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COVID-19 MonitorLast Updated:October 15, 2020
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What bank’s booming profits say about the economy (Axios) Published on: October 14, 2020 | Category: Economic Impact
- Some of America’s biggest banks are making more money now than they were before the pandemic hit.
- These banks are the biggest lenders in the country and have insight into the financial health of millions of Americans and businesses. So analysts often parse these quarterly results for indicators of how the economy is doing.
- Banks were buoyed by strength in the Wall Street-facing divisions: including the parts of the company that, for instance, are focused on trading or help take companies public.
IMF urges governments to spend their way out of pandemic (FT) Published on: October 14, 2020 | Category: Economic Impact, Global Response
- Most advanced economies need not cut public spending to restore government finances after the coronavirus pandemic, the IMF said on Wednesday, in a reversal of the advice given following the last financial crisis.
- The fund said countries heavily reliant on tourism and commodities were likely to be left in “a particularly difficult spot” as it predicted the biggest contraction in the global economy since the Great Depression of the 1930s.
- However, the IMF said interest rates in most advanced economies were likely to remain at record lows, meaning governments could borrow to largely offset the weaker growth and lower tax revenues that would result from the pandemic.
Most Boomer Investors Are Confident About Their Retirement Despite Pandemic and Market Uncertainties (Business Wire Consumer News) Published on: October 14, 2020 | Category: Economic Impact
- According to the Charles Schwab 2020 Modern Retirement Survey, more than 80 per cent of both those who have retired and those who are soon-to-retire are satisfied or confident their lifestyle will be everything that they envision.
- Among those surveyed, 84 per cent anticipate their quality of life in retirement will be better than that of their parents and 80 per cent believe their quality of life in retirement will be better than that of their children.
- Nineteen per cent of survey respondents say they or their spouse were financially impacted by COVID-19 through a salary cut or reduced hours, being laid off or furloughed, or having to retire earlier than planned.
Disney makes a big digital move. But no one can agree on how much will change. (Washington Post) Published on: October 13, 2020 | Category: Economic Impact, Global Response
- With uncertainty over the coronavirus continuing and consumers’ transition to digital accelerating, Disney on Monday reorganized its corporate divisions to bolster the power of streaming service Disney Plus.
- “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it,” Disney chief executive Bob Chapek said in a company statement announcing the change.
- At heart is a question of how much a legacy company like Disney can — or even should want to — fully pivot away from its profitable legacy businesses. Traditional television and studio, after all, generated $10.2 billion in profit in fiscal 2019. Disney Plus, the company has said, won’t be profitable at all until 2024.
Theater Chain AMC Says It Could Run Out of Cash by Year-End (WSJ) Published on: October 13, 2020 | Category: Economic Impact
- Attendance is down about 85% on a same-theater basis from last year since reopening began, company says.
- In a recent regulatory filing, AMC disclosed that it burned through more than $230.4 million of its cash in July and August.
- AMC entered the pandemic with $4.9 billion in debt the company had amassed after a string of acquisitions that made it the world’s largest theater chain.
Pandemic will cause ‘lasting damage’ to living standards, IMF warns (FT) Published on: October 13, 2020 | Category: Economic Impact
- The coronavirus crisis will wreak “lasting damage” on people’s living standards across the world and taxes on the rich and on companies may have to rise to address this economic harm, the IMF has warned.
- This damage will persist because the adjustment from struggling sectors such as travel to expanding ones such as digital technology will inevitably be slow and painful for many people, the IMF said in its twice-yearly World Economic Outlook, published on Tuesday.
- The gloomy prognosis came even after the IMF revised its growth forecasts for this year upwards, reflecting the fact that the second quarter’s recession proved shallower than feared, and countries experienced faster recoveries as they relaxed lockdowns.
- The IMF expects the global economy to experience a 4.4 per cent contraction in 2020, 0.8 percentage points smaller than its June estimate.
Act now to prevent a tragic economic ending (FT) Published on: October 12, 2020 | Category: Economic Impact
- Gains from the rebound have clearly slowed. After adding 4.8m jobs in June, American employers brought fewer workers back in every subsequent month.
- The International Labour Organization estimates the world will lose working hours equivalent to 245m full-time jobs in the final quarter of this year.
- Nearly 80 per cent of US job losses were classified as temporary in April, and 8.5 per cent as permanent. By September, this had changed to 35 per cent and 30 per cent respectively, with the rest being those whose temporary jobs ended.
The Next Big Shift in Economics Takes Shape Under Covid Shadow (Bloomberg) Published on: October 11, 2020 | Category: Economic Impact
- Fiscal policy, which fell out of fashion as an engine of economic growth during the inflationary 1970s, has been front-and-center in the fight against Covid-19.
- Governments have subsidized wages, mailed checks to households and guaranteed loans for business.
- Fiscal stimulus packs a bigger punch than the monetary kind because it can channel cash directly to households or businesses, and it’s better suited for delivering targeted aid to those who need it most in a crisis, like the unemployed.
October 2020 update to TIGER: COVID-19 remains an impediment to the global recovery (Brookings) Published on: October 11, 2020 | Category: Economic Impact
- The world economy is experiencing a tepid, uneven, and fragile recovery from the depths of the COVID-19 recession.
- China’s economy is back on track and the United States appears to have turned the corner, while many other economies plumb new depths.
- World merchandise trade has rebounded strongly, consistent with indications of a revival in household demand for goods in many economies even as the demand for services remains hobbled by restrictions and consumer concerns.
East-west divide: winners and losers in the Covid economy (FT) Published on: October 11, 2020 | Category: Economic Impact, Global Response
- The difference between Europe and China is palpable, said Remigio Brunelli, managing director in China for the Italian sportswear group Tecnica. “Uncertainty is still running high in the old continent [Europe], and we expect it to last for another six or 12 months at least. In Asia, on the other hand, and particularly in China, there is confidence.”
- His comments show how different approaches to the pandemic are now leading to sharp divergences in outcomes, with China, Taiwan and other Asia-Pacific economies on course to grow in 2020, even as countries where coronavirus has become endemic suffer severe contractions.
- Intense global demand for medical goods, such as masks and gowns, and working-from-home necessities, such as personal computers, has rippled through Asian supply chains.
Private equity-owned companies in ‘intensive care’ due to pandemic (FT) Published on: October 10, 2020 | Category: Economic Impact
- One in 10 companies owned by private equity managers is in “intensive care” as a result of the coronavirus pandemic, sparking concerns that alternative funds could suffer performance hits and reputational damage.
- Private equity managers reported that half of the companies they owned were moderately or very affected by the economic disruption caused by the global health crisis, according to an analysis by three finance professors.
- The gross internal rate of return (excluding fees) is expected to be 4.4 percentage points lower on average at 22.6 per cent in 2020, compared with a similar survey conducted in 2013.
White House Draws Up New $1.8 Trillion Virus-Relief Proposal (WSJ) Published on: October 9, 2020 | Category: Economic Impact, Global Response
- A person familiar with the proposal said it included $1.88 trillion in spending, with about $400 billion of the funds reallocated from unspent money from earlier relief legislation, bringing the total cost to about $1.5 trillion.
- Substantial differences have plagued efforts to reach a bipartisan compromise for months. Chief among them is federal aid to state and local governments, which have seen their budgets hammered during the pandemic.
- Very broadly, the two parties largely agree that the next bill should include aid for unemployed workers, small businesses, schools and public-health efforts, among other measures.
The right kind of recovery (The Economist) Published on: October 9, 2020 | Category: Economic Impact, Global Response
- Every few decades in the 20th century the relationship between the state and the individual was reforged in the fire of crisis.
- Young people are frustrated by declining social mobility and high asset prices, and fear the effects of climate change.
- The pandemic has created conditions ripe for misguided interventionism that tries to prevent change rather than adapt to it.
The pandemic has caused the world’s economies to diverge (The Economist) Published on: October 8, 2020 | Category: Economic Impact, Global Response
- As a recovery takes place, huge gaps between the performance of countries are opening up—which could yet recast the world’s economic order.
- The pandemic will leave economies less globalised, more digitised and less equal. As they cut risks in their supply chains and harness automation, manufacturers will bring production closer to home.
- As more activity moves online, business will become more dominated by firms with the most advanced intellectual property and the biggest repositories of data; this year’s boom in technology stocks gives a sense of what is coming, as does the digital surge in the banking industry.
Pandemic Hastens Shift to Asset-Light Economy (WSJ) Published on: October 7, 2020 | Category: Economic Impact, Global Response
- Value is increasingly derived from digital platforms, software and other intangible investments rather than physical assets and traditional relationships.
- “The emergence and growth of ‘virtual’ businesses provided conspicuous evidence that, in the digital age, value accrues to ideas, R&D, brands, content, data and human capital—i.e. intangible assets—rather than industrial machinery, factories or other physical assets,” writes Jason Thomas, chief economist at private-equity manager Carlyle Group.
- The pandemic has taught businesses to operate without offices and to engage customers virtually instead of in person, so they will likely further de-emphasize physical assets in favor of research, customer acquisition and data management, Mr. Thomas says.
Trump Halts Covid-19 Relief Aid Talks Until After Election (WSJ) Published on: October 6, 2020 | Category: Economic Impact
- President Trump pulled the plug on bipartisan coronavirus relief talks, putting off efforts to get more aid to struggling households and businesses at least until after Election Day, an abrupt move that jolted Wall Street and surprised lawmakers of both parties.
- The call to end talks came hours after Federal Reserve Chairman Jerome Powell warned of dire economic consequences if Congress and the White House don’t provide additional support to households and businesses disrupted by the pandemic.
- Recent economic data have shown the pace of the recovery slowing without additional fiscal support.
The emerging resilients: Achieving ‘escape velocity’ (McKinsey) Published on: October 6, 2020 | Category: Economic Impact, Global Response
- The experience of the fast movers out of the last recession teaches leaders emerging from this one to take thoughtful actions to balance growth, margins, and optionality.
- Heavily affected sectors have experienced revenue declines of between 25 percent and 45 percent. These include transportation and tourism, automotive, and oil and gas—sectors containing some of the largest employers in Europe and the United States.
- Leaders can thus assume dynamic business conditions through 2021 as they begin this year’s planning cycle. Wise planners will prepare for a number of outcomes, including a further drift in present conditions or a worsening downturn.
U.S. exporters struggle to gain ground as global recession remains severe (Washington Post) Published on: October 4, 2020 | Category: Economic Impact, Global Response
- If the U.S. economy is going to recover from the coronavirus recession, it will have to do so without much help from overseas.
- Americans have resumed buying imported goods with nearly as much enthusiasm as before the pandemic. But people in other countries are not returning the favor.
- The resulting gap between what the U.S. purchases from other countries and what it sells them — the merchandise trade deficit — hit a monthly record in August.
Job Gains Are Waning, a Blow to Economic Recovery (NY Times) Published on: October 2, 2020 | Category: Economic Impact
- The economy has nearly 11 million fewer jobs than it did before the pandemic, a bigger loss than the 8.7 million at the depth of the recession a decade ago.
- The September slowdown was partly a result of public-sector job losses, particularly in school districts, where payrolls fell by more than 200,000.
Long-Term Unemployment Poses Rising Risk to the Economy (WSJ) Published on: October 2, 2020 | Category: Economic Impact
- In April, the most severe month for job loss in the current downturn, 88% of those who recently lost jobs reported their layoff as temporary, meaning they expected to return to the same role within six months, according to the Labor Department.
- In September, the share of such optimists fell to 51%, Friday’s jobs report showed.
- Meanwhile, those reporting themselves as permanent job losers rose to 3.8 million in September, from 2 million in April.
Oil dragged under $40 by drab demand (FT) Published on: October 2, 2020 | Category: Economic Impact
- Oil prices slipped below $40 a barrel to hit the lowest level since June as traders bet the recovery in a market hammered by the coronavirus pandemic has run out of steam.
- Opec is due to increase production slowly in the coming months under an agreed timeline to unwind its supply deal, but it may need to delay those plans to support crude prices that tumbled below $20 a barrel in April.
How Covid Broke Times Square, the Heart of New York’s Economy (WSJ) Published on: October 2, 2020 | Category: Economic Impact
- New York City’s real-estate market is suffering its most severe crisis in decades.
- At the city’s hotels, as many as 25,000 rooms, or 20% of the total, might never reopen, analysts and hotel owners have said, as business travel and tourism remain subdued.
- Manhattan’s office market is trying to fend off a potential disaster after leasing fell to a 25-year low in the second quarter, as many companies extend work-from-home policies or explore satellite offices outside the city.
Airbnb takes flight: The short-term rental company’s surprising (relative) success during the COVID-19 pandemic (Cardify) Published on: October 1, 2020 | Category: Economic Impact
- Airbnb is outperforming the rest of the lodging industry in the face of the pandemic, which may bode well for the company’s imminent IPO.
- Current Airbnb spending is comparable to the summer of 2019, whereas the lodging industry is down approximately 50% compared to prior year.
- Given these numbers, it is not surprising that Airbnb’s share of the lodging industry has grown significantly since the beginning of the year from 29% to over 57%.
US personal income falls after lapse of Covid benefits (FT) Published on: October 1, 2020 | Category: Economic Impact
- US personal income dropped by 2.7 per cent in August after the lapse of emergency unemployment benefits for millions of Americans, raising fears that lower consumption could dampen the economic recovery.
- According to data from the commerce department’s Bureau of Economic Analysis, the drop in income was worth $543.5bn and larger than economists were predicting.
- It was accompanied by a slowdown in consumption growth to 1 per cent in August, from 1.5 per cent in July, and a drop in the savings rate to 14.1 per cent in August from 17.7 as Americans were increasingly forced to dip into their savings in order to keep spending.
The U.S. Economy Was Laden With Debt Before Covid. That’s Bad News for a Recovery. (WSJ) Published on: October 1, 2020 | Category: Economic Impact
- The coronavirus brought an end to the longest economic expansion in U.S. history.
- Economies carrying a lot of debt generally have weaker recoveries. Businesses and consumers focus on cutting their liabilities during downturns rather than spending cash—and spending is what an economy needs to rebound.
- The most important piece of a recovery is consumer spending, which accounts for nearly 70% of the U.S. economy. High household debt levels tend to lengthen recessions and amplify their severity, according to a study of advanced economies over 30 years by researchers at the International Monetary Fund.
Why, despite the coronavirus pandemic, house prices continue to rise (The Economist) Published on: September 30, 2020 | Category: Economic Impact
- During the global recession a decade ago, real house prices fell by an average of 10%, wiping trillions of dollars off the world’s largest asset class.
- In August house prices in Germany were 11% higher than the year before; rapid growth in South Korea and parts of China has prompted the authorities to tighten rules for buyers.
- Central bankers around the world have cut policy rates by two percentage points on average this year, reducing the cost of mortgage borrowing. Americans can take out a 30-year fixed-rate mortgage at an annual interest rate of just 2.9%, down from 3.7% at the beginning of the year.
Disney to Cut 28,000 Resort Jobs in U.S. (NY Times) Published on: September 29, 2020 | Category: Economic Impact, Global Response
- For six months, Disney has kept tens of thousands of theme park workers on furlough with full health-care benefits in hopes that a light at the end of the pandemic tunnel would appear.
- The company said it would eliminate 28,000 theme park jobs in the United States, or about 25 percent of its domestic resort work force.
- About 67 percent of the layoffs will involve part-time jobs that pay by the hour.
U.S. Retail Bankruptcies, Store Closures Hit Record in First Half (WSJ) Published on: September 29, 2020 | Category: Economic Impact
- Retail bankruptcies, liquidations and store closings in the U.S. reached records in the first half of 2020 as the Covid-19 pandemic accelerated industry changes, particularly the shift to online shopping, according to a report on the downturn’s severity.
- In the first six months, 18 retailers filed for chapter 11 protection, mostly concentrated in apparel and footwear, home furnishings, grocery and department stores, BDO said.
- “I don’t think it’s going to stop anytime soon,” said Andy Graiser, co-president of commercial real-estate advisory firm A&G Real Estate Partners, who advises Tailored Brands, Ascena, Neiman Marcus and Stein Mart, among others.
Outdoor dining has helped restaurants avoid disaster. But winter is coming. (Washington Post) Published on: September 28, 2020 | Category: Economic Impact
- Millions of jobs have been lost, and nearly 100,000 restaurants have closed permanently or indefinitely since the outbreak, according to a recent survey from the National Restaurant Association.
- Restaurateurs are expected to lose $240 million this year, and the worst may be yet to come as winter looms, threatening to slow down or shut down outdoor dining spaces that have given owners hope that they might survive this crisis until a vaccine is widely available.
- A recent Centers for Disease Control and Prevention study found that nearly 300 adults who tested positive for the virus were more than twice as likely to have dined at a restaurant in the two weeks before getting sick than people who tested negative.
Destruction of value in US real estate revealed (FT) Published on: September 27, 2020 | Category: Economic Impact
- Commercial properties in difficulty are being valued at less than 75% previous level, appraisal data show.
- Properties that have gotten into trouble are being written down by 27 per cent on average, data from Wells Fargo shows.
- Recent examples show hotels being especially hard hit, given the collapse in tourism and business travel. A Crowne Plaza hotel in Houston was valued at $25.9m this month, down 46 per cent from when it was bundled into a CMBS deal in 2014.
Costco Grows E-Commerce Sales by 91% (Born Digital) Published on: September 26, 2020 | Category: Economic Impact, Global Response
- Despite below-forecast earnings, Costco reported huge digital growth, with digital sales growing by 91% over the last quarter, and 102% last month alone.
- Online grocery sales grew by “several hundred percent” according to CFO Richard Galanti.
- In addition, Costco has benefitted from consumer spending habits that, during the pandemic, have shifted towards categories such as home improvement and grocery over travel and dining out.
- Shoppers, Galanti said, “seem to have redirected at least some of those dollars to categories like lawn and garden, furniture and mattresses, exercise equipment, bicycles, housewares, cookware … and the like.”
U.S. Durable-Goods Orders Rise for Fourth Straight Month (WSJ) Published on: September 25, 2020 | Category: Economic Impact
- Orders for long-lasting factory goods increased for the fourth consecutive month in August, a sign of the manufacturing industry’s continued recovery from coronavirus pandemic-related disruptions.
- Andrew Hunter, senior U.S. economist at Capital Economics, said the report showed that “business equipment investment staged a V-shaped rebound in the third quarter.”
- Weakness in motor-vehicle, commercial-aircraft and defense orders weighed on overall gains.
Covid-19 has reversed years of gains in the war on poverty (The Economist) Published on: September 25, 2020 | Category: Economic Impact
- Governments in rich countries have spent over 10% of gdp to ease the economic pain.
- The IMF and World Bank have raised lending, but only 31% more of the bank’s money has reached poor countries, says the Centre for Global Development, a think-tank, about half the increase in the global financial crisis, a much smaller shock.
- The best way to help the poor is to give them money directly. The simplicity of this policy makes it less vulnerable to corruption.
High Jobless Claims Suggest Slowing in Labor Market’s Recovery (WSJ) Published on: September 24, 2020 | Category: Economic Impact
- The number of applications for unemployment benefits has held steady in September at just under 900,000 a week, as employer uncertainty about the economic recovery six months into the coronavirus pandemic continued to restrain hiring gains.
- Some employers that held on to workers at the beginning of the economic crisis are now reducing their head counts because of persistently weak demand.
- Economists expect the initial hiring spurt from business reopenings to ease as state restrictions are lifted at a slower pace than in early summer.
Planes, hotels and automobiles: How Americans are traveling during the pandemic (The Points Guy) Published on: September 23, 2020 | Category: Economic Impact, Global Response
- Unsurprisingly, 40% of adults in the U.S. are comfortable taking a driving vacation and visiting a national park or a similar scenic area right now, according to a new poll.
- Only 19% of people surveyed, however, would feel comfortable on a plane.
- According to the results of an exclusive poll conducted by Ipsos on behalf of TPG, 31% of travelers said they’d be comfortable staying at a hotel right now — slightly more than the 22% of travelers who said they’d bed down at a vacation rental property (say, a home booked through Airbnb or VRBO).
Mnuchin, Powell Urge More Spending to Help Economy Recover From Pandemic (WSJ) Published on: September 22, 2020 | Category: Economic Impact, Global Response
- The two top U.S. economic officials told lawmakers that emergency loan programs to support the coronavirus-stricken economy were largely working as intended and that more government spending would be needed to sustain the recovery.
- Their answers suggested they believed those loan programs had done what they could to preserve favorable financial conditions for eligible borrowers and that what many would-be borrowers need now are grants, which would require new funding from Congress, as opposed to loans from the Fed.
- The Treasury secretary said Tuesday he didn’t see a need to use the remaining $259 billion and supported repurposing $200 billion of those funds for other spending programs.
Global stocks sink on fears of new Covid lockdowns (FT) Published on: September 21, 2020 | Category: Economic Impact
- Global stocks suffered a heavy hit on Monday, while government bonds rallied and the US dollar snapped a losing streak in a rush of nerves about the fate of the economic recovery and a potential new set of lockdowns to tackle the coronavirus pandemic.
- Renewed virus concerns dealt a blow to bank and travel shares across markets, pulling Bank of America down 4 per cent and United Airlines down 10 per cent at one point.
- Patrick Vallance, Britain’s chief scientific adviser, warned on Monday that there could be 50,000 new infections every day by mid-October if the virus continued spreading at its current rate. New infections in the UK were doubling every seven days, he said.
Coronavirus Pandemic Threatens to Widen Racial Homeownership Gap (WSJ) Published on: September 20, 2020 | Category: Economic Impact
- The housing market has led the recovery from the pandemic-induced economic downturn as Americans have rushed to buy homes amid a desire for more living space and record-low mortgage rates.
- But some analysts warn even as the housing boom bolsters the overall economy, it may widen the longstanding gap in homeownership between Black and white Americans.
- The potential challenges are on several fronts. Mortgage providers tightened lending standards as economic conditions worsened, which could particularly hurt Black Americans’ ability to finance home purchases.
From toilet paper hoarding to tap-and-go: What habits will we keep post-COVID? (The Age) Published on: September 20, 2020 | Category: Economic Impact, Global Response
- “[There] has been an increased use of online shopping as consumers changed their purchasing behaviour and merchants increased their online capabilities in response to the COVID-19 situation.”
- In fact, the RBA researchers reckon we could see a more permanent shift in spending patterns for some customers, and future surveys will likely show the online share of consumer payments remains higher.
- This has knock-on effects for inner-city retail strips and for the staff that work there. There could be a need for fewer customer service staff and more delivery drivers, packers and IT professionals.
Lessons for investors from six months of pandemic-hit markets (FT) Published on: September 19, 2020 | Category: Economic Impact, Global Response
- One clear takeaway: there is no point trying to fight central banks and their gushers of liquidity. Advocates of momentum trading, or simply buying assets that keep appreciating, have duly prospered.
- In contrast, the Covid-19 market has not been kind to investors who have shunned bonds with long maturities, or who have been drawn to some of the cheap valuations that abound in US and global equity markets — in areas such as financials, leisure, transport, energy and industrials.
- One bright spot is that consumers and companies continue to save cash as a buffer — money that at some point will be spent.
The boom in household waste and what our garbage tells us about the COVID economy (CBC) Published on: September 18, 2020 | Category: Canadian Business, Economic Impact
- According to RBC’s COVID Consumer Spending Tracker, Canadians are spending more on home improvements, electronics and groceries.
- Online marketplaces have emerged as a critical part of consumer habits in the COVID-19 economy, and early data from the City of Toronto suggests consumers are throwing more cardboard boxes into their blue bins as a result.
Movie theater popcorn sales have tanked, prompting American popcorn farmers to find new markets (Washington Post) Published on: September 18, 2020 | Category: Economic Impact
- Microwave popcorn has boomed in the pandemic. Movie theater popcorn has tanked.
- But the farmers who service movie theaters and other group events are different, with different customer bases and sales strategies. They do not have machinery for microwave retail packaging.
In pandemic investing, Robinhood is the real winner (Cardify) Published on: September 17, 2020 | Category: Economic Impact
- Compared to 2019, people invested more in 2020 based on net investment levels, with major spikes during the height of the pandemic (March to May 2020), suggesting people “bought the dip” when markets took a hit.
- During the pandemic, Robinhood was the clear winner amongst investment platforms, surging from one percent market share to 43% based on number of users. It also has the youngest user base, with 81% of its users under the age of 35.
- All platforms saw net investment spikes in the early days of the pandemic, but it was not enough to maintain their market share – eventually, every platform lost some market share to Robinhood.
The virus and America’s resort towns (The Economist) Published on: September 17, 2020 | Category: Economic Impact
- Nationwide, the effect of covid-19 on economic inequality will remain unclear for some time.
- The Centres for Disease Control and Prevention estimates that African-Americans, Hispanics and Native Americans were three times likelier to be infected and five times likelier to be hospitalized than whites.
- Office workers with university degrees were largely spared the unemployment that low-paid service-sector workers endured.
America’s Offices Sit Half-Empty Six Months Into the Covid-19 Pandemic (WSJ) Published on: September 17, 2020 | Category: Economic Impact, Global Response
- Data from Brivo, a company that provides access-control systems for workplaces, shows that “unlocks” at offices—when someone uses their credentials to enter an office—in late August were down 51% from the end of February.
- In Miami, which is dependent on tourism, employee visits to retail stores were at 92% of their pre-pandemic occupancy during the last week in August; in San Francisco, they were at 43%.
- While more offices are reopening this fall, many businesses expect workers will work remotely at least part-time for the foreseeable future, suggesting that it could be years before offices return to pre-Covid-19 occupancy levels.
Five COVID-19 aftershocks reshaping mobility’s future (McKinsey) Published on: September 17, 2020 | Category: Economic Impact, Global Response
- Against a backdrop of mass layoffs, disrupted travel, and public-transit ridership down 70 to 90 per cent in the world’s major cities, shared mobility—and mobility in general—is struggling.
- Developments in personal mobility have coalesced around four disruptions known as ACES: autonomous driving, connected cars, electrified vehicles, and shared mobility.
- Long term, COVID-19 could have a sustained influence on mobility, driving changes in the macroeconomic environment, regulatory trends, technology, and consumer behavior.
Fed Sets Higher Hurdles for Rate Increase (WSJ) Published on: September 16, 2020 | Category: Economic Impact
- Central bank signals rates near zero at least through 2023 to help support recovery.
- The Fed’s rate-setting committee also revised its postmeeting statement to specify it would maintain rates near zero until it sees evidence of a tight labor market and inflation reaches 2% “and is on track to moderately exceed 2% for some time.”
- Separately, officials revised their June economic forecasts to reflect expectations of a less severe contraction this year and a lower unemployment rate.
Americans Keep Spending, but Growth of Retail Sales Slows (NY Times) Published on: September 16, 2020 | Category: Economic Impact
- Retail sales rose 0.6 percent last month, the Commerce Department reported on Wednesday, and the 1.2 percent increase in July was revised down to a 0.9 percent gain.
- Still, Americans continued to spend on home computers, new cars and online groceries, and some retailers serving those pandemic-related needs reported record sales.
- Yet, chains like Best Buy, Dick’s Sporting Goods and West Elm have reported revenue jumps this summer, with many Americans spending more on goods that they could use at home or while socially distancing outdoors.
CERB is ending soon. And almost 3 million people will be worse off when it does, report finds (Toronto Star) Published on: September 15, 2020 | Category: Canadian Business, Economic Impact
- David Macdonald, a senior economist at the CCPA, said in the report that more than four million Canadians will be affected by the switch, which happens Sept. 27.
- “That is an important reason why consumer spending didn’t fall rapidly during a big recession,” he said.
- Macdonald said the Canada Recovery Caregiving Benefit, which provides $500 per week before taxes for Canadians staying home from work to care for children or other dependants, will likely be available to 184,000 former CERB recipients at the outset.
Economists warn of US ‘wasteland’ without stimulus deal (FT) Published on: September 15, 2020 | Category: Economic Impact
- The diminished chances of additional fiscal support have caused many economists to fret that the US rebound will lose steam in later 2020 or early 2021, creating a drag on the global economy as it tries to recover from the worst contraction since the second world war.
- “The risk of fiscal fatigue where policymakers stop providing stimulus or start trying to claw back too early is a meaningful global risk,” said Nathan Sheets, chief economist for PGIM Fixed Income.
- Economists say one of the biggest dangers to the recovery is that consumption could falter after being supported so heavily by direct payments to households worth up to $1,200 per adult and emergency federal unemployment benefits of $600 per week that were included in the $3tn of stimulus approved at the start of the pandemic.
Amazon to hire 100,000 workers as e-commerce swells amid the pandemic (Washington Post) Published on: September 14, 2020 | Category: Economic Impact, Global Response
- It’s the fourth large hiring drive announced by the Seattle-based retail giant this year, adding up to 308,000 jobs.
- Competition among major online retailers has intensified as many Americans adapt to a prolonged period of working from home, and consumers look to online shopping to replace visits to the store.
- As consumers rushed to stock up on cleaning supplies, home office equipment and recreational goods, Amazon was rocked by shipping delays and a depleted inventory.
- As a result, Amazon’s share of the U.S. online retail market fell from 42.1 percent in January to 38.5 percent in June, according to data from Rakuten Intelligence.
Americans who can afford to hoard cash are waiting for a vaccine to spend it (Washington Post) Published on: September 14, 2020 | Category: Economic Impact, Global Response
- Gallup and Franklin Templeton released a survey that found 54 percent of Americans are saving at least a little money, and until there’s a vaccine, they largely plan to keep stashing it away.
- “A lot of people are just waiting on the vaccine to be developed to continue their normal spending,” Grant Buckles, a senior research consultant who worked on the survey, said in an interview.
- Only 24 percent have increased their contributions to retirement accounts, 17 percent have invested in the stock or bond markets, 5 percent have put it into real estate and just 3 percent have invested in other assets, such as cryptocurrency.
10 huge companies, from Amazon to UPS to Home Depot, that are each looking to hire at least 20,000 people (Business Insider) Published on: September 13, 2020 | Category: Economic Impact
- With more than 13 million out of work and 884,000 people filing for unemployment just last week, Americans are on the job hunt, according to the Department of Labor.
- Delivery businesses, grocery stores, and budget options are reigning supreme right now, and that means that they need to beef up their workforces to keep up with demand.
- Take a look at following 10 companies, all of which are looking to hire at least 20,000 employees right now.
EU vows extended stimulus as crisis uncertainty looms (FT) Published on: September 12, 2020 | Category: Economic Impact
- EU finance ministers meeting in Berlin vowed not to cut short the recovery with a premature fiscal clampdown, as they decided to postpone any debate over when to reimpose the bloc’s budget restrictions or how to reform them.
- Speaking after informal eurogroup meetings on Friday, Mr Gentiloni warned that the risks of cutting back stimulus too soon outweighed those of leaving it in place too long, given the enormous uncertainties lying ahead.
- Early in the crisis the European Commission took the unusual step of suspending the stability and growth pact, rules designed to ensure EU countries pursue sound public finances, as it sought to put in place maximum support for economic activity.
Amazon accused of price-gouging for essentials during COVID-19 (NY Post) Published on: September 11, 2020 | Category: Economic Impact
- A watchdog group accused Amazon of jacking up prices for essential goods it sold directly to consumers during the coronavirus pandemic, even though the company has blamed spikes on third-party merchants.
- The e-commerce giant hiked prices for 10 basic products — from corn starch and flour to hand sanitizer and face masks — as much as 1,010 percent from February to mid-August, according to a report from Public Citizen.
- All of the products reviewed were listed as “sold by Amazon” and not sold by third-party vendors, the left-leaning consumer-rights group said in its report.
Who Gets Hurt When the World Stops Using Cash (NY Times) Published on: September 11, 2020 | Category: Economic Impact, Global Response
- Some people don’t have credit or debit cards, so a growing number of state and local governments are requiring businesses to accept cash.
- Businesses that refuse cash put at a disadvantage people who lack traditional bank accounts or can’t qualify for credit cards, consumer advocates say.
- About one-fourth of American adults were unbanked or underbanked in 2019 — meaning they lacked a bank account or had one but also used alternatives like check-cashing services, the Federal Reserve found.
Tory urges province, feds to do more to protect city’s downtown core from ‘ravaging economic impacts’ of COVID-19 (CP24) Published on: September 10, 2020 | Category: Canadian Business, Economic Impact
- In a letter to Ontario Finance Minister Rod Phillips and federal Finance Minister Chrystia Freeland, Tory said there is “increasing concern” among business leaders and civic associations about the future of downtown cores in major cities in Canada and around the world.
- The mayor noted that approximately 90 per cent of the city’s 400,000 office workers are not coming into the downtown core every day and with the exception of a small number of professional hockey teams occupying hotels as part of the NHL bubble, most of the 17,000 hotel rooms in Toronto remain empty.
- Post-secondary campuses in the city’s core are also down about 100,000 students and professors this fall, Tory said, and tens of thousands of hospitality workers have been laid off.
London Offices Aren’t Refilling Fast Enough for Shops Relying on Them (NY Times) Published on: September 10, 2020 | Category: Economic Impact
- The British government and business lobby want workers to return to support surrounding businesses, but some city offices are only 15 percent full.
- In a country that relies on consumer spending to fuel economic growth, the government and business lobby are urging people to return to their offices, pressuring civil servants to set an example, and in turn spend more money on food and travel and in city center shops.
- But the companies charged with responding to this call have discovered that they can function productively with their staff working at home, and many aren’t in the mood to ask employees to risk getting on crowded trains or buses to return to the office.
How Covid-19 sparked a dividend drought for investors (FT) Published on: September 9, 2020 | Category: Economic Impact
- Companies across the world have been forced to cut or suspend their dividend payments to conserve cash in the wake of the Covid-19 crisis.
- Globally, dividends — a vital source of income for pension funds, charities and foundations — fell by over a fifth to $382.2bn in the second quarter of 2020, according to Janus Henderson.
- The $108bn fall is the biggest since the investment group began its global dividend index in 2009.
- Corporate share repurchases have slid even more precipitously — nearly halving in the US in the second quarter.
Do Jobless Benefits Deter Workers? Some Employers Say Yes. Studies Don’t. (NY Times) Published on: September 9, 2020 | Category: Economic Impact, Global Response
- The $600-a-week jobless benefit supplement that Congress approved in March as part of the CARES Act has been widely credited by economists with keeping the economy functioning through the coronavirus pandemic.
- With the supplement, which ended in July, most unemployed workers got more than they had earned in wages; without it, they fell short of their previous income.
- There has been striking agreement among conservative and liberal economists who have studied the issue that the $600 supplement has deterred few workers from accepting a job.
Food inflation threatens lives and economic recovery (FT) Published on: September 8, 2020 | Category: Economic Impact
- In rich and poor countries alike, food shortages are a window on to the challenges of the post-pandemic global economy and the consequences of supply chain disruption and lockdowns.
- There is also the risk that rising food prices could presage a general rise in inflation — which in turn could lead to higher interest rates, threatening economic recovery.
- The UN’s Committee on World Food Security forecasts that malnutrition will double as a direct result of the pandemic, and more people will die of malnutrition and its associated diseases than from coronavirus.
With Washington Deadlocked on Aid, States Face Dire Fiscal Crises (NY Times) Published on: September 7, 2020 | Category: Economic Impact
- Across the nation, states and cities have made an array of fiscal maneuvers to stay solvent and are planning more in case Congress can’t agree on a fiscal relief package after the August recess.
- Economists warn that further state spending reductions could prolong the downturn by shaking the confidence of residents, whose day-to-day lives depend heavily on state and local services.
- State and local governments administer most of America’s programs for education, public safety, health care and unemployment insurance.
As virus cases drop, governors may gamble on bars. Again. (AP News) Published on: September 7, 2020 | Category: Economic Impact, Global Response
- Thousands of bars forced to close after massive virus outbreaks swept across the U.S. this summer could be starting to see an end in sight as cases drop off and the political will for continuing lockdowns fades.
- Bars remain under full closure orders in more than a half-dozen states, including hard-hit ones like Texas but also Connecticut, which has one of the nation’s lowest positivity rates.
- For some states, it is a gamble worth trying, only a few months after a rush to reopen bars in May and June ended in disaster.
Hopes of US stimulus deal fade after strong jobs report (FT) Published on: September 6, 2020 | Category: Economic Impact, Global Response
- Economists and analysts expected an agreement to be struck by the end of the month to plough about $1.5tn in new government money into the economy, which could be pivotal to sustaining the US rebound. But prospects for a deal have diminished.
- After the release of the unemployment data on Friday, Larry Kudlow, President Donald Trump’s top economic adviser, told Bloomberg TV that the US could “absolutely live with” no deal on new stimulus.
These 7 charts from the August jobs report show how far the labor market recovery has come — and how much further it has to go (Business Insider) Published on: September 5, 2020 | Category: Economic Impact
- The US economy added 1.4 million jobs in August, and the unemployment rate ticked down to 8.4%, the Labor Department reported Friday. So far, the US economy has recovered 48% of jobs from pre-coronavirus levels.
- “Progress is clearly being made but there are still 11.5 million people who are out of a job as a result of the COVID shock,” said Michelle Meyer, US economist at Bank of America, in a Friday note.
The Service Economy Meltdown (NY Times) Published on: September 4, 2020 | Category: Economic Impact, Global Response
- For this army of service workers across urban America, the pandemic risks becoming more than a short-term economic shock. If white-collar America doesn’t return to the office, service workers will be left with nobody to serve.
