- Axios says that 54% of all U.S. counties don’t have a testing site. Among counties with 50,000 or more people, 38% don’t have any testing sites. Among rural counties with fewer than 10,000 residents, 68% don’t have any.
China’s New Outbreak Shows Signs the Virus Could Be Changing
Chinese doctors are seeing the coronavirus manifest differently among patients in its new cluster of cases in the northeast region compared to the original outbreak in Wuhan, suggesting that the pathogen may be changing in unknown ways and complicating efforts to stamp it out.
Patients found in the northern provinces of Jilin and Heilongjiang appear to carry the virus for a longer period of time and take longer to test negative, Qiu Haibo, one of China’s top critical care doctors, told state television on Tuesday.
Patients in the northeast also appear to be taking longer than the one to two weeks observed in Wuhan to develop symptoms after infection, and this delayed onset is making it harder for authorities to catch cases before they spread, said Qiu, who is now in the northern region treating patients. (…)
Scientists still do not fully understand if the virus is changing in significant ways and the differences Chinese doctors are seeing could be due to the fact that they’re able to observe patients more thoroughly and from an earlier stage than in Wuhan. (…)
China has one of the most comprehensive virus detection and testing regimes globally and yet is still struggling to contain its new cluster. (…)
- There are some 4.9 million confirmed infections world-wide, according to data compiled by Johns Hopkins University, and more than 323,000 deaths. In the U.S., nearly 1.53 million have been confirmed infected, and almost 92,000 have died.
- The reopenings in the U.S. reflect similar moves in other parts of the world. But there is no clear indication that the pandemic is retreating world-wide. Brazil posted a record daily high of 1,179 fatalities on Tuesday—the world’s third-largest total of confirmed infections, with more than 271,000. Medical experts say the numbers there are not likely to peak until June.
- China has reimposed lockdown conditions in the northeast of the country following a fresh outbreak and India also recorded a new daily high.
- Germany’s new virus cases rose above 1,000 for the first time in 11 days, while the infection rate dropped further below the key threshold of 1.0. There were 1,227 new cases in the 24 hours through Wednesday morning, bringing the total to 177,778. That’s up from 182 on Tuesday but still well below the three-day average of about 2,700 a month ago.
- Brazil reports 17k+ cases in latest record jump. Brazil’s outbreak has been exacerbated by President Jair Bolsonaro’s insistence that the virus is just “a little flu”, and that the only sensible approach is to simply let the disease run its course, Bolsonaro has said.
- the Guardian reported Wednesday that the number of confirmed coronavirus cases in Afghanistan had passed 8,000, as roughly 50% of tests done in a day come back positive for the 2nd straight day.
- In Japan, infection levels have returned to their lows from late March
PANDENOMICS
U.S. Economy Likely to Shrink 5.6% This Year Amid Coronavirus, CBO Says
Gross domestic product will likely be 5.6% smaller in the fourth quarter of 2020 than a year earlier, the CBO said Tuesday, despite an expected pickup in economic activity in the coming months. Though the CBO raised its projection for GDP growth in the fourth quarter of 2021 to 4.2% from 2.8% in an April forecast, the outlook continued to depict a long road to recovery.
That owes to the suddenness and severity of the current downturn, as well as expectations that social-distancing measures will remain in place, to some degree, for at least another year. The CBO estimated GDP will shrink 11.2% in the current quarter from the January-to-March period, more than quadruple the next-biggest quarterly decline in records going back to 1947.
Business and residential investment will be the main drags on growth this year, the CBO said, falling 15.8% and 13.8%, respectively, in the fourth quarter from a year earlier. Consumer spending is seen declining 4.1%, while government purchases will likely slip 1%.
A key source of support for the economy will be the four economic-aid packages passed by Congress since March, the CBO said. It estimated the packages will increase the federal budget deficit by $2.2 trillion in the fiscal year ending Sept. 30 and by $600 billion in the following year.
The agency sees the number of U.S. jobs falling to 133 million in the second quarter from 158.6 million at the end of 2019—more than triple the number of job losses in the 2007-09 recession.
While jobs should start to gradually return in the third quarter of this year, the CBO expects household employment to remain below pre-pandemic levels at 148 million in the last three months of 2021.
