U.S. tops 130,000 deaths from COVID-19 after record surge in cases

By Lisa Shumaker and Doina Chiacu

(Reuters) – The number of U.S. coronavirus deaths exceeded 130,000 on Monday, following a surge of new cases that has put President Donald Trump’s handling of the crisis under the microscope and derailed efforts to restart the economy.

The overall rate of increase in U.S. deaths has been on a downward trend despite case numbers surging to record levels in recent days, but health experts warn fatalities are a lagging indicator, showing up weeks or even months after cases rise.

Nationally, cases are approaching 3 million, the highest tally in the world and double the infections reported in the second most-affected country Brazil. Case numbers are rising in 39 U.S. states, according to a Reuters analysis.

Sixteen states have posted new record daily case counts this month. Florida confirmed a record high 11,000 in a single day, more than any European country reported in a single day at the height of the crisis there.

As health experts cautioned the public not to gather in crowds to celebrate Independence Day over the weekend, U.S. President Donald Trump asserted without providing evidence that 99% of U.S. coronavirus cases were “totally harmless.”

At least five states have already bucked the downward trend in the national death rate, a Reuters analysis showed. Arizona had 449 deaths in the last two weeks of June, up from 259 deaths in the first two weeks of the month. The state posted a 300% rise in cases over the full month, the most in the country.

Steve Adler, the Democratic mayor of Austin, Texas, on Monday criticized the Republican Trump’s comment over the weekend that the virus was mostly harmless.

“It’s incredibly disruptive and the messaging coming from the president of the United States is dangerous,” Adler told CNN. “One of the biggest challenges we have is the messaging coming out of Washington that would suggest that masks don’t work or it’s not necessary, or that the virus is going away on its own.”

Soaring case numbers and packed hospitals in Texas have prompted some mayors and other local leaders to consider launching a new round of stay-at-home orders. Cities are getting together and lobbying the state’s governor to restore the authority to impose local anti-coronavirus measures, Adler said.

White House Chief of Staff Mark Meadows on Monday defended Trump’s comment over the weekend, saying the president was not trying to play down the deaths.

“But it’s really to look statistically to know that whatever risks that you may have or I may have, or my children or my grandchildren may have, let’s look at that appropriately and I think that’s what he’s trying to do,” he told reporters outside the White House.

The U.S. Centers for Disease Control and Prevention has forecast between 140,000 to 160,000 coronavirus deaths by July 25 in projections that are based on 24 independent forecasts.

(Reporting by Lisa Shumaker, Doina Chiacu and Gabriella Borter; Editing by Howard Goller)

Microsoft to close physical stores, take $450 million hit

(Reuters) – Microsoft Corp said on Friday it would close its retail stores and take a related pretax asset impairment charge of $450 million in the current quarter.

The Redmond, Washington-based software giant said it would continue to serve customers online, with team members working remotely from corporate facilities.

A Microsoft spokeswoman told Reuters all current retail employees would be given an opportunity to remain with the company in different roles.

“Speaking over 120 languages, their diversity reflects the many communities we serve,” Microsoft Corporate Vice President David Porter said of the company’s retail employees in a statement. “Our commitment to growing and developing careers from this talent pool is stronger than ever.”The company also said it will rethink other spaces that serve all customers, including operating Microsoft Experience Centers in London, New York, Sydney, and Redmond campus locations.

“This is a tough but smart strategic decision for (CEO) Nadella & Co. to make at this point. The physical stores generated negligible retail revenue for Microsoft and ultimately everything was moving more and more towards the digital channels over the last few years,” Wedbush analyst Dan Ives said in a note. Retailers, whose stores shuttered in mid-March due to coronavirus-prompted lockdowns, have seen a huge surge in online demand amid stay-at-home orders.

