NEW YORK — The number of confirmed cases of the new coronavirus worldwide surpassed 200,000 for the first time Wednesday and the damage being seeded in the global economy is growing more clear by the day. Furloughs and job cuts, from dog walkers to oilfield workers, have begun. Governments around the world are pushing drastic countermeasures to help workers, particularly those who live paycheque to paycheque.
Following are developments Wednesday affecting various levels of the economy, businesses and workers:
MARKETS ROIL: Stocks sank 7% on Wall Street Wednesday, triggering this month’s fourth emergency halt to trading, intended to prevent panic selling.
Markets have been extraordinarily volatile for weeks as Wall Street and the White House acknowledge the rising likelihood that the coronavirus outbreak will ignite a recession. The stock market on a typical day this month has swung up or down by 4.9%. That compares with the average of just 0.4% over the past decade.
The Dow Jones Industrial Average has lost all its gains since President Donald Trump’s inauguration. The CBOE Volatility Index, Wall Street’s fear gauge, appears to have broken from its tether.
European stock indexes lost more than 4% following broad losses in Asia.
CRISIS TO COME: The U.N.’s International Labor Organization estimates that fallout from the virus outbreak could cause nearly 25 million job losses worldwide and drain up to $3.4 trillion worth of income by the end of this year. The Geneva-based agency said “an internationally co-ordinated policy response” could help mitigate such losses through worker protections, fiscal stimulus, and support for jobs and wages. Social media is full of the posts of people who were just laid off. President Donald Trump’s former chief economist, Kevin Hassett, warned this week that U.S. job losses could reach 1 million next month.
Government’s are responding. The U.S. Senate turned to a House-passed coronavirus response bill Wednesday. The Treasury Department wants to start issuing direct payments to Americans by early next month as the centerpiece of a $1 trillion plan to stabilize the economy. In a memorandum issued Wednesday, Treasury is calling for two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The Treasury plan, which requires approval by Congress, also recommends $50 billion to stabilize the airlines, $150 billion to issue loan guarantees to other struggling sectors, and $300 billion to for small businesses. The plan appears to anticipate that many of the loans would not be repaid.
President Donald Trump on Wednesday moved to invoke a federal law that allows the government to marshal the private sector to deal with the coronavirus epidemic, as the economic damage mounted with word that Detroit’s Big Three automakers agreed to shut down all their factories to protect workers.
Canada is deferring tax payments until August, providing a wage subsidy for small businesses and pausing student loan payments amid the pandemic. Up to $82 billion Canadian (US$56.4 billion) is being spent. The money is about three per cent of Canada’s gross domestic product.
The Bank of England’s new governor Andrew Bailey has kept open the prospect that the central bank may hand money directly to households and businesses to help them through the economic shock of the coronavirus crisis. There is growing speculation that the Bank of England will soon re-launch its quantitative easing program that it used to help the British economy in the global financial crisis.
ENERGY FADES: Energy prices are crashing like they haven’t since the financial crisis. U.S. crude tumbled more than 17%, to around $22 per barrel. The last time oil was so cheap, the first cellphone with a built in camera was released in the U.S. On Wednesday, Halliburton furloughed 3,500 workers in Houston for 60 days. Those workers will work every other week and maintain benefits. Oil majors including Exxon Mobil, a company that lays out spending plans a decade ahead, have said they will be slashing capital expenditures.
SUPPLY DEMANDED: Sales in almost every sector of the economy has vanished, but not for those selling or producing toilet paper, or canned or packaged foods. Social distancing is evident almost everywhere save for grocery store lines. Shares of Campbell’s Soup Co., which had been on a years-long decline, are hot. The stock has surged 7% in a month. Hormel is up 17% this week. Also in demand, Walmart and Target along with Kroger, some of the nation’s largest grocers.
