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U.S. Jobless Claims Show Further Economic Strain: Live Updates U.S. Jobless Claims Show Further Economic Strain: Live Updates
(about 2 hours later)
Extending the additional benefits that Congress has given to unemployed workers, which end in July, would help the economy this year but hurt it next year, the Congressional Budget Office estimated on Thursday.Extending the additional benefits that Congress has given to unemployed workers, which end in July, would help the economy this year but hurt it next year, the Congressional Budget Office estimated on Thursday.
President Trump signed a law in March that gives an additional $600 per week to tens of millions of workers who have lost their jobs amid the coronavirus pandemic, on top of the unemployment benefits that they would normally receive. Those expanded benefits expire July 31 and Congress is divided over whether to extend the higher payments.President Trump signed a law in March that gives an additional $600 per week to tens of millions of workers who have lost their jobs amid the coronavirus pandemic, on top of the unemployment benefits that they would normally receive. Those expanded benefits expire July 31 and Congress is divided over whether to extend the higher payments.
Republicans have raised concerns that the more generous benefits will act as a disincentive for people to return to work as the economy recovers, because many workers are now earning more from unemployment than they did from their jobs. Democratic supporters of the benefits say they are cushioning workers against a shock and helping to keep up the level of consumer spending in the economy.Republicans have raised concerns that the more generous benefits will act as a disincentive for people to return to work as the economy recovers, because many workers are now earning more from unemployment than they did from their jobs. Democratic supporters of the benefits say they are cushioning workers against a shock and helping to keep up the level of consumer spending in the economy.
The budget office essentially found merit in both arguments. In a brief report prepared at the request of the Senate Finance Committee Chairman, Charles E. Grassley, Republican of Iowa, the office said that if the benefits were to be extended, economic output would be higher in the second half of 2020 than if the benefits were to expire.The budget office essentially found merit in both arguments. In a brief report prepared at the request of the Senate Finance Committee Chairman, Charles E. Grassley, Republican of Iowa, the office said that if the benefits were to be extended, economic output would be higher in the second half of 2020 than if the benefits were to expire.
But it said output would be lower in 2021 if the benefits were extended, because fewer Americans would be working.But it said output would be lower in 2021 if the benefits were extended, because fewer Americans would be working.
“An extension of the additional benefits would boost the overall demand for goods and services, which would tend to increase output and employment,” the office wrote. “That extension would also weaken incentives to work as people compared the benefits available during unemployment to their potential earnings, and those weakened incentives would in turn tend to decrease output and employment.”“An extension of the additional benefits would boost the overall demand for goods and services, which would tend to increase output and employment,” the office wrote. “That extension would also weaken incentives to work as people compared the benefits available during unemployment to their potential earnings, and those weakened incentives would in turn tend to decrease output and employment.”
Gap, one of the biggest U.S. retailers with its namesake, Old Navy and Banana Republic chains, said on Thursday that net sales in the first quarter plummeted 43 percent to $2.1 billion and that it posted a net loss of $932 million, as it struggled with store closures because of the pandemic.Gap, one of the biggest U.S. retailers with its namesake, Old Navy and Banana Republic chains, said on Thursday that net sales in the first quarter plummeted 43 percent to $2.1 billion and that it posted a net loss of $932 million, as it struggled with store closures because of the pandemic.
The company, which has nearly 2,800 stores in North America, said that it had reopened more than 1,500 locations and expected the “vast majority” of stores to be open by the end of June. The retailer saw major drops across most of its brands, but net sales declined only 8 pecent at Athleta as customers flocked to athleisure. Casualwear was popular across brands as shoppers worked from home, the company said. That trend, however, hurt Banana Republic.The company, which has nearly 2,800 stores in North America, said that it had reopened more than 1,500 locations and expected the “vast majority” of stores to be open by the end of June. The retailer saw major drops across most of its brands, but net sales declined only 8 pecent at Athleta as customers flocked to athleisure. Casualwear was popular across brands as shoppers worked from home, the company said. That trend, however, hurt Banana Republic.
Gap said on an earnings call on Thursday that its reopened stores are operating at nearly 70 percent of their performance last year, with particular strength at Old Navy, which is “advantaged” with off-mall locations. It was also upbeat about a new collection called Gap Teen, which was introduced during the quarter and emphasizes sustainability.Gap said on an earnings call on Thursday that its reopened stores are operating at nearly 70 percent of their performance last year, with particular strength at Old Navy, which is “advantaged” with off-mall locations. It was also upbeat about a new collection called Gap Teen, which was introduced during the quarter and emphasizes sustainability.
