Special Report: How the COVID-19 lockdown will take its own toll on health

By M.B. Pell and Benjamin Lesser

NEW YORK (Reuters) – It’s the most dramatic government intervention into our lives since World War II. To fight the coronavirus outbreak, governments across the globe have closed schools, travel and businesses big and small. Many observers have fretted about the economic costs of throwing millions of people out of work and millions of students out of school.

Now, three weeks after the United States and other countries took sweeping suppression steps that could last months or more, some public health specialists are exploring a different consequence of the mass shutdown: the thousands of deaths likely to arise unrelated to the disease itself.

The longer the suppression lasts, history shows, the worse such outcomes will be. A surge of unemployment in 1982 cut the life spans of Americans by a collective two to three million years, researchers found. During the last recession, from 2007-2009, the bleak job market helped spike suicide rates in the United States and Europe, claiming the lives of 10,000 more people than prior to the downturn. This time, such effects could be even deeper in the weeks, months and years ahead if, as many business and political leaders are warning, the economy crashes and unemployment skyrockets to historic levels.

Already, there are reports that isolation measures are triggering more domestic violence in some areas. Prolonged school closings are preventing special needs children from receiving treatment and could presage a rise in dropouts and delinquency. Public health centers will lose funding, causing a decline in their services and the health of their communities. A surge in unemployment to 20% – a forecast now common in Western economies – could cause an additional 20,000 suicides in Europe and the United States among those out of work or entering a near-empty job market.

None of this is to downplay the chilling death toll COVID-19 threatens, or to suggest governments shouldn’t aggressively respond to the crisis.

A recent report by researchers from Imperial College London helped set the global lockdown in motion, contending that coronavirus could kill 2 million Americans and 500,000 people in Great Britain unless governments rapidly deployed severe social distancing measures. To truly work, the report said, the suppression effort would need to last, perhaps in an on-again, off-again fashion, for up to 18 months.

In the United States, the White House this week said the final toll could rise to 240,000 dead. States have responded to the dire warnings, and the escalating number of cases revealed each day, by extending stay-at-home shutdowns.

The medical battle against COVID-19 is developing so rapidly that no one knows how it will play out or what the final casualty count will be. But researchers say history shows that responses to a deep and long economic shock, coupled with social distancing, will trigger health impacts of their own, over the short, mid and long term.

Here is a look at some.

SHORT TERM CONSEQUENCES

Domestic Violence

Trapped at home with their abusers, some domestic violence victims are already experiencing more frequent and extreme violence, said Katie Ray-Jones, the chief executive officer of the National Domestic Violence Hotline.

Domestic violence programs across the country have cited increases in calls for help, news accounts reported – from Cincinnati to Nashville, Portland, Salt Lake City and statewide in Virginia and Arizona. The YWCA of Northern New Jersey, in another example, told Reuters its domestic violence calls have risen up to 24%.

“There are special populations that are going to have impacts that go way beyond COVID-19,” said Ray-Jones, citing domestic violence victims as one.

Vulnerable Students

Students, parents and teachers all face challenges adjusting to remote learning, as schools nationwide have been closed and online learning has begun.

Some experts are concerned that students at home, especially those living in unstable environments or poverty, will miss more assignments. High school students who miss at least three days a month are seven times more likely to drop out before graduating and, as a result, live nine years less than their peers, according to a Robert Wood Johnson Foundation report.

Among the most vulnerable: the more than 6 million special education students across the United States. Without rigorous schooling and therapy, these students face a lifetime of challenges.

Special needs students “benefit the most from highly structured and customized special education,” said Sharon Vaughn, executive director of the The Meadows Center for Preventing Educational Risk at the University of Texas. “This means that they are the group that are most likely to be significantly impacted by not attending school both in the short and long term.”

In New Jersey, Matawan’s Megan Gutierrez has been overwhelmed with teaching and therapy duties for her two nonverbal autistic sons, eight and 10. She’s worried the boys, who normally work with a team of therapists and teachers, will regress. “For me, keeping those communications skills is huge, because if they don’t, that can lead to behavioral issues where they get frustrated because they can’t communicate,” Gutierrez said.

MEDIUM TERM CONSEQUENCES

Soaring Suicides

In Europe and the United States, suicide rates rise about 1% for every one percentage point increase in unemployment, according to research published by lead author Aaron Reeves from Oxford University. During the last recession, when the unemployment in the United States peaked at 10%, the suicide rate jumped, resulting in 4,750 more deaths. If the unemployment rate increases to 20%, the toll could well rise.

“Sadly, I think there is a good chance we could see twice as many suicides over the next 24 months than we saw during the early part of the last recession,” Reeves told Reuters. That would be about 20,000 additional dead by suicide in the United States and Europe.

Less than three weeks after extreme suppression measures began in the United States, unemployment claims rose by nearly 10 million. Treasury Secretary Steven Mnuchin warned the rate could reach 20% and Federal Reserve economists predicted as high as 32%. Europe faces similarly dire forecasts.

Some researchers caution that suicide rates might not spike so high. The conventional wisdom is that more people will kill themselves amid skyrocketing unemployment, but communities could rally around a national effort to defeat COVID-19 and the rates may not rise, said Anne Case, who researches health economics at Princeton University. “Suicide is hard to predict even in the absence of a crisis of Biblical proportions,” Case said.

This week, the Air Force Academy in Colorado Springs, Colorado, relaxed its strict social isolation policies after the apparent suicides of two cadet seniors in late March, The Gazette, a Colorado Springs newspaper, reported. While juniors, sophomores and freshmen had been sent home, the college seniors were kept isolated in dorms, and some had complained of a prison-like setting. Now, the seniors will be able to leave campus for drive-thru food and congregate in small groups per state guidelines.

