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Newsletter: ‘We May Well Be in a Recession’


This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Record High

A record 3.28 million workers applied for unemployment benefits last week as the new coronavirus hit the U.S. economy, marking an abrupt end to the nation’s historic, decadelong run of job growth. The number of Americans filing for claims was nearly five times the previous record high. The surge was for the week ended March 21 and could rise further. Pennsylvania, Ohio and California were among 10 states reporting more than 100,000 claims, leaving unemployment systems overloaded, Eric Morath, Jon Hilsenrath and Sarah Chaney report.


U.S. personal income for February is expected to climb 0.4% from the prior month, consumer spending is expected to rise 0.2%. (8:30 a.m. ET)

The personal consumption expenditure price index excluding food and energy is expected to rise 0.2% in February from a month earlier and 1.7% from a year earlier. (8:30 a.m. ET)

The University of Michigan consumer sentiment survey for March is expected to fall to 90.0 from a preliminary reading of 95.9. (10 a.m. ET)

The Baker Hughes rig count is out at 1 p.m. ET.

The White House coronavirus task force holds a press briefing at 5 p.m. ET.

The House plans to vote on the coronavirus relief package today.

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


Spring Freeze

The weekly jobless claims report shows how many people applied for unemployment insurance. It’s a very rough proxy for layoffs. And it’s a lot. For the entire month of January—the latest month of data available—there were 1.68 million layoffs and discharges across the U.S. Meanwhile, most companies have stopped hiring. That’s going to hit upcoming jobs numbers hard, if not in the March report then certainly in April and May. Private-sector economists are forecasting net job losses ranging from 8 million to 17 million and beyond in coming months. By comparison, the labor market lost just more than 8.7 million jobs from January 2008 through February 2010. Unlike the last recession, some economists are expecting a quick return to growth. “If we’re really lucky you might see some of those jobs coming back in June,” said Capital Economics economist Paul Ashworth.

Heard on the Street’s Justin Lahart writes that Wall Street economists might be underestimating how long the downturn will last. In the space of a few weeks, they have gone from saying that the U.S. would skirt recession to forecasting the deepest economic contraction in most Americans’ living memory. But most also believe that the economy will bounce back substantially in the third quarter—not by enough to dig it out of the hole dug in the second quarter, but putting it on the road to recovery. Such forecasts are predicated on an expectation that the spread of the novel coronavirus will have been contained, that measures to stop its spread will have been substantially relaxed and that people will be substantially relaxed as well, ready to go back to sitting in restaurants and going to ballgames and taking flights. That is no sure thing.

There are jobs out there, and not just in retail and health care. Moving companies, food makers and others say they need help, too. Economists say most of the opportunities involve getting food, medicine and other essential supplies to people. Blue Apron Holdings is hiring as demand rises for its pre-apportioned meal kits. Pet-food suppliers and cleaning products manufacturers are hiring logistics and distribution staffers, Chip Cutter reports.

Federal Reserve Chairman Jerome Powell said the U.S. economy “may well be in a recession,” but that the central bank is taking unprecedented action to help ensure economic activity can resume as soon as the coronavirus pandemic is under control. The Fed has slashed its benchmark rate to zero and unveiled a series of programs to boost lending. By Friday, it will have also purchased nearly $1 trillion in Treasury and mortgage securities over the past two weeks, Nick Timiraos reports.

Need to Know

The U.S. has overtaken China as the country with the most cases in the world of the novel coronavirus, marking a new milestone in the fight against the global pandemic.

Out of a job? Here’s what to know about getting unemployment benefits.

How to apply for small business loans under the Senate’s aid bill. 

When will stimulus payments be sent and who is eligible?

Around the World

China is getting back to work. With new infections dwindling, factories are restarting, stores are reopening, and people are venturing outdoors. In some ways, China is where the U.S. and Europe hope to be within weeks or months. Yet many Chinese factories find demand for their products has evaporated as consumers world-wide are reluctant to spend because of the pandemic. China’s limited return to normal foreshadows the potential for a sluggish U.S. recovery, Mike Bird, Jon Emont and Shan Li report.

India’s government unveiled $22.5 billion in spending to help the country’s poor survive a nationwide shutdown. The lockdown has begun to jeopardize the lives of millions of daily wage earners and workers who need to earn on a daily basis to eat and provide for their families, Rajesh Roy and Eric Bellman report.

The European Union, the world’s second-largest economy, was built on free movement of people and goods. Coronavirus has suspended that model, upending commerce and communities. Road-travel restrictions, some imposed unilaterally as the pandemic hit this month, combined with grounded air transport, threaten companies’ ability to produce and deliver vital goods and services, including food, medicine and pesticides, as well as medical care, Laurence Norman and Drew Hinshaw report.


Pandemics depress the economy, public health interventions do not. “We find that cities that intervened earlier and more aggressively do not perform worse and, if anything, grow faster after the pandemic is over. Our findings thus indicate that [non-pharmaceutical interventions] not only lower mortality; they also mitigate the adverse economic consequences of a pandemic,” Fed economist Sergio Correia, New York Fed economist Stephan Luck and MIT’s Emil Verner write in a new paper.


Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.

