Box: Why annuities can be a good addition to retirement investments

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The COVID-19 pandemic is making many Americans — whether they’re approaching retirement age or just starting out in their career — anxious about their finances, and retirement savings and plans. As a result, people are increasingly looking for lifetime income products that are less susceptible to factors like market volatility, retirement longevity, and challenges created by cognitive decline in order to secure their income in retirement.

So, how do we balance our uncertainty about our financial futures amid a pandemic, concerns about outside forces impacting our retirement plans, and choosing the right lifetime income products to provide financial security in retirement?

Divorce inspired this woman to learn about money and she retired early

First, consider investing a portion of your assets during your accumulation years to a fixed annuity, particularly if it’s offered as part of your employer’s sponsored retirement plan. This strategy helps solve for the risks that keep preretirees and retirees up at night. When you invest in a fixed annuity, you’re signing up for a guarantee that your account will never decrease in value, even in the most volatile market environments, like the ones we’re experiencing currently. In addition, you receive a minimum rate of return, which will never be lower than the stated amount and has the potential to be higher than the guaranteed minimum. A drawdown strategy such as a 4% withdrawal a year in retirement, can put retirees at risk for exhausting their savings as they age. The right fixed annuity never runs out. It can provide peace of mind as you near retirement and no longer receive a regular paycheck. Investing a portion of your savings in a fixed annuity also gives you the flexibility to allocate money to other asset classes. This could mean investing in an equity mutual fund or a low cost variable annuity where an individual not only gets market exposure, but the added benefit of lifetime income.

Earlier this year, the SECURE Act was passed with the goal of strengthening retirement security in America. A provision within this legislation, enables employers to offer annuities as an investment option within 401(k) plans. Now more individuals will likely gain access to these investment options.

Individuals continue to tell us that certainty of retirement income is what they are trying to achieve with their retirement savings. In fact, a majority of respondents in the TIAA 2019 Lifetime Income Survey believe guaranteed lifetime income – like an annuity – provides a feeling of security (83%) and facilitates better planning by enabling them to know how much they can spend in retirement (74%). And, if the need arises to dip into other assets, you will know your fixed lifetime annuity will continue to pay you through retirement.

And second, while the traditional 60/40 rule-of-thumb is for an investor to hold 60% of their retirement savings in equities and 40% in bonds, investing in bond funds to fund your retirement does not necessarily provide steady income and can leave you exposed to market volatility with interest rate fluctuations. Some retirees who must use their fixed income investments for income needs can end up with increasingly less income, creating a dynamic where they could also completely run out of assets. In contrast, some retirees fear outliving their savings and may be overly conservative. These individuals may spend very little and are not achieving the quality of life that is possible in their retirement years.

Those who incorporate annuities into their retirement plan can also protect against one of the most challenging risks to solve for: longevity risk. While no one can predict how long they will live, using fixed annuities mitigates the risk of spending your nest egg too quickly or, conversely, stockpiling all your savings and not fully enjoying retirement. Instead, fixed annuity products can provide certainty about how much income you will receive, allowing you to plan and make financial decisions accordingly.

Most people remain unsure of where lifetime income comes from or how to get it. The TIAA survey found that one-in-three (32%) didn’t know if lifetime income is a feature of their employer-sponsored retirement plan; of those who thought it was, many incorrectly believe it is offered through mutual funds (35%) or target-date funds (20%).

We believe annuities should be offered in employer retirement plans because they can insulate employees’ retirement savings from the most pressing risks, while helping them receive lasting income. Retirement plan annuities or those sold as in-plan options to participants in retirement plans are typically low-cost options. They may actually have lower costs than many other investment options because they utilize economies of scale to keep pricing low.

But investors should be aware that all annuities are not the same. Retail annuities—available outside of group retirement plans—may have higher fees and are the ones that can have high sales loads (commissions), high surrender charges, and high investment expenses.

No one knows how long their retirement will be or if market fluctuations, global pandemics, or other outside forces will impact their retirement savings. But investors can hedge against these uncertainties with lifetime income products like annuities to ease concerns about their financial futures and to help ensure financial security in retirement.

Any claims are backed by the claims paying ability of the issuing company. In this piece, guaranteed lifetime income references fixed annuities.

Patrick Rowan is senior managing director and head of fixed annuities at TIAA.