Public Health Crippled

Local health departments run programs that treat chronic diseases such as diabetes. They also help prevent childhood lead poisoning and stem the spread of the flu, tuberculosis and rabies. A severe loss of property and sales tax revenue following a wave of business failures will likely cripple these health departments, said Adriane Casalotti, chief of government affairs with the National Association of County and City Health Officials, a nonprofit focused on public health.

After the 2008 recession, local health departments in the U.S. lost 23,000 positions as more than half experienced budget cuts. While it’s become popular to warn against placing economic concerns over health, Casalotti said that, on the front lines of public health, the two are inexorably linked. “What are you going to do when you have no tax base to pull from?” she asked.

Carol Moehrle, director of a public health department that serves five counties in northern Idaho, said her office lost about 40 of its 90 employees amid the last recession. The department had to cut a family planning program that provided birth control to women below the poverty line and a program that tested for and treated sexually transmitted diseases. She worries a depression will cause more harm.

“I honestly don’t think we could be much leaner and still be viable, which is a scary thing to think about,” Moehrle said.

LONG TERM CONSEQUENCES

Job-loss Mortality

Rises in unemployment during large recessions can set in motion a domino effect of reduced income, additional stress and unhealthy lifestyles. Those setbacks in income and health often mean people die earlier, said Till von Wachter, a University of California Los Angeles professor who researches the impact of job loss. Von Wachter said his research of past surges in unemployment suggests displaced workers could lose, on average, a year and a half of lifespan. If the jobless rate rises to 20%, this could translate into 48 million years of lost human life.

Von Wachter cites measures he believes could mitigate the effects of unemployment. The Coronavirus Aid, Relief, and Economic Security Act approved by the White House last week includes emergency loans to businesses and a short-time compensation program that could encourage employers to keep employees on the payroll.

Young People Suffer

Young adults entering the job market during the coronavirus suppression may pay an especially high price over the long term.

First-time job hunters seeking work during periods of high unemployment live shorter and unhealthier lives, research shows. An extended freeze of the economy could shorten the lifespan of 6.4 million Americans entering the job market by an average of about two years, said Hannes Schwandt, a health economics researcher at Northwestern University, who conducted the study with von Wachter. This would be 12.8 million years of life lost.

Thousands of college graduates will enter a job market at a time global business is frozen. Jason Gustave, a senior at William Paterson University in New Jersey who will be the first in his family to graduate from college, had a job in physical therapy lined up. Now his licensure exam is postponed and the earliest he could start work is September.

“It all depends on where the economy goes,” he said. “Is there a position still available?”

WHAT COMES NEXT

In the weeks ahead, a clearer picture of the disease’s devastation will come into focus, and governments and health specialists will base their fatality estimates on a stronger factual grounding.

As they do, some public health experts say, the government should weigh the costs of the suppression measures taken and consider recalibrating, if necessary.

Dr. Jay Bhattacharya, who researches health policy at Stanford University, said he worries governments worldwide have not yet fully considered the long term health impacts of the impending economic calamity. The coronavirus can kill, he said, but a global depression will, as well. Bhattacharya is among those urging government leaders to carefully consider the complete shutdown of businesses and schools.

“Depressions are deadly for people, poor people especially,” he said.

(Reporting in New York by M.B. Pell and Benjamin Lesser. Data editing by Janet Roberts. Editing by Ronnie Greene)

With over a million coronavirus cases, economic freefall looms

By Cate Cadell and Lisa Shumaker

BEIJING/NEW YORK (Reuters) – Global cases of the new coronavirus have shot past 1 million with more than 53,000 fatalities, a Reuters tally showed on Friday, as death tolls soared in the United States and western Europe while the world economy nosedived.

In the space of just 24 hours, 6,095 infected people died – nearly twice the total number of deaths in China, where the virus and COVID-19, the disease it causes, originated.

Atop the grim tally of officially reported data are Italy, with 13,915 deaths, and Spain, with 10,935. But the United States is becoming the new epicentre, with 243,635 cases – by far the most of any nation – and 5,887 deaths.

In China, where draconian containment measures stabilised the epidemic, coronavirus “martyrs” will be mourned on Saturday with a three-minute silence.

Though the official figures are shocking enough, health experts and even some governments acknowledge they do not capture the full spread. The virus mostly goes undetected in people with minor symptoms or none at all.

With airlines largely grounded, businesses closed, layoffs mounting and millions of people under lockdown, the economic fallout is set to be worse than the 2008 financial crisis.

Rather, comparisons are being drawn with such traumatic periods as World War Two or the 1930s global Depression.

ECONOMIES IN FREEFALL

Morgan Stanley predicted that the U.S. economy, the world’s biggest, would shrink 5.5% this year, the steepest drop since 1946, despite an unprecedented aid package. An eye-watering 38% contraction is predicted for the second quarter.

The bank said Britain was heading for a slump that could be worse in the short term than the 1930s.

Global stocks slipped, but then recovered as Wall Street headed into positive territory in morning trade.

Morgues and hospitals in New York City were struggling to treat or even bury victims of the virus, and state governor Andrew Cuomo predicted similar misery for the rest of the country.

Staff at one medical centre in Brooklyn were seen disposing of gowns and caps in a sidewalk trash can after loading bodies into a refrigerated truck.

After initially playing down the crisis, U.S. President Donald Trump’s administration was set to advise Americans to wear masks if venturing out.

Spain and Italy were also counting their daily dead, but prayed they were plateauing as data at least showed a slowdown in daily increases.

Some 900,000 Spanish workers have lost their jobs. Double that number have done so in Turkey, the opposition said.

Britain, accused by the opposition of being slow to respond to the threat of the virus, unveiled a hospital installed in an exhibition centre in under two weeks to provide thousands of extra beds, and promised a tenfold increase in testing.

But Prime Minister Boris Johnson’s extended self-isolation, after testing positive, was a reminder of the risk.

In a video message from Downing Street, he said he still had fever.

In France, the government did something that was shunned even in wartime, cancelling the end-of-high-school “baccalaureat” exam for the first time since its inception in 1808 under Napoleon Bonaparte.

