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Effects of the pandemic on U.S. and global business, the U.S. and global economy from the WSJ.

Imagine 700 of 763 aircraft, most of Lufthansa's planes parked. Lufthansa is in pause mode, having reduced its capacity by 94%. Most passenger airlines have become cargo airlines.

New car registrations in France have fallen 72%. Nissan Renault is not selling anything, and there are no revenues say company representatives.

100,000 sailors on cargo ships are at sea with no hope for landing as shipping comes to a standstill.

Workers on New York's power grid spend the night on trailers in parking lots and in confined spaces with no more than 6 persons on a team. If one got sick he could infect others, and cause a personnel shortage.

 

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In a piece of good news in the reopening U.S. job losses declined in May sharply to match levels seen before the coronavirus. In May 1.8 million workers were laid off from jobs, according to the Labor Department. This is down significantly from 7.7 million in April and 11.5 million in March. May job losses were in line with January and February job losses before the pandemic.

There were 5.4 million job openings in May also a good recovery sign. There are still 21 million Americans shown as unemployed in May. Overall U.S. job gains were 7.5 million jobs added in May and June, after 22.2 million jobs lost in March and April.

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With 22 million people in the U.S. on unemployment benefits and the economy severely affected by coronavirus, president Trump suspended all immigration to the U.S. This will protect American jobs during the recovery.

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China is gradually getting back to normal. With few new infections from coronavirus, factories are starting production again, and stores are reopening, people gradually coming outdoors.

For factories there is one problem- as Europe and the U.S. battle the coronavirus and impose their own lockdowns demand has evaporated. Factories are seeing canceled orders and having to operate with smaller number of workers.

All the graphs shown in this report for Beijing traffic congestion, Guangzhou subway rides and property transactions show the curves for 2020 way, way below the curves for 2019.

This also gives some idea of what the road ahead will look like in the U.S. and Europe. That the recovery will take time and patience after a difficult period ahead tackling the coronavirus state by state. Lost jobs, diminished confidence and fallen income will take time to recover.

 

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The US state of Nebraska has 69,000 job openings and only a third of that in persons looking for work. After Nebraska at 1.3%, the unemployment rate is lowest in Utah at 2.2%, and in Idaho, South Dakota, Oklahoma, all with unemployment rates of below 3%. The US unemployment rate is 4.6% in October 2021.

Factors deterring people from looking for work in the US are fear of coronavirus, child care responsibilities especially for mothers, a desire for work-life balance, desire for stable employment with decent incomes, retiring early, and people moving away from restaurant, hotel, travel and entertainment industries that are hard hit during this pandemic. A sign of how this mismatch between demand for workers and the supply is happening is the national "quits rate,"  a measure of workers leaving jobs as a share of total employment, which is at a record rate of 3%. 

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The best US cities for jobs is changing rapidly in 2021 after the spread of coronavirus. Los Angeles, San Francisco, Chicago, Boston lost jobs. Jobs shifted to hubs in the interior of the country as remote work changed the workplace. Salt Lake City in Utah, Austin in Texas, and Denver became new hubs with environments that included mountains, healthier living, quieter lifestyle, lower costs and efforts to attract employers. Tourist spots suffered with Orlando in Florida moving to 47th place in terms of jobs. The US lost 9 million jobs in 2020 changing how the jobs market in cities looks. The WSJ looks at the changes in this report. Tech hubs such as Raleigh in North Carolina, and San Francisco suffered decline as remote work created new opportunities for cities in the interior of the country. By contrast Salt Lake City was growing twice as fast from 2000 to 2017, and has increased in popularity with surrounding areas of Provo and Ogden in Utah. It is now known as Silicon Slopes as it becomes a new tech hub city. The WSJ looks at Salt Lake City in some detail.  ...

