The numbers only begin to tell a tale — one where the ending seems far off, shrouded in mystery, and more than a bit foreboding.
The jobs data show unemployment claims spiked by 70,000 to 281,000 last week … and that data does not show any effects of the mass layoffs that started in earnest over the past several days as the coronavirus pandemic continues.
The most widely hit industries include the travel vertical, of course, and also restaurants and bars. Mall operators like Simon have shuttered malls. The idea of hunkering at home means that at least some economic activity shifts online. But not enough to keep a recession at bay. And for those whose livelihoods depend on gatherings, on human contact —ride-hailing drivers, waiters and waitresses, barbers and nail technicians — things may get particularly bad.
The coronavirus crisis has caused a swift slowdown in economic activity across the U.S. and the world. Restaurants and bars have scaled back service or closed altogether. Airlines have slashed flights amid widening travel restrictions. Millions of people have hunkered down at home to stop the deadly virus from spreading further. And many may be out of their jobs or working reduced hours.
The shock has been broad and deep, and looking back at the last recession yields well, not all that much to go on. A decade ago, unemployment peaked at 10 percent. But a recession led by a financial crisis is different than a recession led by a global health crisis.
In the latter case, making credit available to smaller firms (and, yes, larger ones) may not matter when businesses are ordered to stay dark, the workforce is hobbled by sickness or fear and consumers are just not willing, or able, to spend. Whether the unemployment picture reaches 10 percent, as we’ve seen before, or 20 percent, as Treasury Secretary Steve Mnuchin has posited, the ripple effects will be enormous.
Yes, there may be pent-up demand when this is all over, and opening the businesses that have gone dark —movie theaters, malls — may be as simple as turning the lights back on and restocking the shelves. But getting the demand back? The confidence to buy again, to hire again, as the scars begin to heal? That will prove to be a long-term challenge.
Banking, Done Digitally: In more evidence of FinTechs crossing the great divide into traditional banking, Square has gotten the green light from the Federal Deposit insurance Corp. to create a de novo industrial bank in Utah — originating commercial loans to retailers who use the company for payments.
(Corporate) Cash is King: Uber details a multi-billion-dollar cash cushion the firm says should help it weather the economic downturn and make acquisitions as it continues to see an embrace of restaurant delivery.
Collaborative Efforts to Help Main Street: Startup Lunchbox and activist investors Eniac Ventures are combining efforts to help small businesses during the coronavirus pandemic. The initiative has been named “Help Main Street” and will compile a database of businesses that offer gift cards — and consumers can use them later, once the impact of the virus recedes.
Amazon Effect Cooled (Somewhat): Amazon is concentrating on selling and shipping coronavirus-related products like household staples and medical supplies. Prioritizing those products could lead to a drop in sales for other merchants.
Silicon Valley Investments: Silicon Valley deals are being halted in the midst of COVID-19. Face-to-face meetings are proving impossible for startups and their would-be investors, according to reports.
Big Tech Fines: Apple is on the receiving end of a $1.2 billion fine from France’s antitrust watchdog, tied to antitrust behavior in its distribution network.