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Making the Most of Lockdowns
A little more than halfway into a year marked by the Covid-19, it’s becoming clear that how countries manage their pandemic response has significant economic impacts. Much of East Asia and Europe suppressed the pandemic’s first wave and are now reopening their economies. But in the U.S., Latin America and India, the virus is still spreading, forcing those countries to choose between economic pain of renewed restrictions on daily life or accepting the human toll of mass infections, writes Marcus Walker.
The lesson here, epidemiologists say, is that lockdowns work. Timing is important, too: infections are rising quickly in countries that lifted their lockdowns too soon. But most important is what countries do during those lockdowns.
“A lot of what you see in the shape of infection curves is how well countries used the time of their lockdowns,” says Solomon Hsiang, director of the Global Policy Laboratory at the University of California, Berkeley. European countries that suppressed the first wave and have so far reopened with only limited upticks in infections “used the time to set up systems for testing and contact-tracing that can bear the weight after lockdowns,” he says. “In the U.S., we didn’t do that. We wasted the time.”
That doesn’t necessarily mean that those countries that wrestled their infections down are seeing a quick economic bounceback. New data from Europe and Asia suggest the recovery could take longer than hoped, write Jason Douglas and Feliz Solomon. The U.K. economy expanded just 1.8% in May from April, following a record plunge in April. Singapore, which has been lauded for its containment of the pandemic, nevertheless saw second-quarter gross domestic product shrink by an annualized 41.2%.
What to Watch Today
U.S. import prices for June come out at 8:30 a.m. ET.
U.S. industrial production and capacity utilization is out at 9:15 a.m. ET. Industrial production is expected to rise 4% in June.
The Bank of Canada releases a rate decision at 10 a.m. ET.
Philadelphia Fed President Patrick Harker speaks at 11:45 a.m. ET.
The Federal Reserve releases its so-called “beige book” at 2 p.m. ET.
Shop Til You Drop
U.S. consumer prices rose sharply last month as states moved to reopen their economies while coping with the coronavirus pandemic, Amara Omeokwe reports. The consumer-price index rose 0.6% in June from the previous month, snapping three months of declines.
Those price increases could be short-lived, however, as states such as California have put new restrictions in place following a surge of new cases.
A move to get American university and college endowments to divest from investments in fossil fuels is gaining steam as students and alumni press the schools over climate change. Those endowments control more than $600 billion. Cornell University, George Washington University and Georgetown University have all moved away from investing in oil and gas and Harvard University could soon appoint pro-divestment candidates to a board that oversees the school’s $40 billion endowment, the country’s largest.
Delta Air Lines plans fewer extra flights in August as the pandemic has slowed demand for domestic flying. The company, which lost $5.7 billion in the latest quarter, will halve the number of additional flights this summer to 500, an indication the company’s recovery is stalling as virus cases surge in various parts of the country, Doug Cameron reports.
Hard Times For GM
General Motors is trying to halt its slide of car sales in China by offering fresh models and revamping its brands, writes Trefor Moss. China is becoming increasingly attractive to auto makers because sales there have rebounded more strongly than in the U.S. and Europe as the country recovers from the downturn caused by the coronavirus pandemic. GM has lost a quarter of its sales in China over the past two years. Its sales fell 5.3% in the first quarter from a year earlier.
With professional sports mostly cancelled, team executives are turning to real estate to make up some of the revenue they’re losing from ticket sales and television deals, writes Will Parker. The Los Angeles Angels baseball team is planning 150 acres of apartments, restaurants and retail around the team’s stadium and the St. Louis Cardinals are part of a venture that will soon open new apartment towers near the team’s stadium where residents can watch games from their units.
The Organization of the Petroleum Exporting Countries expects oil demand to rise by a record 7 million barrels a day next year but that won’t be enough to bring about a return to pre-pandemic levels, David Hodari reports. The cartel forecast a decline of 8.9 million barrels a day in 2020.
What Else We’re Reading
The economic dislocation caused by the coronavirus pandemic has led to a wave of retirements, which has brought down labor force participation, according to new research by Olivier Coibion of the University of Texas, Yuriy Gorodnichenko of the University of California Berkeley and Michael Weber or the University of Chicago. Using large-scale surveys of households, they find that the share of people out of the labor force who say they are retired rose to 60% at the height of the pandemic from 53% before. That suggests the pandemic may have permanently altered the U.S. labor market.
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