Additionally, the Fed – which is the U.S. Mint’s lone customer for coins to be released into general circulation from the Philadelphia and Denver Mints’ production – is monitoring its inventories to determine whether order limits will be extended to pennies and nickels as well.

The Federal Reserve first placed depository institutions on allocation in June 2020, because not enough coinage was flowing back to banks from retail establishments, whose business was impacted by COVID-19 pandemic restrictions.

The Federal Reserve’s Cash Product Office then partnered with the U.S. Mint to alleviate the perceived circulating U.S. coin shortages and distribution problems caused by the coronavirus restrictions. After several months, the coin shortfalls and distribution channels appeared to stabilize, and the allocations were lifted.

“After a relatively stable first quarter of 2021, coin orders from depository institutions began to increase in March, with the most dramatic increase seen in the first two weeks of April,” according to the Cash Product Office. “In addition, coin deposits to the reserve banks have been on a slow decline since January.”

For this reason, the Federal Reserve issued notice that, beginning with circulating coinage orders set for pickup by depository institutions on May 3, the number of dimes and quarter dollars would be restricted.

The Cash Product Office’s notice explained further: “What initially appeared to be the normal seasonal increase in coin orders typical in the spring has developed into a sustained trend that significantly exceeds typical seasonal patterns. “The U.S. Mint continues to produce new coins at increased production levels. However, increased demand from depository institutions is outpacing U.S. Mint production and resupply available from low rates of deposits, resulting in the Federal Reserve’s coin inventory being reduced to below normal levels.”

According to the Cash Product Office, its coin allocation methodology takes into account recent order volume by coin denomination and depository institution end-user, current U.S. Mint coin production levels, and deposit levels.

All “endpoints” – or customers requesting coins – are placed into small, medium, large, extra-large and extra-extra-large endpoint groups. These endpoint assignments remain the same as they were at the end of 2020, and the Reserve banks will continue to honor the adjusted assignments from 2020.

“For endpoints that were not assigned groupings in 2020, because they are new endpoints or did not order a particular denomination, we will use the latest available order data set to identify the appropriate endpoint assignment for each denomination,” the Cash Product Office stated. “Coin order limits are unique by coin denomination and are based on available inventory. At this time, order limits are applied to dimes and quarters only. While no order limits are placed on pennies and nickels, we are paying close attention to our inventories and to order and deposit activity for these denominations.”

On April 28, the Federal Reserve sent a detailed notice to all depository institution customers explaining allocation amounts and how to determine their respective ordering limits.

The U.S. Mint has not disclosed whether it is considering requiring the San Francisco and West Point Mints to begin producing more coinage for circulation.

The San Francisco Mint has been striking circulation-quality quarter dollars for numismatic sales above face value, but not for release into commerce.

The West Point Mint produced a combined 10 million of the five America the Beautiful quarter dollars of 2019 for circulation release, to stimulate the collecting community and raise interest in U.S. coins, but those coins were expected to be pulled from circulation as collectibles. West Point Mint output in 2020 included another 10 million of that year’s five-quarter dollars, for the same purpose.

Thus far, the U.S. Mint has chosen not to resume circulating quarter dollar production at West Point.

Since the first signs of the pandemic-induced quarter shortage last year, the Coin Laundry Association has addressed the issue by educating laundromat operators as to the status of this disruption in the coin supply, including conducting its own store-owner survey to elicit feedback from the field.

In addition, CLA President and CEO Brian Wallace has been in direct and regular contact with the U.S. Coin Task Force, which was established by the Federal Reserve and the U.S. Mint to help reduce the consequences and duration of COVID-19-related disruptions to normal coin circulation.

“We’re advocating on the industry’s behalf and providing feedback to the task force on the impact the shortage has had on the laundromat business,” Wallace noted.

Moreover, the CLA has been instrumental in helping to educate the general public with regard to this situation and its impact on laundromats across the U.S.

Half of States Opt Out of Supplemental Federal Unemployment Insurance

As of this writing, half of the states’ governors had set end dates to their states’ participation in the federal supplemental unemployment benefits program, which was established under the American Rescue Plan.

On May 4, Montana became the first state to opt out of the federal program designed to give workers displaced by the economic shutdown caused by the COVID-19 pandemic an additional $300 per week of unemployment insurance through Labor Day.

