Newsletter: ‘Worst Recession Since the Great Depression’

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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.

Round Two

Layoffs are hitting people who thought their jobs were safe. The first workers to lose their jobs worked at restaurants, malls, hotels and other places that closed to contain the coronavirus pandemic. Higher skilled work, which often didn’t require personal contact, seemed more secure. That’s not how it’s turning out. A second wave of job loss is coming for more people, including white-collar professionals, Eric Morath, Harriet Torry and Gwynn Guilford report.

Businesses that set up employees to work from home are laying them off as sales plummet. Corporate lawyers are seeing jobs dry up. Government workers are being furloughed as state and city budgets are squeezed. And health-care workers not involved in fighting the pandemic are suffering. The longer shutdowns continue, the bigger this second wave could become, risking a repeat of the deep and prolonged labor downturn that accompanied the 2007-09 recession.

The consensus of 57 economists surveyed this month by The Wall Street Journal is that 14.4 million jobs will be lost in the coming months, and the unemployment rate will rise to a record 13% in June.


U.S. retail sales for March are expected to fall 8% from a month earlier. (8:30 a.m. ET)

The New York Fed’s Empire State survey for April is expected to drop to minus-32.5 from minus-21.5 a month earlier. (8:30 a.m. ET)

U.S. industrial production for March is expected to decline 3.5% from a month earlier. (9:15 a.m. ET)

The Bank of Canada releases a policy statement at 10 a.m. ET.

U.S. business inventories for February are expected to fall 0.4% from a month earlier. (10 a.m. ET)

The National Association of Home Builders housing market index for April is expected to slide to 55 from 72 a month earlier. (10 a.m. ET)

Atlanta Fed President Raphael Bostic speaks online about the Fed’s coronavirus response and the economic outlook at 1 p.m. ET.

The Federal Reserve releases its beige book report on U.S. economic conditions at 2 p.m. ET.

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


Saving Shortage

Many Americans who do get laid off will struggle to pay bills. Roughly half of U.S. households have no emergency savings, according to a Federal Reserve survey released last year. Almost 60% said they couldn’t tap into rainy-day funds, borrow from family and friends or sell something to cover three months of living expenses, David Harrison reports.

The Great Lockdown

The global economy has almost certainly entered a recession. The International Monetary Fund in a new outlook said the world economy is expected to contract by 3% in 2020 as the coronavirus pandemic causes nations around the world to close down, Josh Zumbrun reports.

“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” said Gita Gopinath, the IMF’s chief economist. “The great lockdown, as one might call it, is projected to shrink global growth dramatically.”

Big banks sent a clear message in first-quarter earnings Tuesday: This recession is going to be bad. JPMorgan Chase and Wells Fargo set aside billions of additional dollars to get ready for a flood of customers to default on their loans. That sunk the banks’ quarterly profits. JPMorgan and Wells Fargo are the first big U.S. banks to report first-quarter results, and act as a bellwether for the broader economy. Neither bank has yet seen a wave of loans go bad, but they are preparing for it, David Benoit and Ben Eisen report.

Boeing said it suffered the biggest monthly spike in jetliner cancellations in decades as airlines start to adjust their fleets in response to the coronavirus pandemic. The travel slump has coincided with continuing delays in returning the 737 MAX to service, with customers canceling orders for 150 of the jets in March, Doug Cameron reports.

The biggest U.S. airlines reached an agreement in principle with the federal government on financial assistance aimed at preventing layoffs in an industry hit hard by the pandemic. The Treasury Department said Tuesday that 10 of the 12 largest airlines have told the government they intend to accept assistance from the $2.2 trillion economic relief package passed last month, Alison Sider and Kate Davidson report.

Global oil demand is expected to fall by a record 9.3 million barrels a day this year as government-implemented lockdowns keep the economy at a near standstill, the International Energy Agency said Wednesday. In its closely observed monthly oil-market report, the IEA projected that demand for crude would drop in April by 29 million barrels a day to levels not seen in a quarter of a century. That would equate to roughly 29% of the world’s 100-million-barrel daily oil-demand figure from 2019, David Hodari reports.

It’s NOT Tax Day

The Internal Revenue Service has extended the deadline for filing individual tax returns for 2019 to July 15 from April 15 in response to the coronavirus pandemic. Here’s what to know about the July 15 tax deadline and changes to IRS enforcement actions.

Everything you need to know about coronavirus stimulus payments from the government.

China Cuts Key Rate

China’s central bank on Wednesday cut a crucial interest rate that could pave the way for lower benchmark lending rates, as Beijing steps up efforts to support an economy hit by the coronavirus pandemic. The People’s Bank of China lowered the one-year medium-term lending facility rate to 2.95% from 3.15%, according to a statement published on its website. China’s central bank on Wednesday also injected 100 billion yuan ($14.19 billion) of liquidity via MLF operations. The central bank could soon move to reduce deposit rates to further encourage banks to lower borrowing costs, according to economists.


“I don’t expect a sharp V-shaped recovery, I expect something more like negative quarters of growth throughout 2020, and then a gradual return to positive growth in 2021.” —San Francisco Fed President Mary Daly, in an interview with the WSJ


When will this be over? “Prolonged or intermittent social distancing may be necessary into 2022. Additional interventions, including expanded critical care capacity and an effective therapeutic, would improve the success of intermittent distancing and hasten the acquisition of herd immunity…. Even in the event of apparent elimination, SARS-CoV-2 surveillance should be maintained since a resurgence in contagion could be possible as late as 2024,” Harvard researchers write in the journal Science.


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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