The Edge of Risk Menu Search
New thinking on corporate risk and resilience in the global economy.

Quick Takes

Coronavirus Economic Indicators on China Worse Than the Great Recession

Source: IMF, 2020 Note: The x-axis shows the months elapsed since the indicated event, t=0 the initial impact month. GFC refers to the Global Financial Crisis of 2007-08.

Initial economic indicators on China following the outbreak of the coronavirus reveal a greater fallout than past comparable disruptions, such as the Great Recession and the H1N1 virus.

Manufacturing in China took a sharp dive in the first month following initial impact, much more severe than manufacturing setbacks experienced in the second month of the Great Recession. The dive is owed to global manufacturers suspending part or all of their operations in China in an attempt to contain the virus. Services similarly contracted, noting the impact of social distancing and discouraged public interactions.

The IMF figures come as China prepares to rebound from the coronavirus, with authorities continuing to report a drop in new infections. Should China successfully contain the virus, even as it spreads to other countries, it will offer some reprieve to manufacturers. The tech industry has indicated it could resume manufacturing operations in the world’s second-largest economy by the end of March.

50% of Jobs Lost in US Performing Arts Due to COVID-19

Source: Brookings Institution

The creative industry will lose an estimated 31% of jobs and 9% of its sales in the United States due to the impact from coronavirus. Fine and performing arts will see the heaviest loss at 1.4 million jobs and $42.5 billion in sales, according to estimates from the Brookings Institution, due to the pause in live performances.  

The southern region of the U.S. will suffer the most losses, followed by the western region, as creative industries in these areas are larger, with California, New York and Texas being most economically affected.

The creative industry is “one of the sectors most at risk from COVID-19,” says Brookings. The sector heavily supports other regional economies as well, and without the right financial support, “the damage will have reverberating effects” beyond the economy, on culture and quality of life.

News Deserts Are a Major Loss for Communities Across the US

Source: UNC Hussman School of Journalism and Media

More than 2,100 — or one quarter — of newspapers have disappeared in the United States since 2004. 

News deserts, or areas with one local newspaper or none, “contribute to the cultural, economic and political divide within the country,” according to a report from the University of North Carolina. Those who live in news deserts tend to be older, less formally educated and more economically vulnerable, and their lack of access to local news may result in less political engagement and interest in voting. 

During a crisis, local news outlets play a vital role in distributing the latest safety information, but the Brookings Institution found that half of the counties reporting COVID-19 cases in April were in news deserts. Without information from local news on how the pandemic is playing out on a community level and how locals can best protect themselves against the virus, those in news deserts could be more vulnerable to its spread.

Working Hours Lost at 10 Times the Rate of the 2008 Crisis During COVID-19

Source: Organization for Economic Co-operation and Development (OECD)

The impact of job hours lost during the coronavirus pandemic is already 10 times greater compared to the early months of the 2008 Great Recession. The economy is not expected to bounce back to its pre-pandemic levels until after 2021, according to the OECD.

COVID-19 has seen a steeper rise in unemployment and a broader reach among the population compared to the Great Recession. The Great Recession reached its unemployment peak in January 2010 at 10.6% — a rate that we surpassed in May 2020 at 13.0% (and it’s still rising). Almost every age group has been economically affected by the COVID-19 outbreak, while during the Great Recession, parts of the older generations were relatively more insulated from the economic fallout.

This drastic job loss could further expand the poverty-wealth gap and backtrack both progress toward gender equality and the ability of younger generations to be financially independent, purchase a home or pay off student loans. The effects of unemployment on mental health are substantial as well and will likely continue increasing during this crisis.

Most US Adults Believe Pressure Led to Corporate Statements About Race

Source: Pew Research Center

Note: Across racial, ethnic groups, more see pressure rather than genuine concern as contributing a great deal to companies’ statements about race.

Only 19% of U.S. adults believe corporate statements about race were made from genuine concern, as opposed to societal pressure. Conversely, nearly 70% of respondents to a survey conducted by Pew Research Center perceive pressure as the main contributor to public statements about race or racial equity, with 59% of white respondents, 43% of Asian respondents and 32% of both Black and Hispanic respondents feeling the same way. 

In making these statements, a mirror has been held up to companies’ own internal diversity, equity and inclusion (DEI) efforts, as well as their actions of support for marginalized communities local to their area. 

Without their own DEI initiatives, intentional recruitment, diverse leadership, pay equity reviews, or external action to support statements about the imperative of racial justice, for example, these companies may be criticized for empty virtue signaling. The majority of consumers want to know where companies stand on certain issues, but they also need to see how companies exemplify their own purported beliefs.

For optimal delivery, please select your region:
Please enter a valid email address.
Success! Thank you for signing up.