Municipal Borrowing Hits 10-Year High
COVID-19 Shutdowns Drive Borrowing
For the first time in ten years, municipal bond issuance hit $252 billion in 2020. That number, which was a small increase from 2019, mirrored the plummeting interest rates and rising costs of managing city and state governments in the middle of a global pandemic. For the first time since 2013, outstanding municipal debt hit $3.9 trillion. Borrowing for new projects hovered around $150 billion between 2011 and 2015 and has been slowly climbing since then.
The borrowing trend is not likely to slow down, as local governments with already-shrinking budgets work to simultaneously manage the coronavirus pandemic and pay back old debts. Despite this, municipal bonds are still somewhat attractive to investors, as low interest rates provided steady returns throughout last year.
Tight Budgets Fluctuate in Pandemic
Moody’s Analytics (MCO) estimated last month that the coronavirus pandemic has cost states $224 billion. Some local governments in need of liquidity found themselves without options when the markets seized up in March and bond issuance flatlined. The Federal Reserve quickly intervened, and with falling yields, governments snapped up available bonds.
In the first round of federal coronavirus aid, Congress issued $150 billion to state and local governments. For some states, like Wisconsin, that translated to more money than was expected. Despite a drop in revenue, the state had more in the budget than its financial managers anticipated. As a result, Wisconsin issued $1.3 billion in taxable debt in 2020, more than it had since 2003, in order to take advantage of low interest rates. All in all the state borrowed about what it has in past years.
Forecasts for 2021 Revenues Unclear
Though many hoped 2021 would bring more certainty and stability, coronavirus continues to tear through communities around the United States. The most recent coronavirus relief package issued by Congress did not include direct aid for local governments. But in the long term, states have some hope that a Democrat-controlled Federal Government could bring greater coronavirus-related aid to state and local governments.
Local governments whose fortunes are closely tied to property tax revenues will have a longer wait before the tumult of 2020 is reflected on balance sheets. These governments feel economic distress at a slower speed, when property values account for business closures and other financial disruptions.
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Uber and Lyft May Help With Vaccine Distribution
Ride-Sharing Firms Lobby for Role
As Uber (UBER) and Lyft (LYFT) look for ways to shore up their balance sheets after being battered by the pandemic, they are in talks with President-elect Joe Biden’s incoming administration about helping with vaccine distribution.
Executives from Lyft met with the presidential transition team in December 2020 to talk through how the government could provide funds for vaccine-related transportation. Lyft is already a provider of nonemergency medical transportation, and the company’s healthcare arm shared its analysis of public data with Biden’s team. Lyft’s analysis showed that millions of at-risk Americans have limited transportation options and that mobility may be a barrier to effective vaccine distribution.
Meanwhile, Uber announced it would partner with Moderna (MRNA) to provide vaccine safety information to users via its ride-sharing app. Both companies have said they hope to coordinate with public health agencies to distribute vaccine reminder notifications and schedule rides for eligible US residents.
A Potential Path to Recovery for Ride-Share Companies
Ride-sharing companies like Lyft and Uber have been severely impacted by the coronavirus pandemic, as their business depends on customers who travel to restaurants, social gatherings, and airports. A partnership with the incoming Biden administration to help transport people getting vaccinated could help the companies recover some of the income they have lost over the course of the pandemic.
Though the logistics of transporting people to get vaccines could prove challenging for rideshare companies, there is certainly a need for their services. Medical directors, health systems, and pharmacies have expressed concerns about the lack of available transportation to vaccine sites. In response, Lyft recently announced it would partner with JPMorgan Chase, Anthem, and United Way to deliver vaccines to low-income, high-risk, and uninsured people. Uber said it would consider partnerships with governments, foundations, medical providers, and businesses to assist with vaccine rollout.
Until Joe Biden is inaugurated as President on January 20, his administration does not have the authority to make decisions on federal funding or any other government matters. As such, the transition team has said they are in “listening mode” until that time.
But the team did say it plans to accelerate vaccine distribution when Biden takes office. Biden’s administration also plans to set up federally-run vaccination sites and vaccine deliveries to rural and underserved areas of the country. Ride-share companies could be in a position to help with both those initiatives.
PC Sales See Record Growth
The Pandemic Shift from Phones to Computers
Personal computer sales rose 13% last year to 302.6 million units sold around the world, according to research from International Data Corp’s Worldwide Mobile Device Trackers. Another research firm, Canalys, measured an 11% increase to 297 million units sold. That would be the highest annual growth since 2010 and the highest shipment volume in more than five years.
The differences between counts from the different firms are related to how each company defines personal computers. But both statistics show that PC sales have surged during the pandemic. Sales in the fourth quarter of 2020 were particularly strong, which is typical during the holiday season. PC-makers also saw a boost in demand throughout the year as companies, school districts, and families shopped for remote work and school equipment. Gaming computers and monitors also sold at record rates as people looked for ways to entertain themselves at home.
Growth Spurred by Remote Work Rush
As companies rushed to get equipment to newly remote workers in 2020, sales trends were jumbled. Combined sales of notebooks and desktop devices have slumped since 2011, but last year shipments of notebooks and mobile workstations jumped 44% from 2019. Conventional desktop and workstation sales, meanwhile, declined 20%.
During the first quarter of 2020, PC sales declined as Chinese factories shut down while the pandemic raged and global supply chains were shaken. Pent up demand led to a spike in sales later in the year—especially in the commercial sector. “We’ve seen many companies equip their critical resources with one or, in some cases, two laptops to ensure that business roles were not affected due to the inability to come into the workplace,” said Rushabh Doshi, a Mobility Research Director at Canalys.
As CES Begins, PC Makers Look to 2021
The release of these figures has been timed to coincide with the start of CES, the biggest tech show in the world. The conference began on Monday and is all virtual this year. It typically includes product reveals and commentary from industry leaders on tech trends from the past year as well as forecasts for the year to come. Personal computer companies often unveil their newest models at CES, and those announcements can spur future sales.
This year, the Consumer Technology Association anticipates $38 billion in sales for the US laptop market. That would represent a 2% decrease from 2020’s record spending.