Coronavirus recession

Movement of the Dow Jones Industrial Average between December 2019 and March 2020, showing the all-time high in February, and the crash in February and March during the COVID-19 pandemic

The Coronavirus recession, also known as Corona Recession[by whom?] is an economic recession which started affecting the world economy in 2020 due to the 2019–20 coronavirus pandemic.[1][2][3] It is one socio-economic impact of the 2019–20 coronavirus pandemic. While economic data takes time to be collected, many economists agree that the recession is already happening.[1] This has also been supported by findings from surveys of purchasing managers in the United States, Europe and China.[4][5] The United States currently has almost nine times as many unemployment claims as during the previous peak in 1982.[6]

IMF managing director Kristalina Georgieva on 24 March declared in a statement that the global economy will contract in 2020 and this "recession [is] at least as bad as during the global financial crisis or worse." Almost 80 countries have asked the IMF for help.[7](subscription required)

Many countries with large economies, such as Italy and Spain, have enacted quarantine policies. This has led to the disruption of business activities in many economic sectors.[citation needed] Developing countries are also forecast to be severely impacted by the coronavirus.[8]

Financial crisisEdit

The global stock market crash began on 20 February 2020.[9][10][11] Global markets into early March became extremely volatile, with large swings occurring in global markets.[12][13] On 9 March, most global markets reported severe contractions, mainly in response to the 2019–20 coronavirus pandemic and a described Russia–Saudi Arabia oil price war.[14][15] This became colloquially known as Black Monday I, and at the time was the worst drop since the Great Recession in 2008.[16][17]

Recession by sectorEdit

Retail sectorEdit

Shopping centers around the world responded by reducing hours or closing down temporarily in response. As of 18 March 2020, the footfall to shopping centers fell by up-to 30%, with significant impact in every continent.[18] Simon Property Group became the first major US-based mall operator to close all centers on 18 March, with government mandated closures in UAE, Italy, Germany, Spain, Brazil and Austria as of 23 March.

Transportation sectorEdit

 
A nearly empty flight from Beijing to Los Angeles during the pandemic

The pandemic has had a significant impact on aviation industry due to the resulting travel restrictions as well as slump in demand among travelers. Significant reductions in passenger numbers has resulted in planes flying empty between airports and the cancellation of flights.

Restaurant sectorEdit

The 2019–20 coronavirus pandemic has impacted the restaurant business. In the beginning of March 2020, some major cities in the US announced that bars and restaurants would be closed to sit-down diners and limited to takeout orders and delivery.[19] Some employees were fired, and more employees lacked sick leave in the sector compared to similar sectors.[20][21]

Recession by countryEdit

AustraliaEdit

Up to a million people have been laid off due to effects of the recession.[22] Over 280,000 individuals applied for unemployment support at the peak day.[23]

Housing prices in Australia could become 20% more affordable as a result of the recession.[24]

GermanyEdit

Minister of Finance of Hesse Thomas Schäfer was found dead on 28 March 2020. Schäfer left a suicide note, where he mentions the "hopeless" economic situation in the country as one of the reasons.[25]

United StatesEdit

A new record of unemployment claims was made, with 3.3 million claims made in the week ending on 21 March, with the previous record being 700,000 from 1982.[26] Restaurant patronage has fallen sharply across the country,[27] and major airlines are reducing their operations on a large scale.[28] The Big Three car manufacturers have all halted production.[29]

The US yield curve inverted in 2019, usually indicative of a forthcoming recession.[30][31] The St. Louis Fed Financial Stress Index increased sharply from below zero to 5.8 during March 2020.[32][33]

