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These Five Warning Signs Highlight Virus’s Rapid Economic Impact

Stock MarketsMar 20, 2020 05:02PM ET
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(Bloomberg) -- The economic losses from the coronavirus have transitioned from hints of serious difficulties just a week ago to a devastating stoppage at countless U.S. restaurants, hotels, movie theaters, gyms and other service providers, with millions of employees now idled.

While still largely invisible in the mostly dated official economic data, the destruction is clear in private reports on hotels, dining establishments and theaters, many of which are now closed. The key questions center around how much more deterioration remains and how long it will last.

Here are five indicators that give a sense of the emerging crisis for the nation’s businesses.

1. Hotels

The outlook for the lodging industry has quickly gone from bad to worse. In the week ended March 14, occupancy of U.S. hotels plunged to 53%, meaning rooms were about half empty for the week, according to data tracker STR. A year ago, the rate was 70%. The slump occurred even as the industry reduced prices, with average daily rates falling 11% from a year earlier.

With the virus spreading to all 50 states, the falloff in travel is likely to be just the beginning. Seattle, which was an early epicenter of the virus in the U.S., experienced just 33% occupancy, while San Francisco’s was 39%. New York City, which typically is packed with tourists and business travelers, saw a decline to 49%.

Cities that depend on conventions were especially hard hit, said Jan Freitag, STR’s senior VP of lodging insights. “Group cancellations were felt across the markets.”

2. Retail Sales

Retail sales show a somewhat deceptive picture of true demand as they are holding up primarily because Americans are racing to discount and grocery stores to stockpile food, toilet paper and paper towels and other emergency goods. While discounters saw a surge in sales, purchases slumped at department stores that offer discretionary items like clothing, according to Johnson Redbook data.

Gains were led by “canned food, bottled water, pharmaceuticals, cleaning and household products as consumers stocked up in anticipation of staying at home for the next several weeks,” Bloomberg Intelligence analysts wrote.

It will get even worse for department stores. The largest mall owner, Simon Property Group (NYSE:SPG), announced it was temporarily closing all of its retail malls in the U.S.

3. Jobless Claims

With state and local governments ordering restaurants, movie theaters, bars, gyms and other gathering places to close, economists are bracing for a once-in-a-lifetime surge in jobless claims. Applications for unemployment benefits rose 70,000 last week to 281,000, Labor Department data showed Thursday.

But that’s about to spike much higher. Pantheon Macroeconomics Chief Economist Ian Shepherdson said his preliminary estimate is 2 million claims for next week. Goldman Sachs Group Inc (NYSE:GS). economists project 2.25 million.

4. Consumer Comfort

If you are looking for a bright spot, by one measure, consumers’ attitude seem to be holding up reasonably well. The Bloomberg Consumer Comfort Index improved last week to 63 from 62.7 a week earlier, the first gain since January. The caveat is the CCI is reported on a four-week rolling average basis.

Confidence remains well above levels of the past recession during 2007 to 2009. But with layoffs starting to occur in large numbers and the stock market deteriorating rapidly, there is reason to expect sentiment will weaken. Improved household attitudes will be vital for spending when the U.S. emerges from the crisis.

5. Movie Theaters

Theaters in the U.S. and Canada brought in just under $50 million over the weekend starting March 13, researcher Comscore Inc. said Monday. That’s a 61% decline from a year earlier and the smallest weekend tally since at least 1998. The three-largest chains in the U.S. are all closed this week, and almost every new film release has been postponed or is being made available for at-home rental early.

Of course, the cinema isn’t alone within the arts and entertainment industry. Broadway is dark too, having been shut down by order of New York Governor Andrew Cuomo more than a week ago. And all major sports -- remember this should have been a week for NCAA basketball’s March Madness tournament -- have canceled games or suspended seasons indefinitely.

©2020 Bloomberg L.P.

