The coronavirus is threatening businesses and workers everywhere. We asked Christine Romans, CNN’s chief business correspondent, to help answer our listeners’ top financial questions.
You can listen on your favorite podcast app or read the transcript below.
Dr. Sanjay Gupta: The coronavirus is threatening the lives of people all over the globe. But it’s also wreaking havoc on businesses and workers everywhere.
As you know, my specialty is medicine, not the economy. So for this episode, I want to hand things over to CNN’s Chief Business Correspondent, Christine Romans.
Christine is our resident explainer-in-chief of all things money so I asked her to help answer some of your most pressing financial questions.
I’m Dr. Sanjay Gupta, CNN’s chief medical correspondent, and this is “Coronavirus: Fact vs. Fiction.”
Christine Romans: Thanks, Sanjay.
Stimulus checks
Romans: You know, one of the questions I’ve been getting a lot, not just from viewers but also from my friends and family, is about the government’s big stimulus plan, its rescue of Main Street. You probably heard about those $1,200 checks that they’re going to be giving out within the next couple of weeks. So let’s walk through what you need to know about the plan.
So it’s $1,200 for most Americans earning less than $75,000 a year. It’s a one-time payment. It will be direct deposited in your bank account if you file tax returns electronically in 2018 or 2019. Or if you collect Social Security, they have your bank information. They’ll deposit the check directly. If you haven’t filed tax returns in the past couple of years, you might have to wait for a paper check. And that could take a little bit longer.
Also in this stimulus are expanded jobless benefits. States are handing out an extra $600 a week if you find yourself out of work. And that’s going to continue for up to four months. And for the first time, gig economy workers and the self-employed are included. And the states are working out how they will count them and make sure they get jobless benefits as well.
Small business loans
Romans: All right, next, we have been getting questions from concerned small business owners about the resources that the government is giving them to help. And a lot of concerns about how hard it has been to get those loans.
So what’s in this? Well, nearly $350 billion has been allocated for small business owners. Now the Small Business Administration and the banks are working out how best to get it to people. But it is there. The promise is there.
It’s been slow to connect small businesses with that money, but Congress is basically saying more money is coming. This is a cornerstone of the Main Street bailout.
Who is eligible? Any small business with 500 or fewer employees. The goal is to get the money to you so you can pay for your labor and overhead. And the labor is a really big part of that. You don’t have to pay back this loan. It is free money if you use at least 75% of the loan to pay your workers, to keep your workers and the rest then on utilities and rent.
Retirees and students
Romans: What about for retirees and students?
Well, really important information if you’re retired. The required minimum distributions are waived for 2020. That means seniors don’t have to take money out of their retirement accounts and take the loss. This has been a bad year in the stock market. If you’re forced to take money out of your stock accounts, because by law, you have to do that, you could take a loss. So, seniors don’t have to do that for this year.
Also, anybody under 59 years old, you can withdraw up to $100,000 from your IRA or your 401k accounts without a penalty. You have to show that you’re in distress because of the coronavirus pandemic.
Now, that’s a fast way to get money. But look, this should be your last resort. Tapping into your retirement is a sign of real distress. And most studies show that if you do that, you end up further behind when it’s time for you to retire. So, do that as a last resort.
For student loan borrowers, look, you get a break here. Repayment and interest on all federally backed student loans have been suspended for six months until September 30th. And the Department of Education cannot collect on any defaulted loans by garnishing your wages or by taking your tax refund. That’s an important change.
Rent and mortgage
Romans: All right. Another question I’ve been getting is what do I do if I can’t pay my rent or mortgage?
Well, you know, nearly a third of Americans didn’t pay their rent in April. That’s according to brand new data out last week from the National Multi-family Housing Council. But the government’s $2 trillion stimulus bill is giving renters in federally subsidized affordable housing a 120-day moratorium on evictions and late fees so they can’t kick you out there.
But most rental properties are owned by private landlords. So you aren’t eligible there. That means you’ve got to talk to your landlord right away and figure out a plan.
Some states like California and Alabama, New York, they’re suspending evictions for the time being. So if you can’t pay your rent right now, at least you won’t be evicted. Ultimately you need to talk to your landlord about your financial situation.
Also for homeowners, talk to your lender. Some lenders are giving you a three-month grace period – a forbearance. But be careful. That means on July 1st four months mortgages are due and you might not have the money at that time. So be very, very careful about pushing off those bills if you can afford to pay them now.
When does this end and how bad will it get?
Romans: So a lot of us wish we had a crystal ball and could just know when this was going to be over and how bad it’s going to get.
Well, the United States is already in a recession and will probably remain that way for the first half of the year. Now, that’s according to a survey out from the National Association for Business Economics. The 45 economists there predict a sharp, short recession for the first half of the year. And they say the coronavirus pandemic will severely restrict economic activity. No question you see that in the long unemployment lines.
Those are the two big indicators to watch, right? The unemployment lines and the stock market.
So, 16.8 million Americans have lost their jobs and filed for unemployment benefits in just the past three weeks. I mean, we could be at 10% unemployment right now.
So as for the stock market, the S&P 500 has had a really rough spring, the worst month since 2008 in March. But then last week, some good news of sorts. Stocks ended higher in the short week and the S&P 500 had its best week since 1974. You know, where the crisis goes from here, it’s frankly unpredictable and volatility for investors is certainly here to stay.
So what does that mean for your investments? I mean, where should you be putting your money?
The advice from a lot of the top money managers is just to stay the course. All of them say now is a good time to simply reassess your goals. What is your investing strategy? Don’t panic. Don’t rush into bonds or cash. For most investors, especially young ones, stocks are going to give you the best chance of solid returns over the long haul.
All right, so finally, a lot of listeners want to know when the downturn will end and what the recovery will look like.
You know, that’s just hard to say. We’ve never had a recession like this. We’ve never had a crisis like this. It’s uncharted territory. And while many of us might not be able to sort of see the light at the end of the tunnel quite yet, if we all do our parts, things will turn around sooner rather than later.
Dr. Gupta: Christine, thank you so much. I learned a lot, as I always do from you.
And I know most of us are eager to get back to work and look forward to businesses opening again to re-start the economy. But right now, nothing is more important than the health and safety of all Americans and the last thing any of us want is a second wave of the coronavirus infection. So let’s please all do our part to contain this pandemic and put our economy back on track.
And if you have more questions, please record them as a voice memo and email them to asksanjay@cnn.com – we’d like to include them in one of our podcasts.
We’ll be back tomorrow. Thanks for listening.
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For a full listing of episodes of “Coronavirus: Fact vs. Fiction,” visit the podcast’s page here.