Cleveland Clinic and CWRU Prepare for First of 2020 Presidential Debates

This report is a summary of third-party economic research and perspectives to foster communication with business and economic development stakeholders during the COVID-19 crisis.

Key Takeaways

• Global: Global airlines have called for airport COVID-19 tests for all departing international passengers.
• U.S.: Goldman Sachs cut its Q4 GDP forecast due to the lack of a federal stimulus bill. IPOs head for banner year on stock market’s strength. Blank-check firms under regulatory scrutiny.
• Ohio: Ohio has regained over 53% of private sector jobs lost, and 95% of consumer spending. Cleveland Clinic and CWRU prepare for the first of the 2020 presidential debates.

Global

The United Nations Conference on Trade and Development warned of a potential ‘lost decade’ if countries adopt austerity as they attempt to recover from the COVID-19 pandemic. They noted that the global economy will contract over 4% this year leaving a shortfall of output by $6T, and that developed countries will be hit the hardest. Between 90-120M people will be pushed into extreme poverty in the developing world with close to 300M facing food insecurity. German business morale improved for the fifth month in a row in September, in a further sign that Europe’s largest economy is enjoying a solid recovery from the COVID-19 shock.

Data from the World Tourism Organization shows tourist arrivals plunged 93% in June compared to 2019 and that international tourist arrivals dropped by 65% for the first half of the year. This is loss of 440M international arrivals and about $460bn in export revenues – about five times the loss in 2009 amid the global economic and financial crisis. Global airlines have called for airport COVID-19 tests for all departing international passengers to replace the quarantines they blame for exacerbating the travel slump. Rapid and affordable antigen tests that can be administered by non-medical staff are expected to become available in coming weeks and should be rolled out under globally agreed standards, the head of the International Air Transport Association (IATA) said.

U.S.

The lack of another stimulus bill caused Goldman Sachs to slash its fourth-quarter GDP forecast for the U.S. to 3% from 6% on an annualized basis. Federal Reserve Chairman Powell urged Congress to provide the economy with additional fiscal support. Jobless claims increased slightly to 870,000 last week from 866,000 a week earlier, according to Thursday’s Labor Department report. The totals remain well above pre-pandemic peaks but are down significantly from nearly 7M in March. State personal income increased 34.2% at an annual rate in the second quarter of 2020, an acceleration from the 4.1% increases in the first quarter, according to estimates released Thursday by the Bureau of Economic Analysis. Ohio’s rate was above the U.S. average, at 37.8%.

2020 could turn out to be the best year for the IPO market in two decades – through August, 143 companies have gone public and brought in more than $50.4B in proceeds. General Electric plans to stop making new coal-fired power plants, focusing more on renewable sources of power generation. Coal rail traffic remains low with 21.9% year-over-year decline according to the Association of American Railroads. Total weekly rail traffic was down 1.3%, but intermodal volume grew 6.3%. Oil demand remains subdued. The four-week average of gasoline demand from last week was down 9% from a year earlier. Federal Highway Administration data show July mileage traveled remains sharply down from 2019 with regional averages ranging from 9.7% to 15.4% declines.

Trade-credit insurance, a financial tool that protects trade, has been severely cut back for U.S. companies. Companies are reluctant to move goods without this insurance, so shipments are being delayed or dropped even as demand for raw materials revives, and commodity prices are spiking. Less than a third of retail companies paid at least 75% of June rent, but by July, the percentage of rent payers had almost doubled to 65%, according to the National Retail Federation and PJ Solomon. Bloomberg’s Consumer Comfort Index rose 1.9 points to 49.8 last week showing that U.S. consumer confidence advanced to the highest level since early April. The gauge has gained 15.1 points since hitting a six-year low mid-May. The gauge was at 68.6 in mid-March prior to the COVID-19 pandemic.

A new study conducted by the National Bureau of Economic Research found that school closures – which it defined as students not attending school, even for remote learning – could affect students’ future earning potential. The negative impact of the crisis on children’s welfare is especially severe for those with parents with less education and assets.

Ohio

Ohio has regained over 53% of private sector jobs lost, and consumer spending is at 95% of pre-pandemic levels according to the Ohio Department of Jobs and Family Services, and tracktherecovery.org.  Up to half of the personnel at Wright-Patterson Air Force Base may return to their in-person, on-site workplaces as of September 21 as the base transitions to Health Protection Condition Bravo, Phase 2 as part of its Return to Full Capacity/Capability Plan responding to the COVID-19 pandemic. Springfield’s Small Business Development Center has been recognized by the U.S. Small Business Administration as the Great Lakes region’s SBDC of the year.  Due to revenue shortfalls and other problems caused by the pandemic, the Ohio Department of Agriculture has scaled back its efforts to help Northwest Ohio farmers finance best management practices (BMPs) to reduce harmful algal blooms, according to the recently-released H2Ohio annual report.

Resources

• Ohio Department of Health’s COVID-19 Website: coronavirus.ohio.gov
• JobsOhio’s resource portal and information about Open, Secure Supply Chains in Ohio.