The Week in Business: Failing to Save Jobs
Welcome to a truly strange Easter Sunday. Here’s what you need to know for the week ahead, as the coronavirus pandemic continues to ravage the global economy and wreak havoc on jobs. I hope you all get to do something normal-ish today. But most important, stay safe. — Charlotte Cowles
What’s Up? (April 5-11)
More Help Needed
Another 6.6 million Americans filed new claims for unemployment last week, bringing the total number of people who lost their jobs in March and the first few days of April to a record-shattering 16 million and counting. That’s almost twice the net job losses for the entire 2007-9 recession, and brings the unemployment rate to over 13 percent — close to Depression-era territory. What can be done? Congress is haggling over new legislation that would funnel more aid to small businesses that have been hurt by the virus, since the recent stimulus package is already coming up short. But the bill is stalled because Democrats want to add billions more in funding for hospitals and local governments, which are also desperately strapped.
The Fed Steps Up
As lawmakers bickered, the Federal Reserve rolled out its own relief package this past Thursday, promising to pump $2.3 trillion into the economy through new and expanded lending programs. Unlike the federal government’s rescue efforts, which have emphasized aid to small businesses, the Fed’s plan aims to help midsize and larger companies that don’t qualify for many other emergency loans. These broad new measures are some of the biggest (and most expensive) that the Fed has ever taken to bolster the economy, and far outstrip any actions it took during the 2008 financial crisis.
Zoom in the Hot Seat
The creators of the videoconferencing tool Zoom never expected their technology to become a cornerstone of American life. Now, in addition to its original function (work calls), Zoom is being used to conduct online weddings, Seder dinners, Easter services and countless other remote gatherings. But the influx of users has revealed large holes in the tool’s security. Enter “Zoombombing” — when hackers hijack videoconferences and harass participants with porn or other graphic imagery. Scrambling to solve its privacy issues, Zoom has formed a special council of information security experts from other companies to help put better practices in place. It also hired Alex Stamos, the former chief security officer of Facebook, as an adviser.
What’s Next? (April 12-18)
No More Retail Therapy
Aside from stockpiling toilet paper and junk foods, Americans are not in the mood to shop these days. The country’s retailers report their sales for March this Wednesday, and the numbers are expected to show the worst drop since the government began collecting retail data in 1992. Most retailers are reeling as the virus has crippled supply chains and virtually erased demand for “nonessential” purchases. But some — like grocery stores — may see big gains.
The Future of Airbnb
Just a few months ago, the home rental start-up Airbnb was a hugely successful disrupter in the travel industry. Now, it’s just another business floundering in the pandemic. Airbnb was planning to go public later this year, joining the plethora of tech “unicorns” that did so in 2019 (some with mixed results, like Uber). But now that trajectory looks iffy, to say the least. The company has lowered its internal valuation to $26 billion (from a previous high of $31 billion). And like many of its Silicon Valley brethren, it’s stockpiling cash to ride out the storm — it recently raised $1 billion in new funding.
Oil Overload
At an emergency meeting this past week, the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, reached a tentative agreement to temporarily cut oil output by about 23 percent, ending a weekslong price war that has roiled the oil market. But even if the deal is finalized in the next few days, don’t expect oil prices to start going up soon. The cuts won’t take place until May, and the pandemic has choked off demand to such an extent that even this reduced output may leave a surplus.
What Else?
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