COVID-19 and the economy: a week in review

Published on March 23, 2020 by Wojciech Gryc

If you're reading this around March 23, you might be going through an emotional period. At the time of writing, it appears this coming week will see havoc on the stock market. Our goal here is to provide a list of events from the past week, so you're informed for the week ahead.

Let's begin with economic stimulus numbers... These are BIG.

The numbers above might seem abstract. What do they actually mean in terms of our day-to-day lives?

  • This could cost the US 5 million jobs.
  • In Canada, 500,000 people have applied for employment insurance, up 1,752% compared to last year.
  • According to the NY Times, we might see output drop by up to 24% in Q2. This means 24% less equipment being built, less products being sold, and 24% less money being based.
  • As stock markets reel from the news above, this means we have fewer savings. If your pension savings are tied to market perforamnce, then you might have seen a drop of 10%, 20%, or more already.
  • Nearly 1 billion people are now confined to their homes.
  • Airlines need to shut down, or be bailed out. We're seeing this in New Zealand and Italy. The International International Air Transport Association (IATA, an industry group), says airlines will need $200 billion in funding to survive this crisis.
  • American hospitals are also seeking support: “The American Hospital Association has warned some hospitals are running out of cash, at risk of not paying key staff, or even shutting down, as it called for $100bn in federal funding.”
  • Oil & gas companies are struggling due to the oil price war and reduced consumption due to COVID-19. Bailouts in Canada and the US might be in the works.

Many of these numbers are US-focused, but we’re likely to see similar metrics and changes across Europe and North America.

...so let’s end with some good news…

  • While the economic uncertainty is immense, remember that infrastructure is still in place and will be restarted once the pandemic is over. We’re seeing factories, stores, and restaurants reopening in China. This includes Apple, Starbucks, and Volvo.
  • As a result, there is a world after COVID-19 which we have the power and agency to influence. This can be positive or negative. See, for example, Yuval Noah Harari’s piece in the Financial Times.
  • More people are working remotely, and this might become a permanent change.
  • People want to fund new innovations in biotech and pandemics, be it wealthy inviduals or governments (e.g., Canada). I wouldn’t be surprised if post-pandemic, we have more movement and innovation in the biotech space as a result of the attention this space is now receiving.

With the above in mind, this coming week will be difficult, unpredictable, and likely challenging. We’ll keep our COVID-19 tracker updated, but also contact us if you have questions or news to share.

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