It would be nice to think that everything will be back to normal by June. It may also be close to delusional.
As states around the country begin to reopen their economies with the coronavirus crisis still far from under control, we’re about to undertake a very big experiment about whether you can turn the economy on and off, basically, like a light switch. That getting back to business will be easy is a risky bet to make, and so far, signs point to it being pretty unlikely.
“We have to balance optimism with realism, and those are two factors that don’t necessarily point in the same direction,” said Mark Hamrick, senior economic analyst at Bankrate.
There’s no way to predict exactly what the future of the United States economy will be, precisely what the recovery will look like or when it will arrive. Even if businesses reopen, many people won’t risk getting themselves or a loved one sick to crowd into restaurants and bars. Still, a sort of magical thinking has settled into place: This was just a glitch, some people argue, and a swift economic recovery is just around the corner if we just will it.
But much of the evidence points to a longer and harder recovery than optimists project — instead of a “V-shaped” recovery (a quick dip down and then pop back up), at the very least, more of a Nike swoosh. Millions of Americans have lost their jobs, and even when workplaces open back up, some of those job losses will be permanent. The same goes for some businesses that have shuttered. And if the federal government waits too long to take further action to support the economy, the recovery will be longer and slower.
“It’s not going to be a snap-back V-shaped recovery, at least for Main Street,” said Alicia Sasser Modestino, an associate professor of public policy and economics at Northeastern University.
On Monday, the stock market popped, thanks in large part to positive data from a biotech company called Moderna, which showed that eight participants in a Covid-19 vaccine study it was running had developed antibodies against the virus. Now, the stock market isn’t the economy — and the market lately has been a lot more positive than the economy — but the jump is emblematic of the overall hope that scientists will find some sort of solution for the coronavirus pandemic and, poof, everything will be right again.
“If we beat this thing, it’s going to be unbelievable,” trader and CNBC host Jim Cramer told me earlier this year.
“If for some reason somehow one of these companies discovers a vaccine that cures and eradicates the virus, which is a small possibility, we’d be in a V-shaped recovery faster than you could turn around, and the market would go to the moon almost instantaneously,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.
Some sort of instant solution is perhaps possible, but it’s unlikely in the near-term. Scientists still haven’t identified a super-effective treatment for coronavirus, and many experts caution that a 12- to 18-month timeline on a vaccine is optimistic. It’s still unclear how long immunity lasts after someone’s had the virus, and beyond treatments and vaccines, America is still getting its act together on testing.
“The truth is, nobody knows when or if we’re going to have treatments or a vaccine for the virus, and if we wind up with modest treatments and no vaccine, this recovery is going to be pretty gradual,” Frederick said.
Some big-money investors are starting to sound the alarm that the rosy stock market is pointing to a bright economic future that is divorced from reality. Last week, billionaire investor Stan Druckenmiller warned that despite the Federal Reserve’s measures to boost markets, “the risk-reward for equity is maybe as bad as I’ve seen in my career.” David Tepper, the manager of hedge fund Appaloosa Management, said this is the “second-most overvalued stock market” he’s ever seen. Even Warren Buffett, who in 2008 encouraged investors to “buy American,” at Berkshire Hathaway’s annual meeting recently, struck a more pessimistic tone. “You can bet on America, but you kind of have to be careful about how you bet,” he said.
Many states across the country have begun to gradually reopen their economies, but things aren’t back to where they once were. Many establishments have occupancy limits, so restaurants, for example, can only be at partial capacity, or retailers are open, but they’re only doing curbside pickup. Moreover, plenty of people are still very scared of contracting the novel coronavirus, and they’re just not eager to crowd into movie theaters, gyms, or bars.
According to a recent survey from Bankrate, 55 percent of Americans think it’s too soon to reopen the country’s economy, and 43 percent say that they plan to shop in public less than before. Most Americans say it will be at least a month before they feel comfortable going back out, and 13 percent say they wouldn’t feel comfortable until there’s a vaccine or the virus has been contained. There’s a partisan divide to it — Democrats are more hesitant about the economy reopening than Republicans — and there are some people who say they’ll get back to participating in the economy like before. But that’s still not total participation from everyone, meaning different not the same.
According to Bankrate’s survey, about one-third of Americans say they’d be comfortable visiting a local business within a month of restrictions being lifted. “But even if it’s one-third, you have to think about how that affects the margin,” Hamrick said. “You don’t have to have 100 percent for it to be negative.”
Sweden, for example, has decided largely to go about business as usual. But its economy is expected to contract at a similar rate to the rest of Europe because many people are still opting to stay home.