(Reporting by Akanksha Rana in Bengaluru and Stephen Nellis in San Francisco)

Take Five: World stocks’ 2020 rollercoaster ride rumbles on

HALF TIME

World stocks have been on a roller-coaster ride in the first half of 2020. Having slumped 35% from Feb. 20 to March 23, they are now within 10% of February’s record highs thanks to lashings of fiscal stimulus, interest rates slashed to 0% or below in most major economies, and massive amounts of QE. Borrowing costs for high-grade U.S. companies have in fact fallen below January levels.

So what happens over the rest of the year? Much depends on whether another coronavirus wave comes crashing down, further testing policymakers. And if an effective treatment or a vaccine is found, the severest global recession in living memory could also turn out to be the shortest.

Nevertheless, the crisis has exposed weaknesses such as companies’ high debt levels and their over-reliance on share buybacks.

LINES OF CONTROL

Asian market anxiety levels look set to rise another notch in coming days due to geopolitical tensions.

Hong Kong will be in the Chinese parliament’s sights when it meets on June 28-30 to finalize a security law aimed at tackling separatism, subversion, terrorism and collusion with foreign forces.

After a year of sometimes violent anti-government and anti-Beijing protests, the focus is on how far-reaching the law is, what activities constitute such crimes and what the punishment would be. Investors also want to know whether the laws will be retroactive or create new avenues for asset seizures.

China and much of Asia will also publish manufacturing surveys. But as North Korea’s military threats ebb and flow and troops amass on both sides of a disputed part of the Indo-Chinese border, geopolitics will likely trump other factors.

PLEASANT SURPRISE

After the dire numbers of April and May, recent U.S. economic data flow has delivered good news for the most part, helping keep stock markets within 10% of their pre-coronavirus levels.

On the heels of comebacks in employment and retail sales, Citi’s U.S. Economic Surprise Index, which tracks economic data relative to economists’ expectations, is at a record high.

Now the focus is on whether the rebound remains in force. Consumer confidence on Tuesday, manufacturing data on Wednesday and U.S. employment figures on Thursday – both weekly and monthly – are among reports due.

Non-farm jobs actually rose 2.5 million in May, versus April’s record 20 million-plus plunge. Another improvement could allow markets to push higher – bar further coronavirus-linked lock downs.

INFLATION WATCH

Economies are bouncing back from the COVID-19 shock, so will inflation follow? Preliminary June euro area data may offer clues.

Already, inflation expectations are reacting to data showing the worst of the economic gloom has lifted; a long-term gauge of where markets see euro zone inflation headed is just above 1% — near its highest since early-March and almost 40 bps above record lows hit that month.

Some investors are already buying gold and other inflation hedging assets. But others say that if you dig deeper into activity indicators, they suggest little evidence of inflationary pressures picking up. And until that happens, expect the ECB to keep its foot on the stimulus pedal.

EUROPE’S TURNING TIDE

Is the U.S. share juggernaut slowing? Seems like it. In the past month, U.S. equities have under-performed world stocks by 2.5%; Europe outperformed by a similar margin. European stocks enjoyed investment inflows in three of the past four weeks, BofA says.

Behind the shift perhaps are the growing odds of a presidential election victory for Democrat Joe Biden, worsening U.S./China ties and the continued rise in U.S. coronavirus infections that prevent economic activity from fully resuming.

Europe, meanwhile, has largely controlled the virus spread, economies are turning the corner quicker than expected and a proposed EU recovery fund is speeding up euro zone integration.

BlackRock and Goldman Sachs are among those recommending clients shift focus towards European stocks, which lagged U.S. peers throughout the previous economic cycle due to a paucity of “growth” stocks.

European out-performance looks likely until at least November’s U.S. election. Longer-term though, U.S. firms, such as tech names, may face headwinds from higher taxes especially from a Democrat administration. And in a world where investors attach increasing importance to environmental, social and governance (ESG) credentials, Europe’s higher ESG scores will be a plus.