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Newsletter: The American Jobs Machine Has Shut Down


This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

Keep an eye on the weekly U.S. jobless claims report out today to gauge how quickly and deeply the coronavirus pandemic is crashing into the economy. Jeff Sparshott here with the latest on the labor market and broader economy.

Welcome to the Machine

The great American job machine just ground to a halt. As a result of the coronavirus pandemic, more than 1 million Americans are forecast to have filed for unemployment benefits last week, marking a dramatic end to a historic national job expansion that started in 2010, Eric Morath and Jon Hilsenrath report.

Until March, U.S. employers added jobs for a record 113 straight months, causing payrolls to grow by 22 million. In the process, millions of people—including low-wage hourly laborers, disabled people, minorities, former inmates and others—found work. The unemployment rate had been at levels not seen since the 1960s. Wages started picking up after lagging during the early stages of the expansion. The strong labor market kept the U.S economy humming straight through a European debt crisis, Japan’s tsunami, a Chinese economic slowdown, a domestic manufacturing slump, volatile energy prices and a global trade war. And then in a matter of days it stopped.

Millions of Americans, already fearful the new coronavirus could infect them or their families, now have another worry: When will the job machine start again and can they hold out until it does.


The Bank of England releases a policy statement at 8 a.m. ET.

Group of 20 leaders hold a video teleconference at 8 a.m. ET.

U.S. jobless claims are expected to rocket to 1.5 million from 281,000 a week earlier. That would top the previous record of 695,000 set in 1982. (8:30 a.m. ET)

U.S. advance trade in goods figures for February are out at 8:30 a.m. ET.

U.S. gross domestic product growth for the fourth quarter is expected to advance at a 2.1% pace, unchanged from an earlier estimate. (8:30 a.m. ET)

The Kansas City Fed’s manufacturing survey for March is out at 11 a.m. ET.

The White House coronavirus task force holds a press briefing at 5 p.m. ET.

China’s industrial profits for February are out at 9:30 p.m. ET.

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


It’s a Start

The Senate approved the largest economic stimulus package in recent memory, moving the estimated $2 trillion bill to the House as Congress seeks to give American families and businesses a financial shield against the ravages of the new coronavirus pandemic. The House is set to consider the legislation on Friday.

The emergency relief package would help stabilize the coronavirus-battered economy—but likely isn’t enough to bring it back to health. Preliminary data suggest that the U.S. economy is already shrinking, as businesses close and unemployment soars. The depth of the economic decline in coming months will depend on how quickly Washington can deliver checks to cash-strapped households and businesses, as well as whether a treatment is found and how soon shutdowns are lifted, Kate Davidson and Josh Mitchell report.

Underscoring the rapidly changing outlook, JPMorgan Chase revised down its growth outlook for the third time in three weeks on Wednesday. “Such is the pace of events,” economists Michael Feroli and Jesse Edgerton wrote in a note to clients.

What’s in the emergency aid bill? We’ve broken it into four parts: the top lines, households and workers, business and banking, and personal finance and taxes.

$2 trillion could be just the start. If the stimulus isn’t doled out fast enough or the pandemic drags on longer than expected, even this historic rescue package might not be enough, Justin Lahart writes.

President Trump said restrictions on economic activity could be lifted in some parts of the country but not others as his administration works to develop a plan for how Americans could return to work in a few weeks without exacerbating the spread of the virus in the U.S., Rebecca Ballhaus and Stephanie Armour report.

The U.S. now trails only China and Italy in the number of confirmed coronavirus cases, with almost 70,000 infections on Thursday morning, according to Johns Hopkins data. India, meanwhile, implemented the world’s most extensive stay-at-home order.

How much should U.S. households be willing to pay financially to reduce the risk of deaths from the new coronavirus? University of Chicago researchers Michael Greenstone and Vishan Nigam did some calculations and came up with a number: $7.9 trillion. The figure is based on a measure known as the “value of statistical life,” a calculation of how much people already pay in day-to-day life to reduce the risk of mortality in the coming year, Gwynn Guilford reports.

The novel coronavirus is creating an economic doom loop. Western retailers are suspending and canceling clothing orders, threatening millions of factory jobs in Asia just as China shows signs of recovering from the worst of the coronavirus outbreak. Among the first to be hit by the consumer shutdown in the West are suppliers to the world’s “fast-fashion” giants, like H&M. They are now pausing or canceling factory orders, boding ill for Asian manufacturers of other, slower-moving consumer goods like cosmetics, smartphones and cars, Jon Emont reports.

What is essential? In Europe, the answer can depend on where you live. Across the continent, government rulings on what are essential products and services vary widely, even over short distances. In France, baguettes are sine qua non. Across the border in Belgium “french fries” are vital, and next door in the Netherlands, coffee shops—selling legal marijuana—are a must, Valentina Pop and Nick Kostov report.

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


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Saving lives and saving the economy aren’t in conflict. “Our paramount concern at this moment should be to slow the spread of this virus and equip our health care system to effectively respond,” the Aspen Institute’s Economic Strategy Group wrote. “We will hasten the return to robust economic activity by taking steps to stem the spread of the virus and save lives.” The policy group includes four former Treasury secretaries—Timothy Geithner, Henry Paulson, Lawrence Summers and Robert Rubin—as well as former Federal Reserve chairs Ben Bernanke and Janet Yellen.


Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.

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