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from NYT > Business > Economy

Newsletter: Service-Sector Struggles


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Economic activity is crashing around the globe. IHS Markit’s surveys of purchasing managers in Japan and Europe show overall activity plummeting in March, led by a service-sector collapse as companies pulled out of conferences, tourists canceled travel plans, restaurants and shops closed and governments restricted movements to help contain the novel coronavirus. Overall activity in the eurozone and the U.K. contracted at the fastest pace on record and Japan’s composite survey was the weakest since 2011. Purchasing managers, the people who sit in the center of a company’s supply chain and make decisions about whether to order more supplies, change inventories or alter prices, say a recession is coming, if it’s not already here. “Clearly there’s scope for the downturn to intensify further as even more draconian policies to deal with the virus are potentially implemented in coming months,” IHS Markit economist Chris Williamson said of the eurozone survey.

IHS Markit releases its preliminary figures for the U.S. at 9:45 a..m. ET.


IHS Markit’s preliminary U.S. manufacturing index for March is expected to sink to 42.5 from 50.7 at the end of February and the services index is expected to drop to 42.0 from 49.4. (9:45 a.m. ET)

U.S. new-home sales for February are expected to inch down to 757,000 from 764,000 a month earlier. (10 a.m. ET)

The Richmond Fed’s manufacturing survey for March is expected to fall to minus-12.5 from minus-2 a month earlier. (10 a.m. ET)

The Bank of Japan releases minutes from its Jan. 20-21 meeting at 7:50 p.m. ET.

The Senate on Monday failed to advance a rescue package totaling at least $1.6 trillion. Negotiations resume today.

Note: This is a partial listing of key economic events and subject to change.


Hard Landing

Major U.S. airlines are drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S., according to industry and federal officials, as government agencies also consider ordering such a move and the nation’s air-traffic control system continues to be ravaged by the coronavirus contagion, Andy Pasztor and Alison Sider report.

Boeing said it would suspend airliner production in the Seattle area and General Electric said it would lay off workers making jet engines as the coronavirus pandemic places a heavy drag on U.S. industry. Many manufacturers have kept factories running as confirmed cases of the virus have multiplied, but more are closing at least some of their plants as demand plummets and some of their workers test positive for the virus. Winnebago Industries and Polaris said they were suspending some operations. Harley-Davidson and U.S. car makers have also curtailed or suspended some production. Lower vehicle production means lower demand for steel. ArcelorMittal, the world’s largest steelmaker by production, said it plans to idle furnaces in Indiana and Ontario, Andrew Tangel and Thomas Gryta report.

Everything and the Kitchen Sink

Federal Reserve Chairman Jerome Powell’s whatever-it-takes moment arrived Monday. The central bank signaled it would do practically anything—extending loans to big and small businesses and purchasing unlimited amounts of government debt—to help an American economy in a race against time, Nick Timiraos reports.

Americans Are Stocking Up on More than Toilet Paper

U.S. household consumption patterns have gone haywire during the early stages of the global coronavirus health crisis. A Wall Street Journal analysis of high-frequency data from a range of U.S. industries showed sharp declines in spending on hotels, restaurants, airlines and other travel, while spending boomed in other areas including groceries, general merchandise stores, gun and ammunition shops and marijuana suppliers, Gwynn Guilford reports.

Those kinds of spending shifts will be reflected throughout the economy. Walmart, and CVS Health are among about a dozen large companies looking to hire nearly 500,000 Americans in coming weeks. The companies are managing a surge in demand for food and other household products that have taxed their stores and warehouses. 

Separately, Instacart, a grocery-delivery company, said it plans to add 300,000 workers over the next three months, more than doubling the size of its current workforce of about 200,000, Sarah Nassauer and Jaewon Kang report.

The isolated hiring sprees, however, are unlikely to outweigh a big wave of layoffs—Morgan Stanley expects Thursday’s weekly jobless claims report could show that about 3.4 million Americans filed for benefits, a huge jump from 281,000 a week earlier and nearly five times the previous record.

The White House is discussing easing social-distancing guidelines as early as next week as advisers and business leaders push President Trump to boost an economy beset by deepening job losses. The president has told people that he wants to open the economy as soon as possible. The talks have centered on relaxing or restructuring the 15-day guidelines the administration issued last week to stem the spread of coronavirus, Michael C. Bender and Rebecca Ballhaus report.

How much economic loss can the U.S. bear to save an unknowable number of lives from the pandemic? The WSJ’s Jon Hilsenrath and Stephanie Armour look inside the costly debate within the Trump administration, and among economists and epidemiologists.

Chinese authorities are planning to lift the mass quarantine on the central province of Hubei, where the coronavirus pandemic first emerged, as part of nationwide efforts to revitalize an economy brought to a near standstill by the contagion. Just over two months ago, on Jan. 23, China started locking down the province’s capital, Wuhan, in a bid to stem the spread of the virus. Similar measures were extended across Hubei province that month, while partial lockdowns were also imposed across much of China, affecting hundreds of millions of people, Chun Han Wong reports.

The WSJ has lowered its paywall for live coronavirus coverage. Follow along here.


There’s an increasingly visible economic cost to containing the coronavirus—a recession. The benefit? “By reducing economic interactions… these policies exacerbate the recession but raise welfare by reducing the death toll caused by the epidemic. We find that it is optimal to introduce large-scale containment measures that result in a sharp, sustained drop in aggregate output. This optimal containment policy saves about 600,000 lives in the U.S.,” Martin Eichenbaum, Sergio Rebeloy and Mathias Trabandt write in a National Bureau of Economic Research working paper.


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from Real Time Economics