 

(Reporting by Marc Jones, Dhara Ranasinghe and Thyagaraju Adinarayan in London; Vidya Ranganathan in Singapore and Saqib Iqbal Ahmed in New York; compiled by Sujata Rao; Editing by Hugh Lawson)

IMF’s Georgieva says virus crisis could ultimately test $1 trillion war chest

By David Lawder

WASHINGTON (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva said on Friday that the global economic crisis spurred by the coronavirus could ultimately test the Fund’s $1 trillion in total resources, “but we’re not there yet.”

Georgieva told a Reuters Newsmaker webcast event that it was now clear that an economic recovery would have to get underway without a medical breakthrough and the virus’ presence still widespread throughout the world. IMF member countries were standing by to provide more support to the Fund if necessary, she said.

The IMF on Tuesday forecast a deeper global recession than initially anticipated, as business closures, travel restrictions and social distancing measures persist in most countries. It now anticipates a global GDP contraction of 4.9% this year and a total output loss of $12 trillion through the end of 2021.

“We still have about three quarters of our lending capacity available,” Georgieva said. “I wouldn’t put it beyond us that we might be in a place where the IMF resources are being tested, but we’re not there yet.”

Regarding the possibility of additional resources, she said: “Our members are telling us, ‘Everything is on the table. You come to us if you need to do more of something, we are there for you.'”

The IMF has been rapidly deploying some $100 billion in emergency financing and has now provided loans and grants to 72 countries in just over seven weeks, Georgieva said.

(Reporting by David Lawder; Editing by Chizu Nomiyama and Jonathan Oatis)

Texas governor orders bars closed due to coronavirus

(Reuters) – Texas Governor Greg Abbott on Friday ordered the closure of all bars that get 51 percent of their gross receipts from alcohol, except for take-out, and the curbing of other business activity due to surging cases of the novel coronavirus in the state.

“As I said from the start, if the positivity rate rose above 10%, the State of Texas would take further action to mitigate the spread of COVID-19,” Abbott said in a press release, explaining an executive order. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars.”

(reporting by Jonathan Allen in New York and Nathan Layne in Wilton, Connecticut; Editing by Chizu Nomiyama)

Acting DHS head says U.S. doing ‘great job’ getting economy back up

WASHINGTON (Reuters) – The Trump administration is doing “a great job” reopening the country after lockdowns to contain the novel coronavirus outbreak, Acting Homeland Security Secretary Chad Wolf said on Sunday, as infections continued to spike in some key states.

Wolf told NBC’s “Meet the Press” program that the White House coronavirus task force was continuing to meet daily and the Centers for Disease Control had issued guidance to states on how to flatten the curve, including use of face masks.

“We’re seeing a number of states throughout the country in different phases, from phase one to phase three, trying to get this economy, trying to get the country back up and running. And we’re doing a great job at that,” Wolf told NBC.

In a separate interview with CBS’s “Face the Nation,” Wolf said the White House task force was “on top of all of these outbreaks within state by state, county by county, whether it’s Arizona, Texas, Florida, a number of these states that are having hotspots.”

He said the Trump administration was surging medical equipment and staff, as well as individuals from the Department of Homeland Security, into areas that were seeing an uptick in infections, to better understand the causes of those outbreaks and support the state-led reopening efforts.

The United States has reported 2.26 million cases of COVID-19, the disease caused by the new coronavirus, which comprises nearly 26% of the global total of 8.81 million cases, according to a Reuters tally. Over 119,600 deaths have been reported in the United States.

He defended President Donald Trump’s decision to hold an indoor campaign rally in Oklahoma, where infections have also been rising but many attendees did not wear face masks.

“The president’s rally is a state in a phase three reopening, and so activities like this are allowed,” Wolf said in the NBC interview, adding, “It’s also a personal choice that people are making on the face coverings.”

(Reporting by Andrea Shalal and Doina Chiacu; Editing by Nick Zieminski)

U.S. labor market recovery stalling; second wave of layoffs underway

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell last week, but the pace of decline appears to have stalled amid a second wave of layoffs as companies battle weak demand and fractured supply chains, supporting views that the economy faces a long and difficult recovery from the COVID-19 recession.