Simon Property Group, the biggest mall operator in the United States, is suing Gap, the owner of retail chains including Old Navy and Banana Republic, for about $66 million in unpaid rent for April, May and June, according to a lawsuit filed in Delaware this week.Simon Property Group, the biggest mall operator in the United States, is suing Gap, the owner of retail chains including Old Navy and Banana Republic, for about $66 million in unpaid rent for April, May and June, according to a lawsuit filed in Delaware this week.
Simon Property said that it notified Gap in writing that the retail conglomerate had failed to pay $48.2 million in rent and other charges as of May 5, but that the company still had not made the payments as of Tuesday. Gap, one of the biggest specialty store operators in the world, also owns Intermix, Athleta and outlet stores.Simon Property said that it notified Gap in writing that the retail conglomerate had failed to pay $48.2 million in rent and other charges as of May 5, but that the company still had not made the payments as of Tuesday. Gap, one of the biggest specialty store operators in the world, also owns Intermix, Athleta and outlet stores.
The retailer said on the call that it was in active negotiations with landlords.The retailer said on the call that it was in active negotiations with landlords.
Sonia Syngal, Gap’s chief executive since March, started the call by acknowledging the protests across the country and noted that the company has the chance ”to create a world that is more inclusive.” She noted that 20 of its stores sustained “extensive damage” as part of the protests.Sonia Syngal, Gap’s chief executive since March, started the call by acknowledging the protests across the country and noted that the company has the chance ”to create a world that is more inclusive.” She noted that 20 of its stores sustained “extensive damage” as part of the protests.
Raytheon Technologies, one of the country’s biggest defense contractors, recently cut salaries for thousands of employees as the pandemic crimped business. Around the same time, it also quietly made a change to the pay package of its chief executive, Gregory J. Hayes, that could increase his future income by millions of dollars.
Last Friday, after the market closed, Raytheon disclosed in a filing that it had tweaked how it calculates certain stock-related payouts owed to senior executives and employees. The filing did not state by how much Mr. Hayes or others stood to benefit.
The change led to an estimated $12.5 million gain for Mr. Hayes on his recent equity awards, Raytheon later told The New York Times. The company said the change was necessary to ensure that Mr. Hayes and 3,900 employees — about 2 percent of its work force — did not lose compensation they had already been awarded.
But some analysts said the change undermined Raytheon’s commitment to use pay to keep executives’ interests in line with those of shareholders. Publicly traded companies have come under pressure to structure stock-related compensation in a way that creates incentives for executives to improve long-term performance and not just seek to enrich themselves in the short term.
More than two million new unemployment claims came in last week, showing the persistent strain on the economy caused by the coronavirus pandemic.More than two million new unemployment claims came in last week, showing the persistent strain on the economy caused by the coronavirus pandemic.
The Labor Department reported that 1.9 million Americans filed new claims for state unemployment insurance last week, along with 623,000 new claims for federal aid available to the self-employed and others not normally eligible for state jobless benefits.The Labor Department reported that 1.9 million Americans filed new claims for state unemployment insurance last week, along with 623,000 new claims for federal aid available to the self-employed and others not normally eligible for state jobless benefits.
The overall number collecting state benefits increased by almost 650,000 to a seasonally adjusted total of 21.5 million, showing that even as some businesses reopen and workers come off the rolls, others are being newly laid off or belatedly starting to receive benefits.The overall number collecting state benefits increased by almost 650,000 to a seasonally adjusted total of 21.5 million, showing that even as some businesses reopen and workers come off the rolls, others are being newly laid off or belatedly starting to receive benefits.
The job market is “crawling out of the hole now,” said Torsten Slok, chief economist at Deutsche Bank Securities. “We do have the worst behind us,” he said.The job market is “crawling out of the hole now,” said Torsten Slok, chief economist at Deutsche Bank Securities. “We do have the worst behind us,” he said.
At the same time, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the weekly claims “are not falling as fast as I’d like them to fall or thought they would be falling.”At the same time, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the weekly claims “are not falling as fast as I’d like them to fall or thought they would be falling.”
“Let’s not kid ourselves,” he added. “This is still an astonishing rate of layoffs.”“Let’s not kid ourselves,” he added. “This is still an astonishing rate of layoffs.”
The coronavirus pandemic took a toll on United States imports and exports in April, with both falling sharply as stores and factories around the world shuttered and shipping was disrupted, leading to a widening monthly trade deficit, data released Thursday morning showed.The coronavirus pandemic took a toll on United States imports and exports in April, with both falling sharply as stores and factories around the world shuttered and shipping was disrupted, leading to a widening monthly trade deficit, data released Thursday morning showed.
