The running coronavirus pandemic is hitting the U.S. and Europe. At first, it was service industries including hotels, restaurants and tourism. Now, the manufacturing sector is taking the hit. There are shutdowns of heavy industry, unprecedented since the World War II.
A Bloomberg report said:
Automakers in the U.S. and Europe are idling plants. China, Japan and South Korea have already taken the hit.
Filings for U.S. unemployment benefits rose by 70,000 to 281,000 in the week ended March 14, according to the U.S. Labor Department figures.
The Federal Reserve Bank of Philadelphia’s survey of factories showed conditions in the area worsened in March by the most on record.
Timothy Guinnane, an economic historian at Yale University, argues the better parallel may be with what came after the end of the war in 1945, specifically with post-war Germany, “where the whole country came to a halt for a few months.”
Guinnane argues the shutdown now under way in Europe and the U.S. follows an encouraging example in China where life has started to return to normal after a six-week closure. Plus, he said, it’s not clear – yet – that there will be longer-lasting damage to the U.S. economy.
JPMorgan Chase & Co. economists titled a note to clients about the global slowdown “The day the earth stood still.” “There is no longer doubt that the longest global expansion on record will end this quarter,” they wrote.
A week of lost auto sales in the U.S. alone is equivalent to losing 94,400 jobs, $7.3 billion in personal income and $2 billion in tax revenue.
Europe’s industrial giant, Germany, was teetering on the edge of recession before the coronavirus crisis hit. U.S. manufacturers saw their production contract by 0.2% in 2019. China’s manufacturing output fell 15.7% in January and February from a year earlier, according to official data earlier this week. The result is that China is now expected to record its slowest growth since 1976, the year Mao Zedong died and the Cultural Revolution ended.
In Germany, car companies are expected to shut down for about two weeks, leading to a significant dislocation in workers. Volkswagen AG is Europe’s largest industrial company and employs about 475,000 people on the Continent.
In the U.S., the closures have spread beyond the Detroit three with Hyundai Motor Co., Honda Motor Co. and Toyota Motor Corp. announcing temporary closings Wednesday, while VW had already shuttered its Chattanooga, Tennessee, plant.
Also affected are carmakers’ vast supplier networks, already shaky as a result of the shutdown in China. Ford had been forced to shut a plant in Chicago. At a Mercedes-Benz plant in Alabama, managers have warned that the shutdown in Europe may force production to stop soon because of a lack of parts.
The impetus for the auto plant closures in the U.S. is not entirely economic. They came after Detroit automakers capitulated to worker demands to shutter factories because of concerns on the factory floor about the spread of the virus.
GM, Ford Motor Co. and Fiat Chrysler Automobiles NV all said Wednesday they would halt production through the end of March to sanitize plants and adjust to a drop-off in auto sales.
Automakers had been trying to work out a compromise with union leaders that would allow them to keep production lines running by stepping up cleaning and staggering shifts to put workers at a greater distance from each other. But that became more difficult as cases of the virus began to appear in plants.
Two Fiat Chrysler workers – one at a transmission plant in Indiana and another at a truck plant in Michigan – had tested positive for the virus as of Wednesday, while Ford confirmed two cases among its U.S. workforce and GM has one.
“Our members are scared, frustrated, and there is panic amongst them,” LaShawn English, president of UAW Local 1264, which represents Fiat workers at a Michigan stamping plant, wrote in a letter Tuesday to CEO Mike Manley. “We are pleading that you make a stance today and temporarily halt production.”
Still, like other workers now confronting changed circumstances, many autoworkers are also displaying plenty of forbearance.
“There’s no bad guy here. This is unchartered territory for all of us,” said Bruce Baumhower, president of UAW Local 12 in Toledo, Ohio, which represents workers at a plant producing the Jeep Wrangler SUV. “If things deteriorate more over the next two weeks, we’ll just need more time off. We just cannot put our people in that kind of environment. The jobs are tough enough to do and fully concentrate on without worrying about staying alive.”
‘Hurricane-sized Increase’ in unemployment claims, it is just the beginning
A Common Dream report by Eoin Higgins, staff writer of Common Dream, said:
As unemployment claims spike across the U.S. due to the coronavirus outbreak, economists and progressives are warning that the worst is yet to come and only an unprecedented economic stimulus can offset the effects of a major recession.
“The increase of 70,000 last week was slightly more than the increase of 61,000 due to Hurricane Harvey in the week ending September 2, 2017,” Economic Policy Institute director of policy Heidi Shierholz wrote Thursday. “But today’s hurricane-sized increase is nothing compared to what we can expect in coming weeks.”
Shierholz added that while the stimulus package passed Wednesday by Congress and signed by President Donald Trump was a good first step, more action is needed.
“Policymakers should quickly pass a big fiscal stimulus package,” wrote Shierholz. “This ‘phase three’ package should finance a sizable amount of household consumption (including through a major expansion of unemployment insurance), give fiscal aid to state governments, provide a payroll tax credit to businesses to not lay off workers, ramp up direct government purchases of things like medical equipment to help fight the virus, and make sure the duration of all measures to address the coronavirus economic shock are determined by economic conditions, not arbitrary timelines.”
