COVID-19 fears trump job gains, U.S. stocks fall again
San José, CA – On Friday, March 6, the Labor Department reported that 273,000 new jobs were created in January, driving the unemployment down to 3.5%. But despite this strong job report, U.S. stocks fell again; the broadest S&P 500 was down 50 points or about 1.75%. The Dow Jones Industrial Average, which is made up of 30 large companies, fell less than 1% as investors may have felt larger companies are safer havens. But the real flight was to bonds, with the ten-year U.S. Treasury Bond interest rate falling to another record low of 0.75%.
Bad news on the COVID-19 front continued to pour in from both the U.S. and the rest of the world, excepting China. The John Hopkins University COVID-19 tracker reported 330 cases in the United States. The World Health Organization daily situation report for March 6 showed that Germany had joined South Korea, Iran, and Italy in having more new infections than China, with France in striking distance.
The only good news continues to come out of China, where the province of Hubei report zero new infections outside of Wuhan, where the COVID-19 epidemic began. Outside of Hubei there were only 20 new infections in China, despite the gradual lifting of quarantines and return of more and more people to work.
Concern about the economic impact of the COVID-19 on capitalist economies continued to grow. Austan Goolsbee, the former chair of the Council of Economic advisors under President Obama wrote that the impact of epidemic in the United States could be worse than in China. He cited the facts that the United States had fewer people working in agriculture and more people living in cities where disease can spread more easily. Goolsbee also pointed out the larger role of services means that as people cut back on going out, service businesses would be hurt more.