The Wall Street Journal - 21.03.2020 - 22.03.2020

THE WALL STREET JOURNAL. **** Saturday/Sunday, March 21 - 22, 2020 |B

From steelmakers to arts-and-

crafts retailers, companies across the

U.S. are arguing that their operations

are essential, raising questions over

how to preserve as much economic

activity as possible while working to

contain the coronavirus.

Requests from companies to stay

open—for the sake of their workers’

livelihood and the public good—have

continued as more of the country

and many workers retreat to their

homes as the pandemic gains pace.

New York Gov. Andrew Cuomo on

Friday ordered all nonessential busi-

nesses in the state to close as of Sun-

day evening and said residents

should stay home. Illinois Gov. J.B.

Pritzker issued a similar order. Cali-

fornia on Thursday extended a re-

gional lockdown to the state’s entire

population of 40 million. Pennsylva-

nia Gov. Tom Wolf ordered all “non-

life-sustaining” businesses in that

state to close.

The Trump administration on

Thursday identified 16 industries as

critical to the national response to

the pandemic. The Department of

Homeland Security recommended

that states maintain “critical” manu-

facturing operations as well as pro-

duction of food and agriculture. The

agency mentioned sectors including

defense, transportation and energy in

the shutdown-exemption guidelines.

The orders in California and some

other states exempt defense compa-

nies, but some executives said some

Please turn to page B

an unprecedented level, in next

Thursday’s report on the U.S. mar-

ket, according to Goldman Sachs.

The bank also said Friday that it

expects U.S. growth to contract 24%

in the second quarter, far outpacing

the largest drop in gross domestic

product on record in the first quar-

ter of 1958, when the economy con-

tracted 10%.

The blue-chip index dropped

913.21 points, or 4.5%, to close Fri-

day at 19173.98 and had been up

2.2% at its high point for the day.

The S&P 500 fell 104.47 points, or

4.3%, to 2304.92. The tech-heavy

Nasdaq Composite dropped 271.

points, or 3.8%, to 6879.52.

All three indexes are down about

30% from their mid-February re-

cords.

The yield on the 10-year U.S.

Treasury note fell back below 1% as

investors sought the safety of gov-

ernment bonds. The yield settled at

0.932%, down from 1.121% Thursday.

Yields move in the opposite direc-

tion from prices. Earlier in the week,

stocks and bonds had tumbled si-

multaneously in a rare lockstep

move.

U.S. oil prices also slid, falling 11%

to $22.43 a barrel to extend their

declines for the week to 29%. Wor-

ries about a price war among the

world’s biggest oil producers and

signs of slowing demand have

sparked the steep fall.

Lawmakers in Washington are

working on a huge stimulus package

to ease the blow from the pandemic;

it encompasses aid to businesses

and individuals and could top $1 tril-

lion. The Federal Reserve has also

taken aggressive steps to ease mar-

ket strains. It has offered to tempo-

Please turn to page B

Stocks Finish Worst

Week Since 2008

Dow, S&P lost 4%, with

cumulative declines of

at least 14% for week;

oil sinks 11% to $22.

The coronavirus has un-

leashed a massive economic

shock on the U.S. and the world.

It began with disruptions to

supply chains and restrictions

on travel and is now rapidly ex-

panding via spontaneous and

government-imposed “social dis-

tancing” measures such as clos-

ing schools and confining re-

gional populations to their

homes. Entire industries are

shutting down. It is “a sudden

stop to the global economy,”

said Mohamed El-Erian, an ad-

viser to German insurer Allianz.

There is no clear historical

precedent for the scale and na-

ture of this shock. Some econo-

mists see U.S. output falling by

more in the coming quarter

than in the worst quarter of the

2008-09 recession. Nonethe-

less, previous episodes of pan-

demics, disasters and crises of-

fer clues about what to expect,

how policy makers make mat-

ters better or worse and the

likely long-term consequences.

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A

llie and Chris Lyons, the owners

of a popular farm-to-table restau-

rant called Table 20 in Carters-

ville, Ga., have done the math. In

two weeks, they expect to have

just $6,000 in cash, after cover-

ing payroll, insurance and rent.

The first coronavirus infections in the

Cartersville area were confirmed on March 11.

Amid calls for social distancing and with

sales plummeting, the couple on Monday laid

off all but two of their dozen employees.