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California's economy is going through tough times during the coronavirus. Unemployment is up to over 20% which compares to 14.7% for the U.S., closer to that of New York. The state depends on the tourism industry, agriculture in the San Joaquin Valley, and entertainment industry around Los Angeles for jobs. Tech in the San Jose area does not account for as many jobs. The state also has a public university system and foreign students mostly from China bringing in $7 billion.   Its port system around Long Beach and Los Angeles connects with the Asian economies and China, for goods mainly transported to the rest of the U.S.  All these sectors are the ones most badly hit during the coronavirus.  California now has a deficit of $54 billion and was the first state to borrow from the federal government to pay $13 billion in unemployment claims. Undocumented Californians are not able to collect unemployment because of their immigration status, creating an American version of the informal economy that is found in India and Italy or Spain. California has 83 million people taking plane trips to the state for a tourism industry that normally brings in $145 billion. 600,000 travel industry jobs were lost in the state. Taxes related to travel are a significant source of revenue for cities in California bringing in $12 billion. The only sector that is less affected is the tech industry, yet this makes up only about 10% of the jobs or 1.7 million higher paid but fewer jobs. This tech sector at about just 15% of the California economy GDP, is of a precarious nature with a boom bust pattern, the last boom one that happened since the 2009 financial crisis. It in no way forms a significant support for employment or income for people in California or the U.S., and may even be responsible for distortions in the allocation of capital away from infrastructure and public services, through its disproportionate influence on how the nation's capital is allocated. The broader changes underway during coronavirus are likely to affect the state over many years, as supply chains shift away from China, and as infrastructure and public services investment assume their rightful role again in the nation rebuilding effort, agriculture and rural America become a part of the American renewal story.   ...

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The unemployment rate of 5.9% in the US in June 2021 is still higher than the pre-pandemic rate of 3.5%. It is also different in other ways that are not so apparent. There are 9 million Americans looking for jobs. They are also looking for jobs outside industries that were hit hard during the pandemic, or pursuing better jobs with less commute and more remote work, and jobs outside of warehousing which requires less of the skills and training they have or in remote locations far from where they live. Economists like to use terms such as "mismatch" to describe this as in this report in WSJ. This does not bring home to us the enormous human toll of the pandemic. A recent survey of US workers for April by the Federal Reserve Bank of Dallas found that 31% of people do not want to return to their old jobs up from 20% in July 2020. One in three from one in five last year are looking for something different than the the jobs that were hit hard in each successive wave of the coronavirus pandemic. Other surveys have found that 70% of workers who last worked for the leisure and hospitality industries are looking for something in a different industry. Leisure and hospitality that includes restaurants and hotels, airports, were hammered in this pandemic. And 55% of job applicants in one survey were found to be looking for remote work. Economists also see the macroeconomy in terms of supply and demand for labor, in terms of interest rates with low interest rates as a way to tackle unemployment, yet this has limited value in real life situations in the economy when it is affected by a number of factors, including some unusual factors such as the pandemic and man made events such as the global financial crisis of 2009 from banking missteps. The federal government has to take steps of its own to support Americans as these changes take place in the economic situation and Americans are in need of help with adjustments. ...

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The coronavirus pandemic has a significant negative impact on women as they face job, child care and home responsibilities. One report by the Federal Reserve Bank of Minneapolis says that without a comprehensive system of support "women will forever be vulnerable to career scarring during any major crisis like this pandemic." This is true not just for the U.S., it is also true for women in countries in Europe, in Asia and other countries.

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In a massive intervention last week and again this week the Bank of England cut interest rates from 0.25% to 0.1% and launched a 200 billion pound program to buy UK government bonds and corporate bonds to support the economy and business. Investors sold UK government debt for short term cash holdings and invested in U.S. currency holdings as the safest asset they could find, as the economic effects of the coronavirus epidemic hit capital markets. Andrew Bailey, the Governor of the Bank of England stated that it was the government's job of preventing temporary "dislocation" becoming permanent economic "destruction." Business failures are expected as a result of the coronavirus impact and also layoffs resulting in a temporary jump in unemployment. The government needs to take steps to mitigate these effects in the UK as is being done in the U.S. by the Trump administration with $1 trillion in direct assistance to business and people affected by the crisis. ...

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 State tax shortfalls in the US were expected as consumer purchases dropped sharply in 2020 from the impact of coronavirus lockdowns. Yet this has not happened as total taxes for all states have remained essentially flat, only down less than 1% in 2020 over 2019. Widespread intervention by the US government helped households, businesses and financial markets, helping avoid the pessimistic projections. Stable employment for the more affluent households with steady jobs working from home brought in stronger tax revenues. The situation improved for most states in the second half of 2020, with roughly half the states taking in more revenue in 2020 than in 2019.  Idaho and Utah which attracted workers from the West Coast, had some of the highest tax revenue increases. The pandemic spared the high income jobs which generate most of the revenue helping to create surpluses in Colorado, Vermont, Georgia, Maine, California, Maryland and Virginia. In California a surge in initial public offerings in 2020 helped total tax revenue increase by 2.5%. Even a state like Illinois had personal tax collections higher in 2020 than 2019. This sets aside some of the fears that the pandemic caused about loss of jobs in state and local governments. With assistance from the Biden administration to state and local governments in the  $1.9 trillion aid package for 2021 this job loss could be restored to aid economic recovery. ...