Imports fell 13.7 percent from the prior month to $200.7 billion in April, while exports fell 20.5 percent to $151.3 billion, as American shipments of cars, planes, crude oil and machinery all sagged, the Commerce Department said.Imports fell 13.7 percent from the prior month to $200.7 billion in April, while exports fell 20.5 percent to $151.3 billion, as American shipments of cars, planes, crude oil and machinery all sagged, the Commerce Department said.
Service imports and exports, which include revenue from tourism, also slumped. Those trends pushed up the monthly trade deficit in goods and services by 16.7 percent to $49.4 billion, up from $42.3 billion in March.Service imports and exports, which include revenue from tourism, also slumped. Those trends pushed up the monthly trade deficit in goods and services by 16.7 percent to $49.4 billion, up from $42.3 billion in March.
Year-to-date, the trade deficit in both goods and services is still down 13.4 percent from the same period in 2019. But the trade deficit, a measure of how much more the country imports than it exports, has risen sharply in the past two months, nearly reversing almost a year of steady decreases in the monthly figure.Year-to-date, the trade deficit in both goods and services is still down 13.4 percent from the same period in 2019. But the trade deficit, a measure of how much more the country imports than it exports, has risen sharply in the past two months, nearly reversing almost a year of steady decreases in the monthly figure.
The Trump administration has consistently pointed to the trade deficit as a reflection of the health of American manufacturing, and pointed to the drop in the figure over the last year as a sign of their success in bringing more manufacturing to American shores.The Trump administration has consistently pointed to the trade deficit as a reflection of the health of American manufacturing, and pointed to the drop in the figure over the last year as a sign of their success in bringing more manufacturing to American shores.
Economists have expected trade to contract sharply because of the pandemic, before recovering later this year as stores and factories reopen. In April, the World Trade Organization forecast that global trade volumes could shrink up to 32 percent this year, contracting in every industry and region of the world.Economists have expected trade to contract sharply because of the pandemic, before recovering later this year as stores and factories reopen. In April, the World Trade Organization forecast that global trade volumes could shrink up to 32 percent this year, contracting in every industry and region of the world.
The nation’s largest airlines are preparing for more travelers to fly next month, driven by what the carriers said was a desire to vacation within the United States.The nation’s largest airlines are preparing for more travelers to fly next month, driven by what the carriers said was a desire to vacation within the United States.
American Airlines said on Thursday that it would operate more flights in July to cities in Florida and to destinations popular in the summer like Colorado, Montana, Utah and Wyoming as travelers seek out national parks and outdoor spaces. A day earlier, the chief executive of Delta Air Lines, Ed Bastian, said he saw demand rising for flights to similar destinations. United Airlines on Thursday said it also expected customers to book more flights to cities in Florida, Las Vegas, Charleston, S.C., and Portland, Maine.American Airlines said on Thursday that it would operate more flights in July to cities in Florida and to destinations popular in the summer like Colorado, Montana, Utah and Wyoming as travelers seek out national parks and outdoor spaces. A day earlier, the chief executive of Delta Air Lines, Ed Bastian, said he saw demand rising for flights to similar destinations. United Airlines on Thursday said it also expected customers to book more flights to cities in Florida, Las Vegas, Charleston, S.C., and Portland, Maine.
American plans to operate about 55 percent as many flights in the United States in July as it did the year before, up from 20 percent in May. United said it expected a similar, but somewhat smaller rebound, while Mr. Bastian of Delta said that the airline expected to see twice as many passengers in July as it did in May.American plans to operate about 55 percent as many flights in the United States in July as it did the year before, up from 20 percent in May. United said it expected a similar, but somewhat smaller rebound, while Mr. Bastian of Delta said that the airline expected to see twice as many passengers in July as it did in May.
“We’re seeing a slow but steady rise in domestic demand,” Vasu Raja, American’s senior vice president of network strategy, said in a statement. “Our July schedule includes the smallest year-over-year capacity reduction since March.”“We’re seeing a slow but steady rise in domestic demand,” Vasu Raja, American’s senior vice president of network strategy, said in a statement. “Our July schedule includes the smallest year-over-year capacity reduction since March.”
But airlines are not ramping up international flights to the same extent. American, for example, will fly only about a fifth of the flights it operated to other countries last year in July. Domestic and international flights taken together, American’s July schedule has about 40 percent as many flights as in July 2019.But airlines are not ramping up international flights to the same extent. American, for example, will fly only about a fifth of the flights it operated to other countries last year in July. Domestic and international flights taken together, American’s July schedule has about 40 percent as many flights as in July 2019.
