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 paycheck to paycheck.
Following are developments Wednesday affecting various levels of the economy, businesses and workers:
MARKETS ROIL: U.S. stocks tumbled again Wednesday as part of another worldwide sell-off, and wiped out the big gains and optimism that Washington had sparked the prior day with promises for massive aid for the economy. Markets have been incredibly volatile for weeks as Wall Street and the White House acknowledge that recession is almost inevitable. Daily U.S. market swings over the past decade have averaged just 0.4%. In March, swings of 4.9% in either directions have become the norm. This week, the Dow plunged 13%, rose 5% the next day, and are down 7% Wednesday.
The CBOE Volatility Index,Wall Street’s fear gauge, appears to have broken from its tether.
Benchmark U.S. oil plunged close to $22 per barrel for the first time since 2002. European stock indexes lost more than 4% following broad losses in Asia.
The S&P 500, which dictates how 401(k) accounts perform much more than the Dow, is down nearly 30% from its record set last month.
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 coordinated policy response” could help mitigate such losses through worker protections, fiscal stimulus, and support for jobs and wages.
To that end: 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.
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) is being spent. The money is about three percent of Canada’s gross domestic product.
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 cell phone 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 in 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 the fall-off in 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 Wedesday next week due to component shortages and the major disruptions that have occurred in the supplier and logistics chain. Staff directly affected by the planned production shutdown by the truck and bus builder are located in Sweden, the Netherlands and France. Scania’s industrial operations in Latin America, which account for about one-fifth of the company’s production volume, will still continue as planned.
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.
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 canceled, 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.
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Follow AP coverage of the virus outbreak at https://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak
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The Associated Press receives support for health and science coverage from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.