Economic Toll of Virus Goes Global and Hits Close to Home
NEW YORK (AP) – Seven weeks after the first case of COVID-19 was confirmed in the U.S., the spread of the virus that causes the disease has done widespread damage to critical economic sectors in the country. Airlines are cutting capacity, people are working from home, major public events that raise millions of dollars for local communities have been cancelled, including this year’s St. Patrick’s Day parade in Boston. Here is a tally of the effects of the coronavirus on people, businesses, and the economy:
TURBULENCE IN THE AIR: Europe’s airports say they expect 187 million fewer passengers this year due to the virus outbreak, which is “turning into a shock of unprecedented proportions for our industry.” The ACI Europe, which represents the sector, estimated Tuesday that the outbreak will mean a 13.5% drop in airport passengers in the first quarter alone. That translates to 1.32 billion euros ($1.5 billion) in lost revenue. Airports in Italy, where a nationwide quarantine was put in place Tuesday, are most affected. Some 9,172 people have been infected in Italy, and 463 have died.
“What they are now bracing for is a total collapse in air connectivity and the prospect of losing most of their revenues,” said Olivier Jankovec, Director General of ACI Europe. He called on the Italian government to provide emergency financial support, and said that might be necessary across the EU if more authorities clamp down on travel.
Airlines continue to slash capacity as travelers cancel flights or avoid them all together. American Airlines cut international capacity by 10% for the summer Tuesday and will trim domestic capacity by 7.5% next month as millions second guess vacations or business travel. The airline is suspending flights between Los Angeles and mainland China and Hong Kong for the entire summer. It suspended flights between Philadelphia and Rome immediately Tuesday. That hold will remain in place through the end of April.: Delta Air Lines on Tuesday cut international capacity by 20% to 25% and will reduce domestic capacity by 10% to 15%. It also announced a hiring freeze and is offering employees voluntary leave.
United Airlines, Delta Air Lines and American Airlines are allowing passengers to rebook tickets through April 30 without paying fees.
Finnair continues to alter its flight schedules. Finland’s national carrier this month announced temporary layoffs of between 14 days up to one month for its entire staff based in country, affecting more than 6,000 employees. The carrier, which as cancelled 1,400 flights, said Tuesday that it would cancel flights to and from Bologna, Stuttgart, Split, Umea in Sweden, and Venice for the entirety of April.
LEISURE LATER, MAYBE: Vail Resorts is withdrawing its forecast for the entire year. The company said visits were modestly below expectations last week, but it believes that could grow worse.
The online travel company that owns Kayak and other sites withdrew its guidance for the quarter citing the worsening impact of the virus on travel. Booking Holdings said that travel demand, especially in North America and Europe, has fallen. Because of the “rapidly evolving situation,” the company it’s unable to issue a new forecast. Booking said it would offer an update in May.
THE FED AND BIG BANKS: The Federal Reserve and other regulatory agencies are encouraging financial institutions to meet the needs of customers affected by coronavirus. They vowed to give them the regulatory leeway to do so. “Prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism,” the Fed said in a prepared statement along with the Federal Deposit Insurance Corporation and the Office of the Comptroller General.
THE FED AND THE PRESIDENT: President Donald Trump has repeatedly demanded that the Federal Reserve do more to aid the economy, especially in the face of the coronavirus outbreak. On Tuesday, Trump called the Fed “pathetic” and “slow moving” in a tweet for not cutting interest rates as low as other central banks have. He asserted that its failure to do so has put the United States at a competitive disadvantage. “The Federal Reserve must be a leader, not a very late follower, which it has been!” Trump said in a second tweet.
The Fed slashed its benchmark rate by a half-point last week — the largest cut since the 2008 financial crisis — to a very low range of 1% to 1.25%. And most Fed watchers expect further rate cuts in coming weeks. In contrast to Trump, most economists say rate cuts aren’t likely to do much to stem the economic damage from the spreading coronavirus, which has disrupted factory supply chains and pummeled service industries like airlines and tourism companies.
HEALTHCARE: Humana is waiving out-of-pocket costs associated with COVID-19 testing for patients who meet CDC guidelines at approved labs. The Louisville, Kentucky, health insurer also said it would increase the availability of telemedicine to cut down on potential exposure for those it insures. Telemedicine costs for all urgent care needs is being waived for the next 90 days. The company says it will allow early prescription refills for the next 30 days so members could stock up for extended periods. Humana is opening up a support hotline for members to call with specific questions about coronavirus, telemedicine options and other questions.
THE WORKPLACE: A worker at Boeing’s Everett, Washington, facility has tested positive for COVID-19. The employee is in quarantine and co-workers who’ve been in close contact with the individual have been asked to self-quarantine and self-monitor, the company said. The company previously told employees in the Puget Sound area to work from home. Washington state at one point had the highest number of people infected with the coronavirus, prompting the tech industry that is heavy in the area to roll out travel and work restrictions.
Securities and Exchange Commission employees have been encouraged to work remotely for the foreseeable future after a potential incident of the coronavirus was discovered. The U.S. financial industry regulator said it was informed Monday afternoon that a headquarters employee had received medical treatment for respiratory symptoms earlier in the day. The employee, who was not identified, was informed by a doctor that they may have been infected with the coronavirus and was referred for testing. The agency “is encouraging headquarters employees to telework until further guidance,” it said. The SEC is the first major federal agency to employ teleworking in an effort to contain the virus’ spread.
The Florida Department of Health says three employees of a company that greets cruise ship passengers have tested positive for the new coronavirus. Officials are urging anyone who recently traveled through Port Everglades to isolate themselves for 14 days if they start experiencing symptoms. A 69-year-old Broward County woman tested positive for COVID-19, the third employee of Metro Cruise Services to become infected. The advisory asks anyone who passed through the port recently and begins to experience symptoms such as coughing, fever and shortness of breath to isolate themselves and call their health care providers.
Santander, Spain’s largest bank, ordered its employees in Madrid to work from home for the next two weeks on Tuesday and told shareholders to participate remotely, or vote beforehand, in the April 3 annual shareholders’ meeting on April 3.
MARKETS: Global stock markets rebounded from record-setting declines after President Donald Trump said he would ask Congress for a tax cut and other measures to ease the pain of the spreading coronavirus outbreak. The S&P 500 was up 2.6%, as of 10:35 a.m. Eastern time. The Dow Jones Industrial Average rose 573 points, or 2.3%, to 24,645, and the Nasdaq composite was up 2.9%.
Oil prices also recovered some of their losses from Monday’s record-setting plunge. Brent crude, the international standard, rose $2.77, or 8.1%, to $37.13, while benchmark U.S. crude rose $2.450 to $33.63. Oil prices plunged 25% on Monday amid a price war between producers, who are pulling more oil out of the ground even though demand is falling due to the virus.
Perhaps the most notable market move Tuesday was that Treasury yields also pushed higher in a sign that fear has receded a bit, though they remain far below where they were even a week ago. The 10-year Treasury yield rose to 0.65% from 0.49% late Monday. A week ago, it had never been below 1%.