Welcome to Factal Forecast

For the week of May 8-15

Welcome to Factal Forecast, a look at the week’s biggest stories and what they mean from the editors at Factal. We publish our forward-looking note each Thursday to help you get a jump-start on the week ahead. If this email was forwarded to you, and you like what you see, you can subscribe for free.

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A look ahead:

May 8/ U.S. releases unemployment rate: The U.S. government will release April’s jobs report Friday, which experts say will likely show the country’s highest unemployment rate since the Great Depression.

• What's happened so far: Just two months ago, the unemployment rate was at 3.5 percent, the lowest in 50 years. But, since the economy began shutting down in mid-March to help stave off the spread of coronavirus, millions of Americans have lost their jobs and filed for unemployment. Experts believe the jobs report will show the unemployment rate is between 16 percent and 20 percent.
• The impact: The economy losing 22 million jobs in a short period of time will have serious ramifications for a long period. It’s the equivalent of losing every job created since 2010. While many of these people may be employed when things reopen, an untold amount will not.

May 10/ Spain scheduled to lift lockdown: Spain this week extended its state of alarm for the fourth time, though the country is preparing to ease some of its coronavirus measures Sunday — a decision that came despite growing objections.

• What's happened so far: The country’s lower house decided Wednesday to allow the extension of the state of alarm to May 24 after hours of debate. Popular Party leader Pablo Casado criticized the government during his speech, telling Prime Minister Pedro Sánchez that “the exceptional situation does not allow for a constitutional dictatorship.” Sanchez argued that Spain had finally entered a transition phase, but will still require restrictions that need the state of alarm in place.
• The impact: Sanchez warns that Spain will need to limit its movement for a few more weeks, as the number of cases continues to rise daily. It will be up to the health ministry to decide what territories start opening. According to reports, Madrid will ask to enter phase 1 on Monday, a move that comes as a surprise after Isabel Díaz Ayuso, president of the Community of Madrid, said she was not in a "hurry" to do so.

May 11/ France eases lockdown: France, one of the world’s hardest-hit countries by coronavirus, is set to allow some regions to resume some economic activities Monday and restart public transportation and schools under heavy restrictions.

• What's happened so far: France has recorded more than 25,000 deaths and 170,000 infections. While the government’s rush to procure protective equipment helped hospitals weather the crisis, nursing homes weren’t as prepared, and more than 10,000 people died. With the death toll trending lower, however, the health ministry has developed a color-coded map for the nation’s departments, which will allow for eased restrictions based on the ability of local hospitals to deal with new infections.
• The impact: Despite objections from Paris-area mayors and the French senate, Prime Minister Édouard Philippe is pushing to reopen parts of the country amid the worst economic contraction on record. Schools, shops and public transportation will be subject to strict distancing and cleaning rules, while masks will remain mandatory. With Italy also lifting its lockdown, the next two weeks will be pivotal for the two major European economies to show if their containment efforts worked.

May 12/ Fauci to testify before Senate committee: Dr. Anthony Fauci, head of the U.S. National Institute of Allergy and Infectious Diseases, will appear alongside other top health officials before a Senate committee Tuesday to discuss the country's response to the coronavirus pandemic. 

• What's happened so far: The White House had blocked an earlier request for Fauci to come before the House Appropriations Committee, with President Trump later calling the Democratic-run House "a set up," and "a bunch of Trump haters." Meanwhile, officials have floated the possibility the coronavirus task force could wind down its work in the coming weeks, despite more than 70,000 deaths from the virus and some models suggesting that figure could spike as social distancing measures are eased in parts of the country.  
• The impact: With the hearing focused on "safely getting back to work and back to school," the testimony from health officials will likely be used to inform further federal action on reopening efforts. Senate Democrats on the committee have called for greater transparency from the White House on pandemic response efforts.

May 12/ Nebraska primary: Absent any last minute delays, voters in Nebraska will head to the polls Tuesday to cast their ballots in the state’s primaries. It will be the country’s first in-person election in more than a month. 

• What's happened so far: While at least 16 states have postponed their primaries, Nebraska Gov. Pete Ricketts said he doesn’t want to disenfranchise voters who want to go to the polls. “This is something we have done forever in our state. We've done it through pandemics. We've done it through wars," Ricketts said. Nebraska Democratic Party chairwoman Jane Kleeb, however, has said going ahead with in-person voting amid the coronavirus outbreak is “reckless.”
• The impact: Wisconsin was the last state to hold in-person elections. Turnout there was steady compared to primaries in 2008 and 2012, but notably lower than 2016. Still, while the move to have in-person elections was criticized as a Republican ploy to suppress votes, it may have backfired and served Wisconsin Republicans a major defeat in the state’s Supreme Court. It's possible Nebraska will follow a similar track.

May 13/ South Korea to reopen schools:  A "phased and sequential process" to reopen schools in South Korea will begin Wednesday, with high school seniors being the first students to return to the classroom. 

