COVID-19 equals economic and cultural endemic for U.S.

The COVID-19 pandemic reached the United States with a roar, and despite some earlier claims that it might not come to the country by optimists and if it did, would be well under control have dissipated in a cloud of fear and uncertainty, and the country has begun a series of commercial shut downs that have not only isolated some Americans but also led to a vast sense of panic, fear, hoarding, and an exacerbation of cultural and racial fears, exposing perhaps more than ever some of the inequalities in American society, and affected steady if not spectacular job gains.

President Trump’s early statements were positive and reassuring, but quickly devolved into a series of questionable statements that made many anxious, as if he was dismissing the threat to Americans, and some observers, and critics, said that this was done, in order to preserve his major reelection plank: that the economy was strong stable and secure; one that sent the White House to reevaluate the threat,

The optics at a press conference on Friday raised more questions than answers and the subsequent glad-handing, and sight of lawmakers, and medical officials shaking hands, and touching microphones belied whatever good intentions that the media was expecting, not to mention the American public.

While that might have increased the political divide between Republicans and Democrats, the resulting fallout seemed to have made matters worse with local and state officials asking the federal government for assistance, be it for more hospitals, or protective equipment.

Not having FEMA taking the lead also led to stock market worries and the closings of restaurants, museums, and some workplaces has led to economic fears, and conspiracy theories have abounded about the source, and some have said that the virus itself was planted by Trump.

Frustration was evident, weeks ago, when Sen. John Kennedy of Louisiana asked the acting head of Homeland Security Chad Wolfe, “How many people are expected to be affected, and said, in exasperation, “I’m all for committees and task forces but you're the secretary, I think you ought to know the answer.”

In the face of curfews, school closings and demands for public libraries to close, the earlier statement of Health and Human Services secretary, Alex Azar, “We cannot hermetically seal off the United States to a virus,” rang true for many.

Trump did not help matters by saying on a state trip to India that the virus “is very well under control in our country.”

World Health Organization’s Director-General Tedros Adhanom Ghebreyesus said that he was alarmed by the level of inaction, but most importantly, “We have never before seen a pandemic sparked by a coronavirus,” reported The Wall Street Journal.

Globally, the hodgepodge of efforts has spread the fear factor to the U.S., although China’s efforts has been rewarded, after being the source and once epicenter, with a declaration of victory with their efforts at reduction, of less than 30 new infections, as of Wednesday.

Now the U.S. has been brought to a standstill in many urban areas and farfetched statements have been made: some African Americans were overheard, misquoting a popular television preacher, saying that the virus is retribution for the sins of American slavery and racism.

Still others have said that popular novelist Dean Koontz had predicted this outbreak in a book, and taking events even further, in a demonstrated a “blithe disregard” (a term coined by The New York Times) for the realities of others, as witnessed by a young white millennial stating, at a local Chicago branch library, “everyone should just work from home.” 

When reminded that not everyone could do that, especially those in service jobs and in rural areas, he airily suggested, “then we will stay at home, so they can work.”

Meanwhile suggestions have flown like arrows throughout the country with some like Illinois Governor J.B. Pritzker suggested, in a Tweet, that the federal government needed to get its act together although he substituted a popular slang term.

The role of the Army Corps of Engineers has been questioned along with that of the Defense Department and Navy hospitals yet that in, and of itself, is in question, that not having received specific orders, their role and skills have been seen only in the theater of war, and not in a national medical crisis.

Adding fuel to the fire is the rumor that a leaked memo from the Center for Disease Control said that the situation could last as long as 18 months.

The New York Times reported on Wednesday that there were suggestions that Navy medical ships should be harbored on the Hudson River to receive the sick, or house non-infected patients from area hospitals.

Neither of which has been confirmed. And, a proposed shipment of 2,000 ventilators for a hospital was deemed inadequate.

Compounding these efforts is that public health in America is the responsibilities of the states and local governments, a fact little known to the general public.

The greatest threat is, of course, the American economy that while showing steady job growth, even without corresponding wages, is now predicted to be on a downward slide with the possible loss of millions of jobs with “layoffs, lost wages . . .and the threat of the business cycle,” reported the Los Angeles Times.

Hard hits have been taken by the world of professional sports who thrive on large crowds of cheering fans, and has now seen the suspension of March Madness, basketball games, as well as the threat of cancellations of Major League baseball opening day, or playing to empty stadiums

With an overall projection of $1 trillion, there were broad concerns about the lending industry supporting both personal and commercial needs; and, which has seen the stock market already on a downward spiral after weeks of a roller coaster ride.

