In the weeks before states around the country issued lockdown orders this spring, Americans were already spending less, traveling less, dining out less. Small businesses were already cutting employment, or even closing shop.
In some states that have already begun that process, the same daily economic data shows only meager signs so far that businesses, workers and consumers have returned to their old routines.
Such data, combined with recent opinion polling, suggests that Americans who were turning off the economy on their own may not readily reopen it soon — even if officials say it’s OK to.
That is good news for public health experts who are urging caution as states begin to reopen. But for anyone hoping the economy will soon rebound, this picture may be more discouraging.
At the end of March the coronavirus pandemic temporarily forced the closure of all 43 Neiman Marcus stores, as well as its two Bergdorf Goodman stores and Last Call outlets, all but stopping sales and crushing revenue. But while that may have been the immediate cause of Neiman’s filing, its problems had been building for years. The company took on an untenable amount of debt as part of two leveraged buyouts by private-equity firms, and Neiman’s did not respond quickly enough to changes in shopping habits. Together, those developments left the group in a precarious position even before the virus hit.
The pandemic has been disastrous for the already weakened retail industry. Last month, sales of clothing and accessories fell by more than half. Earlier this week, J. Crew filed for bankruptcy. Retailers have furloughed employees, slashed corporate salaries and hoarded cash in a desperate attempt to make it to the end of the shutdown.
The latest evidence of the economic devastation from the coronavirus pandemic came Thursday as the U.S. government reported that an additional 3.2 million jobless claims were filed last week.
The weekly tallies have declined since reaching a peak of 6.9 million claims in late March, but the numbers are still stupefying: Over 33 million people have joined the unemployment rolls in seven weeks. Officials in some states say more than a quarter of the work force is jobless.
Economists expect the monthly jobs report from the Labor Department, due Friday, to show that the unemployment rate in April was 15 percent or higher — a Depression-era level. The figure will almost certainly understate the damage.
Workers in the restaurant, travel, hospitality and retail industries were among the first to lose their jobs when the outbreak forced business shutdowns. But in recent weeks, scores of layoffs were announced for engineers at Uber, advertising account executives at Omnicom, designers at Airbnb and other office employees.
“We’re still seeing a massive wave of layoffs taking over the U.S. economy,” said Gregory Daco, chief U.S. economist at Oxford Economics. He described the latest job losses as a “secondary wave of the coronavirus recession.”
Oil prices aren’t so low anymore. Here’s why.
After taking a brutal pounding in mid-April, oil prices have been on the rise in recent days. Brent crude, the international benchmark, was up about 2 percent Thursday to about $30.40 a barrel while West Texas Intermediate, the U.S. standard, rose about 6 percent to $25.50 a barrel.
The psychology of the market has changed, at least temporarily, since W.T.I. fell deep into negative territory on April 20. The lockdowns intended to combat the coronavirus pandemic are beginning to unwind in parts of the United States, China and in some European countries, notably Germany. The relaxing of some restrictions suggests to traders that demand for oil, which was estimated to have plummeted by nearly a third in April, may now begin to recover as more people hop into cars and go to work.
The gusher of oil that deluged markets last month may also be slowing. The 9.7 million in daily output cuts agreed by the Organization of the Petroleum Exporting Countries and other producers like Russia were scheduled to kick in on May 1, potentially taking about 10 percent of production in normal times off the market. Norway, Western Europe’s largest oil producer, also recently said it would trim by a quarter of a million barrels in June. Operators in the United States are likely to close down more than 600,000 barrels a day in output, according to Rystad Energy, a consulting firm.
Saudi Arabia, the world’s largest oil exporter, gave positive sentiments a boost by raising the prices it will charge customers in June.
Still some analysts say the optimism may be overdone and that the glut will continue to swell if not as fast.
“I can’t help thinking the strengthening is a little bit premature,” said David Fyfe, chief economist at Argus Media, a commodities pricing firm, speaking of oil prices. “Demand is not going to spring back to normal anytime soon.”
In a letter to the company, Senator Elizabeth Warren and eight other senators asked Amazon to provide more information about its policies for firing employees.
An Amazon spokeswoman said: “These individuals were not terminated for talking publicly about working conditions or safety, but rather, for violating — often repeatedly — policies.”
Cases of the coronavirus have been reported in more than 100 Amazon warehouses and several workers have died. State and local officials in Kentucky and New Jersey have asked Amazon to close facilities where workers have fallen sick.
The letter adds to pressure on Amazon and its chief executive, Jeff Bezos, who has been called to testify before Congress in an antitrust investigation and has been a frequent target for criticism from President Trump. A number of senators and representatives have already written to Mr. Bezos expressing concern about warehouse safety.
Stocks in the United States followed European markets higher on Thursday even as data from Britain and the United States showed the ongoing toll of the coronavirus outbreak on the world economy.
The S&P 500 rose nearly 2 percent, and Wall Street’s technology-heavy benchmark, the Nasdaq composite, was close to being in positive territory for the year.
Tech stocks have been rallying on the view that giant companies like Amazon, Apple, and Microsoft will emerge from the coronavirus pandemic with even more power than they had before it began. They’re sitting on mountains of cash that will help protect them from the economic downturn, and the nature of the lockdowns — with workers at home and consumers dependent on e-commerce — plays directly to their strengths.
