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Unemployment Claims Show More Jobs Are Vanishing: Live Updates Wall Street Recovers After a Day of Turbulent Trading: Live Updates
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The economic challenges posed by the coronavirus pandemic are especially acute for the poorest Americans, according to a new Federal Reserve survey released Thursday. Stocks ended a turbulent day of trading on Thursday with a solid gain, after a rebound fueled in part by a surge in oil prices.
Many Americans came into the nationwide lockdown with limited savings, despite gains made over the course of a record-long economic expansion. At the end of 2019, three in 10 adults said they could not cover three months’ worth of expenses with savings or borrowing in the case of a job loss, “indicating that they were not prepared for the current financial challenges,” the central bank said. The S&P 500 rose more than 1 percent, after recovering from an early drop of nearly 2 percent.
One in five people who were working in February reported that they lost a job or were furloughed in March or the beginning of April 2020, the data showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said. The early drop was fueled partly by the Labor Department’s latest report on unemployment claims, which showed that millions of workers are still losing their jobs.
The United States economy began slowing in March, as state and local governments instituted stay-at-home orders to tame the coronavirus’s rapid spread. That has caused the steepest growth decline in the United States’s postwar history. Consumer spending has plummeted as stores and restaurants closed, and mass layoffs have become a feature of everyday life. Nearly three million people filed for unemployment benefits last week, pushing the two-month tally over 36 million. But stocks rose out of that slump as oil prices jumped, prompting gains in shares of energy companies like oil services giant Halliburton and Occidental Petroleum. West Texas Intermediate, the U.S. crude benchmark, rose about 9 percent. At more than $27 a barrel, oil is now far above the lows that it plumbed in April.
Delta Air Lines plans to retire all its Boeing 777 jets, a fleet that helped it become a global airline, as it prepares to shrink its network for up to three years to ride out what is expected to be a long and choppy recovery, especially for international travel. The gains in oil prices came as the chief of the International Energy Agency said on Thursday that he saw “signs of a gradual rebalancing” in the oil market. Global demand for oil fell in April to about 25 percent below its normal level, the agency said, but it is expected to slowly recover as more countries ease lockdown measures.
“Retiring a fleet as iconic as the 777 is not an easy decision; I know it has a direct impact on many of you who fly, crew and service these jets,” Delta’s chief executive, Ed Bastian, told employees in a note. “The 777 played an important role with Delta since 1999, allowing us to open new long-haul markets and grow our international network as we transformed into a global airline.” Financial stocks also rallied on Thursday, with shares of Wells Fargo up more than 6 percent. and Capital One Financial up more than 9 percent.
Delta said it would retire its 18 wide-body 777s by the end of the year. Once demand for international travel recovers, the airline plans to use newer, more fuel-efficient aircraft on long flights. It’s been a tumultuous week for stocks, as investors heard a drumbeat of warnings about the pandemic and its long-term impact.
Delta is losing about $50 million a day, a figure that it hopes to bring to zero by the end of the year. It has already moved up plans to retire two other fleets, the MD-88 and MD-90, and has idled more than 650 jets in all. On Tuesday, Dr. Anthony S. Fauci spoke about the serious risk of a new outbreak if the economy was reopened too quickly. On Wednesday, the Federal Reserve chair, Jerome H. Powell, warned of permanent damage to the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
Other airlines have made similar decisions, choosing to let go of older planes years ahead of schedule in anticipation of a slow, painful recovery. Delta has paid out $1.2 billion in ticket refunds since the crisis began, and more than 41,000 employees have agreed to take some form of unpaid leave of absence. China’s factories maintained a brisk pace last month, but Chinese consumers were slow to resume shopping, according to official statistics released on Friday.
Quartz, a business news site with offices around the world, is cutting nearly half of its staff in a substantial restructuring after the economic fallout of the coronavirus pandemic drastically reduced its advertising revenue. Many countries have been watching China’s economic performance closely because it is several months ahead of the rest of the world in coping with the virus. The Chinese economy shrank in the first three months of this year for the first time since Mao Zedong died in 1976.