- The worry is particularly acute in cities, which for decades have sustained tens of millions of jobs for workers without a college education.
- Consider Nike’s decision in the spring to allow most employees at its headquarters in the Portland area to work remotely. Aramark, which runs the cafeteria and catering at Nike, furloughed many of its workers.
Why the US federal budget deficit could reach $3.3 trillion (Christian Science Monitor) Published on: September 4, 2020 | Category: Economic Impact
- Pandemic aid efforts have increased the federal budget deficit to levels not seen since after World War II.
- The recession has caused a drop in tax revenues have fallen, but the changes are not as dramatic as seen on the spending side, with individual income tax collections running 11% behind last year. Corporate tax collections are down 34%.
- Deficit scolds have long warned that rising levels of debt will serve as a drag on the economy in the coming years. If interest rates rise too high, servicing the debt will put significant strain on the budget.
Fears for US recovery grow as virtual schooling continues (FT) Published on: September 3, 2020 | Category: Economic Impact
- Fears about the prospects for US economic recovery have grown in recent weeks as school districts across the country have decided to begin the academic year with remote learning in response to the coronavirus crisis.
- Economists say the decisions could cause hits to employment, productivity and consumption that would stunt the US recovery — and could lead to more lasting damage in the form of curtailed educational achievement and greater inequality.
- What worries economists is that the US experience stands in contrast to the widespread return of in-person education in many other advanced economies hit hard by Covid-19.
- This is causing a loss of opportunity and productivity for parents, which is disproportionately affecting women.
Overworked and exhausted, warehouse workers brace for a frenzied holiday rush (Washington Post) Published on: September 3, 2020 | Category: Economic Impact, Global Response
- Holiday sales are beginning earlier than ever, as retailers race to accommodate a surge in online demand.
- Warehouse workers across the country say they’ve been under enormous pressure for months, working extended hours to fulfill a crush of pandemic orders.
- Working conditions, they say, have steadily deteriorated during the crisis, leaving many distribution centers understaffed and ill-equipped to accommodate frequent hand-washing and other safety protocols.
In Order to Defeat COVID-19, the Federal Government Must Modernize Its Public Health Data (Heritage Foundation) Published on: September 3, 2020 | Category: Economic Impact, Global Response
- The COVID-19 pandemic has revealed the disastrous public health consequences of the Centers for Disease Control and Prevention’s (CDC’s) failure to follow multiple congressional mandates to modernize its data infrastructure.
- Almost 90 percent of the COVID-19 cases included in the CDC’s March report “lacked any data about underlying health conditions such as diabetes or chronic lung disease, and 75 percent lacked information about hospitalization.”
- Because the case report is not automatically transmitted from an electronic health record or pharmacy management system, busy frontline workers fill out CDC forms by hand and submit them by phone, fax, or e-mail.
- The CDC recently testified that states “have improved the completeness of their reporting in the past two months; in particular, the percentage of reports that include race/ethnicity data has increased from 18 percent in April to 43 percent in early June.” This means that more than half of reports still lack the minimum information required by the CDC.
The $600 per week boom (and bust) – how the unemployment stimulus affected consumer spend (Cardify) Published on: September 2, 2020 | Category: Economic Impact
- Consumers who received the $600 weekly unemployment benefit between mid-April to the end of July, increased their spend significantly more than those who did not receive this benefit.
- Now that these benefits have expired, those who received the benefit are reducing their expenditures once again.
- Those who received unemployment benefits spent significantly more on car rentals, apparel and accessories, and education than those who did not receive the $600 weekly supplement.
Federal Reserve survey finds widespread pessimism about US economic future (Chicago Tribune) Published on: September 2, 2020 | Category: Economic Impact
- The Fed report made public Wednesday said that a theme echoed across the country is the continued uncertainty stemming from the pandemic and its negative effect on consumer and business activity.
- The Fed report said that consumer spending, which accounts for 70% of economic activity, had increased, pushed higher by strong auto sales and some improvements in tourism and retail sales.
- But in a potentially troubling sign, the report noted a recent slowdown in consumer spending.
Inflation Is Higher Than the Numbers Say (NY Times) Published on: September 2, 2020 | Category: Economic Impact
- While government statistics say inflation is low, the reality is that the cost of living has risen during the pandemic, especially for poorer Americans.
- The problem is that measures like real output, real wages and poverty are calculated using inflation adjustments that don’t reflect the higher cost of living during a pandemic.
- This might help explain why measured poverty has fallen even as lines at food banks have grown.
Goodbye to the ‘Pret economy’ and good luck to whatever replaces it (FT) Published on: September 1, 2020 | Category: Economic Impact, Global Response
- The lay-offs are emblematic of the crisis now facing city centres. The CBI, Britain’s biggest business lobby, has warned they will become “ghost towns” unless office staff return to their desks soon.
- The pandemic has made a different future possible. The experience of lockdown proved to many employers what they had not quite believed (and would never otherwise have tried): large-scale remote working is effective.
- Cities will not die, but their benefits could become more diffuse, with well-paid workers spread further into the rest of the country.
Pandemic takes bite out of B.C.’s finances as projected surplus turns to deficit (CBC) Published on: August 31, 2020 | Category: Canadian Business, Economic Impact
- The unexpected cost of the early COVID-19 response contributed to turning B.C.’s finances from a small surplus to a deficit of $321 million, according to the province’s 2019-20 audited financial statements.
- The deficit represents a drop of $595 million from the $274 million surplus projected in the 2019 budget.
McKinsey: 75% of Americans have changed brands during the pandemic (ZDNet) Published on: August 31, 2020 | Category: Economic Impact, Global Response
- Over 75% of U.S. consumers have changed shopping behavior and changed to new brands during the COVID-19 pandemic. The top three reasons for shopping for a new brand were value, availability and convenience.
- Consumer spending is subject to more scrutiny. The research points to consumers being more mindful of spending that is likely to last for all of 2020.
- 40% of US consumers are planning to spend less, with greater focus on essentials.
Airline analysts warn ‘the hardest part’ is yet to come (FT) Published on: August 29, 2020 | Category: Economic Impact, Global Response
- In the past week alone, US carrier American Airlines said it would cut 19,000 jobs, Australian airline Qantas announced it would shed thousands more jobs and Norwegian Air Shuttle warned it needed another rescue package — only months after securing a bailout.
- Analysts warn worse is yet to come as the prospect of second waves of infection and tough government rules on quarantine cripple airlines’ ability to forecast demand.
- “You are getting airlines going from zero to 70 per cent capacity in the blink of an eye then having to ramp back down,” said Mark Manduca, an aviation analyst at Citi.
New Covid-19 Layoffs Make Job Reductions Permanent (WSJ) Published on: August 28, 2020 | Category: Economic Impact
- A new wave of layoffs is washing over the U.S. as several big companies reassess staffing plans and settle in for a long period of uncertainty.
- MGM Resorts International and Stanley Black & Decker Inc. recently told some employees furloughed at the outset of the coronavirus pandemic that they wouldn’t be put back on the payroll.
- The outlook reflects an acceptance by corporate executives that they will have to contend with the pandemic and its economic fallout for a longer period than they had hoped.
U.S. Consumer Spending Rose More Slowly in July (WSJ) Published on: August 28, 2020 | Category: Economic Impact
- U.S. consumers boosted their spending in July, but more slowly than in prior months as new coronavirus infections rose and the expiration of enhanced unemployment checks loomed.
- That marked a slowdown from the previous two months when it picked up strongly after collapsing during the coronavirus-related shutdowns of parts of the economy.
- Economists say the wave of new coronavirus cases that swept the U.S. during July weakened the nascent economic recovery, even though nearly two million Americans joined the workforce.
Alberta on track to record-setting $24.2B budget deficit (CBC) Published on: August 27, 2020 | Category: Canadian Business, Economic Impact
- Alberta is on track to end the current fiscal year with a $24.2-billion deficit, the largest in the province’s history, and the finance minister is suggesting more cuts are on the way.
- The deficit is forecast to be $16.8 billion higher than was estimated in the provincial budget in February.
- The province is now forecasting total revenue will be $38.4 billion, down $11.5 billion from the budget. Total forecasted expense is now pegged at $62.6 billion, up $5.3 billion.
Unemployment Claims Are ‘Stubbornly High’ as Layoffs Persist (NY Times) Published on: August 27, 2020 | Category: Economic Impact
- New filings again exceeded one million last week, and an extra $300 in jobless pay may not show up before mid-September in most states.
- Another 608,000 people filed for benefits under the federal Pandemic Unemployment Assistance program, which offers aid to independent contractors, self-employed workers and others not covered by regular state programs.
- Job growth slowed in July, and real-time data from private-sector sources suggests that hiring has slumped further in August.
- “It is worrying because it does signal that these large companies are pessimistic about the state of the recovery and don’t think that we are going to be returning to normal anytime soon,” said Daniel Zhao, senior economist at the career site Glassdoor.
Fed to tolerate higher inflation in policy shift (FT) Published on: August 27, 2020 | Category: Economic Impact
- The Federal Reserve has adopted a new strategy for monetary policy that will be more tolerant of temporary increases in inflation, cementing expectations that the US central bank will keep interest rates at ultra-low levels for years to come.
- The centrepiece of the Fed’s new approach is the move to an average inflation target, which will allow it to overshoot the US central bank’s 2 per cent target to compensate for persistently low inflation, which has been weighing on the US and other economies in recent years.
- Mr. Powell stressed that “the Fed has less scope to support the economy during an economic downturn by simply cutting the federal funds rate”.
Millennials Help Power This Year’s Housing-Market Rebound (WSJ) Published on: August 27, 2020 | Category: Economic Impact, Global Response
- Millennials reached a housing milestone early last year when the group first accounted for more than half of all new home loans, and they consistently held above that level in the first months of this year, the most recent period for which data are available, according to Realtor.com.
- The generation made up 38% of home buyers in the year that ended July 2019, up from 32% in 2015, according to the National Association of Realtors.
- The recession has been a major financial setback for millions of younger workers who lost their jobs in recent months. A persistently high unemployment rate among millennials could slow homebuying among the group in coming years.
Consumer confidence is wilting (Axios) Published on: August 26, 2020 | Category: Economic Impact, Global Response
- Consumer confidence is moving backwards as more companies announce layoffs, jobs get harder to find and the coronavirus pandemic continues to wreak havoc on the economy.
- It’s the latest indicator showing the U.S. economy is weakening moving into the back half of the year.
- That consumer sentiment has fallen while the S&P 500 has risen for five straight months and by nearly 50% with housing prices counting superb back-to-back months suggests an increasing disconnect between markets and the economy.
Lex in-depth: why rescue finance will slow recovery for businesses (FT) Published on: August 26, 2020 | Category: Economic Impact, Global Response
- Since the outbreak of coronavirus, businesses across the world have raised unprecedented sums from public and private sources.
- In the US, S&P 500 non-financial companies were sitting on $1.35tn of cash and equivalents at the end of June, according to a Lex analysis of quarterly and half-year earnings data.
- Globally corporations have raised $2tn so far this year in bonds alone, a $600bn increase on the same period of 2019, according to rating agency S&P.
Many Americans are using the downturn to shore up their finances: AP-NORC poll (CBS News) Published on: August 25, 2020 | Category: Economic Impact
- It’s the paradox of a pandemic that has crushed the U.S. economy: 12.9 million people have lost a job and a dangerous rash of businesses have closed, yet the personal finances of many Americans have remained strong — and in some ways have even improved.
- In total, about half of Americans say they’ve either saved more or paid down debt since the outbreak began.
- About two-thirds say they’re spending less than usual during the pandemic.
- About half of Black Americans and roughly 4 in 10 Hispanic Americans say they’ve been unable to pay a bill, compared with just 2 in 10 white Americans.
Before Making Loans, Some Mortgage Lenders Ask, Do You Really Plan to Pay This? (WSJ) Published on: August 25, 2020 | Category: Economic Impact, Global Response
- New forms are showing up in some borrowers’ paperwork when they close on their home loan. Lenders are asking them to confirm that they don’t plan to skip their payments, at least not right away.
- While the language varies, the forms generally tell borrowers that they won’t be allowed to skip payments until their loans are backed by the government, according to forms reviewed by The Wall Street Journal.
- The $2 trillion coronavirus stimulus package Congress passed in the pandemic’s early days allows struggling homeowners to request up to 12 months of forbearance on federally backed home loans, meaning they can temporarily pause their payments and make them up later.
Insurers bet that pandemic will usher in era of higher returns (FT) Published on: August 25, 2020 | Category: Economic Impact, Global Response
- The coronavirus crisis appears a rolling nightmare for the insurance industry as it is assailed by huge claims and locked in damaging legal fights with customers.
- But in recent months investors have quietly poured billions of dollars into insurance companies, betting the pandemic will ultimately prove the catalyst that ends a period of fallow returns for the industry.
- According to insurance broker Marsh, prices for commercial insurance leapt by 19 per cent in the second quarter of the year, after a 14 per cent increase in the first three months of 2020.
Europe Tried to Limit Mass Layoffs, but the Cuts Are Coming Anyway (NY Times) Published on: August 24, 2020 | Category: Economic Impact, Global Response
- When European countries ordered businesses to shutter and employees to stay home as the coronavirus spread, governments took radical steps to shield workers from the prospect of mass joblessness, extending billions to businesses to keep people employed.
- A tsunami of job cuts is about to hit Europe as companies prepare to carry out sweeping downsizing plans to offset a collapse in business from the outbreak.
- As many as 59 million jobs are at risk of cuts in hours or pay, temporary furloughs, or permanent layoffs, especially in industries like transportation and retail, according to a study by McKinsey & Company.
COVID-19 pandemic accelerated shift to e-commerce by 5 years, new report says (TechCrunch) Published on: August 24, 2020 | Category: Canadian Business, Economic Impact
- As the COVID-19 pandemic reshapes our world, more consumers have begun shopping online in greater numbers and frequency.
- The pandemic has also helped refine which categories of goods consumers feel are essential, the study found.
- Clothing, for example, declined in importance as more consumers began working and schooling from home, as well as social distancing under government lockdowns.
Coronavirus Lifts Government Debt to WWII Levels—Cutting It Won’t Be Easy (WSJ) Published on: August 24, 2020 | Category: Economic Impact
- Among advanced economies, debt rose to 128% of global gross domestic product as of July, according to the International Monetary Fund. In 1946, it came to 124%.
- After World War II, advanced economies brought down debt quickly, thanks in large part to rapid economic growth. The ratio of debt to GDP fell by more than half, to less than 50%, by 1959. It is likely to be harder this time, for reasons involving demographics, technology and slower growth.
- By the early 1960s, the Group of Seven advanced economies all had population growth of nearly 1% a year or more. Today, no G-7 country has population growth of 1%, and Japan and Italy are shrinking.
- Rapid economic growth and lower military spending in the postwar years made it easy to reduce debt. In the U.S., federal outlays fell by more than half between 1945 and 1947, not accounting for the effects of growth or inflation.
A poorer retirement is pandemic’s hidden legacy (FT) Published on: August 24, 2020 | Category: Economic Impact
- Central banks’ action to stimulate economies and keep interest rates low have made it harder for pension funds to earn the money to pay for their members’ retirement.
- The crisis has come at a particularly difficult time for the pensions industry, which is already under pressure from a decade of low interest rates and low bond yields.
- In Australia, where the government has allowed members early access to their pension superannuation funds, the result has seen some 600,000 people — most of them under 35 — wipe out their savings altogether.
Alarm across Europe over surge in coronavirus cases (FT) Published on: August 23, 2020 | Category: Economic Impact, Global Response
- A sharp rise in the number of coronavirus infections over the past two weeks has put European governments on high alert as holidaymakers return home to big cities and teachers and pupils prepare for the start of the school year after months of disruption.
- France has opted to control the spread of the virus rather than attempt to eliminate it completely, and French president Emmanuel Macron has said there is no such thing as a “zero risk” society.
- In Italy, new daily cases have also increased, reaching 947 on Friday, due to more travel and nightlife activities over the summer holidays.
Pandemic triggers wave of billion-dollar US bankruptcies (FT) Published on: August 22, 2020 | Category: Economic Impact
- Large US corporate bankruptcy filings are now running at a record pace and are set to surpass levels reached during the financial crisis in 2009.
- In total, 157 companies with liabilities of more than $50m have filed for Chapter 11 bankruptcy this year and many believe a lot more will follow.
- Multimillion dollar corporate defaults have been led by oil and gas companies this year as low crude prices have crippled many businesses. There have been 33 filings to date, including Chesapeake, Whiting Petroleum and Diamond Offshore Drilling. There were only 14 last year.
The Coronavirus Generation (NY Times) Published on: August 22, 2020 | Category: Economic Impact
- The virus doesn’t sicken kids as much as adults. But it can still destroy their futures. A child allowance would help.
- The Great Smoky Mountains Study is part of a trove of evidence that has reshaped expert views of child poverty, and it is ripe with lessons today, when the number of needy children is soaring.
- While the coronavirus was initially said to spare the young, that no longer appears to be true medically, and economically it never was — certainly not for the 10 million children below the poverty line and even larger numbers just above it.
U.S. Economic Recovery Gains Steam While Others Stutter (WSJ) Published on: August 21, 2020 | Category: Economic Impact
- The U.S. economy picked up momentum this month as companies shook off the effects of the pandemic-induced downturn, though recoveries in other parts of the world slowed, according to new surveys of purchasing managers.
- The data released Friday suggest U.S. firms are seeing demand return as they reopen from the lockdowns imposed in the spring and early summer.
- They also indicate the economy has so far managed to weather July’s sharp rise in new coronavirus infections and business closures that threatened to knock the recovery off course.
Why the economic value of a face mask is $56.14 (The Economist) Published on: August 21, 2020 | Category: Economic Impact, Global Response
- The thinking goes that masks can, in part, substitute for lockdowns. People wearing them need not be discouraged as much from using public transport. More shops and offices might be able to reopen, albeit while practising social distancing.
- Calculations from Goldman Sachs, a bank, suggest that a 15 percentage-point rise in the share of the population that wears masks would reduce the daily growth of cases by about one percentage point.
- These economic benefits suggest that governments should do even more to nudge the minority of people who still forgo masks.
Governments puzzle over how to unwind job protection schemes (FT) Published on: August 21, 2020 | Category: Economic Impact, Global Response
- A fresh surge in coronavirus cases is putting pressure on governments on both sides of the Atlantic to maintain emergency labour market support mechanisms at a time when politicians had hoped that their economies would be gradually returning to normal.
- Many employees laid off temporarily at the start of lockdowns have returned to work, but millions have not, and job gains are slowing.
- “This is slowly morphing into a long-term unemployment problem,” said Jay Shambaugh, a fellow at the Brookings Institution and former White House adviser, noting that 5 per cent of the US workforce had now been unemployed for more than 15 weeks.
Economists foresee an unemployment “tsunami” coming (Axios) Published on: August 21, 2020 | Category: Economic Impact
- The exponential growth of claims for the Pandemic Emergency Unemployment Compensation (PEUC) program are worrying economists and previewing a weakening U.S. labor market in the coming months.
- “The real tsunami is coming,” Mark Zandi, chief economist at Moody’s Analytics, tells Axios. “My guess is at this point hiring in the industries that have been hit hard is going to abate.”
- “You’re starting to see unemployment spells last a long time. The longer you’re out of the labor force and disconnected from your prior employer, the harder it is to reconnect,” said Julia Coronado, president of MacroPolicy Perspectives.
U.S. Jobless Claims Rise to 1.1 Million in Latest Week (WSJ) Published on: August 20, 2020 | Category: Economic Impact
- New applications for unemployment benefits rose last week after a series of declines, showing that the labor market’s recovery from the effects of the pandemic remains uneven.
- “The labor market isn’t bouncing back—it’s clawing back in fits and starts,” said Michelle Holder, a labor economist at John Jay College in New York.
- The number of new claims rising last week shows that fresh layoffs are occurring even as the economy broadly is showing signs of recovering from the deep economic downturn caused by the pandemic and the shutdowns aimed at curbing it.
COVID-19 Helps Alibaba Beat Q1 Expectations (Jing Daily) Published on: August 20, 2020 | Category: Economic Impact
- Like its competitors, the group’s e-commerce business expanded due to consumers’ growing reliance on online shopping and China’s early post-COVID-19 economic recovery.
- Both of them can thank the mid-year shopping bonanza, 618, which saw platforms and brands offer consumer coupons and subsidies to help lure consumers into revenge spending.
- As KOLs and merchants continued to connect with consumers through livestreaming in Q1, Taobao Live (Taobao’s livestreaming channel) saw its GMV grow by over 100 percent year-on-year, according to a company report that didn’t disclose conversion or sales numbers.
Reinvigorating growth in the consumer-goods industry (McKinsey) Published on: August 20, 2020 | Category: Economic Impact, Global Response
- These companies also really thrived in developing markets by building brands and distribution as consumers became more able to pay for consumer goods.
- But maybe most importantly for this context, they are four times more likely than older consumers to say that they resist buying mass brands.
- Millennials are four times more likely than older consumers to say that they resist buying mass brands.
Target’s breakout quarter underscores big-box retailers’ growing footprint (Washington Post) Published on: August 19, 2020 | Category: Economic Impact
- The pandemic has reshaped consumer habits and priorities, leading to skyrocketing fortunes for a handful of retailers and creating a growing divide between big-box stores such as Target, Walmart and Home Depot and the rest of the industry.
- Profits soared by about 80 percent at both Walmart and Target during the second quarter, driven by a surge in online orders. Home sales are up, too, giving a boost to Lowe’s and Home Depot, where profits rose by 74 percent and 25 percent, respectively.
- Lowe’s led the way with a 30 percent increase in revenue, followed by Target (where sales grew 25 percent), Home Depot (23 percent) and Walmart (6 percent).
The US needs direct cash payments through this crisis — and the next (FT) Published on: August 19, 2020 | Category: Economic Impact
- In the middle of a pandemic, millions of Americans have seen their unemployment benefits drastically reduced by congressional inaction, thereby pushing many into financial precarity or poverty.
- Economists have long championed the role of “automatic stabilisers”. When an economy tanks, these fiscal policies kick in immediately, without any need for congressional approval, and provide a countercyclical economic stimulus.
- They see that a one-off cheque is not enough when unemployment is rising precipitously. The payments should also be targeted to families on the bottom half of the income spectrum, who spend money quickest, thereby stimulating the economy.
Coronavirus brings a wave of early retirements (Axios) Published on: August 18, 2020 | Category: Economic Impact
- Since March, 2.9 million workers between 55 and 70 have left the workforce, according to the New School’s Schwartz Center for Economic Policy Analysis.
- That’s far more than the 1.9 million such workers who exited the workforce in the three months after the start of the Great Recession.
- These early retirements will shrink the U.S. labor supply. “You have less workers and more retirees, which is bad for long-run growth,” says Nicholas Bloom, an economist at Stanford.
Walmart Flexes Its Scale to Power Through Pandemic (WSJ) Published on: August 18, 2020 | Category: Economic Impact
- The company’s e-commerce business nearly doubled, with revenue jumping 97% from a year ago, boosted by people ordering groceries online to pick up in store parking lots.
- Walmart expanded the availability of delivery and pickup time slots about 30% since February in response to the health crisis, said Walmart Chief Financial Officer Brett Biggs on a call to discuss earnings.
- In the April quarter, Walmart’s comparable U.S. sales grew 10% and Wall Street was expecting growth of 5.9% for the July quarter, according to estimates compiled by FactSet.
Norway’s oil fund fears market disconnect from real economy (FT) Published on: August 18, 2020 | Category: Economic Impact
- The world’s largest sovereign wealth fund has warned over the disconnect between the financial markets and the real economy as US stocks set a new intraday record on Tuesday.
- The recovery in equities, turbocharged by central banks’ stimulus, helped Norway’s $1tn oil fund, the world’s largest sovereign wealth fund, to the second-best quarter in its history, returning 13.1 per cent in the three months to the end of June.
- At a press conference in Oslo, Trond Grande, deputy managing director of Norges Bank Investment Management, added that the pandemic “doesn’t seem to be under control in any shape or form”.
COVID-19: Saving thousands of lives and trillions in livelihoods (McKinsey) Published on: August 17, 2020 | Category: Economic Impact
- Our new research looking for visible indicators of economic activity that would suggest such a rebound in growth finds them only in the countries that have successfully placed the virus under control.
- The evidence heavily suggests that a multifaceted public-health response that goes well beyond a simple transient lockdown is a necessary first step to restore confidence and create the conditions for growth.
- The impact of delay is not linear. For every three months we delay in getting the virus under control, we push back the return of GDP to precrisis levels by about six months. Time is the enemy of both lives and livelihoods.
First into the virus slump, China is proving the fastest out (Japan Times) Published on: August 16, 2020 | Category: Economic Impact, Global Response
- China’s economy, the first to succumb to the coronavirus, is proving to be the fastest to recover.
- An industry-powered rebound is pushing the Asian nation out of the historic first-quarter slump and toward the prospect of being the only major economy to expand this year. Economists surveyed by Bloomberg forecast growth of 2.0 percent.
- The reasons for China’s performance so far range from a populace willing to accept and implement strict virus control measures to the fact that the world still needs its exports. Sales abroad jumped in July as factories and retailers elsewhere re-opened.
Home Depot Braced for Covid Pain—Then Americans Remodeled (WSJ) Published on: August 16, 2020 | Category: Economic Impact
- After lobbying to be open, the big box scrambled to meet demand. Old benchmarks don’t apply, says CEO Craig Menear: ‘None of that has a correlation anymore.’
- Americans, stuck at home without much to do, started painting, building, fixing and decorating. Government stimulus checks buoyed long-delayed home improvements, as did less money spent on restaurants and summer travel.
- Daily foot traffic to Home Depot stores since April has been running at least 35% above last year’s, according to Unacast Inc., which tracks location data from 25 million cellphones on any given day. In 26 states, traffic doubled following a surge in late May.
‘New York City Lite’: after coronavirus, will business flock to the suburbs? (FT) Published on: August 16, 2020 | Category: Economic Impact, Global Response
- As the pandemic prompts a migration from cities, companies are debating whether to follow the people.
- The past 20 years has been a golden age of great cities such as New York and London. As talented young workers migrated to such hubs, companies followed, attracting more talent in turn.
- If more and more workers flock to the suburbs, this raises the question of whether companies will also follow. One of the revelations of the coronavirus pandemic has been how communications technology has allowed so many people to work from home without much of a hitch.
India to invest $1.46 trillion to lift virus-hit economy (AP News) Published on: August 15, 2020 | Category: Economic Impact, Global Response
- India’s prime minister said Saturday his country has done well in containing the coronavirus pandemic and announced $1.46 trillion in infrastructure projects to boost the sagging economy.
- The key lesson India learned from the pandemic is to become self-reliant in manufacturing and developing itself as a key supply chain destination for international companies, Prime Minister Narendra Modi said.
- Modi also announced a national digital heath plan under which every Indian will get an identity card containing all health-related information.
Credit card and loan borrowing is predicted to fall by a record amount (This is Money UK) Published on: August 14, 2020 | Category: Economic Impact
- Consumer debt has fallen by record amounts over the last few months as billions has been repaid on credit cards and loans, but banks are less likely to hand it out in the near future.
- The forecasters also said they expected mortgage lending to grow just 2.6 per cent this year, the slowest rise in half a decade.
- Dan Cooper, UK head of banking at EY, said: “Even assuming the economy bounces back in the short term, we’re likely to see very weak growth in loans to home buyers and consumers for some time to come.”
U.S. retail sales slow in July; obstacles mount for nascent economic recovery (The Globe and Mail) Published on: August 14, 2020 | Category: Economic Impact
- U.S. retail sales increased less than expected in July as consumers cut back on purchases of motor vehicles, and could slow further in the months ahead amid spiralling new COVID-19 infections and a reduction in unemployment benefit checks.
- The report from the Commerce Department on Friday, however, did not change expectations that consumer spending will rebound this quarter after a record collapse in the second quarter.
- Consumers also cut back spending at hobby, musical instrument and book stores as well as at building materials outlets.
Taking Stock of the Covid-19 Recession (HBR) Published on: August 14, 2020 | Category: Economic Impact, Global Response
- As the crisis unfolded in February and March of this year, business leaders were forced to rapidly shift their expectations for the future. While expectations varied, we identified five disparities between common assumptions at the time and our current realities.
- Economic forecasts gyrated wildly at the start of the crisis. For example, the median broker forecast for 2Q U.S. growth was still around 0% in mid-March, before collapsing 30 percentage points over the next 20 days. Over the following months the forecast settled around -35% (annualized – not to be confused with, but equivalent to, -10% quarter on quarter growth).
- The severe intensity of the crisis fueled fears of systemic meltdown, driven by liquidity and solvency problems cascading through the real and financial economy.
- While all economic downturns have their own idiosyncrasies, the underlying dynamics of this pandemic-induced recession were similar across the world: A health emergency requiring restrictive public health interventions creates a severe economic disruption, which must be bridged by economic policy.
The recession is over for the rich, but the working class is far from recovered (Washington Post) Published on: August 13, 2020 | Category: Economic Impact
- U.S. stocks are hovering near a record high, a stunning comeback since March that underscores the new phase the economy has entered: The wealthy have mostly recovered. The bottom half remain far from it.
- Jobs are fully back for the highest wage earners, but fewer than half the jobs lost this spring have returned for those making less than $20 an hour, according to a new labor data analysis by John Friedman, an economics professor at Brown University and co-director of Opportunity Insights.
- Some economists have started to call this a “K-shaped” recovery because of the diverging prospects for the rich and poor, and they say policy failures in Washington are exacerbating the problems.
The pandemic is hitting city budgets harder than the Great Recession (Axios) Published on: August 13, 2020 | Category: Economic Impact
- With tax revenue in free-fall and expenditures dramatically rising, the coronavirus pandemic is on pace to hit cities’ finances even harder than the Great Recession.
- Almost all cities are required to balance their budgets, and at this rate they’ll have no choice but to cut more services, layoff or furlough more workers and freeze capital projects.
- Cities, on average, expect a 13% decline in general fund revenues in the 2020 and 2021 fiscal years.
The COVID-19 public health and economic crises leave vulnerable populations exposed (Brookings) Published on: August 13, 2020 | Category: Economic Impact, Global Response
- We find that unemployed and essential workers are the most vulnerable given their lower income, lack of health insurance, and differences across household structure.
- This timely evidence suggests a need for a more robust safety net, such as an expanded unemployment benefits program and more-accessible public health insurance during the COVID-19 pandemic, as well as more-deliberate targeting of federal support to Black and Hispanic households.
- We find that, among those who are unemployed and received unemployment benefits, the average delay between application and first benefits payout is 23 days. However, when evaluated across race/ethnicity, figure 2 shows that unemployed Black Americans waited seven to eight days longer than unemployed white and Hispanic Americans to receive benefits.
Postponed College Football Games Could Disrupt $1 Billion in TV Ads (NY Times) Published on: August 12, 2020 | Category: Economic Impact
- The postponement of much of the college football season could disrupt the flow of more than $1 billion from advertisers to the television networks that count on a slate of game broadcasts every fall.
- Many players and school administrators, and even President Trump, had lobbied against the postponement, which could have financial ramifications for teams, campuses and local communities.
- For Fox last year, college football was responsible for nearly 6 per cent of ad spending and nearly 10 per cent of all TV ad impressions, or viewer exposure to ads, according to the ad measurement company iSpot.TV.
Coronavirus makes for a brutal quarter for smaller US companies (FT) Published on: August 12, 2020 | Category: Economic Impact
- Small and medium-sized US companies suffered a complete wipeout in profits in the second quarter because of the Covid-19 crisis, in sharp contrast to large multinationals that emerged from the most intense phase of the pandemic in better shape.
- As the earnings season draws to a close, companies within the Russell 2000 stock index — the small-cap benchmark — have reported an aggregate loss of $1.1bn, compared to profits of almost $18bn a year earlier, according to data provider FactSet.
- While bigger groups were able to quickly raise needed cash starting in mid-March, smaller companies struggled to tide themselves over. Many turned to government programmes. However, with stimulus measures now lapsing, many small companies once again find themselves in need of capital.
Covid-19: UK economy plunges into deepest recession since records began (Guardian) Published on: August 12, 2020 | Category: Economic Impact
- The Office for National Statistics (ONS) said gross domestic product (GDP), the broadest measure of economic prosperity, fell in the second quarter by 20.4% compared with the previous three months – the biggest quarterly decline since comparable records began in 1955.
- Warning that the government was making a historic mistake by winding down the furlough wage subsidy scheme as the country falls into recession, Anneliese Dodds, the shadow chancellor, said the downturn was a tragedy for the British people that had happened on Boris Johnson’s watch.
- Britain’s decline was more than double the 10.6% fall in the US over the same period and also surpassed declines in France, Germany and Italy among G7 nations that have reported second-quarter figures so far.
- Canada and Japan have yet to publish second-quarter data but are not expected to record greater falls than Britain.
Small Businesses Are Dying by the Thousands — And No One Is Tracking the Carnage (Bloomberg) Published on: August 11, 2020 | Category: Economic Impact
- By some accounts, small businesses are disappearing by the thousands amid the Covid-19 pandemic, and the drag on the economy from these failures could be huge.
- Yelp Inc., the online reviewer, has data showing more than 80,000 permanently shuttered from March 1 to July 25. About 60,000 were local businesses, or firms with fewer than five locations.
- Firms with fewer than 500 employees account for about 44% of U.S. economic activity, according to a U.S. Small Business Administration report, and they employ almost half of all American workers.
Employers Cast Wary Eye on Trump Payroll-Tax Deferral (WSJ) Published on: August 11, 2020 | Category: Economic Impact, Global Response
- Employers considering President Trump’s plan to allow deferred payment of payroll taxes face a series of costs, uncertainties and headaches.
- Employers’ biggest worry: If they stop withholding taxes without any guarantee that Congress will actually forgive any deferred payments, they could find themselves on the hook. That is a particular risk in cases where employees change jobs and employers can’t withhold more taxes from later paychecks to catch up on missed payments.
- Several large employers, including Walmart Inc., United Parcel Service Inc. and Home Depot Inc., said Monday that it was too early to say what they would do.
US online shopping forecast to beat 2019 total by October (FT) Published on: August 11, 2020 | Category: Economic Impact
- American shoppers are on course to surpass total online spending in 2019 as soon as early October, analysts forecast, though the explosive growth in pandemic-driven ecommerce is beginning to slow as parts of the country attempt to reopen.
- Data from Adobe’s Digital Economic Index report suggest Americans have now spent $435bn online since the start of the year — with analysts estimating almost $100bn in extra spend moving online due to Covid-19 lockdowns.
- “We’ve just trained the consumer to shop a different way,” said Sonia Lapinsky from retail consultancy AlixPartners. “They’re now comfortable at home. They’re used to buying things without ever having to leave their house.”
The Unequal Future of Consumption (The New Republic) Published on: August 10, 2020 | Category: Economic Impact, Global Response
- Shopping malls in Stockholm are half empty; H&M sales fell by half in Denmark and Finland, but even in Sweden, without a lockdown, they dropped by a third.
- In the United States, 6 percent of total consumer spending is on restaurants and hotels alone, and another 4 percent goes to recreation.
- In France, in early April, online sales of food were up by 98 percent—but next came rural shops (37 percent) and urban mini-marts (superettes; 25 percent), while the big hypermarkets saw a fall of 3 percent.
US faces inflation threat as money supply rockets (FT) Published on: August 10, 2020 | Category: Economic Impact
- The aggressive monetary and fiscal response to the coronavirus crisis in the US could trigger a burst of inflation that the Federal Reserve might struggle to control, according to Morgan Stanley.
- “While we are likely to experience big imbalances in the real economy for several more quarters, if not years, the most powerful leading indicator for inflation has already shown its hand — money supply, or M2,” said Morgan Stanley’s chief US equity strategist Mike Wilson.
- For equities, faster inflation usually tends to be positive because their earnings rise with higher prices, and fixed-coupon bonds become less attractive.
- But there could be a shake-up of the stock market leaderboard, said Mr Wilson. “The problem may be that equity market leadership is skewed toward deflationary winners, making any sudden surges in inflation quite disruptive to portfolios,” he warned.
How is COVID-19 affecting US trade? (Brookings) Published on: August 10, 2020 | Category: Economic Impact, Global Response
- Overall, exports in the first half of the year were down 16 percent compared to last year. That’s more of a decline than we’ve seen in GDP.
- Two of our big exports, aircraft and automobile parts, are down 30 to 40 percent.
- If you look at the export side, again with Canada and Mexico, and those are our two biggest partners, our exports are down about 20 percent. I think this just reflects this serious recession throughout all of North America. But in the first half of the year, our exports to China were only down five percent.
Amazon and Mall Operator Look at Turning Sears, J.C. Penney Stores Into Fulfillment Centers (WSJ) Published on: August 9, 2020 | Category: Economic Impact, Global Response
- The largest mall owner in the U.S. has been in talks with Amazon.com Inc., the company many retailers denounce as the mall industry’s biggest disrupter, to take over space left by ailing department stores.
- Simon Property Group Inc. has been exploring with Amazon the possibility of turning some of the property owner’s anchor department stores into Amazon distribution hubs, according to people familiar with the matter.