Commodities Corner: This commodity escaped first half of 2020 drop in the energy sector

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A benchmark commodities index lost about 20% in the first half of 2020, with the energy sector leading the decline as the coronavirus pandemic ravaged demand for petroleum. Uranium, though, stands out as a resilient performer that’s likely to continue to do well in the second half of the year.

“Commodities were hit by a perfect storm related to the Covid-19 outbreak,” says Jeroen Blokland, multiasset portfolio manager at Robeco. “The economic sudden stop meant global commodity demand plummeted while supply has no time to adjust,” and commodities are “exactly defined by these two factors.”

The Bloomberg Commodity Index BCOM, +0.25%, which tracks 23 commodities, was down by roughly 20% year to date to June 30.

Among its components, ultralow sulfur diesel (ULSD) HOQ20, +1.31% lost 42% so far this year. Brent oil BRNU20, +1.59% has lost around 38%, and West Texas Intermediate crude CLQ20, +1.22% was down around 36%, while gasoline futures RBQ20, +0.65% fell 29%. In turn, the Bloomberg Energy Subindex BBGCIENG, has fallen about 47% this year.

Petroleum producers have been dealing with “higher stocks and substantially lower consumption,” says James Williams, energy economist at WTRG Economics.

The most extreme case is distillates, of which over 90% is ultralow sulfur diesel, he says. Over the four-week period ended June 19, U.S. distillate demand was down by 17% from the same period a year ago, but distillate supply stood at 28% above the five year average for that time of year, U.S. government data show.

With four-week jet fuel consumption down over 62% year over year as the pandemic curtailed air travel, refiners shifted away from jet fuel to diesel, says Williams. That led to the drop in ULSD futures.

But the most unexpected move of the year came from U.S. benchmark West Texas Intermediate crude futures, which made a historic daily drop of 306% on April 20 to settle at a negative $37.63 a barrel, the lowest on record.

The oil market was dealing with a price war between Saudi Arabia and Russia even before the seriousness of the pandemic set in. Russia refused to support deeper crude production cuts in early March, leading both countries to boost output instead, until they reached a deal on output reductions that began in May.

“The jacked-up oil supply,” combined with the outbreak and quarantine resulted in a world awash in oil, says Adam Koos, president of Libertas Wealth Management Group. That is “not something that fares well for any energy-related commodity or investment.”

Still, the biggest gainer among major commodities may come as a surprise as it is also related to the energy sector. Uranium, which is used as fuel for nuclear reactors, has seen futures prices climb about 30% this year.

Read:Why uranium has rallied, defying a drop in the energy sector

“Demand for nuclear power hasn’t dropped dramatically due to COVID-19 as most reactors operate as baseload power suppliers and are usually the last to be taken off the grid,” says Jonathan Hinze, president of nuclear-fuel consultancy UxC.

“Other power generating fuels, especially coal and natural gas, have been much more negatively affected,” so nuclear utilities have “not really seen a reduction in their near-term needs for nuclear fuel.” Hinze expects uranium demand to be “relatively robust” over the next six to 12 months.

For commodities as a whole, “short-term events have not been favorable for the demand side, but the long-term supply and demand fundamentals would suggest high prices in the future for many commodities,” says Alissa Corcoran, director of research at Kopernik Global Investors.

“Eventually, the world will require more barrels of oil, pounds of uranium and ounces of gold” and prices will need to be high enough to encourage new supply, she says.

People donated millions of dollars to the wrong Black Lives Matter foundation — read this before you give to any charity

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Americans who were moved to fight for racial justice after George Floyd’s killing by police donated millions of dollars to the wrong Black Lives Matter foundation — a cautionary tale for anyone who gives money to charity.

Donors tried to send an estimated $4.35 million to a California-based nonprofit called the Black Lives Matter Foundation, BuzzFeed News reported, but it has no connection with the Black Lives Matter social justice movement. Most of the money didn’t end up at the Black Lives Matter Foundation, because officials at companies involved in raising the cash realized the mistake and froze the funding.

The incident shines a light on the growing role that third-party companies play in collecting and distributing the roughly $300 billion that individual Americans give to charity every year. It’s also a reminder that it pays to do your own research about any organization you want to give money to, especially if you’re donating through online fundraising platforms or employee-matching programs.

“This unfortunate scenario demonstrates the importance of donor diligence,” said Yael Fuchs, president of the National Association of State Charity Officials. She added, “Many online platforms only require that entities raising money prove that they have 501(c)(3) tax exempt status, but having (c)(3) status does not mean that the organization is legitimate or well run.”