These Five Warning Signs Highlight Virus’s Rapid Economic Impact
 

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Comments (26)
Andy Fr
Sweetbabytrades Mar 22, 2020 10:09AM ET
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Lets also keep in mind this is a Bloomberg article, most likely pushing its own agenda. Dems will take the doomsday approach if it helps them at the polls.
pimpin pips
pimpin pips Mar 22, 2020 6:01AM ET
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Idar i was thinking the same thing at first. however the main things to consider here is the flu is very bad and this is more similar to a common cold virus actually. That said flu on a vaccine available to all kills 30k avg year 70k last. think since so many get the flu knowing there sick they cant move and work limiting spread. If the death rate is the same here as the common flu as it might actually end up being, we would probally loose a million world wide without doing what's being done. Be thankful if you have kids 10 and under excluding infants no deaths.
Ed Miller
Ed Miller Mar 22, 2020 6:01AM ET
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"this is more similar to a common cold virus actually."   Similar yes, another another strain of Coronavirus just cause colds,  BUT viruses do MUTATE and change!  Just because your cousin is a sissy doesn't mean you can't be heavyweight champion.  Several things are different about this particular variety of coronavirus, including long incubation-contagious period and much higher morbitity/mortality rate
Idar Polden
Idar Polden Mar 22, 2020 4:31AM ET
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nobody knows. the market needed an excuse to make a correction. unfortunately it got out of control. it is just an influenza. many have had it without even symptoms! how may we trust any numbers as long as it is mission impossible to get tested?
Dutch East
Dutch East Mar 22, 2020 2:30AM ET
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this is a utter overreaction....mass fear corn (p).....and all the political and mass media exploiter line up with their agendas..."all the usual suspects".....fear is the drug.....I do remember someone in history said something along the line of "and all we have to fear is fear itself". The people are more than willing to give up what are left of their few remaining freedoms in exchange for these face masks that actually do not provide any protection from a virus. So they exchange something for absolutely nothing.
Dietmar Stahl
Dietmar Stahl Mar 22, 2020 1:31AM ET
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All health care workers handling Corona must have full face masks with filters. There are not expensive somewhere between $10 (https://www.ebay.com/itm/Safety-Face-Eye-Shield-Mask-Guard-Goggles-Work-Lab-UV-Protection-EyewearGlasses/303500516015?_trkparms=aid=1110001&algo=SPLICE.SIM&ao=1&asc=20180213162448&meid=da9d86bad25f4d8aa6fbe46a02dce8bc&pid=100930&rk=8&rkt=12&sd=273837446778&itm=303500516015&pmt=1&noa=1&pg=2332490&_trksid=p2332490.c100930.m5375) and $150
Midway Eholdings
Midway Eholdings Mar 21, 2020 6:17PM ET
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This will be done in a few weeks. The cowards will be crushed
Ramm Batts
Ramm Batts Mar 21, 2020 6:10PM ET
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We had a fake economy and we will pay for it dearly
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Jordan Gilraine
Jordan Gilraine Mar 21, 2020 6:10PM ET
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Yup, this was just the straw that broke the camels back. This was coming with or without coronavirus.
shi ping
shi ping Mar 21, 2020 6:10PM ET
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we didn't had a fake economy, all this is because the Virus. you can not see that
Daniel Sky
DanielSKY Mar 21, 2020 6:10PM ET
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Silence. This is how senator Burr making money.
Chris Martin
Chris Martin Mar 21, 2020 6:10PM ET
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RammBatts, you are just not right -
Chris Martin
Chris Martin Mar 21, 2020 6:10PM ET
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Threat should group appeared a bit unsavory recently...Think they called Martha?
Matt Miller
Matt Miller Mar 21, 2020 4:34PM ET
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I agree with Sweetbabytrades  I'M just sitting and waiting for the pain to go away for others then I might start buying in.   We are not done with the pain yet.
Josh Modern
JoshModern Mar 21, 2020 2:28PM ET
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meanwhile, some people are calling the market bottom... that is a hilarious notion
Andy Fr
Sweetbabytrades Mar 21, 2020 2:28PM ET
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Market has priced in impact, once the data comes in, we will see if overshot to downside or more pain. Acting like you know more than the next guy is the hilarious part.
Chris Martin
Chris Martin Mar 21, 2020 2:28PM ET
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Agreed -cautious and easy does it. I picked up small position in chip ETF. Only 25% of what I was thinking and was glad I did. Gonna be careful to average in -
jemin An
jemin An Mar 21, 2020 11:03AM ET
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Chinese virus, why global has suffer cause of eating bat chinese? Is this a raisism? No, it's rational reaction from innocent people.