- For Amazon, a deal with Simon would be consistent with its efforts to add more distribution hubs near residential areas to speed up the crucial last mile of delivery.
COVID-19: 8 million Canadians rethinking retirement due to pandemic, report suggests (Sudbury.com) Published on: August 9, 2020 | Category: Canadian Business, Economic Impact
- A whopping two million Canadians have stopped making regular contributions to their retirement savings, according to the study, which extrapolates the data from a survey of 1,500 Canadians and Canadian population data from the U.S. Census Bureau.
- While 54 per cent of adults planning to retire felt confident in their ability to do so before the pandemic, just 39 per cent feel that way now, according to the survey.
- The few who are considering anticipating retirement amid the pandemic, on the other hand, said they “realized that they were looking forward to retirement, or they want to spend time doing other things that are more important to them than work,” according to the report.
Saudi Aramco Says Profit Fell 73 Percent as Demand for Oil Shrank (NY Times) Published on: August 9, 2020 | Category: Economic Impact, Global Response
- Saudi Aramco, the world’s largest oil company, said on Sunday that its quarterly earnings plunged more than 73 percent compared to a year ago, as lockdowns imposed to curb the coronavirus pandemic drastically cut the demand for oil and slammed prices.
- Despite the steep fall in earnings, to $6.6 billion from $24.7 billion, the company said it would continue paying a quarterly dividend of $18.75 billion, almost three times its cash flow.
- Continuing to pay such a large dividend distinguishes Aramco from other oil giants, like BP and Royal Dutch Shell, which have recently cut their payouts to preserve capital in difficult times.
Cruise industry’s hopes for relaunch this month taking on water (Taipei Times) Published on: August 8, 2020 | Category: Economic Impact
- Hopes that the world’s cruise industry would be gathering steam again in time for the holiday season that begins this month are sinking, as some ports remain closed and authorities impose new COVID-19 health rules.
- For its part, Costa Cruises, which is part of the Carnival group, told reporters that it is “working on plans for a gradual resumption of cruises when the authorities of the home and destination ports say it is possible to do so.”
- Costa Cruises’ new guidelines say all passengers are subject to a health check as they board and that “all crew members are subject to daily body temperature checks and their state of health is monitored constantly,” according to its Web site.
Hard hit businesses pay only fraction of rents in July (FT) Published on: August 8, 2020 | Category: Economic Impact, Global Response
- While groceries and other retailers selling essential goods have largely paid what they owe, many restaurants and discretionary retailers have not.
- Illinois-based Retail Properties of America, which owns 102 shopping centres and other properties, said its collection rates for movie theatres and amusement and play centres were only 9 per cent and 6 per cent, respectively.
- Private equity-backed businesses have paid less than their listed peers, according to figures from Spirit Realty Capital, a Dallas-based Reit with $6.3bn in assets under management.
The U.S. economy is on the verge of a ‘lost year’ (Washington Post) Published on: August 7, 2020 | Category: Economic Impact, Global Response
- According to Pew Research, people are growing more pessimistic about how America’s leaders have handled the virus and the nation’s ability to contain it, which only digs a deeper hole for the economy.
- As soon as the virus flares in a part of the country, cellphone data show people immediately stay home instead of instead of venturing out to restaurants, stores and entertainment.
- As so much hangs in the balance, the bulk of the federal government aid for small businesses and unemployed has expired.
Covid-19 Pandemic Triggers Wave of Long-Term Unemployment (WSJ) Published on: August 7, 2020 | Category: Economic Impact
- An increasing number of workers were unemployed for more than three months in July, a signal that the coronavirus pandemic is likely to have a lasting economic impact on many people.
- Following the last recession, long-term unemployment ballooned and was a factor economists pointed to for sluggish wage growth and a lackluster overall recovery as the economy steadily added jobs.
- “The economy is still in really bad shape,” said Katharine Abraham, a University of Maryland labor economist and former economic adviser to President Obama. “It’s hard to see how this doesn’t translate to a lot of people being out of work for a long time.”
Covid-19 could push some universities over the brink (The Economist) Published on: August 7, 2020 | Category: Economic Impact
- Covid-19 has put immense pressure on all universities. But the problems are about to get particularly severe for those in America, Australia, Canada and Britain that have come to rely on international students to fill their coffers.
- Even before the pandemic, many such universities worried about worsening relations with China, the biggest source of international students.
- The problem is that campuses make an excellent breeding ground for the virus, and students travelling across the world are a good way to spread it.
Coronavirus Leads to More Use of Contactless Credit Cards and Mobile Payments Despite Cost and Security Concerns (Business Wire Retail News) Published on: August 6, 2020 | Category: Economic Impact
- With consumers worried about touching surfaces during the coronavirus pandemic, the use of mobile payments and contactless credit or debit cards has significantly increased in the past few months, according to research released today by the National Retail Federation and Forrester.
- “Health experts say there is no clear evidence that COVID-19 is transmitted by cash or credit cards but retailers are putting health and safety first and have rolled out a variety of no-touch payment options in order to err on the side of caution,” NRF Vice President for Government Relations, Banking and Financial Services Leon Buck said.
- Among U.S. consumers, 19 per cent surveyed via Forrester Consumer Technographics said they made a digital payment in a store for the first time this May. Of those, 62 per cent used their phone and 56 per cent used a contactless card.
- “While mobile payments and contactless cards have accounted for a minority of payments in the past, the pandemic has clearly driven consumers to change their behavior and retailers to accelerate their adoption of the technology.”
New US jobless claims hover above 1m though pace slows (FT) Published on: August 6, 2020 | Category: Economic Impact
- The pace of new applications for US unemployment aid slowed last week but remained above 1m, as businesses continue to struggle with the impact of coronavirus outbreaks in some parts of the country.
- The drop in continuing claims indicated that “some rehiring is occurring”, economists at Oxford Economics said. “However, with the level remaining at a very elevated 16.1m, it underscores the painfully slow recovery in the labor market,” they added.
- Health officials have warned that other states spared early in the pandemic could face an accelerated rise in cases. Economists believe regional outbreaks may slow the US economic recovery from months of widespread shutdowns.
A Financial Crisis Is Looming for Smaller Suppliers (HBR) Published on: August 6, 2020 | Category: Economic Impact
- High-profile bankruptcies, refinancing deals, and drastic cost-cutting involving the likes of Brooks Brothers, JCPenney, Hertz, Neiman Marcus, Ford, and GM are testament to the financial distress wrought by the Covid-19 pandemic. But a less visible crisis deep within supply chains is destabilizing small and medium-sized enterprises (SMEs) and could add to the woes of the global economy.
- Over recent decades, companies have striven to become lean organizations by reducing inventory and optimizing operations to increase efficiency. However, these measures have also made their operations more fragile by, for example, increasing their dependence on a finely tuned supply base that is vulnerable to disruptions.
- Companies in need of cash — especially large firms — have increasingly turned to the only source of cash available: their payables.
Risk, resilience, and rebalancing in global value chains (McKinsey) Published on: August 6, 2020 | Category: Economic Impact
- Since 2000, the value of intermediate goods traded globally has tripled to more than $10 trillion annually.
- Businesses that successfully implemented a lean, global model of manufacturing achieved improvements in indicators such as inventory levels, on-time-in-full deliveries, and shorter lead times. However, these operating model choices sometimes led to unintended consequences if they were not calibrated to risk exposure.
- The latest advances offer new solutions for running scenarios, monitoring many layers of supplier networks, accelerating response times, and even changing the economics of production.
‘I am feeling that this is the end of my career.’ Millions of US jobs are gone for good. (Chicago Tribune) Published on: August 5, 2020 | Category: Economic Impact
- On Friday, economists expect the government to report that employers added 1.6 million jobs in July, according to data provider FactSet, and that the unemployment rate declined from 11.1 per cent to a still-high 10.5 per cent. At any other time, a million or more jobs would constitute an unheard-of increase.
- But July’s expected gain would fall way short of June’s 4.8 million increase and would signal that hiring has sharply slowed.
- Traditional retail stores will probably never regain their pre-pandemic levels of sales or employment as consumers increasingly turn to internet purchases.
- And a survey by The Associated Press-NORC Center for Public Affairs Research in July found that nearly half of those who have lost jobs during the pandemic say those jobs are gone for good.
Pandemic Lays Bare U.S. Reliance on China for Drugs (WSJ) Published on: August 5, 2020 | Category: Economic Impact, Global Response
- The shortage of a simple, over-the-counter painkiller shows how dependent the U.S. has become on China for vital pharmaceutical supplies.
- India, the world’s largest producer of generic medicines, depends on China for 80% of its active pharmaceutical ingredients, or API, the chemicals that give drugs their medicinal properties, according to industry data and Indian companies.
- Overall, China makes nearly half of the planet’s API, according to Britain’s Medicine and Healthcare Products Regulatory Agency and pharmaceutical analysts.
Reimagining the $9 trillion tourism economy—what will it take? (McKinsey) Published on: August 5, 2020 | Category: Economic Impact, Global Response
- Tourism made up 10 per cent of global GDP in 2019 and was worth almost $9 trillion, making the sector nearly three times larger than agriculture.
- COVID-19 has caused an unprecedented crisis for the tourism industry. International tourist arrivals are projected to plunge by 60 to 80 per cent in 2020, and tourism spending is not likely to return to precrisis levels until 2024. This puts as many as 120 million jobs at risk.
- New Zealand has offered an NZ $15,000 (US $10,000) grant per SME to cover wages, for example, while Singapore has instituted an 8 per cent cash grant on the gross monthly wages of local employees. Japan has waived the debt of small companies where income dropped more than 20 per cent.
Four trends from the bank earnings season (FT) Published on: August 5, 2020 | Category: Economic Impact
- Government support schemes have helped suppress customer defaults on both sides of the Atlantic. Nonetheless, this year banks have booked tens of billions of dollars of provisions to cover an expected rise in defaults amid a rise in unemployment and uptick in corporate bankruptcies.
- Led by Morgan Stanley, Goldman Sachs and JPMorgan, fixed income revenues more than doubled in the second quarter at the six largest American banks, following a gain of about a third in the first three months of the year.
- The top six US banks managed to grow their capital marginally in the first half of 2020, despite taking a whopping $60bn of loan loss provisions during the period.
Tax and spend is the new economic orthodoxy (FT) Published on: August 4, 2020 | Category: Economic Impact, Global Response
- Since March, governments have rightly embraced enormous deficits to limit the collapse in economic activity, protect incomes and sustain employer-employee relationships. As a result, public debt burdens are rising everywhere to levels not seen for many decades, or even ever before.
- And even this choice — whether to be “fiscally responsible” with debt or with taxes — is only available in a best-case scenario.
- Some express the hope — or the fear — that governments could coax their central banks into inflating away the debt instead. That is theoretically possible.
Pandemic stalled growth at Canada’s most promising tech firms, analysis shows (The Logic) Published on: August 4, 2020 | Category: Canadian Business, Economic Impact
- Funding has plummeted and hiring stalled at Canada’s top private tech firms since mid-March compared to the same period in 2019, as the COVID-19 pandemic roils all sectors of the economy.
- Employment at the 60 companies on the Narwhal List—tech firms deemed fastest-growing in Canada before the pandemic—dropped one per cent since the start of March, compared to an 18 per cent annual growth rate on average over the past two years.
- While the numbers reflect a relatively sharp contraction in the tech industry, they suggest companies in the space are faring better in some respects than the economy at large.
Global Factories Increase Production but Overseas Demand Remains Soft (WSJ) Published on: August 3, 2020 | Category: Economic Impact
- Factories across the U.S., Europe and parts of Asia increased production in July, but the upswing was held back by weak global trade and suggested a long and precarious road ahead for the global economy.
- In the U.S., two surveys of purchasing managers showed improved manufacturing activity.
- The data suggest that easing lockdown restrictions may not be enough to get the global economy back on track. Governments, especially those with export-oriented business models, may need to find a way to stimulate domestic demand to offset lingering weaknesses in international demand for foreign-made goods.
COVID-19 long-term toll signals billions in healthcare costs ahead (Reuters) Published on: August 3, 2020 | Category: Economic Impact, Global Response
- Studies of COVID-19 patients keep uncovering new complications associated with the disease.
- With mounting evidence that some COVID-19 survivors face months, or possibly years, of debilitating complications, healthcare experts are beginning to study possible long-term costs.
- They stem from COVID-19’s toll on multiple organs, including heart, lung and kidney damage that will likely require costly care, such as regular scans and ultrasounds, as well as neurological deficits that are not yet fully understood.
‘New Normal’ Emerges for Companies Navigating Covid-19 Pandemic (WSJ) Published on: August 2, 2020 | Category: Economic Impact, Leadership
- Business executives say they are getting a better grip on what a world transformed by the coronavirus looks like, giving them more confidence to lay out strategies that account for the new reality.
- “It’s time for us to get back on the front foot,” McDonald’s Corp. Chief Executive Chris Kempczinski told investors Tuesday. He said the hamburger chain initially had to work through the shock of the pandemic but is ready to ramp up marketing. It moved to a limited menu in the quarter, helping to simplify operations.
- Chevron Corp., meanwhile, is preparing for oil prices to remain depressed.
Covid-19 Shuttered More Than 1 Million Small Businesses. Here Is How Five Survived. (WSJ) Published on: August 1, 2020 | Category: Economic Impact
- “Firms that are changing now are making changes to survive,” said Jacqueline Kirtley, an assistant professor at the University of Pennsylvania’s Wharton School.
- The number of people working at companies with fewer than 500 employees also fell 10.8% in June from its February peak, according to an analysis of ADP payroll data by Moody’s Analytics.
- Showroom managers videotaped rudimentary showroom tours on their iPhones, then posted them on the company’s website so customers could shop online.
L’Oreal Reports E-Commerce Spike of 65% (Born Digital) Published on: August 1, 2020 | Category: Canadian Business, Economic Impact
- The company’s sales increased for the first time since January 2020, the company also reported, as consumers began to purchase beauty and cosmetics products online in earnest amid store closures resulting from the ongoing COVID-19 pandemic.
- Chairman and CEO Jean-Paul Agon told the Financial Times that the period marked a “tipping point” for the company, as “many [consumers] discovered buying online for the first time.”
- Agon characterized the spike in digital sales to be “unbelievable,” noting that it “has been the biggest phenomenon for us in the past six months.”
- Notably, its virtual try-on tool—a partnership with Canadian company Modiface, available via Amazon—helped consumers see how color cosmetics would look on their own faces, improving product confidence.
Dollar blues: why the pandemic is testing confidence in the US currency (FT) Published on: July 31, 2020 | Category: Economic Impact
- When coronavirus kicked off a historic economic crash and sent stock markets into freefall in March, investors and companies all over the world rushed in to the one currency they trusted above all others: the dollar.
- The scale of the rally — 9 per cent in as many days — was extreme, matching the scale of the crisis.
- Just a few months later, however, the US currency has suffered its poorest monthly performance in 10 years, hitting its lowest point against a basket of peers since 2018. The 5 per cent drop in the value of the dollar in July might sound modest, but in the relatively stable foreign exchange market that counts as dramatic.
30 million unemployed to lose extra jobless benefits, as talks between Congress and the White House are at an impasse (Washington Post) Published on: July 31, 2020 | Category: Economic Impact, Global Response
- Nearly 30 million workers are set to lose $600 in enhanced weekly unemployment benefits that have kept much of the economy afloat these past four months during the coronavirus pandemic, as top lawmakers in Congress and the White House remain at an impasse over how and whether to extend the benefits.
- Many economists and workers credit the additional money with helping them keep up with basic bills during the crisis: rent, mortgage, car and credit card payments, as well as everyday expenses like food. Most states cap weekly unemployment benefits well below $600; some pay as little as $275 a week as their maximum.
- The wrangling over whether and how to extend jobless benefits has occupied Washington for months.
COVID-19 and the great reset: Briefing note #16, July 30, 2020 (McKinsey) Published on: July 30, 2020 | Category: Economic Impact, Global Response
- In North America and in developing markets, executives have become less hopeful about their countries’ economies and more cautious in their views on potential scenarios for COVID-19 recovery.
- Leaders in China and India, on the other hand, are growing more upbeat.
- Our review of historical attrition rates suggests that the current pipeline may yield more than seven approved products over the next few years, with some available for emergency use late this year or early in the next.
- Some young middle managers are defying the problems and frustrations of this difficult period to achieve far more than others. Leading companies are capitalizing on this by installing four talent-management practices to thrive beyond the pandemic.
Private equity gags on its own medicine in contentious debt battles (FT) Published on: July 30, 2020 | Category: Economic Impact
- In a wave of company restructurings following the coronavirus crisis, Apollo Global Management and other traditional private equity groups have appealed to the courts to complain about the behaviour of rival creditors.
- Reaching for new funds to see it through the pandemic, mattress company Serta Simmons Bedding took $200m in new loans from a slim majority of creditors who, in addition to putting in the fresh money, saw their existing loans move up in seniority in the capital structure.
- Some insiders note fundamental changes in the ecosystem beyond just the evolution of asset managers. Big Wall Street banks are no longer large holders of leveraged loans, and are also less active as loan “agents”, the administrator for paper who sometimes act as mediator or traffic cop.
- Also different this time, debt lacking onerous covenants has soared. According to data compiled by Moody’s, its index of high-yield bond covenant quality has been below its “weakest-level protection” threshold since late 2014.
COVID-19 and the surge of “buy now, pay later” (Cardify) Published on: July 29, 2020 | Category: Economic Impact, Global Response
- While the US “buy now, pay later” (BNPL) market is still in its infancy, it has experienced a 197% YoY GMV increase (ending Q2 2020).
- COVID-19 had little impact on the demographics of BNPL users. BNPL usage continues to skew to a younger, female demographic, which is likely due to the fact that BNPL providers have thus far focused primarily on partnerships with female focused ecommerce brands.
- While some consumers appear to use BNPL when experiencing high credit saturation, many others appear to use the offering as an alternative to having a credit card, or simply for preference. Across our panel, 75%+ of customers choosing to use BNPL for payment have the funds to cover the full cost of purchase.
Retailers and landlords do battle over the future of leases (FT) Published on: July 29, 2020 | Category: Economic Impact
- Across the world, the pandemic has unleashed a high-stakes debate over whether rents should be fixed or linked to some measure of how a tenant’s business is performing.
- As rising infections in the US threaten more crippling lockdowns, fashion chain Urban Outfitters is among a growing number of retailers calling for variable leases to help them weather the pandemic.
- For some property companies, the scale of the calamity that has engulfed their tenants means rewriting lease agreements and sharing the pain is necessary.
Fed Extends Emergency Lending Programs by Three Months (WSJ) Published on: July 28, 2020 | Category: Economic Impact, Global Response
- In a statement, the Fed said that the extension of the programs, through Dec. 31, would “facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover.”
- When policy makers announced the programs in March, analysts hoped the virus might be brought under control by the summer.
- The programs serve two main functions. A few are playing a classic lender-of-last-resort function, allowing the Fed to flood short-term funding markets—the plumbing of modern finance—with loans.
- The second category of programs are designed to support lending for an array of credit markets, including debts of large, investment-grade corporations and short-term borrowing for more than 250 state and municipal governments.
Target talks Christmas in July with holiday shopping announcement (Market Watch) Published on: July 27, 2020 | Category: Economic Impact
- Like Walmart Inc., Target says stores will be closed on Thanksgiving Day. And Target will be making 20,000 more items, including groceries, available through its pickup and order delivery services.
- Coresight Research data shows that 48% of shoppers expect to spend less this holiday season. And 28% say they’re going to start their shopping earlier than usual.
- Wedbush Managing Director Michael Pachter has already forecast a back-to-school dud, with many school districts still working out the details about how – or if – students will return to classrooms for the new semester. With much still up in the air, parents have held off on buying supplies and other school gear.
Pandemic crisis: Global economic recovery tracker (FT) Published on: July 27, 2020 | Category: Economic Impact, Global Response
- Alternative indicators give an early picture of whether the global economy is returning to pre-crisis levels.
- The FT will be tracking the most relevant alternative indicators to provide a first snapshot of changes in activity as they happen across key sectors and countries.
- Job postings data from Indeed.com suggest that a labour market recovery has barely started.
- Retail footfall, which tracks the number of visits to shops, tells a different story. Consumers have been slower to return even as businesses have opened their doors.
Where coronavirus stimulus talks stand (Axios) Published on: July 26, 2020 | Category: Economic Impact, Global Response
- The consensus within the White House over the weekend is that they should turn their attention toward passing a smaller, bifurcated stimulus bill, focused on their main priorities.
- “I think [President Trump] made a pragmatic decision to say let’s focus on unemployment insurance, schools and liability protection as the most important aspect of the larger package and deal with anything else later,” said Chief of staff Mark Meadow.
Why Growth in the Fed’s Asset Portfolio Has Paused (WSJ) Published on: July 26, 2020 | Category: Economic Impact
- The Federal Reserve’s asset buying is taking a summer break after surging in the spring, but that doesn’t mean the central bank has dialed back its support for markets or the economy.
- The central bank this month had no takers for short-term overnight loans called repurchase agreements, down from more than $440 billion in March. Arrangements where the Fed lends dollars abroad via currency “swaps” with foreign central banks declined to $122 billion last week from $449 billion in May.
- Second, the Fed stepped in as a market maker of last resort by purchasing Treasurys and mortgage-backed securities when fire sales of these normally supersafe assets overwhelmed Wall Street dealers.
Poll: Nearly half say job lost to virus won’t return (The Spokesman-Review) Published on: July 26, 2020 | Category: Economic Impact
- Nearly half of Americans whose families experienced a layoff during the coronavirus pandemic believe those jobs are lost forever, a new poll shows, a sign of increasing pessimism that would translate into roughly 10 million workers needing to find a new employer, if not a new occupation.
- In April, 78% of those in households with a job loss thought they’d be temporary.
- About 6 in 10 nonwhite Americans say they’ve lost a source of household income, compared with about half of white Americans.
A payroll tax holiday will get Americans back to work (FT) Published on: July 26, 2020 | Category: Economic Impact, Global Response
- A voluntary payroll tax holiday could play a pivotal role in boosting disposable income and incentives to work.
- The payroll tax withholding rate, currently 6.2 per cent for the employee component, could be cut to zero for the first two years, delivering a much-needed income boost for workers who opt in.
- This would increase disposable income for existing workers, which would spur consumption and ignite a virtuous cycle that would encourage even more hiring.
China Tech Headed for Record Year for IPOs Despite Pandemic (The Information) Published on: July 24, 2020 | Category: Economic Impact
- The head of China Renaissance Group, one of China’s most influential investment banking and private equity firms, said he expects 2020 to be a record-breaking year for Chinese tech initial public offerings.
- Even as the coronavirus pandemic has triggered a global recession and created challenges for businesses around the world, some of China’s prominent investors are doubling down on their bets on the country’s most promising tech startups.
- Other than the pandemic, a big challenge for Chinese tech companies and their investors is how to navigate the growing political tensions, not just between the U.S. and China but also in other major markets such as India.
Retail e-commerce and COVID-19: How online shopping opened doors while many were closing (Statistics Canada) Published on: July 24, 2020 | Category: Canadian Business, Economic Impact
- From February to May 2020, total retail sales fell 17.9%. However, retail e-commerce sales nearly doubled (+99.3%), with some retailers relying more on this method of sale.
- Year over year, e-commerce sales more than doubled—with a 110.8% increase compared with May 2019.
- From February to April 2020, only the food and beverage subsector experienced an increase in in-store sales (+3.3%) and a surge in e-commerce (+107.0%).
- In contrast, other retail trade subsectors—such as furniture and home furnishings stores (-69.6%); sporting goods, hobby, book and music stores (-79.0%); and clothing and clothing accessories stores (-84.2%)—saw much sharper declines in in-store sales from February to April 2020.
Governments must beware the lure of free money (The Economist) Published on: July 23, 2020 | Category: Economic Impact, Global Response
- The first is the jaw-dropping scale of today’s government borrowing, and the seemingly limitless potential for yet more. The IMF predicts that rich countries will borrow 17 per cent of their combined gdp this year to fund $4.2trn in spending and tax cuts designed to keep the economy going.
- The result is that long-term interest rates stay low even while public-debt issuance soars.
- The state’s growing role as capital-allocator-in-chief is the third aspect of the new age. To see off a credit crunch, the Federal Reserve, acting with the Treasury, has waded into financial markets, buying up the bonds of at&t, Apple and even Coca-Cola, and lending directly to everyone from bond dealers to non-profit hospitals.
- The absence of upward pressure on prices means there is no immediate need to slow the growth of central-bank balance-sheets or to raise short-term interest rates from their floor around zero.
Coronavirus: California unemployment claims climb to worst levels in nearly three months (The Mercury News) Published on: July 23, 2020 | Category: Economic Impact
- Unemployment claims in California climbed to their highest levels in nearly three months amid fears of benefit reductions for workers and fresh rounds of business shutdowns to combat the coronavirus, federal officials reported Thursday.
- “The new unemployment claims show large scale new layoffs following the renewed economic lockdowns in the state over the past two weeks,” said Michael Bernick, a Milken Institute fellow and former director of the EDD.
- Nationwide, unemployment claims rose for the first time in three weeks, totaling 1.42 million for the most recent reporting period.
Why supermarkets are struggling to profit from the online grocery boom (FT) Published on: July 23, 2020 | Category: Economic Impact
- In the UK, ecommerce took two decades to go from zero to around 7 per cent of total grocery sales. It then went from 7 per cent to 13 per cent in about eight weeks.
- But there is only one problem with the surge in online sales: many supermarket chains are struggling to make a sizeable profit — and in some cases, any profit — from ecommerce because of the huge commitment in resources that it requires.
- No one expects online grocery shopping to return to pre-Covid levels. Research by UBS in the UK found that 71 per cent of respondents said they will shop online “as often or more after the Covid -19 situation improves”.
- Based on other survey evidence, Bain estimates that between 35 per cent and 45 per cent of the recent increase in online sales will turn out to be permanent.
Swapping Shopping Carts for a Laptop, Online Buyers Say They Are Hooked for Good (Business Wire Manufacturing News) Published on: July 23, 2020 | Category: Economic Impact, Global Response
- Consumers have rushed to online shopping, a “seismic shift” that will steadily grow if retailers provide convenient deliveries and environmentally friendly packaging, according to a DS Smith survey with important cues for businesses eager to flourish in a post-lockdown world.
- The national survey by DS Smith, a leading paper, packaging and recycling company, found that the pandemic may have permanently changed Americans’ buying habits, with 85 per cent of online shoppers saying they will continue to shop online at the same level or more, even after stay-at-home rules are lifted.
- Nearly two-thirds of consumers polled say they are shopping online more than before the coronavirus outbreak, chiefly because it’s a safe and convenient way to get what they need.
Credit starts to tighten as job losses remain high (Detroit Free Press) Published on: July 22, 2020 | Category: Economic Impact
- As pandemic emergency relief draws to a close for some renters and others, many struggling consumers could be tempted to cover a few bills by pulling out some old, little-used credit cards.
- Banks have been reducing credit card limits and closing accounts altogether for millions of consumers.
- Many credit card issuers had been working with consumers to let them skip minimum payments for two months early in the pandemic, said Kristen Holt, president and CEO of Farmington Hills-based GreenPath Financial Wellness.
Heir apparent (Reuters Breaking Views) Published on: July 22, 2020 | Category: Economic Impact
- The European Union has shoved the euro a step closer to being a safe haven.
- In theory, the euro is an ideal safe haven. The combined debt of the EU’s 27 members was worth 78 per cent of GDP before the pandemic, lower than the United States or Japan.
- The region runs a current account surplus, making it less dependent on flighty foreign lenders. And nearly a third of global payments involve the euro.
- Yet it’s still not clear if the fund is the template for more integration or an exception. It took a global pandemic for EU leaders to agree to something that is worth less than 6 per cent of the bloc’s 2019 GDP.
Lockheed Martin Boosts 2020 Guidance (WSJ) Published on: July 21, 2020 | Category: Economic Impact, Global Response
- Lockheed Martin Corp. said rising Covid-19 cases are affecting production of its combat jets and missiles in Texas and Florida, impacting an industry that had mostly dodged the financial fallout from the pandemic.
- The world’s biggest defense company by sales on Tuesday cut its expected deliveries of F-35 aircraft produced in Fort Worth, Texas, by 15% for this year.
- The defense industry has been one of the U.S. economy’s most-resilient sectors, with its designation as an essential industry allowing plants to avoid shelter-in-place orders.
- The Pentagon has pledged to cover contractors’ additional costs from continuing work through the pandemic, and it is seeking more than $10 billion in funding that has yet to be authorized by Congress.
Coca-Cola quarterly sales suffer biggest drop in at least 25 years (FT) Published on: July 21, 2020 | Category: Economic Impact
- Coca-Cola has suffered its steepest quarterly sales drop in at least 25 years, in stark contrast to a resilient performance from its rival PepsiCo and raising questions about the drinks company’s defensive qualities.
- The US multinational said it would axe “zombie” brands as part of efforts to protect its bottom line after the closure of bars, restaurants and other venues pushed second-quarter sales down 28 per cent year on year to $7.2bn.
- James Quincey, chief executive since 2017 who also became the company’s chairman in 2019, indicated that he expected demand to pick up in the months ahead, despite a resurgence of coronavirus cases in the US and other countries. Volumes globally had recovered from a 25 per cent slump in April to a 10 per cent decline in June, the company said.
Winning Streak of Big Cities Fades With 2020 Crises (WSJ) Published on: July 20, 2020 | Category: Economic Impact
- Three major shocks now threaten to upend that urban renaissance: The coronavirus is preying on densely packed places; anger over policing is producing social unrest reminiscent of earlier eras; and strained city and state budgets could prolong their economic pain.
- The road to recovery stands to be difficult and long, and will need to address, among other things, housing affordability and homelessness—problems that had been threatening the urban resurgence even before current crises. The end result could be that growth shifts from big cities toward smaller ones and suburbs.
- The common denominator for star cities was that they drew clusters of educated workers who shared ideas and hopped from job to job. “There are inherent advantages in terms of productivity and innovation for firms that locate in those cities,” said Enrico Moretti, professor at the University of California at Berkeley.
Canadians feeling better about personal debt levels than they have in three years: poll (The Globe and Mail) Published on: July 20, 2020 | Category: Canadian Business, Economic Impact
- Canadian consumers are more upbeat about their personal debt than they have been for three years, despite the recession brought about by the COVID-19 pandemic, a poll has found.
- MNP says it saw 51 per cent fewer consumers file for insolvency in May, compared to a year ago.
- COVID-19 dramatically altered consumer spending since restaurants, theatres, malls and other bastions of discretionary spending were closed.
C.E.O.s Say ‘It’s a Grind’ (NY Times) Published on: July 20, 2020 | Category: Economic Impact, Global Response
- “It’s a grind on the organization’s psyche,” said Brian Niccol of Chipotle. He and other leaders also bemoaned a lack of consistent communication from the government.
- C.E.O.s are losing confidence in the recovery. “I’m less optimistic today than I was 30 days ago,” Arne Sorenson of Marriott International said.
- Lobbying over the coming pandemic aid bill has begun in earnest. Groups like the U.S. Chamber of Commerce are beseeching Senate Republicans to accept a stimulus package that’s bigger than the $1 trillion they’re currently considering.
America’s hidden economic crisis: Widespread wage cuts (Politico) Published on: July 19, 2020 | Category: Economic Impact, Global Response
- Millions of Americans who managed to hold onto their jobs amid the coronavirus pandemic have seen their incomes drop as employers slashed wages and hours to weather what they expected to be a short-term shutdown.
- “The speed of a recovery is really directly aligned to how consumers are behaving,” said Jane Oates, a former Labor Department official who is now president of the nonprofit WorkingNation.
- Growth in consumer service spending is expected to halt in July and August, Goldman Sachs said in an analysis on Friday.
- It’s too early in the crisis to know for sure whether the pay cuts are here to stay, economists say, though it’s difficult to expect wages to rise while so much of the economy remains shuttered and while consumers are too concerned about the coronavirus to resume regular behavior and spending.
Resurgence of virus and lockdowns threatens US economic recovery (Straits Times) Published on: July 19, 2020 | Category: Economic Impact
- For months, the prevailing wisdom among investors, Trump administration officials and many economic forecasters was that after plunging into recession this spring, the country’s recovery would accelerate in late summer and take off in the fall as the virus receded, restrictions on commerce loosened, and consumers reverted to more normal spending patterns.
- Expanded benefits for unemployed workers, which research shows have been propping up consumer spending throughout the spring and early summer, are scheduled to expire at the end of July, while more than 18 million Americans continue to claim unemployment.
- Only 16 per cent of all workers with a young child have a nonworking spouse at home who could plausibly care for children who are not in school in order for a spouse to report to work.
U.S. Companies Lose Hope for Quick Rebound From Covid-19 (WSJ) Published on: July 19, 2020 | Category: Economic Impact
- Big U.S. companies are deciding March and April moves won’t cut it.
- Executives who were bracing for a monthslong disruption are now thinking in terms of years.
- Both Delta and United Airlines Holdings Inc. said they would scale back their ambitions to fly more later this summer.
- Still, some economists say the data obscure the reality on the ground, where consumers are increasingly fearful of the economic impact of a new surge of Covid-19 cases in much of the U.S.
Retail bankruptcies ‘tip of the iceberg’, says Levi Strauss boss (FT) Published on: July 19, 2020 | Category: Economic Impact
- A resurgence of coronavirus in the US is threatening to further upset the sector.
- Mr Bergh said he would prefer to have too little merchandise than be stuck with unsold goods.
- Denim has declined sharply in line with the broader apparel category, and US clothing store sales fell 23 per cent in June from the level last year.
- “It’s payback for highly levered companies,” he said, adding he saw a particular opportunity in the women’s business. “Most of the women’s speciality denim brands are relatively small and may not have the financial wherewithal to make it through this.”
Mnuchin Calls for Forgiving PPP Loans to Smallest Businesses (WSJ) Published on: July 17, 2020 | Category: Economic Impact
- Congress should consider automatically forgiving Paycheck Protection Program loans taken out by the smallest U.S. businesses—and offer a second helping of aid to firms hard hit by the pandemic, Treasury Secretary Steven Mnuchin said Friday.
- Mr. Mnuchin, testifying before the committee, suggested the Trump administration would back a proposal from U.S. banks and others who have said the massive lending program should see loans under $150,000 automatically turned into grants.
- That would account for 86% of the roughly 4.9 million PPP loans issued to date, and about 27% of the roughly $520 billion lent.
Mask-wearing, embraced by economists as key to the recovery, proves politically tricky for the Fed (Washington Post) Published on: July 17, 2020 | Category: Economic Impact, Global Response
- A top Federal Reserve official is calling on Americans to wear masks, saying the practice can have crucial benefits for the future of the economic recovery, even as masks fan political flames normally avoided by the central bank at all costs.
- “We’re confident that masks work, and if you want to reopen the economy faster, you want to get people back on planes and in stores,” Robert Kaplan, president of the Federal Reserve Bank of Dallas, said in an interview with The Washington Post.
- The White House’s message on mask-wearing has been inconsistent, and there is no firm federal policy on it.
What Wall Street’s results tell you about America’s economy (The Economist) Published on: July 17, 2020 | Category: Economic Impact
- The first act of the impact of the coronavirus on America’s financial markets and banking system was characterised by panic. As firms scrambled to amass the cash they needed to survive shutdowns, they rushed to sell their holdings of securities and draw down their revolving credit lines.
- The second act was less turbulent, as government support quelled the panic. Legislation passed in March bolstered unemployment benefits, set up a lending scheme for small businesses and provided a backstop for the Federal Reserve to buy up corporate debt.
- More company bosses are now telling investors that they hold enough cash to cover two or three years’ worth of outgoings.
- Newly recapitalised companies are paying back revolving loans. Of the $55bn drawn down from JPMorgan in March $39bn has since been repaid.
Closing the $30 trillion gap: Acting now to manage fiscal deficits during and beyond the COVID-19 crisis (McKinsey) Published on: July 16, 2020 | Category: Economic Impact, Global Response
- In response to the COVID-19 crisis, governments around the world have ramped up their relief and stimulus spending to unprecedented levels—just as tax revenues have slumped.
- The result could be a worldwide $10 trillion deficit in 2020 and a cumulative shortfall of up to $30 trillion by 2023.
- We estimate that they will seek to raise debt equivalent to an additional 20 to 25 per cent of global GDP over today’s level, as a direct result of the crisis.
- Our analysis suggests that higher levels of sovereign debt will add as much as $2.5 trillion a year to the debt-servicing costs of governments over the next decade.
Pandemic, Growing Need Strain U.S. Food Bank Operations (WSJ) Published on: July 16, 2020 | Category: Economic Impact
- Demand for the free vegetables, milk and canned goods on offer here has surged since the coronavirus pandemic torpedoed the U.S. economy, closing businesses and thrusting millions out of work.
- Hunger-relief organization Feeding America, a nationwide network of 200 food banks and 60,000 food pantries and meal programs, estimates the pandemic could push an additional 17 million people into what it calls food insecurity this year.
- Donations of items like rice and soup dried up, forcing many food banks to buy the goods instead and compete with retailers and other food banks.