As Vox’s Matt Yglesias recently wrote, put simply, reopening the economy won’t save the economy. Even before the shutdowns, restaurant bookings fell off a cliff. The airline industry has taken an enormous hit, and people can still travel. Same goes for hotels. Per Yglesias:
The problem is a question of fear. Americans fear spreading or contracting infection, so much so that they’ve overwhelmingly participated in social distancing measures. They tell pollsters by wide margins that they fear lifting those restrictions too soon much more so than too late. They’re willing to stay put even if it harms the economy.
They also fear economic hardship. That’s led prudent people, even those left relatively unharmed by the downturn so far, to delay nonessential purchases, like new cars, appliances, clothes, and other goods.
Consumers are uncertain about what’s to come, and so many are inclined to save.
Over the past two months, more than 36 million Americans have filed new jobless claims. The unemployment rate hit 14.7 percent in April, with estimates suggesting it could reach 20 to 25 percent. One recent study projected that over 100,000 small businesses have shuttered permanently since the onset of the pandemic closed their doors. Coming back from that is going to take time.
In an interview with 60 Minutes that aired on Sunday, Federal Reserve Chairman Jerome Powell, when asked about the likelihood of a “V-shaped recovery,” emphasized that the important thing is to get back on the road to recovery at all. He said he thinks that can happen by the second half of the year, but it’s “very plausible” it will take some time for the economy to gather momentum.
“We’re not going to get back to where we were quickly,” he said. “We won’t get back to where we were by the end of the year. That’s unlikely to happen.”
Recovery is going to be a process, and some things will just never be the same.
The labor market will likely take a long time recover — the nonpartisan Congressional Budget Office projects unemployment will still be at about 10 percent by the end of 2021. There’s a lot of friction that happens in the labor market that slows things down, Sasser Modestino explained. Not all the jobs destroyed because of coronavirus are going to come back. Some companies are going to put in place more automation and technology, or they’re just not going to hire as many people back. A food processing plant is going to put in place more machinery, a daycare at partial capacity will bring back fewer employees.
“It’s very unlikely that all of the furloughed workers will be recalled in June, July, August,” Sasser Modestino said.
“The longer you stay shut down, the harder it is to snap back,” said Scott Baker, an associate professor of finance at Northwestern University’s Kellogg School of Management. Investments are slowed or redirected, jobs don’t return, workers lose contact with employers. And as with so many things in the economy, the recovery is unequal — big companies with access to infrastructure and credit have much better odds than small players. “They can weather this a lot easier,” Baker said.
The recovery is also likely to be split across socioeconomic lines — just because Wall Street makes a comeback doesn’t mean everyday Americans will, especially those hit disproportionately hard by the downturn.
“The people who are getting hurt the worst are the most recently hired, the lowest paid people. It’s women to an extraordinary extent. Of the people who were working in February, who were making less than $40,000 per year, almost 40 percent have lost their jobs in the last month or so,” Powell told 60 Minutes.
Jeff Stein at the Washington Post recently reported that President Donald Trump and many of his top advisers are predicting a quick economic recovery. White House economist Kevin Hassett told reporters on Monday he’s been “really positively impressed by how quickly things are turning around.” National Economic Council director Larry Kudlow said improvements in housing and gasoline demand were positive signs. That’s the same Larry Kudlow who a couple of weeks ago said the White House wants to take a “pause” on economic relief to see how things go.
It’s true that not everything in the economy is all doom and gloom, and some elements of the current situation, as Bloomberg’s Joe Weisenthal recently put it, are just weird.
It’s also true that we don’t necessarily want the economy to look how it did pre-coronavirus. Millions of low-paid workers have been deemed essential during the pandemic, and failures of the social safety net have been exposed.
But broadly, if the federal government wants to improve its chances of accelerating the economic recovery, it can. The Federal Reserve has already indicated it is more than willing to continue to use all the tools in its toolbox to keep the country afloat. Congress has passed three major coronavirus-related bills, and last week, House Democrats unveiled their proposal for a fourth.
States and cities have begun to sound the alarm that they are facing serious budget shortfalls. If the federal government doesn’t step in, they’ll have to cut back services and lay off workers, and that will ultimately slow the recovery even more. “We do not want to be adding public employees to an already long unemployment line,” Sasser Modestino said.
The truth is, no one knows what the future holds for the American economy. And it would be great if some treatment or vaccine appeared for coronavirus tomorrow. But hoping for a miracle is not a safe bet — focusing on actionable, tangible solutions is at least more realistic.