Quartz’s owner, the Japanese financial intelligence firm Uzabase, announced the layoffs in a public filing on Thursday. The company said that approximately 40 percent of Quartz staff members would lose their jobs, and the cuts would be focused on its advertising team. Quartz had 188 employees at the end of last year, Uzabase said. Factories caught up on orders that they had struggled to fill earlier this year, when the coronavirus pandemic raced across the country. The country’s industrial production was up 3.9 percent from April of last year, better than most economists expected. Production had been down 1.1 percent in March from a year earlier and had plunged in February, when the virus outbreak was at its worst in China.
Zach Seward, the chief executive, said in a note to the staff that approximately 80 roles would be eliminated. A spokesman for the NewsGuild, which represents 43 journalists working at Quartz, said about half its members would lose their jobs. But shopping and fixed asset investment stayed weak. Retail sales were down 7.5 percent in April compared to a year earlier, marginally worse than economists’ expectations.
Mr. Seward said the cuts were part of a long-term strategy to make Quartz sustainable by retrenching to a business model that places a premium on revenue from subscriptions rather than advertising. “We should be aware that given the continuous spread of the epidemic abroad, the stability and recovery of the national economy is still faced with multiple challenges,” said Liu Aihua, the director general of the agency’s department of comprehensive statistics.
Uzabase bought Quartz from Atlantic Media in 2018. Strong exports kept factories busy last month. Many factories were catching up on orders placed while Chinese cities were locked down. But orders for further exports have stalled, according to surveys of purchasing managers.
Nearly three million more Americans filed for unemployment benefits last week, continuing a devastating stretch of new jobless claims, but a White House economic adviser, Kevin Hassett, told reporters on Thursday that Trump administration officials saw signs of an economic rebound in the numbers. Despite the progress, tens of millions of migrant workers are unemployed. Many white-collar workers have suffered pay cuts. Weak consumption has some economists wondering how long China can sustain an economic rebound.
Mr. Hassett called the Labor Department’s report of jobless claims “better than expected” and said it likely showed improving economic strength in states where officials had begun to ease restrictions on economic activity imposed as the coronavirus outbreak spread rapidly over the last two months. A prominent think tank with a $115 million endowment said Thursday it was returning a $8 million federal stimulus loan it received from a program meant to stabilize small businesses.
The claims totaled 2.98 million in the week through May 9, the data released on Thursday showed. That’s down from the prior week, but still worse than what many economists had expected. The Aspen Institute said in a statement that it believed its application was “consistent with the goals of the program” but that on “listening to our communities and further reflection, we have made the decision to return the loan.”
“The fact that we came in under three million suggests that the turning on of the economy is beginning, and it’s beginning to show up in the data,” Mr. Hassett said. The institute hosts a yearly conference in Aspen, Colo., that has been attended in recent years by prominent names like the Facebook chief executive Mark Zuckerberg and the BlackRock chairman Laurence Fink.
The coming weeks, Mr. Hassett said, should begin to show the degree to which activity is resuming in states that lift lockdowns, compared to states that keep them in place. Its receipt of the funds and an outcry from some of its affiliates was first reported on Wednesday by The Washington Post.
“My fear is that the places that stay closed could have skyrocketing claims” for jobless benefits, he said, while “the places that turn back on will have claims go back down toward normal.” The think tank is among the many organizations, including prep schools and large public companies, that have returned their loans through the program after public objection. Critics say the program, administered by the Small Business Administration, has channeled funds to well-connected organizations and left struggling small businesses in the lurch.
Many analysts did not share Mr. Hassett’s optimistic read of the new data. A labor case headed to France’s highest court is testing Amazon’s ability to sidestep the demands of workers who are fulfilling the surge in orders the pandemic has produced for Amazon’s business.
