Services Sector Falls Off Cliff: First Data Points from the Eurozone Where Lockdowns Started Earlier

Yves here. Note that early on, Emanuel Saez and Gabriel Zucman estimated that the coronavirus crisis could produce a 10% fall in US annual GDP based on the magnitude of the hit to services. This sounded crazy then and is looking less crazy now.

By Wolf Richter, editor at Wolf Street. Originally published at Wolf Street

In developed economies, the services sector – finance, insurance, health care, professional services such as technology, lawyering, or architects, and many others, including transportation, travel, tourism, restaurants, bars, clubs, etc. – account for 60% to 70% of the economy. What we’re now seeing is a sudden fall-off-the-cliff collapse in the services sector in addition to a dizzying downturn in manufacturing. We got the first glimpse today, from the Eurozone where COVID-19 lockdowns were imposed well ahead of those in the US. And the data for the Eurozone released today picked up the effects.

The IHS Markit Services PMI for the Eurozone, which tracks how executives of unnamed companies see various aspects of business at their own company, collapsed in a totally unprecedented manner. In these Purchasing Managers Indices, 50 is the no-growth line; above 50 means expansion; below 50 means contraction. The lower the number below fifty, the faster the decline. The services PMI for March performed a gut-wrenching off-the-cliff plunge from moderate growth in February (52.6), past the low point during the Financial Crisis (39.2), to a horridly low 26.4:


This plunge in activity was “wide-reaching across the Eurozone,” the report said. Germany, France, Italy, and Spain – the four largest economies in the Eurozone – all experienced sharp declines, with the sharpest declines hitting Italy and Spain.

Incoming work fell at a record pace in the data series, after five years of growth, with Italy and Spain getting hit the hardest.

Some other horrid standouts:

  • “Firms were also increasingly unsure of the long-term impact of the COVID-19 pandemic over the coming year. This led to a sharp and considerable drop in business confidence to a new survey low, with service providers across the whole region pessimistic about the future.”
  • “Overall, employment declined for the first time in nearly five-and-a-half years and to the greatest degree in the survey history.”
  • “The data indicate that the eurozone economy is already contracting at an annualized rate approaching 10%, with worse inevitably to come in the near future.”

The lockdowns and travel bans essentially shut down travel services (such as airlines), accommodation services (hotels, resorts, vacation rentals, etc.), tours, cruises, conferences, and all the other services that business travelers, conference goers, and tourists spend money on.

The Services PMI for Italy, which got hit first and the hardest by the COVID-19 crisis, and imposed lockdowns before other countries did, collapsed to 17.4. And this, the report said, “likely gives a taste of things to come for other countries as closures and lockdowns become more prevalent and more strictly enforced in coming months.”

And the report adds that “the ultimate economic cost of the COVID-19 outbreak cannot be accurately estimated until we get more clarity on the duration and scale of the pandemic.”

Manufacturing Is in Deep Trouble Too, but…

In the Eurozone, manufacturing has been weak and contracting for 14 months, unlike services. But in recent months, the PMI re-approached the expansion line, when the lockdowns hit. The scene is clouded, however, by the way the PMIs are structured (more on that in a moment). The IHS Markit Eurozone Manufacturing PMI, released two days ago, fell to 44.5 (below 50 = contraction), and as bad as it seems, it was still a higher reading than the bottom of the Euro Debt crisis and far higher than the bottom of the Financial Crisis:


However, the less harrowing drop of the manufacturing PMI is in part due to how the PMI is constructed. The overall Manufacturing PMI is a composite of sub-indices. One of these sub-indices tracks supply-chain delays. Longer supply-chain delays in a normal economy mean that factories are busy and are operating at capacity, and backlogs are building, and it takes longer to get components or goods after they’re ordered. So supply-chain delays are normally a sign of rising demand and count as a positive in the index.

But this time around, the “near-record delays are an indication of global supply chains being decimated by factory closures around the world,” the report pointed out. And this quirk just “masks the severity of the slump in manufacturing.”

“We need to look at the survey’s output and new orders gauges to get a better understanding of the scale of the likely hit to the economy that will come from the manufacturing sector’s collapse, and these indices hint at production falling at the sharpest rate since 2009, dropping an annualized rate approaching double digits.”

Nevertheless, unlike the collapse in services that is far outpacing the decline during the Financial Crisis, manufacturing (even with the quirk of supply-chain delays removed) still isn’t plunging at the rate it did during the Financial Crisis.

The Netherlands was the only country with a PMI in growth mode, if barely (50.5), while the other countries saw acute declines. Greece – which had benefited from the strongest growth in the Eurozone in recent months – and Italy were at the bottom:

  • Netherlands: 50.5: (2-month low)
  • Austria: 45.8: (5-month low)
  • Spain: 45.7: (7-year low)
  • Germany: 45.4: (2-month low)
  • Ireland 45.1: (10-year low)
  • France 43.2: (7-year low)
  • Greece 42.5: (55-month low)
  • Italy 40.3: (11-year low)

Some standouts:

  • Manufacturing output and new orders fell at the fastest pace since April 2009.
  • Export sales (which include intra-Eurozone trade) fell for the eighth month in a row, but at the sharpest pace since March 2009, with France, Germany, and Greece getting hit by the sharpest declines.
  • Companies were laying off people at the fastest rate since the Financial Crisis, with job losses particularly sharp in in Austria, Germany, and Ireland.
  • Confidence about the future plunged to a historical low.

The report concluded:

“The concern is that we are still some way off peak decline for manufacturing. Besides the hit to output from many factories simply closing their doors, the coming weeks will likely see both business and consumer spending on goods decline markedly as measures to contain the coronavirus result in dramatically reduced orders at those factories still operating.