Ben Bernanke: I Was Chairman of the Federal Reserve. Save the States. (NY Times) Published on: July 15, 2020 | Category: Economic Impact, Global Response
- In the coming months, the actions taken by both the public and the private sectors will have economic and public health repercussions that will reverberate for years.
- Our state governments serve a dual role as providers of critical services — health care, public safety, education and mass transit — as well as large employers. Many states, including New Jersey, are responsible for tens of thousands of jobs and the paychecks that go with them.
- Many other states face ominous budgetary outlooks, too, implying the need for draconian reductions in essential services to state residents and large potential job cuts.
- Furloughs have already begun in New Jersey. Since February, state and local governments collectively have laid off close to 1.5 million workers.
Most Canadians support shutdowns over 2nd coronavirus wave: Ipsos poll (Global News) Published on: July 15, 2020 | Category: Canadian Business, Economic Impact
- The survey, conducted by Ipsos for exclusively Global News between July 8 and July 10, found 77 per cent of Canadians anticipate there will be a second wave of the novel coronavirus, despite efforts to stem its spread.
- Ipsos Public Affairs CEO Darrell Bricker told Global News this number is so high because Canadians are “watching the news closely.”
- “They’re treating it almost like emergency broadcasts and something that’s been very consistent coming out of our health care professionals, and the people who manage our health care system, and our politicians is that we need to prepare ourselves for a second wave, so that message is getting through,” he said.
- According to the survey, 93 per cent of Canadians feel it would be too risky to travel to the U.S. this summer, and 85 per cent said the Canada-U.S. border should remain closed until at least the end of 2020.
Consumer Appetite for Cars, Homes Bolsters U.S. Economy (WSJ) Published on: July 15, 2020 | Category: Economic Impact
- Historically low interest rates are luring in auto and home buyers, many of whom have higher incomes and firmer job security than low-wage, service-sector workers hardest-hit during the recession, economists and industry experts say.
- Incomes also could take a hit if the federal government doesn’t continue providing expanded unemployment benefits to the millions of people still out of work because of the crisis, he added.
- Solid spending on durable goods—typically more expensive products designed to last more than three years—differs from previous downturns, when consumers sharply pulled back on these larger purchases while continuing to spend at service-sector businesses, according to findings from a Harvard-based nonprofit research group.
As Europe’s Economies Reopen, Consumers Go on a Spending Spree (NY Times) Published on: July 14, 2020 | Category: Economic Impact
- Consumers in Europe are going on a shopping spree as their economies reopen, offering hope that a fragile recovery from a deep pandemic-induced recession may be taking hold.
- Retail sales in the eurozone, which plunged to record lows while millions were confined, surged 17.8 per cent in May from the month before, as people fanned out to buy furniture, electronics, clothing and computer equipment, Europe’s statistics agency reported this week.
- The current binge has doused some worries that Europeans might feel too shaken to spend again, as happened in China, where many chose to curtail expenditures after losing their jobs or having their pay slashed.
JPMorgan loan loss charges top $10bn on ‘uncertain outlook’ (FT) Published on: July 14, 2020 | Category: Economic Impact
- JPMorgan Chase took a record $10.5bn in loan loss charges in the second quarter as the biggest US lender warned of “uncertainty” ahead even as some indicators have pointed to a nascent economic recovery.
- “Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy,” said Jamie Dimon, JPMorgan’s chief executive.
- The corporate and investment bank, which more than doubled profits to an all-time record of $5.5bn, was the standout performer.
‘I Can’t Keep Doing This:’ Small Business Owners Are Giving Up (NY Times) Published on: July 13, 2020 | Category: Economic Impact
- More owners are permanently shutting their doors after new lockdown orders, realizing that there may be no end in sight to the crisis.
- Nearly 66,000 businesses have folded since March 1, according to data from Yelp, which provides a platform for local businesses to advertise their services and has been tracking announcements of closings posted on its site.
- From June 15 to June 29, the most recent period for which data is available, businesses were closing permanently at a higher rate than in the previous three months, Yelp found.
COVID-19 roundup: CEWS extended to December (The Logic) Published on: July 13, 2020 | Category: Canadian Business, Economic Impact
- Ottawa plans to extend its wage subsidy program “until December,” to “give greater certainty and support to businesses as we restart the economy,” Prime Minister Justin Trudeau pre-announced on Monday.
- The requirement disqualified high-growth companies and software-as-a-service business models; scale-ups like point-of-sale tech firm TouchBistro and fintech Borrowell cited their ineligibility for the program when they laid off staff in April.
- The TSX, S&P 500 and Nasdaq closed down after California rolled back its reopening plans.
Consumers Want Anti-microbial Coatings in New Vehicles in light of COVID-19 and are Willing to Pay, according to IHS Markit (Business Wire Consumer News) Published on: July 13, 2020 | Category: Economic Impact, Global Response
- The survey across five major markets* indicates an increase in demand, with 54 per cent of the nearly 800 consumers saying they were “very interested” or “interested” in having an anti-microbial coating in their next personal vehicle.
- While it is not economical to coat entire interior surfaces of a vehicle, IHS Markit expects OEMs and suppliers to deploy cost-effective countermeasures on critical surfaces.
- Additionally, IHS Markit found that 25 per cent of consumers said that they will not use ridesharing after the COVID-19 pandemic and 80 per cent of consumers expect their rideshare vehicles to have some sort of disinfecting supplies going forward.
Jumbled Covid-19 Border Rules Baffle Companies, Stymie Tourism (WSJ) Published on: July 13, 2020 | Category: Economic Impact, Global Response
- After many countries reopened schools, businesses and restaurants, governments world-wide are wrestling with another coronavirus dilemma: When to throw open their borders again.
- Health officials and citizens in many countries are convinced that keeping some restrictions on flights and other arrivals—potentially for months—will be necessary to prevent further infections.
- Pressure over the issue is building, especially in countries that depend on tourists and foreign talent.
- What’s emerging is a spaghetti bowl of travel regulations that will likely act as a brake on the global economic recovery for a long time.
Second wave (Reuters Breaking Views) Published on: July 13, 2020 | Category: Economic Impact
- Analysts expect a 44 per cent year-on-year decline for S&P 500 Index earnings in the period, according to Refinitiv data.
- Even the 71 per cent rebound in earnings they now foresee for the second quarter of 2021 will not quite bring them back to where they were in April to June of 2019.
- But next year the comparisons turn positive again, and for the full year 2021 the forecasters reckon 500 of the largest U.S. companies will – just – be ahead of 2019 on profit, and also ahead on revenue after a 5 per cent drop in the top line for this year compared with last.
Not the last pandemic: Investing now to reimagine public-health systems (McKinsey) Published on: July 13, 2020 | Category: Economic Impact, Global Response
- The COVID-19 pandemic has exposed overlooked weaknesses in the world’s infectious-disease-surveillance and -response capabilities—weaknesses that have persisted in spite of the obvious harm they caused during prior outbreaks.
- The world has seen repeated instances of what former World Bank president Jim Kim has called a cycle of “panic, neglect, panic, neglect,” whereby the terror created by a disease outbreak recedes, attention shifts, and we let our vital outbreak-fighting mechanisms atrophy.
- The economic disruption caused by the COVID-19 pandemic could cost between $9 trillion and $33 trillion—many times more than the projected cost of preventing future pandemics.
Do You Dare Switch Jobs in the Coronavirus Economy? (WSJ) Published on: July 12, 2020 | Category: Economic Impact, Global Response
- The thought of confessing an issue at home to a prospective employer and pleading for flexibility can feel risky, especially as the economy teeters.
- Overall, more Americans are staying put these days, if they can. Some 2.1 million Americans quit their jobs in May, according to data from the Bureau of Labor Statistics, a 41 per cent drop from the same month a year before.
- A recent survey of executives conducted by search firm Salveson Stetson Group found that 64 per cent weren’t interested in making a career move during the pandemic.
The world is drinking less coffee while office workers stay home (Honolulu Star-Advertiser) Published on: July 11, 2020 | Category: Economic Impact, Global Response
- Shutdowns for cafes and restaurants — which typically account for about 25 per cent of demand — were overwhelming, and it could be a while before things pick up again.
- “We believe that consumers will move down price points, and turn more to cheaper, instant coffee, as they tighten their belts amidst the gloomy economic outlook,” Taohai Lin, a consumer and retail analyst at Fitch Solutions.
- Consumers will continue to embrace home brew and instant coffee, both because they will still avoid heading out to cafes, and also because it is generally a cheaper alternative.
Unprecedented damage by COVID-19 requires an unprecedented policy response (Brookings) Published on: July 10, 2020 | Category: Economic Impact, Global Response
- Despite the overwhelming fiscal and monetary policy support, this year the pandemic is expected to trigger the deepest global recession since World War II, with global GDP contracting by 5.2 per cent, as reported in our latest Global Economic Prospects report.
- The pandemic is also projected to lead the most synchronized global downturn on record, with per capita incomes shrinking in the largest fraction of countries since 1870.
- Deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment, erosion of the human capital of the unemployed, and a retreat from global trade and supply linkages.
Tyson Turns to Robot Butchers, Spurred by Coronavirus Outbreaks (WSJ) Published on: July 9, 2020 | Category: Economic Impact, Global Response
- Tyson, the biggest U.S. meat company by sales, currently relies on about 122,000 employees to churn out about 1 in every 5 pounds of chicken, beef and pork produced in the country. The work at Tyson’s Manufacturing Automation Center, which opened in August 2019, is speeding the shift from human meat cutters to robotic butchers.
- Over the past three years, Tyson has invested about $500 million in technology and automation. Chief Executive Noel White said those efforts likely would increase in the aftermath of the pandemic.
- Roughly 585,000 people work in U.S. meatpacking plants. Plant workers cycle in and out of jobs rapidly, with annual turnover in meat plants ranging from 40% to 70%, according to Boston Consulting Group, versus an overall 31% average for manufacturers.
The Recessionals: why coronavirus is another cruel setback for millennials (FT) Published on: July 9, 2020 | Category: Economic Impact
- Yet, amid the economic onslaught that coronavirus has wrought, it is those under 40 who have suffered the biggest economic blow.
- As governments begin to plot a path out of the crisis, generational redistribution is likely become one of the dominant political themes.
- Having now watched them suffer two economic cataclysms in just over a decade, there will be strong pressure for older generations to repay the favour and help millennials get back on their feet.
- The financial crisis shaped the views of millennials in ways that are already driving politics on both sides of the Atlantic, including the greater willingness of younger people to refer to themselves as socialists.
Some economies are bouncing back. But recoveries can easily go wrong (The Economist) Published on: July 9, 2020 | Category: Economic Impact
- Our analysis shows just how fragile consumer confidence can be.
- No one knows for sure yet who has fared well or badly. GDP data for the second quarter are not yet available, and in any case will probably be subject to large revisions over time, as is often the case in downturns.
- The lifting of lockdowns is now boosting economic activity. By how much, however, varies from country to country. Real-time activity data suggest that America and Spain are laggards, not only in terms of visits to restaurants but also to workplaces and public-transport stations.
The retail bankruptcies and store closings just keep coming. For some merchants, the pandemic was ‘the straw that broke the camel’s back.’ (Chicago Tribune) Published on: July 8, 2020 | Category: Economic Impact
- Many of America’s storied retailers already were facing big challenges, but the COVID-19 pandemic has hastened difficult decisions that will mean job losses and empty storefronts in the Chicago area and elsewhere.
- About 45 per cent of people said their spending in stores will return to normal as soon as COVID-19-related restrictions lift, according to a June survey by 451 Research, part of S&P Global Market Intelligence.
- Denim retailer Lucky Brand Dungarees filed for bankruptcy July 3 with plans to close 13 of its stores, including its Michigan Avenue location.
- On Wednesday, Manhattan-based men’s clothier Brooks Brothers filed for bankruptcy and will permanently close more than a quarter of its 200 stores, including a Loop location in the Rookery on LaSalle Street.
As Big Airlines Retrench, Some Carriers Detect an Opening (WSJ) Published on: July 8, 2020 | Category: Economic Impact
- In times of crisis, low-cost discount carriers often benefit, while the bigger, network carriers—with typically fatter organizations and higher costs—are forced to retrench.
- That is happening again, but on steroids, both because of the scale of today’s crisis and the unusual way demand for tickets is starting to return as lockdowns loosen.
- As economies emerge from deep freeze, though, some leisure travel is returning. That is partly because of pent-up demand among fliers eager to get away again.
Canada eyes longer-term debt as servicing costs fall on lower rates: source (Reuters) Published on: July 8, 2020 | Category: Canadian Business, Economic Impact
- Canada is eyeing issuing longer-term debt to take advantage of low interest rates, and expects servicing costs to be lower this fiscal year than was forecast last year despite the billions in emergency spending due to COVID-19, a government source said.
- In December, Canada said it expected public debt charges to be C$23.7 billion ($17.4 billion) in the 2020-21 fiscal year starting on April 1. But a government source said the new estimate would be lower despite a much higher deficit than had been expected.
- “We took on debt so Canadians wouldn’t have to,” Trudeau said at a news conference.
- The Bank of Canada slashed its benchmark rate in March by a total of 1.5 percentage points to 0.25%. It has said it does not intend to reduce rates any further.
Prioritizing health: A prescription for prosperity (McKinsey) Published on: July 8, 2020 | Category: Economic Impact, Global Response
- As the whole world reimagines public health and rebuilds its economy, we have a unique opportunity not merely to restore the past but to dramatically advance broad-based health and prosperity.
- We then determine the impact the disease burden reduction could have on population health, the economy, and wider welfare over the period to 2040. We conduct our analysis for almost 200 countries; our global, regional, and income-level analyses are aggregated from the country-level analysis.
- Economists estimate that about one-third of economic growth in advanced economies in the past century could be attributed to improvements in the health of global populations. Research focused on more recent years has found that health contributed almost as much to income growth as education.
US small-business recovery after the COVID-19 crisis (McKinsey) Published on: July 7, 2020 | Category: Economic Impact, Global Response
- After the 2008 recession, larger companies recovered to their precrisis contribution to GDP in an average of four years, while smaller ones took an average of six.
- Among respondents to our survey, close to a third were operating at a loss or breaking even prior to the crisis.
- Navigating the current crisis and thriving in the next normal will require significant changes in business and operating models for all businesses. Since early in the COVID-19 crisis, around 60 per cent of restaurants in the country have added curbside pickup, and more than a third of consumers who have ordered food for in-store or curbside pickup were first-time users of the service.
Unemployment Expected to Reach Highest Level Since Great Depression (WSJ) Published on: July 7, 2020 | Category: Economic Impact
- Unemployment rates in the world’s advanced economies will end the year higher than at any time since the Great Depression and not return to their pre-pandemic levels until 2022 at the earliest, the Organization for Economic and Cooperation and Development (OECD) said Tuesday.
- Jobless rates could be even higher if a second wave of outbreaks leads to fresh, if partial lockdowns, the OECD said.
- Even if further outbreaks are avoided—an outcome the OECD labels the “optimistic” scenario—the jobless rate is expected to fall only gradually, to 7.7% by the end of 2021. In the event of a second wave, it is expected to stand at 8.9%.
Lockdown heroes: will they ever get a raise? (FT) Published on: July 7, 2020 | Category: Economic Impact
- The pandemic has upended the hierarchy of work, demonstrating that many of the people critical to the functioning of a modern economy are also among the least well paid — from the nurses treating Covid-19 patients to the warehouse and delivery workers who provide vital supplies.
- Many also face the kind of precarious existence that results in part from the flexible labour market policies of the last four decades — lack of job security or control over hours, an inability to save and, especially in the US, little or no paid sick leave.
- In the wake of the financial crisis just over a decade ago, there was a similar debate about how capitalism’s rough edges should be smoothed, but most peoples’ experience of the post-crisis years was of austerity rather than inclusion.
US online grocery sales hit record $7.2 billion in June (TechCrunch) Published on: July 6, 2020 | Category: Economic Impact
- According to new research released today by Brick Meets Click and Mercatus, U.S. online grocery sales hit a record $7.2 billion in June, up 9% over May, as 45.6 million households turned to online grocery pickup and delivery services for a larger portion of their grocery needs.
- This figure is higher than the $4 billion seen in March 2020, when the U.S. first went under coronavirus lockdowns. Since then, online grocery sales have been growing quickly — jumping to $5.3 billion in April, then $6.6 billion in May, as more consumers shifted their shopping to online services, grocery included.
- The growth isn’t just due to a large influx of new customers to online grocery, but also due to more frequent orders.
- Customers may be ordering from online services not only for their large “stocking up” trips, but also for those smaller grocery runs they would often do in between — to grab ingredients for their weekly recipes or to replace the more quickly depleted items, like milk, bread and other staples, perhaps.
Companies pause frantic fundraising to assess pandemic damage (FT) Published on: July 6, 2020 | Category: Economic Impact, Global Response
- Companies are pausing for breath after a frantic four-month race to secure cash, drawing down bank credit lines, agreeing government rescue financings and issuing new debt and equity to outlast the coronavirus crisis.
- Padded by the extra cash, companies raised just $70bn last week through debt markets, the lowest since mid-March when the coronavirus crisis sent stock and bond prices tumbling.
- The slowdown follows the most intense burst of capital raising in history, with about $5.4tn secured by companies across the globe since the year began, including $3.9tn since the start of March.
Banks extend deadline to apply for loan deferrals (The Globe and Mail) Published on: July 5, 2020 | Category: Canadian Business, Economic Impact
- Some of Canada’s largest banks have extended programs that allow clients to defer payments on personal loans through the end of September, signalling that many borrowers still need support even as some early deferrals have expired.
- Banks are still getting new requests for deferrals – about 400 in an average week at RBC, for example – though demand has dropped dramatically from the early weeks of the COVID-19 crisis.
- “I do get concerned about our ability to understand and to see and be prepared for potential credit risks, primarily credit risks, that might be building,” said Jamey Hubbs, assistant superintendent in charge of regulation at the Office of the Superintendent of Financial Institutions.
Coronavirus: Arts venues welcome £1.57bn government support (BBC) Published on: July 5, 2020 | Category: Economic Impact, Global Response
- The government has unveiled a £1.57bn support package to help protect the futures of UK theatres, galleries, museums and other cultural venues.
- Guidance for a phased return of the performing arts is expected to be published by the government shortly.
- Many theatre producers are baffled by what they see as ‘one rule for them, and one rule for us’, approach by government, particularly when it comes to travel. Why is it OK for people to sit side-by-side on a train or plane for hours but not in a theatre, which they argue is a much more controllable environment? As far as they are concerned, that is the billion dollar question.
Soaring saving rates pose policy dilemma for world’s central bankers (FT) Published on: July 5, 2020 | Category: Economic Impact
- Households across the world have been saving up since the coronavirus pandemic hit the global economy, but their cash stash poses a dilemma for policymakers as they try to gauge the amount of stimulus needed to fuel a return to growth.
- If consumers rush back to the shops, extra government stimulus threatens to generate too much spending and inflation; but if they continue to hoard their incomes, too little stimulus threatens a vicious circle of weak expenditure, slower recovery and higher unemployment.
- Christine Lagarde, president of the European Central Bank, recently cited a surge in household bank deposits as reason for caution on the speed of the economic recovery, which she forecast would be “sequential and restrained”.
Hard-hit industries clamor for regulations during pandemic (Washington Post) Published on: July 4, 2020 | Category: Economic Impact, Global Response
- These business interests see a short-term battle against two hard-to-influence forces: individuals acting irresponsibly and a Trump administration that is reluctant to lay down the type of guidelines that would mandate individual behavior during the pandemic.
- In early May, just 29 per cent of Americans were willing to fly on planes, according to an ABC/Ipsos poll, a share that grew to 44 per cent in early June, but by later in the month, the number had fallen to just 36 per cent.
- In early June, 59 per cent of respondents said they were willing to eat at restaurants, up from 41 per cent in early May.
Driving Over Air Travel, Takeout Over Cafes: Pandemic Shapes Consumption (WSJ) Published on: July 4, 2020 | Category: Economic Impact
- U.S. consumers are buying again, but their shopping patterns show broad fears of persistent health risks amid the pandemic.
- Spending data reflect recent reopenings, with consumers cutting back on some online grocery purchases and flocking to hair salons and furniture stores.
- Consumer spending is a critical engine of recovery, typically driving two-thirds of U.S. output.
How Disney could be facing a lot more than a lost summer (Washington Post) Published on: July 4, 2020 | Category: Economic Impact
- The debut of “Hamilton” on Disney Plus this weekend is bringing the company a much-needed win, as many existing and new subscribers are tuning in for the Broadway musical about the roiling early days of the republic, then jumping on social media to talk about it.
- With every passing day of coronavirus uncertainty and social upheaval, Disney finds itself scrambling not only for revenue but also for relevance.
- They’re wondering whether a company built heavily on a foundation of in-person gatherings, and on the peddling of an inoffensive utopia that largely exists outside racial identity, can be effective in a prolonged period of isolation and fulmination.
European Workers Draw Paychecks. American Workers Scrounge for Food. (NY Times) Published on: July 3, 2020 | Category: Economic Impact, Global Response
- The pandemic has ravaged Europeans and Americans alike, but the economic pain has played out in starkly different fashion.
- The United States has relied on a significant expansion of unemployment insurance, cushioning the blow for tens of millions of people who have lost their jobs, with the assumption that they will be swiftly rehired once normality returns.
- European countries — among them Denmark, Ireland, Britain, France, the Netherlands, Spain and Austria — have prevented joblessness by effectively nationalizing payrolls, heavily subsidizing wages and enabling paychecks to continue uninterrupted.
Prospering in the pandemic: the market winners (FT) Published on: July 3, 2020 | Category: Economic Impact
- The latest in a series on companies that have defied the gloom.
- At the start of 2020, Novavax was valued at $93m, the sort of level it had bounced around for most of its three decades on the stock market. Today the Maryland-based biotech company has a market capitalisation of $4.1bn.
- In a series of articles on those fortunate few, the FT is looking at successes in gaming, cloud computing, pharmaceuticals and e-commerce.
Some jobs are coming back, but economy will need years to heal (Washington Post) Published on: July 3, 2020 | Category: Economic Impact
- Sales were stronger than expected when Macy’s reopened its first stores in early May, after a nearly seven-week coronavirus shutdown. But that initial surge soon fizzled, leaving the retailer’s brick-and-mortar business down more than one-third.
- Employers are rehiring workers faster than economists anticipated, at least as of mid-June when the latest Labor Department survey was taken.
- New national data on credit card spending, restaurant reservations and small-business hours show that the recovery from the recession that began in February may already be losing steam.
With a Few Covid-19 Adjustments, Chinese Factory Gets Back to Work (WSJ) Published on: July 3, 2020 | Category: Economic Impact, Global Response
- China, which began restarting its manufacturing plants over four months ago after Covid-19 forced a nationwide shutdown, provides a template for how this can be done safely.
- Workers had their temperatures checked four times a day, and shifts, which normally last 12 hours, were reduced to six or even four hours to limit the workers’ exposure to one another.
- For a time, ZF provided workers with lunchboxes instead of having them use the factory’s canteen, fearing that communal eating might increase the risk of infection.
Cash can’t fix the economy’s problems until the coronavirus is curbed (Axios) Published on: July 2, 2020 | Category: Economic Impact
- Thursday’s jobs report showed 4.8 million jobs created in June, but those were overwhelmingly people beginning to return to places where they had been temporarily laid off.
- The number of “permanent job losers” went up, not down, rising 25 per cent in just one month to 2.8 million from 2.2 million.
- Americans saved 32 per cent of their income in April, and 23 per cent in May — numbers vastly higher than all previous records.
Jack M. Mintz: Alberta is the first to think beyond this crisis. Now let’s see Ottawa’s recovery plan (Financial Post) Published on: July 2, 2020 | Category: Canadian Business, Economic Impact
- The IMF World Economic Outlook expects our GDP to fall 8.4 per cent in 2020 with a rebound gain of only 4.9 per cent in 2021. By 2022 GDP will still be four points below its end-of-2019 level.
- Deficits likely will continue for most of this decade — which is why running surpluses during good years, as we should have been doing since about 2011, is such smart policy.
- The plan is a confidence-booster focused on growth. It has three main parts: stimulate investment, skill training and helping people get back to work; build shovel ready — and shovel-worthy — infrastructure; and diversify the economy.
U.S. added nearly 2.4 million private-sector jobs in June, ADP reports (Washington Post) Published on: July 1, 2020 | Category: Economic Impact
- According to payroll services firm ADP, the nation’s private employers expanded by more than 2.37 million positions in June. It also revised its May figures to show a net gain of 3.1 million jobs instead of the loss of 2.76 million reported last month.
- Still, the gains are tenuous — stores, restaurants and other businesses that were allowed to reopen weeks ago are shutting down as coronavirus infections spike, leading to new layoffs.
- As the economy slowly continues to recover, we are seeing a significant rebound in industries that once experienced the greatest job losses. In fact, 70 per cent of the jobs added this month were in the leisure and hospitality, trade and construction industries.
Revealed: Covid-19 outbreaks at meat-processing plants in US being kept quiet (Guardian) Published on: July 1, 2020 | Category: Economic Impact, Global Response
- A chicken processing facility in western North Carolina reportedly underwent widespread testing for Covid-19 in early June.
- Workers at the plant were scared. Several employees had already tested positive and the company, Case Farms – which has been repeatedly condemned for animal treatment and workers’ rights violations – was not providing proper protective equipment.
- The testing turned up 150 positive cases at the facility, the worker said.
- Yet neither the company, county officials nor the North Carolina department of health and human services would confirm whether those cases were connected to Case Farms.
Canada’s economy saw record 11.6% drop in April, but signs of rebound emerging (The Globe and Mail) Published on: June 30, 2020 | Category: Canadian Business, Economic Impact
- Canada’s real GDP is likely to grow 3 per cent in May, bouncing back from a record decline in April, Statistics Canada said in a flash estimate on Tuesday, as businesses across the country began to reopen following coronavirus-linked shutdowns.
- The goods-producing sector posted a 17.0 per cent decrease, led by sharp declines in manufacturing and construction, with the service sector down 9.7 per cent on sharp plunges in the hospitality, retail and transportation sectors, the StatsCan data showed.
- “April was a ‘mense horribilis’ for the Canadian economy, and the only thing good about it was that in all likelihood it marked the bottom of this short but extremely deep recession,” Avery Shenfeld, chief economist at CIBC Capital Markets, said in a note.
Companies Hit by Covid-19 Want Insurance Payouts. Insurers Say No. (WSJ) Published on: June 30, 2020 | Category: Economic Impact, Global Response
- A cavalcade of restaurateurs, retailers and others hurt by pandemic shutdowns have sued to force their insurers to cover billions in business losses.
- But insurance companies have largely refused to pay claims under this coverage, citing a standard requirement for physical damage.
- More than half of property policies in force today specifically exclude viruses. The firms filing the lawsuits mostly hold policies without that exclusion.
Choosing the right path to unlock the economy (McKinsey) Published on: June 30, 2020 | Category: Economic Impact, Global Response
- How should governments approach the different possible paths to reopening their economies? And what is needed to spur businesses and consumers to start spending again?
- Flattening the infection curve as fast as possible and ensuring hospital capacity, treatment and testing were the imperatives to safeguard our lives.
- The expansion of treatment capacity has been impressive; we can think back to when Wuhan managed to build a hospital in two weeks, and no one in Europe or the US believed it would be possible there—but it was.
Millennials stand out as being more cautious about their personal finances during COVID-19 (Equifax) Published on: June 29, 2020 | Category: Canadian Business, Economic Impact
- Equifax data analytics confirms that, with reduced opportunity for discretionary spending, younger adults have seen a higher rate of decline in credit card balances since January at 16 per cent as compared to under 12.6 per cent for those adults 35 and older.
- After examining the consumer confidence data and survey research, Kelly Peters, CEO & Co-Founder of BEworks, suggests that younger adults in particular are less susceptible to the scarcity mindset driving other consumers.
- By proactively leveraging behavioural insights, financial Institutions can take advantage of the unique times we are living in and help consumers make a fresh start in the post-pandemic world.
- Looking across all age groups, understandably survey respondents are most concerned for their own financial situation, but there’s also a good measure of concern for their friends, country and family dealing with the pandemic that has gripped the world.
Officials warn coronavirus pandemic could worsen as global death toll hits 500,000 (Global News) Published on: June 28, 2020 | Category: Economic Impact, Global Response
- The world surpassed two sobering coronavirus milestones Sunday — 500,000 confirmed deaths, 10 million confirmed cases — and hit another high mark for daily new infections as governments that attempted reopenings continued to backtrack and warn that worse news could be yet to come.
- California Gov. Gavin Newsom rolled back reopenings of bars in seven counties, including Los Angeles.
- South Africa’s health minister warned that the country’s current surge of cases is expected to rapidly increase in the coming weeks and push hospitals to the limit.
- Health Minister Zwelini Mkhize said the current rise in infections has come from people who “moved back into the workplace.
Why the American Consumer Has Fewer Choices—Maybe for Good (WSJ) Published on: June 27, 2020 | Category: Economic Impact
- Some IGA Inc. grocery stores now offer only four choices of toilet paper. A few months ago, before the coronavirus pandemic, IGA’s 1,100 U.S. stores typically carried about 40 varieties.
- Consumer-oriented companies spent the past decades trying to please just about everyone. The pandemic made that impossible, and now some no longer plan to try.
- In grocery stores, the average number of different items sold was down 7.3 per cent over the four weeks ended June 13, said Morgan Seybert, a director of analytics at market-research firm Nielsen. The variety in some categories, such as baby care, bakery and meat, fell as much as 30 per cent earlier in the pandemic.
Governments eye new taxes on cigarettes, homes and tech giants to pay for big budget shortfalls related to the coronavirus (Washington Post) Published on: June 26, 2020 | Category: Economic Impact, Global Response
- Cash-starved cities and states across the country are starting to weigh whether to raise taxes on homes, cigarettes, local businesses and global tech giants, hoping to rake in new revenue that might help them close the massive budget shortfalls created by the coronavirus pandemic.
- Philadelphia increased fees on parking and raised wage taxes on workers who reside outside the city. Chicago Mayor Lori Lightfoot (D) said this month she could not rule out a property tax increase to cover her city’s $700 million budget shortfall.
- Unlike the federal government, which can cut taxes and rack up huge deficits with impunity, localities generally must balance their budgets each year.
A Pandemic Problem for Older Workers: Will They Have to Retire Sooner? (NY Times) Published on: June 26, 2020 | Category: Economic Impact
- It’s still early, but experts believe the pandemic will upend the timing of retirement plans of many older workers.
- In some cases, their decisions will be voluntary; in other cases, retirement may be forced upon them by job elimination or unavoidable health risk.
- “It could be that what we’re seeing is a continuation of a long-term trend in which seniority-based advantages have been gradually eroding because of the decline in unions, and the shrinking bargaining power of older workers,” Mr. Johnson said. “But health risks related to the virus are also probably a very important factor.”
Zoning adjustments could help cities rebound from coronavirus (Axios) Published on: June 25, 2020 | Category: Economic Impact, Global Response
- Cities should ease rigid permitting and zoning rules to help businesses and residents recover during the coronavirus pandemic, according to a trio of policy briefs out today by researchers at the Mercatus Center at George Mason University.
- Restrictions on the amount and type of housing allowed to be built are contributing to the public health crisis by causing overcrowding in some places and unsustainable rents in others.
- “Regulatory wiggle room” can go a long way to letting businesses and restaurants open in new locations or allowing residential development in commercial zones, the researchers argue.
With Unemployment Offices Busy, Recovery Seems a ‘Long Haul’ (NY Times) Published on: June 25, 2020 | Category: Economic Impact
- As American businesses reopen in fits and starts — and anxiety over new coronavirus hot spots increases — state unemployment offices still have their hands full.
- The total number of people collecting state unemployment insurance for the week ending June 13 was 19.5 million, seasonally adjusted, a decrease of 767,000 from the previous week and down from nearly 25 million in early May.
- In a separate report Thursday, the Commerce Department reported that durable goods orders rose 15.8 percent in May, well above the 10.5 percent increase that economists had been expecting.
A global view of financial life during COVID-19 (McKinsey) Published on: June 25, 2020 | Category: Economic Impact
- As of May, across the globe, decision-makers’ perceptions of the health of their national economies were negative and had grown slightly worse since April.
- In most countries, between 20 per cent and 60 per cent of decision-makers say they fear for their jobs, with roughly half of these holding four or fewer months of savings.
- In May, respondents across all countries reported decreased income and savings on a net basis.
Coronavirus Surge Alarms States, Markets and Businesses; Slow Recovery Feared (NY Times) Published on: June 24, 2020 | Category: Economic Impact, Global Response
- On Wednesday, governors, mayors, investors and others across the United States woke up to news that was impossible to ignore.
- More than 35,000 new coronavirus cases had been identified the day before. It was the highest number of cases reported in a single day since late April.
- It was as if the country had found itself back in March — at the start of the pandemic, in the early days of the lockdown, when masks were in short supply and the death toll was skyrocketing.
- In Washington State, where cases are rising again, Gov. Jay Inslee said residents would have to start wearing masks in public.
Data Shows Significant Drop in IT Services Spending Post COVID-19 (NextGov) Published on: June 24, 2020 | Category: Economic Impact, Global Response
- Federal and central governments across the globe have shifted spending priorities to combat the COVID-19 pandemic, with notable declines in IT spending worldwide, according to a new report.
- The U.S. has not been immune to this shift, with a major drop in spending on IT services canceling out continued investments in hardware and software, according to IDC’s “COVID-19: Global and U.S. Federal Spending—Where the Money Is Going,” published Tuesday.
- The report notes the COVID-19 pandemic has forced changes for every sector but argues “the health crisis is affecting government IT spending differently than other industries.”
- Even though trillions of extra dollars are being disbursed, most is going into grants, health and expense relief, not [new] IT systems.
Fitch Downgrades Canada’s Ratings to ‘AA+’; Outlook Stable (Fitch Ratings) Published on: June 24, 2020 | Category: Canadian Business, Economic Impact
- The rating downgrade reflects the deterioration of Canada’s public finances in 2020 resulting from the coronavirus pandemic.
- Fitch expects the coronavirus response to raise Canada’s consolidated gross general government debt to 115.1% of GDP in 2020, up from 88.3% of GDP in 2019.
- Canada has a track record of fiscal adjustment during the 1990s. However, the structure of Canada’s decentralized fiscal framework increases the complexity of any fiscal adjustment.
IMF Downgrades Already-Glum Economic Outlook Due to Coronavirus Crisis (WSJ) Published on: June 24, 2020 | Category: Economic Impact
- The IMF said on Wednesday the global economy will shrink 4.9% this year, compared with its April estimate of 3%.
- The IMF said global employment loss in the second quarter of 2020 could be equivalent to losing 300 million full-time jobs.
- Though the current decline appears significantly worse than anything since the Great Depression, it isn’t nearly as bad as that downturn, which began in 1929. During that episode, the global economy shrunk by 10% over three years—compared with this year’s 4.9% forecast.
- Advanced economies contracted by around 16% then compared with the 8% expected for this year.
Over 700 cash-strapped cities halt plans to repair roads, water systems or make other key investments (Washington Post) Published on: June 23, 2020 | Category: Economic Impact
- The decision to suspend or terminate some of these long-planned purchases, upgrades and repairs threatens to worsen municipal services and harm local businesses, according to the National League of Cities, which deduced from a new survey released Tuesday that more federal aid is necessary to ensure that local financial woes do not imperil the country’s economic recovery.
- Cities had already predicted they would need about $500 billion from Washington to help cover the massive, unanticipated declines in tax revenue and other costs incurred from the pandemic, which has shuttered businesses and left millions of Americans out of work.
- But federal lawmakers have been unwilling to authorize such a cash infusion, forcing many cities to take drastic steps to balance their budgets for fiscal 2021, which for many governments begins on July 1.
A Multibillion-Dollar Opportunity: Virus-Proofing the New Office (NY Times) Published on: June 22, 2020 | Category: Economic Impact, Global Response
- Truework, an income verification start-up, recently introduced software to help employers keep track of their workers’ health status.
- Gensler, an architecture and design firm, has a workplace floor-planning app that generates social-distancing layouts for desks and other office furniture.
- In the United States, the market for contact-tracing technologies for employers could soon be worth $4 billion annually, according to estimates from International Data Corporation, a market research firm.
Housing demand to drop as COVID-19 hit on economy deepens: CMHC (BNN Bloomberg) Published on: June 22, 2020 | Category: Canadian Business, Economic Impact
- Canada Mortgage and Housing Corp. expects a drop in home prices in the country’s biggest cities amid “severe declines” in home sales and construction.
- CMHC says the market likely won’t see a return to pre-pandemic levels before the end of 2022.
- He noted that a decline in immigration and interprovincial activity will lower demand for rental units, which combined with a “significant new supply in rental properties close to being completed,” could mean that vacancy rates are likely to jump.
Global Economy Shows Signs of Pulling Out of Its Slump (WSJ) Published on: June 22, 2020 | Category: Economic Impact
- The global economy is gradually pulling out of its stall as businesses reopen after pandemic-induced lockdowns, with output contracting at a slower pace in the U.S., Europe and Asia this month, according to surveys of purchasing managers.
- The data could be a sign that the sharp drop in economic activity that started in March, when coronavirus cases began to rise, could be bottoming out.