The number of new claims exceeded the consensus forecast, which had been 2.5 million for the week. A research note from Pantheon Macroeconomics declared the number “a smaller drop than we hoped for,” and the researchers said they expected the number of new claims will not fall below one million a week until the end of June, a delay from their previous forecast of mid-June. It is also emblematic of why Amazon, based in Seattle, has battled to keep unions out of the company, especially in the United States, its biggest market, write Liz Alderman and Adam Satariano.
Fatih Birol, the chief of the International Energy Agency, said on Thursday that he saw “signs of a gradual rebalancing” in the oil market that has been ravaged by the coronavirus pandemic, but that the process of bringing supply in line with demand was still “fragile.” Unions in the United States have made few inroads after years of campaigns. But in Europe, national labor laws require companies to deal with them, even if employees aren’t members. With more than 150,000 deaths in Europe from the coronavirus, the groups are leveraging the crisis to reassert influence and press Amazon harder on workers’ rights.
Mr. Birol, discussing the agency’s monthly report, said that this year was likely to prove to be “the worst” in history for the oil market, with April probably the worst month. “The only way to push Amazon to action is through confrontation,” said Jean-François Bérot, , who works at an Amazon warehouse south of Paris. “We’re working in conditions that pose a risk to our safety. Workers’ voices must be heard.”
Global demand for oil fell in April to about 25 percent below its normal level, the agency said, but it is expected to slowly recover as more countries ease lockdown measures. The agency estimated that by the end of May, 2.8 billion people would be living under “some form of confinement,” down from a peak of four billion people. Amazon defended its response to the virus, saying it had put in place more than 150 changes at its warehouses, including providing masks, temperature checks, hand sanitizer, increased time off and higher pay. It expects to have more than $4 billion of coronavirus-related expenses in the current quarter.
At the same time, oil producers are making deeper and more rapid supply cuts than some analysts had expected. The agency forecast that demand may substantially outpace supply in the second half of this year, working off some of the enormous glut that has built up. “We respect everyone’s right to express themselves, but object to the irresponsible actions of some labor groups who have spread misinformation and made false claims about Amazon during this crisis,” said Stuart Jackson, an Amazon spokesman.
Oil prices have recovered in recent days with Brent crude, the international benchmark, trading around $30 a barrel, well above its low of about $19 a barrel in late April but still down more than 50 percent for the year. The American standard, West Texas Intermediate, which briefly fell into negative prices, is trading about $26 a barrel. J. Crew and Neiman Marcus were each facing a host of challenges before the coronavirus pandemic forced them to close their stores and eventually file for bankruptcy.
But they also shared a common problem for retailers in dire straits: an enormous debt burden — roughly $1.7 billion for J. Crew and almost $5 billion for Neiman Marcus — from leveraged buyouts led by private equity firms.
Like many other retailers, J. Crew and Neiman over the past decade paid hundreds of millions of dollars in interest and fees to their new owners, when they needed to spend money to adapt to a shifting retail environment. And when the pandemic wiped out much of their sales, neither had anywhere to go for relief except court, write Sapna Maheshwari and Vanessa Friedman.
The filings by J. Crew and Neiman Marcus followed a wave of retail bankruptcies in the past few years, and came as numerous chains, including J.C. Penney, teetered on the brink because of the pandemic.
J. Crew, which owns Madewell, and Neiman Marcus, which owns Bergdorf Goodman, have vowed to stay in business, but bankruptcies inevitably raise questions about what the future holds for employees, stores and vendors.
McDonald’s has distributed a 59-page guide to franchisees outlining procedures for safely operating dining rooms across the country.
The fast food chain will require restaurants to clean digital kiosks every time a customer uses one and sanitize restrooms and other high-touch areas every half-hour, according to a copy of the guide reviewed by The New York Times. The guide also requires the franchisees to place “closed” decals on certain tables to promote social distancing. And it recommends putting signage on the floor to prevent customers from brushing past each other as they move around the restaurant.
All employees will have their temperatures taken before work, and they will be required to wash their hands regularly.