Before you click on that donate button, here’s how to avoid sending your money to the wrong group.

What happened: How money got donated to the wrong Black Lives Matter group

Donors sent money to the Black Lives Matter Foundation through employee-matching donation programs at their jobs and through third-party fundraising platforms including GoFundMe and the PayPal Giving Fund. This happened because the foundation showed up when users searched those platforms for “Black Lives Matter.”

But as its founder explained to BuzzFeed, despite the similar names, the Black Lives Matter Foundation has no affiliation with the Black Lives Matter social justice movement founded in 2013 by three community organizers. (The movement is not a tax-exempt nonprofit, so it accepts donations through a fiscal sponsor called Thousand Currents.)

Employees at Apple AAPL, +0.83%, Google GOOG, +1.33%, Microsoft MSFT, +2.55% and Dropbox DBX, +2.25% tried to send donations to the Black Lives Matter Foundation through gift-matching programs run by Benevity, a company that manages employee giving and other social responsibility functions for companies, including MarketWatch’s parent company, News Corp NWSA, +1.80%.

None of the money those employees donated to the Black Lives Matter Foundation actually ended up with the foundation, according to Apple, Google, and Microsoft. (Dropbox did not respond to a request for comment.) All told, employees at about 200 of Benevity’s 650 client companies donated to the Black Lives Matter Foundation through its platform, said Benevity founder and executive chair, Bryan de Lottinville.

‘This unfortunate scenario demonstrates the importance of donor diligence.’

— Yael Fuchs, president of the National Association of State Charity Officials

After discovering that donors were sending money to a group that wasn’t affiliated with the Black Lives Matter movement, and after further investigation revealed that the foundation was not in good standing with state authorities in California, where it is based, Benevity did not release any of the donations to the foundation, de Lottinville told MarketWatch. (Benevity has since “deactivated” the foundation on its platform and added a note to its profile explaining that the foundation is not related to the movement.)

Other donations to the Black Lives Matter Foundation were made by individuals who gave money to fundraisers on GoFundMe. Users launched 180 campaigns that raised some $350,000 for the Black Lives Matter Foundation, a GoFundMe spokesman said. GoFundMe listed the foundation on its platform because it was in a database operated by its partner, the PayPal PYPL, +3.49% Giving Fund. GoFundMe and PayPal are working to redirect the donations, spokespeople for the companies said.

Watch out for sound-alike names

There have been attempts to trademark the phrase “Black Lives Matter,” but no one owns it, which means it can end up in the hands of people who aren’t affiliated with the official group, a decentralized global movement with 22 chapters across the country.

The Black Lives Matter Foundation doesn’t appear to have been intentionally deceiving anyone. The foundation was established as a legitimate nonprofit by a Black man who told BuzzFeed his wife’s ex-husband was allegedly killed by the police. The founder also noted that his goals differ from the movement’s goals. His group’s mission is to unify the police and the community, while the movement advocates for defunding the police. (The foundation’s founder could not be reached for comment.)

‘We understand the desire to run a movement in an innovative, non-hierarchical way, but this does leave the door open for fraudsters or other opportunists to claim popular names.’

— Yael Fuchs, president of the National Association of State Charity Officials

In the corporate world, one company wouldn’t be able to incorporate using another’s name, de Lottinville noted. But social movements — like MeToo, for example — often have no defined ownership.

“Many social justice organizations choose not to incorporate or otherwise adopt more traditional leadership structures,” said Fuchs, who is also co-chief of the New York State Office of the Attorney General’s charities bureau enforcement section. “We understand the desire to run a movement in an innovative, non-hierarchical way, but this does leave the door open for fraudsters or other opportunists to claim popular names and may limit protections that are available to the legitimate entity.”

Scammers often use sound-alike names to get donors to open their wallets. Dozens of fake charities were busted in 2018 after using names similar to legitimate groups helping military veterans. Similar frauds have happened with cancer charities.

One tip for steering clear of name confusion: Find out a charity’s EIN (employer identification number) before you donate. No two charities have the same one, and donors can use the number to verify whether a charity is legit.

Is the charity is in good standing with the IRS and state authorities?

If you want your donation to be tax deductible, the group you’re giving to has to be a registered 501(c)(3) nonprofit with the IRS. You can check the IRS website to make sure a nonprofit is in good standing. But donors should also check with authorities in the state where the charity is based. Most state attorneys general have easily searchable databases where donors can check a charity’s status. If you don’t know who your state charity regulator is, you can find it on the National Association of State Charity Officials site.

