RESURGENT VIRUS SCUTTLES US PLANS
New daily infection records in Texas, Florida and California spark worries over lockdowns returning and states reopening more slowly
On Wednesday, governors, mayors, investors and others across the United States woke up to news that was impossible to ignore. More than 35,000 new coronavirus cases had been identified the day before. It was the highest number reported in a single day since late April.
The news kept getting worse. Florida, Texas, Oklahoma and South Carolina reported their highest single-day totals. New York instituted a quarantine for some travellers from out of state. And the stock market slid 2.6 per cent as investors fretted about what the latest troubling news meant for economic recovery. It was as if the country had found itself back in March — at the start of the pandemic, in the early days of the lockdown, when masks were in short supply and the death toll was skyrocketing.
Will the new surge slow down reopening process?
By the end of Wednesday, more than 36,000 new cases had been reported nationwide, the second-highest daily total since the pandemic began. The new cases showed that the outbreak had been far from contained. That could lead some states to slow the process of reopening businesses, further hobbling the economy and delaying its recovery.
Florida reported a new daily high of 5,508 cases Wednesday, and the percentage of residents testing positive has risen sharply. Governor Gavin Newsom of California said Wednesday that the state recorded more than 7,000 new cases over the past day. “I want to remind everybody that we are still in the first wave of this pandemic,” Newsom said at a news briefing.
How are the hospitals coping?
Texas reported more than 6,000 new cases Wednesday. In Houston, the intensive-care units were at 97 per cent of capacity, and hospitals risked running out of ICU beds within two weeks if nothing is done to slow the upward trajectory of the virus. “I strongly feel we are moving in the wrong direction, and we are moving fast,” Mayor Sylvester Turner of Houston said.
In Florida on Wednesday, Governor Ron DeSantis gave no indication that the state would roll back its economic opening, but he urged residents to avoid closed spaces with poor ventilation, crowds and close contact with others. DeSantis continued to attribute the rising infections to younger people who have started to socialise in bars and homes, despite rules in many municipalities prohibiting group gatherings.
“You need to do your part and make sure that you’re not spreading it to people who are going to be more at risk for this,” he said.
What has the WHO said on the situation in US?
The World Health Organisation has warned that if governments and communities in the Americas were not able to stop the spread of the virus through surveillance, isolation of cases and quarantine of contacts, there might be a need to impose — or reimpose — general lockdowns. The New York quarantine announced by Governor Andrew Cuomo applies to visitors from Alabama, Arizona, Arkansas, Florida, North Carolina, South Carolina, Utah and Texas, as well as New Yorkers returning from those states. Violators could be subject to a mandatory quarantine and fines of up to $10,000 (Dh36,700).
How has the virus spike affected businesses?
The reopening of many businesses is not going smoothly. Apple said that it had shut seven stores in the Houston area because of the rising number of cases in the region. Last week, it closed 11 stores in Arizona, Florida, South Carolina and North
Carolina. Apple had opened most of its stores in the US in recent weeks after closing nearly all of its roughly 500 stores worldwide months ago.
The Walt Disney Co. on Wednesday abandoned its plan to reopen Disneyland and Disney California Adventure on July 17, citing a slower-thananticipated approval process by state regulators.
How are the markets responding?
Many stock market investors, who had been expecting the virus to retreat swiftly, were alarmed by its resurgence. The spike appeared to undermine hopes for a V-shaped rebound, in which both the economy and corporate profits would bounce back as swiftly as they plunged when the United States fell into a recession.
“All the hopes of investors looking for a better economy to improve the bottom lines of companies shut down in the recession have been dashed,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in a note to clients Wednesday.
“Forget about the fears of the virus coming back in the fall. The number of new cases and hospitalisations in states like Arizona, Texas and Florida says the threat is happening right now.”
This is the second time in recent weeks that the S&P 500 stock market index has faltered. On June 11, reports of rising infections set off a 5.9 per cent drop. Wednesday’s market drop was led by sharp downturns in sectors including energy, industrial and financial shares, which tend to be sensitive to the nearterm expectations for economic growth.
Airlines were hammered, with United Airlines down more than 8.3 per cent and Delta Air Lines dropping by 7.8 per cent. Energy and oilfield services companies tumbled, too. Occidental Petroleum dropped 9 per cent, and Haliburton fell 8.8 per cent, as oil prices dropped more than 5 per cent, pushing the cost of a barrel of West Texas Intermediate oil below $40.
Investors in other markets assumed a dour outlook for economic growth. Yields on government bonds — traditionally linked to expectations for growth and inflation — fell. The dollar, a traditional safe haven for investors, rose.
What about the global outlook?
The global picture also looked gloomy. The International Monetary Fund said global gross domestic product would shrink 4.9 per cent in 2020, a sharper contraction than the 3 per cent decline it predicted just two months ago. The IMF also lowered its expectations for growth in the United States, saying that the world’s largest economy will shrink 8 per cent this year, more than the roughly 6 per cent rate it expected in April.
“We are definitely not out of the woods,” said Gita Gopinath, director of the IMF’s research department. “This is a crisis like no other and will have a recovery like no other.”
I want to remind everybody that we are still in the first wave of this pandemic.
Gavin Newsom | California governor
I strongly feel we are moving in the wrong direction, and we are moving fast.
Sylvester Turner | Houston mayor
You need to do your part and make sure that you’re not spreading it to people who are going to be more at risk for this.
Ron DeSantis | Florida governor
Covid-19, while dangerous, while still growing in the state of Texas, is not as severe as it is in some other states.
Greg Abbott | Texas governor