FRANKFURT – The number of confirmed cases of the new coronavirus worldwide surpassed 200,000 for the first time Wednesday and the damage being seeded in the global economy is growing more clear by the day. Furloughs and job cuts, from dog walkers to oilfield workers, have begun. Governments around the world are pushing drastic countermeasures to help workers, particularly those who live paycheck to paycheck.
Following are developments Wednesday affecting various levels of the economy, businesses and workers:
MARKETS ROIL: The S&P 500 sank 5 % on Wall Street Wednesday, as fears of a prolonged coronavirus-induced recession take hold. The Dow Jones Industrial Average erased virtually all its gains since President Donald Trump's 2017 inauguration. The CBOE Volatility Index, Wall Street's fear gauge, appears to have broken from its tether.
European stock indexes lost more than 4% following broad losses in Asia.
CRISIS TO COME: The U.N.’s International Labor Organization estimates that fallout from the virus outbreak could cause nearly 25 million job losses worldwide and drain up to $3.4 trillion worth of income by the end of this year. The Geneva-based agency said “an internationally coordinated policy response” could help mitigate such losses through worker protections, fiscal stimulus, and support for jobs and wages. Social media is full of the posts of people who were just laid off. President Donald Trump's former chief economist, Kevin Hassett, warned this week that U.S. job losses could reach 1 million next month.
Government's are responding. The Treasury Department wants to start issuing direct payments to Americans by early next month as the centerpiece of a $1 trillion plan to stabilize the economy. In a memorandum issued Wednesday, Treasury is calling for two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The Treasury plan, which requires approval by Congress, also recommends $50 billion to stabilize the airlines, $150 billion to issue loan guarantees to other struggling sectors, and $300 billion to for small businesses. The plan appears to anticipate that many of the loans would not be repaid.
Senate Wednesday passed a second coronavirus response bill, and President Donald Trump quickly signed it. It passed despite significant misgivings among many Republicans over a temporary new employer mandate to provide sick leave to coronavirus victims. Trump on Wednesday moved to invoke a federal law that allows the government to marshal the private sector to deal with the coronavirus epidemic, as the economic damage
The European Central Bank is launching a new, expanded program to buy financial assets in a bid to calm markets roiled by the virus outbreak. The purchases are aimed at keeping borrowing costs down and making sure the bank's low rates get through to the economy. The bank said Wednesday that the purchases could total up to 750 billion euros ($820 billion) by the end of this year and will include government and private-sector bonds as well as commercial paper.