Though the biggest companies have outsize influence over the market, it isn’t just the giants that are seen as benefiting from the pandemic. The Nasdaq also includes companies like the conference app maker Zoom, home fitness company Peloton Interactive, and Netflix, all of which have rallied this year as demand for their services skyrocketed.
While the Nasdaq will be positive for the year if it closes above 8,973, the S&P 500 still has to climb more than 10 percent to reach its break-even threshold.
Thursday’s gains came even after the latest report on weekly unemployment filings showed that more than 3 million workers in the United States claimed benefits last week. Also on Thursday, the Bank of England projected that the British economy would contract 30 percent in the April-June quarter, and 14 percent for the year.
Investors have been looking past grim economic projections, and the mounting death toll, to bid up stock prices on expectations that the number of coronavirus cases will begin to ebb, and that they can expect more government support for businesses and markets.
The Bank of England, Britain’s central bank, said on Thursday that the economy in the April-June quarter would be nearly 30 percent smaller than at the end of 2019, as consumer spending would fall nearly 30 percent, while business revenue, investment and trade all contracted sharply.
The bank said that the full-year economy for 2020 would most likely fall 14 percent — the worst decline for the British economy, it said, since 1706. .
But the bank, which also announced it would hold interest rates steady at 0.1 percent, said it expected economic activity to pick up “materially in the latter part of 2020 and into 2021” after the lockdowns in Britain and elsewhere are eased and people are able to return to work. It forecast a 15 percent jump in economic growth for 2021.
The global luxury goods market is facing its worst year in memory, with national lockdowns, the annihilation of the tourism industry and a subdued consumer mood leading to a spending collapse across all markets.
According to a new report by consulting firm Bain & Company, the market for personal luxury items like handbags, jewelry and fashion shrank by 25 percent in the first quarter of 2020, a decline that is likely to accelerate significantly in the second quarter. A market contraction of up to 35 percent is predicted for the full year.
The strongest impact and slowest recovery will be in Europe and the Americas, the report said. Executives are now pinning their hopes on Chinese shoppers, who were responsible for one-third of global luxury sales last year, to lead a recovery in spending. (Both LVMH and Kering reported an early sales rebound for some brands in mainland China in recent updates.)
“There will be a recovery for the luxury market but the industry will be profoundly transformed,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study. “The impact of coronavirus on the industry will be twice that of the 2008 financial crisis.”
China’s exports to the rest of the world unexpectedly jumped in April. While that would seem to be a positive development in a time when the coronavirus has curbed demand for just about everything, the good news may be fleeting.
Chinese customs officials said on Thursday that exports in dollar terms rose 3.5 percent when compared with April 2019. It was the first such increase since the outbreak emerged in Wuhan in December and spread across the world.
China’s economy, which shrank in the first quarter for the first time in decades, is expected to continue to struggle in part because the pandemic has closed stores in many other countries that would have sold Chinese-made goods.
A surge in exports would normally be seen as positive news, but economists chalked up the increase to a return in Chinese production — and local companies fulfilling pre-existing orders — rather than a run in new business.
The surge in demand for processed foods like canned soups and vegetables during the pandemic has rippled through the food industry’s supply chain. Makers of metal containers have had to speed up production to keep pace.
Silgan Holdings, a maker of metal and plastic containers for consumer goods with more than 50 plants across the country, reported record first-quarter earnings, in part because of a jump in demand for cans.
Another big maker of food and beverage cans, Crown Holdings, has 81 open production jobs at its 25 U.S. plants, including some for a third production line being set up at a factory in Nichols, N.Y. “We can sell every can we can make,” said Thomas Fischer, Crown’s vice president for investor relations and corporate affairs.
Acquiring metal has not been a problem. Despite the tariffs the Trump administration placed on imported steel and other metals, steel prices have eased this year. And recycling provides can producers with a reliable source — about 71 percent of steel food containers are recycled, according to the Can Manufacturers Institute, a trade group.
Sales of soups and other canned foods have been declining slowly for years, as Americans gravitated toward fresh produce and other options often seen as more nutritious. But the surge in sales of packaged foods has forced manufacturers into a state of high alert.
Catch up: Here’s what else is happening.
ViacomCBS reported Thursday that revenue was down 6 percent to $6.7 billion, with profit halved to $917 million, for the first quarter, largely because CBS benefited from the Super Bowl last year and the NCAA basketball tournament was canceled this year. But the company saw a surge in streaming. CBS All Access and Showtime together saw a 50 percent bump in subscribers to 13.5 million. The ad-supported, free service, Pluto, saw an uptick in viewers to 24 million.
Kohl’s said Thursday it would reopen stores in 10 more states on Monday, after opening in four states this week. Among the safety steps the department store will take: a special shopping period for seniors, pregnant women and people with underlying health conditions every Monday, Wednesday and Friday from 11 a.m. to noon.
PayPal added an average of 250,000 new active accounts every day in April, bringing the total new accounts for the month up 135 percent from March, when growth was also higher than normal. And at Square, the number of new people using its Square Cash service as a bank account was four times higher in April than in March.
Reporting was contributed by Sapna Maheshwari, Vanessa Friedman, Patricia Cohen, Tiffany Hsu, Neal E. Boudette, Emily Badger, Alicia Parlapiano, Kate Conger, Elizabeth Paton, Edmund Lee, Marc Tracy, Noam Scheiber, Stanley Reed, David McCabe, Mary Williams Walsh, Carlos Tejada, Mohammed Hadi, Daniel Victor and Kevin Granville.