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It’s jobs day! February’s employment report will offer a snapshot of the economy before the coronavirus started to affect the U.S. We’ll have a special report looking at how well positioned the labor market is to absorb the epidemic after official numbers are out. First, let’s dive into the latest on the outbreak and its impact on the global outlook.
Exponential Growth
The rapid spread of the deadly Covid-19 virus around the world caught households, business leaders, investors and policy makers off guard. It shouldn’t have. Infectious disease epidemics have become a regular part of the global landscape in the past quarter-century, thanks in part to economic trends including urbanization, globalization and increased human consumption of animal proteins as society becomes more prosperous, Jon Hilsenrath writes.
The public needs to prepare for more of them. The incidence of infectious disease events has more than doubled from the 1940s to 1960s, according to EcoHealth Alliance, which built a database that tracks disease events globally. It surged in the 1980s with the advent of the HIV virus and has remained elevated ever since, says Peter Daszak, president of the group.
Pandemics could cost as much as $23.5 trillion over the next 30 years, Mr. Daszak estimates. That isn’t just lost economic activity or property; it also included economists’ estimates of the statistical value of lost human lives.
WHAT TO WATCH TODAY
U.S. nonfarm payrolls for February are expected to increase by 175,000 from the prior month, and the unemployment rate is expected to tick down to 3.5%. (8:30 a.m. ET) Here’s what to watch.
The U.S. trade deficit for January is expected to narrow to $46.0 billion from $48.88 billion a month earlier. (8:30 a.m. ET)
U.S. wholesale inventories for January are expected to fall 0.2% from the prior month. (10 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
U.S. consumer credit for January is out at 3 p.m. ET.
The White House coronavirus task force holds a press briefing at 5 p.m. ET.
The Shadow Open Market Committee meeting in New York features several Federal Reserve speakers: Cleveland’s Loretta Mester and Chicago’s Charles Evans at 9:20 a.m. ET, St. Louis’s James Bullard at 11:20 a.m. ET, New York’s John Williams and Boston’s Eric Rosengren at 2 p.m. ET, and Kansas City’s Esther George at 3:30 p.m. ET.
TOP STORIES
Flight to Safety
Mortgage rates fell to their lowest level on record. Mortgages are closely linked to yields on the 10-year Treasury, which this week dropped below 1% for the first time following an emergency Federal Reserve rate cut and rising fears that the spread of coronavirus could weigh on the U.S. economy. A decline in mortgage rates typically boosts home sales. But a worsening epidemic and the efforts to contain it—quarantines, business shutdowns and travel restrictions—could keep would-be home buyers on the sidelines during what is usually a busy spring selling season, Orla McCaffrey and Ben Eisen report.
Early Friday, the yield on the benchmark 10-year Treasury fell below 0.8% for the first time as investors piled into haven assets on worries about the economic impact of the virus.
The coronavirus epidemic is upending the carefully calibrated logistics of global shipping. Plunging exports from China are disrupting the trade of American goods, especially farm products such as fruit and meat destined for Asia. Congestion at Chinese ports and interrupted sailings have squeezed space on China-bound vessels and created an imbalance of the 40-foot long refrigerated containers used to ship fruit, meats and other perishables, with many stuck on the China side. The traffic jam is pushing up transportation prices for U.S. exporters and sowing turmoil on the heels of a painful trade war, Jesse Newman and Jennifer Smith report.
Car sales are showing early symptoms of the coronavirus. They could get a whole lot worse if more big economies go the way of China, Japan and Italy. China’s vehicle sales were down an extraordinary 80% in February compared with the same month of 2019 after the country imposed draconian “social-distancing measures.” South Korean car sales dropped to their lowest monthly level since 2009, Japan’s fell 10.7% and in Italy 8.8%. It isn’t all about the health crisis: Auto sales were already falling globally. The downturn has been led by China, where subsidy changes and the slowing economy have hit mainstream brands hard over the past two years, Stephen Wilmot reports.
The health of the U.S. workforce depends partly on how quickly stalled Chinese pharmaceutical factories can get up and running again. Much of the contents of your medicine cabinet can be traced back to Chinese ingredients processed into pills in India. Thanks to the coronavirus, much of Chinese industry remains shut down. Antibiotics are a particularly worrying area of vulnerability. China is by far the largest exporter of basic antibiotic chemicals, Nathaniel Taplin and Charley Grant write.
Makers of some of Italy’s best-known goods, from leather shoes and bags to Gorgonzola cheese and Amarone wine, are grappling with falling demand and disrupted production as the country contends with one of the worst outbreaks of coronavirus outside China.
Sales at Costco stores rose and some items were in short supply as shoppers stocked up on bulk quantities of everyday goods amid the new coronavirus outbreak.
Amazon.com is struggling to stamp out third-party sellers charging exorbitant prices for virus-killing cleaning supplies, hand sanitizer and other products in high demand amid coronavirus fears.
Never heard of Webasto? The little-known German auto supplier fought the novel coronavirus and won. Company executives and health officials used detective work, rapid testing and isolation to limit the spread. The quick response is an example of how to contain a virus that remains little understood and has killed about 3,000 people world-wide, William Boston reports.
Will coronavirus cause a recession? There are fears that the virus could pose a serious threat to the U.S. economy. Jon Hilsenrath looks at whether the global epidemic could cause a recession in the latest Journal podcast.
Follow the WSJ’s live coronavirus coverage here.
WHAT ELSE WE’RE READING (That’s Not About Coronavirus)
Unpaid labor remains largely invisible to economists. “We looked at how much women would have made last year if they earned minimum wage for their unpaid work. The value of this shadow labor is staggering: $10.9 trillion, according to an analysis by Oxfam. It exceeds the combined revenue of the 50 largest companies on last year’s Fortune Global 500 list, including Walmart, Apple and Amazon,” Gus Wezerek and Kristen R. Ghodsee report in the New York Times.
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