Tag Archives: Economy

Climate change, COVID-19 stoke wildfire’s economic risk, Fed says

(Reuters) – Wildfires threaten the economy of the western United States to a greater extent than the rest of the country, and the coronavirus pandemic and climate change will only make that worse, according to research from the San Francisco Fed on Monday.

Some 52% of economic output in Arizona, California, Idaho, Nevada, Oregon, Utah, and Washington originates in counties with elevated wildfire hazard, putting the economies of the region in jeopardy as wildfires become more frequent and more destructive, the researchers found. By 2040 that proportion will have risen to 56%, they estimate. By comparison, about 25% to 30% of the Southeast’s economy faces elevated wildfire risk.

The states together account for a bit more than one-fifth of U.S. economic output.

“The portion of real output produced in (the counties of these states) with elevated exposure increases from $2.1 trillion in 2018 to $4.0 trillion in 2040 in the baseline scenario,” the researchers wrote in the regional Fed’s latest Economic Letter. The economic output under particular wildfire threat rises to $4.4 trillion under a more severe climate change scenario, they said.

Wildfire risk is a combination of the likelihood of a big fire happening – which climate scientists have shown has been rising as the planet warms – and the economic destruction, in terms of lives and livelihoods destroyed that it could cause.

The coronavirus pandemic is increasing the latter risk because the fiscal pinch to states and local governments from the drop in sales tax and other revenue means cuts to wildfire suppression and prevention spending, the researchers said.

(Reporting by Ann Saphir; Editing by Tom Brown)

More grim job losses as U.S. hits record high on new COVID cases

By Lisa Shumaker

(Reuters) – As the number of new coronavirus cases in the United States rose to a single-day record, fresh government data on Thursday showed another 1.3 million Americans filed for jobless benefits, highlighting the pandemic’s devastating impact on the economy.

More than 60,000 new COVID-19 infections were reported on Wednesday and U.S. deaths rose by more than 900 for the second straight day, the highest since early June.

The grim numbers come on top of extraordinarily high jobless figures, although they came in lower than economists had forecast.

Initial unemployment claims hit a historic peak of nearly 6.9 million in late March. Although they have gradually fallen, claims remain roughly double their highest point during the 2007-09 Great Recession.

With coronavirus cases rising in 41 of the 50 U.S. states over the past two weeks, according to a Reuters analysis, many states have had to halt and roll back plans to reopen businesses and lift restrictions. From California to Florida, beaches and bars have been ordered to close. Restaurants in Texas have been told they can have fewer diners.

Earlier this week, President Donald Trump criticized his health agency’s recommendations for reopening schools in the fall as too expensive and impractical, insisting that all schools must open for classroom instruction. Vice President Mike Pence said on Wednesday the Centers for Disease Control and Prevention would issue a “new set of tools” next week.

Many Americans cannot return to work if schools do not open for in-person learning, as they are a major source of childcare in the country.

The CDC’s director, Robert Redfield, on Thursday defended the guidelines but gave no details on what the CDC was changing.

“It’s not a revision of the guidelines. It’s just to provide additional information to help the schools be able to use the guidance that we put forward,” he told ABC’s “Good Morning America” program. “Our guidelines are our guidelines.”

Officials in New Jersey and New York, the hardest-hit states at the outset of the U.S. outbreak, are trying to preserve the progress they made in curtailing the spread of the virus in the face of the resurgence elsewhere, especially the South and West.

New Jersey adopted a stringent coronavirus face-mask order on Wednesday, and New York City unveiled a plan to allow public school students back into classrooms for just two or three days a week.

(Reporting by Susan Heavey and Lucia Mutikani in Washington; Writing by Lisa Shumaker; Editing by Sonya Hepinstall)

COVID-19 pandemic plunges working world into crisis: ILO

GENEVA (Reuters) – Global leaders called for a comprehensive approach to counter the impact of the coronavirus pandemic, which International Labor Organization chief Guy Ryder said on Wednesday had plunged the world of work into “unprecedented crisis”.

“Let’s be clear: it’s not a choice between health or jobs and the economy. They are interlinked: we will either win on all fronts or fail on all fronts,” United Nations Secretary-General Antonio Guterres told an ILO summit that will be addressed by dozens of heads of state and government via recorded messages.

World Health Organization head Tedros Adhanom Ghebreyesus told the summit the world had a special duty to protect the millions of healthcare workers at the front line of the crisis and suffering increasing cases of infection and death.

“Together we have a duty to protect those who protect us,” he said.