- The slower decline, albeit tentative, is most visible in countries that issued stringent stay-at-home rules during the coronavirus pandemic, where economic activity fell sharply in March, April and May.
What insurers can learn from China’s continuing COVID-19 recovery (McKinsey) Published on: June 22, 2020 | Category: Economic Impact
- While the broad economic view in China may be encouraging, the outlook for the insurance industry is complex—some lines fared well, while others suffered significant declines and are just now recovering.
- For example, awareness of health insurance increased, translating to a 17 per cent growth in sales from first quarter 2019 to first quarter 2020, while life (or mortality) products were down 1 per cent over the same period.
- Two-thirds of agents experienced a decline in business performance during the COVID-19 pandemic, while around 20 per cent of agents reported an improvement.
Coronavirus Cash Needs Prompt Companies to Rethink Investments (WSJ) Published on: June 22, 2020 | Category: Economic Impact
- Large companies have swiftly sold big positions in other firms after the coronavirus pandemic sparked a scramble for cash and caused them to rewrite their investing playbooks.
- So far this year, more than $28 billion of U.S.-traded stock has been sold spanning eight secondary transactions of at least $1 billion, according to Dealogic, the most by this point in any year on record.
- For many firms, the sales stem from a reckoning sparked by the coronavirus pandemic as boards focus on whether the most efficient use of capital is a minority stake in another company.
You don’t know your customer anymore (Fast Company) Published on: June 22, 2020 | Category: Economic Impact
- A recent study by Capgemini found that while 70 per cent of consumers feel optimistic about recovery from the current outbreak over the next 12 months, nearly as many (65 per cent) say they will be more mindful of their purchase habits once the pandemic is over.
- Fifty-nine percent of consumers worldwide said they had high levels of interaction with physical stores before the current crisis, but today, less than a quarter (24 per cent) see themselves in that high-interaction category.
- In the next six to nine months, 39 per cent of consumers expect a high level of interaction with physical stores–clearly below the pre-pandemic levels.
Coronavirus and personal debt: the Americans living on a ‘knife edge’ (FT) Published on: June 22, 2020 | Category: Economic Impact
- Although US consumers’ debt levels are lower than in 2008, a swift end to payment holidays would leave millions vulnerable.
- This is what happens when at least 20m jobs disappear overnight in a country where total household debt had already reached $14.3tn, according to the US Federal Reserve, before the crisis hit.
- Payment holidays from lenders and unprecedented government support have kept debt delinquency from spiking. While between 5 and 10 per cent of borrowers have accepted payment forbearance, many are still making payments.
Women’s Job Losses From Pandemic Aren’t Good for Economic Recovery (WSJ) Published on: June 21, 2020 | Category: Economic Impact, Global Response
- Women have lost jobs at a steeper rate than men during the coronavirus pandemic, a factor that is likely to hold back the economic recovery.
- Married women, who in past recessions took jobs to offset lost wages when their husband or male partner was laid off, also are less likely to seek work because their employment prospects are now limited, one researcher concluded.
- The fragility of female-dominated jobs is different from past recessions, when goods-producing sectors such as construction and manufacturing—which are predominantly men—saw greater employment losses.
Will public debt be a problem when the Covid-19 crisis is over? (FT) Published on: June 21, 2020 | Category: Economic Impact
- Even more notable has been the unanimity among macroeconomists that massive fiscal and monetary stimulus is the appropriate response to a “wartime” economic emergency. Almost no one seriously disputes that policy should be doing “whatever it takes” to overcome the shock from the virus.
- But once the recovery is established, the public debt overhang is likely to divide economists along familiar lines.
- John Cochrane and Kenneth Rogoff are among the influential economists who warn that most advanced economies, notably the US, could soon be running on balance-sheet public debt ratios higher than anything seen before, even following the 2008 crisis. Off-balance sheet commitments in social security and health increase potential government spending even further.
Apple to close some stores in states where virus cases are rising (FT) Published on: June 19, 2020 | Category: Economic Impact
- Apple says it will again close almost a dozen stores in the US because of a recent rise in coronavirus infections in the south and west, reversing its recent move to begin reopening stores as states start to ease lockdowns.
- “Due to current Covid-19 conditions in some of the communities we serve, we are temporarily closing stores in these areas,” Apple said. “We take this step with an abundance of caution as we closely monitor the situation and we look forward to having our teams and customers back as soon as possible.”
Canadian Retail Sales See ‘Massive’ Drop In April, Surprising The Experts (Huffington Post) Published on: June 19, 2020 | Category: Canadian Business, Economic Impact
- Canadian retail sales plunged for the second month in a row in April, falling 26.4 per cent during the period when the COVID-19 lockdowns were at their peak, according to data from Statistics Canada.
- The decline is nearly twice as large as the one seen in the U.S. in April, where sales fell 14.7 per cent. It’s also twice as large as what economists had been expecting for Canada.
- It wasn’t all bad news in the report though. Retailers who had an online presence were able to capitalize on some of the shifts in buying patterns.
Fed’s Rosengren Says U.S. Economy Will Need More Monetary, Fiscal Support (WSJ) Published on: June 19, 2020 | Category: Economic Impact
- Federal Reserve Bank of Boston President Eric Rosengren said the U.S. central bank and broader government will need to do more to help the economy emerge from the ongoing impact of the coronavirus pandemic.
- In response to a question after the speech, Mr. Rosengren said, “It’s incredibly important that we support both individuals and businesses that have been affected by this disruption.”
- Mr. Rosengren pushed back in his speech at mounting optimism, driven by recent data, that the economy may be rebounding faster than was expected.
Canadian exports set to plunge in 2020, with rebound in store next year (The Globe and Mail) Published on: June 18, 2020 | Category: Canadian Business, Economic Impact
- The worst industry that anybody would have expected would have had the numbers that we’re now posting for the best industries.
- The industries hit hardest by the pandemic include aerospace, oil, autos and travel services, while the ones weathering the storm the best include agriculture, consumer goods, ores and metals, and chemicals and plastics, according to the report.
- Consumer goods, according to EDC’s forecasts, will see a 9 per cent decline in exports in 2020, followed by a 10 per cent increase next year.
- Mary Robinson, president of the Canadian Federation of Agriculture, says agriculture may fare better than some of its counterparts in exports because the industry is responsible for feeding Canadians and consumers globally.
A Tidal Wave of Bankruptcies Is Coming (NY Times) Published on: June 18, 2020 | Category: Economic Impact
- Already, companies large and small are succumbing to the effects of the coronavirus. They include household names like Hertz and J. Crew and comparatively anonymous energy companies like Diamond Offshore Drilling and Whiting Petroleum.
- Many are teetering on the edge. Chesapeake Energy, once the second-largest natural gas company in the country, is wrestling with about $9 billion in debt.
- More than 6,800 companies filed for Chapter 11 bankruptcy protection last year, and this year will almost certainly have more.
Despite reopening orders, real-time economic data shows Canada’s economy remains largely frozen (The Logic) Published on: June 18, 2020 | Category: Canadian Business, Economic Impact
- Nationwide restaurant reservations are down 75 per cent from the same time last year, but up from the 100 per cent drop in March.
- That increase is driven largely by Edmonton, which leads not only the average in Canada, but most of the world when it comes to restaurant reservations, down only 42 per cent from last year.
- Nationwide walking searches are up 22 per cent, according to Apple, which aggregates changes in search volume for directions on its Maps app.
- Searches for transit maps are down 56 per cent, but driving searches are up 24 per cent.
Why the US pandemic response risks widening the economic divide (FT) Published on: June 18, 2020 | Category: Economic Impact
- In terms of raw numbers, the US economic response to coronavirus has been overwhelming. As well as the $3tn in fiscal stimulus that has been introduced so far, there has also been a massive injection of liquidity into the financial system by the Fed. Steven Mnuchin, the US treasury secretary, has hailed the rescue effort for saving millions of jobs.
- Many of the measures aimed at ordinary people are set to fade or expire soon and, given opposition from many Republican lawmakers, it is not at all clear that they will be extended.
- In the US after the financial crisis, it was the wealthy who saw their incomes and wealth come back fairly quickly, in the first couple of years, while the rest of America had to wait, and for many, in fact, wealth never recovered.
The pandemic has shown that Amazon is essential—but vulnerable (The Economist) Published on: June 18, 2020 | Category: Economic Impact, Leadership
- Jeff Bezos’s vision of a world shopping online is coming true faster than ever. But the job of running Amazon hasn’t got any easier.
- The digital surge began with online “pantry-loading” as consumers bulk-ordered toilet rolls and pasta. Amazon’s first-quarter sales rose by 26% year on year.
- Amazon has hired 175,000 staff, equipped its people with 34m gloves, and leased 12 new cargo aircraft, bringing its fleet to 82.
- Last year Amazon had a 40% share of American e-commerce and 6% of all retail sales. There is little evidence that it kills jobs.
Walmart surpasses eBay in U.S. e-commerce for the first time, Amazon still tops: eMarketer (Market Watch) Published on: June 16, 2020 | Category: Economic Impact
- Walmart Inc. has surpassed eBay Inc. in share of U.S. e-commerce sales for the first time, according to May 2020 data provided by eMarketer, though Amazon.com Inc. remains number one by a large margin.
- Both outcomes are the result of the coronavirus, which forced stores to close and consumers to social distance, shifting shopping activity to necessities and other categories in line with spending more time at home.
- “Compared to pre-pandemic sales for the period, online transactions were $52 billion higher than expected for the period, with e-commerce levels tracking higher than shopping holiday levels on Black Friday and Cyber Monday,” according to the Adobe report.
U.S. bank profits plunge 70% on coronavirus loss provisioning (Reuters) Published on: June 16, 2020 | Category: Economic Impact
- U.S. bank profits fell by 69.6% to $18.5 billion in the first quarter of 2020 from the year prior as banks felt the economic impact of the novel coronavirus pandemic, according to data from a banking regulator.
- The new report, the first government survey of the industry since the pandemic shut down large parts of the economy, shows banks set aside $38.8 billion to cover potential loan losses in the future, up nearly 280% from the year prior.
- The amount of loans banks charged off as delinquent was up nearly 15%, driven by an 87% increase in charge-offs for commercial and industrial loans.
The great balancing act: Managing the coming $30 trillion deficit while restoring economic growth (McKinsey) Published on: June 16, 2020 | Category: Economic Impact
- The dual imperative of our time is to save lives and safeguard livelihoods—and governments around the world are pulling out all the stops to do so.
- As a result, government deficits worldwide could reach $9 trillion to $11 trillion in 2020, and a cumulative total of as much as $30 trillion by 2023.
- There is already concern that many countries will struggle to meet their commitments to creditors, sparking a debt crisis that would compound the economic crisis unleashed by COVID-19.
Risk sentiment rides the waves with some central bank help (FT) Published on: June 15, 2020 | Category: Economic Impact, Global Response
- Global investor sentiment was challenged by signs of another Covid-19 wave on Monday, before Wall Street was bolstered by an announcement on corporate bond purchases from the US Federal Reserve.
- The catalyst for the rebound was the Fed announcing that it would purchase corporate bonds to create a portfolio that reflects “a broad, diversified market index of US corporate bonds”.
- The latest demonstration of seemingly unlimited central bank support drowned out the worrying news over the weekend that Beijing had experienced a jump in coronavirus infections.
At A Time Of Great Need, Public Health Lacks ‘Lobbying Muscle’ (Kaiser Health News) Published on: June 15, 2020 | Category: Economic Impact, Global Response
- “We don’t have millions of dollars to spend on billboards, and we can’t call in a hundred people to stand up at a hearing and say ‘I didn’t get sick because of public health measures” said Kat DeBurgh, executive director of the Health Officers Association of California.
- Health officials say the additional $150 million they’re requesting would help them hire public health nurses and disease investigators, fund public health labs and purchase protective gear.
- County health directors say chronic underfunding has forced them to make difficult decisions to curtail spending and cut programs like public health labs — 11 of 40 have shuttered in the past two decades.
Governments May Revisit Postwar Playbook as They Tackle Huge Debts (WSJ) Published on: June 14, 2020 | Category: Economic Impact
- In the U.S. and elsewhere, government debt is set to soar this year, reflecting lower tax revenue and the cost of financial aid to businesses and households during lockdowns.
- The International Monetary Fund forecasts that U.S. government debt will reach 131% of annual economic output this year, up from 109% in 2019.
- Some people thinking about how to pay down the debt are looking at an approach used after World War II: financial repression, or policies that ensure that interest rates remain low.
Florida fired its coronavirus data scientist. Now she’s publishing the statistics on her own. (Washington Post) Published on: June 13, 2020 | Category: Economic Impact, Leadership
- Tension built for days between Florida Department of Health supervisors and the department’s geographic information systems manager before officials showed her the door, she says, permanently pulling her off the coronavirus dashboard that she operated for weeks.
- Managers had wanted Rebekah Jones to make certain changes to the public-facing portal, she says. Jones had objected to — and sometimes refused to comply with — what she saw as unethical requests.
- White House coronavirus response coordinator Deborah Birx praised Florida’s official coronavirus dashboard in April as a beacon of transparency.
- But Jones has asserted that the site undercounts the state’s infection total and overcounts the number of people tested — with the official numbers bolstering the decision to start loosening restrictions on the economy in early May, when the state had not met federal guidelines for reopening.
One country, two pandemics: what COVID-19 reveals about inequality in Canada (CBC) Published on: June 13, 2020 | Category: Canadian Business, Economic Impact
- A new analysis conducted by CBC News of cases in Montreal, for instance, found strong correlations linking higher rates of COVID-19 infections with low-income neighbourhoods and neighbourhoods with higher percentages of Black residents.
- Public health officials in Ontario reported last week that the rates of infection and death from COVID-19 were disproportionately higher in the province’s most ethnically and culturally diverse neighbourhoods.
- The rate of hospitalizations in those hard-hit communities was four times higher. The rate of death was twice as high.
- In a working paper published this week, four Canadian economists reported that the employment losses in April were greater for younger, low-wage and non-unionized workers, with “public facing” sectors like retail and restaurants hit the hardest.
Trudeau’s call with premiers gets testy as leaders butt heads over funding to reopen economy (CBC) Published on: June 12, 2020 | Category: Canadian Business, Economic Impact
- Thursday evening’s weekly call between Prime Minister Justin Trudeau and the premiers was marked by testy exchanges over the federal government’s pledge of $14 billion to help provinces reopen their economies and the future of the military in Quebec’s long-term care facilities, according to federal and provincial sources with knowledge of the call.
- When Trudeau announced the $14 billion on June 5, he said it would be earmarked for specific measures to help provinces reopen their economies safely.
- Those measures include the purchase of personal protective equipment (PPE) for frontline healthcare workers and businesses.
Businesses Want Virus Legal Protection. Workers Are Worried. (NY Times) Published on: June 12, 2020 | Category: Economic Impact, Global Response
- The stock exchange required Mr. Corpina and others who work there to acknowledge that returning to work could expose them to the coronavirus, and to promise not to sue if they were infected.
- Whether companies are liable if their workers and customers catch the coronavirus has become a key question as businesses seek to reopen around the country.
- Companies and universities — and the groups that represent them — say they are vulnerable to a wave of lawsuits if they reopen while the coronavirus continues to circulate widely, and they are pushing Congress for temporary legal protections they say will help get the economy running again.
KKR asks advisers to ‘share the pain’ amid $18bn spending spree (FT) Published on: June 12, 2020 | Category: Economic Impact
- KKR has asked its financial and legal advisers to “share in the economic pain” by providing discounts on work done this year, even as it has emerged as the most aggressive private equity investor during the economic downturn.
- The US group with $207bn assets under management has requested discounts of at least 15 per cent from advisory firms that it refers to as “long-term partners,” said several people who received the requests.
- KKR’s roster of advisers — accountants, law firms, intelligence companies and consultants — includes some of the largest corporate firms, such as EY and Simpson Thacher & Bartlett, which are among several approached, said people familiar with the matter.
One metre or two? Economic pressure stokes distancing debate (FT) Published on: June 11, 2020 | Category: Economic Impact, Global Response
- Intense economic pressure to lift coronavirus lockdowns around the world has stoked debate over the minimum physical distancing needed to limit the spread of infection.
- Evidence so far suggests that the World Health Organization guideline of one metre is a bare minimum, and that the transmission risk falls further as that gap widens to two metres and beyond.
- Fernando Simón, the epidemiologist leading Spain’s virus fight, said this week that two metres was still ideal, even though his country would cut its requirement to 1.5 metres from June 21.
WSJ Survey: U.S. Recovery From Pandemic Shock to Begin by Third Quarter (WSJ) Published on: June 11, 2020 | Category: Economic Impact
- The U.S. economy will be in recovery by the third quarter of this year, economists said in a survey that also concluded the labor market will fare better than previously expected following the effects of the coronavirus pandemic.
- A monthly Wall Street Journal survey found that more than two-thirds of economists, 68.4%, expect the economic recovery to start in the third quarter.
- Business and academic economists polled in the survey expect gross domestic product to shrink 5.9% this year, measured from the fourth quarter of 2019, a slight improvement from the 6.6% contraction economists predicted in last month’s survey.
Treasury Secretary Mnuchin says ‘we can’t shut down the economy again’ (CNBC) Published on: June 11, 2020 | Category: Economic Impact, Global Response
- Treasury Secretary Steven Mnuchin told CNBC that shutting down the economy for a second time to slow Covid-19 isn’t a viable option.
- The Treasury secretary’s comments came as Wall Street grew more concerned about a second wave of coronavirus cases in the U.S.
- “And not just economic damage, but there are other areas and we’ve talked about this: medical problems and everything else that get put on hold,” he added.
Fed predicts no rate increases until at least the end of 2022 (FT) Published on: June 10, 2020 | Category: Economic Impact, Global Response
- Federal Reserve officials predicted they would keep interest rates close to zero until at least the end of 2022, as the US central bank indicated it would take years to bring joblessness back down to the levels before the coronavirus pandemic.
- The dovish tone from the Fed, which is expecting the US economy to contract by 6.5 per cent this year, with unemployment falling to 9.3 per cent, reinforced expectations that the central bank was settling in for an extended fight against the economic shock triggered by the virus.
- Mr Powell pushed back against concerns the Fed had artificially propped up markets in a way that could be a source of financial trouble ahead.
Coronavirus Continues to Weigh on U.S. Consumer Prices (WSJ) Published on: June 10, 2020 | Category: Economic Impact
- U.S. consumer prices dropped for a third straight month in May as the coronavirus pandemic kept shoppers and travelers at home, but the rate of decline in inflation eased as the cost of groceries, rent and medical services rose.
- The consumer-price index, which measures what Americans pay for everything from alcohol to lawn mowers, fell a seasonally adjusted 0.1% in May after comparable declines of 0.8% in April and 0.4% in March, the Labor Department said Wednesday.
- The cost of food bought for home consumption climbed 1% in May following April’s increase of 2.6%, which was the largest month-over-month jump in grocery prices since 1974.
The Results Of The Zagat Future Of Dining Study (Zagat) Published on: June 10, 2020 | Category: Economic Impact
- 3 in 4 diners cite health and safety concerns as the biggest deterrent to dining out again, far outweighing financial reasons.
- 83% of those not immediately comfortable with returning to restaurants will be made more comfortable with social distancing measures and masks worn by staff.
- As restaurants continue to struggle, some have been offering meal kits, groceries, and alcohol to local consumers. The majority (76%) of respondents surveyed are aware of restaurants in their area selling these items.
- Of those with access to these restaurants, 38% have made a purchase—and if available, 59% will continue to purchase after the crisis.
Rental advocates push back on potential eviction plans from province (News1130) Published on: June 9, 2020 | Category: Canadian Business, Economic Impact
- In the wake of a push by B.C. landlords to get their eviction privileges restored, a tenants’ rights group is pushing back.
- While landlords can’t evict tenants for not paying their rent right now, that debt isn’t going away, and Gharibnavaz says there needs to be a long-term solution.
- “Maybe some sort of rent bank or something like that, where the renter is going to take on the burden,” he suggests.
Pandemic measures expose work-from-home inequality says StatsCan (CBC) Published on: June 8, 2020 | Category: Canadian Business, Economic Impact
- Statistics Canada says that women, people with higher earnings and those with more education are more likely to be able to work from home and therefore less likely to suffer a loss of income due to measures to limit spread of COVID-19.
- About 50 per cent of single women have jobs that allow them to work from home, compared with about one-third of single men, the report found, while 62 per cent of women in dual-income families hold jobs that can be done from home, compared with 38 per cent for men.
- Statistics Canada also finds that while less than 30 per cent of primary earners with a high school diploma can work from home, roughly two-thirds of their counterparts with at least a bachelor’s degree could do so.
World Bank says coronavirus to shrink 2020 global output by 5.2% (Reuters) Published on: June 8, 2020 | Category: Economic Impact
- The coronavirus will cause global economic output to contract by 5.2% in 2020, the World Bank said on Monday, warning that its latest forecasts would be revised downward if uncertainty over the pandemic and business lockdowns persist.
- In its latest Global Economic Prospects report, the World Bank said that advanced economies are expected to shrink 7.0% in 2020, while emerging market economies will contract 2.5%, their first since aggregate data became available in 1960.
- The updated forecasts show more damage to the economy than estimates released in April by the International Monetary Fund, which predicted a 3.0% global contraction in 2020.
Energy Firm BP to Cut 10,000 Jobs Worldwide Amid Coronavirus Pandemic (TIME) Published on: June 8, 2020 | Category: Economic Impact, Global Response
- Energy company BP said Monday that its global workforce will be trimmed by 10,000 jobs as the COVID-19 pandemic slams the oil and gas industry.
- The changes are expected to significantly impact senior levels, cutting the number of group leaders by a third. The company said it will make the senior structure flatter.
The careful economy (McKinsey) Published on: June 8, 2020 | Category: Economic Impact, Leadership
- How financial stability, security, and safety are being redefined for an uncertain future.
- Discretionary spending has fallen, the result of mass unemployment, wage decreases, the realities of living under shelter-in-place orders, and general uncertainty about the future.
- Looking ahead, consumers globally have a pessimistic or unsure view of their country’s economic outlook.
- China is a notable exception: half of consumers there expect the economy to rebound in the next few months as the country emerges from lockdown.
Shipping industry warns of trade logjam as crews remain stranded (FT) Published on: June 7, 2020 | Category: Economic Impact, Global Response
- The international shipping industry has warned of a threat to global trade from a mounting crisis on board merchant vessels, with up to 400,000 crew stranded either at sea or at home by travel restrictions because of the Covid-19 pandemic.
- Many crew have worked several months beyond their contracts, exceeding regulatory limits, and ship owners, unions and captains have sounded the alarm over safety.
- Many seafarers are also struggling to obtain entry or exit visas, while the suspension of commercial flights increase the difficulties in moving crew around.
‘I don’t know if that counts as a job’: Fewer hours, less pay and more anxiety greet returning workers (Washington Post) Published on: June 6, 2020 | Category: Economic Impact
- As millions of Americans return to work amid the worst economic crisis in a generation, they’re unexpectedly discovering their old positions are far more burdensome than they used to be.
- And their job security — despite President Trump’s recent proclamations about an economy on the mend — remains anything but guaranteed.
- At the same time, though, Bunker said there was a higher-than-expected spike in part-time employment, one of a few indicators that “suggests there has not been a full return to work” for some people.
Will the end of lockdown prompt the sale of the century? (FT) Published on: June 6, 2020 | Category: Economic Impact
- Shoppers in Florida’s Tampa Bay area this week had plenty of bargains to choose from as retailers seemingly tried to outdo each other with promotions.
- Airlines, hotels and restaurants are also offering special deals to woo consumers — millions of whom remain reluctant to leave their homes, never mind embark on a spending splurge during a global recession.
- “Consumers are not buying, and therefore businesses have no pricing power,” said Mark Zandi, chief economist at Moody’s Analytics.
The unluckiest generation in U.S. history (Washington Post) Published on: June 5, 2020 | Category: Economic Impact
- After accounting for the present crisis, the average millennial has experienced slower economic growth since entering the workforce than any other generation in U.S. history.
- Millennials will bear these economic scars the rest of their lives, in the form of lower earnings, lower wealth and delayed milestones, such as homeownership.
- Things improved in May, but the improvement just means we’re back to December 2000 levels of employment.
- For millennials who came of age then, it’s as if all the plodding expansions and job recoveries of their namesake epoch evaporated in weeks.
Where Employment Improved—and Where It Didn’t (WSJ) Published on: June 5, 2020 | Category: Economic Impact
- Among goods-producing industries, manufacturing showed strong gains. In the services category, jobs in food services and drinking places rose by 1.4 million, accounting for about half of the gain in total nonfarm employment.
- On the other hand, government payrolls continued to shrink as steep declines in revenue forced cities and states to lay off workers.
- Construction registered the strongest improvement among goods-producing industries with an increase of 464,000 jobs, or almost half the number lost in April.
- Despite the coronavirus shutdowns, house prices continued to rise, and some real-estate brokers and economists say they see signs that demand for new homes has started to rise in recent weeks.
Canada’s trade deficit doubled to $3.3B in April as COVID-19 walloped imports and exports (CBC) Published on: June 4, 2020 | Category: Canadian Business, Economic Impact
- Exports fell to lowest level in a decade, while imports dropped to lowest since 2011.
- “We are really getting hammered with respect to cars and crude,” said Peter Hall, chief economist at Export Development Canada.
- The slump in auto and energy exports because of shutdowns was also reflected in Canada-U.S. trade data, where total trade fell by $23.4 billion, representing more than 90 per cent of Canada’s trade activity decline.
Pandemic Could Scar a Generation of Working Mothers (NY Times) Published on: June 4, 2020 | Category: Economic Impact
- Working from home has highlighted and compounded the heavier domestic burden borne by women. Now office reopenings may force new career sacrifices.
- Day care centers are just starting to reopen, with restrictions, so who will take care of their children?
- For many working mothers, the gradual reopening won’t solve their problems, but compound them — forcing them out of the labor force or into part-time jobs while increasing their responsibilities at home.
The real impact of COVID-19 on income (Cardify) Published on: June 4, 2020 | Category: Economic Impact
- Over 60% of Americans experienced a decline in income during the pandemic, both in the form of job losses and salary reductions.
- Low income segments of the population were the most likely to suffer a total loss of income (14%). Conversely, high income individuals were at a much higher risk of an income reduction, but were much less likely to suffer total income loss (4%).
- The vast majority of income losses arise from salary reductions, not job dismissals. As a result, we believe that looking at unemployment figures to assess the financial health of consumers coming out of COVID-19 is deeply flawed and incomplete.
Coronavirus crisis could cause $25tn fossil fuel industry collapse (Guardian) Published on: June 3, 2020 | Category: Canadian Business, Economic Impact
- The coronavirus outbreak could trigger a $25tn (£20tn) collapse in the fossil fuel industry by accelerating a terminal decline for the world’s most polluting companies.
- The report predicts a 2% decline in demand for fossil fuels every year could cause the future profits of oil, gas and coal companies to collapse from an estimated $39tn to just $14tn.
- It follows findings from the International Energy Agency, which forecast the Covid-19 fallout would lead to the most severe plunge in energy demand since the second world war and trigger multidecade lows for the world’s consumption of oil, gas and coal, while renewable energy continued to grow.
Amazon is sued over warehouses after New York worker brings coronavirus home, cousin dies (Reuters) Published on: June 3, 2020 | Category: Canadian Business, Economic Impact
- Amazon.com Inc has been sued for allegedly fostering the spread of the coronavirus by mandating unsafe working conditions, causing at least one employee to contract COVID-19, bring it home, and see her cousin die.
- The lawsuit said Amazon has made JFK8, which employs about 5,000, a “place of danger” by impeding efforts to stop the coronavirus spreading, boosting productivity at the expense of safety.
- The lawsuit seeks an injunction requiring that Amazon comply with worker safety and public nuisance laws, and not punish employees who develop COVID-19 symptoms or are quarantined.
Millions Of Americans Skip Payments As Tidal Wave Of Defaults And Evictions Looms (NPR) Published on: June 3, 2020 | Category: Economic Impact
- Americans are skipping payments on mortgages, auto loans and other bills.
- Help from Congress and leniency from lenders have kept impending financial disaster at bay for millions of people. But that may not last for long.
- Ford says the company is allowing many customers hurt financially during the pandemic-related shutdowns to skip payments.
Ottawa to pledge billions to aid cash-strapped cities (Toronto Star) Published on: June 1, 2020 | Category: Canadian Business, Economic Impact
- Prime Minister Justin Trudeau on Monday will pledge several billion dollars in assistance to help cash-strapped cities whose bottom lines have been battered by the pandemic, the Star has learned.
- An official originally told the Star the funding would be earmarked for infrastructure funding. That was clarified Monday. In fact it would be an advancement of their promised share of gas tax funding “much much sooner,” said the federal official who spoke on background.
- Municipalities back in April had asked the provinces and federal government for $10 billion — $7.6 billion to cover operating losses suffered by towns and cities and a further $2.4 billion for losses related to transit operations. Toronto alone is looking at a shortfall of up to $1.5 billion this year.
Hesitancy to resume activities marks reopening challenges: POLL (ABC News) Published on: June 1, 2020 | Category: Economic Impact, Global Response
- With two-thirds of Americans worried about a second wave of the coronavirus, a new ABC News/Washington Post poll finds nearly 6 in 10 people are unready to resume their pre-pandemic activities, underscoring continued public unease as the nation seeks a return to normalcy.
- 59 per cent report severe economic impacts in their community — up from 43 per cent two months ago. Among those employed before the pandemic began, 24 per cent have been laid off or furloughed.
- Further demonstrating the extent of the pandemic, 42 per cent of Americans now know someone personally who has been diagnosed with COVID-19, up nearly fourfold from 11 per cent in late March.
China’s Barely Begun Economic Recovery Shows Signs of Stalling (WSJ) Published on: June 1, 2020 | Category: Economic Impact
- More factories are reopening, but they face falling orders from overseas customers.
- More and more Chinese factories have reopened for work in the past three months as authorities have eased their once-aggressive coronavirus measures.
- Taken together, China’s manufacturing surveys suggest that the pace of the economic recovery from the coronavirus disruption is slowing, due in large part to lackluster overseas buying, said Yang Weixiao, a Beijing-based economist at Kaiyuan Securities.
US online grocery shopping jumps as chains rush to add capacity (FT) Published on: June 1, 2020 | Category: Economic Impact
- A Brick Meets Click/Mercatus survey suggested that 43m US shoppers placed 73.5m online grocery orders in May, at an average of $90 per order.
- Sales in the period are estimated at $6.6bn, a 24 per cent increase over April — and a 450 per cent increase on the level in August last year.
- It also found that household penetration for online grocery buying had risen to 33 per cent in May, up 2 per cent from April, and more than double what had been projected for this period before the impact of coronavirus.
Tenants Largely Stay Current on Rent, for Now (NY Times) Published on: May 31, 2020 | Category: Economic Impact
- Despite a 14.7 percent unemployment rate and millions of new jobless claims each week, collections at many buildings are only slightly below where they were last year, when the economy was booming.
- How can this be? The answer is a little negotiation and a lot of government money.
- The $2 trillion CARES Act, which backstopped household finances with stimulus checks and extended unemployment benefits, has kept a surprising number of tenants current on their monthly balances.
New York governor signs bill that provides death benefits to families of frontline workers (CNN) Published on: May 30, 2020 | Category: Economic Impact, Global Response
- New York Gov. Andrew Cuomo has signed a bill that gives death benefits to families of frontline workers who died battling the coronavirus pandemic.
- “It is the least we can do to say thank you, and we honor you, and we remember you. You gave your lives for us. We will be there to support your families going forward,” Cuomo said at a news conference on Saturday.
Small signs of life return to US economy (FT) Published on: May 30, 2020 | Category: Economic Impact, Global Response
- An increase in traffic and a fall in panic purchases at the supermarket are among the signs that Americans are taking their first cautious steps back to normality after coronavirus flatlined the economy.
- There is still a long way to go after months of lockdown. But the low for the “two-month recession” probably occurred in April, says Douglas Porter, chief economist at BMO Financial Group.
- Purchases of toilet paper and disinfectants have declined 63 and 83 per cent, respectively, according to data from Nielsen.
Canada GDP Fell at Near Record 8.2% (WSJ) Published on: May 29, 2020 | Category: Canadian Business, Economic Impact
- Canada’s gross domestic product, or the broadest measure of goods and services produced in an economy, fell at an 8.2% annualized rate in the first quarter, to 2.10 trillion Canadian dollars ($1.53 trillion), Statistics Canada said Friday.
- The drop in Canadian output in the first three months of 2020 was steeper relative to the U.S., its biggest trading partner and southern neighbor.
- Commerce Department data indicate U.S. GDP fell at a 5% annual rate in the first quarter.
COVID-19 Pandemic Wreaking Havoc on Americans’ Retirement Plans While Anxiety over Continued Market Risks Remains (Business Wire) Published on: May 28, 2020 | Category: Economic Impact
- 58% of Americans say the economic impacts of COVID-19 are having a negative effect on their financial retirement plans.
- 54% of Americans are worried the market hasn’t bottomed out yet.
- Over seven in 10 (72%) say the impacts of the COVID-19 pandemic are making them rethink how to protect their retirement savings from volatility.
Designing insurance for the next pandemic (FT) Published on: May 28, 2020 | Category: Economic Impact
- But Ms. Eastwood has been told by Hiscox, the Grand’s insurer, that the policy does not cover the costs of the closure, because the government’s wide-ranging response to the pandemic falls outside the scope of the contract.
- Along with about 400 other companies the theatre is looking at whether to sue Hiscox over the claim.
- Insurers say the pandemic will be one of the most expensive events in the history of their industry, potentially costing them more than $200bn — with half of that in payouts.
The Health 202: Americans are not expecting a quick return to normal. Or a vaccine next year. (Washington Post) Published on: May 28, 2020 | Category: Economic Impact, Global Response
- A spate of recent polls reveals Americans’ attitudes toward the novel coronavirus, which has taken the lives of 100,000 people in the United States. Here’s what we learned.
- Nearly half of Americans say they or someone in their household skipped or delayed medical care because of the outbreak.
- A third of Americans are showing signs of clinical anxiety or depression, Census Bureau data shows, the most definitive and alarming sign yet of the psychological toll exacted by the coronavirus pandemic.
U.S. Businesses See Few Signs of Recovery Through Mid-May (WSJ) Published on: May 27, 2020 | Category: Economic Impact
- U.S. businesses saw limited evidence of a recovery in recent weeks, with economic activity continuing to decline amid the coronavirus pandemic, the Federal Reserve said Wednesday.
- The labor market continued to deteriorate and consumer spending fell further as retailers and restaurants remained largely closed in most of the country through mid-May, the Fed said in its periodic report of anecdotes from businesses around the country known as the “beige book.”
- Travel-industry contacts in the Boston area reported that large conventions have been canceled through early fall, costing the hotel industry 200,000 room-nights as a result.
Disney World sets reopening date (CNN) Published on: May 27, 2020 | Category: Economic Impact, Global Response
- Disney World will reopen its gates, ending a multi-month closure of the park that left the Walt Disney Company reeling.
- The Disney theme park, which employs some 70,000 people, plans to begin a phased reopening on July 11 for its Magic Kingdom and Animal Kingdom parks and July 15 for EPCOT and Hollywood Studios, the company said on Wednesday.
- Disney is implementing several measures to reopen safely and prevent the spread of the coronavirus at its parks.
Experts Predict How Coronavirus May Change Hotel Stays (Huffington Post) Published on: May 26, 2020 | Category: Economic Impact, Global Response
- One area undergoing massive changes ― and preparing for more ― is the hotel business.
- “Travelers will certainly hear hotels talk about their sanitization and cleaning protocols, and certain properties or brands may seek cleanliness certifications,” noted Melanie Lieberman, senior travel editor at The Points Guy. “The key here will be communicating their cleanliness standards to guests.”
- “Marriott, for example, said it’s going to use electrostatic sprayers and hospital-grade disinfectants,” Lieberman said.
- “There will be an acceleration of self-service tech solutions in hotels,” said Konrad Waliszewski, co-founder and CEO of the travel app TripScout. “Services that would have happened anyway over the next decade ― such as self-service and contactless check-ins, mobile keys, mobile check-ins, and mobile SMS/chat for requests ― will become the norm for hotels.”
A Socially Distanced Las Vegas? What Are the Odds? (NY Times) Published on: May 26, 2020 | Category: Economic Impact
- But when the casinos and resorts open up — tentatively early June — after weeks of being shut down, players will no longer be able to touch the cards.
- While many cities and states grapple with the process of reopening, the stakes are high for Las Vegas, which has been hit particularly hard. About one-third of the local economy comes from the leisure and hospitality industry, more than any other major metropolitan area of the country.
- The famed all-you-can-eat buffets will be gone. So will the nightclubs.
Furniture retailers tell customers it’s OK to touch, sit, lie down because they have coronavirus precautions in place (WRAL) Published on: May 25, 2020 | Category: Economic Impact
- Memorial Day is traditionally a big day for retail shopping, but as stores only reopened two weeks ago ease pandemic-related restrictions were eased, business remains a bit slow as both retailers and customers continue to adjust to the new rules.
- Kim Kyle, who run Steven Shell Furniture in Raleigh’s Cameron Village shopping center, said the store also is making its safety protocols known to make customers more comfortable.
