This report is a summary of third-party economic research and perspectives to foster communication with business and economic development stakeholders during the COVID-19 crisis.
- Global: Global economic recovery slowing from a bounce to a grind. Canada proposed a $7.5B plan targeting clean energy, broadband and agriculture.
- U.S.: Historic decline in U.S. GDP in second quarter modified to 31.4% annualized pace. Quarterly new business applications reach all-time high, consumer confidence jumps, job rebound continues.
- Ohio: JobsOhio hosted Military and Federal Sector roundtables in northeast Ohio as the ramp-up to attract more military and federal jobs in the state continues.
The COVID-19 pandemic crossed a grim milestone this week as the virus claimed at least 1M people across the globe according to Johns Hopkins University. Roughly half the world’s total fatalities have been reported in four countries: U.S., Brazil, India, and Mexico. At least 33M have been infected and it has wreaked havoc on countries and the global economics leaving millions unemployed. The Spanish government has ordered a partial lockdown in the capital Madrid and surrounding areas badly affected by coronavirus after a rise in cases.
The IMF is calling for urgent action to prevent a debt crisis in emerging economies including a risk of sovereign bankruptcies unless temporary debt relief measures extended and debt contracts and processes are overhauled. Canadian Prime Minister Trudeau is set to map out a new plan for Canada’s infrastructure bank as his government looks for ways to spur long-term economic growth. The new strategy will focus on agricultural infrastructure, energy retrofits and broadband. In recent weeks, China made several major purchases of U.S. soybeans and sharply increased its purchases of U.S. corn and wheat, partly tied to that nation’s efforts to meet its import commitments under the Phase 1 trade agreement negotiated with the U.S. and signed in January 2020.
Total nonfarm payroll employment rose by 661,000 in September; however, there are still 6.8M more people out of work than in February 2020. Applications to form businesses surged in the third quarter, signaling the labor market may recover more quickly than previous recessions. The Census reported 97,190 business applications for the week ending September 19, representing a 45.1% year-over-year jump. Total second quarter business applications reached an all-time high of 883,174. The Conference Board’s latest data on consumer confidence exceeded expectations for September registering a reading of 101.8 from 86.3 in August, at the largest one-month jump since 2003. For the first time since 1960, U.S. personal consumption expenditure on electricity was higher than it was on gasoline largely because driving fell dramatically when millions of adults began working from home, in effect transferring much of their work-related electricity consumption to their own power bills, which saw the biggest spike in the last 20 years.
The PMI, a gauge of factory activity decreased to 55.4 from 56 a month earlier. Readings above 50 indicate manufacturing is expanding. PNC Bank’s biannual survey of small and middle market companies shows leaders are not confident about the mid-term economic prospects, with more than half reducing operating capacity and 43% reduced hours of operations. U.S. personal income dropped 2.7% in August after the lapse in emergency unemployment benefits for millions of Americans. The drop is raising fears that lower consumption and income could dampen the economic recovery. Consumption growth dropped to 1% in August from 1.5% in July whereas the savings rate fell to 14.1% from 17.7% as Americans were forced to dip into their savings to keep spending.
Another 837,000 Americans filed for first-time unemployment benefits last week, which is slightly fewer from the prior week, although last week’s figures notably do not include updated numbers from California, which paused processing initial claims for two weeks. The U.S. Department of Labor asks for comment on whether gig workers are independent contractors or employees. Walt Disney is slashing 28,000 workers in its U.S. resort business. Allstate, the fourth-largest car insurer in the U.S., will cut 3,800 jobs, 8% of its workforce. Goldman Sachs Group will cut 400 jobs. Airlines in the U.S. began massive layoffs this week with 50,000 workers potentially becoming furloughed due to lack of COVID-19 aid extension. Boeing will consolidate its 787 Dreamliner assembly in South Carolina, and end production of that jetliner in Washington state.
President Trump issued an Executive Order to address the “Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries.” The order states, “the U.S. now imports 80% of its rare earth elements directly from China,” and “…China has exploited its position in the rare earth elements market by coercing industries that rely on these elements to locate their facilities, intellectual property, and technology in China.”
JobsOhio hosted Military and Federal Sector roundtables in northeast Ohio as the ramp-up to attract more military and federal jobs in the state continues. Wexford Science and Technology chosen to design ‘innovation district’ in Cleveland’s MidTown neighborhood. Consumer spending in Ohio is recovering faster than the U.S., with Ohio at 98% of pre-pandemic levels v. 96% recovery for the U.S.
In the first overhaul of the state’s Medicaid program in 15 years, Ohio will begin accepting applications from businesses interested in providing managed care plans. Lt. Governor Husted announced Ohioans can access training at no cost through 12 training providers under the Individual Microcredential Assistance Program (IMAP), a program for those who are low income, or partially or totally unemployed.
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