1.5 million file state unemployment claims in the latest weekly tally.
Businesses are reopening, but the layoffs won’t quit.
Another 1.5 million people applied for state unemployment benefits last week, the Labor Department said Thursday.
It was the 13th straight week that state filings topped one million. Until the coronavirus crisis, the most new claims in a single week had been 695,000, in 1982.
Claims for Pandemic Unemployment Assistance, a federal program for self-employed workers, independent contractors and others ineligible for standard benefits, added 760,000 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 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.
With no revenue for months, small businesses must find ways to pay for the new sanitation regimens, thermometers, plexiglass, masks and other items necessary to open, without knowing whether customers will return.
“None of the relief packages have included specific funding for safety retrofitting, purchasing of safety equipment or even helping business getting a handle on uniform P.P.E. for employees and customers,” said Amanda Ballantyne, executive director of the Main Street Alliance, an advocacy group for small business.
Some businesses are taking a slow approach. At first, Chris Lynch and Michael Samer weren’t sure what to do about their ocean adventure tours business, Everyday California, when they got the go-ahead in late April.
Mr. Lynch and Mr. Samer decided to reopen with curbside kayak and surf rentals only, keeping their retail shop and tour business closed. Then, as they felt more comfortable, they reintroduced tours at a 50 percent capacity with everyone wearing a mask. They also invested in their neglected online shop.
The bet paid off: They increased what had been a small number of online merchandise sales by 750 percent in May, allowing them to bring back about 20 employees to help with shipping and marketing.
Wall Street faced another day of unsteady trading on Thursday, with stocks drifting between negative and positive territory as investors considered new data on unemployment claims and the latest reports on fresh coronavirus outbreaks.
The S&P 500 was flat by midmorning, after having started the day with a decline. European stocks were slightly lower.
Concerns about a rise in new coronavirus cases around the world have collided with expectations for a quick economic recovery in recent days and stocks have become somewhat directionless as a result. It’s a consolidation that many Wall Street analysts have described as long overdue, after the S&P 500 ripped higher with a string of gains from late March to early June.
But it also reflects growing uncertainty about the economic picture going forward.
A report out Thursday showed another 1.5 million U.S. workers applied for state unemployment benefits last week. Not all the unemployment claims reported on Thursday necessarily reflect new layoffs. Some states are still working through backlogs of claims filed earlier in the crisis; in other cases, people filing under multiple programs may be double-counted.
But three months into the crisis, there is little doubt that layoffs remain elevated. Economists warn that job losses could worsen if government support that has helped prop up the economy is allowed to lapse too soon.
Investors were also awaiting the latest word on coronavirus infections in the United States, which have shifted to states like Arizona, Florida and Oklahoma. On Wednesday, Oklahoma recorded 259 new cases, a single-day record for the second day in a row. The number of infections also rose in Beijing, raising questions about China’s efforts to control the outbreak.
Many people are in the position of needing help they never imagined would be necessary. Ron Lieber and Tara Siegel Bernard created a guide to connect you with information about government benefits, free services and financial strategies to get you through this crisis.
If you need temporary relief on your credit card or auto loan payments, many lenders are offering at least some help. Start with the website for your lenders and read what they have posted. Some have made their policies more stingy since Ron first reported on changes in March.
If you call for help via phone, record the conversation if you can or at least get written documentation of any changes the lender agrees to. This column from Ron explains how and why. And be sure to ask how any change might affect your credit score.
Financial losses often come with emotional strain, at the very point when people may be least likely to spend money on care for themselves. If you are in severe distress, the number for the National Suicide Prevention Hotline is 1-800-273-8255. Or text HELLO to 741741.
The National Alliance on Mental Illness maintains a help line that can provide referrals to local resources as well. Its number is 1-800-950-6264.
The Bank of England said Thursday that it would hold interest rates steady at 0.1 percent but increase its purchases of British government bonds by 100 billion pounds, or about $125 billion, as it tries to help shore up the economy.
Dean Turner, an economist at UBS Wealth Management in London, said the decisions were not a surprise. The British government, he said, is issuing large amounts of debt to finance its response to the pandemic, including paying many employees furloughed by their companies. The central bank is supporting those programs by buying up similar volumes of bonds in order to keep yields and financing costs low. The bank’s purchases were set to soon reach the £200 billion target set in March, and so it needed to raise the limit.
