The Economist 14Mar2020

(Ann) #1
The EconomistMarch 14th 2020 United States 19



s fears growabout the impact of the
covid-19 virus, financial markets have
slumped. Now there are signs that the virus
is moving from traders’ screens to the real
economy. No one will know the true eco-
nomic impact for some time, because offi-
cial statistics are published with a lag: the
first estimate of gdpgrowth in the current
quarter, for instance, will not appear until
April 29th. Analysts cannot wait that long.
So they are turning to “real-time” data,
mainly produced by the private sector, on
everything from transport use to social-
media activity. None of these measures is
reliable by itself, but together they give a
decent impression of what is going on.
It is not all doom and gloom. So far there
are few indications—either from weekly
jobless claims or from company an-
nouncements—that joblessness is rising.
Worries that broken supply chains would
stoke inflation also look overdone, for now
at least. Data to the beginning of March
from State Street PriceStats Indicators,
which measures inflation daily, suggest
that inflation has been on a steady down-
ward trend since the beginning of the year
(though in recent days food prices have
inched up, perhaps pointing to the effects
of stockpiling). Railway and trucking vol-
umes appear to be holding up. There is
some evidence of lower electricity de-
mand, perhaps as people miss work,
though the figures are volatile.
Household spending is taking a big hit,
however. Analysis by Goldman Sachs, a
bank, of Twitter posts suggests that con-
sumer confidence has dropped. People are
nervous of crowds—and some 40% of
household spending is vulnerable to peo-
ple shunning gatherings, according to cal-
culations by The Economistusing a method-
ology from an Oxford University research
paper. (About 5% of consumer spending
goes on dining out, for instance.)
Google searches for “restaurant reserva-
tions” are way down. The maître d’at San
Francisco’s best oyster bar was so pleased
to see a customer that he offered a free plate
of them when your correspondent bought
a drink (the bar looked over the bay towards
Grand Princess, a virus-stricken ship har-
boured in Oakland). A report from JPMor-
gan Chase, another bank, estimates that
last weekend the virus reduced cinema-
ticket receipts by 20%. Attendance at
Broadway shows has also dropped. Data
from TomTom, a location-technology firm,

revealunusuallylow traffic congestion in
many American cities since the end of last
week. Lower consumer spending points to
feeble gdpgrowth in the first half of this
year, though a recession still seems unlike-
ly at this stage.
What happens next depends on wheth-
er America gets a handle on the outbreak. If
it does not, then over time revenue-starved
firms and salary-starved families will

struggle. Any short-term economic boost
from stockpiling would be cold comfort in
the face of lower spending on services. But
if America contains the virus, it can look
forward to a bounceback of sorts. Real-time
data in China, from traffic congestion to
energy consumption, remain weak but are
fast improving as the number of new infec-
tions slows. An acute economic shock does
not have to turn chronic. 7

Tracking the economic impact of the
virus in real time

Covid-19 and the economy


Shelf and safety


n 1987, whilehe was mayor of Burling-
ton, Vermont, Bernie Sanders released an
album of folk songs and poetry entitled
“We Shall Overcome”. The record included
anthems of Americana such as “This Land
Is Your Land”, as well as civil-rights ballads
like “Oh Freedom”. It became popular
among Mr Sanders’s supporters during the
2016 Democratic primaries, embodying his
long-standing devotion to progressive
ideas about race and civil rights, along with
his vintage lefty beliefs about the state’s re-
sponsibility to create equality. (His singing
abilities were probably less of a factor in
the album’s success.)
Despite his folksy appeal, Mr Sanders
was unable to win the Democratic Party’s
presidential nomination that year. Voters
seem to have decided on a similar fate for
him this time round. After briefly leading
the primary race in February, the Vermont
senator suffered a severe setback on Super

Tuesday. He limped into this week trailing
Joe Biden, the former vice-president, by
roughly 80 delegates, according to The
Economist’s projections. On March 10th Mr
Biden dealt him another crushing blow. Mr
Sanders lost in Michigan, where he won in
2016, by more than 15 percentage points. He
also lost in Missouri and Mississippi
(which he lost in 2016) and in Idaho (which
he won).
The results in Michigan are particularly
rough for Mr Sanders. Back in 2016 his sur-
prise victory was an important boost for a
campaign that had struggled to build a win-
ning coalition. He had lost the majority of
the primaries and caucuses held the previ-
ous week, and trailed Hillary Clinton by 156
delegates (a far worse deficit than his posi-
tion this week). Yet despite the odds—polls
had him down by 20 percentage points—he
won the state, breathing new life into his
campaign. Victory then came thanks to

Working-class whites deserted the Vermont senator in the Midwest

The Democratic primaries

Berning out

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