“For dine-in orders, the bag will be placed on a clean sanitized tray and delivered to the customer while maintaining social distance requirements,” the guide states. “Do not forget napkins and straws!”
The guide does not outline a strict timeline for reopening. Once a local government says that restaurants can admit dine-in guests, a McDonald’s official in that region will decide whether to begin reopening, the guide states. Then individual franchise owners will make a decision about whether to go through with reopening.
The guide also includes a Q. and A. section on how to manage guests who refuse to comply with social distancing guidelines.
As the coronavirus forces meat plants to shut down, hundreds of thousands of pigs have grown too large to be slaughtered commercially, forcing farmers to kill them and dispose of their carcasses without processing them into food.
In Iowa, the nation’s largest pork-producing state, agricultural officials expect the backlog to reach 600,000 hogs over the next six weeks. In Minnesota, an estimated 90,000 pigs have been killed on farms since the meat plants began closing last month.
One Minnesota hog farmer sealed the cracks in his barn and piped carbon dioxide through the ventilation system. Another farmer has considered gassing his animals after loading them into a truck. And a third shot his pigs in the head with a gun. It took him all day.
“There are farmers who cannot finish their sentences when they talk about what they have to do,” said Greg Boerboom, a second-generation pig farmer in Marshall, Minn., who is trying to find ways to avoid killing a backlog of more than 1,000 pigs.
“This will drive people out of farming. There will be suicides in rural America.”
Microsoft may emerge from the pandemic even stronger than before, thanks to its products that help people work remotely (including its own employees). But the company’s chief executive, Satya Nadella, said that he was “on the lookout for what is lost” in remote work.
Speaking to a group of reporters and editors from The New York Times, as detailed in today’s DealBook newsletter, Mr. Nadella noted that some work force productivity numbers have gone up at the company, but it isn’t something to “overcelebrate.” More meetings start and end on time than before, but “what I miss is when you walk into a physical meeting, you are talking to the person that is next to you, you’re able to connect with them for the two minutes before and after,” he said. Those moments are hard to replicate virtually, as are other soft skills crucial to connecting with co-workers and building a community.
“Maybe we are burning some of the social capital we built up in this phase where we are all working remote,” he said. “What’s the measure for that?”
The weekly count of new unemployment claims has been declining since late March, but job losses from the coronavirus pandemic continue to mount. The two month tally of workers who joined the U.S. unemployment rolls is now more than 36 million.The weekly count of new unemployment claims has been declining since late March, but job losses from the coronavirus pandemic continue to mount. The two month tally of workers who joined the U.S. unemployment rolls is now more than 36 million.
Michelle Meyer, head of U.S. economics at Bank of America, said that even with businesses reopening in some states, she doubted that callbacks to work outnumbered additional layoffs from other sectors. The slowdown has been rippling beyond the early shutdowns in retail and hospitality to professional business services, manufacturing and health care.Michelle Meyer, head of U.S. economics at Bank of America, said that even with businesses reopening in some states, she doubted that callbacks to work outnumbered additional layoffs from other sectors. The slowdown has been rippling beyond the early shutdowns in retail and hospitality to professional business services, manufacturing and health care.
“In a sense, it’s a rolling shock,” she said.“In a sense, it’s a rolling shock,” she said.
Jerome H. Powell, the Federal Reserve chair, said Wednesday that Fed research being released Thursday would show that in households making less than $40,000 a year, about 40 percent of those working in February lost their jobs in March.Jerome H. Powell, the Federal Reserve chair, said Wednesday that Fed research being released Thursday would show that in households making less than $40,000 a year, about 40 percent of those working in February lost their jobs in March.
State unemployment insurance and emergency federal relief were supposed to tide households over during the shutdown. But several states have a backlog of claims, and applicants continue to complain of being unable to reach overloaded state agencies.State unemployment insurance and emergency federal relief were supposed to tide households over during the shutdown. But several states have a backlog of claims, and applicants continue to complain of being unable to reach overloaded state agencies.