In the last week of May, which included the Memorial Day holiday, American carried a daily average of about 110,000 passengers, up from the approximately 79,000 it averaged for the rest of last month.In the last week of May, which included the Memorial Day holiday, American carried a daily average of about 110,000 passengers, up from the approximately 79,000 it averaged for the rest of last month.
The European Central Bank administered another dose of economic stimulus to the eurozone economy Thursday, saying it would nearly double the size of its purchases of government and corporate bonds.The European Central Bank administered another dose of economic stimulus to the eurozone economy Thursday, saying it would nearly double the size of its purchases of government and corporate bonds.
The central bank will step up its bond purchases by another 600 billion euros, or $675 billion, a way of driving down market interest rates and making credit cheaper. The decision will push the total bond purchases promised by the central bank since the pandemic began to 1.35 trillion euros.The central bank will step up its bond purchases by another 600 billion euros, or $675 billion, a way of driving down market interest rates and making credit cheaper. The decision will push the total bond purchases promised by the central bank since the pandemic began to 1.35 trillion euros.
Christine Lagarde, the central bank’s president, raised expectations that the bank would do more when she said last week that the economic effects of the pandemic could fulfill worst case scenarios. Members of the bank’s Governing Council have also expressed concern about deflation, a ruinous downward spiral of prices.Christine Lagarde, the central bank’s president, raised expectations that the bank would do more when she said last week that the economic effects of the pandemic could fulfill worst case scenarios. Members of the bank’s Governing Council have also expressed concern about deflation, a ruinous downward spiral of prices.
The latest data on joblessness in the eurozone, released Wednesday, showed the unemployment rate in April was 7.3 percent, a number that reflects the government-backed furlough programs designed to curb mass unemployment. But many national financial support programs are set to begin scaling back soon, making it likely that joblessness will grow higher over the coming months, economists said.The latest data on joblessness in the eurozone, released Wednesday, showed the unemployment rate in April was 7.3 percent, a number that reflects the government-backed furlough programs designed to curb mass unemployment. But many national financial support programs are set to begin scaling back soon, making it likely that joblessness will grow higher over the coming months, economists said.
Stocks on Wall Street inched lower, following European markets down on Thursday in a small retreat after days of back-to-back gains.Stocks on Wall Street inched lower, following European markets down on Thursday in a small retreat after days of back-to-back gains.
The drop came after the U.S. government said the overall number of workers on state jobless rolls increased last week, signaling continued strain on the economy even as some businesses reopen.The drop came after the U.S. government said the overall number of workers on state jobless rolls increased last week, signaling continued strain on the economy even as some businesses reopen.
In Europe, the decline came despite new efforts by the European Central Bank to bolster the region’s economy. The E.C.B. said that it expanded its stimulus measures by more than expected, stepping up bond purchases by another 600 billion euros, or $675 billion, to address economic distress caused by the virus outbreak.In Europe, the decline came despite new efforts by the European Central Bank to bolster the region’s economy. The E.C.B. said that it expanded its stimulus measures by more than expected, stepping up bond purchases by another 600 billion euros, or $675 billion, to address economic distress caused by the virus outbreak.
The S&P 500 fell about 0.3 percent. The index had climbed for four consecutive days before the dip on Thursday.The S&P 500 fell about 0.3 percent. The index had climbed for four consecutive days before the dip on Thursday.
Stocks have been buoyed by recovery hopes in recent weeks, with the S&P 500 rising to within 10 percent of its pre-pandemic highs, while stocks in Europe are back to where they stood in early March. Investors have been inspired by signs of a quick return of normal activity — even if not to levels seen before government-imposed shutdowns and social-distancing orders. Companies, from automakers to restaurants, have reported that sales are beginning to pick up.Stocks have been buoyed by recovery hopes in recent weeks, with the S&P 500 rising to within 10 percent of its pre-pandemic highs, while stocks in Europe are back to where they stood in early March. Investors have been inspired by signs of a quick return of normal activity — even if not to levels seen before government-imposed shutdowns and social-distancing orders. Companies, from automakers to restaurants, have reported that sales are beginning to pick up.
Still, the bad news has been relentless, from unrest in the United States to continuing tensions between Washington and Beijing.Still, the bad news has been relentless, from unrest in the United States to continuing tensions between Washington and Beijing.
When the French luxury giant LVMH agreed to buy Tiffany for $16.2 billion last November, many thought it was a high price at the time. It looks even more expensive amid the coronavirus pandemic, and LVMH is weighing whether to press for the deal to be re-priced.