DISASTER FOR DEVELOPING WORLD

While prosperous nations reel, there are fears of potentially far worse impact in places already struggling with poverty, insecurity and weak health systems.

In Iraq, three doctors and two officials said there were thousands of cases, many times more than publicly reported.

In India, many poor labourers were desperate, and hungry, after losing jobs in a lockdown ordered at four hours’ notice by Prime Minister Narendra Modi.

“I’m very sure that he works only for the big people and not for a man like me,” said former Modi supporter Ravi Prasad Gupta, laid off from a pipe plant.

Aware that religious gatherings have in some parts aided the virus’s spread, both Pakistan and Bangladesh sought to stop people going to mosques for Friday prayers, while Saudi Arabia imposed a curfew in the holy cities of Mecca and Medina.

Though there was little cause for cheer anywhere, one positive offshoot of the crisis has been a massive drop in atmospheric pollution. One expert said carbon dioxide emissions could fall this year by the largest amount since World War Two.

New Google data from mobile phones in 131 countries showed huge changes in human behaviour as people are told to stay home and businesses shut. For example, in Italy and Spain, visits to retail and recreation locations including restaurants and cinemas plunged 94% in March.

But authorities are still nervous about public criticism in many places, not only authoritarian states.

The U.S. Navy relieved the captain of the aircraft carrier Theodore Roosevelt of his command on Thursday, punishing him for the leak of a scathing letter to superiors seeking stronger measures to a curb a coronavirus on board.

(Reporting by Reuters bureaux worldwide; Writing by Daniel Wallis and Andrew Cawthorne; Editing by Howard Goller and Kevin Liffey)

U.S. weekly jobless claims blow past 6 million mark

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing claims for unemployment benefits shot to a record high of more than 6 million last week as more jurisdictions enforced stay-at-home measures to curb the coronavirus pandemic, which economists say has pushed the economy into recession.

Thursday’s weekly jobless claims report from the Labor Department, the most timely data on the economy’s health, reinforced economists’ views that the longest employment boom in U.S. history probably ended in March.

Initial claims for state unemployment benefits surged 3.341 million to a seasonally adjusted 6.648 million for the week ended March 28, the government said. Data for the prior week was revised to show 24,000 more applications received than previously reported, lifting the number to 3.307 million.

Economists polled by Reuters had forecast claims would jump to 3.50 million in the latest week, though estimates were as high as 5.25 million.

“Similar to last week’s unemployment claims numbers, today’s report reflects the sacrifices American workers are making for their families, neighbors, and country in order to slow the spread,” U.S. Labor Secretary Eugene Scalia said in a statement.

The United States has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the virus, with more than 214,000 people infected. Nearly 5,000 people in the country have died from the illness, according to a Reuters tally.

The dollar <.DXY> was little changed against a basket of currencies. U.S Treasury prices were trading higher while U.S. stock index futures pared gains.

GENEROUS PROVISIONS

Applications for unemployment benefits peaked at 665,000 during the 2007-2009 recession, when 8.7 million jobs were lost. Economists say the country should brace for jobless claims to continue escalating, partly citing generous provisions of a historic $2.3 trillion fiscal package signed by President Donald Trump last Friday and the federal government’s easing of requirements for workers to seek benefits.

As a result, self-employed and gig workers who previously were unable to claim unemployment benefits are now eligible. In addition, the unemployed will get up to $600 per week for up to four months, which is equivalent to $15 per hour for a 40-hour workweek. By comparison, the government-mandated minimum wage is about $7.25 per hour and the average jobless benefits payment was roughly $385 per person per month at the start of this year.

“Why work when one is better off not working financially and healthwise?” said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles.

Last week’s claims data has no bearing on the closely watched employment report for March, which is scheduled for release on Friday. For the latter, the government surveyed businesses and households in the middle of the month, when just a handful of states were enforcing “stay-at-home” or “shelter-in-place” orders.

It is, however, a preview of the carnage that awaits. Retailers, including Macy’s, Kohl’s Corp and Gap Inc , said on Monday they would furlough tens of thousands of employees, as they prepare to keep stores shut for longer.

According to a Reuters survey of economists, the government report on Friday is likely to show nonfarm payrolls dropped by 100,000 jobs last month after a robust increase of 273,000 in February. The unemployment rate is forecast to rise three-tenths of a percentage point to 3.8% in March.

“A rough look at the most affected industries suggests a potential payroll job loss of over 16 million jobs,” said David Kelly, chief global strategist at JPMorgan Asset Management in New York. “The loss would be enough to boost the unemployment rate from roughly 3.5% to 12.5%, which would be its highest rate since the Great Depression.”

Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid jumped 1.245 million to 3.029 million for the week ended March 21, the highest since July 6, 2013.

(Reporting By Lucia Mutikani; Editing by Dan Burns, Chizu Nomiyama and Paul Simao)

Stuck at home and jobless, Americans confront growing costs of coronavirus

By Doina Chiacu and Susan Heavey

WASHINGTON (Reuters) – A record 6.6 million Americans filed for unemployment benefits last week, the U.S. government said on Thursday, after another four states told residents to stay at home in the latest signs of the human and economic cost of the coronavirus.

Initial jobless claims rocketed as more states imposed stay-at-home orders, forcing large and small businesses to curtail output or shut altogether. More than 80 percent of Americans in 39 states are now under orders to remain at home to contain the spread of the virus.

Florida, Georgia, Mississippi and Nevada told residents to stay home on Wednesday, when the death toll soared by 925 to more than 4,800 nationwide. Confirmed U.S. cases climbed to 214,000, nearly double that of Italy, with the second most.

Globally, the number of confirmed infections approached 1 million with nearly 47,000 fatalities, led by Italy with over 13,000 dead.

More gloomy news came on Thursday when the Labor Department reported a whopping 6.6 million people filed for jobless claims in the past week, double the previous record set a week ago.