HEAVY INDUSTRY: A person briefed on the matter told The Associated Press that Detroit’s three automakers have agreed to close all of their factories due to worker fears about the coronavirus. Honda said Wednesday that it will shut down plants in North America for a week, starting on Monday because it expects sales to fall. Fiat Chrysler has temporarily closed an assembly plant north of Detroit for a second time in two days after fears that the virus could spread there. The evening shift was sent home Tuesday at the Sterling Heights, Michigan, plant after a worker tested positive for the virus that causes COVID-19. Work resumed early Wednesday, but the company shut the plant down again for deep cleaning “out of an abundance of caution.” The plant makes Ram pickup trucks and employs 7,271 hourly workers.
BMW is closing its factories in Europe. It follows Ford, Volkswagen, Renault, Groupe PSA and Fiat Chrysler. It is not only the risk of infection, but cratering demand. Airbus, the global aircraft maker, is halting production in France and Spain for the week. Porsche on Wednesday halted production at its main plant in Stuttgart, and will the same will take place at its plant in Leipzig starting Saturday.
Scania of Sweden will halt operations at most European production facilities on Wednesday next week due to component shortages and the major supply disruptions. Staff directly affected by the planned production shutdown by the truck and bus builder are in Sweden, the Netherlands and France.
WHEELS DOWN: Airlines are in crisis. U.S. carriers on Monday asked the federal government for more than $50 billion in rescue aid. Late last week, Delta, American and United on successive days announced massive cuts to their flight schedules. They have grounded hundreds of planes, imposed hiring freezes and asked employees to consider voluntary unpaid leave. On Wednesday, JetBlue, Spirit and Allegiant announced cutbacks. JetBlue’s CEO told employees that cancellations are running 10 times higher than normal.
Canadian-based Porter airlines is temporally suspending operations until June. Flights will stop Friday and there will be temporary layoffs.
TRADE WAR TRUMPS PANDEMIC: In the face of a potentially withering global recession, the United States moved ahead with new tariffs on Airbus planes as part of the Trump administration’s ongoing trade war with Asia and Europe. The tariffs will further test U.S. airlines teetering on cataclysmic declines in air travel.
The tariff on large aircraft from the European Union moved to 15%, up from 10%, on Wednesday. The levies are paid by U.S. airlines that import the planes.
The tariffs arise from a long-running dispute over the EU’s subsidies for Airbus. The World Trade Organization, which oversees trade disputes, ruled the subsidies illegal and last year authorized the United States to impose $7.5 billion in sanctions on the EU, France, Germany and the United Kingdom. (In a separate case, the WTO also declared illegal Washington state’s tax subsidies for American aircraft giant Boeing.)
Airlines are already asking the U.S. government for $58 billion in grants and low-cost loans.
“The evolution of the global Covid-19 pandemic and its impact on the critical aviation industry reinforces the urgency of the need to put this outdated case behind us and find a sustainable way forward for the industry,’’ Airbus spokesman Clay McConnell said by email.
WANDER LOST: States and cities that depend heavily on tourism are capitulating, for now. The governor of Hawaii encouraged everyone to postpone vacations there for at least the next 30 days. The governor of Nevada ordered all casinos to close for the month. Major casinos have already ceased operations on the Las Vegas Strip. Two cruise ships that have been turned away by other ports are headed to Honolulu. Holland America Line’s Maasdam cruise ship, which had its port call for Hilo, Hawaii cancelled, will disembark in Honolulu Harbor, state officials said. The Maasdam, with 842 guests and 542 crew, is scheduled to arrive in Honolulu Friday. Norwegian Cruise Line said that one of its vessels, the Norwegian Jewel with 2,000 aboard, had been turned away by Fiji and New Zealand. It is expected to disembark in Honolulu on Sunday. There are no cases of coronavirus on either ship, said Tim Sakahara, a spokesman for Hawaii’s transportation department.
RESPECTING BORDERS: The U.S. and Canada agreed to close their shared border to nonessential travel and the Trump administration is considering a plan to turn back all people who cross the border illegally from Mexico.
The European Union closed its borders for 30 days. The EU is still trying to repatriate some 80,000 citizens stuck outside Europe but faces huge logistical challenges.
Puerto Rico’s governor asked the Federal Aviation Administration to temporarily halt all commercial passenger flights to and from the U.S. territory for two weeks.