“Company closures, lockdowns and rising unemployment are likely to have an unprecedented impact on expenditure around the world, crushing demand for a wide array of products. Exceptions will be food manufacturing and pharmaceuticals, but elsewhere large swathes of manufacturing could see downturns of the likes not seen before.”

Similar patterns are now spreading across the US and other parts of the world, where lockdowns started later. They will show up in the data as we go forward. There are now all kinds of estimates circulating about the decline of the economy as measured by GDP, with similar fall-off-the-cliff effects, depending on how long this situation lasts and how slowly the lockdowns will loosen and how quickly or slowly the economy wobbles back to life. But one thing is now getting increasingly clear, there won’t be a sudden go-back-to-normal moment.

This type of sudden, previously unimaginable fall-off-the-cliff data about the lockdown-economy is gut-wrenching. ReadWeek Two of the Collapse of the Labor Market

Print Friendly, PDF & Email


  1. PlutoniumKun

    The Dutch figures are one to watch – they have been laggards when it comes to a lockdown – they are playing the ‘keep calm and carry on’ mode that the UK abandoned. The only real strike to them has been the flower industry which has been decimated. They are considered the No.1 opponent of Coronabonds, so as long as their economy is good, they may feel in a political position to keep up the pressure.

    Its ironic, but the future of the Eurozone might depend on the Dutch taking a very big economic nosedive and for their covid strategy to be proven wrong.

    1. Maurice

      The Dutch covid strategy seems to be working so far (and is not that different from other countries, in practice we are also in a lock down). The current estimation of the ‘r’ is that it is somewhere around 0.5, and that we will probably manage the peak to our healthcare, although just barely, and with the help of some hospital beds in Germany. Of course the exit strategy is still clouded in mist, but that is true for all western democracies.

      The Dutch economy is very heavy on logistics (acting as the port for Germany), so the supply-chain problems might have given us an unwarranted push up in the charts. The feeling about the economy being in negative territory is very real, especially for the service industry which is more concentrated in the western part of the country, where also the government is located.

      I won’t really discuss the opposition against the Coronabonds, as I have never agreed with the stance my country takes in EU financial matters (didn’t agree with the treatment of Greece during the financial crisis either). But their position has considerable support in the population, especially on the right side, where the party of our prime-minister is located. The only parties right of him are the populist ones and he wants to keep them at bay. The backslash to their opposition from other European countries was not unnoticed though, and the importance of the EU is largely undisputed so far. So I expect that in the end the Dutch will just follow Germany’s lead.

      1. The Rev Kev

        I am not so sure that things are going well with the Netherlands from what I read earlier. I looked up the figures and found that they have had 16,627 total cases and 1,651 have died so far. That is about a 10% death rate which means that either testing is seriously lacking or that the Netherlands health-care system is collapsing, hence the need to evacuate a few to Germany.

        1. Monty

          Aside from grim curiosity, the only numbers worth much are coming from Iceland. You are probably aware they are trying to test as many people as possible, regardless of age/symptoms to get a view on the actual number of cases. So far that have carried out 17x the number of tests per million population than the USA, and the numbers are a lot less scary as a result They have got through about 10% of the population so far. 1 in 250 currently people have it, 1% serious/critical and a CFR of ~ 0.3%. The numbers could all change either way with time, but such a large sample gives reason for hope.

          1. neplusultra

            They’ve only tested around 24000 people. Sure, when you put that in per capita perspective then it’s a lot because they have such a small population. But there are a ton of extraneous factors this doesn’t take into account. You can’t just take a CFR from Iceland and extrapolate it to a country like USA or really anywhere else where there are different levels of obesity, underlying health conditions, social services, infrastructure etc. We are past the point of optimism now. An effective therapy and then a vaccine would be reasons for hope.

            1. Monty

              We have no idea how many are infected anywhere. Any equations yielding percent of cases dying or in ICU are highly suspect because the denominator is unknown. Around here in USA, as far as I can tell, you need to be sick to get tested in the first place, or you’d have to pay out of pocket. That means the numbers are going to be heavily biased by more serious cases, at the expense of the majority which seem to be asymptomatic, when wider testing takes place.

        2. Jack Hunter

          Testing in the Netherlands is seriously behind Germany (which are doing that much better). The only *relatively* certain number we have for any place is the number of deaths (and even that might well be under-reported).

          The health-care system overall is not collapsing (at the moment), but it is creaking at the seams in the southern part of the country, which was hit first and (for now) has been hit hardest. The biggest issue seems to be the hard limit to the number of ICU beds, or more exactly, ICU qualified doctors and nurses, which give an upper limit of about 2400 ICU “beds” nation-wide (of which 500 are for non-COVID-19 cases). Unlike actual beds or ventilators, you can’t increase trained staff overnight. There’s indeed talk of moving some patients to Germany if needed (in places, that will be closer by than available beds across the country).

          From what I can follow, we might just scrape by with the available ICU beds … or we might not. Fingers crossed.

    2. Ignacio

      Rutte reluctantly took measures that topped the 14th of march announcement resulting in the closure of schools, cafes, restaurants and gyms on March 15th but I guess other shops and business in general are still open. But this was, compared to the earlier and faster development of the disease in Spain and Italy, a relatively fast move if we consider the number of cumulative deaths to that date (similar to Spain, but in Spain the epidemics was roaring and so far has seen the fastest development, may be with New York as closest “competitor” then followed by the UK in third position). Social life is (was) probably much more intense in Italy and Spain and this is IMO the main reason these countries have suffered the most with many events that acted as super-spreaders. The problem for The Netherlands (and for any other country) is that you only know how a measure has worked after several days have passed. So we will see.

      1. PlutoniumKun

        I think that its true that in ‘social’ countries the epidemic has been much worse, its the only explanation I can see why its been so bad so far in Italy and Spain so far compared to northern European countries or Japan. I think the question is whether more social contacts makes the intensity worse, or just means it hits a peak a few weeks before other countries.