- “Every morning, we come in an hour early,” she said. “We wipe down every piece of furniture, especially paying attention to the handles. We are using Lysol to disinfect.”
The meat industry is trying to get back to normal. But workers are still getting sick — and shortages may get worse. (Washington Post) Published on: May 25, 2020 | Category: Economic Impact
- Tyson Foods, the largest meat processor in the United States, has transformed its facilities across the country since legions of its workers started getting sick from the novel coronavirus.
- It has set up on-site medical clinics, screened employees for fevers at the beginning of their shifts, required the use of face coverings, installed plastic dividers between stations and taken a host of other steps to slow the spread.
- Despite those efforts, the number of Tyson employees with the coronavirus has exploded from less than 1,600 a month ago to more than 7,000 today, according to a Washington Post analysis of news reports and public records.
I’m a Chef in a Seaside Town. I’m Not an Epidemiologist. (The Atlantic) Published on: May 25, 2020 | Category: Economic Impact
- Business owners like me face a summer of uncertainty, and I’m terrified.
- Cooped up in large towns and cities, many people heading into their third month of quarantine have been trying to decide whether they should visit their favorite summer destinations this year. My answer is an unsatisfying maybe.
- We returned later that night to an exhausted and shaken crew. In practice, the safety protocols we had agonized over had been hard for our team to enforce. While we had been away, the dining room filled with day-trippers, who crammed around our spaced-out tables.
Europe’s luxury goods capitals reopen to new reality (FT) Published on: May 24, 2020 | Category: Economic Impact
- Pandemic forces upmarket brands to rethink pricing, store locations and supply chains.
- As the fashion capitals of Paris, Rome and Milan stir back to life, the luxury industry faces a stark reality: Chinese tourists, who accounted for two-thirds of the sector’s sales in Europe before Covid-19, are absent and unlikely to return any time soon.
- “The fashion industry is very physical, we need designers, tailors, fittings, fabrics, not everything can be managed remotely.” To encourage staff back to the office in Milan, Moncler is offering them bicycles, free doctor consultations and Covid-19 antibody tests.
How COVID-19 is exposing Canada’s socioeconomic inequalities (The Globe & Mail) Published on: May 23, 2020 | Category: Canadian Business, Economic Impact
- Preliminary data support the idea that COVID-19 is hitting marginalized communities harder than others.
- Public-health messages about staying home, which are aimed at curbing the spread of COVID-19, have largely ignored the realities faced by low-income workers, people who are homeless or other at-risk groups, said Andrew Boozary, a doctor who is executive director of health and social policy at University Health Network.
- A recent Toronto Public Health analysis of COVID-19 cases in the city showed that neighbourhoods in Toronto with the lowest incomes, highest rates of unemployment and highest concentrations of newcomers consistently had twice the number of cases of COVID-19 and more than twice the rate of hospital admissions.
How Upbeat Vaccine News Fueled a Stock Surge, and an Uproar (NY Times) Published on: May 23, 2020 | Category: Economic Impact
- The desperate hunt for treatments and vaccines has changed how researchers, regulators, drug companies like Moderna, investors and journalists do their jobs.
- Nine hours after its initial news release — and after the markets closed — the company announced a stock offering with the aim of raising more than $1 billion to help bankroll vaccine development.
- That offering had not been mentioned in Moderna’s briefings of investors and journalists that morning, and the company chairman later said it was decided on only that afternoon.
Debt investors lay claim to islands, cruise ships and theme parks (FT) Published on: May 22, 2020 | Category: Economic Impact
- Companies pledge all manner of assets as collateral for Covid-19 rescue deals.
- The Miami-based operator pledged the 268-acre Caribbean idyll it has owned since 1986 as collateral, along with a second island in Belize and a couple of ships.
- So-called secured debt deals were once a rarity in the corporate bond market, but American companies are now pawning their family silver as never before.
The Covid Surcharge: Companies Confront the Unforgiving Economics of Coronavirus (WSJ) Published on: May 22, 2020 | Category: Economic Impact
- Companies from major retailers and package carriers to local restaurants and hair salons are awakening to a new economic reality in the age of the new coronavirus: Being open for business is almost as hard as being closed.
- Facing higher costs to keep workers and customers safe and an indefinite period of suppressed demand, businesses are navigating an ever-narrower path to profitability.
- Walmart Inc., Target Corp. and Home Depot Inc. this week said they absorbed more than $2 billion combined in added expenses for wages, bonuses and other benefits for workers during the early months of the pandemic.
Scientists vs politicians: the reality check for ‘warp speed’ vaccine research (FT) Published on: May 22, 2020 | Category: Economic Impact, Global Response
- Hollywood-style messages from politicians about beating the pandemic downplay the technical complexity.
- Hope that a coronavirus vaccine might be ready “prior to the end of the year” was even quicker than the optimistic — but often repeated — timeline for a vaccine to be ready in 12 to 18 months.
- But many scientists feel a duty to dampen the enthusiasm. They say a vaccine could take much longer because little is known about the disease and how bodies will react to attempts at immunisation.
- In fact, some warn we may never create a vaccine for Covid-19.
New data will track reopening in real time (Reuters Breaking Views) Published on: May 21, 2020 | Category: Economic Impact
- Novel data sources have sprung up that provide real-time information traditional statistics can’t offer. Some may have staying power.
- Mobility reports track how much iPhone and Android users walk, drive cars, take public transit or go to workplaces compared to what used to be normal.
- Similarly, Harvard researchers have put together a site that tracks consumer spending, small business closures and job postings at local, state and national levels. It shows lifting lockdowns may not result in a quick bounce back.
- Despite Georgia’s aggressive reopening, for example, consumer spending is still down 20%.
Spelling out the economic recovery options as the world starts to reopen from COVID-19 (CBC) Published on: May 20, 2020 | Category: Canadian Business, Economic Impact
- As economies around the world take their first, tentative steps toward restarting, Canadians are beginning to wonder what life may look like on the other side of this pandemic.
- Will the recovery look like a V or more like a U? What about a Nike “swoosh” or something wobbly like a W? Or the worst case scenario — will we take the dreaded L?
- “There’s virtually no one who thinks there will be a V-shape recovery,” said Karl Schamotta, chief market strategist at foreign exchange firm Cambridge Global Payments.
Time to buy a car? Industry hopes for coronavirus silver lining (FT) Published on: May 20, 2020 | Category: Economic Impact
- Indications from China, which came out of lockdown as Europe and the Americas were just entering theirs, are of a sharp rise in individual car use as commuters shun public transport.
- By the middle of April, congestion in major Chinese cities was back to 90 per cent of pre-lockdown levels, while subway use lingered at just 50 per cent, according to figures from Bernstein.
- Premium brand Volvo reported that sales in China were 20 per cent higher than in 2019, while the whole market in April was 4.4 per cent higher than a year earlier.
Covid-19 is helping Walmart make up ground against Amazon (Quartz) Published on: May 19, 2020 | Category: Economic Impact
- Walmart has almost 5,000 stores in the US, which they may seem like an obvious drag on its business when much of the country is sheltering in place, but that huge network of stores is helping drive the retailer’s e-commerce business amid the pandemic.
- In its most recent quarter, the mega-retailer said its US e-commerce sales shot up 74% versus the same period last year, driven by a surge of store pickups of online grocery orders as well as delivery.
- The option for customers to buy online but pickup at a physical store—a service that’s free but requires a $30 minimum order—has been key to Walmart’s success in e-commerce, which it was slow to develop after Amazon started to take over online retail.
The Mnuchin/Powell show (Axios) Published on: May 19, 2020 | Category: Economic Impact, Global Response
- The Treasury Department and Federal Reserve both think the worst could be yet to come for America’s economy.
- Fed Chair Jerome Powell reiterated his belief that a full recovery may not come until there’s a vaccine, and Treasury Secretary Steven Mnuchin said there’s the risk of “permanent damage” if states delay reopening.
U.S. workers hit McDonald’s with class action over COVID-19 safety (Reuters) Published on: May 19, 2020 | Category: Economic Impact, Global Response
- Five McDonald’s workers in Chicago filed a class action lawsuit against the chain on Tuesday, accusing it of failing to adopt government safety guidance on COVID-19 and endangering employees and their families.
- McDonald’s failed to provide adequate hand sanitizer, gloves and masks and has not notified its staff when an employee has become infected with the new coronavirus, according to a copy of the lawsuit provided by a spokesman for the workers.
- The workers requested the Illinois state court issue an injunction, which would make McDonald’s stop requiring workers to reuse masks, mandate face coverings for customers and require the company to inform employees if a coworker becomes infected.
Home-Decor Retailer Pier 1 Looks To Close For Good (NPR) Published on: May 19, 2020 | Category: Economic Impact
- Pier 1 Imports — one of America’s most prominent home-decor chains — is packing it in.
- “Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down” said CEO and Chief Financial Officer Robert Riesbeck.
- The coronavirus pandemic has devastated “nonessential” retail stores and cut sales at furniture and home furnishings stores by more than half.
COVID-19’s financial impact on N.J.’s hospitals is devastating, study finds (ROI New Jersey) Published on: May 19, 2020 | Category: Economic Impact
- The financial impact of the coronavirus pandemic on New Jersey’s hospital systems is severe, according to a financial impact report from the New Jersey Hospital Association.
- The hospitals said revenue fell 32%, or $650 million per month, due to Gov. Murphy’s executive order suspending all elective surgeries.
- Since the virus first hit New Jersey on March 4, hospital expenses have increased 10.6% or $214 million per month, the report said.
The New Face of Restaurant Hospitality Wears a Mask (NY Times) Published on: May 18, 2020 | Category: Economic Impact
- In fits and starts around the country, restaurants are beginning to reopen, guided by a hodgepodge of federal, state and local laws and recommendations that seems to shift daily
- The face mask is the most ubiquitous, and perhaps divisive, tool in an arsenal of protective measures, like disposable menus and plastic partitions, that restaurants are incorporating into an emerging culture of pandemic hospitality.
- The Hillstone Restaurant Group, which runs 45 restaurants in several states, decided that its Texas servers would not wear masks in part because the face wear didn’t match the style of service. A server sued; a judge issued a temporary restraining order and is expected to make a final ruling on May 20.
The New Airline Travel: Fewer Flights, More Layovers, Rules for Bathrooms (WSJ) Published on: May 18, 2020 | Category: Economic Impact
- Airports and airlines are rolling out temperature checks for crew and, increasingly, passengers, as well as thermal scans to spot people with elevated body temperatures.
- Forget about the perks of priority boarding at Air France. The carrier is one of several boarding passengers seated at the back of the aircraft first, to limit traffic jams in the aisle.
- Some airlines are considering requiring passengers to sign health certifications, or to eventually carry “immunity passports”—documentation that a passenger has had, and recovered from, the virus.
Transit workers are paying a heavy price during the pandemic (Washington Post) Published on: May 17, 2020 | Category: Economic Impact, Leadership
- The covid-19 deaths were piling up so fast that New York City bus driver Danny Cruz began to worry that no one understood the toll the virus was taking on his fellow transit workers.
- By Cruz’s count, 129 New York City transit workers have died of covid-19.
- Across the country, an estimated 430,000 public transit workers, including train operators and bus drivers like Cruz, have kept systems operating, moving essential workers such as doctors, nurses and first responders who have been hailed as heroes.
China’s once-resilient tech economy starting to crack under pressure from coronavirus economic carnage (SCMP) Published on: May 17, 2020 | Category: Economic Impact
- In the first quarter of 2020, the number of Chinese recruitment postings across all industries fell 22.6 per cent compared with the same period last year.
- A survey found that 5.4 per cent of tech firms experienced job cuts while 12.9 per cent have reduced contractors, interns and part-time employees.
U.S. Secret Service: “Massive Fraud” Against State Unemployment Insurance Programs (KrebsOnSecurity) Published on: May 16, 2020 | Category: Canadian Business, Economic Impact
- A well-organized Nigerian crime ring is exploiting the COVID-19 crisis by committing large-scale fraud against multiple state unemployment insurance programs, with potential losses in the hundreds of millions of dollars, according to a new alert issued by the U.S. Secret Service.
- A memo seen by KrebsOnSecurity that the Secret Service circulated to field offices around the United States on Thursday says the ring has been filing unemployment claims in different states using Social Security numbers and other personally identifiable information (PII) belonging to identity theft victims, and that “a substantial amount of the fraudulent benefits submitted have used PII from first responders, government personnel and school employees.”
- The primary state targeted so far is Washington, although there is also evidence of attacks in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.
Amazon planning to reopen its French warehouses from May 19 (Financial Post) Published on: May 15, 2020 | Category: Economic Impact, Global Response
- Amazon said on Friday it aims to gradually reopen its French warehouses from May 19 as it finalizes an agreement with unions and work councils to end a dispute over coronavirus protection steps that closed the sites for more than one month.
- The U.S. e-commerce giant’s six French warehouses, which employ about 10,000 people on permanent and interim contracts, have been closed since April 16 following court rulings that ordered it to restrict deliveries during the COVID-19 pandemic or face hefty fines.
U.S. Economy Adds to Grim Records, Signaling Yearslong Recovery (Bloomberg) Published on: May 15, 2020 | Category: Canadian Business, Economic Impact
- U.S. retail sales and factory output registered the steepest declines on record in April, illustrating a recession so deep that it will likely take years to fully recover.
- Revenue at retailers and restaurants fell 16.4% from the prior month, almost double the 8.3% drop in March which was previously the worst in data back to 1992, according to a Commerce Department report released Friday.
- That compared with the median projection for a 12% decline.
How Investors Can Navigate Pandemic-Related Risk in Emerging Markets (HBR) Published on: May 15, 2020 | Category: Economic Impact, Leadership
- In a few countries there are already early signs of political instability and civil unrest; in others the political effects will become clearer as the virus and government responses unfold over the months ahead.
- Business environments in these locations were already complex, but the pandemic makes the politics even more complicated and the relationships and information needed to navigate them even harder to access.
- Foreign investors will, at a minimum, face two widespread yet underappreciated risks.
Coronavirus ‘could cost global economy $8.8tn’ says ADB (BBC) Published on: May 15, 2020 | Category: Economic Impact
- The coronavirus pandemic could cost the global economy between $5.8tn and $8.8tn (£4.7tn-£7.1tn), according to Asian Development Bank (ADB).
- That’s more than double last month’s prediction and equates to 6.4%-9.7% of the world’s economic output.
Tesla employees who don’t return to work could lose unemployment benefits (TechCrunch) Published on: May 14, 2020 | Category: Economic Impact, Leadership
- Furloughed Tesla employees who are called back to work could lose unemployment benefits if they choose to stay at home due to COVID-19 concerns, the company’s head of human resources Valerie Workman wrote in an email sent to workers Wednesday.
- Musk has lobbed repeated criticisms at Alameda County and its health officials for extending a stay-at-home order to the end of May. Over the weekend, Musk threatened to pull Tesla operations out of the state and sue the county.
- Tesla filed a lawsuit against the county Saturday seeking injunctive relief.
McDonald’s Details What Dining In Will Look Like (NY Times) Published on: May 14, 2020 | Category: Canadian Business, Economic Impact
- The fast-food chain distributed a guide to franchise owners with instructions like putting “closed” signs on tables to promote social-distancing and cleaning bathrooms every half-hour.
- Once a local government says that restaurants can admit dine-in guests, a McDonald’s official in that region will decide whether reopening can begin, it says. Then individual franchise owners will make a decision about whether to go through with reopening.
- Unlike the small, independent restaurants that have been battered during the pandemic, McDonald’s was in a good position to weather the economic fallout. Its drive-throughs have stayed open, and they accounted for about two-thirds of the company’s revenue before the crisis.
Economic Shock of Virus Hit Lower-Income Households Harder, Fed Finds (WSJ) Published on: May 14, 2020 | Category: Economic Impact
- Almost 40% of households earning less than $40,000 a year experienced at least one job loss in March, versus 19% of households earning between $40,000 and $100,000 and 13% of those earning more than $100,000, the Fed said.
- And while 85% of those with no work disruption said they could pay the current month’s bills in full, just 64% of those who had lost a job or had their hours cut said they could cover their expenses for the month, the Fed said in the report released Thursday.
- The survey reveals a rapidly widening gap between those households that experienced the early economic effects of the pandemic and those that were spared.
Americans Keep Clicking to Buy, Minting New Online Shopping Winners (NY Times) Published on: May 13, 2020 | Category: Economic Impact
- While the shutdowns immediately altered how people spent their money, the patterns have continued to shift as the weeks have gone on, new data shows, shaped by waves of panic buying and even payouts of government aid.
- The latest bump in online spending came after the government sent out stimulus payments to tens of millions of American households beginning on April 11.
- Many e-commerce companies are now in a much stronger position than before.
Fed Chair warns of long, painful downturn if Congress does not provide more economic relief (Washington Post) Published on: May 13, 2020 | Category: Economic Impact, Global Response
- Almost 40 percent of U.S. households making less than $40,000 a year lost a job in March, citing results from a Fed survey coming out later this week.
- They found more than 2 per cent of U.S. small businesses have closed permanently already.
- “A lot firms had half a month to two months worth of cash on hand. They can stretch it by cutting costs or taking a government loan, but we are now getting several months into the crisis, and we’re getting to the point where firms are going beyond the cash on hand to weather the crisis,” said Alex Bartik, an economics professor at the University of Illinois.
- Several Fed officials said this week they think the U.S. economy will soon hit its low point and then start to rebound, but they have warned a recovery is likely to be slow.
Apple is reopening 5 stores in the US — here’s a list of the locations that have opened so far (Business Insider) Published on: May 13, 2020 | Category: Economic Impact
- Apple has begun reopening some retail stores in the US in certain states like Alabama, Alaska, South Carolina, and Idaho.
- Apple says the initial focus will remain on customer service through the Genius Bar, and is encouraging customers to shop virtually when possible.
- The company will also enforce precautions like temperature checks, face masks, and social distancing at its stores.
From PepsiCo to GM, Big Advertisers Set to Cancel Commitments to TV Networks (WSJ) Published on: May 12, 2020 | Category: Economic Impact
- TV ad spending fell in the initial weeks of the coronavirus pandemic, but was insulated from an even bigger drop.
- That is because the majority of the roughly $42 billion spent on national TV ads in the U.S. is bound by contractual commitments that are made well in advance of a new TV season, which starts each September.
- Marketers are worried about the ability to sell their products in a prolonged economic downturn, and aren’t certain what programming networks can put on the air, given the near-total shutdown of production in Hollywood.
Booking Holdings chief seeks government subsidies for travel (FT) Published on: May 12, 2020 | Category: Economic Impact
- Governments should subsidise consumers’ holidays to boost the tourism industry once a Covid-19 vaccine or treatment is found, according to the head of one of the largest travel booking companies, who predicted the sector will be one of the last to recover from the pandemic.
- It would be “years, not quarters” before travel rebounds, said Glenn Fogel, chief executive of Booking Holdings, telling the Financial Times that the industry merited its own stimulus package because of its importance to most big economies.
- Governments should “prime the pump” in such a way because travel was an important provider of entry-level jobs, he said.
Britons spending an extra £250m a week on food, alcohol and entertainment during lockdown, suggests survey (The Independent) Published on: May 12, 2020 | Category: Canadian Business, Economic Impact
- Despite increased spending on food, drink and isolation pursuits, consumers are spending an average of £17.9 bn less per month across the economy more broadly.
- The survey of more than 2,000 adults aged between 35 and 54 by the financial services firm Legal and General and CEBR, an economics consultancy, found the pandemic is creating “fundamental” changes to how consumers spend their money.
- The survey estimates that Britons are spending 24 per cent less on takeaways and 9 per cent less on tobacco.
TTC faces $520-million shortfall by Labour Day due to pandemic (Toronto Star) Published on: May 12, 2020 | Category: Canadian Business, Economic Impact
- The TTC is facing a budget shortfall from the COVID-19 crisis that could grow to more than half a billion dollars by Labour Day, and the agency will be unable to continue providing vital transit service unless it gets financial help from the provincial and federal governments, according to a new report.
- The document, which was authored by TTC staff and will be discussed at a special virtual meeting of the agency’s board Wednesday, estimates the agency is facing $520 million in losses and increased costs as a result of the pandemic, which has sent transit ridership and fare revenue plummeting to a fraction of pre-crisis levels.
Coronavirus: Musk defies orders to reopen Tesla’s California plant (BBC) Published on: May 12, 2020 | Category: Economic Impact, Leadership
- Tesla has reopened its only US electric car plant in California, despite local orders against manufacturing.
- While the state has eased restrictions to allow manufacturing, Alameda County, where the Fremont plant is located, has not.
- US Treasury Secretary Steven Mnuchin said on Monday California “should prioritize” helping Tesla reopen because it was one of the biggest manufacturing employers in the state.
Ottawa to create bridge financing for big companies, including airlines and energy, that need help in crisis (Financial Post) Published on: May 11, 2020 | Category: Canadian Business, Economic Impact
- Canada on Monday said it would create a bridge financing facility for large employers including in the airline and energy sectors that need help to get through the economic downturn caused by the coronavirus.
- The bridge lending facility will be for all companies, except those in the financial sector, with an annual revenue of about $300 million seeking financing of about $60 million or more that have “significant operations or workforce in Canada.”
- Companies that use the lending facility will have to commit to respect collective bargaining agreements, protecting workers’ pensions, and support “national climate goals.”
DIY hairdressers under covid-19 lockdown tend it like Beckham (The Economist) Published on: May 11, 2020 | Category: Economic Impact
- Data from Google suggest that the pandemic has caused a global surge in DIY haircare.
- Buzzcuts have seen the biggest increase. In early April, searches for “hair clippers” (or the equivalent in languages other than English) were up five-fold since February. Searches for “beards” and “moustaches” were up by 50%.
- Hairdressers and salons have been among the first establishments to reopen in some countries easing lockdown restrictions. Not a moment too soon: after falling to 40% below usual levels at the start of April, global searches for “hairdresser” are now 70% higher than they were before the pandemic started.
Factories Close for Good as Coronavirus Cuts Demand (WSJ) Published on: May 11, 2020 | Category: Economic Impact, Global Response
- Factory furloughs across the U.S. are becoming permanent closings, a sign of the heavy damage the coronavirus pandemic and shutdowns are exerting on the industrial economy.
- Those factory shutdowns will further erode an industrial workforce that has been shrinking as a share of the overall U.S. economy for decades.
- The closures suggest that a growing share of the record job losses in recent weeks won’t be temporary, said Gabriel Ehrlich, an economic forecaster at the University of Michigan.
Rise in German virus infections spurs concern (France24) Published on: May 10, 2020 | Category: Economic Impact, Global Response
- Germany’s coronavirus spread appears to be picking up speed again, official data showed Sunday, just days after Chancellor Angela Merkel said the country could gradually return to normal.
- The latest data raised alarm after Merkel only on Wednesday declared that Germany had left the “first phase” of the pandemic behind it and federal states announced relaxations of social restrictions.
- German local authorities have however agreed to pull an “emergency brake” and reimpose social curbs if the infection rate rises above 50 cases per 100,000 residents over a week.
New virus outbreaks hamper efforts to reopen global economy (FT) Published on: May 10, 2020 | Category: Economic Impact
- New Covid-19 outbreaks in South Korea, Germany and China have highlighted the challenge faced by governments seeking to loosen social restrictions, as millions of Europeans prepare for the tentative reopening of their economies today.
- France, Spain, Denmark, Norway and the UK will all lift some measures brought in to contain the spread of the deadly virus, as leaders across the region seek to limit the worsening economic damage.
- In Spain, just over half the population will enter “phase 1” of the country’s exit from lockdown, allowing bars and restaurants to serve customers outside and people to congregate in groups up to 10.
IMF warns of further drop in global growth due to Covid-19 (Guardian) Published on: May 9, 2020 | Category: Economic Impact, Global Response
- The head of the International Monetary Fund (IMF) has signalled a possible downward revision of global economic forecasts, and warned the United States and China against rekindling a trade war that could weaken a recovery from the coronavirus pandemic.
- The IMF’s April projection for a 3% contraction the global economy would mark the steepest downturn since the Great Depression of the 1930s.
- Kristalina Georgieva, the IMF’s managing director, said the IMF had already provided emergency funding to 50 of the 103 countries that had requested aid.
- The IMF’s chief economist, Gita Gopinath, said that the situation had worsened since March when the IMF projected that emerging markets and developing countries would need $2.5tr in external financing to manage the health and economic crisis.
Younger workers are hit hardest in the coronavirus job market, and it spells bad news for millennials and Gen Z (Business Insider) Published on: May 8, 2020 | Category: Economic Impact
- Younger workers are bearing the economic toll of the coronavirus pandemic more so than older workers, according to a recent report by Data for Progress.
- More than half of those polled under age 45 have lost jobs, lost hours, or been put on leave, the report found.
- It’s bad news for millennials, who are still financially behind from the Great Recession, and Gen Z, who might find themselves on the same path as older millennials.
Health-Care Workers See Steep Job Losses From Coronavirus (WSJ) Published on: May 8, 2020 | Category: Economic Impact
- The jobs report released Friday said the health-care sector shed a record number of jobs in April as medical facilities halted elective procedures and doctors’ and dentists’ offices closed because of shutdowns aimed at containing the coronavirus.
- Hospitals cut nearly 135,000 jobs in April, according to the Labor Department.
- St. Louis-based BJC HealthCare announced furloughs this week as it faced projections that operations won’t reach pre-pandemic levels before 2021, said Richard Liekweg, the system’s chief executive.
White-Collar Companies Race to Be Last to Return to the Office (NY Times) Published on: May 8, 2020 | Category: Economic Impact, Leadership
- Google and Facebook employees were told Thursday that they could stay home until next year.
- The moves reflect the reality that no one is sure how the coronavirus pandemic will evolve.
- But even after the coronavirus no longer requires it, working from home is likely to retain a significant presence in corporate life.
The global food supply chain is passing a severe test (The Economist) Published on: May 7, 2020 | Category: Canadian Business, Economic Impact
- If you live in the rich world and want an example of trade and global co-operation, look no further than your dinner plate.
- Today, thanks to fleets of delivery lorries filling supermarket shelves, you can binge-eat as you binge-watch.
- This capitalist miracle reflects not a monolithic plan, but an $8trn global supply chain adapting to a new reality, with millions of firms making spontaneous decisions, from switching rice suppliers in Asia to refitting freezers.
The Results Are In for the Sharing Economy. They Are Ugly. (NY Times) Published on: May 7, 2020 | Category: Economic Impact
- The coronavirus pandemic has gutted the so-called sharing economy.
- “While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived,” Brian Chesky, Airbnb’s chief executive, wrote in a memo to employees.
- Thirty percent of gig-economy revenue could disappear over the next one to two years, with a portion of it unlikely to return, said Daniel Ives, managing director of equity research at Wedbush Securities.
Gap, Nordstrom prepare to reopen hundreds of stores with new protocols for workers, shoppers (Washington Post) Published on: May 6, 2020 | Category: Economic Impact
- Nordstrom and Gap are among a growing group of national retailers that will gradually reopen their stores in the coming weeks as states emerge from coronavirus shutdowns, even as the U.S. death toll from covid-19 continues to rise.
- But the company said stores will look and feel a bit different: Bathrooms and fitting rooms will be closed, and returned items will be quarantined for 24 hours before being placed back on shelves.
- Shopping hours will be reduced, and the flow of customers will be “actively” monitored in stores.
A return to 1970s stagflation is only a broken supply chain away (FT) Published on: May 6, 2020 | Category: Economic Impact, Global Response
- Central bankers insist that inflation expectations are anchored.
- Consumer retrenchment will persist only until a Covid-19 vaccine arrives. If this takes another 12 to 18 months, as scientists believe, pent-up demand will build as never before.
- Therein lies the inflationary risk for the post-coronavirus world. As part of a growing backlash against globalisation in general, and China in particular, nations are threatening to bring their offshore platforms back home.
One in five Wendy’s is out of beef, analyst says (CNN) Published on: May 5, 2020 | Category: Economic Impact
- The national meat shortage has come for Wendy’s.
- Around 1,000, or 18%, of Wendy’s 5,500 US restaurants are not serving any hamburgers or other meat-based items, according to an analysis of online menus at every location conducted by financial firm Stephens.
- Many meat suppliers have temporarily closed their factories because workers are falling ill from Covid-19.
Wall Street ‘flying blind’ after companies scrap guidance (FT) Published on: May 5, 2020 | Category: Economic Impact
- The number of US blue-chips offering full-year profit guidance alongside their first-quarter earnings has been cut in half, leaving Wall Street analysts struggling to assess the full impact of measures to contain the spread of coronavirus.
- America’s earnings season has passed the halfway mark, with 283 companies in the S&P 500 having reported by Friday last week. Within that group, 53 of the 103 companies that provided earnings guidance earlier this year have scrapped it according to Credit Suisse data.
- The bank expects just 23 per cent of S&P companies to offer guidance for the year, a little less than half the usual proportion.
Who pays the bill? The coming deluge of pandemic litigation (FT) Published on: May 5, 2020 | Category: Economic Impact
- Trial lawyers are mobilising, seeing an almost bottomless well of negligence cases against employers, and businesses big and small.
- Stricken companies are turning to insurers desperate for the cash. Others are trying to shed obligations.
- Even more importantly, the vast potential liabilities will greatly exceed the ability of many defendants to pay them.
- Once lockdowns are lifted, fear of costly suits alone could hamper the recovery.
Air Canada reports $1.05B first-quarter loss due to impact of COVID-19 pandemic (CBC) Published on: May 4, 2020 | Category: Canadian Business, Economic Impact
- Air Canada has cut its second-quarter capacity by 85 to 90 per cent from same time last year.
- Air Canada says it lost $1.05 billion in its first quarter compared with a profit of $345 million in the same quarter last year as governments imposed travel restrictions around the world due to the COVID-19 pandemic.
- Air Canada is also accelerating the retirement of 79 older aircraft in a move that it says will simplify the airline’s fleet, reduce costs structure and lower its carbon footprint.
GM and SAIC’s China sales rebound in April as market recovers (Reuters) Published on: May 3, 2020 | Category: Economic Impact
- General Motors’ sales in China saw double-digit year-on-year growth in April, its two local ventures said on Sunday, as the world’s biggest auto market recovers from the coronavirus.
- To attract customers, GM and SAIC have hired social media celebrities to promote its new models and are offering free medical masks to customers.
- China’s biggest automaker SAIC, which sold more than 6 million cars last year, said its sales rose 0.5% compared to the same period last year.
Global oil demand starts a long, painful and uncertain recovery (Toronto Star) Published on: May 3, 2020 | Category: Economic Impact
- From the streets of San Antonio to Barcelona and Beijing, traffic data, sales at fuel stations, and pipeline flows all suggest that the slump in oil demand probably bottomed out around the middle of April, and has now started a modest — and very tentative — recovery.
- But the recovery is extremely slow. Oil traders believe it’s likely to take more than a year, and perhaps much longer, before global demand reaches the pre-pandemic levels of roughly 100 million barrels a day.
- The epicentre of the oil recovery is the same as where the public health crisis started in January: Wuhan. Weekday traffic in the Chinese city has almost returned to pre-crisis levels, although it remains depressed on weekends.
Profits and Pride at Stake, the Race for a Vaccine Intensifies (NY Times) Published on: May 3, 2020 | Category: Economic Impact, Global Response
- Governments, companies and academic labs are accelerating their efforts amid geopolitical crosscurrents, questions about safety and the challenges of producing enough doses for billions of people.
- Seven of the roughly 90 projects being pursued by governments, pharmaceutical makers, biotech innovators and academic laboratories have reached the stage of clinical trials.
- The intensity of the global research effort is such that governments and companies are building production lines before they have anything to produce.
Reimagining Business After Coronavirus: How One Cleveland Restaurant’s Choices Ripple Through the Economy (WSJ) Published on: May 2, 2020 | Category: Canadian Business, Economic Impact
- After coronavirus, he is fundamentally rethinking his business to have any chance of saving it in a post-lockdown world.
- “This isn’t a restart. This is a startup,” said Mr. Bebenroth. “The model has changed so much,” he added. “It is a new company.”
- Among the questions the 42-year-old chef is grappling with: Is the pandemic the end of passed-around hors d’oeuvres? What to do with a farm full of fancy purple asparagus?
As weather improves, questions about outdoor COVID-19 transmission risks grow (CBC) Published on: May 2, 2020 | Category: Canadian Business, Economic Impact
- Please, go outside, says B.C.’s top doctor. Don’t go where everybody else is going, says Ontario’s.
- Research about the likelihood of outdoor transmission of the new coronavirus is virtually non-existent.
- While evidence about outdoor transmission of the virus is lacking, research “has consistently shown that transmission is strongly dependent on being in close proximity to a sick person for some period of time,” says the National Collaborating Centre for Environmental Health, a Vancouver-based team of researchers funded by the Public Health Agency of Canada.
Coronavirus Prompts Biggest U.S. Manufacturing Pullback Since Last Recession (WSJ) Published on: May 1, 2020 | Category: Economic Impact
- The Institute for Supply Management said Friday its manufacturing index fell to 41.5% from 49.1% in March.
- A subindex for manufacturing production fell to 27.5 in April, the lowest reading in records going back to January 1948.
- Meanwhile, the Commerce Department reported that construction spending rose 0.9% in March from the previous month thanks to a 2.3% jump in residential construction.
The week business waved goodbye to the V-shape recovery (FT) Published on: May 1, 2020 | Category: Economic Impact
- Remember the V-shaped recovery? Not long ago, it was the economic consensus: a short sharp shock from the pandemic followed by a rebound in the third quarter.
- But Norwegian Air Shuttle warned this week it expected to stay in “hibernation” for the next 12 months and would only resume normal operations in 2022.
- McDonald’s acknowledged as much this week, with chief executive Christopher Kempczinski noting that “we’re not seeing a V-shaped recovery in China”.
The 90% economy that lockdowns will leave behind (The Economist) Published on: April 30, 2020 | Category: Economic Impact, Global Response
- Data from Womply, a firm which processes transactions on behalf of 450,000 small businesses across America, show that businesses in all sectors have lost substantial revenue.
- The “90% economy” thus created will be, by definition, smaller than that which came before. But its strangeness will be more than a matter of size.
- Some indication that the spending effects of a lockdown will persist even after it is over comes from Sweden.
- Discretionary spending by Chinese consumers—the sort that goes on things economists do not see as essentials—is 40% off its level a year ago.
More than 50% of Canadian companies have lost at least one-fifth of their revenue to COVID-19, StatsCan says (CBC) Published on: April 29, 2020 | Category: Canadian Business, Economic Impact
- Nearly one-third — 32.3 per cent — of businesses have lost 40 per cent of their revenues during the pandemic.
- A further 21.2 per cent said revenues were down by at least 20 per cent.
- Businesses in the accommodation and food services sector were most likely to have felt the pinch, followed by entertainment and recreation and retail trade.
- More than 60 per cent of businesses in those parts of the economy reported losing at least one-fifth of their usual revenue.
US GDP falls 4.8% in worst economic decline since 2008 (FT) Published on: April 29, 2020 | Category: Economic Impact, Global Response
- The blow to the American consumer, the biggest driver of US economic growth, was evident in a 7.6 per cent drop in personal consumption, which marked the biggest decline since 1980.
- Counter-intuitively, healthcare was one of the sectors that provided the biggest drag on the economy, as hospitals stopped performing lucrative elective procedures in order to focus on dealing with coronavirus patients.
- Some economists forecast the economy could shrink between 30 per cent and 40 per cent in the current quarter.
The iconic brands that could disappear because of coronavirus (Washington Post) Published on: April 29, 2020 | Category: Economic Impact
- The retail industry, rife with bankruptcies and shuttered stores long before the coronavirus, is facing its biggest test yet.
- More than 100,000 stores could disappear by the end of 2025, according to UBS.
- “The companies with the thinnest margins are the most vulnerable,” said Hugh Ray, a bankruptcy attorney for the Dallas-based law firm McKool Smith. “The bread and butter for bankruptcy lawyers is restaurants, grocery stores, and automobile businesses with margins that are too thin to sustain much of an interruption.”
We Mapped All the Media Impacts of COVID-19 in Canada (The Canadian Journalism Project) Published on: April 29, 2020 | Category: Canadian Business, Economic Impact
- More than 100 media outlets in Canada have made cuts in 11 provinces and territories in a six-week period, with nearly 50 community newspapers shuttering.
- Journalists and media workers across Canada are suffering from the labour impacts, as are other sectors. Despite challenging employment conditions, they are sourcing and delivering crucial information on a protracted, history-defying news event.
Donald Trump orders meat processing plants to stay open (FT) Published on: April 29, 2020 | Category: Economic Impact, Global Response
- Donald Trump has issued an executive order to force meat-processing factories to remain open, as concerns mount about the US food supply chain after the closure of several big plants because of Covid-19 outbreaks.
- The US president invoked the Defense Production Act — a Korean war-era law that permits the government to compel companies to take action for national security reasons — after a spate of recent outbreaks of the virus at processing facilities raised concerns about serious food shortages.
- Earlier on Tuesday, Trump suggested that the executive order would help shield companies from any legal liability that could arise from remaining open while they deal with coronavirus outbreaks in their plants.