Economist and New York Times columnist Paul Krugman noted that the spike in claims already exceeded any week from the 2008-2010 recession and echoed Shierholz’s warning that next weeek’s numbers would be worse.
As Slate reported, the surge in claims is a direct consequence of the coronavirus outbreak and the disease’s effect on the service industry:
The entire leisure and hospitality sector, which employs 16.9 million people, or about 10 percent of the entire labor force, is going into hibernation, as Americans avoid bars, restaurants, and travel, and states and cities begin to order establishments closed.
The shock of the global pandemic on the U.S. economy is likely to be felt for months. Layoffs across the country are increasing as companies face a national economy with dried up demand and a lack of consumer spending.
According to the New York Times, the coronavirus’ impact on the economy could be far worse than already predicted as “the damage looks likely to be much deeper and longer lasting than seemed possible even a week ago.”
The Times added that the crisis is leading to a political consensus on using massive direct cash payments to stimulate the economy:
With striking speed, Democrats and Republicans in Washington have embraced proposals for cash payments to Americans to help offset the economic damage. On Tuesday, President Trump endorsed the move, after previously pushing for a payroll-tax cut instead.
Unemployment benefits, as Dig Left researcher Andrew Perez pointed out, are insufficient to meet the scope of the crisis — and that efforts from Democratic Party leaders like Senate Minority Leader Chuck Schumer (D-N.Y.) to use refundable tax credits to help were unlikely to do much.
“Unemployment insurance is $275 a week in some states,” said Perez.
Trump administration warns of 20 percent unemployment rate due to coronavirus
An NBC News said on March 18, 2020:
Trump administration officials warned Senate Republicans on Tuesday that the coronavirus outbreak in the U.S. could cause the unemployment rate to reach 20 percent, according to two sources familiar with the discussion.
The warning came during a closed-door lunch on Capitol Hill in which Secretary of the Treasury Steven Mnuchin presented a White House stimulus plan that could cost at least $1 trillion. The prediction was first reported by Bloomberg News. White House economic adviser Larry Kudlow also attended the lunch.
As the stock market struggles and the health of the economy is in serious jeopardy, previously reluctant Republicans are becoming much more open to approving an aid bill that large.
That estimated unemployment rate would be double the highest rate from the period around the Great Recession from 2007 to 2009, when it reached 10 percent in October 2009, according to the Bureau of Labor Statistics. Before then, the unemployment rate had not been that high since late 1982 through the first half of 1983 when it peaked at 10.8 percent.
Earlier this week, New York City Mayor Bill de Blasio issued a stark warning.
“We have the historical playbook, and this, if you want to know what this whole thing is going to play out as, one part the Great Recession we went through a few years ago, one part the Great Depression, one part the 1918 flu epidemic,” he said in an interview on MSNBC’s “Morning Joe,” saying those are three models to use in considering how to manage the outbreak.
The U.S. coronavirus outbreak that has intensified in recent days has prompted companies to lay off workers as health officials at the federal, state and local levels tell people to practice social distancing — not congregate in large groups and to work from home if possible — in order to help flatten the curve of its spread.
Mnuchin said at the White House coronavirus task force briefing and at the Capitol on Tuesday that the administration is interested in giving a major boost to the economy with Congress’ help with a massive stimulus package. Part of that plan that Mnuchin presented to Republicans and previewed publicly Tuesday would include $250 billion in payments to Americans that could begin being disbursed at the end of April if Congress agrees to the proposal.
CDC tells nurses to ‘use bandanas and scarves’ as face mask shortage hits U.S.
The US Centers for Disease Control (CDC) has advised nurses and frontline healthcare workers to use bandanas and scarves as makeshift masks when caring for Covid-19 patients “as a last resort” should hospitals reach “crisis capacity.”
The updated guidance comes during a national shortage of face masks as supplies dwindle amid soaring infection numbers.
The CDC acknowledged that the new advice to “use homemade masks (e.g., bandana, scarf) for care of patients with COVID-19,” goes against recommended standards of care across the US and cautions: “Homemade masks should ideally be used in combination with a face shield.”
The CDC admits that the protection level afforded by homemade face masks “is unknown.”
Previous guidance emphasized the need to use N95 masks, also referred to as “respirators,” before supplies were exhausted. Then healthcare workers were told to use surgical masks, even though they do not block airborne viruses but are designed to shield against droplets of saliva and mucus. Despite this, surgical mask stocks have been severely depleted from hospitals, hence the DIY disaster response advice.
“The CDC guidance came out telling people not to use N95 masks. That helps with the supply of N95s, but it puts a greater burden on the supply of surgical masks,” Mark Parkinson, president of the American Health Care Association, said.
Parkinson cited examples of nursing homes using improvised masks and gowns made out of plastic bags and now estimates that, within two weeks, up to 40 percent of suppliers will not be able to provide protective equipment for nurses and doctors.
The American Medical Association wrote a letter to Vice President Mike Pence, who was tasked with handling the coronavirus crisis by President Donald Trump, beseeching him for more assistance in obtaining N95 respirators and surgical masks to help protect frontline staff.