        Another interesting (in an academic sense) result will be the relationship between high density cities and suburbs/exurbs. I suspect that its just a timing issue (I think the Spanish Flu ultimately hit rural areas just as badly as urban areas), but again, we’ll soon find out.

        1. Ignacio

          Yep, i totally agree with the timing issue. The epidemics follows the rate of social contacts but at the end it will reach any corner unless it is fully isolated. I am also beginning to wonder about the summer that usually comes, specially in Northern countries, with a stark re-opening of social activities. This summer will be different!

          1. Clive

            Turning sensible approaches to containment into, as has now become the case, a theatre of political virtue-signalling (“our lockdown was earlier and tighter than your lockdown”, “no, our lockdown is going to be longer and more vigorously enforced than your lockdown”) without allowing oneself a path to walk back and de-escalate on is painting the political actor(s) into a social, ethical and economic corner they can’t then escape from.

            Absent a vaccine or universal testing (neither of which are even on the horizon) something will have to give. Popular resentment and non-compliance seems the most likely.

            The herd immunity policy adherents recognised this at the start. Most, although not quite all, were overruled by a domestic political (and even to a degree international) collaboration which formed a coalition against it, which itself got (sort-of) a general understanding or at least acquiescence. Thus, the current lockdown policy is kept aloft by popular sentiment being more-or-less supportive of it.

            Popular sentiment is notoriously fickle. Thought should be given for when — and it is a when not an if — it starts to evaporate.

            1. Ignacio

              This theatre is quite unfortunate Clive and shows how many incompetents are there at all levels. We are now in 20th quarantine day and yesterday I witnessed an anecdotal (but I think possibly quite representative) scene of a few running wild on despair and hate (just by their talk, not actions) and I think this is not solely consequence of the quarantine but some subterranean, may be partially organized, campaign. Not the Russians, though we will soon hear about Russian interference on this.

            2. Tom Bradford

              New Zealand has introduced a series of four levels of lock-down with increasingly severe restrictions. Presently the entire country is at level 4 after a couple of days at level 3 to let people prepare. The Govt. has indicated that depending on how this thing develops it might begin dropping the levels in some regions if the numbers/situation there justify it. That easing, or the promise of it, might go some way to easing the tensions while not undermining the whole system.

              We shall see.

      2. Maurice

        If only it were days. Only now, about two weeks after the measures were taken, do the experts see the effects. This is also caused by a lack of testing capacity, so you can only measure at the hospital gate so to say.

        And one additional remark about the Dutch measures, by far the most important one is that everyone should keep 1,5m distance from others while outside the house. That is basically the one rule from which all else follows. Places which cannot guarantee this, like schools and restaurants, are closed. Shops can stay open as long as they actively try to keep their customers 1,5m from each other. Most employees work from home, but a lot of businesses where this is not possible are closed. And yes the police does fine people who ignore this social distancing.

        And to get back to the reason of this thread, PlutoniumKun’s ‘point’ that, for the sake of the EU, it would be better if the Corona crisis also got out of hand in the Netherlands. My point is, don’t count on it. And I don’t think it would make a difference either. The corona crisis has already made its impact, also in the Netherlands. It is all over the news. The economic consequences are also all over the news. And even the Dutch government is very aware of the fact that there needs to be some kind of EU solution, that having each country fend for itself is not the answer.

        1. PlutoniumKun

          My point is – and I’m thinking here solely in terms of politics – is that the enthusiasm for domestic politicians for fast and radical measures, including Coronabonds, has less to do with ideology (which seems to be getting thrown out the window all over the world), than the domestic situation.

          Those countries that are generally doing ok are probably going to be less inclined to agree to radical measures for the sake of the South. Just look at how quickly it took for the Tories to become enthusiastic about throwing money around (it took about a week after the budget). The Irish centre right government – a long time ally of Rutte in Europe, has become outspoken in support of corona bonds – a very rapid turnaround from being equally enthusiastic austerians.

        2. John Jones

          I’m intrigued to know and understand what sort of EU solution is feasible ?
          Maybe if health was an EU competency or EU was in charge of public health ?
          Giving the EU competency in health is quite a big step that many nations would not particularly like to do.
          Interesting but when the chips are down , it’s the nation state that seems to come to the people’s aid – Italy has been , again, thrown under a bus , albeit with some some small aid from China and lesser extent Germany.

          1. Clive

            If nothing else, COVID-19 has shown that the only real solution to the problems of us Europeans is a political union.

            But the EU has thus far demonstrated that it is incapable of fostering such a political integration. Indeed, at times, it seemed to have unwittingly — or on occasions it even seems to be wittingly — been a venue for playing out of long-standing political animosities and settling of old, old scores which should have long since been put to bed.

            Why, I wonder, when given as an aggregate group, the European people appear very willing and even eager to be motivated to act together in a spirit of goodwill and continental solidarity, we nevertheless then find we’re constantly impeded in our desire for a European fraternity (and sorority!) by the very governance structure which ostensibly is supposed to be providing and enabling this for us?

            1. JTMcPhee

              You think you have it bad? Try living in a representative democracy (sic sic), “E Pluribus Unum.” The lines of fracture are not quite so invisible as the network of geologic faults that also form a dangerous tracery of future disasters under most of these “United” States.

              When the Manifest Destiny empire runs out of places to loot, it’s back to the 14th century, in my humble estimation, or something not unlike.

              So many ways it can all come apart, so many systemic frailties that can become catalysts for disaffection and dissociation in a relative eyeblink… And that being outside the effects on billions of individuals from systemic collapses and failures. I keep hoping someone with way more skills than I develops a “Vulnerability Index” to remind us of where things stand. McGyvering can only provide joust so many patches and duct tape “fixes…”

              1. Ian Ollmann

                Yes, but we haven’t doomed ourselves by trying to keep the states fiscally independent with a common currency. W Va may always be a basket case, but there is a net influx of federal dollars to help stabilize things. Not to pick on W Va here. There are plenty of net takers, and most of them are red states. This is a wholly different thing to Germany telling Greece they must practice austerity and live within their ever diminishing means.