The outlook for the global labor market in the second half of 2020 is “highly uncertain” and the forecast recovery will not be enough for employment to return to pre-pandemic levels this year, the ILO said last week.

The U.N. agency said the fall in global working hours was “significantly worse than previously estimated” in the first half of the year.

(Reporting by Emma Farge and Michael Shields; Editing by Andrew Heavens)

Fed’s Bostic: Business ‘getting nervous again’ as virus surges

(Reuters) – The surge in U.S. coronavirus cases has made business owners “nervous again,” Atlanta Federal Reserve Bank President Raphael Bostic said on Tuesday, and prompted him to focus on company decisions over the next three to six weeks.

“We are hearing it more and more as we get more data. People are getting nervous again. Business leaders are getting worried. Consumers are getting worried. And there is a real sense this might go on longer than we have planned for,” Bostic said in webcast remarks to the Tennessee Business Roundtable.

A Fed survey released on Tuesday morning showed Americans may be hunkering down for a longer than expected fight against the virus and the economic fallout from it.

The poll of 1,869 people took place between June 3 and June 12, as the first signs emerged of a newly growing coronavirus caseload, showed 46% of respondents now think it will take more than a year for conditions to return to normal. That is up from 35% in an April survey.

In conversations with managers in his Southern district, where several states are facing a renewed health crisis, Bostic said he is asking “what are their plans for the next three weeks, six weeks, how are they thinking about staffing decisions.”

That period could prove critical in the pace of an economic recovery Bostic suggested may plateau sooner and at a lower pace than expected.

At the end of July, some of the programs approved to support businesses and families during the pandemic will expire, most notably the $600-a-week addition to unemployment benefits.

With the caseload growing again, Bostic said it may become apparent that a longer bridge to the post-pandemic world is needed.

“It is pretty clear this is going to go on beyond the expiration of relief efforts,” Bostic said, adding that as the fact becomes clear, elected officials might “strongly consider doing more.”

(Reporting by Howard Schneider; Editing by Chizu Nomiyama and Jonathan Oatis)

U.S. tops 130,000 deaths from COVID-19 after record surge in cases

By Lisa Shumaker and Doina Chiacu

(Reuters) – The number of U.S. coronavirus deaths exceeded 130,000 on Monday, following a surge of new cases that has put President Donald Trump’s handling of the crisis under the microscope and derailed efforts to restart the economy.

The overall rate of increase in U.S. deaths has been on a downward trend despite case numbers surging to record levels in recent days, but health experts warn fatalities are a lagging indicator, showing up weeks or even months after cases rise.

Nationally, cases are approaching 3 million, the highest tally in the world and double the infections reported in the second most-affected country Brazil. Case numbers are rising in 39 U.S. states, according to a Reuters analysis.

Sixteen states have posted new record daily case counts this month. Florida confirmed a record high 11,000 in a single day, more than any European country reported in a single day at the height of the crisis there.

As health experts cautioned the public not to gather in crowds to celebrate Independence Day over the weekend, U.S. President Donald Trump asserted without providing evidence that 99% of U.S. coronavirus cases were “totally harmless.”

At least five states have already bucked the downward trend in the national death rate, a Reuters analysis showed. Arizona had 449 deaths in the last two weeks of June, up from 259 deaths in the first two weeks of the month. The state posted a 300% rise in cases over the full month, the most in the country.

Steve Adler, the Democratic mayor of Austin, Texas, on Monday criticized the Republican Trump’s comment over the weekend that the virus was mostly harmless.

“It’s incredibly disruptive and the messaging coming from the president of the United States is dangerous,” Adler told CNN. “One of the biggest challenges we have is the messaging coming out of Washington that would suggest that masks don’t work or it’s not necessary, or that the virus is going away on its own.”

Soaring case numbers and packed hospitals in Texas have prompted some mayors and other local leaders to consider launching a new round of stay-at-home orders. Cities are getting together and lobbying the state’s governor to restore the authority to impose local anti-coronavirus measures, Adler said.

White House Chief of Staff Mark Meadows on Monday defended Trump’s comment over the weekend, saying the president was not trying to play down the deaths.

“But it’s really to look statistically to know that whatever risks that you may have or I may have, or my children or my grandchildren may have, let’s look at that appropriately and I think that’s what he’s trying to do,” he told reporters outside the White House.

The U.S. Centers for Disease Control and Prevention has forecast between 140,000 to 160,000 coronavirus deaths by July 25 in projections that are based on 24 independent forecasts.