• What's happened so far: After being one of the first countries outside of China with a coronavirus outbreak, South Korea is now among the few places to bring the situation under control through a combination of widespread testing and contact tracing. The country hit a key milestone on April 30, reporting no new domestic cases for the first time since mid-February. 
• The impact: While the gradual resumption of in-person classes marks a key step in the country's recovery, Education Minister Yoo Eun-hae stressed it does not mean "the end of the coronavirus," and urged students, parents and teachers to continue practicing quarantine guidelines.

A look at coronavirus' impacts:

Coronavirus testing and treatment: As the United States expands antibody testing to determine how many people contracted the virus, concerns are rising about the test's accuracy and usefulness as a basis for a return to normalcy. On the prevention and treatment front, the UN succeeded in raising more than $8 billion this week to fund vaccine research, while the United States cleared an experimental drug to treat the sickest patients after a trial showed “promising results.”

• Watch for: The race to produce a reliable vaccine has already attracted dozens of companies across four continents and prompted the launch of a U.S. government project to develop one by early next year. A partnership between Pfizer and BioNTech is already starting human trials in the United States and Germany. Meanwhile, Regeneron Pharmaceuticals is due to start testing an antibody treatment in June, targeting availability for public use by fall if it proves effective. In an interview last week, Dr. Fauci said the Trump administration’s goal of producing millions of doses of a viable vaccine by January “is doable if things fall in the right place.”

Australia and New Zealand travel bubble: Australia and New Zealand plan to develop a “trans-Tasman bubble” by easing travel restrictions between the two countries after both flattened their respective coronavirus curves. The announcement came after New Zealand Prime Minister Jacinda Ardern joined Australia’s cabinet meeting, the first time the two countries joined cabinets since WWII. No timetable was provided for the travel arrangement, with both countries saying they move toward it “as soon as it is safe."

• Watch for: A trans-Tasman travel bubble represents a potential model for other countries as nations work toward getting control of coronavirus outbreaks. New Zealand, for example, could broaden the arrangement to include other countries with flattened curves such as Taiwan or Hong Kong, according to their top tourism industry executive. Such arrangements represent a possible pathway to increasing global demand for struggling industries, such as tourism, airlines and energy.

United States' reopening: As of May 5, nearly half of America’s 50 states have at least partially reopened their economies or relaxed their restrictions in the wake of the coronavirus pandemic. Several more are expected to follow suit in the coming weeks, despite the disease continuing to spread across the country.

• Watch for: In mid-April, the White House released its guidelines for states and localities to reopen their economies. While many states have lifted stay-home rules, some health experts warn none have met the four guidelines outlined by the Trump administration to best protect residents. Data also appears to show infection rates rising in parts of the country. New York Gov. Andrew Cuomo warned that the nature of new cases is “alarming,” even as infection rates declined in the state, and said residents must continue prevention measures.

What else matters:

Hong Kong’s recession deepens: Hong Kong suffered its worst first quarter contraction since 1974, sliding further into recession amid the coronavirus pandemic and civil unrest. Despite relative success in managing the virus outbreak, with numbers peaking in late March, Hong Kong has been significantly affected by the outbreak in mainland China. Hong Kong’s economy depends on the spending of Chinese tourists and their numbers fell to almost zero during the first quarter, contributing to the economy shrinking by more than 5 percent over three months. The contraction comes after Hong Kong entered recession last year, with months of pro-democracy protests bringing the city to a standstill.

• Watch for: Although Hong Kong is set to start reopening and coronavirus restrictions are set to be relaxed, the city faces the possibility of further turmoil. Mass marches are planned for this summer after Beijing oversaw a fresh wave of crackdowns on protesters during the coronavirus outbreak.

Extended outlook:

What’s on our radar in the coming weeks

May 8: U.S. releases unemployment rate

May 9: Deadline for Iraq's PM-designate to submit cabinet line-up to parliament

May 10: Spain scheduled to lift lockdown

May 11: France expected to ease lockdown restrictions; New Zealand possibly lowers coronavirus restrictions

May 12: Nebraska primary; Fauci to testify before U.S. Senate committee

May 13: South Korea to reopen schools; Netanyahu and unity government to be sworn in

May 19: Oregon primary

May 20: Burundi presidential election; Hawaii primary; Syrian parliamentary elections

May 22: Hawaii Democratic primary

May 27: NASA's first SpaceX crewed flight

June 2: D.C., Montana, New Mexico, Connecticut, Delaware, Indiana, Maryland, Pennsylvania, Rhode Island and South Dakota primaries

June 6: Virgin Islands caucus

June 9: West Virginia and Georgia primaries

June 20: Louisiana primary

June 23: Kentucky and New York primaries

July 2: Malawi to hold fresh presidential election

July 7: NewJersey primary

July 13: Democratic National Convention

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