It is unclear how many hospitals and care facilities are experiencing “crisis capacity,” but the U.S. currently has 9,415 confirmed cases of coronavirus infection.
Bonnie Castillo the head of National Nurses United, the largest nurses’ union in the U.S., called the CDC guidance a “recipe for making this disaster worse, potentially far worse.”
Meanwhile, the American Nurses Association (ANA) said the recommendations were “appropriate,” adding that hospitals should inform staff when they have reached “crisis capacity.”
“The guidance with regard to the use of face masks is appropriate given the need to adapt the standard of care given the situation of the facility,” ANA Vice President of Nursing Practice and Work Environment Cheryl Peterson said in a statement.
Nicole Lurie, who served as assistant secretary for preparedness and response at the Department of Health and Human Services (HHS) during the Obama administration, called the CDC’s bandanna suggestion “a wake-up call.”
“The bottom line is, if you cannot protect healthcare workers and they get sick, the whole system goes down,” she told the Post. “The priority to maintain public health is to protect healthcare workers.”
Medical workers plea for key supplies
Another report said:
Frontline medical workers across the U.S. expressed alarm about “severe shortages” of testing and protection equipment.
Minnesota Department of Health said: Due to a national shortage of COVID-19 laboratory testing materials, the state is forced to make adjustments to its testing criteria to focus on the highest priority specimens, including hospitalized patients.”
“This is a huge problem,” Scott Becker, CEO of the Association of Public Health Laboratories, told CNN, which reported on medical supply shortages across the U.S. late Wednesday. “I’m really concerned that we are not going to have the capabilities to test those who really need and should get a test.”
Medical officials at several state health departments, hospitals, and labs have told CNN they need more testing swabs, reagents, pipettes, and other material needed to conduct the COVID-19 tests.
The Ohio Department of Health told CNN that it is focusing on “testing our most vulnerable patients” because of a “global shortage of supplies.”
The Minnesota Department of Health announced Tuesday “due to a national shortage of COVID-19 laboratory testing materials, the state is forced to make adjustments to its testing criteria to focus on the highest priority specimens, including hospitalized patients.”
The Washington Post reported Wednesday that Utah health officials are trying to reserve tests for “the most at-risk populations” and are instructing patients to only seek testing if they display obvious symptoms. “Unfortunately, we are faced with infrastructure and logistical challenges that prevent us from being able to test everybody,” Angela Dunn, the state epidemiologist, said Tuesday. “There’s not a win in that situation. It’s just what we have to do.”
Patients in various states told CNN they have been informed: “We aren’t priority to take the test” and are “so angry and outraged at the way this is being handled,” test suppliers in the U.S. and Europe explained that “it is unprecedented demand” and they cannot keep up.
The New York Times explained Wednesday, the limited supplies are affecting tests and treatment for not only COVID-19 but other healthcare services.
At the UCSF Health — a San Francisco hospital system at the heart of one of the nation’s coronavirus outbreaks — officials said they would have to stop testing patients in about five days because they will run out of nasopharyngeal swabs, which are inserted into patients’ nasal passages to get samples for testing.
Other hospitals elsewhere in the U.S. were ending their practice of using a second swab to test for the flu in an effort to preserve their supply.
The main manufacturer of the swabs, Copan, is an Italian company whose manufacturing plant is in Northern Italy, a region that has itself been hard hit by the coronavirus outbreak. It says it has ramped up manufacturing to deal with the extraordinary demand for an otherwise unassuming product to which many doctors gave little thought, until now.
Dr. Ulrike Sujansky of San Mateo, California told the Times that she has only been able to test a few patients in her hard hit area because of supply problems, such as swab kits have arrived late or have not been the right type. “We cannot test,” she said. And repeated: “We cannot test.”
Sujansky said that she also lacks standard protective gear, like face masks despite trying purchasing them and appealing to local and state authorities and hospitals. “I’m not given any tools to deal with this complete crisis,” Sujansky said.
At major hospitals in Seattle and Washington, D.C., mask shortages had already become so acute that doctors and patients were being asked to reuse the masks, not dispose of them as previous, traditional CDC protocol requires, even after contact with infected patients.
At Rush University Medical Center in Chicago, hospital staff have started using washable lab goggles instead of throwing away face shields for eye protection.
The Times newsletter “The Interpreter” explained Thursday, China and South Korea have shown that “testing early, often, and widely makes all the difference.”
The newsletter report on lessons from the global fight to contain the outbreak pointed out that “aggressive testing” is essential because “it gets countries better data on not just the overall spread of the virus but the particulars of how and where it is spreading.”
South Korean Foreign Minister Kang Kyung-wha told the BBC, “Testing is central because that leads to early detection, it minimizes further spread, and it quickly treats those found with the virus.”
He called South Korea’s widespread testing efforts “the key behind our very low fatality rate.”
Trump on Wednesday signed the $100 billion Families First Coronavirus Response Act, which ensures free coronavirus testing for all Americans and other assistance like paid sick leave, but only for certain workers.