The latest evidence of the economic devastation from the coronavirus pandemic came Thursday as the U.S. government reported that an additional 3.2 million jobless claims were filed last week.
The weekly tallies have declined since reaching a peak of 6.9 million claims in late March, but the numbers are still stupefying: Over 33 million people have joined the unemployment rolls in seven weeks. In many states, more than a quarter of the work force is jobless.
Economists expect the monthly jobs report from the Labor Department, due Friday, to show that the unemployment rate in April was 15 percent or higher — a Depression-era level. The figure will almost certainly understate the damage.
Workers in the restaurant, travel, hospitality and retail industries were among the first to lose their jobs when the outbreak forced business shutdowns. But in recent weeks, scores of layoffs were announced for engineers at Uber, advertising account executives at Omnicom, designers at Airbnb and other office employees.
“We’re still seeing a massive wave of layoffs taking over the U.S. economy,” said Gregory Daco, chief U.S. economist at Oxford Economics. He described the latest job losses as a “secondary wave of the coronavirus recession.”
Stocks in the United States followed European markets higher on Thursday even as data from Britain and the United States showed the ongoing toll of the coronavirus outbreak on the world economy.
The S&P 500 rose more than 1 percent in early trading, and Wall Street’s technology-heavy benchmark, the Nasdaq composite, was close to being in positive territory for the year.
Tech stocks have been rallying on the view that giant companies like Amazon, Apple, and Microsoft will emerge from the coronavirus pandemic with even more power than they had before it began. They’re sitting on mountains of cash that will help protect them from the economic downturn, and the nature of the lockdowns — with workers at home and consumers dependent on e-commerce — plays directly to their strengths.
Though the biggest companies have outsize influence over the market, it isn’t just the giants that are seen as benefiting from the pandemic. The Nasdaq also includes companies like the conference app maker Zoom, home fitness company Peloton Interactive, and Netflix, all of which have rallied this year as demand for their services skyrocketed.
While the Nasdaq will be positive for the year if it closes above 8,973, the S&P 500 still has to climb more than 10 percent to reach its break-even threshold.
Thursday’s gains came even after the latest report on weekly unemployment filings showed that more than 3 million workers in the United States claimed benefits last week. Also on Thursday, the Bank of England projected that the British economy would contract 30 percent in the April-June quarter, and 14 percent for the year.
Investors have been looking past grim economic projections, and the mounting death toll, to bid up stock prices on expectations that the number of coronavirus cases will begin to ebb, and that they can expect more government support for businesses and markets.
And even as companies have reported that profits are cratering as consumers stay home and economies are locked down, Wall Street is expecting earnings to bounce back quickly. While analysts at Goldman Sachs expect the combined profits of S&P 500 companies to fall by a third this year, they expect them to surge next year to a level that exceeds what the companies made in 2019.
The Bank of England, Britain’s central bank, said on Thursday that the economy in the April-June quarter would be nearly 30 percent smaller than at the end of 2019, as consumer spending would fall nearly 30 percent, while business revenue, investment and trade all contracted sharply.
The bank said that the full-year economy for 2020 would most likely fall 14 percent, compared with a 1 percent increase in 2019.
But the bank, which also announced it would hold interest rates steady at 0.1 percent, said it expected economic activity to pick up “materially in the latter part of 2020 and into 2021” after the lockdowns in Britain and elsewhere are eased and people are able to return to work. It forecast a 15 percent jump in economic growth for 2021.
In its report, the bank said it had tested the financial strength of major British banks and found that they were strong enough to continue lending in the difficult economic environment.
The bank, which described its report as a “scenario” rather than a formal forecast, acknowledged that the outlook for both the British and global economies was unusually uncertain and depended on the evolution of the pandemic and “how governments, households and businesses respond.” On Wednesday, the European Commission projected a 7.4 percent collapse in the European Union economy for 2020.
The global luxury goods market is facing its worst year in memory, with national lockdowns, the annihilation of the tourism industry and a subdued consumer mood leading to a spending collapse across all markets.
According to a new report by consulting firm Bain & Company, the market for personal luxury items like handbags, jewelry and fashion shrank by 25 percent in the first quarter of 2020, a decline that is likely to accelerate significantly in the second quarter. A market contraction of up to 35 percent is predicted for the full year.
The strongest impact and slowest recovery will be in Europe and the Americas, the report said. Executives are now pinning their hopes on Chinese shoppers, who were responsible for one-third of global luxury sales last year, to lead a recovery in spending. (Both LVMH and Kering reported an early sales rebound for some brands in mainland China in recent updates.)
“There will be a recovery for the luxury market but the industry will be profoundly transformed,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study. “The impact of coronavirus on the industry will be twice that of the 2008 financial crisis.”
China’s exports to the rest of the world unexpectedly jumped in April. While that would seem to be a positive development in a time when the coronavirus has curbed demand for just about everything, the good news may be fleeting.
Chinese customs officials said on Thursday that exports in dollar terms rose 3.5 percent when compared with April 2019. It was the first such increase since the outbreak emerged in Wuhan in December and spread across the world. The results surprised economists surveyed by Bloomberg and Reuters who had predicted another drop.
