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It’s jobs day. The U.S. Labor Department releases its April employment report at 8:30 a.m. ET. We’ll have a special edition of the newsletter soon after. In the meantime, Jeff Sparshott here with the latest on the labor market, state reopenings, Sweden’s approach to coronavirus, and China’s missing stimulus.
Brace for Impact
The unemployment rate likely rose in April to a record-high while employers shed millions of jobs. Economists surveyed by The Wall Street Journal forecast the unemployment rate climbed to 16% and the economy lost nearly 22 million jobs due to business closures and other disruptions triggered by the coronavirus pandemic. By comparison, the steepest monthly loss on records back to 1939 was 1.96 million jobs at the end of World War II, Sarah Chaney and Eric Morath report.
The longer-term severity of the employment crisis depends on factors such as the path of the virus and how fast consumers start to visit businesses and spend money as the economy reopens. Such reopenings are already materializing in South Carolina, Georgia, Texas and elsewhere, though often with restrictions. It will likely take awhile for industries hardest hit by the coronavirus, including restaurants, hotels and transportation, to recover.
WHAT TO WATCH TODAY
U.S. nonfarm payrolls in April are expected to fall by 21.5 million from the prior month and the unemployment rate is expected to jump to 16%. (8:30 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
Ask WSJ: Managing Debt and Bills During the Pandemic. Join The Wall Street Journal’s Personal Finance Bureau Chief, Bourree Lam, for a conversation on managing personal debt and negotiating bills during the coronavirus crisis. Begins Friday at 12 p.m. ET.
Note: This is a partial list of events and subject to change.
TOP STORIES
It’s Complicated
Businesses looking for a quick return to normal are running into a big hitch: Workers on unemployment benefits are reluctant to give them up. That’s complicating plans to reopen states and get the U.S. economy back on track. For some workers, unemployment benefits are now paying more than their old jobs. For others, safety concerns or a lack of childcare is making them hesitant to go back. The longer it takes to recover that lost employment, the more extended the economic downturn caused by the pandemic will be, Kris Maher reports.
Child-care scramble: In 2019, more than 50 million U.S. workers had children under the age of 18; almost half that number had children under age 6. But as of early April, nearly half of child-care facilities nationwide had closed completely, and 17% remained open only for the children of essential workers. Schools in 40 states have been ordered to stay shut through the end of the school year.
New claims for unemployment benefits eased last week but remain at historically high levels.
Into the Great Wide Open
White House officials said the coronavirus task force put the brakes on a CDC proposal that sought to provide detailed guidelines for schools, churches and businesses to reopen. The task force asked the CDC for revisions that would ultimately make the guidelines less prescriptive.
New York has developed its own formula to restart its economy. Will other states follow?
California retailers such as clothing stores, bookstores, florists and sporting goods stores can reopen for curbside pickup starting today. Manufacturers in the state will also be allowed to restart operations.
Michigan’s governor said the state’s auto industry can resume operations starting Monday.
A WSJ guide to state coronavirus reopenings and lockdowns.
Take a Chance On Me
Sweden has avoided a coronavirus lockdown. Its economy is hurting anyway. Shops, restaurants and even nightclubs have been allowed to stay open. There are no curbs on the manufacturing and services industries. But that doesn’t mean life is normal. Even without legal prohibitions, many Swedes are voluntarily following authorities’ social-distancing recommendations and limiting travel, pushing down domestic consumption. And the country can’t insulate itself from lockdowns among its trading partners. The result: Sweden’s economy is contracting, though not by as much as some others in Europe, Stu Woo and Bojan Pancevski report.
Australia is laying out a detailed three-step plan to reboot its economy. The goal is to move through all three stages by July, as strict social-distancing measures in recent weeks appear to have suppressed the coronavirus’s spread. Infection rates have dropped markedly, with six of Australia’s eight states and territories going multiple days without a single new case, Rachel Pannett reports.
Hot Pockets
China has just suffered its first quarter of economic contraction since the 1970s. Millions of jobs have been lost, and the coronavirus pandemic has hampered businesses for more than three months. So where is the economic stimulus? Despite dire predictions of tens of millions of lost jobs and a global recession that could cripple China’s export sector this year, Beijing has yet to start major government spending on infrastructure or more dramatic cuts to lending rates. Initially, officials questioned whether traditional stimulus measures would help much. Perhaps most important, authorities worry it could overheat pockets of the economy, especially the property market, Jonathan Cheng reports.
U.S. and Chinese trade negotiators said a phase-one trade deal is still on track. Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin, and U.S. Trade Representative Robert Lighthizer spoke Thursday. The call came after President Trump threatened to “terminate” the trade deal if China failed to buy promised goods and services from the U.S.
QUOTE OF THE DAY
“I don’t think we’re headed for another Great Depression.” —Minneapolis Fed President Neel Kashkari
WHAT ELSE WE’RE READING
The coronavirus downturn isn’t landing equally across the economy. “Workers in the bottom quintile of the wage distribution experienced a 35% employment decline while those in the top quintile experienced only a 9% decline. … We find that roughly 16% of lost paid employment and almost 40% of lost active employment can be attributed to business exit, and exit is particularly prevalent among small businesses,” economists from the Federal Reserve, University of Chicago and ADP write in a new working paper.
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