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| Europe Is Probably in Recession. Can Its Leaders Move Fast and Deliver Relief? | Europe Is Probably in Recession. Can Its Leaders Move Fast and Deliver Relief? |
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| LONDON — Europe had already been teetering toward trouble. Even before the coronavirus outbreak quarantined the industrial heart of Italy and emptied the teeming streets of Venice, before France banned public gatherings and major trade shows were canceled in Germany and Spain, economists were openly warning about the prospect of an economic downturn across the continent. | LONDON — Europe had already been teetering toward trouble. Even before the coronavirus outbreak quarantined the industrial heart of Italy and emptied the teeming streets of Venice, before France banned public gatherings and major trade shows were canceled in Germany and Spain, economists were openly warning about the prospect of an economic downturn across the continent. |
| Now, Europe is almost certainly gripped by a recession, amplifying fears that the global economy could be headed that way, too. | Now, Europe is almost certainly gripped by a recession, amplifying fears that the global economy could be headed that way, too. |
| “It seems pretty difficult to avoid a recession in the first half of the year,” said Ángel Talavera, head of European economics at Oxford Economics in London. “The spread of the disease in Europe is a game changer. The question is how deep it will be, and how long it will last.” | “It seems pretty difficult to avoid a recession in the first half of the year,” said Ángel Talavera, head of European economics at Oxford Economics in London. “The spread of the disease in Europe is a game changer. The question is how deep it will be, and how long it will last.” |
| But as the world absorbs the consequences of Europe sinking into a slump just as China suffers a profound downturn, the sense of alarm is heightened by another question with no obvious answer: Can European leaders transcend their often-bitter differences to forge an effective response — especially when this crisis may be beyond traditional economic policy prescriptions? | But as the world absorbs the consequences of Europe sinking into a slump just as China suffers a profound downturn, the sense of alarm is heightened by another question with no obvious answer: Can European leaders transcend their often-bitter differences to forge an effective response — especially when this crisis may be beyond traditional economic policy prescriptions? |
| Recent history is not reassuring. Europe has earned its reputation for dithering, debating and cross-border recriminations while economic shocks play out largely unchallenged. This is especially true within the 19 nations that share the euro currency. They operate with strict limits on how much money individual nations may spend, and how much debt they may incur. They lack a political compact to enable a collective budget. | Recent history is not reassuring. Europe has earned its reputation for dithering, debating and cross-border recriminations while economic shocks play out largely unchallenged. This is especially true within the 19 nations that share the euro currency. They operate with strict limits on how much money individual nations may spend, and how much debt they may incur. They lack a political compact to enable a collective budget. |
| As Greece descended into a depression a decade ago in the wake of the global financial crisis — an event that posed an existential crisis for the euro — European leaders frequently prolonged the danger by failing to agree on an effective rescue package. | As Greece descended into a depression a decade ago in the wake of the global financial crisis — an event that posed an existential crisis for the euro — European leaders frequently prolonged the danger by failing to agree on an effective rescue package. |
| When Italy, Spain and Portugal were assailed by their own emergencies, with international investors demanding elevated rates of interest for continued lending, Europe’s policymakers exacerbated the distress through perpetual discord that conveyed the message that no one was really in charge. | When Italy, Spain and Portugal were assailed by their own emergencies, with international investors demanding elevated rates of interest for continued lending, Europe’s policymakers exacerbated the distress through perpetual discord that conveyed the message that no one was really in charge. |
| At the center of these events was a foundational difference of values within the eurozone. Germany, Europe’s largest economy, and other Northern European nations like Finland nurse deep cultural aversions to debt. They use crises as platforms to lecture their Mediterranean cousins on their supposedly profligate ways. Southern European countries chafe at such depictions while lamenting the eurozone’s limits on spending, which have constrained their growth. | At the center of these events was a foundational difference of values within the eurozone. Germany, Europe’s largest economy, and other Northern European nations like Finland nurse deep cultural aversions to debt. They use crises as platforms to lecture their Mediterranean cousins on their supposedly profligate ways. Southern European countries chafe at such depictions while lamenting the eurozone’s limits on spending, which have constrained their growth. |
| Now, another economic disaster is threatening European livelihoods, adding to the terror that has captured global markets. Few express confidence that European policymakers can do better this time. | Now, another economic disaster is threatening European livelihoods, adding to the terror that has captured global markets. Few express confidence that European policymakers can do better this time. |
| European dysfunction is “a major source of concern,” said Peter Dixon, a global financial economist at Commerzbank in London. “It’s almost bordering on policy negligence.” | European dysfunction is “a major source of concern,” said Peter Dixon, a global financial economist at Commerzbank in London. “It’s almost bordering on policy negligence.” |
