The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed as it continues to spread across the world. Here is a look at some of the latest developments Wednesday related to the global economy, particular economic sectors, and the workplace:
HOUSING: Economists have been waiting for the first signs of virus-related disruptions in housing with the expectation that they will be seismic. Federal housing data looks further back for trends, meaning there is a lag in real world activity. But details have begun to emerge in private surveys.
On Wednesday, the Mortgage Bankers Association reported that mortgage applications plunged 29.4% last week. People trying to sell homes have cancelled showings during the outbreak and because closings are done in person, economists expect sales will decline sharply. But the virus has affected the market in other, unforeseen ways as well.
Despite additional cuts to benchmark interest rates by the U.S. Federal Reserve, mortgage rates have actually been rising.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said that's partially because lenders amid the outbreak are wrestling with capacity issues, backlogs in the pipeline, and the challenge of working remotely in real estate.
“Home purchase applications were notably impacted by rising rates and the widespread economic disruption and uncertainty over household employment and incomes," Kan wrote. “Last week’s purchase index fell 15% to its lowest level since August 2019.”
While mortgage applications fall, refinancing, which can be done from home, is soaring. Lending Tree says the economic effects of the virus outbreak have led to unprecedented volatility in mortgage interest rates and an overwhelming surge of borrower demand. The company's data shows that refinance mortgage applications through its marketplace tripled from a year ago in each of the 50 largest cities and in all but five states. In San Francisco, refinance loan requests skyrocketed 417%.
RETAIL: Local groceries and other mom-and-pop shops have become a lifeline for millions of people ordered by states or cities to shelter at home. Major retailers are another, and the impact of the virus has reordered priorities.
Target has been aggressively remodeling and opening new stores as competition from Amazon.com grows increasingly intense. On Wednesday, it significantly rolled back those plans. Target said it will remodel 130 stores this year, less than half of 300 it has planned. It will open only 15 to 20 smaller format stores this year, down from the 36 it had hoped to. It will also push back plans to incorporate fresh food and alcohol in its online pickup service.
The Minneapolis company warned Wednesday that it is absorbing rising costs, including higher pay for workers. Target expects an additional $300 million in costs this quarter from a $2 bump in hourly pay, and increased investments in online operations. The company withdrew its annual and quarterly financial guidance and suspended its share repurchase program to raise much-needed cash.
Fast food chains are offering another lifeline, but at a cost. The owner of Pizza Hut, KFC and Taco Bell said in a regulatory filing that 7,000 of its restaurants worldwide are closed, including over 1,000 Pizza Hut Express locations in the U.S. and over 900 KFCs in the U.K.
Yum increased borrowing under an existing credit facility to $525 million from $425 million. The company also suspended its $2 billion stock buyback program.
Yum said because the situation is ongoing and the duration and severity are unclear, it's difficult to forecast results. It expects COVID-19 to impact its same-store sales for the quarter ended June 30 more significantly than in the current quarter due to the increasing number of markets currently impacted.
Nordstrom, meanwhile, said it will start to furlough a portion of its corporate employees starting April 5 for six weeks. It also said that it will be extending its temporary store closures for at least one week, through April 5.
TECH: Attorneys general from 33 states are asking online sales and retail companies to aggressively monitor price gouging by third-party sellers on their websites.
Consumers have complained since the start of the virus outbreak that prices online for certain household essentials, like toilet paper, sanitizers and wipes, have skyrocketed.
Pennsylvania Attorney General Josh Shapiro and 33 other attorneys general are requesting that Amazon, Facebook, ebay, Walmart and Craigslist should actively keep an eye out on their sites for illegal price hikes and put procedures in place to keep more from happening in the future.
TRAVEL: The Associated Press reported this week that airline services are teetering on the brink. Travel bans are rolling out across the globe, businesses are cancelling travel, conferences have been cancelled and vacationers are staycationing.
On Wednesday, American Airlines took out of circulation half of all middle seats and all seats adjacent to flight attendant jump seats on every flight to provide more social distancing. The airline will also be able to proactively reassign seats to create more space between customers beginning March 24.
American will limit food and drink options from March 27 through April 30 to provide minimal contact between flight attendants and customers and offer more social distancing. The reduced service will be based on flight length and destination.
United Airlines announced deeper schedule cuts on Wednesday, reducing its U.S. passenger-carrying capacity by 52%. That’s from a previously announced cut of 42%. The airline said demand for travel is still dropping because of the coronavirus outbreak. Including international flights, which were the first to get cut, United is operating at about one-third its normal level.
Air traffic controllers are back at work at McCarran International Airport in Las Vegas, a week after a co-worker tested positive for the new coronavirus. The Federal Aviation Administration posted an update Wednesday saying that staffing should increase throughout the day.
Airport service slowed due to airline cancellations and delays were reported after the control tower closure on March 18. McCarran ranks as one of the busiest passenger airports in the nation. But arriving flights were reduced Monday to about 12 an hour. Federal officials reported Tuesday that a security screener at McCarran also tested positive for COVID-19.
ROBOTS: Where are the robots that can disinfect hospitals and supermarkets, swab patients and provide relief to medical workers and others overwhelmed by the COVID-19 pandemic?
There aren’t any, or, at least, not enough of them, according to engineers and computer scientists calling for more sustained funding for building machines that can perform important tasks during an infectious disease outbreak.
A group of leading robotics experts published an appeal Wednesday in the academic journal Science Robotics calling for more research and development of robots that can assist in critical care, telemedicine, decontamination and package delivery.
A similar call came from the White House six years ago looking for robots that could help fight the Ebola outbreak. But as global concern over Ebola subsided, so too did funding and motivation to develop new machines.
“Without a sustained approach to this, history will repeat itself and the robots won’t be ready” for the next pandemic, said Guang-Zhong Yang, founding editor of Science Robotics and dean of the Institute of Medical Robotics at Shanghai Jiao Tong University.