WASHINGTON — From music festivals to sporting events, the cancellations that have accompanied the spread of COVID-19 seem likely to give a shock to the economy — or at least important parts of it.
While the anger of fans and devotees of events such as the NCAA Basketball Tournament or the SXSW Festivals has made headlines, the real-world economic impacts for communities around the country may be dramatic. And when you add up all the cancellations there are signs a major economic hit is coming, with the biggest hits falling on people who are likely not well-equipped to handle them.
Start with some of the biggest headlines in the last few weeks, the major sporting events and festivals that have already been put on ice.
The massive SXSW festival in Austin, Texas brought in about $355 million to the area in 2019 according to an analysis by the firm Greyhill Advisers. That’s a lot of empty hotel beds and meals not served this year.
The Final Four for the NCAA was supposed to bring more than $100 million into Atlanta in early April. And those are just for the semifinal and championship games. Across the country, there were other cities that were going to host first and second-round games — Albany, Cleveland, Greensboro, Omaha, St. Louis, Sacramento, Spokane and Tampa. In Cleveland they estimated the city would derive $8 million from the event, so figure similar hits in those other cities.
And in Detroit, the NCAA’s hockey equivalent, the Frozen Four, was estimated to bring in about $10 million to the area with a few small NCAA events, all of which are canceled.
The losses of those events, and countless others, are about more than performers or coaches and league officials not getting paid. There are a lot of ripple effects — fewer drinks being poured at bars, fewer cabs rides around town
One place the virus impacts are already clear is in air travel. No events mean no need for transportation to those events.
A look at some a random selection of flights on Friday found some very low fares. Looking to go somewhere warm from New York? On Friday afternoon, roundtrip airfare from LaGuardia to Orlando from Saturday to Saturday was $157 on Delta. If you wanted to fly in two months, the roundtrip fare from May 9 to May 16 was only $97.
There were similar fares for other routes. Chicago to Dallas (on American) and Denver to Los Angeles (on United or Delta) were also both $97 if you traveled roundtrip May 9 to May 16.
Those are great deals if you’re looking to fly, but those are also deep cuts for airlines to take in their fares. Those numbers over a prolonged period of time are going to have serious impacts for airlines. Flight schedules have already been slashed to levels even lower than they were after the September 11, 2001 terrorist attacks. That means fewer days of work for pilots, crews and mechanics. Unpaid leave is already being discussed.
And then there are the hotels where people stay in those places. The numbers this week showed cancellations were already spiking, according to the site Knowland.
In Asia, where the pandemic has been a story for much longer, the cancellation rate of hotel rooms over the next few months is 90 percent. In Europe the figure is just over 50 percent. And here, in the United States, the cancellation rate is about 40 percent — or it was as of March 11. That’s compared to a rate after July 1 of only about 20 percent.
Those are steep drops and they likely mean fewer people needed to clean rooms or work in hotel kitchens or at front desks.
When you add all those declines together and factor in a timetable no one yet truly knows, the economic picture — macro and micro — looks challenging to say the least. And remember, none of this adds in the impacts of the suspended NBA, NHL or Major League Baseball seasons. That will bring drops in revenues in neighborhood bars and restaurants every game day.
Also missing here are all the impacts of workers telecommuting to their jobs. That means fewer work lunches and fewer cups of coffee being purchased. The workers at those establishments, in turn, have less to spend in their pockets.
The point is these impacts can grow remarkably fast.
And with all that in mind, remember this figure: $25,580. That’s the mean annual income for a worker in the Food Preparation and Serving Related Occupations for 2018, according to the U.S. Census.
There were a lot of eyes on the stock market this past week and a lot of complaints about 401(k) plans. But the numbers here show how far-reaching the coronavirus outbreak could be and how quickly the impacts could be felt — all in a year with a presidential race.
The COVID-19 story is first and foremost about the health and well-being of Americans, but its impacts seem likely to extend into other areas long after the virus is eventually tamed.
Coronavirus: Premier François Legault offers glimmer of hope for Quebec’s economy – Global News
Quebec Premier François Legault expressed optimism about the possibility of getting Quebec’s economy back on track, after taking a hit due to the COVID-19 pandemic.
Non-essential businesses have been shuttered for weeks in an effort to contain the spread the virus, which has had an impact on the economy.
Legault said he was encouraged by COVID-19 projections — made public on Tuesday — and believes Quebec is leaning towards a best-case scenario because of its social-distancing measures.
Coronavirus outbreak: Quebec projections show COVID-19 peak likely in mid-April
Public health officials project the number of cases will peak around April 18 and Legault said he was hopeful businesses could start opening next month.
“But we have to restart the economy without restarting the pandemic,” he warned.
