Housing market chills, layoffs, companies boost virus fight
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Wednesday related to the global economy, the work place and the spread of the virus.
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Wednesday related to the global economy, the work place and the spread of the virus.
PAYCHECKS STOP: Companies are in survival mode, which means tens of thousands of people are losing weekly paychecks. Governments are pushing billions of dollars into programs to stop the bloodletting, but job cuts keep coming.
— Tesla furloughed most factory workers and announced pay cuts. Furloughed employees won’t be paid, but health benefits will continue. The company anticipates a return to work on May 4, according to an email from Valerie Workman, head of HR for North America.
— Starbucks will provide direct grants to employees worldwide. The Seattle roaster will provide $10 million in grants for things like housing, utilities, and family funeral costs during the pandemic.
BROKEN HOMES: There were already early signs of weakness in the housing market before the pandemic. New data shows a significant deterioration.
— Mortgage applications nationwide dropped 17.9% in one week, according to a Mortgage Bankers Association survey Wednesday. Purchase applications, which hint at future activity, slid 12% in a week, and a whopping 33% from the same week last year.
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— The number of people paying rent in March slipped 12%, according to the National Multifamily Housing Council. In it’s first review of the effects of the COVID-19 outbreak, the group found 69% of households had paid their rent by April 5, compared with 81% in the previous month.
HEAVY INDUSTRY: Manufacturers have reconfigured factory floors to provide essential goods despite the lack of a coordinated response from Washington and clashes between President Donald Trump and some of the nation’s largest producers.
— The U.S. will buy 30,000 desperately needed ventilators from General Motors for $489.4 million. GM is producing the devices at cost. The ventilators will go into the Strategic National Stockpile for distribution, HHS said. GM will deliver 6,132 ventilators by June.
— FedEx and DuPont are teaming up to get 450,000 protective suits to U.S. healthcare workers from a plant in Vietnam this week. Federal officials expect delivery of 2.25 million sets of protective gear in the next five weeks. The HHS has an option to double that order.
— The Burton snowboard company is donating 500,000 respirator masks to hospitals across the Northeast.
— Amazon is testing disinfectant fogging at warehouses. Amazon has been under pressure from workers to improve safety during the outbreak.
The online retail giant also confirmed it’s putting its delivery service for non-Amazon packages in the U.S. on hold starting in June. The service, launched in 2018, was in a handful of cities.
— The amount of freight that railroads hauled last week fell nearly 16% overall as more industries were affected by the ongoing coronavirus outbreak.
The Association of American Railroads said shipments of motor vehicles and parts plummeted 82% to 3,171 compared to last year’s 14,389 after most auto plants shut down. The number of coal shipments dropped 23% to 57,504 carloads of coal.
EMPTY SKIES: For the first time in well over a generation, skies are largely empty of planes. The number of people passing through U.S. airports is plumbing lows comparable only to the days following the Sept. 11 attacks.
— For the first time since the formation of the Transportation Security Administration, the number of passengers screened daily at U.S. airports dropped below 100,000. The figure recorded Tuesday, 97,130, represents a decline of more than 95% compared with the same day a year ago.
— Airbus is reducing production by about a third.
— JetBlue is responding to a drop in air travel by consolidating service in the New York, Boston, Washington, Los Angeles and San Francisco areas and reducing flights daily flights in those regions from nearly 500 to 70. The airline said Wednesday it will suspend flights to eight airports including San Jose, Baltimore and New York’s LaGuardia from April 15 through June 10.
JetBlue has reduced overall flying by 80% in April, compared with last April.
MACRO DEVASTATION: Despite national efforts to blunt the worst of the economic damage, a significant global contraction is increasingly likely.
— Japan’s economy is headed for a 25% contraction in the current quarter, even with the government’s fiscal aid package, Goldman Sachs said Wednesday. The contraction for the world’s third largest economy would be a record, since gross domestic product began to be tracked in 1955.
— The virus outbreak will cause a deep recession in Germany, shrinking the economy by 4.2% this year, leading German research institutes said Wednesday in their twice-annual report. Economists predict a swift rebound to growth of 5.8% in 2021.
MARKETS: Stocks climbed on Wall Street on Wednesday, while benchmark U.S. crude oil rose.
EATING OUT IS OUT: Restaurants and bars have been devastated by the virus, and even the “winners,” those that do not rely entirely on dining rooms, are getting clobbered.
— McDonald’s is reporting a 22% tumble in sales for March. About 75% of McDonald’s locations are open, but most are offering drive-thru, takeout or delivery only. McDonald’s has pulled financial guidance for the year.
— Panera Bread is offering basic groceries for takeout and delivery at about 90% of U.S. stores. Customers can order things like milk, fruit, and yogurt along with regular Panera meals.
— Starbucks Corp. said its U.S. same-store sales fell between 60% and 70% in the final few weeks of March. But the company said sales in China are gradually improving, with same-store sales down 42% in the last week of March compared to a 78% decline in the month of February.