                We also for the most part share a common language and a common history curriculum. Sure there are divisions in this country, but they are manufactured mostly by echo chamber “news” organizations that serve as a propaganda wing for a political party. I don’t see that continuing forever. It isn’t sustainable. Fox ad revenues are low. They only make money because they negotiate well for cable company channel welfare. As more people unbundle, this will dry up.

                1. BlakeFelix

                  Although speaking from rural America, I take that Wall Street and DC supporting us stuff with a grain of salt. How about you guys stop sending us money hot off the presses and we stop sending you food and energy and troops and we’ll see who is supporting who…

            2. John Jones

              “If nothing else, COVID-19 has shown that the only real solution to the problems of us Europeans is a political union.”

              This is an assertion which you appear to subsequently demolish in your other paragraphs.

              If you go for full political union it necessarily has to obviate the “tribal ” nation state and its commcommitant local demos. It’s not to say that a demos couldn’t exist in a full political union but it’s very hard to see recent (within say 200 years) successful examples on a scale of say 500m people with such differing cultures /languages and social mores .

          2. Ignacio

            If at least some bloody $%%&&%&€¬ds have had a good reaction by at least trying not to rise to the occasion to spread all the shit they can… and I am not referring here to one or two remarkable examples because unfortunately there are too many doing the same.

          3. Bazarov

            When I read about the EU in the news (especially the sharp commentary on NC), I’m reminded of the reading I did on the Thirty Years War, which lead me to study the Holy Roman Empire (HRE).

            The HRE is one of the most unique and frustrating political formations in human history. Sometimes, it governed decisively. Usually, it tried to govern but only half-heartedly (the motto of the HRE should’ve been: “To be seen as trying to govern”). Often, it found itself unable to govern at all–due to its arcane constitution and lack of true political union.

            Yet despite its obvious shortcomings, the HRE was very successful and even resilient. It survived for a thousand years. Very few political formations can be said to have lasted that long.

            So, I look at the EU, and I often shake my head, as many an intelligent observer has shaken their head at the HRE over the past millennium or so. But then I remember the fact of the HRE’s fundamental resilience, and I think: “Maybe the Europeans are on to something. Is this the shape of things to come for us all? Is nationhood ultimately on the decline, to be replaced by arcane, amorphous structures of ‘international’ rule very much in the tradition of the HRE?”

            Sorry if this is off-topic. All this EU discussion brought up these thoughts in me, and I thought I would put them here.

        3. Ignacio

          The 1,5 m rule has also been adopted in Spain and it is applied to open shops, basically spmkts, pharmacies… As well as working from home etc. No country is that different I guess but prevailing socio economic activities before the outbreak are very much what makes the difference between countries/regions/cities regarding the spread of Covid-19. Rutte, more precisely his Finance Minister, made the big mistake of making very stupid provincial remarks about this. Not the only one to spread shit but, man, when you are in power you should be quite careful!

      3. Susan the other

        I’m trying to make up a timeline to tell myself – so I can be patient and careful for the duration. The reason I’m doing this is because nobody else is. I’m totally guessing – from the time it took to spread from the very beginning sometime in October to the peak in China sometime in early March to then around the world in both directions sort of meeting in NYC: around 5+ months. So I think (because evidence now in China) there will be a second wave when the virus gets its second wind and we humans haven’t had time yet to get back to normal. I think there will be a creepy hiatus between the first and second wave of Covid-19 where it comes back with renewed virulence – to which we have not adapted. So two rounds each taking 5+ months to go around the world. Let’s call it a year. Maybe next January 2021 we will be on the mend and we will have remedies, both effective drugs and a vaccine or two. And hopefully we will be purged of our godawful politics and politicians. If I don’t live to see it, please everyone keep your wisdom and courage close.

        1. Ian Ollmann

          Ideally, the second time around, perhaps this fall, there will be fewer surprises. Plenty of PPE, and fewer social butterflies.

  2. Ignacio

    Logical in quarantines. It seems to me the index does a very poor job capturing the picture at least for Italy and Spain where the drop must have been more profound. Much more profound. And services is almost everything in Spain since manufacturing, thank you globalization, is a relatively small part of the economy. Spain had bought ventilators/respirators to Turkey and now they prefer to keep them just in case they need them. Are we realising how stupid have we been? There are people working hard now to provide what globalization cannot bring. A starting point for big changes Covid-19 will bring, IMO.

    1. ambrit

      Good observation. One unexpected result of the Covid-19 pandemic will probably be a relocalization trend in manufacturing, plus, perhaps, (one mustn’t underestimate stupidity at the policy making levels of business’) an abandonment of the ‘just in time’ supply paradigm.
      I’m curious about the possible reignition of the Pandemic in China. If true, then the supply chain disruptions will be on the order of years, not months.

      1. David

        Yes, there’s already a lot of rhetorical support for re-localization of production (and agriculture, by the way), even if there are few actual initiatives yet. But services seem to me qualitatively different, and you can’t relocalize them in the same way. By definition, foreign holidays, currency exchange, export-related services, translation and interpretation, long-distance air travel, organization of international conferences – the list goes on – cannot be relocalized, and domestic demand cannot make up the shortfall beyond a certain point. In France, for example, whilst the economy could support a great deal of re-localization of manufacturing, services are another issue. Not only will people cut down on holidays, restaurants, entertainments etc, many of these sectors are themselves only viable at their current size because of tourism (restaurants and hotels above all). Bluntly, French people generally don’t go on holiday to Paris, and if they do they don’t eat in tourist restaurants.

