Here’s what you need to know:
- There is ‘extraordinary uncertainty’ about the U.S. economy, Fed officials say.
- Jobless claims reach 38.6 million in nine weeks.
- Flying over the holiday weekend? Expect lots of changes.
- Republicans remain noncommittal on more aid as millions more file for unemployment.
- The Atlantic lays off 17 percent of its staff.
There is ‘extraordinary uncertainty’ about the U.S. economy, Fed officials say.
Top Federal Reserve officials continued to strike a cautionary tone about the United States economy on Thursday, with the Fed’s vice chair saying the virus is creating “extraordinary uncertainty.”
“The coronavirus pandemic poses the most serious threat to maximum employment and, potentially, to price stability that the United States has faced in our lifetimes,” Richard Clarida, the vice chair of the Federal Reserve, said in a speech.
He added that he believed “we’ll begin to get a better sense” of the scenario “in the fall.”
His comments came shortly after remarks from John C. Williams, the president of the Federal Reserve Bank of New York, who said that the pandemic puts “a large question mark” over how industries will fare going forward.
“The cause of this recession — a global pandemic — means that our economic future will be determined in large part by the path of the virus,” Mr. Williams said at an event held by several upstate New York business groups. “It’s impossible to know exactly how and when workers and businesses will be fully back to work and when consumers will return to the businesses that are open.”
The Fed is confronting the worst economic downturn in generations, with another 2.4 million people filing new unemployment claims last week. Mr. Williams said that the unemployment rate was likely to head higher than its double-digit reading in April. Mr. Clarida said the country would see rates “we have not seen in 80 years.”
While the Fed has cut rates to near-zero and announced a suite of emergency lending programs, Mr. Clarida reiterated a message that Fed Chair Jerome H. Powell has made regularly in recent weeks: More government support may be needed to get the economy through this challenging period.
Jobless claims reach 38.6 million in nine weeks.
Claims were filed in
the last nine weeks
Initial jobless claims, per week
Claims were filed in
the last nine weeks
Initial jobless claims, per week
“The hemorrhaging has continued,” Torsten Slok, chief economist for Deutsche Bank Securities, said of the mounting job losses. He expects the official jobless rate for May to approach 20 percent, up from the 14.7 percent reported by the Labor Department for April.
A recent household survey from the Census Bureau suggests that the pain is widespread: Forty-seven percent of adults said they or a member of their household had lost employment income since mid-March. Nearly 40 percent expected the loss to continue over the next four weeks.
And there is increasing concern that many jobs are not coming back, even for those who consider themselves laid off temporarily.
Nicholas Bloom, a Stanford University economist who is a co-author of an analysis of the pandemic’s effects on the labor market, estimates that 42 percent of recent layoffs will result in permanent job losses. “I hate to say it, but this is going to take longer and look grimmer than we thought,” he said of the path to recovery.
Flying over the holiday weekend? Expect lots of changes.
Airports this Memorial Day weekend are likely to be far emptier than usual, but people who are planning to fly will find lots of changes to every part of the screening process.
At security lines, signs and other markings will remind passengers to keep their distance. The Transportation Security Administration said Thursday that its agents would wear masks, gloves and, in some cases, eye protection. Passengers will be asked to scan their own boarding passes and place any food in their luggage in a separate bin during screening to limit cross contamination.
“In the interest of T.S.A. front line workers and traveler health, T.S.A. is committed to making prudent changes to our screening processes to limit physical contact and increase physical distance as much as possible,” David Pekoske, the agency’s administrator, said in a statement.
Most normal rules remain in place, but the T.S.A. said it would relax one: Passengers will now be allowed to bring up to 12 ounces of hand sanitizer with them on their journey.
Airlines are also making changes. Travelers who need to check a bag or print a ticket, for example, might find a sneeze guard separating them from a ticketing agent, a precaution being taken in some locations by United Airlines and Delta Air Lines. If they opt to use a kiosk instead, passengers may end up interacting with one that works without any need for contact at all.
Republicans remain noncommittal on more aid as millions more file for unemployment.
With another 2.4 million workers filing new claims for unemployment benefits last week, attention is again turning to whether Washington will provide additional aid to those struggling amid the pandemic.