(Reporting by Lisa Shumaker, Doina Chiacu and Gabriella Borter; Editing by Howard Goller)

Microsoft to close physical stores, take $450 million hit

(Reuters) – Microsoft Corp said on Friday it would close its retail stores and take a related pretax asset impairment charge of $450 million in the current quarter.

The Redmond, Washington-based software giant said it would continue to serve customers online, with team members working remotely from corporate facilities.

A Microsoft spokeswoman told Reuters all current retail employees would be given an opportunity to remain with the company in different roles.

“Speaking over 120 languages, their diversity reflects the many communities we serve,” Microsoft Corporate Vice President David Porter said of the company’s retail employees in a statement. “Our commitment to growing and developing careers from this talent pool is stronger than ever.”The company also said it will rethink other spaces that serve all customers, including operating Microsoft Experience Centers in London, New York, Sydney, and Redmond campus locations.

“This is a tough but smart strategic decision for (CEO) Nadella & Co. to make at this point. The physical stores generated negligible retail revenue for Microsoft and ultimately everything was moving more and more towards the digital channels over the last few years,” Wedbush analyst Dan Ives said in a note. Retailers, whose stores shuttered in mid-March due to coronavirus-prompted lockdowns, have seen a huge surge in online demand amid stay-at-home orders.

(Reporting by Akanksha Rana in Bengaluru and Stephen Nellis in San Francisco)

Take Five: World stocks’ 2020 rollercoaster ride rumbles on

HALF TIME

World stocks have been on a roller-coaster ride in the first half of 2020. Having slumped 35% from Feb. 20 to March 23, they are now within 10% of February’s record highs thanks to lashings of fiscal stimulus, interest rates slashed to 0% or below in most major economies, and massive amounts of QE. Borrowing costs for high-grade U.S. companies have in fact fallen below January levels.

So what happens over the rest of the year? Much depends on whether another coronavirus wave comes crashing down, further testing policymakers. And if an effective treatment or a vaccine is found, the severest global recession in living memory could also turn out to be the shortest.

Nevertheless, the crisis has exposed weaknesses such as companies’ high debt levels and their over-reliance on share buybacks.

LINES OF CONTROL

Asian market anxiety levels look set to rise another notch in coming days due to geopolitical tensions.

Hong Kong will be in the Chinese parliament’s sights when it meets on June 28-30 to finalize a security law aimed at tackling separatism, subversion, terrorism and collusion with foreign forces.

After a year of sometimes violent anti-government and anti-Beijing protests, the focus is on how far-reaching the law is, what activities constitute such crimes and what the punishment would be. Investors also want to know whether the laws will be retroactive or create new avenues for asset seizures.

China and much of Asia will also publish manufacturing surveys. But as North Korea’s military threats ebb and flow and troops amass on both sides of a disputed part of the Indo-Chinese border, geopolitics will likely trump other factors.

PLEASANT SURPRISE

After the dire numbers of April and May, recent U.S. economic data flow has delivered good news for the most part, helping keep stock markets within 10% of their pre-coronavirus levels.

On the heels of comebacks in employment and retail sales, Citi’s U.S. Economic Surprise Index, which tracks economic data relative to economists’ expectations, is at a record high.

Now the focus is on whether the rebound remains in force. Consumer confidence on Tuesday, manufacturing data on Wednesday and U.S. employment figures on Thursday – both weekly and monthly – are among reports due.

Non-farm jobs actually rose 2.5 million in May, versus April’s record 20 million-plus plunge. Another improvement could allow markets to push higher – bar further coronavirus-linked lock downs.

INFLATION WATCH

Economies are bouncing back from the COVID-19 shock, so will inflation follow? Preliminary June euro area data may offer clues.

Already, inflation expectations are reacting to data showing the worst of the economic gloom has lifted; a long-term gauge of where markets see euro zone inflation headed is just above 1% — near its highest since early-March and almost 40 bps above record lows hit that month.

Some investors are already buying gold and other inflation hedging assets. But others say that if you dig deeper into activity indicators, they suggest little evidence of inflationary pressures picking up. And until that happens, expect the ECB to keep its foot on the stimulus pedal.

EUROPE’S TURNING TIDE

Is the U.S. share juggernaut slowing? Seems like it. In the past month, U.S. equities have under-performed world stocks by 2.5%; Europe outperformed by a similar margin. European stocks enjoyed investment inflows in three of the past four weeks, BofA says.

Behind the shift perhaps are the growing odds of a presidential election victory for Democrat Joe Biden, worsening U.S./China ties and the continued rise in U.S. coronavirus infections that prevent economic activity from fully resuming.