In a statement, the bank reported signs of recovery following an economic contraction of around 26 percent in March and April. Payments data showed that consumer spending was picking up in May and June. Housing activity was also increasing, the bank said. The bank said, though, that there was ”a risk of higher and more persistent unemployment” in Britain.
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.”
Chanel said it expected a “significant” reduction in sales and profitability for 2020, the latest luxury business to warn on the serious hit to the sector caused by the coronavirus pandemic.
The storied French fashion house, owned by the secretive billionaire brothers Alain and Gerard Wertheimer, is one of the largest and most consistently successful luxury brands in the industry. On Thursday Chanel’s global chief financial officer, Philippe Blondiaux, said the company had reopened 85 percent of its global boutiques and recorded a “double or even triple digit recovery in sales” in markets like China and India.
But he noted, “That is local spending only, and simply put it will be insufficient when it comes to compensating the spending by traveling consumers.” The closure of duty free stores had also hit the company hard. “Even if airlines resume operations it will take a large proportion of 2020 and 2021 for things to get back to normal,” he added.
The disclosures came as it reported record annual results for 2019, the third time Chanel has disclosed earnings in its 110-year history. Last year, the company generated $12.3 billion in global sales, up 13 percent on a comparable basis year-over-year, with operating profit hitting nearly $4 billion, up almost 17 percent from 2019.
Despite a change at the creative helm — Virginie Viard succeeded Karl Lagerfeld, the longtime Chanel fashion director who died in February 2019 — Mr. Blondiaux said there had been double-digit growth in all regions and product lines for the fashion division last year.
A dispute over a $3.6 billion mall deal escalates.
Taubman Centers, the shopping mall owner that agreed to be acquired by Simon Property Group for $3.6 billion this year, is pushing back on Simon Property’s attempt to terminate the deal based on the pandemic.
Taubman, which owns 24 high-end malls including the Mall at Short Hills in New Jersey, said in court filings on Wednesday that Simon Property was experiencing “a classic case of buyer’s remorse,” and that the companies had “contracted to allocate the risk of global pandemics to the Simon parties, knowing full well that there was a pandemic raging in the world.” Taubman said that Simon Property had already negotiated a lower purchase price for the company based on an uncertain retail environment, that was shaky in part because of the coronavirus.
Simon Property, the biggest mall operator in the United States, said last week that the pandemic “had a uniquely material and disproportionate effect on Taubman” compared to other retail real estate companies, pointing to its high proportion of indoor malls versus open-air strip centers. It also faulted Taubman for failing to mitigate the impact of the pandemic by “not making essential cuts in operating expenses and capital expenditures.”
Taubman said on Wednesday that Simon Property’s comparison was flawed, noting that its malls were “hardly in the same industry” as strip centers, and that they did not have grocery stores or anchors like Home Depot or Target. The company also said that Simon Property was kept informed about its actions in response to the pandemic.
Catch up: Here’s what else is happening.
Kroger, the grocer with about 2,800 stores in 35 states, said Thursday that its sales increased to $42 billion in the quarter that ended May 23, up from $37 billion in the same period last year. Digital sales jumped 92 percent during the period marked by pandemic shutdowns. The company, which has about 500,000 employees, said it had hired 100,000 workers.
Carnival Corporation, the giant cruise company, reported Thursday that it lost $2.4 billion in the three months that ended on May 31. Carnival, which offered refunds or credits for future cruises to passengers whose voyages were canceled by the pandemic, said that about half asked for their money back. Customer demand for 2021 was increasing, it said, with about two-thirds of bookings in a recent six-week period coming fresh and one-third from customers using credits. Carnival said it could not say when it would return to normal operations.
Reporting and research were contributed by Ben Casselman, Tiffany Hsu, Coral Yang, Sapna Maheshwari, Mohammed Hadi, Amy Haimerl, Ron Lieber, Tara Siegel Bernard, Elizabeth Paton, Stacy Cowley, Jeff Sommer, Stanley Reed, Carlos Tejada and Gregory Schmidt.