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The U.S. orders the closure of the Chinese consulate in Houston, Texas. The State Department in a statement said China was conducting "massive illegal spying and influence operations throughout the U.S. against U.S. government officials and American citizens," saying such activities have increased. Footage on local television stations purportedly showed people burning documents on consulate premises, and firefighters were called, says this report in the WSJ. In Copenhagen, Secretary of State Pompeo citing two hacking indictments and U.S. jobs stolen by China's policies, said  "President Trump has said, 'Enough, we're not going to allow this to continue to happen." The two hacking indictments relate to two hackers in China working for China's civilian intelligence agency, targeting American firms involved in coronavirus research and stealing hundreds of millions of dollars of sensitive information from companies around the world, says this report in the WSJ. ...

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There is a major shift in world opinion among major countries in Asia and Europe and North America moving negative by double digits in Pew research surveys. The shift is gradual and negative in Germany, France, Spain and Italy, and steeply negative in Sweden, Denmark, Britain and the U.S., Japan and South Korea. The people with negative views of China in world affairs are also the people who believe China did a bad job in handling the coronavirus.  In Australia in one year alone there is a 24% increase to 81% of people who see China unfavorably, in Britain this is a 19% increase in one year to 74%. In the U.S. the shift is over 4 years by 20% to negative views for 73% viewing China unfavorably or negatively. The shift in Canada is similar to the U.S. The biggest shift is in Japan where 86% view China unfavorably and Sweden where this is 85% after China handled Swedish relations poorly. See the color graphs in the original article in DW.com by clicking on original article here in Lyrarc.com. It is rare to see the such a dramatic shift in public perception of one country. The handling of the coronavirus by China in a way that hurt all countries with lack of transparency and total cooperation normally seen in pandemics and the cost in poverty and job losses, economic losses has resulted in a massive loss of confidence in China, and in the leadership of Xi Jinping. Most public opinion in these countries now believes that Jinping cannot be trusted to do the right thing in world affairs. ...

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Countries dependent on remittances of workers overseas are hit hard by the coronavirus. This WSJ report shows the situation in Central America which gets $24 billion in remittances form its workers in the U.S. E Salvador gets $5.6 billion in remittances. This is down by 40% in April central bank numbers show, because of jobs lost in the U.S. by workers from El Salvador who migrated to the U.S.  Unemployment rate for Hispanics in April was 20%. El Salvador depends on remittances more than any other Latin American country as remittances are higher than exports. In some rural areas this means older residents have no money to buy food and depend on charities for food supplies.

Today the situation in India, Pakistan and Bangladesh, and other countries in Asia which depend on remittances of overseas workers is also leading to a difficult time for families dependent for such support.

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This WSJ report on critical analysis of coronavirus data has a very useful chart of Estimated Range of Symptomatic Cases Reported by Country. Complete coronavirus data for all symptomatic persons who have the coronavirus infection is lacking in most countries. Many people in large populations have symptoms and are positive but are not reflected in the official data collection. This is a big problem as the total number of cases are understated by a magnitude of twice to five times the numbers reported in official tally.   South Korea has done a good job of getting more of the symptomatic people with the infection in its data, as about 53% to 90% of such persons are reflected in official data. Next comes Germany at a range of 38% to 55%.  China comes third and has about 28% to about 38% of such persons reflected in its data, the U.S. currently on April 4 at about 14% to 19%, according to this chart in the WSJ. The source for this is Mathematical Modeling Center at the London School of Hygiene and Tropical Medicine. What this means is that the US. number of cases at 278,000  reported infected people with symptoms (April 4) is only 14% to 19% of the true number. Another way to say this is that the actual infected persons with symptoms is about 5 times what is reported, or over 1 million not the 278,000 reported.  As happens for China data collection agencies may never get the true number. To be comparable to the Chinese numbers, as the U.S. is a large country, the figure closer to the true numbers would be twice the 278,000 reported or over half a million symptomatic infections of coronavirus in the U.S. Why is this data important. With widespread testing as in South Korea one gets data that tells one how many people are infected (the size of the problem) and therefore the resources needed and the point of greatest impact. Also it tells one the typical transmission rate per person, and it helps hospitals in each area know what to expect and what resources are needed to prepare- not find people suddenly turn up in the E.R. in unpredictable numbers. The lack of widespread testing and better reporting in the data to get a grip on the pandemic is shown in this chart for countries hardest hit, less than 5-6% for Italy and Spain. The UK and France at 5-8%.   ...