LVMH’s chief executive, Bernard Arnault, is talking with advisers about his options, and the matter was discussed at a board meeting on Tuesday, according to today’s DealBook newsletter. Among the points the company could raise are whether Tiffany has suffered a “material adverse change” to its business, or whether the jewelry icon will miss financial projections agreed to in the deal.
Tiffany’s shares plunged after Women’s Wear Daily first reported LVMH’s on deliberations. LVMH said this morning that it would not buy Tiffany shares in the open market, ruling out a potential tactic to lower the overall price of the deal.
LVMH hasn’t approached Tiffany to discuss re-pricing the deal. For its part, Tiffany believes that its deal agreement is ironclad. And buying Tiffany would give LVMH another major luxury brand and landmark real estate on Fifth Avenue in Manhattan. Neither side expects LVMH to try to walk away from the deal — at least, not at this moment.
A number of deals agreed before the pandemic have been rescinded or revamped, including L Brands breaking off a sale of Victoria’s Secret to Sycamore Partners, Carlyle fighting to get out of buying a stake in American Express Global Business Travel, and BorgWarner and Delphi agreeing to cut the price of their deal after threatening lawsuits.
J.C. Penney, the 118-year-old department-store chain that filed for bankruptcy last month, said on Thursday that it would start store closing sales at 154 locations on June 12. It disclosed the locations on its company blog and said in a statement that the sales would be completed within 10 to 16 weeks. Additional store closing sales are expected to be announced in coming weeks.J.C. Penney, the 118-year-old department-store chain that filed for bankruptcy last month, said on Thursday that it would start store closing sales at 154 locations on June 12. It disclosed the locations on its company blog and said in a statement that the sales would be completed within 10 to 16 weeks. Additional store closing sales are expected to be announced in coming weeks.
The Senate gave final approval on Wednesday to a measure that would relax the terms of the Paycheck Protection Program, a federal loan program for small businesses struggling during the pandemic. The bill, approved overwhelmingly by the House last week, would extend to 24 weeks from eight weeks the time that small businesses would have to spend the loan money. The measure now heads to President Trump’s desk.The Senate gave final approval on Wednesday to a measure that would relax the terms of the Paycheck Protection Program, a federal loan program for small businesses struggling during the pandemic. The bill, approved overwhelmingly by the House last week, would extend to 24 weeks from eight weeks the time that small businesses would have to spend the loan money. The measure now heads to President Trump’s desk.
Germans will receive 300 euros, or about $336, per child, and pay a reduced value added tax on daily items and less for electricity, under a €130 billion stimulus plan announced by Chancellor Angela Merkel’s government. Ms. Merkel called the package, which was agreed to late Wednesday, a “bold response” to the pandemic downturn.Germans will receive 300 euros, or about $336, per child, and pay a reduced value added tax on daily items and less for electricity, under a €130 billion stimulus plan announced by Chancellor Angela Merkel’s government. Ms. Merkel called the package, which was agreed to late Wednesday, a “bold response” to the pandemic downturn.
The owner of New York & Company, the women’s apparel brand with nearly 400 stores that dates to 1918, said on Wednesday that based on disruptions caused by the coronavirus pandemic, it “believes that seeking protection under the bankruptcy laws is probable.” Its owner, RTW Retailwinds, said that based on store closures in mid-March, much of its inventory is aged and that it did not pay rent for most stores in April and May. It also cut more than 50 percent of its work force at its headquarters in April.The owner of New York & Company, the women’s apparel brand with nearly 400 stores that dates to 1918, said on Wednesday that based on disruptions caused by the coronavirus pandemic, it “believes that seeking protection under the bankruptcy laws is probable.” Its owner, RTW Retailwinds, said that based on store closures in mid-March, much of its inventory is aged and that it did not pay rent for most stores in April and May. It also cut more than 50 percent of its work force at its headquarters in April.
Reporting was contributed by Sapna Maheshwari, Tiffany Hsu, Nelson D. Schwartz, Niraj Chokshi, Jim Tankersley, Vivan Wang, Melissa Eddy, Jack Ewing, Matt Phillips, Michael J. de la Merced, Jason Karaian, Jeanna Smialek, Patricia Cohen, Mohammed Hadi and William Davis. Reporting was contributed by Peter Eavis, Anupreeta Das, Sapna Maheshwari, Tiffany Hsu, Nelson D. Schwartz, Niraj Chokshi, Jim Tankersley, Vivan Wang, Melissa Eddy, Jack Ewing, Matt Phillips, Michael J. de la Merced, Jason Karaian, Jeanna Smialek, Patricia Cohen, Mohammed Hadi and William Davis.