Chris Martin
Chris Martin Mar 21, 2020 11:03AM ET
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it is really quite laughable that the left parents the Chinese propaganda talking points just to try and hurt the president. Anything, to hurt the president these leftist loathsome animals shouldn't be allowed to preach on the television.
Chris Martin
Chris Martin Mar 21, 2020 11:03AM ET
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Chris Martin "parrots" ya goof
William Hineser
William Hineser Mar 21, 2020 10:22AM ET
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Everyone is doing the best they can here. Time for patience and smart folks will make some $$$. without Trump and a great economy to start with, this would have been much worse.
rob finch
rob finch Mar 21, 2020 10:17AM ET
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Hotel room occupancy drops by 40% for 2 weeks out of 52. I'm coming up with around 1.6% for the year. If things are shut down for only these 14 days. Pretty good sale on equities.
Brady Murray
Brady Murray Mar 21, 2020 10:17AM ET
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agreed. if we go out 60 days we see a 20 percent haircut in Revenue for all industry then we are certainly oversold now. But.........still need to wait for reversal and follow through day for uptrend. so hard to be patient
Aver Raiher
Aver Raiher Mar 21, 2020 10:17AM ET
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It was 40% before the worst happened. I think this week was much worse, especially considering that a lot of hotels were forced to close completely like in FL. Not to mention that a lot of people might feel anxious about traveling even when the cases start to drop. Just be careful with optimistic scenarios.
Chukwuma Ememe
Chukwuma Ememe Mar 21, 2020 8:47AM ET
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The overall economic implication will depend on the duration, there will be woes in all facets of life, after that, there will be recovery. Human beings will rise naturally from the ashes !
Emmanuel Nweke
Emmanuel Nweke Mar 21, 2020 8:42AM ET
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O my God what is all these..!
Glen Rautio
GlentheTaper Mar 21, 2020 7:28AM ET
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The virus that originated in China.
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Warren Sinden
Warren Sinden Mar 21, 2020 7:28AM ET
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All we know about covid19 is that it a close relative to the crono virus found in Rhinolophus bats. There are experts that are still trying to find out exactly where it came from.
rob finch
rob finch Mar 21, 2020 7:28AM ET
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I heard the prices are really low on rhinolophus bats at the Wuhan market this week.
Chris Martin
Chris Martin Mar 21, 2020 7:28AM ET
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yes, the Wuhan Virus of Communist China. anybody that considers This Racist isn't equipped with the intelligence to really speak.
Chris Martin
Chris Martin Mar 21, 2020 7:28AM ET
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Warren Sinden wuhan Warren. Where you been? you seem like a smart guy, come on!
Daniel Sky
DanielSKY Mar 21, 2020 7:28AM ET
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What about several flu pandemics originated from US? The rest of world hasn't been paid yet. No one call those "American Flu".
Kwong To
Kwong To Mar 21, 2020 7:19AM ET
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It's a hoax... we'll see what happens...... DT
Jan Buyle
Jan Buyle Mar 21, 2020 5:07AM ET
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Guess GDP will be down >30%. That sounds extreme. But let's keep our cool. Once the crisis is over GDP will take up again soon. First month it will get worse. Bad news and reports of many deceased will scare us even more. But this will pass and the economy will survive it. So please: STOP PANICKING!
Chris Martin
Chris Martin Mar 21, 2020 5:07AM ET
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All in on that one Jan!
민기 김
민기 김 Mar 21, 2020 2:53AM ET
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It has been over a month since there were no people on the street in Korea. A lot of companies are going through restructuring and going bankrupt.
Kaveh Sun
Kaveh Sun Mar 21, 2020 2:47AM ET
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Meanwhile tow trucks still tow cars despite orders. Business for them is as ussual.
yoga yoggie
yoga yoggie Mar 21, 2020 1:58AM ET
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america is no angel, we should rename 2009 influnza to AMERICAN INFLUENZA. Trump is superior at blame game - blame China, blame Obama, blame Everybody except himself, americans deserve trump. he can be president shows how stupid can americans be!
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Jim Torguson
Jim Torguson Mar 21, 2020 1:58AM ET
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Trump's blaming other people is not bad. What is bad is who he is blaming. If he just followed the Messiah and said EVERYTHING is Bush's fault, the press and the Democrats woudl love him.
Chris Martin
Chris Martin Mar 21, 2020 1:58AM ET
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So China being in the WTO is Bushs fault. You are aware of this, right? Bush IS a globalist.
Brady Murray
Brady Murray Mar 21, 2020 1:58AM ET