Worries of the differences between treasures and futures are sending investors into a panic mode “because signs of stress there can foretell lending pullbacks,” according to the Journal.

Most economists and academics are fearing that a recession is imminent.

The Federal Reserve has slashed interest rates to near zero and on Thursday, the Senate approved a House bill to give emergency relief to American workers, according to Treasury Secretary Steven Mnuchin which would place money directly into the hands of most Americans.  

“The first one would be $1,000 per person, $500 per child,” Mnuchin said. “So for a family of four, that’s a $3,000 payment.”

“As soon as Congress passes this, we get this out in three weeks. And then, six weeks later, if the president still has a national emergency, we’ll deliver another $3,000,” Mnuchin said in a Fox Business Network interview.

Furthermore, as CNBC.com reported, “Mnuchin said the White House’s plan would also allocate $300 billion for small businesses, noting that “there will be loan forgiveness” for employees who keep their workers on the payroll. $200 billion would also be used for “more facilities” with the Federal Reserve, as well as secured lending to airlines and other critical industries being strangled by the crisis.”

There is some opposition to the airline industry getting support, since with its last cash infusion after 9/11 and with the corporate tax reduction, many put most of the money into stock buyback options and executive salaries.

This one time effort will not be enough said, Senate Minority Leader Chuck Schumer, who in the same report suggested “instead that providing expanded and “beefed-up” unemployment insurance would cover Americans “for a much longer time and would provide a much bigger safety net.”

While it’s clear that a multi pronged effort is needed, just how long this will last, or if further measures will be needed, “Earlier this month, the president signed into law an $8.3 billion bill that sailed through Congress with near-unanimous support. On Wednesday, Trump signed an additional $100 billion package that includes provisions for emergency paid leave for workers as well as free testing for the deadly virus,” added CNBC.

Compromising the entire dilemma is that in the U.S. who, where and when people can get tested depends on where you live, with some, noted the Journal, getting access and test results in hours, and some measures limited to those who may or may not be symptomatic.

CDC kits were defective, at first but have been corrected, but while public health labs are cost free, the delay means the ongoing epidemiology of the virus is hurting research efforts.

Adding to the piecemeal approach is that necessary materials to make the test kits are in short supply, making most, if not many, vulnerable to this virus.

February Jobs Report: fire before the coronavirus storm

The February Jobs Report, issued by the U.S. Labor Department, was mostly a continuation of the last several months, despite exceeding the 175,000 non-farm jobs that was predicted by many economists’ and, the increase to 275,000, with an unemployment rate of 3.5 percent was pre corona virus, which has made the report mostly irrelevant as fears of the virus, or Covid-19, puts that in sharp relief against a background of fears of illness, and worldwide deaths.

Some good news was that “Employment gains for January and December, meanwhile, were revised up by a combined 85,000. The government raised the increase in new jobs in January to 273,000 from 225,000. December’s gain was lifted to 184,000 from 145,000,” reported Marketwatch.com.

With an increased fear of a pandemic, the Federal Reserve Board of the United States, issued a half-point interest rate cut, the first since 2008, and while the move might have soothed the nerves of investors, it was not long lived as 10 year treasuries dipped at the end of trading that day to less than one percent, further sharpening concerns, since a it can be a goal post of economic health, as well as consumer spending.

Earlier concerns were still present in February: wage earnings of 3.0 percent, year over year despite the tagline of a 50 year low; and, one which is getting tattered as the months roll on.

Some easing of the global market was presaged due to the Trump Administration’s easing of trade concerns with China, but most observers had posited that as political cover for the 2020 presidential campaign.

The Washington Post reported that “Global markets have shown volatility and fallen sharply as investors have monitored the coronavirus’s dampening effect on manufacturing, travel and consumer spending. Analysts are predicting that global growth this quarter could slow to the lowest levels since the financial crisis.”

The grounding of the 737 Max is still an important component of U.S. and global economic concerns, and continued to dim the lights on what some wanted to see as confirmation of an expansive U.S. economy.

Private employers, a few days prior, had reported 183,000 jobs created, coming close to federal market predictions and there was seen as a positive trend, albeit compromised and their underlying statement, diplomatically stated, “The labor market remains firm, as private-sector payrolls continued to expand in February,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Job creation remained heavily concentrated in large companies, which continue to be the strongest performer.”