Quebec’s public health director Dr. Horacio Arruda said social-distancing measures will continue be as important as ever. He also stated that most gatherings will still be forbidden in order to avoid a resurgence of the virus.
Legault said re-imagining the workplace should be top of mind.
“I think it’s important that managers, owners of different businesses, that they start thinking about a new way to work in the next weeks or months,” he said.
On Monday, the government announced a $100-million employee training program to help businesses adjust to a new reality. The idea is to ensure employees are trained to use new technologies and can learn new workflows.
Other measures put forward by the government to boost the economy include the Panier Bleu, an online platform to encourage Quebecers to buy locally, as well as various subsidies for businesses and individual workers alike.
Legault said government officials are also working with various company representatives to see how businesses will be able to re-open, provided the “figures stay good in the next few days.”
It’s a reminder that everyone has a crucial role to play in the pandemic.
“I know it’s tough, tough to continue all our efforts, but as we say in English: April showers bring May flowers,” he said.
— With files from Global’s Raquel Fletcher
© 2020 Global News, a division of Corus Entertainment Inc.
Expert weighs in on Kenney’s economic plan for Alberta, suggests PST could be an answer – Global News
While Jason Kenney’s televised address to the province on Tuesday night gave details on how the COVID-19 pandemic in the province could play out in terms of cases and deaths, some political scientists say the comments the premier made in regards to the economic future of Alberta didn’t provide a lot of specifics.
One political scientist in the province said there is one option for the government to increase revenue: implementing a provincial sales tax (PST).
Alberta premier warns devastating economic impact of COVID-19 could mean record unemployment, negative oil prices
Mensah said the pandemic has completely changed the circumstances of the province, and that while the UCP had campaigned on a platform of fiscal conservatism, there needs to be a way of balancing the books going forward.
“The only way available is to look at a modest PST, to provide options for the government to be able to fund programs.”
Kenney said in his Tuesday night address that the social distancing and closure orders in the province would be in place at least until the end of May. He also said that the province would eventually roll out a “relaunch strategy” to get the economy moving again, involving mass testing to get those with immunity back to work, and increasing border screening.
Explaining Alberta’s probable, elevated and extreme COVID-19 modelling numbers
However, once the premier addressed the situation with the global oil markets, experts said there was a lack of clarity on how the province could move past this.
“There didn’t seem to be a whole lot of answers, and just some real dangerous situations,” Mount Royal University political science professor Duane Bratt said.
“[Kenney] talked about a budget deficit that will triple to about $20 billion dollars, [he] talked about negative prices for energy — where we may have to pay people to take it — and there was no sense of how we’re going to get out of that,” said Bratt.
In his address Tuesday, Kenney said he could not “overstate how grave the implications of this will be for jobs, the economy and the financial security of Albertans.
“Much of this is due to the COVID-19 recession, but it has been made worse by a predatory price war led by Saudi Arabia and Russia, who are trying permanently to damage North America’s energy industry.”
Bratt said that while Kenney did reference the Keystone XL pipeline project as an important energy investment made by the government, as well as the work being put into collaborating with its federal counterpart and the U.S in regards to the energy sector, when it came to the province’s economic future, “he didn’t go into the same degree of details, the same strength of numbers as was on the health side.”
While the PST has been a difficult policy option for governments in the past, the COVID-19 situation has put the government into a spot that would be tricky to get out of without it, Mensah said.
“It’s the time to really put aside the ideology of fiscal conservatism,” Mensah said. “I think there’s room for a modest PST, to generate revenue in these uncertain times. You could even put a sunset on the PST— you could have it for five years or so, for the revenue to start to improve.
“The government really has to re-calibrate here and come up with an alternate approach to the province’s finances,” he said.
Kenney has shut down PST idea
However, on March 9, just over a week before Alberta declared a health emergency due to COVID-19, Kenney shut down the idea.
“I cannot imagine a dumber thing to do in the midst of a time of economic fragility, an oil price collapse and a global recession, than to add a multi-billion-dollar tax on the Alberta economy and on Alberta families,” he said.
Jason Kenney says government will not implement a PST
“You’re talking about a PST that would generate several billion dollars of revenue. That would take several thousand dollars out of the pockets of Alberta families at the worst possible time.
“This government is not going to take thousands of dollars out of people’s household budgets at a time of real economic challenge,” Kenney said.
On Wednesday, a spokesperson for the premier said in a statement that Kenney’s previous comments on the idea of a provincial sales tax still stand.
Cases of COVID-19 have spiked and mass layoffs have been handed out in Alberta since March 9, when there were just seven confirmed cases in the province. Just under a month later, on April 8, there were 1,423.
© 2020 Global News, a division of Corus Entertainment Inc.
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