| The European Central Bank has long played the role of primary rescuer. In the decade after the financial crisis, the central bank pushed short-term interest rates down to zero to keep money pumping through European economies. It adopted the unorthodox policy of buying bonds to push longer-term interest rates lower, ensuring that companies and households could secure credit to promote further spending. | The European Central Bank has long played the role of primary rescuer. In the decade after the financial crisis, the central bank pushed short-term interest rates down to zero to keep money pumping through European economies. It adopted the unorthodox policy of buying bonds to push longer-term interest rates lower, ensuring that companies and households could secure credit to promote further spending. |
| But many economists assume that the central bank has exhausted the potential of such policies. “The credit card is maxed out,” Mr. Dixon said. | But many economists assume that the central bank has exhausted the potential of such policies. “The credit card is maxed out,” Mr. Dixon said. |
| Most expect that the European Central Bank will cut rates when it convenes on Thursday. That sense was enhanced on Monday as Saudi Arabia shocked markets by significantly increasing the supply of oil, pushing oil prices sharply lower and adding to a general sense of confusion among investors. In a moment dominated by the coronavirus outbreak, confusion is in an invitation to dark thinking. From Tokyo to to London to New York, stock prices plummeted. | Most expect that the European Central Bank will cut rates when it convenes on Thursday. That sense was enhanced on Monday as Saudi Arabia shocked markets by significantly increasing the supply of oil, pushing oil prices sharply lower and adding to a general sense of confusion among investors. In a moment dominated by the coronavirus outbreak, confusion is in an invitation to dark thinking. From Tokyo to to London to New York, stock prices plummeted. |
| But if the European Central Bank does cut rates, it will be mostly symbolic, an effort to signal that the authorities grasp the magnitude of the trouble. | But if the European Central Bank does cut rates, it will be mostly symbolic, an effort to signal that the authorities grasp the magnitude of the trouble. |
| When interest rates are at zero or below, pushing them further into negative territory tends to have little effect. | When interest rates are at zero or below, pushing them further into negative territory tends to have little effect. |
| For Europe — as for the rest of the world — this crisis does not appear to be easily influenced by a reduction in interest rates. Italy’s broad quarantine has disrupted production at factories that are major suppliers of parts to the auto industry across Europe, a central threat to the Continent’s economy. These factories will not suddenly roar back to life if the central bank reduces borrowing costs. That will happen only when the threat to public health subsides. | For Europe — as for the rest of the world — this crisis does not appear to be easily influenced by a reduction in interest rates. Italy’s broad quarantine has disrupted production at factories that are major suppliers of parts to the auto industry across Europe, a central threat to the Continent’s economy. These factories will not suddenly roar back to life if the central bank reduces borrowing costs. That will happen only when the threat to public health subsides. |
| The most meaningful way policymakers can alleviate the economic damage is through fiscal policy, unleashing government money that can help small businesses grapple with a loss of sales while aiding workers who are unable to get to their jobs. Governments could spur spending in a moment when shopping malls, restaurants, concert halls, convention centers and other venues for human interaction are being avoided as transmission zones for a lethal virus. | The most meaningful way policymakers can alleviate the economic damage is through fiscal policy, unleashing government money that can help small businesses grapple with a loss of sales while aiding workers who are unable to get to their jobs. Governments could spur spending in a moment when shopping malls, restaurants, concert halls, convention centers and other venues for human interaction are being avoided as transmission zones for a lethal virus. |
| On Monday, as Europe absorbed the impact of Italy’s decision to cordon off some 16 million people from the rest of civilization, senior European leaders called for targeted government spending. | On Monday, as Europe absorbed the impact of Italy’s decision to cordon off some 16 million people from the rest of civilization, senior European leaders called for targeted government spending. |
| The Italian prime minister, Giuseppe Conte, promised that his government would deliver “massive shock therapy.” The French finance minister, Bruno Le Maire, said a “massive” economic stimulus was now required to cope with the outbreak. | The Italian prime minister, Giuseppe Conte, promised that his government would deliver “massive shock therapy.” The French finance minister, Bruno Le Maire, said a “massive” economic stimulus was now required to cope with the outbreak. |
| But, tellingly, Mr. Le Maire told French radio that he planned to discuss an economic stimulus plan with other European officials at a meeting a week later, on March 16 — a seeming eternity in the face of a rapidly spreading outbreak with no discernible boundaries. | But, tellingly, Mr. Le Maire told French radio that he planned to discuss an economic stimulus plan with other European officials at a meeting a week later, on March 16 — a seeming eternity in the face of a rapidly spreading outbreak with no discernible boundaries. |
| Updated June 2, 2020 | |
| 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. |
| 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. | 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. |
| 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.) |
| More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said. | More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said. |
| 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. |
