It has been 30 months since I first heard of a novel coronavirus spreading like wildfire in China. At the time, its spread seemed unstoppable, and the numbers of infected and deceased were increasing geometrically. I remember thinking that if that thing ever comes to our shores, it could do some real damage.
Fortunately, things did not turn out to be as dire as first expected. But just how harmful has this Covid Virus been? I don't think even today. We know the answer. The Centers for Disease Control reports that the disease has killed over 1 million Americans. The vaccine has injured another million. And nearly one-third of the population has been diagnosed with Covid 19.
That has to be an incredible impact on any economy. But it is far from telling us the whole story of the Pandemic's economic impact.
Let's take you back to the chaotic second quarter of 2020, at the height of the Pandemic. State, local, and national governments began a series of draconian mandates. These were the Mandates based on the recommendation of the CDC. Cities were lock-down, citizens were told to "self-quarantine," and all "non-essential" businesses were ordered to be closed.
These actions were an absolute body-blow to our nation's commerce. The economy went into free fall. The Second Quarter of 2020 was a more significant economic disaster than the Great Depression of nearly a century ago. The Bureau of Economic Analysis estimated that the nation's GDP fell by 33%. But as we'll see, even that was likely an understatement.
You see, the independent operators suffered the most, the little mom-and-pop shops that line Main Street USA. The restaurants and boutiques that make up the cash register economy. Many of these small businesses quietly closed their doors, never to re-open again.
The winners were the large mega-corporations, considered too big to close. That kept what little was available up and running. These were the Walmart and Amazon. The places where we could still buy groceries and have supplies delivered.
And in the ensuing two and a half years, we've looked at these giant companies as representing the economic progress in this country. We've measured it by the progress of Walmart and Amazon. And we cut those small businesses loose. We left to drift in our financial wake.
Meanwhile, we've seen the mega-corporations expand their market share and make the best of this current situation. I note that Walmart is now the major grocer, having more than 50% market share in 38 of the largest communities in the country.
Making this so pertinent right now, this week, six of the nation's largest retailers will announce their latest results. Leading off on Tuesday will be Walmart and Home Depot, followed Wednesday by home improvement store, Lowes the Target, and TJX Corporation parent company of TJ Max, and finally, on Thursday, Ross Stores.
But before we assume that everything is beer and skittles for those who remain in the retail industry, we need to remember the result that Amazon revealed.
One of the worst earnings reports Amazon has delivered in years. A couple of weeks ago, Amazon announced terrible results, with their cash flow falling by 40%. The combination of high gas prices, Amazon has a lot of delivery trucks, high inflation, and a customer whose wallet is getting thin caused Amazon to report a $2 billion loss.
So let's hope all the companies reporting this week fare better than Amazon. After all, a lot is riding on this. As any economist will tell you, collectively, all of these retail companies represent about two-thirds of the economic activity in the country. It is a case of as goes retail so goes the nation.
And if I can throw one more report at you, the Census Bureau will also release the latest results of the nation's overall retail sales on Wednesday. This report has been all over the ballpark this year, with two giant slides, and this would make two flat months. And just so you know, Wall Street analysts expect to see a 90% drop in retail sales.
You know, one of the things I like best about earnings reports is that they are real. There's no one blowing smoke, no one trying to make a sale. Oh sure, they're all trying to cast a positive light. But a $2 Billion loss is a $2 billion loss, and no amount of dancing by Amazon could get around that.
So this week, six of the largest retail companies in the nation report their latest quarterly results, along with that all-important tabulation of the nation's overall retail sales.
The interesting news is coming out of Asia. We begin with Japan, where the Japanese Economy appears to be gaining momentum. Just reporting is the first estimate of Q2 GDP for Japan, showing a better than 2% improvement in their overall Economy. This gain in GDP was underscored by a record jump in Japanese Industrial Production, where industry improved by over 9% versus the month before. This was an all-time record.
Let's move to China, where that country sees some economic improvement as they relax some extremely stiff Covid restrictions. China is reporting positive results in both Industrial Production and Retail Sales, although both measures were below market expectations. Industrial Production for China was up less than 4%, while retail sales were up less than 3%.
The Chinese Policy of Zero Covid has extracted an enormous toll on the Chinese Economy this year.
The New York Federal Reserve Branch will report on the Empire States Manufacturing Index closer to home. This volatile index is expected to remain in positive territory, although below last month's reading.
In earnings reported so far this morning, three companies trading higher on their results, IT Company Thoughtworks Holdings, bio-pharmaceutical company Roivant Sciences, and travel support company Clear Secure, are all trading higher currently.