The CBO cited three factors that are likely to tamp down on job growth as social-distancing measures ease and consumer spending rebounds in coming quarters.
First the federal Paycheck Protection Program of forgivable loans to small businesses “will wane in coming months, which may precipitate a new wave of layoffs and furloughs,” the agency said.
At the same time, health concerns could dampen laid-off workers’ incentives to search for new jobs. Finally, declining tax revenue in state and local governments will likely lead to more layoffs in those sectors, the CBO said.
Powell, Mnuchin Differ on Perils for Economy
The nation’s top two economic policy leaders offered contrasting visions about the economic outlook, with Treasury Secretary Steven Mnuchin favoring a wait-and-see approach to more federal aid and Federal Reserve Chairman Jerome Powell suggesting more would be needed. (…)
“There is the risk of permanent damage” to keeping commercial activity closed down too long, Mr. Mnuchin told the Senate Banking Committee.
Mr. Mnuchin echoed comments by President Trump and other administration officials who are predicting a V-shaped recovery—a sharp downturn followed by a strong bounceback. (…)
Mr. Powell, meanwhile, challenged the premise that there is a trade-off between economic growth and protecting the public’s health. Fear of coronavirus infection is the economy’s biggest hurdle, he said, and the recovery will be held back until Americans believe it’s safe to resume commercial activities involving person-to-person contact.
“The No. 1 thing, of course, is people believing that it’s safe to go back to work so they can go out,” said Mr. Powell. “That’s what it will take for people to regain confidence.” (…)
Mr. Powell and other senior central bank officials have indicated they don’t think a V-shaped recovery is likely. This has fueled their concern that the government’s initial relief measures may prove insufficient to nurse the economy through a shock with no modern parallel and with interest rates already near zero. (…)
“If consumers are afraid to eat out, shop or travel, a relaxation in laws requiring business closures may do little to bring back customers and thus jobs,” said Mr. Rosengren. “It is vital that the design and timing of reductions in business restrictions not result in worse outcomes and higher unemployment over a longer period of time.”
The nonpartisan Congressional Budget Office, which released its updated economic forecast Tuesday, said it anticipates a “gradual and incomplete pattern of recovery” over the next year and a half. CBO expects the economy will grow faster in 2021 than it projected last month, but will still be 1.6% smaller than it was at the end of 2019, while the jobless rate remains above 9% through the end of next year. (…)
“We are not going to spend our way out of this,” White House economic adviser Lawrence Kudlow said in an interview last week. Animating the administration’s approach is the expectation of a V-shaped recovery, he indicated. “We believe it’s the best bet,” Mr. Kudlow said.
Another White House economic adviser, Kevin Hassett, told reporters Monday a fourth round of economic stimulus might be unnecessary. “I think it’s possible that we’ll see a strong enough economy that we don’t need a Phase Four,” he said. (…)
Funny that it’s now the Fed saying the Administration is not doing enough…
- President Trump didn’t press Senate Republicans Tuesday about specific ideas for the possible next round of coronavirus relief, instead focusing on the 2020 election and other concerns.
- McConnell said congressional Republicans and Mnuchin, who negotiated previous rounds of stimulus with Democrats, are all in agreement that a pause is needed. With the Senate leaving later this week for a nearly two-week recess, he said discussions on next steps would happen in couple of weeks.
- Behind Bond Market’s Stall, Investors See Hard Times Ahead Yields on U.S. government bonds have stalled near all-time lows, a sign that investors are anticipating a painful economic recovery and years of aggressive monetary stimulus.
- As countries in Europe begin a gradual reboot of their economies, CEOs and Chairs of major industrial companies in Europe expect the global economy to recover slowly. A majority of respondents (53 percent) say it will take between one and two years for the global economy to recover from the COVID-19 crisis, and 45 percent expect it will take more than two years. However, 54 percent of CEOs said that if the COVID-19 pandemic were to end now, their revenue would return to early 2020 levels in less than one year, and 14 percent expected it to recover within three months.
- Some of the biggest U.S. retailers such as Amazon.com and Kroger are ending the extra pay they gave to front-line workers during the coronavirus crisis.