        1. ambrit

          I have always wondered what strata of any “advanced” society took foreign vacations. A general rule of thumb for casinos here in America seems to be that, since the slot machines produce the lion’s share of casino revenues, and slot machines are geared towards a more ‘frugal’ sort of punter, that most casino revenues are dependent on a fairly narrow geographical region. “We’ll make it up in volume,” looks to be the strategy. Las Vegas seems to be the primary exception that ‘proves’ the rule. Even that may be more of an artifact of good public relations and advertising than real funds sources.
          An as yet unspoken aspect of this dislocation is the question of whether or not the ‘Service Sector’ ever recovers to it’s former levels.
          Given the real hit to the general economy the Dreaded Pathogen has supplied, “disposable income” can be assumed to be drastically reduced for the average family. The question is, how “average” was the participation in the ‘service sector’ from the beginning. I would posit that the degree that the service sector is hurt by the Dreaded Pathogen’s effects depends on just how far up the “ladder of wealth” the economic dislocation reaches. Service sector venues should recover proportionally to the disruption of income in the population. Many ostensibly “middle class” people I have been talking to these past few weeks all have evinced a sense of impending doom. A new “Culture of Personal Austerity” in the Developed World may be the primary result of this pandemic. Economic shocks may pass off fairly rapidly, but the psychological shocks will take years to be processed and adapted to.

          1. Monty

            I hear that online casinos are doing a very brisk business. However, these are mostly forbidden in the Land of the Free™.

        2. Ignacio

          But what you say reinforces the idea, because as services cannot be re-localized and will suffer a gigantic slump a possible way to try to compensate for the massacre, would precisely be to re-organize, re-localize manufacturing activities and supply chains.

        3. PlutoniumKun

          Yes, I think it will be very interesting to see if the impacts on tourism are long lasting. I certainly don’t see many people risking an expensive flight long distance for a year or two, until it all dies down. But I suspect that many people will stick to more local holidays for 12-18 months at least.

          The problem, as you suggest with the reference to Paris, is that you can’t like-for-like replace domestic holiday makers with foreign holidaymakers. Here in Ireland, not many Irish will want their holidays in Dublin, but a lot of Dubliners will be looking for more short let cottages on the west coast than are available.

          My personal plan as soon as the restrictions loosen are to take a week or two off and do a long distance hike in the hills south of Dublin, but I’d anticipate that many people are planning to do the same, so I’ll have to be quick to book the hostels and B&B’s from here.

            1. Wyoming

              Hah! Before this event I was training for a multi-month bike trip from Mexico to Banff and back to Mexico on the GDMB route and the Wild West MTB route. Assuming I am still around and my health and economics are still good I intend to give it another chance next year.

              1. Arizona Slim

                Me? No plane or train rides to my next bike tour.


                Instead of traveling to some distant place, I want to take a nice, leisurely multi-day ride on Tucson’s Loop bike trail.

                1. Wyoming

                  I’m with you. No planes for me either. It helps of course living in AZ. I plan on cycling to Antelope Wells (that’s about 540 miles) then doing the Tour Divide route (a variation of the GDMB route) to Banff. Then returning via that route to the US border where the Wild West route starts and taking it to the Mexican border near Sierra Vista, AZ and then back to the house. Total is about 6500 miles. Slow and steady is the goal – if I went fast I would break I am pretty certain. I will pass to the east side of the Catalina’s and the Rincon’s so I will be close to you. I plan on taking the Arizona Trail back north as far as Rt 60 east of Phoenix and then crossing the city to the Black Canyon Trail to get to Prescott (the same way I came south). One should always strive to be ambitious and at my age this is – not that others my age have not done this before.

              2. PlutoniumKun

                I did that route 10 years ago (blog here), although I couldn’t get further south than Santa Fe, I ran out of time (I went the opposite direction). I was very slow – apart from being a slow cyclist I was recovering from an accident at the time – but it is amazing, especially the high plains and north Colorado. Montana north is a bit… well, there are lots of trees.

                1. Ignacio

                  My teeth grow with envy! Hahahahaha! A friend of mine that lived in Dublin a couple of years ago biked his way back to Spain. Niiiice!

                  And just for fun, a neighbour that went with her children to Dublin, when they came back after two years, they totally looked like Irish! Well they are from North Western Spain, so Celtics.

                  1. PlutoniumKun

                    My plan before the virus had been to fly to Bilbao, and cycle from that city back to the ferry port in Brittany along the French coast. I hope I’ll get to do it next year.

                2. Wyoming

                  Nice! I will check it out.

                  I don’t know if you have come across Iohan Gueorguiev’s travels. He has been bike packing around the world for 6 years now. His travels on a bike are beyond epic. He is my inspiration. …And I wonder what his status is right now as he is likely in the middle of nowhere in South America or Africa with little money and this epidemic coming at him.

                  Start with video #2 if that does not hook you then check out video #34.


                  1. PlutoniumKun

                    I haven’t heard of him, but thanks, I’ll have a look at some of his clips. It seems everything has migrated from blogs to vlogs these days.

                    I used to follow quite a few, but my favourite, because of its amazing photos, is Cass Gilberts blog.

                    This reminds me, I really must update my blog, I’ve loads of photos from my last cycling trip in South Korea and Japan, I guess if I don’t do it during a pandemic lockdown, I’ll never do it…

                  1. PlutoniumKun

                    Yes, it was great – I can’t believe it was almost 10 years ago. Actually, it was the result of the last big crisis, my employer was trying to save money so I volunteered for 2 months unpaid leave.

                    It was a physical struggle (in truth, I wasn’t strong enough at the time to really enjoy it), but it was a fantastic experience. One day I’ll get around to finishing the NM stage, and maybe to into Mexico and keep going.

          1. John Jones

            I think the whole tenor , content and shape of the Brexit PD / negotiaiting positions will change quite significantly.

