Newsletter: Fastest Reallocation of Labor Since World War II – Real Time Economics

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The coronavirus pandemic is forcing the fastest reallocation of labor since World War II, with companies and governments mobilizing an army of idled workers into new, urgently needed activities. Former hotel, restaurant and airline staff are moving to grocers, online retailers and hospitals as parts of the economy are shuttered to prevent the spread of the disease—and essential goods and services are strained, Ruth Bender and Matthew Dalton report.

In the U.S., the pool of potential workers has exploded. A record 3.28 million people applied for unemployment benefits. Though at the same time, big companies that have seen pandemic-fueled spikes in demand, including Walmart and CVS, are seeking nearly 500,000 new staff members in the coming weeks. In Europe—where social safety nets mean fewer workers have lost their jobs—governments are trying to move workers to where they are most needed.

WHAT TO WATCH TODAY

U.S. pending home sales for February are expected to rise 0.5% from the prior month. (10 a.m. ET)

The Dallas Fed’s manufacturing survey for March is out at 10:30 a.m. ET.

The Atlanta Fed’s Raphael Bostic delivers remarks by video to the National Association of Housing and Redevelopment at 12:30 p.m. ET.

The White House coronavirus task force holds a press briefing at 5 p.m. ET.

Japan’s industrial production figures for February are out at 7:50 p.m. ET.

China’s official manufacturing index for March is expected to rebound to 51.5 in from a record low of 35.7 in February, reflecting the government’s push for work resumption following widespread coronavirus-related closures. (9 p.m. ET)

Note: This is a partial listing of key economic events and subject to change.

TOP STORIES

It’s Over

Yes, some laid off workers will quickly find employment. But many won’t. Economists surveyed by The Wall Street Journal expect the March employment report, out Friday, to show a net loss of jobs, snapping a record 113-month stretch of job creation. And that figure doesn’t capture the depth of the crash: The March payroll report, like nearly all such Labor Department employment reports, is based on surveys asking about the week or pay period that includes the 12th day of the month. As a result, it will primarily reflect the labor market in the first two weeks of the month, before the number of virus-related infections and deaths jumped and several governors ordered nonessential businesses to close. If the shutdowns continue for a few more weeks, the April jobs report could show the greatest one-month deterioration of the labor market on record, Eric Morath and Paul Kiernan report.

2020 graduates were set to enter a hot job market. But the coronavirus pandemic has caused opportunities nationwide to evaporate, leaving soon-to-be grads unsure of what’s next.

It’s a big week for America. Bills are coming due for companies and millions of laid-off workers: payrolls, rent, utilities, credit cards, mortgages. The decisions made in the next few days—what to pay and what to put off—will shape how the pandemic affects the economy, Ruth Simon, Esther Fung, Suzanne Kapner and Heather Haddon report.

President Trump on Sunday said he was extending the administration’s social-distancing guidelines for another 30 days through the end of April. Mr. Trump said the peak of the death rate from the new coronavirus was expected to hit in two weeks.

U.S. lawmakers last week completed a record-shattering economic-rescue package estimated at $2 trillion. Now, legislators from both parties, administration officials, economists, think tanks and lobbyists are already roughing out the contours of yet another emergency-spending package—perhaps larger than the last,  Jacob M. Schlesinger and Joshua Jamerson report.

Who’s left out of the most recent stimulus package? Anyone who isn’t a child and who can be claimed as someone else’s dependent. That includes some high-school students, college students and some disabled and elderly people, many of whom show up on the tax returns of the people they live with who provide most of their support. They won’t get money directly, and no one will get money for them, Richard Rubin reports.

More information on stimulus payments.

The Federal Reserve quickly deployed a half-dozen emergency lending programs over the past two weeks to ensure cash keeps coursing through the U.S. financial system. Now, Congress wants it to go much further, approving $454 billion to reload the Fed’s own ability to lend. The economic-rescue legislation President Trump signed on Friday asks the Fed to charge headlong into credit and fiscal policy, by financing businesses, states and cities. The move to entrust the Fed with more responsibility marks an about-face for both Congress and Mr. Trump, who has unsparingly criticized the central bank and the man he picked to lead it, Jerome Powell, for keeping rates too high, Nick Timiraos reports.

The economic shutdown caused by the coronavirus is testing America’s safety net. In Seattle, among the first U.S. cities where the virus was detected, a flood of people have flocked to homeless shelters, slammed suicide hotlines and packed food pantries. The economic shutdown is hitting the poor and working class with the most force, Douglas Belkin and Kate King report.

Economic sentiment in the European Union posted its sharpest drop on record. It could have been worse. The data would normally have been collected between Feb. 26 and March 23. But fieldwork effectively stalled in some countries amid coronavirus containment efforts. “In many countries, the vast majority of survey responses were collected before such strict containment measures were enacted,” the European Commission said. 

U.S. crude-oil futures dropped to their lowest level in over 18 years.

WHAT ELSE WE’RE READING 

Lock down or let it loose? Chicago Booth offered its Initiative on Global Markets economic experts panel the following statement: “Abandoning severe lockdowns at a time when the likelihood of a resurgence in infections remains high will lead to greater total economic damage than sustaining the lockdowns to eliminate the resurgence risk.” The responses: 41% strongly agree, 39% agree, 14% uncertain and 0% disagree, strongly or otherwise. “But containment doesn’t mean complete elimination. May be optimal to stagger return to work for low-risk groups once peak-disease is gone,” said MIT’s Daron Acemoglu.

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