COVID-19: How It's Impacting the Economy and our Industry, plus Advice from Bankers on Weathering the Storm Presenters: David Nelson-Study Groups Johnny Milazzo-Lard Oil , Don Stephenson-Cary Oil , Steve Ward-US Bank, Mike Phelps-Citizens Bank
Working Remotely ………… .
New Coronavirus Cases Announced in the U.S. Each Day
Where C-19 Cases Have Been Reported U.S. Cases Through March 26 th : 85,724 Deaths: 1,275
Social Distancing and Beyond More Extreme Measures No Handshakes Please • 19 States with Stay at Home Orders involving approximately Half the U.S. Population • Nonessential Businesses ordered shut involving millions of workers
Percent of U.S. Population Infected by Covid- 19 by May 20 with no control measures
Percent of U.S. Population Infected by Covid- 19 by May 20 with some control measures
Percent of U.S. Population Infected by Covid- 19 by May 20 with extreme control measures
Pondering the Trade-Off Between Control of Covid-19 and the Economic Costs of Control • “We cannot let the cost of the cure be worse than the problem itself” – Donald Trump • “I’d like the U.S. to be open for business by Easter (April 12)”DT • “The virus control effectiveness sets the timetable, not the calendar” Andrew Fauci • Estimated cost of the Crisis to the U.S. 5 million jobs and $1.5 Trillion in Output • U.S. Deaths from no action range wildly from 20k to over 2 million
Initial Claims for Unemployment Hit 3.3 million for the March 15-21, 2020 week
Initial Job Claims as a Share of Labor Force for week of March 15-21, 2020
The Leisure and Hospitality Industry has the highest fraction of hourly workers and the fewest who are able to work from home
Resident Trips as a Percent of Normal Have Declined Sharply on a Global Basis
Consumer Confidence has dropped Sharply
Likely impact of Covid-19 on Various Sectors
The Federal Reserve’s Balance Sheet is Projected to Balloon by Several Trillion Dollars Fed Policy Actions Include: 1. Open-ended Quantitative Easing by Treasuries and MBS 2. Credit Facilities to buy investment grade corporates and exchange-traded funds 3. TALF to issue asset-backed securities (autos, credit cards) 4. Funding expanded for Commercial Paper 5. Main Street Lending Program to support lending to small and mid-size businesses
The interest rate spread between 10 year Treasuries and 30 year mortgages has widened and now narrowed a bit
Recent Fiscal Policy From Billions to Trillions Phase One Bill Passed Phase Two Bill Passed • $6.5 B to Dept of Health and • Businesses with fewer than 500 Human Services employees have to give employees two weeks of paid • $7 Billion disaster loan provision sick leave for themselves or to for SBA support family • $1.25 B for State Dept for • Tax credits provided to business international work to offset these costs (with limits) • Paid Family Leave
Phase Three – A 2.2 Trillion Dollar Stimulus
Major Provisions of the Stimulus Package:
The Impact of the 3 Fiscal Policy Measures Passed by Congress is Equal to 10.7% of GDP
Stocks are now up more than 20% from their low constituting a new Bull Market (or a big dead cat bounce?)
Thoughts from Our Industry Panelists C-Store/Petroleum Marketer Insights Banking and Credit Insights • Don Stephenson, Cary Oil Co., • Mike Phelps, Citizens Bank Cary North Carolina • Stephen Ward, US Bank • Johnny Milazzo, Lard Oil Co., Denham Springs, Louisiana
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