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Don’t Call it a Comeback
An official gauge of China’s manufacturing activity rebounded strongly in March as work resumption picked up, though economists warned that business remains far from normal following a devastating coronavirus outbreak. China’s manufacturing purchasing managers index jumped to its highest level since 2017 from a record low in February, the National Bureau of Statistics said. A separate nonmanufacturing PMI, also released Tuesday, showed service and construction activity similarly bouncing back. But the reversal merely shows activity is better than it was a month earlier, not that it’s back to pre-coronavirus levels. Economists widely forecast the Chinese economy will post a year-over-year contraction in the first quarter of the year, Jonathan Cheng reports.
WHAT TO WATCH TODAY
The S&P/Case-Shiller home-price index for January is out at 9 a.m. ET.
The Chicago purchasing manager index for March is expected to fall to 40.0 from 49.0 a month earlier. (9:45 a.m. ET)
The Conference Board’s consumer confidence index for March is expected to drop to 110.0 from 130.7. (10 a.m. ET)
The Bank of Japan’s quarterly tankan survey of business sentiment is out at 7:50 p.m. ET.
The China Caixin manufacturing index for March is out at 9:45 p.m. ET.
Note: This is a partial listing of key economic events and subject to change.
The New Normal
Underscoring the relative economic rebound, traffic levels in Beijing are back close to normal during the workweek, according to an index of congestion developed by TomTom NV, a transportation data provider.
But traffic in Wuhan, the epicenter of the coronavirus outbreak, is still well below levels from a year earlier.
The coronavirus has produced something new in economic history. Never before have governments tried to put swaths of national economies in an induced coma, artificially maintain their vital organs, and awaken them gradually. If it works cleanly, it will be a testament to the flexibility of modern capitalism and the ingenuity of modern government. More likely, much will go wrong. Marcus Walker writes about how it all might come together.
Will it be another Great Recession? What matters is not the depth, but the duration: Greg Ip says businesses need to believe the pandemic disruption, like a hurricane, is transitory. That will help keep temporary job loss from becoming permanent.
Macy’s, Gap and other retailers will furlough tens of thousands of employees beginning this week, highlighting the limits of the $2 trillion rescue package for U.S. businesses that have been cut off from their customers. The furloughs add to the swelling ranks of unemployed and the economic damage resulting from the fast-spreading coronavirus, Suzanne Kapner reports.
Layoffs and furloughs are only part of the employment equation. Hiring, another key component, also appears to be suffering as hospitality and tourism jobs dry up. Data from jobs site Indeed suggests employers aren’t looking for workers at anything near the same pace as previous years.
The Treasury Department urged airlines to submit applications for grants and loans by Friday to begin receiving funds as soon as possible.
New details from the IRS on tax deadlines and audit relief.
Beware of coronavirus scams.
The federal government will begin sending out stimulus payments to households in the next three weeks.
Consumers are loading up on pasta, rice and bread. Farm supply lines are disrupted. Countries are restricting agricultural exports. The result: Prices of wheat and rice, two of the world’s staple grains, are rising sharply. Difficulties moving grain within countries and across borders, coupled with frenzied buying, could exacerbate the impact of the pandemic on the global food market, Kirk Maltais and Joe Wallace report.
The oil crash deepened on Monday, sending prices to an 18-year low. U.S. crude-oil futures ended the day at their lowest level since February 2002. Typically when fuel prices plummet, consumers drive more, helping the energy sector recover. But restrictions on travel and movement are altering that dynamic, leaving traders to project a massive surplus of oil and even lower prices ahead. A price war between Saudi Arabia and Russia has made the rout even more painful, Amrith Ramkumar and David Hodari report.
2 Fast, 2 Furious
The novel coronavirus sideswiped the economy so fast and hard that government economic data quickly became outdated even before it was published. Enter the Weekly Economic Index. The New York Fed’s Daniel Lewis, the Dallas Fed’s Karel Mertens and Harvard’s Jim Stock developed the measure from seven high-frequency time series—including government jobless claims but also private measures of retail sales, temp staffing and steel production. It’s not looking good: “Developments in the past week saw the index fall to a level unseen since 2008.”
The Swedish Approach
Sweden’s radically different approach to the coronavirus: No lockdown, no quarantines, just voluntary advice and a big dose of hope. Businesses, kindergartens and schools remain open. Stockholm’s street cafes and outdoor bars swelled with people over the weekend. The only mandatory rules are a ban on meetings of more than 50 people and an order forcing bars and restaurants to only serve seated customers so as to avoid overcrowding. It is too early to assess whether Sweden’s approach will have a benign or catastrophic outcome, but so far, the virus hasn’t spread widely there. The next two weeks may determine whether Sweden’s approach can succeed or if authorities bend to the reality of a rash of new cases, Bojan Pancevski reports.
WHAT ELSE WE’RE READING
Working from home? You might not have have as much company as you think. “Our classification implies that 34% of U.S. jobs can plausibly be performed at home. We obtain our estimate by identifying job characteristics that clearly rule out the possibility of working entirely from home, neglecting many characteristics that would make working from home difficult. Our estimate is therefore an upper bound on what might be feasible and greatly exceeds the share of jobs that in fact have been performed entirely at home in recent years,” the University of Chicago’s Jonathan Dingel and Brent Neiman write.
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