According to a poll for The New York Times in early May by the online research firm SurveyMonkey, more than half of those applying for unemployment benefits in recent weeks were unsuccessful.According to a poll for The New York Times in early May by the online research firm SurveyMonkey, more than half of those applying for unemployment benefits in recent weeks were unsuccessful.
Stocks fell on Thursday, as investors continued to assess the lasting damage they face from the coronavirus pandemic.
The S&P 500 was about half a percent lower, having recovered from an early drop of nearly 2 percent. Shares in Europe and Asia fell sharply.
Stocks have been declining this week as investors heard a drumbeat of warnings about the pandemic and its long-term impact.
On Tuesday, Dr. Anthony S. Fauci spoke about the serious risk of a new outbreak if the economy was reopened too quickly. On Wednesday, Federal Reserve chair, Jerome H. Powell, warned of permanent damage to the economy if Congress and the White House did not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
On Thursday, the government’s latest report on unemployment claims showed that millions of workers are still losing their jobs.
The recent declines mean this week could be the worst for U.S. stocks since mid-March, although it isn’t nearly as substantial as it was then. The S&P 500 is down about 4 percent this week, compared with a 15 percent drop in the week that ended March 20.
That’s in part because efforts by the Federal Reserve and lawmakers in Washington, including a $2 trillion economic rescue package, have helped calm investors’ nerves.
Homeowners who have temporarily paused their federally backed mortgages because of virus-related hardships have been wondering if they could push those missed payments to the end of their loan. On Wednesday, federal regulators provided an answer: Yes.Homeowners who have temporarily paused their federally backed mortgages because of virus-related hardships have been wondering if they could push those missed payments to the end of their loan. On Wednesday, federal regulators provided an answer: Yes.
Borrowers who reach their final payoff date and still owe the unpaid amount will have to pay it in a lump sum at that time, according to the Federal Housing Finance Agency, which oversees mortgages guaranteed by Fannie Mae and Freddie Mac. If they sell or refinance their homes, they’ll have to pay what they owe then.Borrowers who reach their final payoff date and still owe the unpaid amount will have to pay it in a lump sum at that time, according to the Federal Housing Finance Agency, which oversees mortgages guaranteed by Fannie Mae and Freddie Mac. If they sell or refinance their homes, they’ll have to pay what they owe then.
Under the CARES Act, homeowners whose mortgages are backed by the federal government are permitted to skip their payments for up to a year.Under the CARES Act, homeowners whose mortgages are backed by the federal government are permitted to skip their payments for up to a year.
Homeowners owe the skipped amount in full, and the agency is encouraging borrowers to pay it as soon as they’re able. But even if they have to push the payment to the end of their loan, homeowners will not be charged extra fees or interest on the balance.Homeowners owe the skipped amount in full, and the agency is encouraging borrowers to pay it as soon as they’re able. But even if they have to push the payment to the end of their loan, homeowners will not be charged extra fees or interest on the balance.
There is one caveat: Housing officials said borrowers who were not current on their loans, or were more than 31 days delinquent before March 1, would not be eligible.There is one caveat: Housing officials said borrowers who were not current on their loans, or were more than 31 days delinquent before March 1, would not be eligible.
A few months ago, everything seemed to be going Elon Musk’s way. The New York Stock Exchange will begin to reopen its trading floor the day after Memorial Day, the exchange’s president, Stacey Cunningham, wrote in an op-ed article in The Wall Street Journal. As part of “measured reopening plans,” floor brokers will return in small numbers and be required to wear masks. Social distancing requirements will be in place, and workers and visitors will be screened before entry.
