Latest report on U.S. jobless claims expected to show another 1.8 million filings.
The U.S. government is expected to report Thursday morning that 1.8 million people filed new claims for state unemployment benefits last week, continuing the decline in new claims from the more than six million who submitted applications in a single week in March.
But even as the pace of layoffs has eased, the ranks of people continuing to join the rolls — more than 40 million filings since mid-March — underscore the continuing strain on the economy caused by the pandemic.
The overall number collecting state benefits — known as continuing claims — fell by roughly 3.8 million to 21.1 million in the week that ended May 16, and is expected to decline again in the latest report, partly signaling that laid-off workers are being recalled as businesses reopen.
Some people out of work have gone months without government assistance because states have grappled with technical glitches and a flood of claims. Payments have evaporated for some workers, who have struggled to reach overwhelmed unemployment administrators for an explanation.
Diane Swonk, chief economist at the accounting firm Grant Thornton, said the recent looting and vandalism in many cities further clouded the employment outlook. “The unrest adds insult to injury in an economy already struggling to reopen,” she said. “It could delay workers being called back or cause people to be laid off again.”
Global markets indicate a drop after days-long rally.
European markets fell slightly early on Thursday after a muted trading day in Asia, as a slew of bad news finally caught up with investors who had sent shares higher in recent days.
Market indicators broadly showed investors taking a pause. Prices for U.S. Treasury bonds rose, a sign of market skepticism. Oil prices were down more than 1 percent on futures markets. Stock market futures indicated Wall Street would open mildly lower as well.
Investors were holding their breath ahead of weekly employment data from the United States, which has shown declining but still heavy amount of jobless claims. They were also awaiting word on the next move by the European Central Bank on how it will address pandemic-driven troubles.
Until early Thursday, stocks had been buoyed by recovery hopes. The S&P 500 was within 10 percent of its pre-pandemic highs, while stocks in Europe are back to where they stood in early March. Investors have been inspired by signs of a quick return of normal activity — even if not to levels seen before government-imposed shutdowns and social-distancing orders. Companies, from automakers to restaurants, have reported that sales beginning to pick up.
Still, the bad news has been relentless, from unrest in the United States to continuing tensions between Washington and Beijing. Market watchers had been expecting investors to take a break.
The European Central Bank is meeting to decide its next stimulus moves.
The European Central Bank is expected to administer another dose of economic stimulus to the eurozone economy when it meets later on Thursday.
The central bank will probably step up its purchases of government and corporate bonds, analysts say, a way of driving down market interest rates and making credit cheaper. The bank could also buy bonds with lower credit ratings, in effect removing risk from the financial system.
Christine Lagarde, the central bank’s president, raised expectations that the bank will do more when she said last week that the economic effects of the pandemic could fulfill worst case scenarios. Members of the bank’s governing council expressed concern about deflation, a ruinous downward spiral of prices.
The latest data on joblessness in the eurozone, released Wednesday, showed the unemployment rate in April was 7.3 percent, a number that reflects the government-backed furlough programs designed to curb mass unemployment. But many national financial support programs are set to begin scaling back soon, making it likely that joblessness will grow higher over the coming months, economists said.
Germany approves €130 billion in stimulus to restart economy.
Germans will receive 300 euros, or about $336, per child, and pay a reduced value added tax on daily items and less for electricity, under a €130 billion stimulus plan announced by Chancellor Angela Merkel’s government.
Ms. Merkel called the package, which was agreed to late Wednesday, a “bold response” to the pandemic downturn.
The plan also includes €5.3 billion for the social security system, €10 billion to help municipalities cover housing and other costs and €1.9 billion for cultural institutions and nonprofits. It includes incentives to purchase electric vehicles, but none for gas- or diesel-fired engines, which Germany’s powerful automakers had sought.
The plan requires new borrowing. Ms. Merkel’s government abandoned its adherence to a balanced budget in March, when it passed a €750 billion rescue package that included taking on more than €150 billion of fresh debt. The latest package will also be financed by new borrowing, reflecting government concerns that millions of employees still need incentives to encourage spending.
“We need to get out of this crisis with an oomph,” the finance minister, Olaf Scholz said.
Senate sends changes to Paycheck Protection Program to the president.
The Senate gave final approval on Wednesday to a measure that would relax the terms of the Paycheck Protection Program, a federal loan program for small businesses struggling during the pandemic.
The bill, approved overwhelmingly by the House last week, would extend to 24 weeks from eight weeks the time that small businesses would have to spend the loan money. The eight-week period to spend the loan money was set to lapse within days for some businesses, leaving the Senate limited time to consider alternatives. The measure now heads to President Trump’s desk.
The bill also would give companies greater flexibility to use the loan money on other business expenses, like utilities and rent, by lowering the amount required to be spent on payroll to 60 percent, from 75 percent.
Republicans said that they generally favored revamping the program, which was created by the $2.2 trillion stimulus bill enacted in March. But an attempt to pass the bill by unanimous consent was delayed by Senator Ron Johnson, Republican of Wisconsin, who wanted a letter clarifying that the extension applied to the time frame to spend the loan money, not to the application period. Senator Mitch McConnell of Kentucky, the majority leader, submitted the letter just after 7 p.m.
The Paycheck Protection Program aims to help small businesses continue paying their workers by giving them access to government-backed loans that will be forgiven entirely if most of the money is spent on payroll costs.
Catch up: Here’s what else is happening.
Senior executives at Quibi will take a 10 percent pay cut, with the company’s leaders calling it “the right thing to do.” Jeffrey Katzenberg and Meg Whitman raised $1.75 billion to start the short-form video service, but it has gotten off to a rocky start, which Mr. Katzenberg has blamed on the coronavirus.
The Federal Reserve announced on Wednesday that it will expand its municipal bond-buying program, allowing two cities or counties in each state to sell their debt to the central bank, regardless of their population. The change will affect sparsely populated states like Wyoming, and will also extend to bond issuers like New York’s subway system.
Sales of e-bikes jumped 85 percent in March from a year earlier, according to the NPD Group, a research firm. Amazon, Walmart and Specialized are sold out of most models. If you are contemplating an e-bike purchase, there are trade-offs to consider, writes Brian Chen.
Canada Goose, the seller of $1,000 down-filled jackets, reported on Wednesday a fourth quarter sales decline of 10 percent, after cutting about 20 percent of its corporate work force last month amid the pandemic. While the company said publicly that it cut just 2.5 percent of its global work force when it laid off 125 people last month, it said in internal communications obtained by The New York Times that the figure represented roughly 20 percent of corporate employees.
Reporting was contributed by Melissa Eddy, Jack Ewing, Tiffany Hsu, Nelson D. Schwartz, Matt Phillips, Jeanna Smialek, Patricia Cohen, Mohammed Hadi and William Davis.