We appear to have reached the stage where just about everybody is terrified of what the coronavirus outbreak will do to the economy.
The Federal Reserve pulled the fire alarm this weekend, announcing that it would cut interest rates to near zero and take other emergency measures that it last used during the 2008 financial meltdown. The U.S. stock market responded to this news on Monday with its worst trading session since 1987, during which the S&P 500 plummeted by around 12 percent. Economists at the UCLA Anderson School of Management think the economy has already stopped growing and will contract at a 6.5 percent rate next quarter (Goldman Sachs thinks 5 percent). Former White House economist Kevin Hassett, a relentless optimist if there ever was one, told CNN that the world faced close to a 100 percent chance of recession, and April could bring 1 million job losses. Even President Donald Trump momentarily lowered his reality distortion field and admitted the nation “may” be headed for recession. His former aide Gary Cohn thinks we’re probably at the start of one already.
One of the few people who does not appear to be particularly ruffled is Larry Kudlow, the former TV talking head who is now Trump’s top economic adviser. He told reporters that any downturn would be brief—a mere “weeks and months.” This is worrisome, since Kudlow is notoriously wrong about everything. He is the George Costanza of economic forecasters: Whatever the man predicts, it is safe to expect the opposite.
In other words, the conventional wisdom is absolutely correct: Everybody should be terrified about what’s coming. Our public health officials have no idea how long this crisis might last. But China just released a batch of data showing that the fight against COVID-19, which required mass lockdowns throughout the country, basically demolished its economy over the past several months. Here in the U.S., we’re already seeing early signs of the virus’s economic toll. On Saturday night, restaurants had 40 percent fewer diners compared with a year before, according to OpenTable. And that was before New York City and Washington state closed all of theirs down. More than 12 million Americans work in restaurants, bars, and fast food. It’s not hard to see where all this is going. Our economy is headed into a strange, fluish hibernation.
The one upside to all this fear is that it’s spurring action. The Fed has risen to the occasion, both by slashing rates early and by announcing a massive bond-buying spree to prevent a serious credit crunch from developing. Nobody—least of all the central bank itself—thinks these moves will be enough on their own to prevent the economy from sliding into recession, which is part of why the stock market fell in response. (On Sunday, Chairman Jerome Powell all but begged Congress to take action, calling a fiscal response “critical.”) But its swift maneuvering may at least prevent that downturn from creating a full-fledged financial crisis, like we saw in 2008.
There could even be hope in Congress. The original relief bill that the House and White House negotiated to expand sick pay and medical leave may have been woefully insufficient, seeing as it only covered a fraction of the workforce. But now, both Republicans and Democrats in the Senate are talking about more dramatic action. Like some left-wing members of the House, Utah Sen. Mitt Romney wants to send $1,000 checks to every adult, which would help tide families over and buoy the economy a bit. Sen. Tom Cotton of Arkansas also says he wants to get more cash into the hands of affected workers. The pressure in Congress to do something dramatic seems to be growing along with the sense of danger. Meanwhile, the White House says that it is aiming for $800 billion in total stimulus. Half of that would come from a payroll tax cut that practically nobody outside the administration seems to support, because it targets the people who’d need it least. But if the administration can come to an agreement with Congress, a large, spending package could make the recession both shallower and shorter, sparing us all a long slog to recovery once the virus has been contained.
Everyone is frightened. But as a result, Washington might, conceivably, pull its act together to prevent some economic pain. Let’s hope.
For more on the economic impact of the coronavirus, listen to Tuesday’s episode of What Next.
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Alberta's economy loses 117,000 jobs in March amid COVID-19 – Calgary Herald
Alberta’s economy lost 117,100 jobs in March, the worst recorded single-month change on record, according to Statistics Canada.
New numbers released by the federal agency on Thursday reflect the early impacts of the economic toll of COVID-19 on the province as well as the country as a whole, which lost over a million jobs during the same period.
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The numbers reflect labour market conditions during the week of March 15 to 21, by which time travel restrictions and public health measures directing Canadians to limit public interactions had already been put in place. However, public health measures and restrictions on non-essential businesses have intensified since then, meaning job numbers are likely going to look even worse when Statistics Canada releases its April numbers.
“We knew it was coming, but it’s still shocking to see the initial effects of the effort to contain the spread of COVID-19 on employment,” said ATB Financial on Thursday.
‘Dynamic’ physical distancing could help balance COVID-19 fight, economy in Ontario: study – Global News
Dialing physical distancing measures up and down could be a way of sustaining the long-term fight against COVID-19 while not crushing the economy, a new study from Ontario researchers suggests.
The scientists from the University of Toronto and the University of Guelph used mathematical modelling to predict the course of the disease in Ontario.
Their base modelling found 56 per cent of the province’s population would become infected with the novel coronavirus over the next two years.
At the peak of the crisis, 107,000 Ontarians would be hospitalized with 55,000 people in the ICU, the modelling numbers suggested, should nothing be done. The province currently has about 2,000 intensive care beds.
However, the research suggested so-called “dynamic” physical distancing could help keep the health-care system from becoming overwhelmed while allowing “periodic psychological and economic respite for populations.”
Physical distancing is an effective tool to curb the spread of the disease, Canada’s public health agencies have said.
The key, according to study lead author Ashleigh Tuite, is to “ride the wave” _ by pegging physical distancing measures to the number of intensive care beds in use, those restrictions can be loosened when ICU numbers drop, then tightened up again when the numbers near capacity.
“Instead of a sharp up-and-down epidemic curve, we have something that is stretched out and kind of goes up and down, up and down, and we basically modulate our responses based on where we are in that curve,” said Tuite, an assistant professor of epidemiology from U of T.