The Labor Department’s weekly jobless claims report on Thursday, the most timely data on the economy’s health, sketched a picture of a distressed labor market even though employers hired a record 2.5 million workers in May as businesses reopened after shuttering in mid-March to slow the spread of COVID-19. At least 29 million people are collecting unemployment checks.

Stubbornly high joblessness could stifle the nascent signs of economic recovery that had been flagged by a record jump in retail sales in May and a sharp rebound in permits for future home construction. Federal Reserve Chair Jerome Powell told lawmakers this week that “significant uncertainty remains about the timing and strength of the recovery.”

The economy fell into recession in February.

“The recent sightings of green shoots for economic growth are going to fade in a hurry if workers can’t return to the jobs they lost during the pandemic recession,” said Chris Rupkey, chief economist at MUFG in New York. “Over 20 million out of work without a paycheck is a lot of spending missing from the economy.”

Initial claims for state unemployment benefits fell 58,000 to a seasonally adjusted 1.508 million for the week ended June 13, the government said. Data for the prior week was revised to show 24,000 more applications received than previously reported, bringing the tally for that period to 1.566 million.

Economists polled by Reuters had forecast claims dropping to 1.3 million in the latest week. The 11th straight weekly decrease pushed claims further away from a record 6.867 million in late March. Still, claims are more than double their peak during the 2007-09 Great Recession.

“The fear of a second wave of layoffs, as industries not directly affected by COVID-caused shutdowns have started to shed workers, appears to have begun,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.

A separate report from the Philadelphia Fed on Thursday showed labor market conditions remained depressed in June at factories in the mid-Atlantic region even as manufacturing activity in the region that covers eastern Pennsylvania, southern New Jersey and Delaware rebounded sharply.

Stocks on Wall Street were trading lower on the claims report and rising COVID-19 infections in parts of the country. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.

MILLIONS ON UNEMPLOYMENT ROLLS

From manufacturing, retail, information technology and oil and gas production, companies have announced job cuts. State and local governments, whose budgets have been shattered by the COVID-19 fight, are also cutting jobs.

Economists expect an acceleration in layoffs when the government’s Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, giving businesses loans that can be partially forgiven if used for wages, runs out.

They attributed to the PPP a drop in the number of people receiving benefits after an initial week of aid from a record 24.912 million in early May. But these so-called continued claims, which are reported with a one-week lag, also appear to have since stalled. The claims report showed continuing claims dropped 62,000 to 20.544 million the week ending June 6.

Initial claims covered the week during which the government surveyed establishments for the nonfarm payrolls component of June’s employment report. But economists cautioned that claims were no longer a good predictor of job growth.

The government has expanded eligibility for unemployment benefits to include the self-employed and independent contractors who have been affected by the COVID-19 pandemic, including through lost employment, reduced hours and wages. These workers do not qualify for the regular state unemployment insurance.

They must file under the Pandemic Unemployment Assistance (PUA) program and are not included in the initial claims count. Applications for PUA increased 66,063 to 760,526 last week.

A total of 29.2 million people were receiving unemployment benefits under all programs during the week ending May 30, the latest available data, down from 29.5 million in the prior period.

“Employment may rise on a net basis in June as the economy reopens and workers are recalled, but the initial claims data suggest that there is still a steady stream of new layoffs as corporations adjust to the new coronavirus reality,” said Lou Crandall, chief economist of Wrightson ICAP in Jersey City, New Jersey.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

‘This is about livelihoods’: U.S. virus hotspots reopen despite second wave specter

By Andrew Hay

(Reuters) – Facing budget shortfalls and double-digit unemployment, governors of U.S. states that are COVID-19 hotspots on Thursday pressed ahead with economic reopenings that have raised fears of a second wave of infections.

The moves by governors of states such as Florida and Arizona came as Treasury Secretary Steven Mnuchin said the United States could not afford to let the novel coronavirus shut its economy again and global stocks tanked on worries of a pandemic resurgence.

