The weekly tally of state jobless claims is again expected to exceed a million.
Businesses are reopening, but the layoffs won’t quit.
The Labor Department is expected to report on Thursday that 1.2 million people applied for state unemployment benefits last week. That would make it the 13th straight week that filings topped one million. Until the coronavirus crisis, the most in a single week was 695,000, in 1982.
Claims for Pandemic Unemployment Assistance, a federal program for self-employed workers, independent contractors and others ineligible for standard benefits, will add to the total.
“It’s a sustained hemorrhaging of jobs unlike anything we’ve seen,” said Heidi Shierholz, director of policy at the Economic Policy Institute, a progressive think tank.
Economists said recent layoffs, though smaller than the wave in March and early April, suggested that the crisis was reaching deeper into the economy.
Hilton Worldwide, the hotel operator, said this week that it was eliminating 2,100 corporate jobs globally and would extend previous furloughs and cuts in hours and wages for 90 days. AT&T disclosed plans to shed 3,400 technician and clerical jobs nationwide and to permanently close more than 250 stores, according to one of its unions. The gym chain 24 Hour Fitness said it was filing for bankruptcy protection and would permanently close more than 100 locations.
Global stocks drift as investors await jobs data and virus outbreak updates.
Global stocks were mixed early on Thursday, showing caution for the second day in a row as they awaited jobs data from the United States and more updates on new coronavirus outbreaks,
European stocks traded in a narrow range in the morning, after Asian stocks drifted mildly lower. Futures markets were predicting a modest drop on Wall Street later in the day.
Other markets also sent mixed signals. Prices for U.S. Treasury bonds fell modestly, and oil prices rose in futures markets, indicating some positive investor sentiment.
Investors were awaiting data on weekly jobless claims in the United States, which were expected to show that at least one million more people applied for unemployment benefits. They were also waiting the latest word on coronavirus infections in the United States, which have shifted to states like Arizona, Florida and Oklahoma. The number of infections also rose in Beijing, raising questions about China’s efforts to control the outbreak, which had been considered successful.
China plans a credit injection to jump-start its economy.
China aims to speed up an infusion of credit into its economy this year as it tries to restart growth after coronavirus the outbreak.
Speaking at the annual Lujiazui Forum in Shanghai on Thursday, Yi Gang, the governor of the People’s Bank of China, said that the authorities saw total social financing — a broad measure of credit in the Chinese economy — rising to more than 30 trillion renminbi, about $4.24 trillion, this year. That would be more than $600 billion above the 2019 level.
While the Chinese economy has rebounded by some measures since the lockdowns in the first part of the year, officials have acknowledged that joblessness remains a big problem.
Yet China’s moves show caution. In the United States, the Federal Reserve said in April that it would free up more than $2 trillion. Chinese officials have been wary about a big lending splurge after their response to the 2008 global financial crisis layered the economy with debt. Mr. Yi said officials would “moderate the total amount and consider the timely withdrawal of policy tools in advance.”
In another speech, Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission, warned that the Fed played an unofficial role as the world’s central bank and would put the U.S. dollar and financial system at risk if it unleashed too much credit.
He warned that quickly rising stock markets might be harmful and unsustainable without real economic recovery. He did not specify the market, but global stocks have risen sharply from their earlier lows in part because many governments have rolled out big plans to spend money to get the economy humming again.
All countries and regions need to examine whether stimulus policies might be going too far, Mr. Guo said, noting the problems that can be created with too much credit. When stimulus efforts begin, “everyone rejoices,” he said. “When exiting, it may be very painful.”
Government relaxes loan forgiveness requirement that businesses rehire all workers.
Small-business owners won’t have to pay back their federal pandemic relief loans even if they don’t rehire all of the workers they laid off, the Trump administration affirmed, effectively eliminating a rule that many borrowers had feared would leave them stuck with a large debt.
The Treasury Department and the Small Business Administration, the program’s manager, released new loan forgiveness forms on Wednesday with a “safe harbor” option. Borrowers can simply affirm they were unable to operate “at the same level of business activity” they had before the crisis because of government requirements or safety guidance, including social distancing rules.
Those borrowers can have their loans fully forgiven if they meet the program’s other rules, including a requirement that they spend at least 60 percent of their aid money on payroll. The change follows a new law that loosened many terms of the Paycheck Protection Program loans.
For some leery borrowers, the recent changes were a major turnaround. George Evageliou, the founder of Urban Homecraft, a custom woodworking company in Brooklyn, had left his $192,000 loan untouched because he feared he would not be able to spend it in compliance with the program’s rules.
But the changes — in particular an expansion giving borrowers 24 weeks to spend their aid money — gave him time to safely restart operations and recall his laid-off employees. His staff began returning to work last week.
“We’re feeling pretty good about our decision to sit tight and let the law change,” Mr. Evageliou said. “We’re just so grateful for the help this grant will give us.”
Hertz raised eyebrows last week when it asked for, and received, a bankruptcy judge’s permission to sell stock. It was an unusual move. Shareholders usually get wiped out during bankruptcy proceedings.
On Wednesday, Hertz reversed course on its plan to sell $500 million in shares, saying it had suspended further sale of its stock “pending further understanding of the nature and timing” of a review by the Securities and Exchange Commission.
Earlier in the day, Jay Clayton, the agency’s chairman, said on CNBC: “We have let the company know that we have comments on their disclosure,” and added: “In most cases, when you let a company know that the S.E.C. has comments on their disclosure, they do not go forward until those comments are resolved.”
It all seemed an unsurprising turn of events. In a prospectus on Monday, the company had warned that buying its stock was a risky move, and that investors who did should be prepared to end up losing money.
The S.E.C. declined to expand on Mr. Clayton’s statement, and Hertz did not respond to repeated requests for comment.
Hertz filed for Chapter 11 bankruptcy protection from its creditors last month. The company, which started with a fleet of a dozen Ford Model T’s a century ago, had piled up $17 billion in debt and was unable to pay its lenders after the coronavirus pandemic grounded business travelers and tourists. A sharp drop in used car prices has also decreased the value of its fleet.
Catch up: Here’s what else is happening.
Red Robin Gourmet Burgers, the casual dining chain that closed 35 restaurants and cut executive pay 20 percent in an effort to mitigate the effect of the coronavirus pandemic, said on Wednesday that it had raised $30 million through a stock offering. The company, based in Greenwood Village, Colo., said it planned to use the money for general purposes, including paying down debt. First-quarter revenue fell 25 percent to $306 million from the same period a year earlier, the company reported last week.
Reporting and research were contributed by Coral Yang, Mohammed Hadi, Stacy Cowley, Jeff Sommer, Carlos Tejada, Ben Casselman, Tiffany Hsu and Gregory Schmidt.