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The number of confirmed coronavirus cases around the world surged past 1.2 million but markets rose early Monday following fresh signals that lockdowns in the U.S. and Europe were helping slow the pandemic. Jeff Sparshott here with the latest on economic fallout from the virus and efforts to contain it.
At least one-quarter of the U.S. economy has suddenly gone idle. An analysis conducted for The Wall Street Journal by Moody’s Analytics offers one of the most comprehensive looks yet at how much of the world’s largest economy has shut down in the past three weeks. Forty-one states have ordered at least some businesses to close to reduce the spread of the coronavirus, according to Moody’s. While 8 in 10 U.S. counties are under lockdown orders, they represent nearly 96% of national output, Josh Mitchell reports.
The upshot: U.S. daily output has fallen roughly 29%, compared with the first week of March, just before the spate of closures. The analysis almost certainly underestimates the total hit because it looks only at the lost output caused by the abrupt closure of businesses to date. It doesn’t consider how much output will be further lost due to additional demand-side drops from higher unemployment and the loss of household wealth on consumer and business spending.
WHAT TO WATCH TODAY
The Bank of Canada releases its business outlook survey at 10:30 a.m. ET.
Japan’s household spending data for February is out at 7:30 p.m. ET.
Note: This is a partial listing of economic events and subject to change.
Texas had one of the best economic records of any U.S. state after the 2008 financial crisis. In this crisis, it faces the prospect of a deep and prolonged downturn. The Lone Star State is exposed to many of the pandemic and shutdown’s economic ill consequences. Three cities—Austin, Houston and Dallas, home to an abundance of service-sector jobs—are especially at risk. A downturn in the oil industry and other businesses big in Texas, including airlines and ports, will likely amplify the pain. Industry analysts expect the oil downturn to outlast the current viral outbreak, Collin Eaton and Jon Hilsenrath report.
U.S. employers slashed 701,000 U.S. jobs last month. About two-thirds of the drop occurred in restaurants, bars and other segments of the leisure and hospitality industry. Those who can work remotely—typically in more high-skilled, higher-income jobs such as information and financial activities—saw little change in payrolls last month. The labor market’s digital divide cuts along both income and educational lines. The unemployment rate for workers with a bachelor’s degree and higher degrees rose to 2.5% in March from 1.9% in February. For workers with less than a high school diploma it rose for the third month in a row, jumping to 6.8% from 5.7%, Harriet Torry reports.
China is edging toward what could be its first credit downturn in decades. In recent weeks, executives at some Chinese banks and online lending platforms said more consumers have fallen behind on their credit-card and loan payments, which could snowball into higher defaults in the coming months. Some lenders have reduced loan originations as a result, despite regulators’ calls to keep credit flowing across the economy. The development could foreshadow what is in store for U.S. lenders in the coming months, Stella Yifan Xie and Xie Yu report.
- Travel is resuming—cautiously—in China. After some two months hunkered down at home, many Chinese people headed out this weekend—the annual tomb-sweeping holiday—boosting beleaguered hotels and travel companies, Trefor Moss reports.
- And BMW sees signs of a recovery in China. The German luxury car maker said sales of new vehicles plummeted during the first three months of the year, but noted that the trend began to reverse in March in China and South Korea.
The coronavirus pandemic is coming for economies across the developing world. Economic output in emerging markets is forecast to fall 1.5% this year, the first decline since reliable records began in 1951, according to research firm Capital Economics. Even if some developing nations manage to avoid catastrophic coronavirus infection rates, the lockdowns and expected recessions in industrialized countries will take a heavy economic toll. They likely will dent demand for everything from beach holidays in Thailand to clothing stitched together in Bangladesh to auto parts and avocados from Mexico, David Luhnow and Santiago Pérez report.
The European Union got off to a bad start as the coronavirus spread last month. Belatedly, EU officials have shifted into overdrive. Over the past two weeks they have helped reopen borders, ship equipment to hospitals, send stranded citizens home and keep goods moving. The European Commission, the EU’s executive arm, suspended state-aid rules and waved through hundreds of billions of euros in government support to business. The plans EU officials unveiled on Thursday for a new €100 billion ($110 billion) job-support program for members hardest hit by the coronavirus is the kind of tangible aid it needs to underpin crumbling economies—and to show its 446 million citizens Brussels can deliver in a crisis, Daniel Michaels and Laurence Norman report.
The Los Angeles smog has lifted, water in Venice’s canals has cleared and China’s factory emissions have fallen so dramatically the change can be seen from space. International travel restrictions and city lockdowns have led to swift and sometimes surprising environmental benefits. Many climate scientists now expect greenhouse gas emissions to fall for the first time since the financial crisis more than a decade ago. What happened then? Emissions rebounded sharply as governments rolled out economic stimulus packages that often focused on infrastructure and heavy industry. Within two years, global emissions had surpassed their 2008 peak, Stuart Condie reports.
WHAT ELSE WE’RE READING
Historically, plagues make societies more equal. This pandemic may be an exception. “The coronavirus’s RNA was decoded quickly—we will not have to wait centuries for a vaccine or a treatment. Yet the odds are that once we know how to control it, not everyone will benefit equally. I am perhaps too cynical, but I suspect that once the pandemic is over, U.S. drugmakers and hospitals will be more powerful and wealthier than ever,” Nobel Prize-winning economist Angus Deaton writes in the Financial Times.
The next round of stimulus should send money to companies so they can keep paying employees, rather than sending laid-off workers to collect enhanced unemployment benefits. “Companies fire amid the virus. They hire everyone back, once the virus is gone. Not in the real world. Not by a long shot. If we allow the jobless rate to soar to 20% in 6 months, the notion that it will retrace back to 3.5%, amid safe coronavirus news is comical. Hysteresis is a well known economic issue in labor markets,” Bob Barbera, Floyd Norris and Jonathan Wright write at the Johns Hopkins Center for Financial Economics.
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