They have asked their landlord and lenders

for relief. They have canceled orders on ev-

erything from linens to liquor.

Each of those decisions may be felt far be-

yond Cartersville, a working-class community

of 21,000 an hour outside Atlanta, and helps

show how the troubles of one small business

can ripple through the U.S. economy as the vi-

rus brings commerce and capital to a halt.

Laid-off waitress Casey Brazell is putting

off her dream to buy a new house. A family

farm where Table 20 buys most of its greens

is left without orders. The restaurant’s bank is

losing revenue as it gives breaks to dozens of

businesses. Its credit-card processor in Ari-

zona has frozen its hiring. A tech company in

San Francisco is waiving fees for Table 20 and

scores of other clients.

Confirmed infections in the U.S. surged past

15,000 this week, bringing alarm to both Wall

Street and Main Street. As hospitals scramble to

handle patients, most everything else is shutting

down. Airlines have canceled thousands of

flights. Schools are closed. Malls and auto facto-

ries are dark. Professional sports are suspended.

The crisis from the economic slowdown is

most acute for the smallest businesses, which

tend to operate on thinner profit margins and

with smaller cash reserves. They employ

about 60 million Americans, or nearly half the

private workforce.

With fewer dollars coming in, small busi-

nesses have hard decisions to make about

whether to pay rent, workers or bills from

their supply chain, said William Dunkelberg,

chief economist for the National Federation of

Independent Business. “Somebody is going to

get the short end of it,” he said. “That will

work its way back through the economy.”

Unlike some states, Georgia hasn’t ordered

restaurants closed but Gov. Brian Kemp has

encouraged residents to order takeout or use

the drive-through option to get food and limit

public gatherings to no more than 10 people.

When the Lyonses opened Table 20 in Cart-

Please turn to page B

Chain

Reaction

When Table 20 closed its dining room

in Cartersville, Ga., this week, the pain radiated

out to a hydroponic farmer, a tablecloth supplier,

a liquor distributor, a credit-card processor,

a banker and countless others.

The Trade-Off Between

Economy and Health

This isn’t the first time we’ve struggled to

strike the balance. Lessons from past crises.

BYRUTHSIMON

BYBOBTITA

ANDAUSTENHUFFORD

Businesses

PleadtoBe

Deemed

‘Essential’

BYGREGIP,DANNYDOUGHERTY

ANDANTHONYDEBARROS

EXCHANGE

Faulty Memory

Someday, we’ll

all look back on

this and lieB

Alone Time

How Americans

passed the hours

this past weekB

BUSINESS|FINANCE|TECHNOLOGY|MANAGEMENT

DJIA19173.98g913.21 4.5% NASDAQ6879.52g3.8% STOXX 600293.04À1.8% 10-YR. TREAS.À1 26/32 , yield 0.932% OIL$22.43g$2.79 GOLD$1,484.00À$5.40 EURO$1.0697 YEN110.

Table 20, a restaurant outside Atlanta, is only serving takeout now. Its owners have been forced to lay off all but two of their employees and have sharply reduced their own salaries.

U.S. stocks fell Friday as fresh

measures to contain the coronavirus

pandemic spooked investors, cap-

ping off the worst week for the Dow

Jones Industrial Average and S&P

500 since October 2008.

Major indexes opened higher but

pulled back after New York Gov. An-

drew Cuomo ordered the state’s

workforce to stay home. California

and Illinois have issued similar

edicts. Stocks sank further after the

Trump administration said U.S. bor-

ders with Mexico and Canada would

be closed to nonessential travel.

The Dow industrials and S&P 500

lost more than 4%, closing near ses-

sion lows and extending their de-

clines for the week to at least 14%.

The whipsaw moves in markets over

the past month have rattled inves-

tors who even fled traditionally safe

assets like U.S. government bonds

and gold in recent days.

“Unlike in 2008, there’s no place

to hide,” said Scott Martin, chief in-

vestment officer of Kingsview

Wealth Management. “Nobody wants

to own anything except cash.”

The disruption caused by the out-

break in the U.S. and elsewhere is

starting to become apparent: State-

level information suggests jobless

claims could hit more than 2 million,

ByAlexander Osipovich,

Joe Wallace

andChong Koh Ping

DUSTIN CHAMBERS FOR THE WALL STREET JOURNAL

During the 1918 Spanish flu, which killed 675,000 in the U.S., the

federal government did little to help. The economic impact was mild.

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