China’s economy, which shrank in the first quarter for the first time in decades, is expected to continue to struggle in part because the pandemic has closed stores in many other countries that would have sold Chinese-made goods.
A surge in exports would normally be seen as positive news, but economists chalked up the increase to a return in Chinese production — and local companies fulfilling pre-existing orders — rather than a run in new business. China’s vast trade machine will face tough challenges as the world recovers in the months to come, amid signs that the long-simmering trade war between the United States and China may be heating up again.
More predictably, imports fell 14.2 percent in April compared with a year earlier, as China’s lockdown efforts and slow restart cut into demand.
The surge in demand for processed foods like canned soups and vegetables during the pandemic has rippled through the food industry’s supply chain. Makers of metal containers have had to speed up production to keep pace.
Silgan Holdings, a maker of metal and plastic containers for consumer goods with more than 50 plants across the country, reported record first-quarter earnings, in part because of a jump in demand for cans.
Another big maker of food and beverage cans, Crown Holdings, has 81 open production jobs at its 25 U.S. plants, including some for a third production line being set up at a factory in Nichols, N.Y. “We can sell every can we can make,” said Thomas Fischer, Crown’s vice president for investor relations and corporate affairs.
Acquiring metal has not been a problem. Despite the tariffs the Trump administration placed on imported steel and other metals, steel prices have eased this year. And recycling provides can producers with a reliable source — about 71 percent of steel food containers are recycled, according to the Can Manufacturers Institute, a trade group.
The food business is normally steady. Sales of soups and other canned foods have been declining slowly for years, as Americans gravitated toward fresh produce and other options often seen as more nutritious.
But the surge in sales of packaged foods, at a time when other transportation companies and vegetable producers have been knocked off stride by the virus, has forced manufacturers into a state of high alert.
“Almost all our plants are running at capacity,” said John Church, chief supply chain officer for General Mills. The company has 25 plants in North America.
The North American plants of the three big U.S. automakers have been closed since mid-March. Mostly.
A handful of General Motors workers have labored on — including several dozen at a plant in Bedford, Ind., that makes chassis for Chevrolet Corvettes.
A G.M. spokesman said the factory’s continuing operation was aimed at reducing a chassis shortage and helping resume Corvette production more quickly once the company reopens an assembly plant in Bowling Green, Ky.
The spokesman said that the Bedford plant was running three shifts a day — with about 20 people per shift, down from about 250 hourly workers normally — and that the workers had volunteered for the assignment, at their usual wage.
The company said Wednesday that it planned to “restart the majority of manufacturing operations” in North America on May 18.
The G.M. spokesman said that aside from the Bedford plant, the company had continued work at a Texas plant to finish building a sport utility vehicle before the plant changed over to a new model, and in Lockport, N.Y., to make replacement parts for existing vehicles.
Brian Rothenberg, a United Automobile Workers spokesman, said the union had cooperated with such efforts if the return to work was voluntary and adequate safety measures were in place.
Religious organizations around the United States are looking to a troubled federal loan program for help as donations dry up.
Around 9,000 Catholic parishes have received Paycheck Protection Program loans administered by the Small Business Administration, said Patrick Markey, the executive director of the Diocesan Fiscal Management Conference, which works with dioceses on financial issues.
“Everybody’s trying to keep their people on the payroll and hoping that with the P.P.P. they can do that until they start meeting again, and then no one gets let go,” he said.
A survey by the Jewish Federation of North America found that at least 533 loans had been distributed to Jewish organizations with a total value of $276 million. The median value of the loans was $246,000, said Rebecca Dinar, a spokeswoman for the group.
The loans are meant to stabilize small businesses and are forgivable by the government if the majority of the funds go toward payroll. The government distributed $342.3 billion in loans in the first round of the program, which ended in mid-April. It has distributed $183.5 billion in loans in a second round as of Wednesday evening.
The program has attracted ample interest from nonprofit organizations like religious congregations worried about a downturn in donations and other sources of revenue. That includes some private schools with large endowments that have kept the loans in the face of backlash from the administration and their own alumni.
Catch up: Here’s what else is happening.
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Kohl’s said Thursday it would reopen stores in 10 more states on Monday, after opening in four states this week. Among the safety steps the department store will take: a special shopping period for seniors, pregnant women and people with underlying health conditions every Monday, Wednesday and Friday from 11 a.m. to noon.
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More people and businesses are using electronic payments and other alternatives to the traditional financial system. PayPal added an average of 250,000 new active accounts every day in April, bringing the total new accounts for the month up 135 percent from March, when growth was also higher than normal. And at Square, the number of new people using its Square Cash service as a bank account was four times higher in April than in March.
Reporting was contributed by Patricia Cohen, Tiffany Hsu, Neal E. Boudette, Kate Conger, Elizabeth Paton, Marc Tracy, Noam Scheiber, Stanley Reed, David McCabe, Mary Williams Walsh, Carlos Tejada, Mohammed Hadi, Daniel Victor and Kevin Granville.