Europe, meanwhile, has largely controlled the virus spread, economies are turning the corner quicker than expected and a proposed EU recovery fund is speeding up euro zone integration.

BlackRock and Goldman Sachs are among those recommending clients shift focus towards European stocks, which lagged U.S. peers throughout the previous economic cycle due to a paucity of “growth” stocks.

European out-performance looks likely until at least November’s U.S. election. Longer-term though, U.S. firms, such as tech names, may face headwinds from higher taxes especially from a Democrat administration. And in a world where investors attach increasing importance to environmental, social and governance (ESG) credentials, Europe’s higher ESG scores will be a plus.

 

(Reporting by Marc Jones, Dhara Ranasinghe and Thyagaraju Adinarayan in London; Vidya Ranganathan in Singapore and Saqib Iqbal Ahmed in New York; compiled by Sujata Rao; Editing by Hugh Lawson)

IMF’s Georgieva says virus crisis could ultimately test $1 trillion war chest

By David Lawder

WASHINGTON (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva said on Friday that the global economic crisis spurred by the coronavirus could ultimately test the Fund’s $1 trillion in total resources, “but we’re not there yet.”

Georgieva told a Reuters Newsmaker webcast event that it was now clear that an economic recovery would have to get underway without a medical breakthrough and the virus’ presence still widespread throughout the world. IMF member countries were standing by to provide more support to the Fund if necessary, she said.

The IMF on Tuesday forecast a deeper global recession than initially anticipated, as business closures, travel restrictions and social distancing measures persist in most countries. It now anticipates a global GDP contraction of 4.9% this year and a total output loss of $12 trillion through the end of 2021.

“We still have about three quarters of our lending capacity available,” Georgieva said. “I wouldn’t put it beyond us that we might be in a place where the IMF resources are being tested, but we’re not there yet.”

Regarding the possibility of additional resources, she said: “Our members are telling us, ‘Everything is on the table. You come to us if you need to do more of something, we are there for you.'”

The IMF has been rapidly deploying some $100 billion in emergency financing and has now provided loans and grants to 72 countries in just over seven weeks, Georgieva said.

(Reporting by David Lawder; Editing by Chizu Nomiyama and Jonathan Oatis)

Texas governor orders bars closed due to coronavirus

(Reuters) – Texas Governor Greg Abbott on Friday ordered the closure of all bars that get 51 percent of their gross receipts from alcohol, except for take-out, and the curbing of other business activity due to surging cases of the novel coronavirus in the state.

“As I said from the start, if the positivity rate rose above 10%, the State of Texas would take further action to mitigate the spread of COVID-19,” Abbott said in a press release, explaining an executive order. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars.”

(reporting by Jonathan Allen in New York and Nathan Layne in Wilton, Connecticut; Editing by Chizu Nomiyama)

Acting DHS head says U.S. doing ‘great job’ getting economy back up

WASHINGTON (Reuters) – The Trump administration is doing “a great job” reopening the country after lockdowns to contain the novel coronavirus outbreak, Acting Homeland Security Secretary Chad Wolf said on Sunday, as infections continued to spike in some key states.

Wolf told NBC’s “Meet the Press” program that the White House coronavirus task force was continuing to meet daily and the Centers for Disease Control had issued guidance to states on how to flatten the curve, including use of face masks.

“We’re seeing a number of states throughout the country in different phases, from phase one to phase three, trying to get this economy, trying to get the country back up and running. And we’re doing a great job at that,” Wolf told NBC.

In a separate interview with CBS’s “Face the Nation,” Wolf said the White House task force was “on top of all of these outbreaks within state by state, county by county, whether it’s Arizona, Texas, Florida, a number of these states that are having hotspots.”

He said the Trump administration was surging medical equipment and staff, as well as individuals from the Department of Homeland Security, into areas that were seeing an uptick in infections, to better understand the causes of those outbreaks and support the state-led reopening efforts.

The United States has reported 2.26 million cases of COVID-19, the disease caused by the new coronavirus, which comprises nearly 26% of the global total of 8.81 million cases, according to a Reuters tally. Over 119,600 deaths have been reported in the United States.

He defended President Donald Trump’s decision to hold an indoor campaign rally in Oklahoma, where infections have also been rising but many attendees did not wear face masks.

“The president’s rally is a state in a phase three reopening, and so activities like this are allowed,” Wolf said in the NBC interview, adding, “It’s also a personal choice that people are making on the face coverings.”

(Reporting by Andrea Shalal and Doina Chiacu; Editing by Nick Zieminski)