ReferencesEdit

  1. ^ a b Stewart, Emily (21 March 2020). "The coronavirus recession is already here". Vox. Retrieved 26 March 2020.
  2. ^ Islam, Faisal (20 March 2020). "Coronavirus recession not yet a depression". BBC News. Retrieved 26 March 2020.
  3. ^ Times, The Canberra (25 March 2020). "The coronavirus recession has arrived". The Canberra Times. Retrieved 26 March 2020.
  4. ^ Tokyo, Harriet Torry in Washington, Paul Hannon in London and Megumi Fujikawa in (24 March 2020). "Coronavirus Triggers Record Drops in U.S., European Business Activity". The Wall Street Journal. ISSN 0099-9660. Retrieved 26 March 2020.
  5. ^ Business, Laura He, CNN. "China's economy could shrink for the first time in decades because of the coronavirus". CNN. Retrieved 27 March 2020.
  6. ^ Yglesias, Matthew (3 April 2020). "March unemployment rate hits 4.4 percent— but the truth is worse". Vox. Retrieved 4 April 2020.
  7. ^ IMF forecasts 2020 global recession, recovery in 2021
  8. ^ Forecasting the Economic Impact of Coronavirus on Developing Countries. Political Economy – Development: Health eJournal. Social Science Research Network. Retrieved 30 March 2020.
  9. ^ Samuelson, Robert J. (12 March 2020). "What Crash of 2020 Means". The Washington Post. Retrieved 12 March 2020.
  10. ^ Wearden (earlier), Graeme; Jolly, Jasper (12 March 2020). "Wall Street and FTSE 100 plunge on worst day since 1987 – as it happened". The Guardian. ISSN 0261-3077. Retrieved 12 March 2020.
  11. ^ Williams, Sean (10 March 2020). "Stock Market Crash 2020: Everything You Need to Know". The Motley Fool. Retrieved 12 March 2020.
  12. ^ "Asian shares rise following stimulus-led surge on Wall St". MyNorthwest. Associated Press. 4 March 2020. Retrieved 13 March 2020.
  13. ^ DeCambre, Mark (7 March 2020). "Wild stock-market swings are 'emotionally and intellectually wearing' on Wall Street". MarketWatch. Retrieved 13 March 2020.
  14. ^ Partington, Richard; Wearden, Graeme (9 March 2020). "Global stock markets post biggest falls since 2008 financial crisis". The Guardian. ISSN 0261-3077. Retrieved 15 March 2020.
  15. ^ He, Laura; Duffy, Clare; Horowitz, Julia. "US stocks halted after falling 7%. Global stocks plunge as oil crashes and coronavirus fear spreads". CNN. Retrieved 15 March 2020.
  16. ^ Prynn, Jonathon; English, Simon; Murphy, Joe (9 March 2020). "Black Monday: Fourth biggest City fall as virus panic hits markets". London Evening Standard. Retrieved 13 March 2020.
  17. ^ Partington, Richard; Wearden, Graeme (9 March 2020). "Global stock markets post biggest falls since 2008 financial crisis". The Guardian. ISSN 0261-3077. Retrieved 13 March 2020.
  18. ^ Inc, Aislelabs (23 March 2020), How Shopping Centres Globally are Responding to Coronavirus by Aislelabs, retrieved 23 March 2020
  19. ^ "Chart: How coronavirus is devastating the restaurant business". Archived from the original on 19 March 2020. Retrieved 19 March 2020.
  20. ^ "Coronavirus exposes sick leave gap for retail, restaurant workers". Press Enterprise. 17 March 2020. Archived from the original on 18 March 2020. Retrieved 20 March 2020.
  21. ^ Sick leave National Bureau of Economic Research
  22. ^ Henriques-Gomes, Luke (24 March 2020). "Newly unemployed Australians queue at Centrelink offices as MyGov website crashes again". The Guardian. ISSN 0261-3077. Retrieved 26 March 2020.
  23. ^ Bonyhady, Nick (25 March 2020). "'Surge in demand': 280,000 ask Centrelink for help in one day". The Sydney Morning Herald. Retrieved 26 March 2020.
  24. ^ Farrer, Martin (19 March 2020). "Australian housing market will hit the wall in coronavirus recession, experts say". The Guardian. ISSN 0261-3077. Retrieved 26 March 2020.
  25. ^ "Zum Tod des hessischen Finanzministers Thomas Schäfer". Tichys Einblick (in German). 29 March 2020.
  26. ^ Yglesias, Matthew (26 March 2020). "Chart: New unemployment claims soar to 3.3 million, shattering previous records". Vox. Retrieved 27 March 2020.
  27. ^ Molla, Rani (16 March 2020). "Chart: How coronavirus is devastating the restaurant business". Vox. Retrieved 26 March 2020.
  28. ^ Gilbertson, Dawn. "American Airlines cuts 55,000 flights, parks 450 planes amid coronavirus: 'Fight of our lives'". USA Today. Retrieved 26 March 2020.
  29. ^ Business, Peter Valdes-Dapena and Vanessa Yurkevich, CNN. "GM, Ford and other automakers to halt production in the US". CNN. Retrieved 26 March 2020.
  30. ^ "A closely followed recession indicator is flashing its most worrying sign in 12 years | Markets Insider". Business Insider. May 2019. Archived from the original on 30 September 2019.
  31. ^ "U.S. Yield Curve Inverts for the First Time Since March". Bloomberg L.P. May 2019.
  32. ^ "The St. Louis Fed's Financial Stress Index, Version 2.0 | FRED Blog". 26 March 2020. Archived from the original on 27 March 2020. The revised STLFSI, however, has increased sharply—reminiscent of the worst of the financial market turmoil during the Great Recession in 2008–2009—registering a value close to 5.8.
  33. ^ "St. Louis Fed Financial Stress Index (STLFSI2)". FRED, Federal Reserve Bank of St. Louis. 26 March 2020. Archived from the original on 27 March 2020.