'Why the Outlook for the Economy Just Got Worse' diff viewer (10/11)

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Why the Outlook for the Economy Just Got Worse	Why the Outlook for the Economy Just Got Worse
2020-06-13 08:10:40 UTC	2020-06-17 05:58:53 UTC (4 days later)
There are rare moments when the world economy seems to be reconfiguring itself beneath our feet. These can be startlingly fast bursts, not obvious to people who are just going about their business, but glaringly so to those who interpret the moves of financial markets.	There are rare moments when the world economy seems to be reconfiguring itself beneath our feet. These can be startlingly fast bursts, not obvious to people who are just going about their business, but glaringly so to those who interpret the moves of financial markets.
March 2020, it is now abundantly clear, is one of those moments.	March 2020, it is now abundantly clear, is one of those moments.
Already, it appeared that chunks of the American economy would have to reduce operations or shut down entirely to try to slow the spread of a novel coronavirus, especially in travel-related businesses. Then over the weekend, Russia and Saudi Arabia began an oil price war that sent the price of crude to its biggest plunge in three decades — which could cause widespread bankruptcies in the American energy industry.	Already, it appeared that chunks of the American economy would have to reduce operations or shut down entirely to try to slow the spread of a novel coronavirus, especially in travel-related businesses. Then over the weekend, Russia and Saudi Arabia began an oil price war that sent the price of crude to its biggest plunge in three decades — which could cause widespread bankruptcies in the American energy industry.
The exact scope of the economic damage the United States faces is still an open question, and there may yet prove to be significant disruptions without full-scale recession.	The exact scope of the economic damage the United States faces is still an open question, and there may yet prove to be significant disruptions without full-scale recession.
But Monday’s markets, which recorded the steepest single-day drop since 2008, indicated that some very gloomy possibilities were becoming more likely.	But Monday’s markets, which recorded the steepest single-day drop since 2008, indicated that some very gloomy possibilities were becoming more likely.
Asian markets opened for the week with implausibly large moves in some of the world’s most important measures of economic and financial conditions. The numbers that flashed on traders’ screens in Asia, then eventually in Europe and the U.S., seemed to be evidence of a world economy realigning itself.	Asian markets opened for the week with implausibly large moves in some of the world’s most important measures of economic and financial conditions. The numbers that flashed on traders’ screens in Asia, then eventually in Europe and the U.S., seemed to be evidence of a world economy realigning itself.
Ignore the steep sell-off in stocks — that is an effect, not a cause, of the disruptions remaking the global economic outlook. What matters now are bond yields and commodity prices, the two most vivid indicators of a shifting landscape.	Ignore the steep sell-off in stocks — that is an effect, not a cause, of the disruptions remaking the global economic outlook. What matters now are bond yields and commodity prices, the two most vivid indicators of a shifting landscape.
These market prices are telling us that a recession is becoming more likely in the United States this year, and that it will probably leave scars on the economy for years to come. Worse, it looks like predictions of a “V” shaped downturn with a quick, sharp rebound are probably off base.	These market prices are telling us that a recession is becoming more likely in the United States this year, and that it will probably leave scars on the economy for years to come. Worse, it looks like predictions of a “V” shaped downturn with a quick, sharp rebound are probably off base.
“We’ve reached the tipping point where things are feeding off of each other,” said Julia Coronado, president of MacroPolicy Perspectives. “We’re going to lose a chunk of activity and then we’ll grow out of it. That’s the good news. But are we going to boom out of it or crawl out of it? Crawling is looking more likely.”	“We’ve reached the tipping point where things are feeding off of each other,” said Julia Coronado, president of MacroPolicy Perspectives. “We’re going to lose a chunk of activity and then we’ll grow out of it. That’s the good news. But are we going to boom out of it or crawl out of it? Crawling is looking more likely.”
President Trump late Monday endorsed a temporary cut in payroll taxes — after weeks in which his administration appeared largely resistant to large-scale fiscal stimulus. He said that he would announce other economic measures on Tuesday, and that “they’ll be very major.”	President Trump late Monday endorsed a temporary cut in payroll taxes — after weeks in which his administration appeared largely resistant to large-scale fiscal stimulus. He said that he would announce other economic measures on Tuesday, and that “they’ll be very major.”
The Federal Reserve is likely to take further actions to contain the damage for the economy and financial markets. Not only do futures markets indicate the Fed will cut its short-term interest rate target more in the coming weeks, but the yield on 10-year United States Treasury bonds also fell to a mere 0.54 percent, and the 30-year bond now yields only 1 percent. Those numbers strongly suggest investors expect the Fed to keep rates near zero — or conceivably below zero at some point — for a very long time.	The Federal Reserve is likely to take further actions to contain the damage for the economy and financial markets. Not only do futures markets indicate the Fed will cut its short-term interest rate target more in the coming weeks, but the yield on 10-year United States Treasury bonds also fell to a mere 0.54 percent, and the 30-year bond now yields only 1 percent. Those numbers strongly suggest investors expect the Fed to keep rates near zero — or conceivably below zero at some point — for a very long time.