After a turbulent start to 2019, Tesla, the electric car company he helped found, had reported a profit two quarters in a row and its stock was surging. Mr. Musk claimed vindication by defeating a defamation lawsuit and was staying out of trouble on Twitter. Tesla was on a tear. Disney Theatrical Productions said Thursday that its stage adaptation of “Frozen” would not reopen on Broadway once the pandemic eases, making the musical the first to be felled by the current crisis. “We believe that three Disney productions will be one too many titles to run successfully in Broadway’s new landscape,” Thomas Schumacher, the president of Disney Theatrical Productions, said in a letter to his staff.
But the coronavirus set Mr. Musk off. His dreams of dominating the car industry were postponed when Alameda County, Calif., forced Tesla’s Fremont plant, which brings in most of the company’s revenue, to shut down in late March.
That frustrated Mr. Musk, who had long dismissed the seriousness of the coronavirus — promoting unproven research, suggesting that Covid-19 deaths were overstated and predicting that there would be zero new cases in the United States by the end of April. (There were almost 32,000.)
His anger boiled over last week, as he threatened to move the factory out of California and sued the county in federal court, Niraj Chokshi reports. This week, Mr. Musk officially reopened the plant, to the frustration of some workers and county officials who had been negotiating a reopening plan with Tesla for weeks.
As the plant reopened, Mr. Musk thanked employees for making “the factory come back to life.”
“I have vastly more respect for someone who takes pride in doing a good job,” he said in an email, “whatever the profession, than some rich or famous person who does nothing useful.”
Nissan said the head of its North American operation, José Luis Valls, had resigned for “personal reasons” and would leave the company on June 15. Nissan has struggled with anemic sales in the United States, its most important market after China. Jérémie Papin, the senior vice president for finance at Nissan North America, will replace Mr. Luis Valls, the company said.Nissan said the head of its North American operation, José Luis Valls, had resigned for “personal reasons” and would leave the company on June 15. Nissan has struggled with anemic sales in the United States, its most important market after China. Jérémie Papin, the senior vice president for finance at Nissan North America, will replace Mr. Luis Valls, the company said.
Leslie H. Wexner, the longtime chief executive officer and chairman of L Brands, stepped down from both roles on Thursday as expected, though he will retain a board seat. Mr. Wexner, 82, the longest serving chief executive of a company in the S&P 500, recently faced serious questions about his leadership because of issues with the company’s culture and his relationship with the disgraced financier Jeffrey Epstein, a convicted sex offender.Leslie H. Wexner, the longtime chief executive officer and chairman of L Brands, stepped down from both roles on Thursday as expected, though he will retain a board seat. Mr. Wexner, 82, the longest serving chief executive of a company in the S&P 500, recently faced serious questions about his leadership because of issues with the company’s culture and his relationship with the disgraced financier Jeffrey Epstein, a convicted sex offender.
J.C. Penney might file for bankruptcy as soon as Friday after skipping two interest payments on its debt in the past month, according to two people familiar with the matter. The company is in talks to secure about $450 million in debtor-in-possession financing, which would allow it to keep operating the business, according to the people, who spoke on condition of anonymity because discussions were confidential. Reporting was contributed by Liz Alderman, Adam Satariano, David McCabe, Vanessa Friedman, Gregory Schmidt, Jason Karaian, David Yaffe-Bellany, Michael Corkery, Patricia Cohen, Tiffany Hsu, Stanley Reed, Niraj Chokshi, Li Yuan, Ben Dooley, Carlos Tejada, Jeanna Smialek, Tara Siegel Bernard Jim Tankersely, Matt Phillips, Sapna Maheshwari, Michael J. de la Merced and Kevin Granville.
Sony reported a 57 percent drop in operating profit in the three months ending in March. The coronavirus has hit Sony’s electronics business hard, while giving a boost to some of its entertainment offerings, as people stuck at home seek to keep themselves busy.
Reporting was contributed by Patricia Cohen, Tiffany Hsu, Stanley Reed, Niraj Chokshi, Li Yuan, Ben Dooley, Carlos Tejada, Jeanna Smialek, Tara Siegel Bernard Jim Tankersely, Matt Phillips, Sapna Maheshwari, Michael J. de la Merced and Kevin Granville.