“It takes your breath away,” said Justin Hoogendoorn, head of fixed income strategy and analytics at Piper Sandler in Chicago. “Obviously the immediate reaction to something like that is going to be fear, especially when (jobless claims) were just about double what economists were even predicting, thinking dire scenarios.”

The new evidence of the pandemic’s impact on the economy follows a growing consensus by health experts that the respiratory illness could kill 100,000 to 240,000 people even if lockdown orders remain in place and Americans abide by them.

To deal with the mounting number of fatalities, the U.S. Defense Department is looking to provide up to 100,000 body bags after the Federal Emergency Management Agency placed an order for that many, a Pentagon official told Reuters on Wednesday.

New York City crematories are extending their hours, burning bodies into the night, with bodies piling up so quickly that city officials are surveying cemeteries elsewhere in the state for temporary interment sites.

Funeral homes and cemetery directors describe a surge in demand unseen in decades as COVID-19 cases, the respiratory ailment caused by the novel coronavirus, surpassed 40,000 infections in the city, killing more than 1,000.

“We’ve been preparing for a worst-case scenario, which is in a lot of ways starting to materialize,” said Mike Lanotte, executive director of the New York State Funeral Directors Association.

NEW ORLEANS HIT HARDThe coronavirus is even more lethal in New Orleans, which has a per-capita death rate much higher than in New York City. Doctors, public health officials and available data say the Big Easy’s high levels of obesity and related ailments may be part of the problem.

“We’re just sicker,” said Rebekah Gee, head of Louisiana State University’s healthcare services division.

The outbreak will get worse and social distancing is the only way to contain it, said Dr. Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases.

“We just have to do it,” Fauci told NBC’s Today show on Thursday. “That is our major weapon against this virus right now. We don’t have a vaccine that’s deployable. This is the only thing we have.”

He called on U.S. states to review the exemptions they have granted to their stay-at-home orders when he was asked whether businesses such as hair salons and florists should remain open.

“I urge the people at the leadership at the state level to really take a closer look at those kinds of decisions,” Fauci said.

An emergency stockpile of medical equipment maintained by the U.S. government has nearly run out of protective gear for doctors and nurses, as governors and healthcare providers across the country clamor for protective gear and medical equipment such as ventilators, which help COVID-19 patients breathe.

New York City, the epicenter of the U.S. outbreak, has appointed former police commissioner James O’Neill to oversee the city’s medical supply chain.

U.S. Senate Democratic Leader Chuck Schumer of New York called on Trump to follow suit and appoint a national czar with military experience to oversee the production and distribution of medical supplies.

“The system that the administration has in place is horrible,” Schumer told MSNBC, adding he would send a letter to Trump later on Thursday.

Fellow Democratic Senator Dick Durbin echoed Schumer, telling CNBC, “We are begging, pleading, scratching around at every way, shape or form to bring in the protective equipment that we need” for his state of Illinois.

Trump tweeted that New York has received more federal aid than any other state and said the man he describes as “Cryin’ Chuck Schumer” and local officials should stop complaining, saying they should have stocked up long ago.

Trump also said on Twitter that 51 large cargo planes with medical supplies were on their way to the states and the federal government was “sending many ventilators today” without giving details.

(Reporting by Doina Chiacu, Susan Heavey and Barbara Goldberg; Writing by Daniel Trotta; Editing by Howard Goller)

 

The U.S. weighs the grim math of death vs. the economy

By Ann Saphir and Jeff Mason

SAN FRANCISCO/WASHINGTON (Reuters) – Hollstadt Consulting CEO Molly Jungbauer has had to let go 30 of the 150 employees at her St. Paul, Minnesota firm to weather the drop in revenue from travel industry clients because of the coronavirus.

She’s worried about her daughter, who lives in New York and has the disease. But she also worries that shutting the economy with open-ended stay-at-home orders could have an “irreversible” impact.

So she was relieved to hear Minnesota Governor Tim Walz’s plan last week: clamp down on commerce and social activity now but then reopen the state for business by May 4. “It is nice to know that we have somewhat of an end date,” she said.

Coronavirus shut-downs could lop 25% or more from U.S. output, some economists forecast, throwing tens of millions of Americans out of work.  The U.S. government and the Fed are mounting what could be a $6 trillion economic rescue.

And elected U.S. politicians entrusted with public welfare are making calculations centered around the question: How many possibly preventable deaths are acceptable, as weighed against millions of jobs lost and trillions of dollars of economic output foregone?

Declaring the cure can’t be worse than the disease, President Donald Trump has said that by April 12, he wanted churches all over the country to be “packed” with Easter celebrants. On Sunday, Trump backed away from that goal by extending social distancing guidelines to April 30.

More testing is critical, Trump advisor Stephen Moore told Reuters.

“Once you have testing you can open up the economy,” he said. South Korea has tested a much bigger portion of its citizens than the United States has, allowing it to reduce infections and without stopping its economy. The U.S. has ramped up its capacity in recent weeks, though some states are making bigger inroads than others.

Also key, Moore said, is understanding if new cases are rising as fast in the Midwest as on the coasts, and if more people can, like the hundreds of thousands of workers at FedEx still on the job, practice social distancing and still work.

“You kind of have to look at the businesses that are running,” Moore said.

BUCKLE UP, MINNESOTA

U.S. state and local officials are doing their own calculus.

“We will not put a dollar figure on human lives,” New York Governor Andrew Cuomo said. Almost half of the 130,000 U.S. cases to date have appeared in New York, where some hospitals are overwhelmed with critically-ill patients.

Other governors in states with fewer cases are forging ahead with plans to try to limit both deaths and economic damage.

On Wednesday, Walz – who is self-quarantining after possible exposure – told Minnesotans that models project an eventual 2.4 million infections statewide.

If allowed to spread unchecked now, he said, as many as 74,000 Minnesotans could die because too few hospital beds and ventilators means patients won’t get the medical care they need.

