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.
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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.
OTTAWA – Statistics Canada says real gross domestic product grew 0.2 per cent in July, following essentially no change in June, helped by strength in the retail trade sector.
The agency says the growth came as services-producing industries grew 0.2 per cent for the month.
The retail trade sector was the largest contributor to overall growth in July as it gained one per cent, helped by the motor vehicles and parts dealers subsector which gained 2.8 per cent.
The public sector aggregate, which includes the educational services, health care and social assistance, and public administration sectors, gained 0.3 per cent, while the finance and insurance sector rose 0.5 per cent.
Meanwhile, goods-producing industries gained 0.1 per cent in July as the utilities sector rose 1.3 per cent and the manufacturing sector grew 0.3 per cent.
Statistics Canada’s early estimate for August suggests real GDP for the month was essentially unchanged, as increases in oil and gas extraction and the public sector were offset by decreases in manufacturing and transportation and warehousing.
This report by The Canadian Press was first published Sept. 27, 2024.
TORONTO – Canada’s main stock index closed above 24,000 for the first time Thursday as strength in base metals and other sectors outweighed losses in energy, while U.S. markets also rose and the S&P 500 notched another record as well.
“Another day, another record,” said Angelo Kourkafas, senior investment strategist at Edward Jones.
“The path of least resistance continues to be higher.”
The S&P/TSX composite index closed up 127.95 points at 24,033.83.
In New York, the Dow Jones industrial average was up 260.36 points at 42,175.11. The S&P 500 index was up 23.11 points at 5,745.37, while the Nasdaq composite was up 108.09 points at 18,190.29.
Markets continue to be optimistic about an economic soft landing, said Kourkafas, after the U.S. Federal Reserve last week announced an outsized cut to its key interest rate following months of speculation about when it would start easing policy.
Economic data Thursday added to the story that the U.S. economy remains resilient despite higher rates, said Kourkafas.
The U.S. economy grew at a three-per-cent annual rate in the second quarter, one report said, picking up from the first quarter of the year. Another report showed fewer U.S. workers applied for unemployment benefits last week.
The data shows “the economy remains on strong footing while the Fed is pivoting now in a decisive way towards an easier policy,” said Kourkafas.
The Fed’s decisive move gave investors more reason to believe that a soft landing is still the “base case scenario,” he said, “and likely reduces the downside risks for a recession by having the Fed moving too late or falling behind the curve.”
North of the border, the TSX usually gets a boost from Wall St. strength, said Kourkafas, but on Thursday the index also reflected some optimism of its own as the Bank of Canada has already cut rates three times to address weakening in the economy.
“The Bank of Canada likely now will be emboldened by the Fed,” he said.
“They didn’t want to move too far ahead of the Fed, and now that the Fed moved in a bigger-than-expected way, that provides more room for the Bank of Canada to cut as aggressively as needed to support the economy, given that inflation is within the target range.”
The TSX has also been benefiting from strength in materials after China’s central bank announced several measures meant to support the company’s economy, said Kourkafas.
However, energy stocks dragged on the Canadian index as oil prices fell Thursday following a report that Saudi Arabia was preparing to abandon its unofficial US$100-per-barrel price target for crude as it prepares to increase its output.
The Canadian dollar traded for 74.22 cents US compared with 74.28 cents US on Wednesday.
The November crude oil contract was down US$2.02 at US$67.67 per barrel and the November natural gas contract was down seven cents at US$2.75 per mmBTU.
The December gold contract was up US$10.20 at US$2,694.90 an ounce and the December copper contract was up 15 cents at US$4.64 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 26, 2024.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in the base metal sector, while U.S. stock markets were also higher.
The S&P/TSX composite index was 143.00 points at 24,048.88.
In New York, the Dow Jones industrial average was up 174.22 points at 42,088.97. The S&P 500 index was up 10.23 points at 5,732.49, while the Nasdaq composite was up 30.02 points at 18,112.23.
The Canadian dollar traded for 74.23 cents US compared with 74.28 cents US on Wednesday.
The November crude oil contract was down US$1.68 at US$68.01 per barrel and the November natural gas contract was down six cents at US$2.75 per mmBTU.
The December gold contract was up US$4.40 at US$2,689.10 an ounce and the December copper contract was up 13 cents at US$4.62 a pound.
This report by The Canadian Press was first published Sept. 26, 2024.