“There’s been real economic damage, of course, caused by these restrictions, and no amount of got assistance is going to fix all of that,” Hamrick said. “It’s going to be more of a recovery process than it will be an event.”
Support Vox’s explanatory journalism
Every day at Vox, we aim to answer your most important questions and provide you, and our audience around the world, with information that has the power to save lives. Our mission has never been more vital than it is in this moment: to empower you through understanding. Vox’s work is reaching more people than ever, but our distinctive brand of explanatory journalism takes resources — particularly during a pandemic and an economic downturn. Your financial contribution will not constitute a donation, but it will enable our staff to continue to offer free articles, videos, and podcasts at the quality and volume that this moment requires. Please consider making a contribution to Vox today.
Enbridge to boost tolls on key pipeline based on 2019 economy – BNNBloomberg.ca
A year ago, the economy looked rosy and crude prices were riding high. Enbridge Inc. now will be getting a bit of a boost from that due to a nearly decade-old contract provision that will increase what the company charges to transport oil on Canada’s largest pipeline network.
The increase comes as the Canadian oil industry has been ravaged by the COVID-19 pandemic and pipelines out of Canada are running partly empty after oil sands producers slashed about 25 per cent of output with demand for their product waning.
Enbridge’s Mainline system, which runs from Hardisty, Alberta, to the Chicago area, ships about 75 per cent of Western Canada’s oil output. The toll on the 2.9 million barrel-a-day system from Alberta to the Chicago area will rise 18 cents a barrel, or 3.9 per cent, starting July 1, Enbridge said. The increase is based on an index of Canada’s economic growth from the prior year, a formula approved by regulators in 2011.
The Canadian economy grew 1.7 per cent last year but has contracted so far this year due to the pandemic. Still, Enbridge says the contract provision has kept prices from rising even higher.
In the past, shippers would have been forced to pay more when oil demand and volumes on the pipeline were lower. The provision “shields shippers from throughput risk which, in current circumstances with decreased oil demand and declining volumes on the Mainline, would have otherwise resulted in a significant toll increase under the previous negotiated settlement,” Jesse Semko, a company spokesman, said in an email.
Enbridge discussed the toll changes with companies that ship on the lines in the middle of May before submitting them to the Canadian Energy Regulator, Semko said.
Lower demand for oil from U.S. refineries has made exporting Canadian crude less economic. The price difference between Canadian heavy oil in Alberta versus the U.S. oil hub of Cushing, Oklahoma, is about US$4 a barrel, according to NE2 Group pricing.
That’s too narrow a difference to cover the cost of most oil shipments on Enbridge’s pipeline system at current tolls.
Too Many Pipelines
For years, Canadian oil producers struggled with a shortage of export pipelines. Since the coronavirus pandemic and the drastic decline in output, Canada has gone from having too few pipelines to too many. Mainline volumes are expected to be down by 300,000 barrels a day this year, according to Enbridge.
The Mainline includes several pipelines that carry light, medium and heavy oil from Alberta to Superior, Wisconsin, where they link to pipelines running into eastern Canada and South to pipelines connected to the U.S. Gulf Coast.
Enbridge’s toll increases weren’t matched by other pipeline operators. The Federal government-owned Trans Mountain Pipeline running from Alberta to the Vancouver area cut rates for shipping light crude from Edmonton to Sumas, British Columbia, by 32% on May 1. TC Energy Corp. plans to keep rates to Texas unchanged for uncommitted shipers starting July 1 on its Keystone pipeline after lowering them April 1.
TELUS Health: Accelerating virtual health care innovation to help restart the economy – GlobeNewswire
MONTREAL, June 02, 2020 (GLOBE NEWSWIRE) — François Gratton, Group President of TELUS and Chair of TELUS Health and TELUS Québec, will address members of the Chamber of Commerce via virtual chat to discuss three current themes: what we’ve learned so far about the COVID-19 pandemic, contributing to economic recovery by accelerating health care virtualization, and the role of business in employee safety and wellness.
“Overnight, the COVID-19 crisis triggered major changes in our lives and, in particular, greater awareness of health and wellness in our society. Today more than ever, access to health care is everyone’s business. I firmly believe that we have some fantastic opportunities to take advantage of as we write new pages in our history,” stressed Mr. Gratton.
Virtual health care represents an opportunity for businesses as their employees’ health and safety is more than ever a key concern. It is also an opportunity to reduce absenteeism, stimulate productivity, and increase retention of talents who want the flexibility to balance work and family. Following the introduction of our various health solutions, tens of millions of Canadians now have access to virtual health services.