In addition, some governors have instituted alternative ways to encourage unemployment insurance recipients to return to the workplace. For example, Arizona, Montana, New Hampshire and Oklahoma are each offering a one-time return-to-work bonus, ranging from $500 to $2,000 for workers who are hired either part-time or full-time. These one-time bonuses would be to replace the supplemental insurance provided under the federal program.

SBA Reconvenes Council on Underserved Communities

The U.S. Small Business Administration recently announced that it is reconvening the Council on Underserved Communities, under the authority of the Federal Advisory Committee Act.  

The restoration of the Council will help support the SBA’s prioritization of equity across its programs and initiatives. The Council will consist of 20 diverse stakeholders from every region of the country tasked with advising the SBA on strengthening and improving its strategies to help underserved communities.  

The CUC was established to focus on communities and populations that have traditionally faced barriers in accessing credit, capital and other resources necessary to start and grow businesses. Its mission is to collectively provide the SBA with input, advice and recommendations on strategies to improve and strengthen equity among women-, veteran- and minority-owned businesses, as well as businesses in low- to moderate-income communities and rural areas.

 “I applaud [SBA] Administrator [Isabel] Guzman for reconvening the Council on Underserved Communities to advise SBA on policies that will better meet the needs of underserved entrepreneurs,” said Senator Ben Cardin, chairman of the U.S. Senate Committee on Small Business and Entrepreneurship. “The months and years ahead are an opportunity to reshape our nation’s economy and make it fairer and more equitable. The SBA must play a key role by ensuring that minorities, women, veterans, people with disabilities and entrepreneurs in rural communities have access to the tools they need to start and grow successful businesses.”    

State Revenue Data: Some Good News

At the onset of the COVID-19 pandemic, predictions for state budgets were dire. In fact, the Center on Budget and Policy Priorities forecast that state revenues would drop $370 billion, or approximately 41 percent, during Fiscal Year 2021. And that was just one of many examples projecting state revenue catastrophe.  

However, although full revenue data for all 50 states for FY 2021 won’t be available until September, from the information that is available, it’s clear that – contrary to initial projections – the states collectively are doing quite well. According to government relations firm MultiState Associates, nearly every state reporting monthly revenue since April has exceeded projections by unprecedented percentages – and that’s before factoring in hundreds of billions of dollars in state and local aid.  

Using Census Bureau state sales tax data, let’s examine the first nine months of FY 2020 (July 1, 2019 through March 31, 2020), which was before the pandemic had any meaningful impact on state revenues), and the first nine months of FY 2021 (July 1, 2020 through March 31, 2021).

When comparing the first three quarters in FY 2020 and FY 2021, sales tax revenue increased, on average, by 3.17 percent. Only 10 states and Washington, D.C. experienced a decrease in sales tax revenue. What’s more, of those, only D.C. and Hawaii experienced declines of greater than 5.7 percent.  

By contrast, six states experienced double-digit increases in sales tax revenue, including Mississippi (12.4 percent), Alabama (12.6 percent), Utah (13.2 percent), Vermont (13.3 percent), Idaho (14.7 percent) and Michigan (16.7 percent). Of the 35 states that experienced positive sales tax revenue growth, the average increase was 6.91 percent.  

The overarching message is that states are experiencing record revenue collections and – coupled with billions of dollars of upcoming federal aid – are well-positioned for the upcoming budget cycle.

SBA Closes Off Loan Program

In June, the U.S. Small Business Administration announced the closure of the Paycheck Protection Program to new loan guaranty applications.

Since last year, the PPP has provided nearly $800 billion in economic relief to more than 8.5 million small businesses and nonprofits. In 2021, the SBA prioritized underserved businesses, particularly the smallest businesses and those owned by women and people of color – 96 percent of PPP loans went to small businesses with fewer than 20 employees.

“The Paycheck Protection Program provided more than 8.5 million small businesses and nonprofits the lifeline they needed to survive during a once-in-generation economic crisis,” said SBA Administrator Isabel Guzman “I’ve heard story after story from small-business owners across the country about how PPP funds helped them keep the lights on, pay their employees – and gave them hope.”   Thirty-two percent of PPP loans went to low- to moderate-income communities.

In addition, community financial institutions played a crucial role in the 2021 round of PPP, lending to underserved communities, providing 1.5 million loans totaling $30 billion. In 2021, PPP loans averaged $42,000, which is another indication that the loans truly went to the smallest of small businesses.