Economically, he said, the state can’t afford to stay shut for a year or more until a vaccine is developed, an approach an influential Imperial College study  recommends.

So Walz is imposing a strict “stay-at-home” order for two weeks and a more relaxed version for a few weeks after that, to give hospitals the time to prepare. Epidemiologists refer to this as “flattening the curve.”

“I don’t believe it’s prudent to try to shelter in place until a vaccine is there,” Walz said. “I’m asking you to buckle it up for a few more weeks here.”

Even that will be painful: state officials estimate 28% of Minnesotans will be temporarily jobless for the next two weeks, with about 40% of those without any form of paid leave.

Once businesses and schools reopen, Walz hopes to use testing and targeted quarantines to keep new cases in check.

But he acknowledged there will be more deaths. “It’s agonizing and I find it nearly unacceptable,” he said. “My job is to reduce it down.”

Coronavirus is about ten times deadlier than the flu, killing one of every hundred that get it, according to Anthony Fauci, the top U.S. infectious disease expert. Given Walz’s estimate of 2.4 million Minnesota residents infected, that means 24,000 dead.

So far there have been 503 cases and nine deaths in the state.

FALSE TRADEOFF

For a growing chorus of economists, the notion of weighing deaths against the economy is fundamentally flawed.

“One can do those types of quite gruesome calculations” said MIT economist Emil Verner. But evidence suggests “that in some sense, that’s a false tradeoff,” he said.

Verner last week co-authored a paper about the response to the 1918 flu epidemic and found that cities that restricted public gatherings sooner and longer had fewer deaths – and ultimately emerged from the pandemic with stronger economic growth.

“Saving lives and saving the economy are not in conflict right now,” former Fed Chair Janet Yellen and more than 30 other current and former policymakers and economists wrote in a joint statement published earlier this week.

Paul Winfree, director of economic policy studies at the conservative Heritage Foundation, agrees that easing restrictions too early could be damaging. But, he said, allowing the downturn to deepen into a depression would ultimately negatively impact health.

“The White House is starting to weigh the long and short term health consequences of coronavirus and mitigation…(and) they are hearing from the business community that there needs to be some level of certainty,” he said.

The question remains if the American consumer, who is responsible for about two-thirds of U.S. GDP, will be confident enough to go to crowded malls and cozy restaurants if the death toll is still rising.

UCLA professor Andy Atkeson says that though lifting lockdowns may seem like an economic shot in the arm, doing so could let infections shoot right back up again.

“Americans would lock themselves down, afraid to go out to shop and work given the illness and death around them,” Atkeson wrote.

(Reporting by Ann Saphir and Jeff Mason, additional reporting by Heather Timmons; Editing by Heather Timmons and Edward Tobin)

Factbox: Global economic policy response to the coronavirus pandemic

LONDON (Reuters) – Governments and central banks around the world have unleashed unprecedented amounts of fiscal and monetary stimulus and other support over the past month for national economies reeling from the coronavirus pandemic.

Following is a summary of the main policy steps so far.

UNITED STATES

MONETARY STIMULUS – The Federal Reserve cut interest rates by 150 basis points total in two emergency meetings on March 3 (50 basis points) and March 15 (100 bps), taking the federal funds rate to 0-0.25%, along with $700 billion in asset purchases, or quantitative easing (QE).

It also cut the discount window rate by 150 basis points. The Fed followed on March 23 with unlimited and open-ended QE, planned purchases of corporate, municipal government bonds.

LIQUIDITY OPERATIONS AND FUNDING – Trillions of dollars in repurchase agreements flooding the markets with cash; swap lines with other major central banks to provide dollar funding; program to support money market funds; various easing of bank capital buffers; funding backstop for businesses to provide bridging loans of up to four years; funding to help credit flow in asset-backed securities markets; also plans to extend credit to small- and medium-sized businesses.

FISCAL STIMULUS (FEDERAL) – U.S. Senate passed a $2 trillion stimulus package on March 25 including a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 apiece to millions of U.S. families. The U.S. House of Representatives will vote on Friday.

EURO ZONE

MONETARY STIMULUS – The European Central Bank on March 12 added 120 billion euros to its existing asset-purchase program of 20 billion a month, more quantitative easing (QE). On March 19, the ECB added another 750 billion euros in QE, taking the total to about 1.1 trillion euros this year, and added Greece to the portfolio of bonds it would purchase. On March 26, it eliminated a cap on how many bonds it can buy from any single euro zone country.

LIQUIDITY OPERATIONS AND FUNDING – The ECB cut the interest rate on its Targeted Long-Term Refinancing Operations (TLTROs), cheap loans to banks by 25 basis points to -0.75% on March 12. It provided additional LTROs to bridge bank funding through to June and relaxed capital rules.

FISCAL/OTHER: Suspension of limits on EU government borrowing; considering allowing a precautionary credit line worth 2% of national GDP from the ESM bailout fund.

GERMANY

FISCAL STIMULUS – Agreed a package worth up to 750 billion euros on March 23; 100 billion euros for an economic stability fund that can take direct equity stakes in companies; 100 billion euros in credit to public-sector development bank KfW for loans to struggling businesses; stability fund will offer 400 billion euros in loan guarantees to secure corporate debt at risk of defaulting.

FRANCE

FISCAL STIMULUS – 45 billion euros of crisis measures on March 17 in to the economy to help companies and workers; guaranteeing up to 300 billion euros of corporate borrowing from commercial banks on March 16.

ITALY

FISCAL STIMULUS – Emergency decree worth 25 billion euros on March 16 which suspends loan and mortgage repayments for companies and families and increases funds to help firms pay workers temporarily laid off.

SPAIN

FISCAL STIMULUS – A 200 billion-euro package announced on March 17; half of the economic assistance measures are state-backed credit guarantees for companies and the rest include loans and aid for vulnerable people.