| Italy gained European approval last week to unleash a 7.5 billion euro (about $8.6 billion) package of spending measures to aid those harmed by the outbreak. But as the virus continued to spread, yielding growing numbers of cases in Germany, France and beyond, the European authorities appeared no closer to tackling the crisis collectively. | Italy gained European approval last week to unleash a 7.5 billion euro (about $8.6 billion) package of spending measures to aid those harmed by the outbreak. But as the virus continued to spread, yielding growing numbers of cases in Germany, France and beyond, the European authorities appeared no closer to tackling the crisis collectively. |
| “There is very little coordination at this stage,” said Silvia Dall’Angelo, senior economist at Hermes Investment Management in London. “This is no longer contained to Italy, and there’s only a national-level response, which is suboptimal.” | “There is very little coordination at this stage,” said Silvia Dall’Angelo, senior economist at Hermes Investment Management in London. “This is no longer contained to Italy, and there’s only a national-level response, which is suboptimal.” |
| Some held out hopes that the coronavirus would prove an impetus for the extension of European solidarity, a spur to collective action that has so frequently failed to materialize in other crises. | Some held out hopes that the coronavirus would prove an impetus for the extension of European solidarity, a spur to collective action that has so frequently failed to materialize in other crises. |
| When the outbreak emerged in Italy last month, it was initially seen as a menace to European industry and a potential shock to the global supply chain. The outbreak began in China, shuttering industry there, and prompting fears that factories around the world would soon suffer shortages of parts and electronics. The jump to Italy exacerbated those fears, raising the likelihood that German automakers would have difficulty gaining parts made in Italian factories. | When the outbreak emerged in Italy last month, it was initially seen as a menace to European industry and a potential shock to the global supply chain. The outbreak began in China, shuttering industry there, and prompting fears that factories around the world would soon suffer shortages of parts and electronics. The jump to Italy exacerbated those fears, raising the likelihood that German automakers would have difficulty gaining parts made in Italian factories. |
| That story was consistent with the conventional wisdom at the time that the world economy was in for a rough few months but would bounce back. The virus would be contained, factories would revive, and products not made on schedule would be produced at some later point. | That story was consistent with the conventional wisdom at the time that the world economy was in for a rough few months but would bounce back. The virus would be contained, factories would revive, and products not made on schedule would be produced at some later point. |
| But the events of recent days have blown that scenario to bits. Italy and the rest of Europe are threatened with far more than disruption to their manufacturing supply chains. Tourism is being devastated as people avoid the confined spaces of airplanes, trains and buses. Hotels, restaurants and other parts of the hospitality industry are in peril. And many of these scrapped activities amount to outright economic losses, not just spending shifted from one time to another. | But the events of recent days have blown that scenario to bits. Italy and the rest of Europe are threatened with far more than disruption to their manufacturing supply chains. Tourism is being devastated as people avoid the confined spaces of airplanes, trains and buses. Hotels, restaurants and other parts of the hospitality industry are in peril. And many of these scrapped activities amount to outright economic losses, not just spending shifted from one time to another. |
| A trip to the dentist not made because of the outbreak will presumably be rescheduled to a less dangerous time. Not so outings to cinemas, night clubs and other entertainment venues. That spending comes off corporate bottom lines, limiting economic growth. This is the realization that has stock markets seized by fear as they struggle to get a handle on how bad things could get. | A trip to the dentist not made because of the outbreak will presumably be rescheduled to a less dangerous time. Not so outings to cinemas, night clubs and other entertainment venues. That spending comes off corporate bottom lines, limiting economic growth. This is the realization that has stock markets seized by fear as they struggle to get a handle on how bad things could get. |
| They could get very bad. The virus “looks likely to cause a worldwide recession and bear market in stocks,” said Charles Dumas, chief economist at TS Lombard, an investment research firm, in a report released on Monday. | They could get very bad. The virus “looks likely to cause a worldwide recession and bear market in stocks,” said Charles Dumas, chief economist at TS Lombard, an investment research firm, in a report released on Monday. |
| Perhaps the danger has become so severe that it will demand European action. This crisis is not about arcane matters like credit ratings and derivatives. It centers on whether people live or die, the central fact that will determine the depth and breadth of the economic damage. That may prove enough for European leaders to push past their legacy of inaction to deliver a muscular response. | Perhaps the danger has become so severe that it will demand European action. This crisis is not about arcane matters like credit ratings and derivatives. It centers on whether people live or die, the central fact that will determine the depth and breadth of the economic damage. That may prove enough for European leaders to push past their legacy of inaction to deliver a muscular response. |
| “Europe works in leaps and bounds,” said Maria Demertzis, an economist and deputy director at Bruegel, a research institution in Brussels. “There is inaction until problems hit, and then we take action. The question is, can we be a little quicker?” | “Europe works in leaps and bounds,” said Maria Demertzis, an economist and deputy director at Bruegel, a research institution in Brussels. “There is inaction until problems hit, and then we take action. The question is, can we be a little quicker?” |