The bad news on the economy called for the shutdown just keeps growing but there is a hint of good news in the near future. First the good news. 9/30/20 – CNBC – US economy plunges 31.4% in the second quarter but a big rebound is expected – Commerce Department calculations of Gross Domestic Product (GDP) for the second quarter were revised, which is routine, dropping from an annualized contraction of 31.7% down just a little to 31.4% reduction in GDP. The good news is expectations from economists for the third quarter is an expansion of something in the range of 30% on an annualized basis. That would suggest that a large portion of the second quarter contraction is offset by third-quarter expansion. The scheduled date for the release of the third quarter data is October 29. That is a routine, scheduled, expected timing. The increased significance of the data is the presidential election will be five days later. The bad news keeps rolling: CNBC – 9/16/20 – Yelp data shows 60% of business closures due to the coronavirus pandemic are now permanent. Yelp obviously has data on a humongous number of businesses in terms of their hours and whether the information reported by businesses indicates they are closed or open during the pandemic. At the end of August there were about 164,000 businesses with status on Yelp showing they were closed. Good news is that’s down from the number of businesses that were closed early in the pandemic but is a large increase since mid-July. The distressing news is that about 97,966 businesses in the Yelp database show they are closed and will not reopen. That is around 100K businesses in their database that will never reopen. The statistics are that about 60% of closed businesses are gone, never to return. The number of permanent closures is up 34% since Yelp’s last report in mid July. A large number of businesses have failed. I’m guessing a huge portion of those will be restaurants. 9/29/20 – Hollywood Reporter – Disney Parks to Lay Off 28,000 Employees; Cites California’s “Unwillingness” to Reopen Disneyland – Disney has furloughed its Cast Members and all staff from the Disneyland theme park since April. The company has covered health care benefits all staff are not working. The company is now going to lay off 28,000 workers, meaning they will lose their health insurance. Two thirds of those were part-time and one third were full-time. The company explicitly cites the state of California’s “unwillingness to lift restrictions that would allow Disneyland to reopen” as a significant factor in the termination of nearly 30,000 employees. On the other side of the country, Disney World in Orlando Florida has been open since July, operating with reduced capacity and increased safety rules. California is not willing to provide any guidance on how Disneyland could eventually reopen. Presumably that will happen when nobody is ever again getting sick in Orange County. 9/2/20 – Wall Street Journal – United Plans to Cut More Than 16,000 Staff – Previously announced level of layoffs was 36,000 with that pulled back to 16,370, consisting of 6,920 flight attendants, 2,850 pilots, and 4,520 airport operations and maintenance staff. Goal is to eventually cut staffing by half. 50%. United says it is operating at 64% of the year earlier capacity (number of flights). It expects traffic (passenger count) to level out at 50%. 9/30/20 – Wall Street Journal – American Airlines, United to Cut 32,000 Jobs as Washington Debate Relief – The aid package approved by Congress earlier this year requires the airlines not to lay off any staff until October 1. Well, the date has arrived without a recovery in air travel and without additional funding from the Congress. United and American announced they will proceed with layoffs of over 32,000 jobs on 10/1. Article provides a bit more precision. Cuts at United will be over 13,400 and American will let go over 19,000. The number of layoffs industry-wide are smaller than previously announced because airlines are offering buyouts and early retirement to staff. Unions have become more flexible in allowing some changes leading to cost-cutting. Air travel is down about 70% from a year ago. As a thought exercise to gain some appreciation for the messy situation the airlines are in, imagine how you would run your business if your sales were off 70% and you were not allowed to lay off any staff.
Headline from 2017 which is relevant again today: Credit Suisse under investigation. Again. For money laundering. Again.
With Credit Suisse expected to get swallowed up into UBS today and thus disappear as an independent entity, I thought it would be a fine time to reprint this article which describes the bank’s legacy. Read more…