Adhering to that same mood, ADP reported “that Mark Zandi, chief economist of Moody’s Analytics, said, “COVID-19 will need to break through the job market firewall if it is to do significant damage to the economy. The firewall has some cracks, but judging by the February employment gain it should be strong enough to weather most scenarios.”

While Zandi seems to be undertaking a positive chord, the winners in the report, leisure and hospitality at a plus of 53,000, are expected to take a nosedive this month with the cancellation of international conferences both in the U.S. and abroad, and Chicago cancelled the International Housewares Show, at McCormick Place, and in Texas South-by-Southwest has also been cancelled, with the expected dent in the profits of not only airlines, but also Visa’s credit card business.

Airlines are feeling the pinch, and United Airlines announced that it began a hiring freeze through June, “postponing scheduled merit raises and inviting employees to apply for unpaid leave, said The New York Times.

“Global airline stocks have shed $41 billion in value, or 25 percent of the sector’s market cap, in the past month. The International Air Transport Association is predicting an 11 to 19 percent drop-off in global passenger revenue this year, driven by falls in airfreight and cargo,” noted The Washington Post.

Taking a more hard-edge estimation, “There is a red line in the calendar,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The value of it is that this report gives us a kind of a benchmark of where we were before things began to go wrong,” also according to the Times.

Taking a wider look often involves a marker and those 10 year treasuries are giving notice, as “The low yield on the 10-year Treasury is a sign that the investors are very concerned about future growth in the economy,” said Eric Jacobson, a senior research analyst at Morningstar. “That’s what happens. When people are worried about everything else, they run to Treasurys because they know they are going to get paid back.”

On the marquee side, as we label the unemployment rate, all seemed good, but as always, it’s important to take a look at those that want full time jobs, but are stuck in part-time jobs and this figure has wavered little since January.

Labor force participation held steady at 63.4, and reflects an increase, but as reported last month, with high numbers of women working; but, also reflects a trend to support working families, where men are working at lower wages, and their wives are forced to take work, or more work to sustain the family, and just as true for single mothers. 

Women have come a long way since this vintage image

These pink-collar jobs, as they used to be known, are heavily concentrated in hospitality transportation and service industries.

“It’s certainly a relief that we had a strong tailwind,” said Diane Swonk, chief economist at Grant Thornton. “Service, leisure and hospitality, these are all very vulnerable. The good news is that these workers had some cushion ahead of time. It helps blunt the blow,” to the Times.

Wages being central are still a disappointment and even with a strong “firewall” against the coronavirus, as some economists have predicted, all things being equal wages are the central reason why people work, and their expenditures are the driver of the U.S. economy.

The Atlantic noted in late March that "the spiraling cost of living" was bleeding Americans dry and that "for millions, a roaring economy felt precarious or downright terrible" with high housing costs that have "outstripped wages in roughly 80 percent of America's metro regions, " added This Week.

Add the high cost of education and loan repayment many young people cannot afford to move to areas where the better jobs are, not to mention the high cost of child-care, they summarized.

Daniel Zhao, the senior economist at Glassdoor, noted to ABC News, that, “Despite the hot job market, American workers have yet to see wages accelerate," he said. "If things don’t change in the coming months, American workers may not see big wage gains in 2020."

Manufacturing managed to add 15,000 jobs, a feat in that area these days, but the ISM in their report has noted that from January 2020 there has been a 2.2 percent reduction, reflecting an 8 percent difference between 50.1 percent in February and 52 percent from the first month of the year, also reflected in new orders.

The ISM is considered one of the most reliable economic indicators and its report shows cautious optimism as well as some mixed news with employment, and “This is the seventh month of employment contraction, but at a slower rate compared to January,” they said.

 “Among the six big industry sectors, two expanded and four contracted . . .  of the 18 manufacturing industries, three reported employment growth in February: Food, Beverage & Tobacco Products; Plastics & Rubber Products; and Computer & Electronic Products”; but all reflective of the dangers of Covid-19 for the future, as we have seen.

Engineering News-Record, offered some conjoined news, reporting that “Construction’s jobs surge continued for the second-straight month as the industry’s workforce expanded by 42,000 in February, the Bureau of Labor Statistics has reported.

The February numbers, contained in a BLS report released on March 6, follow a construction gain of 49,000 in January, as the bureau adjusted its initial preliminary figure upward by 5,000 for that month, making a stronger gain than expected."

March will be a truer indicator of where the U.S. jobs market is going to go, and the effect of the virus, and that view may not show the optimism of some, and one can only take the long view at this point.

Updated March 9, 2020, 5:52 DCST