Mnuchin Says Big Companies Should Apologize for Taking Small Business Loans (WSJ) Published on: April 28, 2020 | Category: Economic Impact, Leadership
- Treasury Secretary Steven Mnuchin is seeking an apology to American taxpayers from large companies that sought coronavirus hardship funds intended for small businesses.
- “The owners should be apologizing that they took this, not just giving the money back.”
- Mr. Mnuchin on Tuesday rebuked companies that inappropriately tapped the roughly $660 billion in loans available through the Paycheck Protection Program and warned that they could face criminal liability if the money isn’t returned.
Which companies are most immune to the pandemic? (The Economist) Published on: April 28, 2020 | Category: Economic Impact
- A working paper published this week by economists at the University of Hong Kong, the Chinese University of Hong Kong and the University of California, Berkeley examines which characteristics were most beneficial, and most harmful, during the stockmarket sell-off up to March 27th.
- All else being equal, the share prices of companies with more cash, larger profits and less debt were more resilient against the pandemic.
- Firms were also penalised for circumstances largely beyond their control. Companies owned by hedge funds, for example, fared worse than those with corporate backers.
The Federal Reserve Is Changing What It Means to Be a Central Bank (WSJ) Published on: April 27, 2020 | Category: Economic Impact, Global Response
- By lending widely to businesses, states and cities in its effort to insulate the U.S. economy from the coronavirus pandemic, it is breaking century-old taboos about who gets money from the central bank in a crisis, on what terms, and what risks it will take about getting that money back.
- And with large-scale purchases of U.S. Treasury securities, the Federal Reserve is stretching the boundaries for what a central bank will do to finance soaring federal debt—actions that move it deeper into political decisions it usually tries to avoid.
- Economists project the central bank’s portfolio of bonds, loans and new programs will swell to between $8 trillion and $11 trillion from less than $4 trillion last year.
Largest US meat company warns food supply chain is breaking (FT) Published on: April 27, 2020 | Category: Economic Impact
- The largest US meat company has warned of shortages for consumers, saying the country’s complex food chain was “breaking” as Covid-19 spreads to refrigerated packing plants.
- Almost a third of US pork processing capacity and 14 per cent of beef capacity is now offline as the disease sweeps through the densely staffed cutting floors of packing plants, agricultural economists say.
- On Friday, US packing plants killed 83,000 cattle, down by more than a quarter from 114,000 a year before, and 361,000 pigs, down almost 20 per cent from 449,000 a year ago the USDA reported.
Pandemic accelerates shift to meat substitutes (FT) Published on: April 26, 2020 | Category: Economic Impact
- Plant-based alternative sales jump 200 per cent in US amid slaughterhouse closures.
- This compares with jumps of 30 per cent and 39 per cent respectively over the same periods for fresh meat.
- Compared with real meat, the production of plant-based protein is also more automated and less reliant on labour, so is less vulnerable to staffing shortages.
How Fed Intervention Saved Carnival (WSJ) Published on: April 26, 2020 | Category: Economic Impact, Global Response
- That all changed on March 23 when the Federal Reserve defibrillated bond markets with an unprecedented lending program.
- By April 1, the company had raised almost $6 billion in bond markets, paying rates far below those executives had discussed just days earlier.
- Carnival may still founder if tourists shun cruises over the long term, and its new debt carries a far heftier price tag than previous offerings.
- But the immediate survival of the company, which employs about 150,000 people, is no longer in question.
Investors baffled by soaring stocks in ‘monster’ depression (FT) Published on: April 25, 2020 | Category: Economic Impact, Global Response
- The divergence between the flying stock market and the dying economy is so extreme it is leaving many analysts scrambling for explanations.
- What was once dismissed as a mere “bear market rally” — often strong but ultimately doomed bounces that can occur in the middle of severe downturns — has now turned into a 23 per cent jump for global stocks.
- Analysts and investors say that global efforts by central banks to soothe the financial system have been the trigger.
- Throw in various other liquidity injections and a series of government spending packages aimed at ameliorating the effects of measures taken to contain the coronavirus outbreak, and the overall stimulus bill comes to $14tn, according to the IMF.
Congress Shovels Trillions at Virus, With No Endgame in Sight (NY Times) Published on: April 25, 2020 | Category: Economic Impact, Global Response
- There is a growing list of detailed plans for how the federal government can bring the United States economy safely out of lockdown and back on a path to normalcy amid the coronavirus pandemic. Congress isn’t following any of them.
- Instead, lawmakers who have spent the past two months rushing to respond to a public health and economic emergency with a series of ever-larger, taxpayer-financed spending packages appear to be locked in a reactive cycle, as the toll and financial costs of the virus mount.
- The Congressional Budget Office said Friday that it expects economic pain from the crisis to persist for years to come, even though it believes activity will begin to rebound in the second half of the year.
Get Ready for 60-cent Loonie and Canada Downgrades, Rosenberg Warns (Bloomberg) Published on: April 24, 2020 | Category: Canadian Business, Economic Impact
- Canada’s currency will depreciate sharply and its credit rating will suffer as the federal government is forced to “backstop everyone,” rolling out more assistance for provinces, companies and households, according to economist David Rosenberg.
- The country is “likely facing a series of downgrades” to its AAA rating, given that the total debt in the economy is already an unprecedented 350% of GDP, he said.
- “It will be interesting to see how a central bank that does not govern over the world’s reserve currency and a country with a massive balance-of-payments deficit will be able to have all of this largesse find its way onto the BoC balance sheet” without jeopardizing global investor confidence, he said.
Coronavirus: This is where all 50 states stand on reopening (The Mercury News) Published on: April 24, 2020 | Category: Economic Impact, Global Response
- More than 97% of the US population is currently under a stay-at-home or shelter-in-place order as the coronavirus pandemic continues to upend life as we know it. But worries for the economy — and people’s mental health — are raising the question: When will things go back to normal?
- This article has the latest on where states stand in their plans to reopen.
- Alabama: Gov. Kay Ivey says the existing stay at home order will remain in effect until April 30th.
The risk of a US double-dip depression is real (FT) Published on: April 23, 2020 | Category: Economic Impact, Global Response
- If you think one lockdown is painful enough, imagine a second.
- Economists point out that the US is not even in a recession, which is defined as two consecutive quarters of negative growth.
- Yet JPMorgan forecasts that the US economy will shrink by 40 per cent in the second quarter.
More Cooking, Less Shampooing: The Coronavirus Consumer Starts to Emerge (WSJ) Published on: April 23, 2020 | Category: Economic Impact
- Consumers are cooking and cleaning more while spending less time and money on grooming and makeup, consumer-products companies say, as a picture emerges of how the coronavirus is reshaping lifestyles.
- Procter & Gamble Co. last week said Americans were doing more laundry loads every week, washing garments after each wearing.
- Makeup giant L’Oréal last week said the global cosmetics market was down 8% in the first quarter as consumers pull back on skin care and beauty products.
Canada Post sees ‘Christmas-level’ package volumes during COVID-19 (CityNews) Published on: April 23, 2020 | Category: Canadian Business, Economic Impact
- The postal service says it delivered more than 1.8 million parcels to Canadians on Monday, similar to the biggest delivery days it sees during the holiday season.
- Canada Post is advising customers to expect delays because it takes longer to process the heavy, incoming parcel volumes.
After the disease, the debt (The Economist) Published on: April 23, 2020 | Category: Economic Impact
- To cope with the expensive legacy of the pandemic, governments will have to find the right path between stimulus and restraint
- Public borrowing in the rich world is set to soar to levels last seen amid the rubble and smoke of 1945.
- Across the rich world, the IMF says gross government debt will rise by $6trn, to $66trn at the end of this year, or from 105% of gdp to 122%—a greater increase than was seen in any year during the global financial crisis.
The socioeconomics of pandemics policy (Brookings) Published on: April 22, 2020 | Category: Economic Impact
- Expansive macroeconomic policy can stimulate aggregate demand, but when social distancing is enforced, it will not stimulate production and consumption whenever this demand is satisfied through physically interactive activities.
- Once the pandemic is over, a more profound rethinking of decisionmaking—in public policy, business, and civil society—is called for.
- First, decisionmakers will need to supplement the current focus on economic efficiency with greater emphasis on economic resilience.
US Congress strikes $484bn deal to fund small business (FT) Published on: April 21, 2020 | Category: Economic Impact, Global Response
- The White House and congressional leaders have reached a deal on a $484bn stimulus package that includes more than $300bn to replenish the depleted small business rescue fund.
- In addition to $320bn for replenishing the Paycheck Protection Program — the loan programme to help US small businesses during the crisis — the bill will also include $75bn for hospitals and $25bn for expanded coronavirus testing.
- Of the new funds to replenish PPP, $60bn will be allocated to small lenders and community-based financial institutions — a key demand from Democrats.
Several States Move to Reopen Economy as Disruptions From Coronavirus Rise (WSJ) Published on: April 21, 2020 | Category: Economic Impact
- Attorney General William Barr says Justice Department would consider backing those who claim states’ coronavirus policies violate their rights
- Some South Carolina retailers were open for business Tuesday, with social-distancing measures, after Republican Gov. Henry McMaster loosened restrictions put in place earlier this month.
- In Alabama, Republican Gov. Kay Ivey said the state would have to increase testing capacity before reopening its economy.
Covid-19 will only increase automation anxiety (FT) Published on: April 21, 2020 | Category: Economic Impact
- Furthermore, with jobless claims rising at record rates and the world economy shrinking, automation anxiety looks set to witness a revival — and with good reason. Coronavirus is likely to accelerate automation.
- An influential study by Nir Jaimovich and Henry Siu showed that routine jobs that can easily be automated vanished with the 2008 financial crisis and didn’t come back, contributing to a jobless recovery.
- Consumers also tend to “trade down” during a recession, opting for cheaper and less labour-intensive goods and services. For example, if US consumers switch from Whole Foods (which employs six workers per $1m of sales) to Sam’s Club (which employs two workers per $1m of sales), they increase the level of automation in the economy.
Denmark and Poland are refusing to bail out companies registered in offshore tax havens (Business Insider) Published on: April 20, 2020 | Category: Economic Impact, Global Response
- Denmark and Poland won’t give financial aid to companies registered in offshore tax havens.
- “Companies that seek to dodge their obligations to broader society by cutting their tax bills shouldn’t expect to get bailed out when things go wrong,” Robert Palmer, the executive director of Tax Justice UK, told Business Insider.
Doctor’s association says help from government is not enough to survive COVID-19 (CityNews) Published on: April 19, 2020 | Category: Canadian Business, Economic Impact
- The association representing Ontario doctors says a proposal from the provincial government to offer advance payments will not be enough to keep clinics open during the COVID-19 pandemic.
- The provincial government is offering clinics monthly payments to cover the loss of revenue from lower patient volumes and increased costs for personal protective equipment.
Disney stops paying 100,000 workers to save $500m a month (FT) Published on: April 19, 2020 | Category: Economic Impact, Global Response
- Walt Disney will stop paying more than 100,000 employees this week, nearly half of its workforce, as the world’s biggest entertainment company tries to weather the coronavirus lockdown.
- Suspending pay for thousands of so-called cast members will save Disney up to $500m a month across its theme parks and hotels, which have been shut in Europe and the US for almost five weeks.
- The decision leaves Disney staff reliant on state benefits — public support that could run to hundreds of millions of dollars over coming months — even as the company protects executive bonus schemes and a $1.5bn dividend payment due in July.
Watch Out For China Buying Spree, NATO Warns (Forbes) Published on: April 18, 2020 | Category: Economic Impact, Global Response
- Watch out for Chinese companies swooping in with buckets of cash to buy strategic stakes, or majority control in U.S. and European companies as asset prices fall due to the pandemic.
- “The geopolitical effects of the pandemic could be significant,” said NATO Secretary-General Jens Stoltenberg in web conference of defense ministers on Wednesday.
- “Some allies (are) more vulnerable for situations where critical infrastructure can be sold out,” he said.
Canada, U.S. extend border restrictions 30 days to control coronavirus spread (Reuters) Published on: April 18, 2020 | Category: Canadian Business, Economic Impact
- Canada and the United States have agreed to extend border restrictions for another 30 days to help control the spread of coronavirus, Prime Minister Justin Trudeau said on Saturday.
- Trudeau said the agreement is unchanged, and he expected shipments of medical supplies such as masks to continue to cross the border.
- Quebec is the epicenter of Canada’s outbreak, with seniors in care homes accounting for most of the province’s 805 deaths.
US banks brace for surge in loan losses (FT) Published on: April 18, 2020 | Category: Economic Impact, Global Response
- Big US banks made one thing clear this week: they are battening down the hatches to deal with an expected surge in loan losses as the pandemic casts serious doubts over the capacity of consumers and companies to pay their debt.
- Loan loss charges at six big American banks reached a total of $25.4bn in the first quarter.
- This marks a 350 per cent surge in collective provisions across Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley versus a year earlier, as charges soared to levels not seen since the financial crisis.
Seoul’s Full Cafes, Apple Store Lines Show Mass Testing Success (Bloomberg) Published on: April 18, 2020 | Category: Economic Impact, Global Response
- While both the U.S. and South Korea confirmed their first virus cases around the same time in late January, the number of infections in the U.S. has swelled to more than 700,000 while Korea “flattened the curve” last month and cases have slowed to just over 10,000.
- Moon’s popularity had soared in recent weeks, thanks in part to South Korea gaining global attention for its handling of the virus outbreak.
- “We did pretty well in prevention — that’s finding the patients and taking quarantine measures — thanks to our prior experience with MERS outbreak,” said Kim Yoon, professor of health policy and management at Seoul National University’s College of Medicine, referring to the 2015 outbreak that killed 38 Koreans.
China’s economy: the risk of a second coronavirus wave (FT) Published on: April 17, 2020 | Category: Economic Impact, Global Response
- On the same day that Chinese authorities began to relax a 77-day quarantine on Wuhan, the city that exported coronavirus across China and ultimately to every corner of the world, a small town on the country’s border with Russia was locked down for the second time in three months.
- But now Suifenhe faces a real crisis, after Chinese nationals returning home from Russia triggered a much-feared “second wave” of infections. The city has more than 320 confirmed cases and almost 1,500 people in centralised quarantine facilities.
- US sportswear company Nike said this week that 80 per cent of its China stores were open in cities such as Shanghai, which shows few visible signs of the pandemic.
- Car factories in Chengdu, capital of southwestern Sichuan province, have restored operations with little disruption, other than the use of face masks and other protective gear and social distancing in the canteen.
New York Fed Leader Says U.S. Recovery Unlikely to Be Swift (WSJ) Published on: April 17, 2020 | Category: Economic Impact
- Federal Reserve Bank of New York President John Williams said Friday that even a swift resolution to the coronavirus pandemic is unlikely to bring a fast recovery to the U.S. economy.
- “Even as the pandemic passes, even as the restrictions are relaxed gradually over time, people may take quite a while before they are willing to get back on airplanes, on trains, or go to the theater or go to concerts or things like that,” Mr. Williams said.
- Mr. William’s remarks came after a speech on Thursday in which he said the Fed’s effort to bolster the economy will be in place for some time to come.
U.S. airlines sitting on $10 billion owed to consumers for canceled flights, lawmakers say (Reuters) Published on: April 17, 2020 | Category: Economic Impact
- U.S. airlines are estimated to be sitting on more than $10 billion in travel vouchers that should have been cash refunds from canceled flights, a group of senators released on Friday.
- Many U.S. airlines are cancelling between 60% and 80% of their flights, and under federal law passengers on those flights are entitled to full refunds, Senators Ed Markey, Elizabeth Warren and Richard Blumenthal said in a statement.
- “However, many airlines have been obfuscating this right by offering travel vouchers as the default option, requiring passengers to take burdensome steps to request refunds instead,” they said.
Could a remote-work revolution spread tech outside its clusters? (Protocol) Published on: April 17, 2020 | Category: Economic Impact
- Champions of spreading tech opportunities into new hubs believe the coronavirus-driven shift to remote work could boost their efforts — as long as the crisis’ economic ravages don’t set them back even further.
- About three-fourths of business executives said in a recent Gartner survey that they expected to shift some jobs to permanent remote status.
- The trend could become part of a greater tech expansion from places like the Bay Area, Seattle, New York and Boston — the regions that attract the most venture capital funding — to areas like the Midwest and the South.
U.S. now has 22 million unemployed, wiping out a decade of job gains (Washington Post) Published on: April 17, 2020 | Category: Economic Impact, Global Response
- More than 22 million Americans have filed for unemployment aid since President Trump declared a national emergency, a staggering loss of jobs that has wiped out a decade of employment gains and pushed families to line up at food banks as they await government help.
- Layoffs are mounting in nearly every sector as businesses have been forced to close in an effort to stem the spread of covid-19.
- The Small Business Administration stopped accepting loan applications on Thursday after it ran out of funds for a key program that is supposed to help businesses stay afloat and retain workers.
Tracking covid-19 excess deaths across countries (The Economist) Published on: April 16, 2020 | Category: Economic Impact, Global Response
- In many places, official daily figures exclude anybody who did not die in hospital or who did not test positive.
- The best way to measure the full damage caused by such a medical crisis is to look at “excess mortality”: the gap between the total number of people who died from any cause during a given period, and the historical average for the same place and time of year.
- This suggests that the true toll was about 120% higher.
Food banks’ demand surges amid COVID-19. Now they worry about long-term pressures (Global News) Published on: April 15, 2020 | Category: Canadian Business, Economic Impact
- The use of food banks increased 28 per cent across the country during the Great Recession, according to Food Banks Canada CEO Chris Hatch — and in just in the last few weeks of the COVID-19 pandemic, demand jumped 20 per cent on average.
- As the spread of COVID-19 forces businesses to close and lay off employees, Hatch projected demand at the 3,000 food agencies his organization represents could surge to 30 or even 40 per cent from pre-pandemic levels, which averaged 1.1 million visits per month.
Coronavirus Fight Is Creating Mountains of Global Debt (WSJ) Published on: April 15, 2020 | Category: Economic Impact
- Already, global authorities have announced emergency efforts totaling almost $8 trillion in direct spending, loans and loan guarantees, the International Monetary Fund (IMF) said on Wednesday.
- That is roughly 9.5% of global output, according to Vitor Gaspar, the IMF’s fiscal-affairs director.
- The IMF expects the world’s gross fiscal debt will grow to 96.4% of GDP this year from 83.3% in 2019. In advanced economies, it will grow even more: to 122.4% from 105.2%, the IMF said.
Leaked CDC and FEMA plan warns of ‘significant risk of resurgence of the virus’ with phased reopening (Washington Post) Published on: April 15, 2020 | Category: Economic Impact, Global Response, Leadership
- A draft national strategy to reopen the country in phases, developed by the Federal Emergency Management Agency and the Centers for Disease Control and Prevention, emphasizes that even a cautious and phased approach “will entail a significant risk of resurgence of the virus.”
- The framework lays out criteria that should be in place before a region can responsibly ease guidelines related to public gatherings: a “genuinely low” number of cases; a “well functioning” monitoring system capable of “promptly detecting” spikes of infections; a public health system able to react robustly to new cases and local health systems that have enough inpatient beds to rapidly scale up in the event of a surge in cases.
- Reading the 10-page executive summary of the proposed public health response offers a window into the discussions happening inside the government about how to practically and responsibly ease toward reopening.
- For example, the document says the first priority should be reopening places where children are cared for – including K-12 schools, day cares and summer camps – so parents can return to work.
Real-time economic data shows Canada frozen in time (The Logic) Published on: April 15, 2020 | Category: Canadian Business, Economic Impact
- To capture the state of Canada’s economy today, The Logic compiled real-time data that shows a country fundamentally transformed.
- Toronto Pearson International Airport has seen a rapid decline in airplane departures, dropping 87 per cent between March 3 and April 13, from 597 departures in one day to 79.
- In total, 9.64 million Canadians are now actively online during the workday, a 110 per cent increase from the typical 4.6 million pre COVID-19, according to Wi-Fi analytics firm Plume.
There’s Been a Spike in People Dying at Home in Several Cities. That Suggests Coronavirus Deaths Are Higher Than Reported. (Pro Publica) Published on: April 14, 2020 | Category: Economic Impact
- Coronavirus death counts are based on positive tests and driven by hospital deaths.li>But data from major metropolitan areas shows a spike in at-home deaths, prompting one expert to say current numbers were just “the tip of the iceberg.”
- As of Tuesday afternoon, the United States had logged more than 592,000 cases of COVID-19 and more than 24,000 deaths, the most in the world, according to the Center for Systems Science and Engineering at Johns Hopkins University.
- The official COVID-19 death count may, at least for now, be missing fatalities that are occurring outside of hospitals, data and interviews show.
- Some state officials told ProPublica it would take weeks to provide complete death numbers because of thin staffing or antiquated computer systems.
Is Zoom’s breakout moment with individuals creating additional revenue for the company? (Cardify) Published on: April 14, 2020 | Category: Canadian Business, Economic Impact
- Over the past few months, few companies have received as much attention and scrutiny as Zoom.
- While it’s still early, we’ve seen a sharp increase in Zoom subscriptions on personal (not corporate) credit and debit cards.
- The increase coincides with statewide stay-at-home orders across the country, with every state exhibiting a nearly identical pattern.
Markets and economists are still too upbeat on coronavirus (FT) Published on: April 14, 2020 | Category: Economic Impact, Global Response
- The gap between the relatively quick V-shaped recovery that some economists and many market participants predict, and grim coronavirus-driven realities on the ground has narrowed.
- Economists initially — and over-optimistically — embraced the idea of a quick second-quarter recovery after a sharp contraction in the first quarter.
- Big companies lack visibility on what lies ahead, and are suspending guidance on earnings — a phenomenon that will increase during the first-quarter reporting season.
The future is not what it used to be: Thoughts on the shape of the next normal (McKinsey) Published on: April 14, 2020 | Category: Economic Impact, Global Response, Leadership
- For some organizations, near-term survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal.
- Even before COVID-19 hit, there were signs of unease, expressed in calls for protectionism and more restrictive immigration and visa policies.
- McKinsey research on the 2008 financial crisis found that a small group of companies in each sector outperformed their peers.
How Coronavirus Spread Through Corporate America (WSJ) Published on: April 13, 2020 | Category: Economic Impact
- A by-the-numbers look at the outbreak’s economic toll in terms of guidance withdrawn, dividends cut, buybacks scrapped and workers furloughed.
- Almost 300 companies withdrew their financial guidance. About 175 companies suspended stock buybacks or cut their dividend.
- As companies closed stores or reduced services, they rushed to draw down existing credit lines or take out new ones. Nearly 260 companies did one of those things in the past month, adding almost $221 billion in new debt.
Recovery in Chinese trade far from sight as global outlook dims (Straits Times) Published on: April 13, 2020 | Category: Economic Impact
- The contraction in China’s foreign trade is set to continue through the second quarter, as global demand remains depressed by measures to curb the ongoing coronavirus outbreak.
- China’s shipments plateaued in 2019 due to the trade war with the US and slowing global growth, and the virus outbreak then caused the weakest start for any year since 2012 with exports dropping 17.2 per cent from a year earlier in the first two months.
- “If China’s major export markets including the EU and the US suffered in the second quarter due to the pandemic, it’s very likely that China’s exports will be hit hard during the period,” said Betty Wang, senior economist at Australia & New Zealand Banking Group in Hong Kong.
Steering Through the Next Cycle (Oliver Wyman) Published on: April 12, 2020 | Category: Canadian Business, Economic Impact
- This year’s report sketches out three alternative scenarios for the evolution of the pandemic and its economic impacts, ranging from a rapid rebound to a deep global recession, and assesses the implications for wholesale banks over the medium term.
- The combination of lower revenues and elevated credit losses could drive earnings down by 100 percent in our central case to over 250 percent in our deep global recession scenario.
- The industry has built extensive capital and liquidity buffers to withstand this kind of stress event, putting them in a position to play an important role as shock absorber for the economy.
Walmart CEO says we’re in the ‘hair color’ phase of panic buying (CNN) Published on: April 11, 2020 | Category: Economic Impact
- First went the hand sanitizer, disinfectants and toilet paper. Now hair clippers and hair dye are flying off shelves.
- The first wave of heightened shopping showed consumers were buying up various means to protect themselves as the virus spread in the United States — masks, cleaning products and hand sanitizers.
- Sales of hair clippers increased 166% and hair coloring products rose 23%, from the same period a year earlier, according to Nielsen.
Electricity prices slump as businesses close across the US (FT) Published on: April 11, 2020 | Category: Economic Impact
- The coronavirus pandemic has led to a sell-off in wholesale US electricity markets as closed restaurants and office buildings, and idled factories, lead to lower power use.
- The state’s grid operator on Thursday said daily energy use had fallen nearly 8 per cent from late March, even adjusting for the effects of weather.
- While it typically jumps early in the morning as people rush to work or school, now it is picking up gradually, according to analysis by the Electric Power Research Institute.
How the Virus Transformed the Way Americans Spend Their Money (NY Times) Published on: April 11, 2020 | Category: Canadian Business, Economic Impact
- In recent weeks, more than 16 million workers in the country have filed for unemployment. And with no end to the outbreak in sight, consumer spending is likely to be fundamentally different for many months to come.
- In a 7-day period that ended on March 18, grocery sales were up 79 percent from the previous year.
- Spending on video game companies like Twitch and Nintendo is booming, and streaming services, including Netflix and Spotify, are enjoying gains as well.
Boeing Taps Investment Banks as It Weighs Government Aid (WSJ) Published on: April 10, 2020 | Category: Economic Impact
- Boeing Co. has tapped investment banks for help securing a financial lifeline after the coronavirus pandemic grounded most of the world’s flights and deepened the aerospace giant’s troubles.
- Boeing Chief Executive David Calhoun has balked at the idea of giving the U.S. government an equity stake as part of a deal, a possibility the stimulus bill envisions.
- One possibility: Boeing could apply for the Treasury to buy a few billion dollars worth of its bonds and secure the rest of what it needs privately, perhaps from buyout firms or other well-heeled investors.
The post-pandemic question: when this ends, how do we get our country back? (CBC) Published on: April 10, 2020 | Category: Canadian Business, Economic Impact
- Our relative success in navigating the ‘new normal’ will be measured by how quickly we can return to something like the old normal, and how much pain we might endure on the way to getting there.
- Current measures to shut down most of the Canadian economy and calls to practice physical distancing will remain in place until the first wave has passed.
- But 3,598 Canadians were killed at Vimy Ridge. We might consider ourselves lucky if only that many die as a result of COVID-19.
Japan to Fund Firms to Shift Production Out of China (Bloomberg) Published on: April 9, 2020 | Category: Economic Impact, Global Response
- Japan has earmarked $2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China as the coronavirus disrupts supply chains between the major trading partners.
- China is Japan’s biggest trading partner under normal circumstances, but imports from China slumped by almost half in February as the disease shuttered factories, in turn starving Japanese manufacturers of necessary components.
- The government’s panel on future investment last month discussed the need for manufacturing of high-added value products to be shifted back to Japan, and for production of other goods to be diversified across Southeast Asia.
How the covid-19 pandemic is changing Americans’ spending habits (The Economist) Published on: April 9, 2020 | Category: Economic Impact
- A stockpiling splurge in early March has given way to penny-pinching.
- Today, with stay-at-home orders in effect for 300m Americans in more than 40 states, the early rush to stock up seems to have subsided.
- Consumers did not react uniformly to social-distancing guidelines. Households with children spent more than other households in the early days of the pandemic, but later cut back twice as fast as those without, perhaps because parents were less inclined to venture out with their kids.
- Men seemed more reluctant than women to change their behaviour.
Europe’s Big Economies Brace for Sharpest Drop Since World War II (NY Times) Published on: April 8, 2020 | Category: Economic Impact
- Germany and France are a harbinger of how bad it’s about to get as countries weigh the cost of coronavirus-induced lockdowns against the prospect of an extended recession.
- France officially slid into a recession after suffering one of the worst quarterly contractions in more than 50 years.
- For every two weeks the population remains under confinement, the economy shrinks by at least 1.5 percent, it added.
Healthcare, like banking, needs buffers to survive a shock (FT) Published on: April 7, 2020 | Category: Economic Impact, Global Response
- Apply the lessons of the global financial crisis to make our health systems resilient.
- Effective risk management requires an understanding of where the risk in the system resides so that the appropriate action can be taken to mitigate the risk and reduce collateral damage.
- We are learning much the same about the inadequacy of buffers in the healthcare systems in many countries.
Container Shipping Lines Cancel Sailings to Weather Coronavirus Storm (WSJ) Published on: April 6, 2020 | Category: Economic Impact
- Global container shipping lines have canceled more than 160 sailings over the past week as they try to maintain freight rates in the face of billions of dollars in potential losses driven by falling trade demand.
- Sea-Intelligence estimates the biggest international carriers will see combined losses ranging from $800 million to $23 billion this year, depending on how they manage the economic impact from widespread coronavirus-driven lockdowns.
- He predicts the pandemic will cut demand for container shipping this year by about 10% overall, about the same decline as in 2009, when the financial crisis unfolded disrupting world trade.
Some Auto Insurers Are Sending Refunds To Customers As Crash Rate Falls (NPR) Published on: April 6, 2020 | Category: Economic Impact
- The pandemic has emptied out U.S. streets as Americans stay home to avoid spreading the coronavirus. Less driving means fewer car crashes.
- And at least three companies have decided to pass those savings along to their customers.
- Allstate is going to send out some $600 million in premium refunds. All 18 million drivers with Allstate auto policies will be receiving 15% of their premium, credited to their bank account, credit card or Allstate account.
Swiss lead way with crisis loans to small businesses (FT) Published on: April 6, 2020 | Category: Economic Impact, Global Response
- It took Matthias Knaur only a minute or two to complete and scan the single-page form for a liquidity lifeline from the Swiss government.
- About 30 minutes after sending it, the money was in his company’s account.
- Switzerland unveiled its SFr20bn ($20bn) package of emergency loans to support small businesses on March 25. In its first week of operating, it disbursed more than SFr15bn to 76,034 businesses.
What top CEOs fear telling America about the coronavirus shutdown (Axios) Published on: April 6, 2020 | Category: Economic Impact
- Top CEOs, in private conversations and pleas to President Trump, are warning of economic catastrophe if America doesn’t begin planning for a phased return to work as soon as May, corporate leaders tell Axios.
- Several of these leaders told us they want to have a hard national conversation about tradeoffs involved in any widespread lockdowns beyond the middle of next month.
- Business owners are asking: ‘At what point do I just lay my people off and shut down and give the landlord the key?’
Cities with strong social distancing see stronger economic recoveries (MIT Sloan Management Review) Published on: April 6, 2020 | Category: Economic Impact, Global Response
- Critics fear social distancing edicts hurt the economy, but research on the 1918 flu pandemic reveals an aggressive response can help spur economic recovery.
- Somewhat surprisingly perhaps, we find that areas that acted early and aggressively with non- pharmaceutical interventions do not perform worse economically, at least in the medium term — if anything, they actually come out of the pandemic stronger.
- Lifting restrictions too early could make the economy worse by leading to a resurgence of the virus in an even more destructive pandemic.
Virtuous cycle (Reuters Breaking Views) Published on: April 6, 2020 | Category: Economic Impact
- China may be hoping an illusion of economic recovery will inspire the real thing.
- To address this insecurity, officials are pushing an alternative line of statistics that imply prosperity is just around the corner. On March 25, for example, the official Xinhua News Service claimed 88% of key agricultural enterprises had “restarted business”, that construction on 89% of key infrastructure projects had resumed, and that electricity usage had revived to 90% of pre-outbreak levels for industries like electronics and pharmaceuticals.
- Unfortunately “restarting business” is vaguely defined. Local business publication Caixin reported in early March that many companies, pushed to restart manufacturing by officials, have turned on lights and machinery to simulate resumption – which means signs of revived energy consumption may be unreliable.
Facebook’s Road to Redemption Runs Straight Down Main Street (WSJ) Published on: April 5, 2020 | Category: Economic Impact, Global Response, Leadership
- COO Sheryl Sandberg says past mistakes prepared social network for coronavirus response; company offers cash, tools to help mom-and-pops.
- One-third of small businesses in America don’t have a formal web presence at all, according to Ms. Sandberg, but many of those businesses have long had a Facebook page.
- The $100 million grant pales in comparison to a government stimulus plan, but dwarfs some of the relief efforts set up by other tech companies and many cities. Facebook will spend $40 million of that in the U.S., focused on small businesses located near 34 cities where it has operations.
Europe prepares to ease coronavirus lockdowns (FT) Published on: April 5, 2020 | Category: Economic Impact, Global Response
- Governments across Europe have begun preparations to ease the lockdowns imposed across much of the continent to contain the coronavirus pandemic, even if restrictions that have paralysed the economy are expected to remain in force for several more weeks.
- Angelo Borrelli, head of Italy’s Civil Protection Agency which is in charge of co-ordinating the national response to the outbreak, suggested a “phase two” of the country’s lockdown could begin next month.
- “I don’t want to give dates, but between now and May 16 we may have further positive data that suggests we can resume activities and then start phase two,” he said.
Why America’s $1.3tn car-loan market cannot avoid a pile-up (FT) Published on: April 4, 2020 | Category: Economic Impact
- The logic seemed to be clear: you can sleep in your car, but you cannot drive your house to work.
- Not only are millions of people being put out of work, but governments are calling for everyone to stay at home to limit the spread of coronavirus.
- “We have found that companies can remain in business for a while losing money, but they go out of business very quickly when they lose access to their warehouse lines of credit,” said Amy Martin, senior director at S&P Global Ratings.
Canada’s Big Six banks cut credit card interest rates to ease coronavirus impact (Reuters) Published on: April 4, 2020 | Category: Canadian Business, Economic Impact
- Canada’s Big Six banks all said they will reduce interest rates on credit cards to provide relief to customers affected by COVID-19 pandemic.
- Bank of Montreal said on Saturday it will temporarily reduce credit card interest rates to 10.99% for personal and small business customers receiving payment deferrals due to the outbreak.
- Last week, Prime Minister Justin Trudeau said his government had urged banks to help alleviate the burden credit card interest rates place on Canadians.
See how your community is moving around differently due to COVID-19 (Google) Published on: April 3, 2020 | Category: Economic Impact
- As global communities respond to COVID-19, we’ve heard from public health officials that the same type of aggregated, anonymized insights we use in products such as Google Maps could be helpful as they make critical decisions to combat COVID-19.
- These Community Mobility Reports aim to provide insights into what has changed in response to policies aimed at combating COVID-19.
Sensing and Shaping the Post-COVID Era (BCG) Published on: April 3, 2020 | Category: Economic Impact, Leadership
- COVID-19 and the containment polices aimed at controlling it have changed how we work and what we consume. History shows that such changes are not always temporary—crises can fundamentally reshape our beliefs and behaviors.
- Societal crises can also have lasting effects on consumption patterns. For example, the 2003 SARS outbreak in China changed attitudes toward shopping: because many people were afraid to go outside, they turned to online retail.
- It’s hard to predict precisely how it will shape our perspectives on society, but it’s plausible that we could see a greater focus on crisis preparedness, systems resilience, social inequality, social solidarity, and access to health care.
‘It’s going to be stark,’ Ford agrees to release COVID-19 infection modelling to public (CP24) Published on: April 2, 2020 | Category: Canadian Business, Economic Impact
- Premier Doug Ford has reversed course on releasing Ontario’s COVID-19 modelling data, saying now that the public needs to see the data he has seen, adding “it’s going to be stark.”
- He wouldn’t speak to the data provincial doctors will release sometime on Friday, but said it will be sobering for some.
Traffic at Walmart, Costco and Target falls for the first time in weeks as coronavirus stockpiling behavior shifts (Market Watch) Published on: April 1, 2020 | Category: Economic Impact
- Traffic at Walmart Inc., Costco Wholesale Corp. and Target Corp. dropped for the first time in the weeks since the coronavirus pandemic ramped up in the U.S., according to Placer.ai.
- Shopper traffic could climb again, though social distancing and e-commerce may keep consumers away from stores.
Start-Ups Are Pummeled in the ‘Great Unwinding’ (NY Times) Published on: April 1, 2020 | Category: Economic Impact
- After a crush of travel cancellations in March, WanderJaunt, a short-term home rental start-up in San Francisco, laid off 56 of its 240 employees last week.
- And at ClassPass, which offers a membership program for fitness classes, over 95 percent of revenue evaporated in just 10 days as studios and gyms around the world shut down.
- Airbnb, the home rental start-up valued at $31 billion, has stopped hiring and has suspended $800 million of marketing.
China is using digital coupons to entice people to get shopping again (Quartz) Published on: April 1, 2020 | Category: Economic Impact, Global Response
- One of the key ways China is incentivizing people is through the use of digital coupons, which are issued by some local governments and delivered to users via third-party platforms such as payment app Alipay and WeChat pay.
- Residents log in to the apps to redeem the coupons, which can be used for dining, shopping, and travel within a short period of time.
- In February, China’s car sales plunged 79% from a year earlier, the biggest-ever monthly decline. A gauge of factory activity in March unexpectedly rebounded into positive territory after an abysmal performance the previous month, but officials warned that the data should not be seen as a sign of economic stabilization.
Canada’s next-door neighbour is now the epicentre of global pandemic. Here’s what that U.S. surge means (CBC) Published on: March 31, 2020 | Category: Canadian Business, Economic Impact
- When asked Monday about the travel restrictions on Canada and Europe, Trump acknowledged they would likely also remain in place at least until April 30: “The guidelines will be very much as they are.”