            Self sufficiency, rules of origin all sorts of complex interplays need to be sorted – the movement of people and Schengen will no doubt be a source of contention possibly .

            We the UK need to extend transition in June – certainly the political and economic relationship with the EU is likely to change in all sorts of unanticipated ways given Coronavirus.

            1. Clive

              Difficult to see what an extension will bring to the party.

              Adherence to the Acquis will bring problems where you just don’t need them (ridiculous state aid rules which are completely unsuitable for the policy responses the U.K. will want to adopt, agribusiness and fishing standards and access rights which will harm self-sufficiently without bringing any increased food security in return) … and not bring the benefits when you do need them (Single Market freedom of goods in circulation rules which aren’t worth the paper their written on when it comes to things like PPE equipment and ventilators which are hoarded by Member States with apparent impunity, product standards which were never properly enforced even before COVID-19 in many sectors and that’s now even more risible such as the “CE” marked Chinese swabs which were not compliant with medical device directives and all those wonky testing kits which gave false negatives).

              And even if these weren’t factors, given that Member States can apparently make up new rules just as they see fit (such as France threatening to close the border with the U.K. just because it didn’t like the U.K.’s containment response wasn’t to its liking) what, precisely, are we going to get for €1.2bn a month?

              And even if you ignore all that, you have to sell continued alignment to a highly sceptical population who will need a whole lot of convincing you’re not just a hopeless incurable EU-bot intent on re-litigating the referendum result.

              1. David

                I’d agree with you that, other things being equal, an extension of the negotiation timetable wouldn’t change much. But it’s the equality bitty thingy that is changing in front of our eyes. I frankly wouldn’t care to speculate what shape Europe might be in when eventually HMG and the EC (or the survivors, anyway) drag themselves back to the conference table. (I’ve done many things in my life, but I’ve never negotiated with a mask on.) I suspect the political terms of trade are going to change radically, but I don’t know how. I continue to think, as I’ve said, that the EU might be quite a different beast in a few months time, and that it may be a weaker player and a less desirable partner.
                Which reminds me: people are still confusing Europe the continent and the concept, with Europe as seen from Brussels. These two things are not the same. The former, in this context, is really about international collaboration, and that’s been subject to the usual rules that you look after the interests of your own people first. I’m not sure that’s actually a weakness. And indeed there has been some cooperation (French patients taken to Germany for example). The other, coordination at 27, was never really going to happen anyway: imagine a Rumanian Commissioner for Health deciding that a shipment of masks was needed in Spain rather than Italy. That’s why I can’t see health becoming an EU competence for a very, very long time.

                1. Clive

                  Absolutely, I always try to draw a distinction between “Europe” as in, well, Europe, as distinct from the EU. I’m nothing at heart but a hopeless old naive romantic and do hope and dream that one day, maybe soon (but probably not) there will be a country called “Europe” which will sweep away all the pettiness and meanness and self-centredness which our miserable crop of elites and rulers can’t seem to shake off.

                  As some wags elsewhere in these comments lament, it is redolent of the US being a collections of states which are often — even now, what, 200 years plus after the fact — still prone to squabbling. But, I say to myself, if you can have Louisiana, just as an example, in the same country as, to cite another unlikely bedfellow, Massachusetts, you must be able to have Spain in the same (probably fairly federal-ish) nation as Hungry or the UK.

                  Although having just written up my own particular dream jar, it does strike even me as not necessarily being able to win the 2020 award for The Thing Most Likely To Happen In Our Lifetimes. But still, I can but wish.

                2. John Jones

                  ” I suspect the political terms of trade are going to change radically, but I don’t know how. I continue to think, as I’ve said, that the EU might be quite a different beast in a few months time, and that it may be a weaker player and a less desirable partner.”

                  The EU has squandered and lost any credibility it had when it failed to support Italy in its time of need – the eurozone was crudely and badly designed from the get go – time and again the EU/EZ has wasted precious time to re build /re design a more robust EMS since 2008 but has manifestly failed to do so. Now , even quasi debt mutualisation is unlikely to save Italy from another 20 plus years of negative growth.

        4. JTMcPhee

          Bloomberg gives an idea of what is most likely to happen going forward:

          “When, and how, does the coronavirus pandemic end:
          A road map authored by a group of U.S. health specialists including former Food and Drug Administration commissioner Scott Gottlieb calls for an intermediate stage in which schools and businesses would reopen but gatherings would still be limited. People would continue to be encouraged to keep at a distance from one another, and those at high risk would be advised to limit their time in public. If cases begin to rise again, restrictions would be tightened. Their report, published by the pro-business American Enterprise Institute, is arguably more optimistic than the future envisioned by researchers at Imperial College London. Their models suggest that for at least two-thirds of the time until herd immunity is established, all households would need to reduce contact with schools, workplaces or the public by 75%. In any case, the widespread availability of testing is important in this stage. At the heart of the U.S. plan: at least 750,000 tests per week.

          So, get the looting economy working again, and if deaths start spiking again, then maybe reinstitute some contact restrictions. Rely on herd immunity, because that (barring some miraculous vaccine that public money will pay to develop and private industry will Monopoly-monetize, like as is happening with testing), herd immunity is he only way to get the rich ack safely atop the pyramid. Nothing to see here…

    2. Samuel Conner

      I wonder if there may be a trend toward “open source” or “standardized components” for many products in “re-localized” industries. A way of realizing some of the cost efficiencies that have been, until now, obtained through manufacturing in low-wage countries would be local but “at scale” production of common components. It will not be possible to offer the same vast variety of products if these have to be produced with higher labor costs locally; some cost savings could still be realized with scale production of a smaller range of components and products.

      I would welcome having fewer products competing for my attention — surely purchasers much more so; the “paradox of choice” is a real thing. I would expect that it would also, by simplifying them, improve the resilience of supply chains, compounding the benefits of re-localizing.

