Great Depression-sized slowdown seen, but some light appears

Friday, April 10, 2020, Vol. 44, No. 15
The Associated Press

The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Tuesday related to the global economy, the work place and the spread of the virus.


GLOBAL MALAISE: Economists are trying to put into context the shock that the world must absorb. On Tuesday, the International Monetary Fund put the damage  at Great Depression levels.

— France is forecasting an 8% drop in growth this year and is staring down its worst recession since World War II. And that 8% drop may be optimistic, Finance Minister Bruno Le Maire said Tuesday.

Unemployment benefits and aid for struggling businesses coupled with plunging growth could push France's deficit up 9% in 2020.

AS YOU WERE: North America is in lockdown but regions struck early by the coronavirus are moving toward the post-pandemic normal. Those attempts  could provide a road map.

— Italian book, stationary and children's stores were allowed to open nationwide Tuesday, provided they could maintain the same social-distancing and safety measures required of supermarkets.

— Poland will gradually lift restrictions Sunday on businesses and individuals. The number of people allowed into shops will be increased and some restrictions on pubic movement will be lifted.

— Audi restarted operations at its Hungarian plant, though at a very limited scale. A single shift of about 100 employees began assembling V6 engines Tuesday, with another V6 engine assembly line expected to restart by the end of the week.

— Austria is allowing small retailers, DIY businesses and gardening supply stores to reopen Tuesday. Customers will be required to wear masks and maintain social distancing.

BREATH OF FRESH AIR: There is a dire need for medical devices due to the severity of the outbreak.

— Hamilton Medical will open its first U.S. factory to make ventilators. The Swiss company is hiring several hundred people to staff the Reno, Nevada, plant, with help from General Motors. Production begins this month. The U.S. awarded Hamilton a $552 million contract to build 14,115 ventilators by July 3.

— General Motors says it has started producing breathing machines at a repurposed electronics plant in Kokomo, Indiana. The company plans to ship more than 600 of the critical care ventilators by the end of April under a contract with the U.S. Department of Health and Human Services.

The $489.4 million contract calls for GM to deliver 30,000 by the end of August. GM said it is producing the ventilators at cost. The machines will go into the Strategic National Stockpile for distribution, HHS said.

COST IN JOBS: The wave of layoffs and furloughs have been massive  and companies continue to shed jobs.

— Groupon will release or furlough about 2,800 workers, more than 40% of its workforce. The company said in a regulatory filing that the majority will take place this quarter.

RETAIL THERAPY: Retailers and malls have been hard hit by the shutdown, but some are pivoting.

— American Dream, a huge New Jersey entertainment complex, is partnering with health care companies to open a drive-thru testing site for the COVID-19 virus at its massive parking lot. The complex, the second largest mall behind Mall of America, opened in November after 12 years of development. It was supposed to unveil a waterpark and hundreds of stores last month but it ended up closing the entire mall to curb the spread of the coronavirus.

THIN AIR: It's a mixed day for airlines. From an operations standpoint, the situation continues to deteriorate. But an agreement on a rescue package appears to be nearing.

— The International Air Transport Association estimated Tuesday that passenger revenue this year will tumble $314 billion, a 55% plunge, from 2019. Two weeks ago, the IATA forecast a $252 billion drop.

— The pandemic has compounded problems at Boeing, which is struggling to contain a crisis related to malfunctioning of its marquee aircraft, the 737 Max. Boeing dropped more than 300 planes from its order book in March. The company said Tuesday it delivered 20 commercial jets last month, less than half the 54 delivered in March 2019.

— Airline stocks rose sharply on expectations that the airlines will tap $25 billion in grants and loans to cover their payrolls. The nation's leading airlines could begin agreeing to Treasury's terms as early as Tuesday, according to officials briefed on the matter.

EARNINGS SEASON!: Twenty-three S&P 500 constituents are scheduled to report quarterly earnings this week. Of the 11 S&P sectors, only three are expected to report per-share profit gains compared with last year, according to S&P Global Market Intelligence. Everyone will be looking closely at companies with operations in China to see how those operations emerged from the outbreak.

— JPMorgan Chase, Wells Fargo and Johnson & Johnson posted earnings Tuesday.

MARKETS: Volatility in markets continues. Markets have tumbled sharply since the beginning of the pandemic, but they're up this week.

— Stocks moved higher  as the White House and a number of state governors weighed how to reopen the economy.

ISLANDS IN THE STREAM: Global activity has screeched to a halt, but there are aspects that are humming, and that includes streamed  entertainment.

— Roku expects first-quarter steaming hours will spike 49% compared with last year, about 13.2 billion hours. It anticipates an increase of 3 million active users, close to 40 million.

The newly launched Disney streaming service now has 50 million new subscribers.