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Incoherent dribble from a commie.
Chris Martin
Chris Martin Mar 21, 2020 1:58AM ET
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At last, someone else that calls a spade a spade!
Daniel Sky
DanielSKY Mar 21, 2020 1:58AM ET
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U speak as a good investor. If people here cannot understand what Trump wants to express, then he should leave from this money game. The only work Trump doing now is pointing out "It is not my fault". That's it. He knows the coronavirus in Jan...
Leo Russolesi
Leo Russolesi Mar 21, 2020 12:04AM ET
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all this. suffering in our beautiful main street America while the CEO of Goldman Sachs takes home an additional 4million dollars in home pay(19%) plus his annual salary of over 20 millions. Disgraceful , UNAMERICAN!!!!!!!!
Chris Martin
Chris Martin Mar 21, 2020 12:04AM ET
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You should have gone to school for banking? Maybe Elon should be mentioned here? Was our 44,000 times the average salary in hous company he was supposed to be compensated? Disgraceful? You decide.
James castagna
James castagna Mar 20, 2020 10:46PM ET
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Financial "news reporting" needs to be reformed so that the Guests are required afterwards to substatiate their claims and recommendations so retail viewers can see their "truthfulness" rating. Otherwise, we have misleading sensationalizm witjout accountability. One shoukd be "licensed to speak publically."
Chris Martin
Chris Martin Mar 20, 2020 10:46PM ET
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I like that it would give Credence to something of what they say! Rather than I ramped-up opinionated pile.
Warren Sinden
Warren Sinden Mar 20, 2020 10:07PM ET
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If you want to point blame, ask Pres Xi Jinping why did China hold important data & information back from the rest of the world until it became a global problem & why did Pres Trump block the private sector from doing test  regarding the virus until it was too late to prevent it from reaching Pandemic levels? If you see anything that is false or misleading in the above article please point it out.
Chris Martin
Chris Martin Mar 20, 2020 10:07PM ET
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The entire lead-up to it was sensationalized. The Commie News Network often lies about anything this Administration does, and says the opposite. The left has taken the Xi side of communist propaganda, we can't even bring MSNBC into the conversation as the 260 viewers they have are diggin' the Mad Cow, right?. These people have generated again the mass hysteria and are taking fear to scare people more creating a lot of what's written here as with other leftist articles.
Chris Martin
Chris Martin Mar 20, 2020 10:07PM ET
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I forgot to mention The part about Trump you mentioned was a "pile" ...
Leo Russolesi
Leo Russolesi Mar 20, 2020 10:07PM ET
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Perhaps the reason why the Chinese held back information on the corona virus even suppressing honorable Chinese doctors and scientist aware of the dangers of not releasing the inf from the worldis because they were well aware of the corona virus pandemicand disruption it would HAVe in the economies of America, Europe and lots of other countries.As a result we are in middle of march 2020America is in emergency crisis mode, more than 600 people died in one day in Italy, the Europe and many many countries are in lockdown, business are closing by the thousands around the world and China is celebrating with a big event for their health related heroic service people and production going back full speed so that can supply the rest of the world with goods to the countries that they are on their knees with the Corona virus pandemic.
Chris Martin
Chris Martin Mar 20, 2020 10:07PM ET
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Great thoughts laid out very easily understood.
Chris Martin
Chris Martin Mar 20, 2020 9:44PM ET
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Here's the Bloonberg sensationalist machine. "Let's make them more afraid than they should be" and point at Trump. Thanx Mike. Point blame where out- belongs@China. The WUHAN Virus!
Don Getty
Don Getty Mar 20, 2020 9:44PM ET
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so which one of Trump's kids are you - the dum b one or the dum ber one both the girls are smarter and the youngerst likely has other priorities!
Chris Martin
Chris Martin Mar 20, 2020 9:44PM ET
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poor DonGy, Anybody wearing a hat to cover their bald head as you are males me- think you'll put on a big, red rubber nose and large, orange shoes later. Also, the first two you mentioned have more meanings in their small finger than you directions to and well, I'd rather tho say you've never had "priorities" in your life... just Mary, right?
Warren Sinden
Warren Sinden Mar 20, 2020 9:30PM ET
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The author is not intentionally creating fear, they are just stating facts. The few speculations are backed by historical facts.
Chris Martin
Chris Martin Mar 20, 2020 9:30PM ET
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You a parrot?
 
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