The Americas Account For 50% Of Top Countries Hardest Hit By Covid-19
The pandemic started in a China city most of us never heard of — Wuhan. It might as well have started in New York City. Since the outbreak there began in late February and led to lockdowns, the United States has become the global epicenter of the new SARS coronavirus. In fact, all of the Americas has been particularly hard hit. The two biggest countries in this hemisphere — Brazil and the U.S. — are the hardest hit with nearly 8 million cases between the two of them. That’s more than all of Asia, including India and Russia.
Of the top 10 countries that have reported the greatest number of cases, five of them are in the Americas, based on Johns Hopkins University’s Covid-19 map.
Important U.S. states are seeing a spike in the infection curve. Perhaps our over-reliance on case loads rather than hospitalizations makes it worse than it is. But for those in the government taking their cues from positive SARS-CoV-2 test results, even if the patient is not in need of hospitalization, then the spike in California, Texas and Florida is a headwind in every sense of the word — bad for markets, bad for business, bad for schools, bad for society.
California, Texas, and Florida are numbers 1, 2, and 3 in terms of population and 1, 2, and 4 in terms of GDP in the U.S. “The fact that the virus is spiking in all of these states is certainly bad news for the economy and is likely bad news for the market,” says Marco Odo, client portfolio manager at Swan Global Investments. “A double spike in infections might lead to a double dip in the market,” he says.
The U.S. economy remains dependent on policy. Public health policies to slow the growth of Covid-19 cases, fiscal support to replace lost income and revenues for households and business, and accommodative monetary policies that support the flow of credit are needed.
Barclays said on Friday in a note to clients that their U.S. economics team expects another $1.5 trillion fiscal package to be approved by Friday.
Mexico recorded more than 9,000 daily coronavirus cases for the first time this weekend. Mexico lifted lockdowns imposed earlier this year, reported 9,556 new cases on Saturday, proving that lockdowns really do only flatten the curve, they do not cause the coronavirus to pick a new country to infect, or die out. Mexico also announced 784 additional deaths, bringing its total to 47,472.
Top ten coronavirus nation Peru may have failed to count 27,253 deaths. An investigation by the Pan American Health Organization started last week, the AP reported. If so, the new additions would nearly double the death toll there.
Chile is another top 10 nation. Not a list it wants to be on. Their copper mining industry is suffering because workers can’t get to work, and demand is in decline.
They are now training dogs to “sniff out” the coronavirus. No, this isn’t a Trump recommendation. Germany’s doing it, too. Maybe it was Angela Merkel’s idea.
Unemployment in Chile hit 12.2%, which seems low compared to the U.S.
More than 27 million people have lost their jobs in Latin America since the start of the pandemic. If these losses are not temporary, the economic recovery is likely to be slower.
Mexico has recorded a dramatic loss of 12 million jobs, while in Brazil, the job destruction looks more contained as the country did not do hard-and-fast lockdowns nationwide. Neighboring Argentina has recorded the highest formal job loss since 2002. They are now in default. Again.
From what we know about the pandemic, roughly 18 million people have contracted the virus, within varying degrees of illness from no symptoms at all, to a severe lower respiratory failure that leads to death.
With 18 million the official number, it means that roughly 0.3% of the world’s population has gotten it. And with 679,000 deaths, some 0.009% of the 7.8 billion people worldwide have died.
But everyone was impacted economically. Some made a lot of money. Some lost their careers, and businesses. Over 70 million people were laid off in the Americas, at least.
Let’s look at some job markets. I picked three. The good (ish), the bad and the ugly.
Brazil Jobs: Bad
Brazil has shown a relatively contained effect in job losses compared with the rest of Latin America.
Job losses totaled 6.2 million in April and March, a 5.5% annual decline in jobs, including the informal sector.
If you consider only formal sector, as measured by the Department of Labor (CAGED), the decline has been 1.5 million since the beginning of the pandemic, a 2.6% drop only as of June 30.
The most affected sectors in Brazil were services, manufacturing and tourism, while construction was not greatly affected. As a result, the unemployment rate has risen to 12.9% in May from 11.6% in February, while the participation rate fell to 56.8% from 61.7%.
A potential explanation for the relatively contained number is the aggressive fiscal support to keep people working, and the Bolsonaro Administration’s disdain for lockdowns, even though the biggest and most economically important states all ignored Bolsonaro’s view and locked down anyway.
On the policy side, the Brazilian government has been solid with their implementation of tax relief, low cost loans to business and cash support to individuals under the “coronavoucher” program.
Also, the lockdown were first implemented in Rio de Janeiro and Sao Paulo states, while other regions implemented lockdowns at a later stage, especially in the capital city of Brasilia.
Mexico’s Jobs: Worse
Mexico has lost at least 12.2 million jobs as of end of May, a 20.7% decline from last year. Their labor force participation rate declined to 47.4% in May from 60.1% in February. Their unemployment rate looks benign at 4.2% because this does not measure people who are not looking for work. Some workers were registered as underemployed, meaning they have had their work hours cut, or were forced into multiple part time jobs to cover for full time job loss.
Mexico’s economy is collapsing at 18.9%, but businesses are not firing people at the same rates as in the Great Financial Crisis of 2008-09. By sector, construction has been hit the hardest, followed by manufacturing and services, according to data compiled by Barclays.
Mexico’s formal employment sector has been impacted more than in Brazil, probably due to the lack of government support that led to layoffs. That could translate to job losses being more permanent there than in Brazil.
Argentina’s Jobs: Que horror!
And then there is Argentina. The formal employment numbers looked okay, contracting just 2.3% in March and April combined, compared with 3% in Brazil and 3.3% in Mexico for the same period. Around 320,000 formal jobs were lost in the first month and a half of lockdown, of which 220,000 were in the private sector, 95,000 were independent workers, and 18,000 were domestic workers, while the government added 14,000 to payroll.
The numbers look low, but the decline in April private sector employment was the largest on record since the 2002 default. These numbers do not include informal job losses, which have been hit harder by lockdowns.
Job losses should be partly contained by the government’s stimulus program, which includes the payment of complimentary wages and subsidized credit for companies and independent workers. Argentina has also banned layoffs without a just cause.
Private sector furloughs have increased, reaching 8.8%, from 0.8% in March, according to the Ministry of Labor, with 17% of companies reported to have suspended workers in May, up from 5% in March.
“We expect unemployment levels to rise significantly this year,” wrote Barclays economists led by Marco Oviedo in New York in a note published Friday.
But wait, there’s more!
Argentina is extending lockdown orders for another two weeks. Despite lockdowns being in place since March 20, the number of coronavirus cases still keeps going up. Proof you can run, but you cannot hide from the new SARS coronavirus.
“The big problem that we have had in the last 15 days is that we relaxed, we felt that it was contained … I ask you please to help us and to join us,” the country’s president Alberto Fernandez said during a press conference on Friday.