New COVID-19 Wave Crashes Through Global Economy

It’s been a week of all the wrong kinds of COVID-19 records getting set all over the world. In the United States, the average number of new daily cases hit another record on Monday (Oct. 26), as 36 states reported an alarming spike in new cases.

And over the past week, the average number of U.S. patients hospitalized with COVID-19 ticked up by at least 5 percent, according to reports. That’s a figure experts warn is going to keep climbing, as hospitalization is a metric that tends to lag behind new cases.

“This is a harbinger of a very tough winter that’s coming,” Vanderbilt University epidemiologist Dr. Bill Schaffner told CNBC. “I think hospitals are going to be very, very stressed this fall and winter.”

And indeed, that rough ride is a global phenomenon. The European Union had done better than the United States during the summer months in bringing down infections, but caseloads have suddenly spiked all over the continent.

Europe’s hospital infrastructure is being put to the test, and in some cases looks like it runs a risk of being overwhelmed. Reuters reported that cases in Switzerland have risen to record levels this month, with infection rates far exceeding those of its neighbors Germany and Italy. At University Hospital in Geneva – one of the hardest-hit areas – cases have increased more than six-fold in three weeks to 350 patients.

“Everyone expected a second wave, but no one to my knowledge expected it to be so wild and so severe,” hospital director Bertrand Levrat told Reuters.

Switzerland reports about a third of intensive care units remain available for now, but they run the risk of filling up completely within the next 10 days if current infection rates persist, Andreas Stettbacher, a government delegate for the country’s Coordinated Medical Services, told Reuters.

The sudden spike and the possibility of hospitals being overwhelmed means Swiss officials will soon announce new national measures to curb the infection, and they’re under extreme pressure from doctors to impose a strict national shutdown. If they do so, Switzerland will be the third major European state to have put such measures into place. EU members Ireland and the Czech Republic did so at the end of last week in response to climbing infection rates.

And even in states where full lockdown measures haven’t gone into place, limitations on travel and some public movement have already started popping up. Bars and restaurants are closing at 6 p.m. in Italy, while movie theaters, gyms and swimming pools were also obliged to shut their doors.

Meanwhile, Spain’s government has approved emergency powers in case it needs to close the nation’s nightclubs in hopes of curbing COVID-19’s spread enough to avoid another full shutdown. Kids all over the EU have also switched to virtual-only schooling.

Leaders stated that the goal of the more limited restrictions is avoiding the necessity of full shutdowns going into the holiday season. “The objective is not to bring the contagion curve down to zero, but to bring it under control,” The Wall Street Journal quoted Italian Prime Minister Giuseppe Conte as saying on Sunday (Oct. 25) as he announced new measures to slow the virus there.

The Fear of More Economic Fallout

European shutdown measures have led to protests and even small riots in Italy. The property damage and fires, according to reports, came mostly care of extreme soccer fans whose ends were unclear. However, the protests were also reportedly led by SMB owners concerned that shutdowns would ultimately wipe out their businesses.

That fear is far from unfounded, as small business owners worldwide have been pushed to the brink by COVID-19 and the restructuring of consumers’ commercial lives. When PYMNTS surveyed U.S. small business owners earlier in the pandemic, nearly a quarter (22.7 percent) were either fairly sure they weren’t going to survive the pandemic or thought their survival was at least unlikely.

And the situation is similar across the pond. According to a study by McKinsey, more than half of Europe’s SMBs (55 percent) reported expecting to go under within the next year if their revenues didn’t improve markedly. Moreover, roughly 10 percent believed they’d have to file for bankruptcy within the next six months. One in five was also concerned they might default on loans and have to lay off employees, while 28 percent feared they would have to cancel growth projects.

And the problem in both the U.S and Europe isn’t lack of access to government assistance. A large percentage of firms scared for their continued survival reported having collected PPP money or some other form of government relief.

And the hits aren’t just coming to small businesses: Big businesses have also been hit dramatically hard. For instance, after a decade of record-breaking growth, the airline industry has been pushed to the point of near-collapse. Some 43 commercial airlines have already folded, while 485 planes have been idled due to the airline failures.

“The worst is not behind any airline, not only Qatar Airways,” Qatar Airways CEO Akbar Al Baker told CNBC. “There will soon be other bailouts in Europe. There will be other collapses around the world. Because the second wave, I think it is … even more severe than the first wave.”

The Consumer Question

Perhaps the bigger question to ask is whether government-mandated lockdowns really matter so much when it comes to the timeline for consumers returning to once-normal activities like eating in restaurants, going to the movies or traveling in airplanes.

According to recent PYMNTS/PayPal data on the subject, the answer seems to be a pretty resounding “no.” Only 6 percent of those we surveyed noted that state and local governments relaxing restrictions is their single most important prerequisite for returning to their pre-pandemic lifestyles.

What the data mostly demonstrate is the fact that consumers are still deeply concerned about the pandemic and want a vaccine before they’re willing to get back out there the way they once did. Thirty-eight percent of consumers say having a readily available vaccine is the single most important requirement for returning to their pre-pandemic lifestyles.

Meanwhile, 59 percent say they at least would need to know that a COVID-19 vaccine was readily available before feeling comfortable returning to their previous routines. And perhaps most disturbing given the recent trends in infection rates, 58 percent of consumers say they would want to know that the number of new COVID-19 cases had decreased before feeling comfortable returning to their pre-pandemic routines.

However, infection rates aren’t decreasing – quite the opposite, they’re soaring at the moment. And it seems that even if those figures do come down and countries avoid full-scale lockdowns, consumers will impose their own personal lockdowns and stick to digital commerce until a vaccine makes the scene.