      1. Ignacio

        This is interesting IMO. I very much agree with our second para. In many instances there is such a long list of products that competition is only a question on who is the first to reach one’s attention or who manages the control of the middle men. Success is a question of how much you spend on ads and how good is your PR campaign rather than the quality or efficiency of the provider making stuff.

      2. JTMcPhee

        I took the risk of going to the supermarket the other day, maintaining social distance and all that. In the soap and toothpaste aisle, an older woman was leaning on her cart and looking with a kind of blank expression at the six-foot by ten-foot array of toothpaste, with another two standard retail sections of toothbrushes. I asked if I could help and she said the brand she has bought for generations, plain old Colgate, apparently is no longer made.

        We both spent some time searching for it in the fog of attention-grabbing colorful cardboard (maybe it was just out of stock, though there were no vacancies in the display and no shelf tags for it. (I used to work in retail so I kind of know where to look.)

        Dozens of variants and brands, with distinctive packaging and marketing messages and “added values” like whiteners, tartar control and a dozen other “features and benefits” which we all know where they came from, those really smart MBAs and Marketers trying for Sales Domination by plucking some responsive string in the subconscious of the hapless Consumer.

        Maybe the ability to print solids to spec will develop to the point that all that has to be distributed is the source material and the code describing the part and the replacement bits for the 3-D printer. The future is Bright and belongs to the Agile?

        1. Amfortas the hippie

          Toffler strikes again

          i loathe shopping for things like toothpaste, and do the blank stare, myself.
          wife used to do that sort of thing, but now it’s on me, as “The One Who Leaves”.
          that’s really the biggest change for me…I was the Hermit, and she was the Face of Us in the world.

  3. The Rev Kev

    What concerns me here is what happens after we finally get on top of Coronavirus which hopefully will be next year. So the economy starts to recover – or does it? According to Mark Blyth, it is domestic consumption that is the real driver for the American economy and there are plenty of other countries like this too. That is why after 9/11 George Bush told America that the best thing that they could do is go shopping. But who will do the buying now? The 1% has already been made whole on any bad bets that they made but they only do a small part of consumption. The middle class – what is left of them after 2008 – will be crunched and poorer workers will be worse off, especially if business tries to lower wages even more. The debts accumulated during the next year or two will probably smother most efforts to re-start again. Most of the small business will be gone in any case as the Federal government has shown that they are only interested in saving the big corporations, not the little ones. Even Lazarus with a triple-bypass won’t be able to come back from this one and the only way forward is a massive re-structuring of the economy. Plus a side order of sparkly ponies, yeah, I know.

    1. John k

      Dismantling global means local hiring and higher wages. But slow going.
      Wonder what they’re going to do with all the sickness in the mil… hopeless on surface ships, imagine subs… everything in port pretty soon… and how to maintain 6ft even landslide? Plus not enough masks… send everybody home?

    2. Janie

      Consumer extravagance for the vast middle cohort may never come back. I had older parents, adults during the depression and WWII rationing. They retained thrifty habits always, and my mother lived until the late 1990’s. Use it up, make it do, patch the sheets, turn the outgrown slacks into pedal-pushers, crochet rag rugs. It will be the same for many for the rest of their lives.

      1. John Wright

        There might be a trend for simpler stuff.

        I saw a new style electric plug in pressure cooker.

        It has an electronic display and front panel buttons..

        It is easy to imagine this new electronic pressure cooker won’t be working/repairable 5 years from now.

        But new lid gasket for old stove top pressure cooker is about $11.00 delivered.

        The old style pressure cooker will likely still be functional/repairable 5 years from now.

        I can see simplicity and ease of repair coming back in style, especially if people have more time and lower discretionary income during Covid-19 crisis.

  4. Ignim Brites

    Fallen off or pushed off? Just as agitation for higher wages started to get going with near full employment, the State (executive committee of the ruling class) engineered a massive expansion of the industrial reserve army. Fanciful? Maybe, not sure it would even pass muster with the science of history. On the other, absolute rejection might be the dreaded science denial.

    Is this COVID-19 pandemic really worse than a bad influenza season? Or does it seem worse because it piggy backed on an already bad influenza season? Hence the strain on medical capacity.

    A lot of questions are not being asked or answered. All in the spirit of soldiering on together in this “war”.

    1. Seamus Padraig

      My sentiments exactly. Is it really worth completely destroying the economy of Western civilization over what amounts (so far) to a bad chest cold?

      1. witters

        “A bad chest cold…” Sure, Dude. And what is this “Western Civilization” you wan to save? The neoliberal one around us?

        (“The System is corrupt and vicious!”
        “The System is collapsing!”
        “We must save it!”)

  5. Dennis Brown

    Here in British Columbia as of April 3 we had 1174 confirmed cases.673 (57%) of which have already recovered. 35 have died. (All elderly, 70% in rest homes.)Mortality rate of confirmed cases to deaths=2.9%.
    We have tested 46,000 people , but no one knows what the actual number of people that have been exposed to this virus really is. Thus, all of the above percentages are are therefore likely much lower.

    I suppose we are lucky here because we still have a reasonably sound medical system here. Although politicians of all stripes have been trying for the past 40 years to undermine it.

    In Canada, with a population of 35m, we have had 1109 cases (0.003%) 127 deaths (0,0003%). Unknown number infected.

    As of April 3–according to W.H.O–Italy with a population of 60M has had 115,242 cases (0.19%) 13917 deaths (0.023%). No one knows how many infected.

    Spain, population 47M, has had 110,238 cases (0.23%) 10,003 deaths (0.021%)

    France, population 65 M, has had 58,327 cases (0.089%) 4490 deaths (0.006%)

    U.S.A. , population 330M, has had 213,600 cases (0.64%) deaths 4793 (0.001%)

    For what it is worth, and that ain’t much I admit, these do not look like Bubonic Plague type statistics.