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About half of people in Britain in a recent poll taken during the second wave of coronavirus say they see a negative impact on mental health. Depression is affecting a fifth of the population in Britain. It has never been more important to be kind to each other and ourselves as the second wave hits a weary and fatigue stricken society.  People found many activities and hobbies to do during the 6 week lockdown period and there was an expectation that spring would bring better conditions. During the second wave of coronavirus there is a sense of a dreary period that goes on through Christmas. The uncertainty from the U.S. elections, Brexit in Britain, the reopening in countries such as India, the loss of jobs and income in countries that range from severe in Brazil, Mexico and Argentina to moderate in China, adds to the anxiety of daily life with surging cases. Creating what amounts to a low grade depressive effect during the second wave that needs to be addressed by the authorites, by health agencies, and in other ways, says this report in The Times. ...

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Very low interest rates are enabling buyers in the U.S. to renew buying cars and homes. Higher income workers were hit less then the hardest hit low wage service sector workers in industries such as travel, restaurants. The better economy now depends on the surge in coronavirus and expansion of unemployment benefits that expire in July. Retail sales of new autos were just below pre-virus forecasts in week ending July 5, says J.D. Power. Interest rates are as low as 0.9%. New home sales including higher end buyer homes are doing well as many workers with higher incomes are able to work remotely from home providing more job security and confidence in buying.

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For the regions hardest hit by the coronavirus and its variants- the US, Brazil, India, Europe, Russia, China and Africa, the researchers and the frontline workers in South Africa are doing an incredible job. This report by Stephanie Nolan in the NYT shows the work of researchers at KRISPS advanced medical research center and the frontline workers in South Africa, who are making a difference. Shown are researchers and scientists at KwaZulu Natal Research Innovation and Sequencing Platform in Durban, South Africa on whom the world depends for stepping up the fight against the coronavirus- Dr Tulio de Oliveira, principal investigator of the national genetic monitoring network, and Saleem Abdul Karim, epidemiologist. On the frontline workers who visit patients homes to make sure immune compromised patients have access to their medications is Sizakele Mathe, community health worker. Stephanie Nolan has provided a much needed account of what work is being done on the frontlines to keep us all safe. ...

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The coronavirus variant surge has led to burnout for frontline medical workers in the US. It has been calamitous for the mental health of public health workers in the US. These are the data analysts, policy advisors and other workers in public health departments. Many have quit their job as reported here in The Guardian. A CDC survey of 26,000 public health workers in the US shows about half have problems of mental health. Public health workers have to face problems with elected officials as well as public resentment on issues such as vaccination.

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This report in WSJ shows how European countries are maintaining salaries of employees who would otherwise be laid off. Governments have setup programs in France, Britain, Germany and other countries to provide employers with the money for 80-84% of salaries up to 2500 pounds ($3165) in Britain and 5330 euros a month in France. As a result 1 worker out of three in the private sector in France for subsidy applications for 6.9 million workers are already received. For the German program 2.4 million workers will get this benefit. About 1 million companies in Europe retain employees with this program of governments simply sending out the salaries with funds directly to households. This helps to keep out the stress for families, particularly families with children. It is as if the employees are not really laid off but asked to stay at home for manufacturing facilities and work from home in shorter hours where work can be done remotely.  Money is quickly deposited into the bank account of employees in these countries, though it is slower in Italy and Spain. It is as if the European approach is put the whole economy on pause for 2 months and restart it almost like before with only a small dent in employment once the coronavirus is pushed out with lockdowns and strict control actions. This will cap German unemployment at 5.9% compared with 5% last year, only a modest increase. The cost is not that much considering what it accomplishes. 10 billion euros is the cost in Germany where the state fund for this has 26 billion euros. 10 billion pounds in Britain. And 20 billion euros in France.  The U.S. adopts a similar approach also through its $349 billion program which provides loans to companies with less than 500 employees to meet payroll for 8 weeks and pay some overhead. Loans are forgiven based on job retention and employees on the payroll and only if the employees are retained. Another program is for companies larger than this. And a third program targets entire industries such as airlines, aerospace, and companies in other industries so that they do not have to layoff employees. U.S. unemployment insurance is modified to work along similar lines maintaining incomes of employees laid off because of the pandemic. Another program sends checks directly of $1200 to households with lower incomes to help them and to help people at poverty level or without jobs. The thrust of both the European and American efforts is the same, lose as few jobs as possible, keep people's incomes steady, and do this in a way that the economy can pick up quickly to the former level in as short a time as possible. Compared to Europe U.S. unemployment will be higher predicted at 9.8% with the expected rebound lowering the unemployment in 2021. ...

