Europe hunkers down as US jobless claims hit record

As I await the US jobless claims numbers this morning, I am thinking about the international news broadcasts I listened to overnight. I think it’s time to turn to a more global focus and get a sense of how countries around the world are faring. Since I speak a number of European languages and have more experience there, I will probably end up being euro-centric. But, hopefully, that’s better than just being Anglo-American centric.

Germany

The Germans seem to be at about the same point as the US in their Covid-19 preparations. Just as in the US and the UK, the reach of this pandemic goes right to the highest levels of government. The German Chancellor, Angela Merkel, was in contact with a doctor who has tested positive for the coronavirus. And she has now been tested a second time, returning a negative result both times.

The German state of North Rhine-Westphalia (NRW), where my daughter lives and studies at University, is in lockdown only recently. At last count, at 10am this morning, there were 10,467 positive coronavirus cases in NRW. My daughter told me that life was relatively normal up until this past week, though people had been more cautious in keeping their distance.

The tone has changed dramatically though in the last week, with people now mostly staying indoors. And the streets are now empty. Her university was on a break as the situation escalated. But then, the university shut down, issuing a notice of Allgemeines Kontaktverbot (general contact prohibition) on Monday. That’s even later than the shutdowns we saw in the US.

There are other similarities to the US. Because of Germany’s federal nature, German states have a lot of autonomy. And when it comes to Abiturprüfungen, the high school test equivalent of A-levels in the UK, some states are doing them and others are not. The sense I get though, is that there is more cross-state coordination of coronavirus crisis response in Germany than the US. For example, in the US, ‘Blue America’, states run by Democratic governors, is more likely to take an aggressive lockdown response than ‘Red America’, states run by Republican governors. Axios’ David Nather has a breakdown here.  I think the lack of cross-state coordination is likely to make the coronavirus problem worse in the US. We’ll see.

As far as Germany goes, German media is also reporting that NRW is now fining people who congregate with more than two in public, picnic or engage in open grilling in public outdoors. They are also reporting a reduction in crime, like pickpocketing, theft and break-ins.

The news in Germany also talked about German stimulus preparations. But I don’t have enough data on that to go into detail at this time

Austria

This morning I was listening to an Austrian morning news program. And, as you could expect, coronavirus news dominated the broadcast. In Austria, a relatively small country, a lot of what was talked about was the border closures. The Czech Republic and Germany have now closed their border to Austria, as has Italy. And it is creating severe disruption for commuters and exporters.

One vector of economic distress was via farming, where beef prices have plummeted as Austrian farmers could not sell their beef abroad due to the border closures. Another vector mentioned was wood, where Austrian wood could not be exported to Italy and required massive amounts of water to keep the wood fresh as Austrian companies waited for the opportunity to export their product across the border to Italy.

A third vector of distress was via commuters. Border crossings have now been arrested. Health workers, specifically from Germany and the Czech Republic, are exempted. Starting today, at the Czech border crossing, other commuters living in the Czech Republic but working in Austria or Germany could cross under a set of strict stipulations; they must remain on one border side for at least three weeks before they could cross to the other side, at which point they would be in quarantine for a further two weeks.

Clearly, the EU is not a United States of Europe, nor will it ever be. National borders matter.

Italy

I had a conversation yesterday morning with an American economist in lockdown in Lake Como, Italy which is smack dab in the Lombardia region of Italy, hardest hit by the Covid-19 outbreak. She told me that the lockdown is now complete. In the past, one could exercise outdoors as long as it was solo. But just this week, an edict was given that everyone must stay indoors except to shop for essentials or if they were commuting to and from a designated essential work position. She told me that she was actually on a run when the edict was issued and the police stopped her and sent her home.

She also told me that she had a bout of sickness that began in early January, which she subsequently believes to have been coronavirus. During that time, she had all of the classic symptoms like high fever, chest congestion, difficulty breathing, fatigue, and so on. And as she hasn’t had a high fever in 26 years, she said she knew immediately it was unusual. Only when the virus came to Italy did she connect her symptoms to coronavirus, because in January when she developed them, in her mind, it was a purely Chinese virus, as Trump keeps calling it. She has not been tested bug is relatively sure she had the bug, and was laid out or weakened for more than a month.

Given her story, it’s clear that coronavirus probably hit Italy earlier than early January, perhaps in early to mid December. And it was in community transmission mode by the time she got it. She told me that in Italy it is suspected that a football match between Atalanta and Valencia is what spread the virus so far and wide. I checked the Internet for this and found this UK Guardian article from two days ago:

A coronavirus outbreak at a local hospital and a Champions League match played in Milan are thought to be among the main factors that contributed to an escalation of cases in Italy’s worst-affected province, Bergamo, its mayor has said.

About 40,000 football fans from Bergamo travelled the 30 miles (50km) to Milan’s San Siro stadium on 19 February to watch their team, Atalanta, beat the Spanish team Valencia.

“It was crowded in the stadium and then afterwards in the bars,” Giorgio Gori, the mayor of the city of Bergamo, told reporters via video link. “For sure, that night there was a strong escalation of contagion between people.”

[…]

Valencia said last week that more than a third of their players and coaching staff had tested positive for the virus, implying in a statement that the club’s participation in the Champions League first-leg tie against Atalanta is linked to the high number of positive tests.

The game was played two days before the virus suddenly emerged in Codogno, a town in the province of Lodi about 40 miles from Bergamo. About 2,500 Valencia fans travelled to Milan for the game, several of whom also tested positive, including a Spanish journalist.

The outbreak in Bergamo province was first detected at a hospital in the town of Alzano Lombardo two days after Italy’s first locally transmitted case was confirmed in Codogno, which lies south of Milan.

The Champions League match is also a vector that might explain the strong outbreak in Spain.

From a political perspective, there is a lot of unrest, with the present government coming in for heavy criticism. Apparently, there is a groundswell of support for having the head of state, the Italian president, topple the government and install Mario Draghi, the former European Central Bank president, as Prime Minister, the head of government.

There’s also a sense in Italy that it’s every euro state for itself at this point. With Italy hardest hit by the coronavirus pandemic, Italians sense a lack of solidarity and cohesion. And that could have political consequences

The Jobless Claims Numbers

Ok. Here they come. The jobless claims number was huge. 3.283 million, well above even some of the highest estimates. This is five times the largest number we have ever seen in the US. And the median estimate was for 1.640 million.

The Labor Department email on the figures to me read:

In the week ending March 21, the advance figure for seasonally adjusted initial claims was 3,283,000, an increase of 3,001,000 from the previous week’s revised level. This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series. The previous high was 695,000 in October of 1982. The previous week’s level was revised up by 1,000 from 281,000 to 282,000. The 4-week moving average was 998,250, an increase of 765,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 232,250 to 232,500.

My view

I am going to end it there. But, hopefully this gives you a sense of the magnitude of this crisis on a more localized level. It’s a complete breakdown of globalization, even on the regional level, as we see in the European Union. How long this continues is anyone’s guess at this point. But this re-nationalizing of commerce is going to have wide-ranging impacts on how we conduct business for years, and perhaps decades, to come.