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Economy takes hit and so will profits at oil, hotel firms

Sheltering in place, shutting down large parts of the economy and skyrocketing job losses due to coronavirus are bad for America’s health, the economy and for corporate profits.

So be prepared for unsettling news when companies start reporting how much money they made — or lost — in the first three months of 2020. And brace for even worse earnings news when the second quarter ends after June.

While the economy was faring well in January and February, it has downshifted dramatically in March. That’s when the deadly coronavirus spread quickly across the U.S., prompting the federal and state governments to intentionally shutter businesses to slow the spread of COVID-19.

The resulting hit to business activity and jobs has been sizable, despite emergency help provided by the Federal Reserve and a $2 trillion relief bill passed by Congress. Fed chief Jerome Powell said Thursday the economy “may well be in recession.” And the hit to Main Street workers has been swift, with a record 3.3 million people filing for unemployment benefits for the week that ended March 21.

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As expected, companies are making a lot less money due to the unprecedented shutdown of the U.S. and global economy. And analysts haven’t yet lowered their profit projections to fully account for the damage caused by the pandemic. The broad U.S. stock market has already dropped sharply in value as investors have factored in lower future earnings and a coming recession.

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