UNITED KINGDOM

MONETARY STIMULUS – The Bank of England cut interest rates by a total of 65 basis points in two emergency meetings on March 11 (50 bps) and March 19 (15 bps); taking Bank Rate to a record low of 0.10%; announces 200 billion pounds of bond purchases.

LIQUIDITY OPERATIONS AND FUNDING – The BoE also introduced a new program for cheap credit and reduced a capital buffer to help banks lend. A BoE corporate financing facility will buy commercial paper with a maturity of up to 12 months from businesses that had an investment-grade credit rating or similar pre-crisis.

FISCAL STIMULUS – A 30 billion-pound stimulus plan on March 11; 330 billion pounds in loan guarantees to businesses; offered to pay 80% of wage bills if staff put on leave up to a maximum of 2,500 pounds ($2,930) a month each – if firms kept them on. Businesses also allowed to temporarily hold on to 30 billion pounds ($35 billion) of value-added tax (VAT).

CANADA

MONETARY STIMULUS – The Bank of Canada cut rates by 100 basis points in two emergency meetings on March 4 (50 bps) and March 13 (50 bps), taking the overnight interest rate to 0.75%.

LIQUIDITY OPERATIONS AND FUNDING – eligible collateral for term repo operations expanded; C$50 billion ($34.6 billion) insured mortgage purchase program; C$10 billion credit support program for businesses.

FISCAL STIMULUS – C$55 billion in tax deferrals for businesses and families; C$27 billion aid package for workers and low-income households.

JAPAN

MONETARY POLICY – The Bank of Japan eased monetary policy by ramping up purchases of exchange-traded funds (ETFs) and other risky assets, including corporate bonds. The central bank also decided to create a new loan program to extend one-year, zero-rate loans to financial institutions.

FISCAL STIMULUS – The government announced 430.8 billion yen ($4.1 billion) of extra spending, much aimed at supporting affected small and medium-sized businesses. The government will also fund upgrades to medical facilities, and subsidize working parents forced to go on leave because of closed schools.

No fiscal stimulus plans have been announced, but something is expected in April, which may include cash payouts. They could be worth more than 30 trillion yen ($270 billion).

AUSTRALIA

MONETARY STIMULUS – The Reserve Bank of Australia cut rates by a total of 50 basis points in two decisions (25 bps at the March 3 meeting and another 25 bps at a March 19 emergency meeting), taking the cash rate to 0.25%; introduces first use of quantitative easing, setting a target of around 0.25% for bond yields.

LIQUIDITY OPERATIONS AND FUNDING – A$90 billion ($53.3 billion) funding facility to banks at fixed rate of 0.25%; A$15 billion purchase program of residential mortgage-backed and other asset-backed securities; A$715 million support program for airlines.

FISCAL STIMULUS – A$66.1 billion in assistance for companies and additional welfare payments; A$17.6 billion package in subsidies for apprentices, small businesses, pensioners and others.

SOUTH KOREA

MONETARY STIMULUS – Bank of Korea cut interest rates by 50 basis points to 0.75% on March 16.

FISCAL STIMULUS – Supplementary budget of 11.7 trillion won; 50 trillion won in emergency financing for small businesses; further loosened key capital flow rules temporarily to encourage local financial institutions to supply more dollars.

CHINA

MONETARY STIMULUS – People’s Bank of China cut its one-year Loan Prime Rate, first introduced in August, by 10 basis points to 4.05% on Feb 20, following various liquidity injections and other mild policy easing. The PBOC cut the cash banks must hold as reserves for the second time this year on March 13, releasing 550 billion yuan ($79 billion).

LIQUIDITY AND FUNDING – China offered easier funding for small- and medium-sized businesses, increasing yuan re-lending and re-discount quotas by 500 billion yuan on Feb 25. Also increased policy banks’ loan quota by 350 billion yuan to make loans targeting these businesses.

FISCAL STIMULUS – China is set to unleash trillions of yuan of fiscal stimulus. The ramped-up spending will aim to spur infrastructure investment, backed by as much as 2.8 trillion yuan ($394 billion) of local government special bonds, according to sources on March 19. The national budget deficit ratio could rise to record levels, sources added.

Various small measures and fiscal expenditure such as tax breaks, reduced power charges and fee reductions.

BRAZIL

MONETARY STIMULUS – Central Bank of Brazil cut interest rates by 50 basis points to 3.75% and eased capital requirements for financial institutions.

LIQUIDITY OPERATIONS AND FUNDING – 1.2 trillion reais ($233.8 billion) central bank program to inject liquidity through purchases of bank loan portfolio packages; new rules allowing banks to offer firms and households increased loans and better terms; central bank intervention in FX markets and repurchases of dollar-denominated sovereign bonds.

FISCAL STIMULUS – 150 billion reais budget boost to support most vulnerable population and jobs; presidential decree declaring national emergency over the coronavirus passed in Congress, allowing the government to waive fiscal targets and free up budget resources. [nL1N

INDIA

FISCAL STIMULUS – The Federal government announced on March 26 a 1.7 trillion rupee ($22.6-billion) economic stimulus plan providing direct cash transfers and food security measures.

SOUTH AFRICA

MONETARY STIMULUS – The South African Reserve Bank (SARB) cut its main lending rate by 100 basis points to 5.25% on March 19.

LIQUIDITY OPERATIONS AND FUNDING – The SARB announced on March 25 a program to buy bonds of varying maturities on the secondary market, but it did not give further details.

(Compiled by Reuters Polls)

McConnell, Pelosi, Mnuchin see deal soon on $2 trillion U.S. coronavirus aid

By David Morgan and Richard Cowan

WASHINGTON (Reuters) – Senior Democrats and Republicans said on Tuesday they were close to reaching a deal on a $2 trillion coronavirus economic stimulus package, raising hopes that the U.S. Congress could soon act to try to limit the economic fallout from the pandemic.