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Viewing people as "pass throughs for units of fiscal stimulus" that is no longer an option, no longer wise, no longer possible. Brian Deese, US president Biden's economic adviser, uses this sentence as he describes the approach of president Biden in putting together a $2 trillion plan to invest in infrastructure and in the people of America. He compares 2009 to 2021 and talks about the differences then and now after the pandemic. The coronavirus pandemic exposed all the weak spots in the American fabric and society and in the way national life was organized. Today the pain is felt in socio economic groups throughout the country.    US president Biden wants to make a decisive impact with large investments in infrastructure, education, health and jobs. In American manufacturing competitiveness and in America's technological advancement. The investments made in 2009 were in simple recovery mode, this time the investments are intended to bring America back to its position in the world after 1945, the hope and the optimism for a better future. ...

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Mr. Trump says he will wear a mask on a visit to soldiers at Army's Walter Reed Hospital. Trump says its "a very appropriate thing. I have no problem with a mask." As cases hit 3 million in the U.S., close to 1 million in India and Russia, Mr. Trump joins the movement for masks worldwide. Early on Mr. Trump  took up the issue of transmission from Wuhan by banning flights from China, failed to get WHO and China to respond quickly to the pandemic requests from U.S. by providing information and allowing a team to visit Wuhan quickly in January. A stumbling block appeared within the health ministry in the U.S. with poor leadership which Trump had to overcome by relying on Vice President Pence to lead the stop coronavirus team at the White House.   Trump's reopening decision came under criticism and he says he had to balance the damage to jobs and economic well being that also affected health. Some of the states and young people responded in ways that led to public gatherings that have led to surges in the south and the western states such as Calfornia. The WSJ reported that in Los Angeles County on June 20 half a million people went to bars after they reopened, showing that culturally even counties in states like California lacked what is accepted good sense. For instance Tokyo bars were paid by the Japanese government not to reopen, according to one report. By wearing a mask Trump is simply acknowledging facts about transmission - a German study shows 40% reduction in cases with face coverings. ...

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The pandemic and ensuing lockdowns, unemployment in the US separated workers from their jobs just long enough to give them a chance to rethink how bad their jobs, incomes, and working conditions were before 2020, says this expert in the NYT. The aid to unemployed workers through long term unemployment benefits, moratorium of rent payments, direct money to households, gave workers enough financial room to make the choice not to go back to poor paying jobs with huge contact risks from coronavirus in the restaurant, fast food franchise, travel and entertainment industries, related industries.  With the Biden administration investing in child care, maternity leave, care for elderly leave, new opportunities for relocating and looking for work were opening for women, and for men who had stuck to old jobs and put up with lousy conditions because of a lack of alternatives. Biden administration's Families and Workers Plans, the effects of the pandemic, helped to shape a new culture of what was possible for workers- a sense that dignity in the workplace was part of culture in America. Restored by FDR/Truman and now again by Biden after two tech booms in the 1920's and the 1990's. A similar situation of a change in culture respecting the dignity of workers and of work is taking place in European Union as stated by SPD leader Olaf Scholz in his election campaign in Germany. Scholz is now incoming Chancellor replacing Merkel. European Union countries have better laws and rules in place for worker retention, and also better worker protections so that the great resignation that happened in America took place in a milder version. ...

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This report in The Guardian says what India urgently needs is for the US to lift export restrictions on supplies for India's vaccine factories, and tools such as genome sequencing to identify and control emerging variants of the coronavirus.

The report also points out that of the 1 billion vaccine jabs about half are in the US and Europe and the low income countries have only a tiny fraction of vaccinations. India which sent 64 million vaccine doses to countries including Brazil and Morocco, Bangladesh, in 3 months prior is reported to have sent only 1.2 million doses this month.

The crisis in India also shows the need says The Guardian for an international approach to the crisis no a country by country approach. It says the Bush plan for Aids and the the 2014 plan for Ebola in West Africa are models of an international approach that is needed now.