- One epidemiologist and public-health specialist who checked the totals Monday estimated that the rate of infections was, in fact, about 2.9 times higher in the U.S. than in Canada.
- That evaporation of American incomes would further batter Canada’s economy, given that three-quarters of Canada’s international exports go to the U.S.
Ex dividend (Reuters Breaking Views) Published on: March 30, 2020 | Category: Canadian Business, Economic Impact
- Carmaker Ford Motor, fashion retailer H&M and UniCredit, the Italian bank, are among those that have cancelled or suspended their payouts in the last few weeks.
- Official restrictions are partly to blame. The European Central Bank on Friday urged lenders it regulates to halt dividends and conserve capital.
- Nevertheless, a dividend drought will put pressure on income-dependent investors, like pension funds, which tend to rely on the regular income to meet their obligations.
After pandemic ends, U.S. needs Recovery Authority to speed economic rebound (USA Today) Published on: March 30, 2020 | Category: Economic Impact, Global Response
- Cutting red tape in health care has unleashed waves of energy and ingenuity to deal with the COVID-19 crisis.
- Once the crisis is under control, the same kind of energy and resourcefulness will be needed to get America’s schools, businesses, government agencies and nonprofits up and running again.
- What’s needed is a temporary Recovery Authority with a broad mandate to identify and waive unnecessary bureaucratic hurdles to recovery.
Leaked memo from Delta reveals plans to cut worker hours and pay, despite protections in the coronavirus stimulus package. United and other airlines are doing the same. (Business Insider) Published on: March 30, 2020 | Category: Economic Impact, Global Response
- Despite the payroll grants offered to airlines in the coronavirus stimulus package, airline workers at Delta, American, United, Southwest, and others will, in practice, take home less money than they had before.
- The Coronavirus Aid, Relief, and Economic Security Act, or “CARES” Act – offered $58 billion in aid to airlines, split into two parts. Up to $29 billion in loans for air carriers is available, and an additional $29 billion in payroll grants.
- Both the loans and the grants mandate that companies accepting them not reduce workforces until after September 30, 2020 – in effect, the mandate prohibits involuntary job cuts.
Urgent Demand for Medical Equipment Is Making Air Cargo Fees ‘Absolutely Crazy’ (Bloomberg) Published on: March 30, 2020 | Category: Canadian Business, Economic Impact
- Urgent demand for medical equipment to fight the coronavirus has sent the cost of chartering aircraft skyrocketing and turned a typically humdrum process into an ultra-competitive auction.
- “Chartered prices have been pushed up from less than $300,000 four to six weeks back to $600,000 to $800,000 in the last few days,” Anthony Lau, chairman and founder of logistics company Pacific Air (HK) Ltd., said in an interview Friday.
- The likes of Cathay Pacific Airways Ltd., Korean Air Lines Co. and American Airlines Group Inc. are hauling a greater amount of goods in the bellies of their passenger planes to keep up with demand. Cargo rates have risen over 10% in recent weeks.
Fauci predicts millions of coronavirus cases in US, and more than 100,000 deaths (Boston Globe) Published on: March 29, 2020 | Category: Economic Impact, Global Response
- The coronavirus outbreak could kill 100,000 to 200,000 Americans, the US government’s top infectious-disease expert warned on Sunday, as smoldering hotspots in nursing homes and a growing list of stricken cities heightened the sense of dread across the country.
- But spikes in infections were recorded around the country, not only in metropolitan areas but in Midwestern towns and Rocky Mountain ski havens.
- “This is not going to get better soon,” New York Governor Andrew Cuomo said.
America’s Make-or-Break Week (WSJ) Published on: March 29, 2020 | Category: Economic Impact
- The decisions they make this week could shape how deeply the economy is damaged by the coronavirus pandemic.
- “Rent is due. Utilities are due. Credit card bills are due April 1.”
- An estimated $20 billion in monthly retail real estate loans are due as early as this week, according to Marcus & Millichap, a commercial real-estate services and consulting firm.
- Many retailers and restaurants have said they are not going to pay their April rents, which in turn poses a threat to the $3 trillion commercial mortgage market.
Microsoft: Cloud services demand up 775 percent; prioritization rules in place due to COVID-19 (ZDNet) Published on: March 29, 2020 | Category: Canadian Business, Economic Impact
- Microsoft is sharing more guidance around capacity limits it is putting in place for its cloud resources caused by higher-than-usual demand due to the coronavirus pandemic.
- Microsoft officials say the company has seen a 775 per cent increase in demand for its cloud services in regions enforcing social distancing and/or shelter-in place due to the COVID-19 coronavirus.
- Last week, officials acknowledged the company has been throttling some “non-essential” Office 365 services so as to continue to meet demand.
Big companies raise record sums from bond market in dash for cash (FT) Published on: March 29, 2020 | Category: Economic Impact, Global Response
- Global corporate bond issuance by “investment grade” companies has surged to $244bn so far in March, the highest monthly total since a record $252bn was sold in September, according to Dealogic.
- Adding in a raft of new bank bond sales from the likes of Wells Fargo and Goldman Sachs takes the global tally to $408bn this month, separate data from Refinitiv showed.
- Analysts warn that despite higher-rated companies bolstering their cash piles, rising corporate defaults could still ricochet through the economy. Around $9tn of outstanding corporate debt has built up over the past decade while borrowing costs have been low.
Canada ‘very concerned’ with OPEC’s decisions amid coronavirus outbreak: Trudeau (Global News) Published on: March 28, 2020 | Category: Canadian Business, Economic Impact
- Prime Minister Justin Trudeau said Canada is “very concerned” with the Organization of the Petroleum Exporting Countries’ (OPEC) decisions amid the novel coronavirus outbreak, but that the government remains focused on helping Canadians struggling as a result of the dramatic drop in oil prices.
- The price of oil sank nearly 20 per cent in early March after Russia refused to roll back production in response to falling demand and OPEC member Saudi Arabia signalled it will ramp up its own output.
- The price of Western Canadian Select for crude fell below $5 USD a barrel on Friday, as demand during the COVID-19 outbreak continued to drop.
Bank of Canada ventures into uncharted territory to fight coronavirus fallout (Financial Post) Published on: March 27, 2020 | Category: Canadian Business, Economic Impact
- Along with the interest-rate cut, the central bank said it will begin buying at least $5 billion worth of government bonds per week until the economy turns around.
- The Bank of Canada’s trading desk has been watching markets for government bonds, mortgage-backed securities, and short-term business loans become increasingly rigid as lenders attach severe risk premiums to the interest rates they charge in normal times.
- Poloz avoided arithmetical predictions about the future. He said the Bank of Canada will release its quarterly economic report on April 15.
Some U.S. Cities Could Have Coronavirus Outbreaks Worse Than Wuhan’s (NY Times) Published on: March 27, 2020 | Category: Economic Impact, Global Response
- If its rate of growth in coronavirus cases continues, the New York City metropolitan area will suffer a more severe outbreak than those experienced in Wuhan, China, or the Lombardy region of Italy.
- But as an epidemic progresses, the number of cases per capita can provide a good measure of the prevalence of coronavirus in a community.
- By this measure, the situation in New York does not appear promising. The rate of increase in cases is far higher than it was in Wuhan or Lombardy, once they had reached similar numbers of cases.
- Other metropolitan areas, like Detroit and New Orleans, stand out as places where a coronavirus outbreak might escalate quickly without preventive measures.
New Rochelle, Once a Coronavirus Hot Spot, May Now Offer Hope (NY Times) Published on: March 27, 2020 | Category: Economic Impact, Global Response
- “Everybody talks about flattening the curve, and I think that’s exactly what we were able to do,” a health official said.
- The state took drastic measures that stirred a backlash, including creating a containment zone. But now, the latest data indicates that the measures may be starting to work.
- Over the last four days, only 38 new cases were reported to the county.
IMF chief says the global economy is already stuck in a coronavirus-fueled recession — and only a coordinated worldwide effort will save it (Business Insider) Published on: March 27, 2020 | Category: Economic Impact
- The global economy is stuck in an unprecedented kind of recession that necessitates international cooperation, International Monetary Fund chief Kristalina Georgieva told CNBC on Friday.
- The international organization said last week it “stands ready” to use its $1 trillion credit capacity to aid countries strapped for cash amid the outbreak.
- “We’ve never seen the world economy standing still. Now we do,” she said. “How we go about revitalizing it is another important topic.”
Allianz liquidates two hedge funds after losses (FT) Published on: March 27, 2020 | Category: Economic Impact
- Allianz Global Investors, the asset management group owned by Germany’s largest insurance group, is liquidating two hedge funds that suffered huge losses during the March market rout.
- Initially the hedge fund industry was resilient as coronavirus spread and market volatility rose. The average hedge fund lost just 1.4 per cent in February, according to Hedge Fund Research.
- But as the turmoil deepened and market liquidity declined in many areas, some popular and previously reliable trades went awry. Hedge funds were now down 8.6 per cent in March, and nearly 10 per cent for the year.
Canada can ignore drug, device patents during outbreak under new law (Reuters) Published on: March 26, 2020 | Category: Canadian Business, Economic Impact
- Canada’s emergency legislation on the coronavirus crisis gives the health minister powers to circumvent patent law and ensure medical supplies, medication or vaccines can be produced locally.
- Ventilators could be the legislation’s first target, pharmaceutical consultancy PDCI Market Access said in a note to clients.
- Canada’s main pharmaceutical lobby group, Innovative Medicines Canada, said it was concerned that the legislation did not require the government to check in with the original manufacturer to see what it can supply before authorizing others to step in.
China goes back to work (The Economist) Published on: March 26, 2020 | Category: Economic Impact, Global Response
- Measures aimed at preventing another surge of covid-19 have added to the complexities of manufacturing in China. The German manager of an optical-wire factory in Jiangsu province has divided his workers into ten separate units to minimise the risk of cross-infections. The units are kept apart from each other in the factory, the canteen and their dormitories.
- Nevertheless, on the supply side, the overall picture is encouraging. Large companies report that they are fully operational.
- Resuscitating demand is proving more difficult. It involves two things that are harder for the government to manage: global growth and public anxiety about the disease.
- State-owned firms account for about three-quarters of corporate debt in China. The government need not spell out that it stands behind them. Investors know that.
The Coronavirus War Economy Will Change the World (Foreign Policy) Published on: March 26, 2020 | Category: Economic Impact, Global Response
- There are models less reliant on the private sector than the DPA; one important peacetime predecessor is the New Deal-era Works Progress Administration. This sort of public scheme would be able to put to work the large numbers of workers who are facing unemployment in the coming weeks and months.
- As one financial analyst pointed out, “lockdown economics” is in many ways the exact opposite of the wartime economics of total mobilization.
- But this is not a problem of prioritizing expenditures or limited resources. The issue is sustaining circulation. In the short run, the demands of disease prevention (quarantine measures) and care (hospitalization) will put the livelihood of those dependent on other forms of capitalist production at risk. Only massive government intervention to protect the channels of economic circulation can resolve this tension in a way that does not sacrifice the former for the latter.
- Despite being framed as exceptional wartime or postwar measures, many provisions rapidly became entrenched.
- There is no precedent for the asymmetric mix of mobilization and demobilization of labor that we are witnessing right now.
Canada doubles value of coronavirus stimulus package, promises cash, loan delays (Reuters) Published on: March 26, 2020 | Category: Canadian Business, Economic Impact
- Canada has almost doubled the value of an aid package to help people and businesses deal with losses from the coronavirus outbreak, with Ottawa handing out more money than forecast, Finance Minister Bill Morneau said on Wednesday.
- A portal will be set up by April 6 for people who have lost jobs or are unable to work to apply for monthly payments, which will run for four months.
- Sports equipment maker Bauer Hockey plans to modify its hockey visors into face shields for healthcare workers, while retailers Canada Goose Holdings, and Gap Inc said they would produce medical gear.
MPs suspend Parliament for hours after opposition rejects proposed new government powers (The Globe and Mail) Published on: March 25, 2020 | Category: Canadian Business, Economic Impact
- Opposition parties vowed to reject Liberal government plans to authorize months of unlimited spending without Parliamentary approval, derailing efforts for quick approval of billions in support for workers and businesses.
- The Prime Minister did not provide any specific details as to how the draft bill might be changed.
- “We want to build in some measures that ensure that parliamentary oversight is going forward, that there are some mechanisms for Parliament to do its job,” Andrew Scheer told CTV’s Power Play early Tuesday evening as negotiations continued. “We have to be able to know there are some safety measures there on behalf of the Canadian people.”
U.S. Domestic Passenger Flights Could Virtually Shut Down, Voluntarily or by Government Order (WSJ) Published on: March 24, 2020 | Category: Economic Impact, Global Response
- Major U.S. airlines are drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S., according to industry and federal officials.
- Government agencies also consider ordering such a move as the nation’s air-traffic control system continues to be ravaged by the coronavirus contagion.
- Airlines are preparing for the possibility that contagion-driven staffing emergencies at air-traffic control facilities could force the issue, making it impossible to continue operating in parts of the country.
- Another option to keep cargo shipments flowing would be a White House decision to call up portions of what is called the Civil Reserve Air Fleet, essentially commercial jets designated to help the Pentagon with logistics and other needs during national emergencies.
Trump Considers Reopening Economy, Over Health Experts’ Objections (NY Times) Published on: March 24, 2020 | Category: Economic Impact, Global Response
- Officials have said the federal government’s initial 15-day period for social distancing is vital to slowing the spread of the virus, which has already infected more than 40,000 people in the United States.
- Any push to loosen the new limits on commerce and movement would contradict the consensus advice of public health officials, risking a surge in infections and deaths from the virus.
- The recent rise of cases in Hong Kong, after there had been an easing of the spread of the virus, is something of an object lesson about how ending strict measures too soon can have dangerous consequences.
The Impact Of Coronavirus On Global Activity (FitBit) Published on: March 23, 2020 | Category: Economic Impact
- As the COVID-19 pandemic continues to evolve, it’s had a major impact on physical activity levels for our 30 million plus active Fitbit users around the globe.
- The severity of the decline in steps varied from country to country, with European countries showing a more dramatic change, ranging from a 7% to 38% decline in step counts during the week ending March 22, 2020.
- There are also reasons for optimism, as you can see that step counts are starting to rise again in China, Japan, and Hong Kong.
Negotiations falter over $2tn US stimulus deal (FT) Published on: March 23, 2020 | Category: Economic Impact
- The Trump administration and congressional leaders struggled to reach a deal on fiscal stimulus measures worth nearly $2tn to help the US weather the coronavirus pandemic, leaving the fate of the package up in the air as jittery markets opened around the world.
- The negotiations hit an impasse on Sunday after Democrats on Capitol Hill objected that the proposed deal offered big business an overly generous bailout with limited conditions and scant oversight.
- They also argued it would not release enough new funds to hospitals.
Dow futures plunge as coronavirus slams market, Fed official warns unemployment could hit 30% (Market Watch) Published on: March 23, 2020 | Category: Economic Impact
- U.S. stock-index futures fell by the most allowable for the day Sunday evening as the cases of coronavirus globally neared 330,000 and the market appeared unhappy with a lack of government action to address the current and expected fallout from the COVID-19 pandemic.
- On top of that, a U.S. central bank official estimated that the unemployment rate could surge from just over 3% to 30% at its peak as businesses shutter in an effort to clamp down on the spread of the deadly illness.
Denmark’s Idea Could Help the World Avoid a Great Depression (The Atlantic) Published on: March 21, 2020 | Category: Economic Impact, Global Response
- This week, the Danish government told private companies hit by the effects of the pandemic that it would pay 75 percent of their employees’ salaries to avoid mass layoffs.
- The plan could require the government to spend as much as 13 percent of the national economy in three months.
- The philosophy here is that the government wants companies to preserve their relationship with their workers. It’s going to be harder to have a strong recovery if companies have to spend time hiring back workers that have been fired.
Coronavirus and Politicians vs. the Economy (Cato Institute) Published on: March 20, 2020 | Category: Economic Impact
- The government does not have enough money to keep the economy afloat until a vaccine arrives, maybe a year from now.
- The nation’s 130 million private‐sector workers would have generated $16 trillion of income this year.
- Consider a scenario where half of private‐sector workers are idled for three months. That would lose the economy $2 trillion of income.
Volvo back to ‘normal’ in China as it shuts EU and US car plants (FT) Published on: March 20, 2020 | Category: Economic Impact, Global Response
- Volvo Cars said its Chinese business had returned to “normal”, offering a ray of hope to European and US carmakers that have shuttered operations in the face of the global coronavirus pandemic.
- Carmakers have in the past week announced the closures of every large European plant and more than 100 facilities across North and South America in a wave of measures to impede the spread of the virus.
- “We need to plan for normality after Easter, to give people a light at the end of the tunnel,” said Mr Samuelsson. “Let’s hope that will be the case. Continuing to Christmas would be a disaster.”
To solve the economic crisis, we will have to solve the health-care crisis (Washington Post) Published on: March 20, 2020 | Category: Economic Impact, Global Response
- This is not an economic crisis; it is a health-care crisis.
- In an economic crisis, you could imagine a situation in which people lose their jobs and are unable to spend money.
- In these conditions, cash to consumers cannot jump-start consumption. Relief to producers will not jump-start production.
- The federal government should announce a Manhattan Project-style public-private partnership to find and produce a vaccine.
Is It Time to Rethink Globalized Supply Chains? (MIT Sloan Management Review) Published on: March 19, 2020 | Category: Economic Impact, Leadership
- The COVID-19 pandemic should be a wake-up call for managers and prompt them to consider actions that will improve their resilience to future shocks.
- The transformation of supply chains to global multistage production networks took place in a benign environment of falling trade barriers and an implicit willingness to accept increasing interdependence and the associated risks.
- Over the past decade, we have had a number of black swan events. Although such occurrences are supposed to be exceedingly rare, in the past decade we have had several of them: the introduction by China of export quotas on rare earth elements in 2010; the 2011 Tohōku East Japan earthquake and tsunami; the flooding in Thailand later that year; the U.S.-China trade war; and now the coronavirus contagion.
ECB to launch €750bn bond-buying programme (FT) Published on: March 19, 2020 | Category: Economic Impact, Global Response
- Pandemic Emergency Purchase Programme will cover sovereign and corporate debt.
- The ECB also decided to expand the range of assets eligible for purchase to non-financial commercial paper and to ease its collateral standards to allow banks to raise money against more of their assets, including corporate finance claims.
- Another option for the ECB to repair market confidence would be to lift its self-imposed limits to not buy more than a third of the eligible sovereign bonds of any single country and to purchase sovereign bonds in proportion to the weight of each country’s investment in its capital.
- The latest €750bn package comes on top of last week’s €120bn extra purchases and means the ECB will buy more than €1tn of bonds in the next nine months — its highest ever pace of purchases.
GM, Ford and FCA shutter all North American factories over coronavirus fears (TechCrunch) Published on: March 18, 2020 | Category: Economic Impact, Global Response
- Detroit’s big three automakers are to shut down all factories due to fears over the coronavirus.
- Over the last few days, United Auto Workers has been pushing the automakers to shut down their factories over concerns of worker safety.
- Early today, Honda announced it was pausing all operations at its 12 North American factories, including transmission and engine plants in Ohio, Indiana, Alabama, Canada and Mexico. Ford and GM followed several hours later. Now, in the afternoon, FCA also decided to close its factories.
Plight of Retail Workers: ‘I’m Scared to Go to Work’ (NY Times) Published on: March 18, 2020 | Category: Economic Impact, Global Response, Leadership
- Dozens of employees staffed the cash registers, cosmetics counter and shoe department. Many were frightened. Three days before, the company said that a worker at the store had tested positive for the coronavirus.
- The retail industry has endured a recent raft of bankruptcies and closures, as well as the pressure of new tariffs in the past year. It makes the prospect of losing weeks of business to the coronavirus even more chilling for many stores.
- The Retail Industry Leaders Association, an industry trade group, has been urging state and local officials to not unilaterally declare most of retail, outside of grocery stores and pharmacies, as nonessential. The group said officials should first consult with retailers before ordering stores to close.
How covid-19 is interrupting children’s education (The Economist) Published on: March 18, 2020 | Category: Economic Impact
- Almost a billion children have seen their schools close.
- In 2013 Britain’s Health Protection Agency looked at flu outbreaks that coincided with school closures. It found that shutting them slowed the transmission of the virus, even if it also slowed the transmission of knowledge.
- For poor children, schools may provide the most nutritious meal of the day. Around 26m children in American schools—roughly half of all students—qualify for free or reduced-price lunches.
France ready to nationalise virus-stricken companies (FT) Published on: March 17, 2020 | Category: Economic Impact, Global Response
- France has rolled out an emergency €45bn rescue package for its coronavirus-stricken economy and pledged an array of possible measures, including nationalisation and an extended ban on short selling, if it needs to save important companies.
- In addition the French state will guarantee €300bn of bank loans to businesses to ensure they do not collapse for want of liquidity, while eurozone members had collectively offered €1tn in such national guarantees.
- France has also joined Spain, Italy and Belgium in banning the short selling of stocks to calm investors rattled by heavy price falls.
3 charts that helped change coronavirus policy in the UK and US (World Economic Forum) Published on: March 17, 2020 | Category: Economic Impact, Global Response
- Suppression involves a combination of four interventions: social distancing of the entire population, case isolation, household quarantine and school and university closure.
- But when these measures are relaxed, the modelling predicted cases would rise again, so interventions may need to be in place until a vaccine is developed – 18 months or longer.
- Around three weeks after the combined interventions are introduced, the scientists predict there would be a reduction in the peak need for intensive care beds – and this would continue to decline while the policies stay in place.
- However, once the interventions are relaxed (around September in the above chart), the infections would begin to rise again, leading to a predicted peak epidemic later in the year.
The state of the restaurant industry (OpenTable) Published on: March 17, 2020 | Category: Economic Impact
- As the COVID-19 pandemic keeps people home and some cities, states, and countries limit restaurant operations, our community of nearly 60,000 restaurants faces unprecedented challenges.
- We’ve summarized the data we have from the restaurants on our platform and are updating it daily.
- This data shows year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins.
The places a COVID-19 recession will likely hit hardest (Brookings) Published on: March 17, 2020 | Category: Economic Impact
- As recession forecasts proliferate, it’s not necessarily true that all areas will be hit equally hard.
- To illustrate this, we mapped the employment geography of an array of industries vulnerable to disruption by virus-related demand declines, shutdowns, and layoffs.
- Zandi composed a list of five especially vulnerable sectors: mining, oil and gas, transportation, employment services, travel arrangements, and leisure and hospitality.
The economic policy response to COVID-19: What comes next? (Brookings) Published on: March 16, 2020 | Category: Economic Impact, Global Response
- The federal policy response thus far has focused on public health.
- In addition, send $1000 checks per adult to households (with an income cap that can be applied later as part of 2020 taxes) (~$200 billion) with checks for dependents of $500, which may take longer to mail (~$50 billion) due to the necessity to match dependents to households.
- The Families First Act expands access to paid sick leave and unemployment insurance, but far more people are losing income, tips, commissions, and hours than are helped through this legislation.
- It is increasingly clear, though, that there will be substantial economic fallout.
Amazon ramps hiring, opening 100,000 new roles to support people relying on Amazon’s service in this stressful time (Amazon) Published on: March 16, 2020 | Category: Canadian Business, Economic Impact
- We are opening 100,000 new full and part-time positions across the U.S. in our fulfillment centers and delivery network to meet the surge in demand from people relying on Amazon’s service during this stressful time, particularly those most vulnerable to being out in public.
- In the U.S., we will be adding an additional $2 USD per hour worked through April from our current rate of $15/hour or more, depending on the region, £2 per hour in the UK, and approximately €2 per hour in many EU countries.
- We continue to consult with medical and health experts, and take all recommended precautions in our buildings and stores to keep people healthy.
Coronavirus is taking a brutal toll on China’s economy (Quartz) Published on: March 16, 2020 | Category: Economic Impact
- The country clocked a 20.5% decline in retail sales for January and February compared with the same period a year before, according to China’s National Bureau of Statistics.
- “Almost the whole February saw retail sales halted. Apart from daily necessities and food, other categories of retail goods have all been impacted hugely by the epidemic.”
- Industrial output, an important indicator for measuring economic performance, also shrank by 13.5% for the two months, compared with a median forecast of a 3% decline from analysts polled by Bloomberg.
- First-quarter GDP data will be out a month from now.
Most airlines face bankruptcy by end of May, industry body warns (FT) Published on: March 16, 2020 | Category: Economic Impact
- In the past 24 hours, United Airlines of the US, IAG — parent of British Airways, Aer Lingus and Iberia — Air France-KLM, easyJet, Finnair, Air New Zealand and Aeroflot all unveiled drastic measures to cut costs after several countries, including Germany and Spain, closed their borders.
- Willie Walsh, head of IAG, will postpone his retirement to steer the group through the health emergency.
- “By the end of May 2020, most airlines in the world will be bankrupt. Co-ordinated government and industry action is needed — now — if catastrophe is to be avoided.”
The Implications of Hitting the Hard 0% Interest Rate Floor (Ray Dalio) Published on: March 16, 2020 | Category: Economic Impact
- Hitting this 0% floor also means that virtually all the reserve country central banks’ interest rate stimulation tools (including cutting rates and yield curve guidance) won’t work.
- Our biggest economic risk comes from the possibility that our elected officials (who are the ones who control fiscal policy) will handle it badly. That is because it’s tough enough to know what to do during a big crisis and then do it boldly even when there aren’t divisive politics.
- Thus far, meaningful debt supports to industries that would go broke due to this shock have been absent (other than SBA-subsidized loans, which look to be small).
Distrust is contagious: How the coronavirus could upend America’s business relationships to China (Fortune) Published on: March 16, 2020 | Category: Economic Impact
- The contagion is having a similarly grim effect on the U.S.-China economic relationship—where accumulated mistrust and resentment have created unhealthy conditions of a different kind.
- At minimum, the chaos has prompted U.S. investors and executives to rethink the wisdom of concentrating supply lines in China and relying heavily on Chinese consumers.
- Proponents of a more distant relationship, including some of President Trump’s top economic advisers, have seized on the contagion as proof of the dangers of doing business in a secretive, Communist-controlled economy.
Fed Takes Emergency Steps as Virus Pushes Economy Toward Recession (WSJ) Published on: March 16, 2020 | Category: Economic Impact, Global Response
- The Fed, in a series of statements, said it would cut the federal-funds rate to a range between 0% and 0.25%, down 1 percentage point, and would buy $700 billion in Treasury and mortgage-backed securities, among other actions.
- The Fed said it was activating with five other central banks, including the European Central Bank and the Bank of England, swap lines to smooth out disruptions in overseas dollar-funding markets, effectively encouraging foreign central banks to use existing facilities to supply dollars to their own financial systems.
- But they say Congress will have to provide a much bigger package—perhaps on the order of $400 billion—to prevent the world’s largest economy from spiraling into a much bigger crisis.
- Also on the table: suspension of student-loan payments, infrastructure projects and aid to state and local governments.
The Workers Who Face the Greatest Coronavirus Risk (NY Times) Published on: March 15, 2020 | Category: Economic Impact, Leadership
- As the coronavirus continues to spread throughout the United States, people with jobs that put them in physical contact with many others are at the greatest risk of becoming sick.
- Many people who do service jobs like cashiers and fast-food workers face elevated risks. Walmart, Starbucks and Uber are among the many companies that have had workers fall sick.
Apple Reopens All 42 China Stores After Virus Closures (Bloomberg) Published on: March 13, 2020 | Category: Economic Impact
- Apple Inc. has reopened all 42 of its stores in China after it was forced to close them last month due to the coronavirus outbreak in the country.
- Since shutting the stores, Apple gradually reopened them and 38 of the 42 stores were operating as of last week.
U.S. suspends travel from Europe as coronavirus forces Italy to tighten lockdown (Reuters) Published on: March 12, 2020 | Category: Economic Impact, Global Response
- U.S. President Donald Trump said the United States will suspend all passenger travel from continental Europe on Friday to limit the spread of the coronavirus after the outbreak was formally declared a pandemic, sending global markets into a tailspin.
- Trump’s announcement came after Italy, the worst-affected country in Europe, enacted the most severe controls on a Western nation since World War Two, shutting bars, hairdressers and restaurants along with other restrictions already in place.
- The U.S. travel restrictions on Europe would apply from midnight on Friday, Trump said, adding that similar restrictions on travelers from China and South Korea had helped limit the spread of the virus.
The Coronavirus Customer-Service Crisis (The Atlantic) Published on: March 11, 2020 | Category: Canadian Business, Economic Impact
- When stores are dealing with unending lines and impatient, nervous customers, workers can’t always maintain a six-foot distance from people and clean their hands regularly.
- “The sense of frustration and helplessness is growing. It’s making it really depressing to be at work.”
- Over the past week, Instacart has experienced demand spikes of up to 20 times its normal order volume in California and Washington, where community spread of the coronavirus has dominated news coverage.
- As the crisis deepens, a whole gamut of customer-service workers are being pulled into the fray.
Coronavirus has disrupted supply chains for nearly 75% of U.S. companies. (Axios) Published on: March 11, 2020 | Category: Canadian Business, Economic Impact
- Of the companies surveyed that expect supply chain impacts (80% said yes), most expect the severity of the disruptions will increase after the first quarter of this year.
- For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States — even if they can get orders filled.
- Manufacturers in China report operating at 50% capacity with 56% of normal staff.
Trudeau Ready to Backstop Businesses in Response to Virus (Bloomberg) Published on: March 11, 2020 | Category: Canadian Business, Economic Impact
- Justin Trudeau announced C$1.1 billion ($800 million) in new financial measures to help mitigate the effects of the widening coronavirus outbreak in Canada, adding he’s prepared to use federal financing agencies to stimulate the economy further if needed.
- The prime minister said Wednesday the immediate plan includes providing faster unemployment insurance benefits to people who self-isolate, more funding for coronavirus research and financial assistance to provinces for medical supplies.
Coronavirus fallout: Bank of England launches 4 key measures (FT) Published on: March 11, 2020 | Category: Economic Impact, Global Response
- The Monetary Policy Committee voted unanimously to reduce its benchmark interest rate by 50 basis points to 0.25 per cent, equalling its lowest levelsince the second world war.
- The Term Funding scheme for Small and Medium-sized Enterprises (TFSME) offers funding at interest rates at, or very close to, the benchmark rate. It is expected to last one year and to provide in excess of £100bn in funding.
- The last measure came from the BoE’s Prudential Regulation Authority, which laid out an expectation that banks should not use any funds freed up by the other measures to increase dividends or bonuses.
New trade barriers could hamper the supply of masks and medicines (The Economist) Published on: March 11, 2020 | Category: Economic Impact, Global Response
- Some governments are erecting trade barriers to safeguard their supplies.
- On March 3rd France’s president, Emmanuel Macron, announced that the state would seize all masks, restricting sales abroad.
- Despite calls from the WHO for countries to work together to ease the problem, this is proving difficult even within a close-knit trading bloc like the EU.
Coronavirus updates: New York sets up containment zone, Australia bans travel to Italy (CNET) Published on: March 11, 2020 | Category: Economic Impact, Global Response
- An area of New York state has been designated a containment zone, Australia bans travel to Italy and the EU wants to set up a fund to address the outbreak.
- The zone falls within “a 1 mile radius around the site of the most cases in New Rochelle,” Cuomo said on Twitter, adding that the city has the “biggest cluster of coronavirus cases in the state.”
- King County, home to Seattle, has confirmed 33 new cases of coronavirus and three more deaths, bringing total deaths in the county to 20 and in the state of Washington to 22.
Coronavirus: Italy suspends mortgage payments amid lockdown (The Independent) Published on: March 10, 2020 | Category: Economic Impact, Leadership
- Payments on mortgages are to be suspended in Italy due to the coronavirus outbreak, the country’s government has announced.
- Giuseppe Conte, the prime minister, said that everyone in Italy would be confined to the area where they live unless they are able to demonstrate a need to work, health conditions, or other limited reasons in order to travel elsewhere.
Trump to Propose Steps to Ease Economic Fallout From Coronavirus (WSJ) Published on: March 10, 2020 | Category: Economic Impact, Global Response
- Measures may include payroll-tax cut, relief for hourly wage earners, president says.
- He said he would hold a news conference Tuesday afternoon to lay out the proposals in more detail.
- On Friday, Mr. Kudlow said possible fiscal measures included deferring taxes for the industries hardest hit by the virus—primarily hospitality and travel, an administration official said.
COVID-19: Implications for business (McKinsey) Published on: March 9, 2020 | Category: Economic Impact, Global Response
- Those infected often display only mild symptoms (or no symptoms at all), so it is easy for public-health systems to miss such cases.
- For example, 55 percent of the cases on board the Diamond Princess cruise ship did not exhibit significant symptoms.
- We believe that the prevalent pessimistic narrative (which both markets and policy makers seem to favor as they respond to the virus) underweights the possibility of a more optimistic outcome to COVID-19 evolution.
Corporate America Races to Respond to a Crisis That Upends Work (WSJ) Published on: March 8, 2020 | Category: Economic Impact, Leadership
- Employers separate their teams, require personal travel disclosures and offer cash for supplies.
- On Monday, Bank of America Corp. will begin splitting up some employees on its equities and fixed-income teams between New York and Connecticut, creating redundancy so that if an employee gets sick and a whole team has to self quarantine, a backup team could keep functioning in its place.
- Stripe Inc., a San Francisco-area financial-technology company, has switched to videoconferencing for job interviews in place of on-site meetings.
Canada set to lose millions of tourism dollars due to COVID-19: Joly (CTV News) Published on: March 7, 2020 | Category: Canadian Business, Economic Impact
- She said that Chinese tourists visiting Canada amounts for an average of $2 billion in tourism revenue each year, and the current downturn is forecasted to result in a loss of $550 million by June.
- Among the measures being taken: the government is going to be encouraging Canadians to explore their own country, diverting tourism promotion dollars towards domestic travel instead of continuing to target big international markets like China.
Editorial: On coronavirus, Canada’s leaders are getting it right (Ottawa Citizen) Published on: March 7, 2020 | Category: Canadian Business, Economic Impact
- First, public health agencies have provided frequent, factual updates on COVID-19.
- Second, their tone has been non-political.
- But at the moment, there is unusual trust between Canadians and their governments on coping with COVID-19.
Foreign Investment Set to Fall on Coronavirus Outbreak (WSJ) Published on: March 6, 2020 | Category: Economic Impact, Global Response
- Businesses will likely cut their overseas investments by between 5% and 15% this year in response to the coronavirus outbreak, but there may also be a longer-lasting movement of production back to their home countries, the United Nations said Friday.
- It added that a majority of the largest 5,000 companies by revenues had revised their earnings expectations over the past month, and lowered their projections by 9% on average.
How are North American employers protecting employees from coronavirus? (Benefits Canada) Published on: March 6, 2020 | Category: Canadian Business, Economic Impact
- The survey, which polled 158 employers, found more than half (59 per cent) have deployed communications campaigns geared toward preventing spread of the disease, while 44 per cent have increased access to hand sanitizers for their North American employees and 38 per cent are reviewing and or/revising HR policies and procedures.
- However, only five per cent are evaluating and/or reserving for potential increased liabilities in their health plans.
Beyond the Coronavirus Crisis: Prepare Now (Bain) Published on: February 10, 2020 | Category: Economic Impact, Leadership
- Tertiary industries (services) took the biggest hit, with transportation, hospitality/food and beverage, and the financial sector all down 3 or more percentage points.
- While essentials—namely, groceries, nondiscretionary consumer products and pharmaceuticals—will remain strong, offline consumption will feel the worst effects.
- Proactively update your M&A and partnership plans to include potential acquisitions, divestitures, partnerships and bold moves.
Reeling from the loss of gas tax revenue during pandemic, states are deferring billions of dollars of transportation projects (Washington Post) Published on: January 1, 1970 | Category: Economic Impact
- Leaders of state transportation departments across the nation say the coronavirus pandemic has left them facing an estimated $50 billion shortfall in funding needed to repave rutted and pockmarked roads, maintain bridges and otherwise prop up already shaky infrastructure.
- More than $8.5 billion of work planned in 14 states and 19 localities — from major highway projects to local street repairs — has been canceled or delayed, according to the American Road and Transportation Builders Association.
- In recent weeks, demand for gas has rebounded as people take to the roads again, according to the U.S. Energy Information Administration, but demand remains well below where it stood last summer.
For Pensions, Valuing Real Estate Is Tough. Covid-19 Brings New Hurdles (WSJ) Published on: January 1, 1970 | Category: Economic Impact
- Public pension funds invested in malls, apartments and offices over the last decade in search of higher returns. Now they are grappling with how much those real-estate investments are worth in a world transformed by Covid-19.
- How assets are valued has major consequences for the nation’s pensions. Any reduction could lower returns and add to funding shortfalls, increasing retirement costs for states and cities while the pandemic is draining pension funds and crushing municipal budgets.
- Pensions are $4.9 trillion short of what they have promised retirees as of the first quarter, according to the Federal Reserve. The shortfall stems from years of over-optimistic investment assumptions and government decisions to skimp on annual retirement fund contributions.