TELUS Health is one of Canada’s largest providers of healthcare technology services, with a wide array of products and services covering the entire healthcare ecosystem. Restarting the economy also means virtualizing tools for health professionals, from medical consultations to home follow-up. This allows them to see patients safely while respecting social distancing.
“Today, all employers are being called upon, through the decisions they make about the benefits they offer employees, to consider the offering of virtual care solutions such as those provided by TELUS Health’s Akira and Babylon applications, connecting Canadians and their families to health professionals over their phones, and giving them the opportunity to get an opinion anytime, anywhere,” added Mr. Gratton.
Over the last 10 years, TELUS has invested over $3 billion in transforming Canada’s health care sector. As soon as the COVID-19 started, TELUS Health has made a clear commitment: to do everything we can to facilitate access to health care, and to help protect and support organizations in the pursuit of their activities.
Over 3,000 members of the TELUS Health team, based primarily here in Montreal, are working to develop virtual solutions to streamline access to health care for all citizens. Moreover, TELUS will make major investments of more than $850 million in the Greater Montreal area over the next four years to speed up the rollout of our leading-edge solutions.
TELUS investments will prioritize the following:
- Network robustness, speed and reliability as the virtualization of activities at our companies, hospitals and clinics accelerates exponentially Ongoing development of our virtual solutions
- Sustaining our community efforts, as shown by the partnership with the CHUM Foundation to expand Montreal’s screening capacity and the emergency fund our TELUS Community Board has set up to meet the essential needs of a dozen charitable organizations such as the Fondation du CHU Ste-Justine, Tel-Jeunes and La tablée des chefs
- TELUS has committed $150 million to support Canadians through the COVID-19 crisis.
To stay informed of the measures being taken by TELUS during the COVID-19 pandemic, visit telus.com/covid19.
This news release contains statements that are forward-looking, including regarding the anticipated amount of our investments and our investment priorities. By their nature, forward-looking statements require TELUS to make assumptions and predictions and are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual expenditures to differ materially from the forward-looking statements in this release. Accordingly, the statements in this news release are subject to the disclaimer and qualified by the assumptions, qualifications and risk factors referred to in our 2019 annual management’s discussion and analysis and our Q1 2020 management’s discussion and analysis, and in other TELUS public disclosure documents and filings with securities commissions in Canada (on SEDAR at sedar.com) and in the United States (on the Electronic Data Gathering, Analysis, and Retrieval System, administered by the US Securities and Exchange Commission at sec.gov). The forward-looking statements contained in this news release describe our expectations at the date of this news release and, accordingly, are subject to change after such date. Except as required by law, TELUS disclaims any intention or obligation to update or revise forward-looking statements.
TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications and information technology company with $14.8 billion in annual revenue and 15.3 million customer connections spanning wireless, data, IP, voice, television, entertainment, video and security. We leverage our global-leading technology to enable remarkable human outcomes. Our long-standing commitment to putting customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. TELUS Health is Canada’s largest health care IT provider, and TELUS International delivers the most innovative business process solutions to some of the world’s most established brands.
Driven by our passionate social purpose to connect all Canadians for good, our deeply meaningful and enduring philosophy to give where we live has inspired our team members and retirees to contribute more than $700 million and 1.3 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world.
For more information about TELUS, please visit telus.com, follow us on Twitter (@TELUSNews) and Instagram (@Darren_Entwistle).
For media inquiries, please contact:
TELUS Public Relations
A lost decade looms for America's economy – CNN
A walkout at Facebook
What black CEOs are saying
Social media, music world go dark for Black Out Tuesday – CP24 Toronto's Breaking News
NBA Projects 2020 Finals To Be Completed By October 12th – RealGM.com
Sega Celebrates Its 60th Anniversary With A Micro Version Of The Game Gear – Nintendo Life
- Tech23 hours ago
Apple Confirms Serious New Problems For iPad, iPhone Users
- Tech21 hours ago
iOS 13.5.1 and iPadOS 13.5.1 release with ‘important security updates
- Tech14 hours ago
Google is sending Android 11 updates to some Pixel 4 owners early – Engadget
- Sports20 hours ago
Jon Jones Has Made Enough Money from Fighting to Retire
- Art23 hours ago
Vankleek Hill Art Show and Scavenger Hunt festival to entertain for entire month of June
- Economy21 hours ago
Australia central bank sees glimmer of hope as economy restarts after pandemic shutdown – The Guardian
- Health15 hours ago
Nova Scotia reports one new case of COVID-19, bringing total to 1057 – Winnipeg Free Press
- Tech18 hours ago
Xiaomi Mi Band 5 launch date set for June 11: All you need to know – Android Authority