The oil price rout — a barrel of West Texas Intermediate Crude was at $31.13, down 25 percent in a single day and around half its level at the start of the year — implies trouble to come in the American oil patch.	The oil price rout — a barrel of West Texas Intermediate Crude was at $31.13, down 25 percent in a single day and around half its level at the start of the year — implies trouble to come in the American oil patch.
Cheaper oil will create benefits for American consumers and for oil-consuming industries. But as the shale gas industry has grown and the United States has become a net energy exporter, the balance has changed in how cheaper energy affects the economy.	Cheaper oil will create benefits for American consumers and for oil-consuming industries. But as the shale gas industry has grown and the United States has become a net energy exporter, the balance has changed in how cheaper energy affects the economy.
The pain of cheap oil will tend to be highly concentrated in oil-producing locations, and will have an outsize impact on capital spending. (Spending on energy is a major driver of demand for heavy industrial equipment.) A telling indicator: Shares of Halliburton, the leading maker of energy equipment, were down 38 percent Monday, compared with about 7 percent for the overall market.	The pain of cheap oil will tend to be highly concentrated in oil-producing locations, and will have an outsize impact on capital spending. (Spending on energy is a major driver of demand for heavy industrial equipment.) A telling indicator: Shares of Halliburton, the leading maker of energy equipment, were down 38 percent Monday, compared with about 7 percent for the overall market.
The United States has experienced something like this before, in late 2015 and early 2016, when a drop in commodity prices caused an economic slump that was most pronounced in the oil patch and in heavy industry.	The United States has experienced something like this before, in late 2015 and early 2016, when a drop in commodity prices caused an economic slump that was most pronounced in the oil patch and in heavy industry.
In that episode, the overall United States economy kept humming along because consumer spending and service industries were mostly unaffected. What makes the outlook for 2020 seem so different is that the oil price swoon is coming at the same time coronavirus appears likely to wallop those sectors.	In that episode, the overall United States economy kept humming along because consumer spending and service industries were mostly unaffected. What makes the outlook for 2020 seem so different is that the oil price swoon is coming at the same time coronavirus appears likely to wallop those sectors.
The damage is still highly uncertain. But if large gatherings like conferences and concerts continue to be canceled, and more people decide they will not fly this summer and stay home more generally, it’s likely to cripple the consumer-driven side of the economy.	The damage is still highly uncertain. But if large gatherings like conferences and concerts continue to be canceled, and more people decide they will not fly this summer and stay home more generally, it’s likely to cripple the consumer-driven side of the economy.
That means that workers who serve those industries will be in danger of furloughs, lost hours or layoffs. “This is unusual in that it may prove faster acting than past downturns,” said Jay Shambaugh, director of the Hamilton Project at the Brookings Institution. “The drop in oil prices and drop in financial markets alone, and when you add those to the impact of the virus and the hit to global demand, at some point that has spillovers to the U.S. economy.”	That means that workers who serve those industries will be in danger of furloughs, lost hours or layoffs. “This is unusual in that it may prove faster acting than past downturns,” said Jay Shambaugh, director of the Hamilton Project at the Brookings Institution. “The drop in oil prices and drop in financial markets alone, and when you add those to the impact of the virus and the hit to global demand, at some point that has spillovers to the U.S. economy.”
Companies affected by the coronavirus spending freeze would, like their counterparts in the energy business, be at risk of default.	Companies affected by the coronavirus spending freeze would, like their counterparts in the energy business, be at risk of default.
Updated June 12, 2020	Updated June 12, 2020
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.	So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
	Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.	A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.	The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.	Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.	Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.	States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.	Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)	If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.	Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.	The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.	If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.	If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
Years of aggressive lending practices by businesses could come back to bite them, and a few high-profile bankruptcies could trigger a broader reassessment of risk among lenders that means even healthy businesses have trouble rolling over their loans.	Years of aggressive lending practices by businesses could come back to bite them, and a few high-profile bankruptcies could trigger a broader reassessment of risk among lenders that means even healthy businesses have trouble rolling over their loans.
The downside of the aggressive borrowing by corporate America in the last decade is that it makes companies more brittle — less able to withstand the occasional hiccup in demand, or a problem with supplies. It appears 2020 will be a test of their resilience and whether debt loads have truly become excessive.	The downside of the aggressive borrowing by corporate America in the last decade is that it makes companies more brittle — less able to withstand the occasional hiccup in demand, or a problem with supplies. It appears 2020 will be a test of their resilience and whether debt loads have truly become excessive.
In effect, plunging energy prices caused by geopolitical machinations are combining with coronavirus to put numerous major industries under pressure in ways that could bounce off one another — through financial markets, to the economy, and back again — in unpredictable ways.	In effect, plunging energy prices caused by geopolitical machinations are combining with coronavirus to put numerous major industries under pressure in ways that could bounce off one another — through financial markets, to the economy, and back again — in unpredictable ways.
The news isn’t all bad. Lower oil prices really are good news for consumers; lower bond yields will translate into lower mortgage rates; and the big market moves Monday will probably get the attention of policymakers and coax a more aggressive response.	The news isn’t all bad. Lower oil prices really are good news for consumers; lower bond yields will translate into lower mortgage rates; and the big market moves Monday will probably get the attention of policymakers and coax a more aggressive response.