If donors to the Black Lives Matter Foundation had typed its name into the California Attorney General’s charity verification tool, they would have seen that state authorities had issued a cease and desist letter to the foundation because it had not registered with the attorney general’s office, yet was soliciting donations, said Tania Ibanez, senior assistant attorney general in charge of the charitable trust section of the California Attorney General’s Office.

There is pending legislation in the California State Assembly that would require third-party platforms like GoFundMe, PayPal, and Benevity to vet the status of charities in California before listing them on their platforms, Ibanez noted.

Look at the charity’s own website before you donate

When donors come across a charity on a third-party fundraising platform or on a friend’s social media feed, where it’s common for people to ask for donations in lieu of birthday presents, it’s easy to quickly click donate, especially when it’s a cause that’s been in the news lately.

Third-party fundraising platforms like Benevity, GoFundMe or PayPal Giving Fund typically have blurbs describing the charities that are listed on their sites. But before deciding whether to donate, donors should hit pause and visit the charity’s own website. (The Black Lives Matter Foundation, for example, doesn’t have its own website.)

“My general counsel would be to slow down and take time to look at a website — and the mission statement in particular — and, if possible, check the list of donors on the website,” said Phil Buchanan, president of the Center for Effective Philanthropy and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.” A charity’s website should clearly explain its mission and accomplishments. You can also look to see who is on the group’s board of directors. “Make sure it all makes sense,” Buchanan said.

Check a charity’s ratings

After you check out a charity’s website yourself, also check its rating on sites such as BBB Wise Giving Alliance, Candid (formerly Guidestar), CharityNavigator, CharityWatch, Givewell, or GreatNonprofits.

‘Slow down and take time to look at a website — and the mission statement in particular — and if possible check the list of donors on the website.’

— Phil Buchanan, author of ‘Giving Done Right: Effective Philanthropy and Making Every Dollar Count’

However, even rating sites don’t always give a complete picture. The Black Lives Matter Foundation was listed on CharityNavigator, for example. because it was a registered 501(c)(3) organization, but the foundation had no rating, a CharityNavigator spokesman noted. CharityNavigator has now updated the entry with a “moderate concern” advisory.

There’s no national database of complaints against charities. But donors can do a little digging by Googling the group’s name with words like “fraud,” “lawsuits,” or “complaints” to see if any news stories come up. Don’t forget to click past the first page of results.

See also:Some of America’s biggest employers don’t match employee donations to charity

Ask the organization what it will do with your money

A nonprofit should be able to say what it does with donations. If it can’t, that’s a red flag.

“The nonprofit should also provide visibility into how the nonprofit operates,” said Kevin Scally, spokesman for Charity Navigator. “Are they an advocacy organization? Do they provide direct services? Do donations fund research? Legitimate organizations should make the answer to these questions very clear.”

Donors can see details of how an organization spends money — including salaries for executive directors — on Form 990s, which all nonprofits are required to file. Legitimate 501(c)(3) charities should file a Form 990 with the Internal Revenue Service annually, Scally noted. “If they have not done so, for example, if the organization was something recently formed and you are having difficulty finding information on it, err on the side of caution,” he said.

You don’t have direct control over your money

Third-party platforms make donating to charities easier than ever. They function as online directories where people can quickly look up causes they’re interested in supporting. They’re fast and convenient, and help get exposure for charities that may not have big marketing budgets.

But because third-party platforms are essentially middlemen between donors and their money, there are caveats. Some of these platforms charge nonprofits fees to appear on their sites. Platforms have been known to go out of business, leaving donations undistributed to charities. Sometimes there’s a delay between when a donor makes a donation and the nonprofit receives that money.

Generally when donors give money to a charity through these platforms, their donation doesn’t go directly to the charity. Typically it first goes to a 501(c)(3) nonprofit that’s run by the platform, which then gives the money to the charity.

That loss of control comes with pros and cons. The buffer between donor and charity worked well in this case, said Benevity’s de Lottinville, because it prevented money from ending up with the wrong group. Benevity only lists charities that are in good standing with the IRS, and before it distributes funds to charities, it does another round of vetting.

During that round, Benevity discovered the California cease and desist letter, de Lottinville said, and also realized that the Black Lives Matter Foundation wasn’t affiliated with the movement. “It’s unfortunate, but this is exactly what we’re set up to do, is help protect our corporate client and our donors,” he told MarketWatch.

