Housing market chills, layoffs, US companies dial up virus fight
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Wednesday related to the global economy, the work place and the spread of the virus.
Paychecks Stop: Companies are entering survival mode, which means tens of thousands of people are losing weekly paychecks. Governments are pushing billions of dollars into programs to stop the bloodletting, but job cuts keep coming.
– Tesla furloughed most factory workers and announced pay cuts. Furloughed employees won’t be paid, but health benefits will continue. The company anticipates a return to work on May 4, according to an email from Valerie Workman, head of HR for North America.
– Starbucks will provide direct grants to employees worldwide. The Seattle roaster will commit $10 million to the Global Partner Emergency Relief Program, which will provide grants for things like housing, utilities, and family funeral costs.
– Hong Kong announced a third round of relief measures worth 137.5 billion Hong Kong dollars ($18 billion) on Wednesday, aimed largely at preventing further layoffs in the city as unemployment hits a nine-year high.
Broken Homes: There were already early signs of weakness in the housing market before the pandemic. New data shows a significant deterioration.
– Mortgage applications nationwide dropped 17.9% in one week, according to a Mortgage Bankers Association survey. Purchase applications, which hint at future activity, slid 12% in a week, and a whopping 33% from the same week last year. It’s far worse in regions where COVID-19 is raging. Compared with last year, purchase applications tumbled 38% in Washington state and 31.3% in New York, which just recorded its biggest one-day jump in deaths. California reported a 15.9% drop in applications.
– The number of people paying rent in March slipped 12%, according to the National Multifamily Housing Council. In it’s first review of the effects of the COVID-19 outbreak, the group found 69% of households had paid their rent by April 5, compared with 81% in the previous month.
Heavy Industry: Manufacturers have reconfigured factory floors to provide essential goods despite the lack of a coordinated response from Washington and clashes between President Donald Trump and some of the nation’s largest producers.
– The U.S. will buy 30,000 desperately needed ventilators from General Motors for $489.4 million. GM is producing the devices at cost. The ventilators will go into the Strategic National Stockpile for distribution, HHS said. GM will deliver 6,132 ventilators by June.
– FedEx and DuPont are teaming up to get 450,000 protective suits to U.S. healthcare workers from a plant in Vietnam this week. Federal officials expect delivery of 2.25 million sets of protective gear in the next five weeks. The HHS has an option to double that order.
– Amazon is testing disinfectant fogging at warehouses. Amazon has been under pressure from workers to improve safety during the outbreak.
Empty Skies: For the first time in well over a generation, skies are largely empty of planes. The number of people passing through U.S. airports continues to plumb lows comparable only to the days following the Sept. 11 attacks.
– For the first time since the formation of the Transportation Security Administration, the number of passengers screened daily at U.S. airports dropped below 100,000. The figure recorded Tuesday, 97,130, represents a decline of more than 95% compared with the same day a year ago.
Macro Devastation: Despite national efforts to blunt the worst of the economic damage, a significant global contraction is increasingly likely.
– Japan’s economy is headed for a 25% contraction in the current quarter, even with the government’s fiscal aid package, Goldman Sachs said Wednesday. The report said exports are expected to dive by 60% in the April-June period. The contraction for the world’s third largest economy would be a record, since gross domestic product began to be tracked in 1955.
– The virus outbreak will cause a deep recession in Germany, shrinking the economy by 4.2% this year, leading German research institutes said Wednesday in their twice-annual report. Economists predict a swift rebound to growth of 5.8% in 2021.
Markets: Volatility has continued on Wall Street as updates on the pandemic change daily.
– Stocks climbed on Wall Street on Wednesday, while benchmark U.S. crude oil rose.
Eating Out Is Out: Restaurants and bars have been devastated by the virus, and even the “winners,” those that do not rely entirely on dining rooms, are getting clobbered.
– McDonald’s is reporting a 22% tumble in sales for March. About 75% of McDonald’s locations are open, but most are offering drive-thru, takeout or delivery only. McDonald’s has pulled financial guidance for the year.
– Panera Bread is offering basic groceries for takeout and delivery at about 90% of U.S. stores. Customers can order things like milk, fruit, and yogurt along with regular Panera meals.
AP reporters Yuri Kageyama, Tom Krisher, Michelle Chapman, Dee-Ann Durbin, Stan Choe and David Koenig contributed to this report.