    Like most everyone I have been dutifully following the social distancing regulations. But fail to see what our esteemed leaders “exit plan” is.

    Unlike many on NC I don’t purport to understand economics. So, I have no clue as to what the economic, social, and political consequences of all this will be. But I can’t imagine that shutting down the global economy and deconstructing civilization in the current haphazard way will help. (Yes, indeed, I’d love to see a complete transformation to a post-consumerist, ecologically benign, socialist world. And no,I’m not a closet Trump supporter when I worry that the consequences to the global economy are severe at the moment.)

    Just remember that the bearded one–as Lambert likes to call him–told us a century and a half ago that Banks do not create value. Currencies do not create value. Machines and factories by themselves do not create value. Even the “gifts of nature”- raw commodities- have no value without some form of human input. In other words, all value comes from human labor. With global labor now in precipitous decline all the talk about bail-outs etc becomes somewhat problematic–at least in the longer term. With the real economy collapsing where does the value come from to support the bail-out?

    Again , I don’t purport to know nuthin about nuthin. But I fear no good will come from the current approach. It’s a moot point but perhaps we should have thought long ago about maintaining, or rather expanding our global health care capacity instead of supporting endless global war. Perhaps we should have thought about better ways of protecting our increasingly aging population, and the vulnerable, instead of warehousing them in dire facilities which lead to ill health. Ending global poverty, a prime source of disease and pestilence. And on, and on and on….

    1. JTMcPhee

      Exit plan = Moon, Mars or Elysium? Along the way, raking up all the rest of the money.

    2. Monty

      The exit plan is to have all the little people experience severe emotional and financial distress, then liquidate their assets at bargain basement prices. Connected cronies (who shorted from the top) will buy it all with free money from the Fed. Then they will blame China for the mess, tell everyone “it’s over, now get back to work”, and finally reflate asset prices, growing the 0.1%s share to even higher record highs.

    3. Dennis Brown

      I made a transcription error in my earlier post. Canada had 10,000 confirmed cases on April 3, not 1109. The percentages are accurate however.

    4. albrt

      I thought the Bearded One was Krugman.

      Please don’t tell me I have to go back and read a decade of posts and completely rework my economic thinking.

    5. Lynne

      Here in SD, we’ve had a terrifying story. One middle-aged, healthy woman went for a nap because her stomach was upset. She woke with shortness of breath and they were concerned because she had been exposed through family. Her husband called 911, the ambulance came promptly, and she died 6 hours later at the hospital. Mid-March, the governor ordered that state workers work from home and started holding daily press briefings in which she recommends people stay home at much as possible, but has resisted calls for a complete shut-down, apparently for two reasons: one, it is questionable whether she has that authority; and two, she insists that it won’t work because people will not be able to sustain it for the amount of time it would take. So we have a bizarre patchwork of some people cowering in their homes while others go to the bars and party. Testing is spotty at best due to unavailability, so we have no accurate stats. I had to drive somewhere the other day, and the roads were almost deserted except for trucks weaving on the interstate. I understand they lifted the driving hours restriction, and wow, is it showing.

  6. K teh

    Of course Gates wants to shut down everything…and reboot with only electronic money as the basis going forward. He is in the demographic replacement business and only has electronic money himself. Essentially, Fintech has removed all the lower gears in the economy in the process of embedding itself. Who programmed the numbers in the computer determining the arbitrary distribution of wealth? Who replaced labor and savings with debt as the input to investment, short-circuiting ever greater numbers from opportunity? It’s not called activity by accident.

    For the sake of argument, let’s say we wanted to build an effective community bank, instead of selling natural resources to the monopoly for 1s and 0s in a social compliance system under surveillance. We have to begin at the abutment we are on, not the abutment we want. Fortunately, statistics divides by zero at its heart, the starting point for a quantum reaction.

    We know that the globalists are working a top-down, efficient, balance sheet operation to tune themselves in and you out, replacing the required investment in labor expense with government guarantees for revenue and profit. As a project manager, we also know that the front-end outliers removed by statistics must be injected back into the mix.

    The trick is knowing that bottom-up development reverses the dependent and independent variables, dc to ac, and everything really affects everything. Social disintegration / specialization removes the opportunity to drive one system with the gravity of another.

    We also know that existing banks no longer have direct access to their own data, having ceded it to the globalists rolling out MMT for themselves and capitalism for you. Socialism and capitalism work together, against you.

  7. John

    The only way we can prevent the economy from completely collapsing is through massive amounts of fiscal stimulus. But how will Eurozone countries pay for it? Even before this there were the problem’s with Italy’s banking system and of course Brexit at the end of this year. We’ll see public debt crises (especially the PIGS countries) and tremendous strain on the banks. And with how interconnected the global financial system is (not to mention that developing countries will be hit with debt-deflating spirals as well), this will trigger a collapse in the still very inflated US stock market. The government won’t be willing to run the extremely high deficits required to keep the economy functioning–much less to keep the global economy from severely contracting–and we’ll end up with the worst Depression in the history of the world.

    1. JTMcPhee

      At some point maybe there will be a “force Majeure” Jubilee — debts that can’t be paid, won’t be paid. Even if the creditors “own” the assets, there’s not enough force in the system to contend with the natural inclinations of ordinary people to want to survive, and their annoying habit of recognizing who’s put them in the crapper…

      Probably just wishful thinking, but who is going to maintain the surveillance state when things get really dodgy? Are local warlords And barons of the New 14th Century going to contract with Amazon for shelf space in the cloud, for their repressive data collections?

      Those hardy folks that inhabit the Khyber Pass and make functioning AK-47s out of truck springs and axles will appear amongst the masses in other countries, going forward…

Comments are closed.