Likewise, GoFundMe donors are protected by a guarantee that their money will go to the intended recipients and allows for refunds in some cases. Donors to the PayPal Giving Fund are advised that if their donation can’t be sent to their chosen charity, PayPal will “reassign” the funds and “whenever possible will consult with you on the reassignment.”

He said he doesn’t know exactly how much money Benevity has helped raise for racial-justice groups in the past month, but estimated that it’s “probably in the $100 million range.”

The roughly $4 million that donors tried to send to the Black Lives Matter Foundation through Benevity “sounds like a big number,” de Lottinville said, “but in the context of the total giving through the platform to these issues, it was actually relatively small.”

New Jersey postponed indoor dining as New York makes decision on Wednesday — why is it so dangerous?

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Restaurants in New Jersey were set to reopen for indoor dining on Thursday, but on Monday Democratic Gov. Phil Murphy said that it won’t happen.

“We have seen spikes in other states driven in part by the return of patrons to indoor dining establishments where they are seated and without face coverings for significant periods of time,” Murphy said during a briefing held Monday.

‘There’s nothing magical about six feet. That’s about that average distance respiratory droplets can travel, so being further apart from people is always better.’

— Ryan Malosh, an infectious disease epidemiologist at the University of Michigan School of Public Health

New York Gov. Andrew Cuomo said he is going to make a final decision regarding indoor dining on Wednesday. “We know that indoor dining has been problematic,” he said during a briefing held Monday. “Outdoor dining has worked very well all across the state, New York City included.”

That said, “there have been no major outbreaks related to indoor dining,” a New York Department of Health spokesman told MarketWatch.

“We’re not going backwards, we’re going forwards,” Cuomo said Monday. “[A] lot of these other states have actually had to go backwards. They started to reopen and they had to stop.”

So what makes indoor dining riskier?

For starters, it can be much harder to space tables further apart when you’re inside. Even though six feet is the widely publicized distance people should maintain from one another to avoid potentially coming in contact with respiratory droplets that can transmit coronavirus, there’s scientific evidence that these droplets have the ability to travel well beyond six feet.

“There’s nothing magical about six feet,” said Ryan Malosh, an infectious disease epidemiologist at the University of Michigan School of Public Health. “That’s about that average distance respiratory droplets can travel, so being further apart from people is always better.”

On top of that, air filtration is generally better outdoors than indoors because particles have more room to be dispersed, Malosh said. “Outdoors, a light breeze can disperse particles with no constraint on the distance they can then travel.”

Diners don’t tend to wear masks outdoors. If people wear masks indoors, however, that can significantly lower the chances of dispersing virus-containing particles, said Thomas Russo, chief of the division of infectious disease at the University at Buffalo.

‘It’s already going to be dicey going into the school year and getting elementary students to wear masks is going to be hard, but it’s an important activity that’s much different than going into restaurant indoors.’

— Thomas Russo, chief of the division of infectious disease at the University at Buffalo

In fact, over 140 clients who visited a hair salon based in Springfield-Greene County, Mo. where two stylists tested positive for coronavirus did not contract the virus themselves. The county’s Director of Health, Clay Goddard, cited the “value of masking” as the reason 140 clients and six other employees at the salon did not contract coronavirus.

Meanwhile, more than 100 cases of coronavirus were traced back to one bar in East Lansing, Mich. which reopened on June 8. Malosh used this as an example of the increased risk of dining indoors.

The bar, Harper’s Restaurant & Brew Pub, has since closed down to install “air purifying technology,” according to a statement made on Facebook FB, +2.91% on June 22.

(Harper’s did not immediately respond to MarketWatch’s request for a comment.)

Even though malls and movie theaters in some states’ reopening plans are allowed to reopen after restaurants can reopen for indoor dining, Russo said indoor dining poses greater risks.

Related: How COVID-19 could spread on college campuses. Will students be safe?

“Whenever there’s a scenario where everyone can wear masks at all times the risk is lower,” Russo said. “When eating you physically can’t wear a mask but you can minimize that risk by popping it back on between bites.”

States like New York and Jersey which have been hit particularly hard by the virus, are also planning to reopen schools in the fall and “want to start off the school year with the best possible conditions,” Russo told MarketWatch.

“It’s already going to be dicey going into the school year and getting elementary students to wear masks is going to be hard, but it’s an important activity that’s much different than going into a restaurant indoors.”

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