“At last, I believe, we’re on the five-yard line,” Senate Majority Leader Mitch McConnell said, using a football analogy meaning close to scoring, as the chamber opened its session on Tuesday morning.

“We are very close,” added McConnell, the top Republican in Congress.

House of Representatives Speaker Nancy Pelosi, the top Democrat in Congress, said the two sides had agreed to more oversight provisions of a $500 billion fund to help hard-hit businesses, resolving a key sticking point.

“I think there is a real optimism that we could get something done in the next few hours,” Pelosi told CNBC.

Steven Mnuchin, President Donald Trump’s treasury secretary, told reporters that lawmakers hope to have a draft ready within the next two to three hours. He confirmed the changes to the industry fund. “There’s better oversight,” Mnuchin said.

Democrats have twice blocked attempts to advance the bill, saying it did not provide enough money for states and hospitals, lacked sufficient aid for unemployed Americans and did not include adequate supervision of a massive fund to aid big businesses.

Those concerns appear to have been addressed.

“I’m very optimistic that there will be a deal announced this morning,” Democratic Senator Chris Coons said on MSNBC.

Wall Street jumped at the open on Tuesday as signs that Washington was nearing a deal on the rescue package gave a shot of optimism to markets reeling under the biggest selloff since the global financial crisis more than a decade ago.

Trump’s administration has launched a major push for action to try to blunt the economic impact of the pandemic and steep stock market decline, after he spent weeks dismissing the risks.

As talks concluded late on Monday, Senate Democratic Leader Chuck Schumer said the two sides were nearing an agreement and he expected that the legislation would be voted upon on Tuesday.

‘ALL OF THE NONSENSE’

Republicans, Democrats and top Trump aides had negotiated for days over the package, which would be the third and largest passed to address the crisis if it is backed by both the Republican-majority Senate and Democratic-majority House and signed by the Republican president.

“Congress must approve the deal, without all of the nonsense, today. The longer it takes, the harder it will be to start up our economy,” Trump wrote on Twitter on Tuesday.

The coronavirus pandemic has killed more than 550 people in the United States and sickened more than 43,800, shuttered thousands of businesses, thrown millions out of work and led state governors to order about 100 million people – nearly a third of the nation’s population – to stay at home.

Pelosi has introduced her own $2.5 trillion counterproposal that also includes $4 billion that would allow states to conduct the November presidential and congressional elections by mail.

That legislation would likely be irrelevant if a bipartisan deal is forged in the Senate.

While details of the emerging bipartisan bill were not available, it is expected to provide financial aid for Americans out of work because of the virus and help for struggling industries such as airlines.

Republicans normally hold a slim 53-47 majority in the Senate, meaning they need Democratic support to garner the 60 votes required to advance most legislation.

But the coronavirus has affected their ranks, giving Democrats even more leverage. Republican Senator Rand Paul has tested positive for coronavirus and four other Republicans are also unable to vote because they were exposed to Paul or others with the virus.

(Additional reporting by Doina Chiacu, Lisa Lambert and Susan Heavey; Writing by Andy Sullivan and Patricia Zengerle; editing by Scott Malone, David Gregorio and Will Dunham)

‘Dilly-dallying around’: Testy U.S. Senate nears coronavirus relief vote

By David Morgan and Andy Sullivan

WASHINGTON (Reuters) – Tempers boiled over in the U.S. Senate on Monday as lawmakers moved toward another vote on a far-reaching coronavirus economic stimulus package even though Republicans and Democrats said they were still at odds over details that had stalled the package over the weekend.

Both sides said they were close to an agreement on the massive bill, which Treasury Secretary Steven Mnuchin said carried a $2 trillion price tag. But they remained at odds over provisions to help businesses, as well as the amount of money to provide to hospitals and state and local governments.

Senate Majority Leader Mitch McConnell and several other Republicans angrily accused Democrats of trying to take advantage of the crisis to advance their political agenda with unrelated provisions. McConnell said the Senate, controlled by President Donald Trump’s fellow Republicans, would hold another procedural vote on the package after it fell short on Sunday.

U.S. Senate Majority Leader Mitch McConnell (R-KY) speaks to the media after a meeting to wrap up work on coronavirus economic aid legislation, during the coronavirus disease (COVID-19) outbreak, in Washington, U.S., March 22, 2020. REUTERS/Mary F. Calvert

“This is not a juicy political opportunity. This is a national emergency,” McConnell said as the Senate opened its session.

Senate Democratic Leader Chuck Schumer suggested the vote would again fall short unless the measure included more guardrails to avoid misuse of the $500 billion earmarked to help struggling industries.

“Our goal is to reach a deal today and we’re hopeful, even confident that we will meet that goal,” Schumer said. He said the upcoming vote would be “irrelevant” if negotiations were not complete.

Republican Senator John Thune angrily accused the Democrats of “dilly-dallying around.”

“The country is burning and your side wants to play political games,” Thune said.

Mnuchin said the two sides made progress on Monday morning.

“We knocked off a bunch of things on the list already and we’re closing in on issues,” Mnuchin told reporters after exiting Schumer’s office. He did not give specifics.

U.S. stocks fell on Monday as the coronavirus forced more U.S. states into lockdown, eclipsing optimism from an unprecedented round of policy easing by the Federal Reserve.

The bill represents a third effort by Congress to blunt the economic toll of the pandemic that has killed at least 428 people in the United States and sickened more than 34,000, leading state governors to order nearly a third of the nation’s population to stay at home and putting much business activity on hold.

The measure includes financial aid for ordinary Americans, small businesses and critically affected industries, including airlines.

Republicans said Democrats were seeking to add unrelated provisions, such as expanded tax credits for wind and solar power and increased leverage for labor unions.

Democrats said Republicans were also trying to add provisions that would exclude nonprofit groups from receiving small-business aid, and extend a sexual abstinence-education program that is due to expire in May.

The speaker of the House of Representatives, Nancy Pelosi, released her own version, which would add billions of dollars to help states conduct elections by mail.

