Newsletter: Deep Freeze

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

The number of Americans seeking unemployment benefits likely continued to climb into record territory. We’ll get the latest numbers this morning. First, Jeff Sparshott here with the latest developments across the economy.

Closed for Business

Large swathes of the U.S. economy froze in March as the coronavirus pandemic closed malls, restaurants and factories. Americans cut retail spending by a record amount and the country’s industrial output plunged at the steepest rate in more than 70 years, Harriet Torry and Sarah Nassauer report.

Retail sales, a measure of purchases at stores, gasoline stations, restaurants, bars and online, posted the biggest month-over-month decline since records began in 1992. Americans stockpiled food but cut back on clothing, autos and restaurants.

Industrial production—a measure of factory, utility and mining output—posted its biggest monthly drop since 1946. Manufacturing, the biggest component of industrial production, also saw its biggest decline since post-World War II demobilization.

Heard on the Street’s Justin Lahart writes that April will be even worse. That puts the economy in a very deep hole—a hole it won’t begin to dig out of until social-distancing measures are relaxed and Americans are comfortable doing all the things they did before the pandemic hit the U.S.


U.S. jobless claims are expected to remain elevated at 5 million for the week ended April 11. Nearly 17 million workers applied for jobless aid in the three weeks ended April 4. If the latest forecasts are correct, the level will shoot past 20 million. (8:30 a.m. ET)

U.S. housing starts for March are expected to fall to an annual pace of 1.35 million from 1.599 million a month earlier. (8:30 a.m. ET)

The Philadelphia Fed’s manufacturing survey for April is expected to fall to minus-30.0 from minus-12.7 a month earlier. (8:30 a.m. ET)

President Trump participates in a Group of Seven leaders’ videoconference on coordinating responses to coronavirus at 8:30 a.m. ET. Mr. Trump also has separate calls scheduled with members of the House, members of the Senate and state governors through the day.

China’s gross domestic product for the first quarter is expected to contract. (10 p.m. ET)

Federal Reserve: Atlanta’s Raphael Bostic speaks online on the Fed’s response to the coronavirus pandemic at 11 a.m. ET, San Francisco’s Mary Daly gives an online video presentation at 12 p.m. ET, New York’s John Williams speaks online on coronavirus and the economic outlook at 2 p.m. ET, and St. Louis’s James Bullard speaks at a U.S. Chamber of Commerce virtual event at 3 p.m. ET.

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


When Can We Reopen?

President Trump said his administration would detail new guidelines Thursday for reopening the country. Banking and financial services executives told him the White House needed to dramatically increase the availability of coronavirus testing before the public would be confident enough to return to work, eat at restaurants or shop in retail establishments, Michael C. Bender and Andrew Restuccia report.

Germany will start reopening its economy next week after spending a month in a partial lockdown. But the plan suggests any exit from the lockdowns will be slow and vulnerable to setbacks if it leads to a renewed rise in Covid-19 cases. German Chancellor Angela Merkel said smaller nonessential stores could resume operations starting Monday under certain conditions. Schools will restart in stages beginning May 4, Bojan Pancevski and William Boston report.

Prime Minister Shinzo Abe plans to expand a state of emergency to all of Japan after seeing new clusters of infection outside big cities. Japan had hesitated to introduce emergency measures after initial success in keeping the virus in check. But a rise in cases left Mr. Abe little choice—he declared a state of emergency in the Tokyo region and two other urban areas on April 7 and is now expanding his declaration to the entire country, Peter Landers reports.

Other Asian nations that seemed to dodge the worst of the coronavirus’s damage are seeing jumps in infections and deaths.

The WSJ’s Greg Ip writes that economists and epidemiologists need to help governments devise interventions that both maximize lives saved and minimize the economic cost as they explore when and how to reopen their economies.

On the Road Again

Back to normal won’t come quickly. Already, a host of indicators show China—the epicenter and first to emerge from the outbreak—is slowly rebounding. But traffic patterns suggest continued caution among the public and government. In Beijing, for example, rush-hour traffic is back to its pre-pandemic peak. But during lunch breaks, evenings and weekends, it’s not even close, according to an index of congestion developed by TomTom NV. “A plausible interpretation is people do what they need to do but don’t go out for fun,” said Gijs Peters, a data scientist and traffic expert at the transportation data provider. 

Activity in Wuhan, where the outbreak originated, is more restrained—even after the government lifted a lockdown. “I can imagine people are still hesitant to go out of their houses. They know what the virus has done and can do to their lives,” Mr. Peters said.

Think Small

A small-business loan program designed to back workers’ paychecks has exhausted most of its funding, ramping up pressure on U.S. lawmakers to reach a deal on the next round of economic aid. Negotiations between Congress and the White House over replenishing the small-business program resumed Wednesday, Kristina Peterson reports.

Where is the money going? Most of the federally guaranteed small business loans approved so far are for less than $350,000, with the construction industry the biggest beneficiary.

Even with government stimulus available, some small businesses are still shutting down.

What about me? Americans can now track the status of their stimulus payments on a new IRS website and provide bank-account information to get their money faster via direct deposit.


Arizona State’s Alexander Bick and Virginia Commonwealth’s Adam Blandin developed a real-time estimate of the labor market. The latest covers March 29 to April 4 and it isn’t pretty. “1. The employment rate decreased from 72.7% to 60.7%, implying 24 million jobs lost. 2. The unemployment rate increased from 4.5% to 20.2%. 3. Hours worked per working age adult declined 25% from the second week of March. Half of this decline is due to lower hours per employed as opposed to lower employment. 4. Over 60% of work hours were from home, compared with roughly 10% in 2017-2018. 5. Those who still have their jobs are working fewer hours; 21% report a decline in earnings. 6. Declines were most pronounced for workers who were female, older, and less educated.”


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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