The answer, for now, is maybe.
It remains unclear whether lawmakers will agree to extend enhanced unemployment benefits that were included in the $2 trillion stimulus package passed in March, which provides an additional $600 per week to workers who file for unemployment.
That enhanced benefit expires at the end of July and House Democrats included a provision in the $3 trillion stimulus bill it passed on Friday to extend it through January 2021.
But Republicans have rejected that measure, along with the entire House bill, and do not plan to vote on it in the Senate. They have raised concerns that the higher benefit creates a disincentive to work.
In a private phone call with House Republicans Wednesday afternoon, Senator Mitch McConnell of Kentucky, the majority leader, vowed that Republicans would “clean up the Democrats’ crazy policy that is paying people more to remain unemployed than they would earn if they went back to work.”
Democrats have repeatedly slammed Republicans for what Senator Chuck Schumer of New York, the minority leader, referred to on Thursday as a “staggering” level of inaction on coronavirus legislation.
The Atlantic lays off 17 percent of its staff.
The Atlantic will lay off 68 workers across “events, sales, and editorial,” David G. Bradley, the chairman of Atlantic Media, said in a staff email on Thursday, as the publication struggles with the same forces — mostly a drop in digital advertising — that have affected tens of thousands of jobs in news media during the coronavirus crisis even as it has experienced a sharp rise in subscribers.
Those laid off represent 17 percent of the total staff, The Atlantic said in a statement. Executives will have their pay cut, and there will be general pay freezes.
A long-term strategic pivot to a business model that relies predominantly on reader revenue, Mr. Bradley said, “is accelerated — and made necessary — by the overnight and near-complete undoing of in-person events and, for now, a bracing decline in advertising.”
The Atlantic instituted an online paywall last year, and has since added 160,000 new subscribers, Mr. Bradley said. More than 90,000 of those have been added since March. The magazine, which is 163 years old and was once edited by Ralph Waldo Emerson, has drawn widespread praise for its coverage of the pandemic.
Three years ago, Mr. Bradley sold a majority stake in Atlantic Media to Emerson Collective, the organization founded by the billionaire Laurene Powell Jobs.
Victoria’s Secret plans store closures while Bath & Body Works sees a surge in sanitizer sales.
L Brands, which owns Bath & Body Works and Victoria’s Secret, reiterated its commitment to separating the two companies on Thursday and said that Victoria’s Secret would close 250 stores in the United States and Canada this year, cutting its fleet to about 850 locations.
The company said on an earnings call on Thursday that it anticipated that there would be more Victoria’s Secret store closures next year and in 2022. Bath & Body Works is closing some stores, but it is also reopening others, as it works to exit certain “at-risk mall properties.”
Victoria’s Secret, which saw its planned sale to a private equity firm fall apart this month, had nearly half of its sales erased in the first quarter of this year. Bath & Body Works’ sales declined by 18 percent in that time.
Bath & Body Works was a bright spot, however, with an 85 percent surge in digital sales driven by outsize demand for hand sanitizer and soap. The brand said on an earnings call that it had scrambled to keep up with the rapid purchasing of sanitizer both online and in stores.
Macy’s reports a 45 percent drop in sales.
Macy’s, one of the biggest department store operators in the United States, reported preliminary first-quarter net sales of roughly $3 billion, a 45 percent drop from the same period last year, and an operating loss of as much as $1.1 billion. The company shared the figures on Thursday ahead of a full release of its first-quarter results on July 1.
The company, which also owns Bloomingdale’s and Bluemercury, said that March was “very tough” but that its digital business exceeded expectations in April.
Macy’s, which has announced an ambitious plan to reopen all of its 775 stores by the end of June, said on Thursday that its plan was on track, and that it had already opened 190 Macy’s and Bloomingdale’s locations. It anticipated opening 80 more Macy’s stores before this weekend.
Macy’s initially expected as little as 15 percent of its typical business in reopened stores, but “it’s coming in stronger than that,” Jeff Gennette, the company’s chief executive, said during a presentation on Thursday. The business is down about 50 percent in reopened stores, and improves with each week the store is open, he said.
Mr. Gennette added that outside of digital sales, it has found new success with curbside pickup, and has been working with New York to add the service at its flagship store in Herald Square in coming weeks.
