Data Points
- Phase one in the White House’s plan to reopen the U.S. economy would begin May 1st
- Retail sales and industrial production fell in March by 8.7% and 5.4%, respectively, the largest month-over-month declines in decades for each
- OPEC reached a deal to cut global petroleum output by nearly a tenth
Top Three Market Headlines
White House Presents Plan to Reopen Economy: The Trump administration last week presented a three-phase plan to reopen the economy. The informal guidelines, the implementation of which would remain at the discretion of individual states’ governors, would advise areas with low numbers of COVID-19 infections to begin pulling back on social distancing measures after May 1 while prompting harder-hit areas to wait longer. The first phase would encourage the opening of restaurants, movie theatres, and places of worship, with social distancing restrictions highly enforced. Phase two would see the resumption of non-essential travel and the reopening of schools. Phase three would lift restrictions on workplaces while maintaining social distancing for individuals when possible.
Economic Data Exposes Depth of Economic Downturn: As large parts of the U.S. economy remain frozen to combat the spread of COVID-19, March economic data has provided a glimpse into the depth of the developing economic downturn. Last week, the Commerce Department reported that retail sales fell by 8.7% from a month earlier, the biggest month-over-month decline since its records began in 1992. Even after excluding the volatile auto and gasoline components, retail sales were down 3.1% from last year. Additionally, housing starts decreased by 22% from the prior month, the largest decline since March 1984. Finally, the Federal Reserve announced that U.S. industrial production fell by 5.4% in March from the prior month, its biggest monthly drop since 1946.
OPEC+ Agrees to Historic Production Cut: The world’s top oil producers agreed to cut global petroleum output by nearly a tenth after declining demand and the recent price feud between Saudi Arabia and Russian pushed oil prices down to a 20-year low. The deal is designed to combat sharply increasing oil supplies that some investors have feared would exceed storage limits. Although Saudi Arabia, Russia, and their oil allies will sustain the largest production cuts under the agreement, Mexico and the United States also agreed to cut their production by a combined 400,000 barrels. The deal will go into effect on May 1, allowing a window of opportunity for the increased production to continue for the next three weeks.