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Layoffs Surging
The number of Americans applying for first-time unemployment benefits jumped last week. The worst is yet to come. Initial jobless claims increased by 70,000 in the week ended Saturday, March 14, the fourth biggest percentage jump on record back to 1967, Sarah Chaney and Amara Omeokwe report.
That still only brought weekly claims to 281,000. State-level data suggest the figure could hit more than 2 million in the report out next Thursday, according to a note from Goldman Sachs. The Trump administration asked states to abstain from releasing unemployment-claims figures prior to the publication of the national compilation, according to a state labor department official. But anecdotal reports are already out: California Gov. Gavin Newsom said the state received 80,000 unemployment insurance applications Tuesday, compared with an average of 2,000 claims per day typically. New York’s website to register for unemployment benefits is averaging 250,000 logins per day, a 400% increase over its typical average, according to a department spokesperson
WHAT TO WATCH TODAY
U.S. existing-home sales for February are expected to rise to an annual pace of 5.5 million from 5.46 million a month earlier. (10 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
The WSJ has lowered the paywall on its coronavirus live coverage. Follow along here.
TOP STORIES
Call in the Cavalry
The Federal Reserve boosted bond buying and shored up dollar supplies. The European Central Bank anounced a new bond-buying program and the Bank of England cut rates.
Perspective: The Fed purchased more than $3 trillion in Treasury and mortgage securities in three separate rounds of bond buying, dubbed quantitative easing or QE, between 2008 and 2014. To get a sense of the scale of recent purchases, the current round is on pace to exceed in just weeks the $600 billion in the second round of bond buying the Fed conducted between November 2010 and June 2011. The current purchases are focused squarely on reducing turmoil in financial markets, rather than on stimulating economic activity, Nick Timiraos reports.
The Fed also said it would provide billions of dollars at near-zero rates to nine central banks grappling with dollar shortages in many parts of the world.
Manufacturers were rushing this week to produce medical ventilators, the key life-support machines for people with pneumonia caused by the virus. Even companies that don’t make medical devices may chip in: General Motors and Ford are exploring the possibility. And other companies across the West are retooling to produce medical equipment. Christian Dior perfumes started making hand sanitizer, a car-parts company is producing hygienic masks, luxury hotels are becoming makeshift quarantine shelters.
Even with a spike in demand for medical goods, U.S. factories are getting hit by a slowdown in economic activity. First the New York Fed and then the Philadelphia Fed reported the sharpest drops on record for state manufacturing indexes. The Philadelphia Fed move was particularly stunning: from a three-year high in February to the lowest reading since July 2012 in March. “It is safe to say that any hope of a manufacturing recovery in 2020 is completely extinguished as the coronavirus leads to an unprecedented shutdown in economic activity,” Oxford Economics economist Oren Klachkin said.
Tesla Chief Executive Elon Musk announced plans to suspend production at its lone U.S. auto-making plant. Competitors General Motors, Ford Motor and Fiat Chrysler have also disclosed closure plans.
Walmart said it would pay special cash bonuses totaling $550 million to its hourly workers and hire 150,000 temporary staffers as the country’s biggest retailer seeks to manage a shopping surge sparked by the coronavirus pandemic. The company, which employs around 1.5 million people in the U.S., has struggled to keep its stores stocked and fulfill online orders as consumers stock up, Sarah Nassauer reports.
America has plenty of food. The challenge is getting it from the farm to your table. Companies that supply meat, vegetables and other staples are struggling to redirect the nation’s sprawling food supply chain to meet a surge in demand caused by the coronavirus pandemic. Restaurant closures and shoppers’ rush to stock their pantries are forcing the agriculture industry to boost production, hire new employees and set up “war rooms” to keep grocery stores stocked, Jacob Bunge and Jesse Newman report.
Again, a boost in hiring at places like Walmart or across food supply chains isn’t going to fully offset losses elsewhere. Data from job site Indeed.com suggest a recent slowdown. U.S. job openings this year were increasing at about the same pace as the prior two years—until mid-February. The falloff is much sharper in places like Italy, where the pandemic has so far hit harder.
U.S. oil prices Thursday rebounded from their lowest level in 18 years with their largest one-day percentage gain on record. The drivers: The U.S. Energy Department formally requested to buy up to 30 million barrels for the Strategic Petroleum Reserve, and a Wall Street Journal report that the U.S. was considering a diplomatic push to get the Saudis to cut oil production.
California ordered its 40 million residents to stay at home except for essential activities beginning Thursday night in the largest such lockdown in the U.S. In a letter to President Trump, California Gov. Gavin Newsom said he estimated 56% of the state’s population, or 25.5 million people, would be infected with the coronavirus over an eight-week period.
The State Department on Thursday raised its travel advisory to Level 4: Do Not Travel, for all international destinations, and urged U.S. citizens currently abroad to return home immediately.
China’s ports are again pushing out thousands of containers that were stranded at the onset of the coronavirus outbreak. But as China returns to work, fears are rising that the Western ports won’t be able to handle a flood of imports as seaports and coastal cities face their own shutdowns and economic disruption.
WHAT ELSE WE’RE READING
Find ways to make better use of idle resources to fight the coronavirus. “While the pressure on the supermarkets may ease, the strain on the healthcare system will not. It is already intense and will get much worse. Yet while clinicians are overstretched, others wonder when the next job is coming from. From the falafel seller to the celebrity chef, the hotel porter to the millionaire motivational speaker, many tens of millions of people around the world are fit and eager to work, yet unable to. This is a test of flexibility and imagination,” Tim Harford writes in the Financial Times.
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