Limping businesses are preparing to reopen across the country, and some Americans are raring to get out of the house. Is this the beginning of the economy’s recovery or will it lead to a resurgence of coronavirus infections? Here’s the business news you need to know for the week ahead.
What’s Up? (April 26-May 2)
Down and Out
The United States’ gross domestic product — the broadest measure of economic output — shrank by 4.8 percent in the first quarter of this year. It’s the first decline since 2014, and the worst quarterly contraction since the 2008 recession. And it’s only a preview of what’s to come, since those quarterly numbers don’t account for the economic nightmare that was April. Analysts warn that the second quarter’s contraction could be 30 to 40 percent. Lawmakers are already discussing the next round of aid funding, and the Federal Reserve has pledged to keep interest rates near zero for the foreseeable future.
Silicon Valley Holds Steady
Now that we’re all conducting our lives online, is it any surprise that Facebook, Google and Microsoft reported rising revenue for the past quarter? Still, big tech isn’t totally immune to the downturn. Both Facebook and Google warned of declining or stagnant ad revenue (their bread and butter) in the months ahead as retailers, travel companies, and other businesses slash their budgets and consumers tighten their belts.
What’s Next? (May 3-9)
Going, Going, Gone
A staggering 30 million people have filed for jobless benefits in six weeks, according to the Labor Department. But that’s probably a vast undercount, as unemployment agencies have been overwhelmed and unable to process applications as fast as they’re coming in. The April jobs report, which comes out this Friday, will provide an even more devastating view of how bad things are — and expect the numbers to be revised (in a negative way) as the overflow of jobless claims catches up.
A Rocky Reopening
Like many major retailers, J.Crew was struggling financially long before the coronavirus. But the pandemic pushed it over the edge, and the company is said to be preparing to file for bankruptcy protection. Other chain stores and shopping centers — like Macy’s and Simon Property Group, the country’s largest mall operator — are planning to reopen in the coming weeks with special rules in place. In a memo, Simon said that mall security officers and employees will “actively remind and encourage shoppers” to steer clear of one another. And at Macy’s, fitting rooms will be limited and beauty counter consultations done from a distance. It’s a gamble, but if the measures work, they’ll be used as a blueprint by other businesses.
As someone who lives directly under the flight path for planes landing at La Guardia Airport, I can confirm that almost no one is flying right now. And they probably won’t for a while, according to Boeing, which cut 16,000 jobs this past Wednesday and said that it did not expect air travel to recover for at least three years. Still, struggling airlines are exploring ways to operate safely. Most now require their flight crews to wear masks, and others are taking the additional step of asking passengers to wear them, too, even as planes remain largely empty.
New York’s attorney general says that Amazon may have broken the law by firing a warehouse worker who organized a protest against the company’s response to the coronavirus outbreak. Executives at Salesforce and Apple are tapping their overseas manufacturing connections to secure masks for hospitals, since the government has fallen short. And as most Americans remain at home, streaming services like Disney Plus are moving up movie release dates to capitalize on housebound viewers. But movie theaters are mad that they’re being robbed of future ticket sales as blockbusters like “Trolls World Tour” skip cinemas entirely.