- Landlords Fume as Starbucks, Other Chains Seek Extended Rent Cuts National restaurant chains and other stable businesses are asking for rent relief as the economic picture sours, setting the stage for court battles and protracted clashes between big tenants and property owners.
- UK sells negative-yielding government bonds for first time ‘Symbolic hurdle’ coincides with debate into whether BoE should move to negative rates
- Shutdowns Wreak Devastating Toll on Poorest Nations, World Bank Chief Says
(…) “The human toll in the developing world—in the poorest countries, in particular—from the shutdown is devastating,” World Bank President David Malpass said in an interview. “The question is: how long will it last? And for the developing world that depends heavily on the reopening of the advanced economies.”
The World Bank estimates that 60 million people world-wide are likely to fall into extreme poverty—subsisting on less than $1.90 a day—this year, while hundreds of millions more could lose their jobs. Such a backslide could have health implications beyond the coronavirus, such as stunting growth in children who can’t get enough nutrition, Mr. Malpass said. (…)
- Chinese President Xi Jinping vowed to allocate $2 billion over two years to help countries fight and recover from the Covid-19 pandemic, particularly developing nations. In an address to an online session of the World Health Assembly Monday, Xi also pledged to make China’s coronavirus vaccine a global public good once one is available
Canada Warned About Coronavirus-Induced Mortgage Arrears The head of Canada’s state-owned mortgage insurer warns the income shock from the pandemic could leave a fifth of all the country’s mortgages in arrears.
Evan Siddall, chief executive of Canada Mortgage and Housing Corp., added the insurer now forecasts the average house price will fall 9% to 18% in the coming year, and won’t fully rebound until 2022.
“The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer-term financial stability,” Mr. Siddall said, in testimony before a parliamentary committee on Tuesday. (…)
The country’s banks have allowed mortgage-payment delays of up to six months for roughly 740,000 households, representing about 15% of mortgages on banks’ balance sheets. After the deferral period ends, though, the debt payments will come due. The Bank of Canada said it expects a rise in the proportion of households whose debt-service payments exceed 40% of income—an indicator of household vulnerability.
Mr. Siddall said the mortgage deferrals are “adding to already historic levels of household indebtedness.” Data from the Bank for International Settlements indicates the total credit extended to Canadian households is just over 100% of gross domestic product, or nearly double the average for the Group of 20 industrial and developing nations. He said he expects a peak 130% later this year. (…)
He said CMHC, the country’s dominant mortgage insurer, has enough capital on hand to deal with an expected surge in insurance claims resulting from the pandemic—which the housing agency estimates will be up to 9 billion Canadian dollars (US$6.5 billion).
At the end of 2019, CMHC had total insurance in force of C$429 billion. The agency said the mortgage-arrears rate last year stood at 0.31%.
In our annual survey, we asked the CEOs of the Fortune 500 whether they agreed or disagreed with some of the predictions being floated these days about how things will permanently change. (Fortune)
- “Business travel will become less frequent, replaced by video conferencing.” – 91% agreed.
- “Nationalism will rise, and global supply chains will become less common.” – 82% agreed.
- “Government surveillance techniques will become more common worldwide.” – 81% agreed.
- “Trust in government will rise, as a result to their response to the crisis.” – 55% disagreed.
- “China will be strengthened as a power in the world” – 42% agreed, 38% disagreed.
- “Trust in capitalism will rise, as a result of the business response to the crisis.” – 28% agreed, 24% disagreed.
- “Concern about the environment will fall, as a result of more immediate focus on economic problems.” – 42% agreed, 35% disagreed.
PANDEMONIUM
Trump says U.S. should consider ending trade deals under which it imports cattle
(…) “I read yesterday where we take some cattle in from other countries, we have trade deals. I think you should look at terminating those deals,” Mr. Trump said at a White House event on food aid. “We have a lot of cattle in this country.” Mexico exports more than one million cows across the border each year that become part of the U.S. beef supply. (…)
- China Vows Retaliation Over Pompeo’s Message to Taiwan’s Tsai China denounced the U.S. Secretary of State for referring to Taiwan’s leader as “president.”
The WSJ editorial team did not see fit to point out that “all” evaluated participants were a grand total of 8, a number that appeared within another WSJ piece:
Harvard’s Reinhart and Rogoff Say This Time Really Is Different