Macy’s plans to offer another business update on June 9 before it formally reports first-quarter results.
Wall Street dips as global markets cool.
Stocks on Wall Street fell and European markets were lower on Thursday as investors remained cautious.
The S&P 500 fell about 1 percent early trading, after a nearly 2 percent gain the day before.
Investors were considering the latest figures on jobless claims from the Labor Department, which showed that the surge of layoffs had reached more than 38 million in nine weeks. Also, data on home sales showed that sales of existing homes plunged nearly 18 percent in April to the slowest pace since September 2011.
But economic data from Europe provided more optimism. A monthly flood of European purchasing managers’ index reports showed business activity slowly picking up: The euro-area manufacturing index came in at 39.5 points, higher than expected and up from 33.4 last month, while the services index rose to 28.7, from 12.0 last month.
The numbers for Britain also showed an upswing: The manufacturing index reached 40.6, up from 32.6 past month, and the services sector reached 27.8, up from 13.4.
The reports, based on surveys of executives and released by the analysis firm IHS Markit, still show business activity far below normal, said Chris Williamson, chief business economist at the company.
“The eurozone saw a further collapse of business activity in May, but the survey data at least brought reassuring signs that the downturn likely bottomed out in April,” he said.
In Asia, monthly trade figures in Japan showed a nearly 22 percent fall from a year ago, underscoring the weakness of demand for the goods that the country’s factories make. Heated rhetoric in Washington against China raised the prospect that relations between the world’s two biggest economies would deteriorate further. Investors also worried about worsening tensions between China and Australia, a country that depends on Chinese demand to fuel big parts of its economy.
Bank of China billed crude oil as a safe bet. Investors are deep in the red.
One of China’s biggest and most established banks made the investment seem like a sure bet: Buying barrels of crude oil would make investors money whether the price rises or falls, the bank said.
That was not exactly true. When global oil prices crashed last month in the middle of the coronavirus crisis, those who had bought the investment product, called Crude Oil Treasure, lost their money and then some. Because of a quirk in global oil markets, Bank of China said, investors owed the lender even more money, specifically $37.63 for every barrel they had bought.
The outrage that followed has exposed the plight of small investors in one of the world’s largest economies. They have few safe places to park their money. They have limited legal protections compared with investors in other countries. And when they protest, they are often silenced by the authorities.
For Beijing, the timing is problematic. Many people in China are struggling to overcome the economic devastation caused by the coronavirus outbreak. The country’s lawmakers are set to meet on Friday for their delayed annual legislative session. Angry, outspoken investors would make for an unwelcome image.
On a mission to secure masks, Bethenny Frankel found a global bazaar of ex-cons and exaggerations.
It was late March, with the coronavirus starting to peak in New York and hospitals already running short on supplies, when Bethenny Frankel, the entrepreneur and reality television star, received an email from a publicist offering her access to 500 million medical masks.
Ms. Frankel was intrigued. While spending eight seasons on the “Real Housewives of New York City,” she began flying to places like Guatemala and the Bahamas to aid in disaster relief. Now, with the disaster down the road, she wanted to help. She called the New York governor’s office, and her home state drafted her to find masks.
So began Ms. Frankel’s journey into the market for masks, a sort of high-stakes house of mirrors, where lives and millions of dollars were on the line and things were rarely what they seemed.
Ms. Frankel’s path through the mess, the characters she encountered and the fact that states relied upon a Real Housewife to find lifesaving medical gear all reflected the feeble preparations of government and industry and the opportunism that often follows disaster.
Catch up: Here’s what else is happening.
Japan’s exports as measured by value slumped by more than a fifth in April compared with a year earlier, the nation’s Finance Ministry reported on Thursday. The slump was broad, with shipments to both the United States and Europe down by roughly one-third.
Reporting was contributed by Jeanna Smialek, Emily Cochrane, Niraj Chokshi, Geneva Abdul, Jack Nicas, Patricia Cohen, Marc Tracy, Mohammed Hadi, Sapna Maheshwari, Alexandra Stevenson, Cao Li, Carlos Tejada, Katie Robertson, Daniel Victor and Kevin Granville.