“When things start ramping up again, then we know that we need to enhance our social or physical distancing measures. And when things are on the downturn, then we can potentially return a little bit more to normal life.”
The paper was submitted in late March to the Canadian Medical Association Journal and published as a pre-print that has not yet been peer-reviewed.
Ontario government releases COVID-19 modelling data
Amy Greer, one of the study’s author’s, said this is another method to buy society time until a vaccine is available, which is likely more than a year away.
“In the absence of access to a safe and effective COVID-19 vaccine, we will need to work hard to slow down community transmission while also recognizing that we can’t reasonably maintain long-term and aggressive physical distancing until a vaccine becomes available,” said Greer.
Ben Bolker, a math and biology professor at McMaster University who was not involved in the research, called it a “sensible study.”
“The really hard part is figuring out how it’s all going to work at a government, logistic and bureaucratic level,” he said.
He said one potential method would be to change the laws around how many people can gather at once.
Both Tuite and Bolker said other tools will be arriving soon that could help. For one, they said, exhaustive testing would allow the province to drill down into hotspots and ensure isolation measures are placed on those people.
That also might allow some people to return to work.
“It sucks that we have to keep the economy shut for a bunch longer,” Bolker said. “But during that time we’re gathering information and figuring out how the hell we’re going to get out of this.”
Atif Kubursi, a retired professor of economics at McMaster University, said the study is a good starting point for how to fight the disease over the next year or two.
“This is one of the most important questions right now: how can you balance the risk of increased morbidity and death versus destroying the economy?” he said.
Kubursi points out that the study does not get into economic modelling and the effect of starting and stopping businesses – something he’d like to see future research take on.
“It sounds a little simplistic,” he said. “I don’t know if it’s easy to turn the economy on and off, but I guess there are some measures you can take to make businesses essential again.”
“We’d need to know the answer to the question: Is it worthwhile? Can we get people back to jobs in big numbers for short periods of time?” Kubursi said.
“If we can, maybe that is a way to keep the economy greased, keep it moving. It could be worthwhile.”
© 2020 The Canadian Press
The economy is in a Corona-coma, and not even Statistics Canada can tell us when we’ll recover – Maclean's
Miles Corak: No one has the numbers we most need that would tell us how much damage the economy has suffered, or how long this will last
Miles Corak is with the Stone Center on Socio-Economic Inequality and professor of economics at The Graduate Center, City University of New York. You can follow him @MilesCorak.
Only weeks ago a tightly packaged bundle of RNA floated across the seas on a droplet of air and pushed a $2-trillion dollar economy over a cliff.
On Thursday morning Statistics Canada released its first comprehensive assessment of the economic fallout, documenting the job and unemployment totals for March, with employment falling by more than one million. As electrifying as these statistics are, they are still less than perfectly clarifying.
Last week journalists clamoured hard for clear information on the projected number of COVID19 cases and deaths, data at the very heart of decision making, and the right of every Canadian to know.
The Federal government hesitated to release health projections, but there’s no hesitancy, no caveats, and no concerns about accuracy now that the statisticians in Ottawa have pressed the release button. Statistics Canada reports that there has been an unprecedented collapse in employment, and a strikingly longer line of unemployed.
Yet we should also treat these numbers as provisional, even for a survey that is reliably conducted every month. Official statistics just can’t move as fast as the events we are now living through.
This morning’s data only give a snapshot captured at one point early on, not a running documentary of what happened and what is now happening, never mind a clear sense of what things might look like after the economy hits rock bottom and the dust has settled.
The jobs and unemployment numbers refer to one particular week last month, from Sunday, March 15 to Saturday, March 21. Statistics Canada surveyed about 55,000 Canadian households, and asked them only about their situation during this specific week. The results are a one-week picture, just a single frame in a movie that has now been running for more than a month.
Similar American data released last Friday were anchored even earlier in March, leading observers to clearly warn that the jump in the unemployment rate, even if it was the largest on record since 1975, understated the economic damage of COVID19.
The Canadian data are better timed, but they nonetheless only capture the initial impact of COVID19, during a week in which international travel was restricted and the seriousness of the situation started to hit home, but before many schools closed and non-essential work was shut down in most provinces.
The jobs situation has certainly deteriorated, but it probably deteriorated even more during the two weeks after Statistics Canada asked its questions.
On March 20 it was reported that half a million Canadians had applied for Employment Insurance in the previous four days, but by the end of the month the cumulative total of Employment Insurance applicants was put by some at more than two million, and it is dramatically higher now.
Statistics Canada defines unemployment according to how Canadians behave: are they looking for a job, are they waiting to start a job, or are they on a temporary lay off and expecting to return to their job in the near future?
So whether or not you collect Employment Insurance is a whole other thing, but this time round almost all new claimants have certainly found themselves classified as unemployed, most of them considered to be temporarily laid off.
On this basis alone the number of unemployed would have ballooned. But Statistics Canada goes one better, also capturing the freeze in hiring that always precedes a recession, so the ranks of the unemployed have swelled even more as luck ran out for those who would have started a job.
In fact, the number of unemployed jumped to one and a half million, putting the unemployment rate at 7.8 per cent, up from February’s 5.6 per cent. The economy is falling into a deep corona-coma, losing all the employment gains made since November 2016, as the number of Canadians holding a job dropped by one million.
But a good deal has already happened since the second week of March, and it is likely that the unemployment rate right now is even higher, likely approaching 15 per cent, or one-in-seven Canadians.
This is not a pretty picture, and we don’t need Statistics Canada to tell us that. Still these data, what statisticians tell us are facts, will focus our imaginations on the economic fallout of this health crisis.
However accurate the numbers, what Canadians really need to know is when we will be able to stand up, dust ourselves off, and start again.
This morning, Statistics Canada has told us nothing at all about how long this economic disaster will last.
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