Republicans normally hold a slim 53-47 majority in the chamber, short of the 60 votes they need to advance most legislation.

But the coronavirus threat has affected their ranks. Republican Senator Rand Paul said he tested positive for the virus on Sunday, and several others have self-quarantined as a precautionary measure. Republicans only mustered 47 votes in a procedural vote on Sunday.

(Reporting by David Morgan and Andy Sullivan; Additional reporting by Susan Cornwell; Writing by Andy Sullivan; Editing by Scott Malone, Will Dunham and Jonathan Oatis)

Trump blasts media as anxious Americans come to grips with coronavirus pandemic

WASHINGTON (Reuters) – U.S. President Donald Trump on Friday capped a tumultuous week as Americans faced sweeping life changes and massive Wall Street losses amid the fast-spreading coronavirus outbreak by turning to a familiar playbook: attacking the media.

In a contentious press briefing, the Republican president lashed out at an NBC reporter who noted Trump’s tendency to put an optimistic spin on the situation and asked what his message was to the American people who may be scared.

“I say that you’re a terrible reporter. I think that is a nasty question,” Trump said.

Two of the nation’s most populous states – California and New York – have enacted their toughest restrictions yet affecting some 60 million people, while federal authorities this week moved to close the borders with Canada and Mexico. More than 200 people have died in the United States and over 14,000 cases of the highly contagious respiratory illness had been confirmed by Friday.

Trump and top administration officials for weeks downplayed the outbreak, which began in China in December, before shifting their tone about the severity of the health crisis more recently.

The president, who is running for re-election on Nov. 3, has long sparred with the media, blasting coverage of him as “fake news” and “hoaxes,” and slamming news outlets and journalists on his Twitter feed. His re-election campaign also recently filed lawsuits against several outlets, including the New York Times and the Washington Post.

Yet the crises has propelled Trump recently to give briefings with news outlets nearly every day in the White House briefing room, a place he eschewed during his first three years in office.

On Friday, in a particularly unusual twist, Trump’s first White House press secretary, Sean Spicer, attended the briefing and asked a question in his role working for Newsmax. Spicer repeatedly sparred with reporters during his time as a spokesman early in Trump’s term.

During his recent engagements with the press, Trump has sought to display unabashed optimism despite more sober comments from public health officials, medical experts, state governors and others who have sounded the coronavirus alarm.

One reporter on Thursday asked about the impact on the economy as many businesses have had to dramatically shift operations or shut down entirely during drastic measures to slow the spread of the virus.

“Thanks for telling us. We appreciate it,” Trump said. “What’s the rest of your question? We know that. Everybody in the room knows that.”

Asked last week about his role regarding the disbanding of a National Security Council pandemic preparedness team on his watch, Trump told a PBS reporter: “That’s a nasty question… When you say me, I didn’t do it.”

(Reporting by Steve Holland, Alexandra Alper, and Jeff Mason; writing by Susan Heavey; editing by Bill Berkrot)

UK puts military on standby as coronavirus shuts down swathes of London

Reuters
By Guy Faulconbridge and Kylie MacLellan

LONDON (Reuters) – The United Kingdom put 20,000 military personnel on standby, closed dozens of underground train stations across London and Queen Elizabeth left the city for Windsor Castle as the coronavirus crisis shut down whole swathes of the economy.

As the coronavirus outbreak sweeps across the world, governments, companies and investors are grappling with the biggest public health crisis since the 1918 influenza pandemic, panicked populations and imploding financial markets.

Against a background of panic buying in supermarkets and the biggest fall in sterling for decades, the British government moved to quash rumors that travel in and out of London would be restricted.

“There is zero prospect of any restriction being placed on traveling in or out of London,” Prime Minister Boris Johnson’s spokesman told reporters.

He said police were responsible for maintaining law and order and there were no plans to use the military for this purpose, though the government put military reservists on formal notification.

But dozens of underground train stations across the capital were due to be closed and an industry source said supermarkets were expecting police support amid the fears that London was facing a virtual shutdown.

After ordering the closure of schools across a country that casts itself as a pillar of Western stability, Johnson on Wednesday said the government was ruling nothing out when asked whether he would bring in measures to lock down London.

Johnson has asked the government to come up with plans for a so-called lockdown which would see businesses closed, transport services reduced, gatherings limited and more stringent controls imposed on the city.

Queen Elizabeth on Thursday left the capital for her ancient castle at Windsor. The monarch has also agreed to postpone the planned state visit by Japanese Emperor Naruhito in June.

LONDON CLOSING?

London’s transport authority said it would close up to 40 underground train stations until further notice and reduce other services including buses and trains. The line between Waterloo station and the City of London financial district would be closed.

“People should not be traveling, by any means, unless they really, really have to,” London Mayor Sadiq Khan said.

Britain has so far reported 104 deaths from coronavirus and 2,626 confirmed cases, but UK scientific advisers say more than 50,000 people might have already been infected.

Britain faces a “massive shortage” of ventilators that will be needed to treat critically ill patients suffering from coronavirus, after it failed to invest enough in intensive care equipment, a leading ventilator manufacturer said.

With the world’s fifth largest economy coming to a standstill, the pound on Wednesday plunged to its lowest since March 1985, barring a freak “flash crash” in October 2016. On Thursday the pound was down 0.5% at $1.1570.

British shoppers were queuing around the block early on Thursday morning to buy basic supplies such as bottled water and tinned goods ahead of an expected toughening of measures to contain the coronavirus outbreak.

Supermarkets have been forced to limit purchases after frantic shoppers stripped shelves. Outside one Sainsbury’s supermarket in central London on Thursday, a huge queue had formed ahead of opening, with people standing calmly in the rain.

(Writing by Guy Faulconbridge; Additional reporting by Dylan Martinez, Kate Holton and Kylie MacLellan; Editing by Michael Holden and Giles Elgood)