As Florida reported its highest daily tally of new coronavirus cases on Thursday, Governor Ron DeSantis unveiled a plan to restart public schools at “full capacity” in the autumn, arguing the state’s economy depended on it.

North Carolina reported record COVID-19 hospitalizations for a fifth straight day on Thursday, a day after legislators passed a bill to reopen gyms, fitness centers and bars in a state where more than one in ten workers are unemployed.

Governors of hotspot states face pressure to fire up economies facing fiscal year 2021 budget shortfalls of up to 30% below pre-pandemic projections in the case of New Mexico, according to data from the Center on Budget and Policy Priorities think tank. Nevada, which has seen cases increase by nearly a third in the past two weeks, is suffering 28% unemployment, based on U.S Bureau of Labor statistics.

“This is about saving lives, this is also about livelihoods in the state of Arizona,” Governor Doug Ducey told a news briefing, adding that a second shutdown of the economy was “not under discussion” despite official figures showing a 211% rise in virus cases over the past 14 days.

About half a dozen states including Texas and Arizona are grappling with rising numbers of coronavirus patients filling hospital beds.

Ducey and Texas Governor Greg Abbott say their hospitals have the capacity to avoid the experiences of New York, where the system was stretched to near breaking point as some COVID patients were treated in hallways and exhausted workers stacked bodies in refrigerated trailers.

‘FOOT ON THE BRAKE’

A second wave of coronavirus deaths is expected to begin in the United States in September, the Institute for Health Metrics and Evaluation said on Thursday, citing a surge in mobility since April. Its latest model projects 170,000 deaths by Oct. 1, with a possible range between 133,000 and 290,000.

A note of caution came from Utah, where Governor Gary Herbert said most of the state would pause its reopening after a 126% rise in cases over the past two weeks.

Austin, Texas on Thursday also said it would likely extend stay-at-home and mask orders past June 15 after the state reported its highest new case count the previous day. Austin health officials blamed a record week of infections on easing business restrictions and Memorial Day gatherings.

There was no talk of new shutdowns.

In New Mexico, Health Secretary Kathy Kunkel pointed to outbreaks at the Otero County Prison Facility, as well as in nursing homes and assisted living facilities, as factors behind an uptick in cases.

“It means a little bit of a foot on the brake, watch carefully for the next couple of weeks, not much in the way of major changes in what we’re doing,” said Human Services Secretary David Scrase.

(Reporting By Andrew Hay in Taos, New Mexico; Additional reporting by Brad Brooks in Austin and David Schwartz in Phoenix; Editing by Bill Tarrant and Daniel Wallis)

U.S. layoffs abate; job openings plunge

WASHINGTON (Reuters) – Layoffs in the United States fell in April, but remained the second-highest on record, while job openings dropped, suggesting the labor market could take years to recover from the COVID-19 crisis despite a surprise rebound in employment in May.

The Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS, that layoffs and discharges dropped 3.8 million in April to 7.7 million.

That was the second-highest level since the government started tracking the series in 2000. The layoffs and discharge rate fell to 5.9% in April from a record high of 7.6% in March.

The labor market was slammed by the closure of nonessential businesses in mid-March to slow the spread of COVID-19. Many establishments reopened in May, with the economy adding a stunning 2.509 million jobs last month after a record 20.7 million plunge in April, government data showed on Friday.

Despite last month’s rebound in hiring, economists warn it could take even a decade for the labor market to recoup all the jobs lost during the COVID-19 recession. The National Bureau of Economic Research, the arbiter of U.S. recessions, declared on Monday that the economy slipped into recession in February.

The NBER does not define a recession as two consecutive quarters of decline in real GDP as is the rule of thumb in many countries, instead, it looks for a drop in economic activity, spread across the economy and lasting more than a few months.

The government also reported that job openings, a measure of labor demand, declined 965,000 to 5.0 million on the last business day of April, the lowest since December 2014.

The job openings rate dropped to 3.7%, the lowest since January 2017, from 3.8% in March. Vacancies peaked at 7.52 million in January 2019.

Hiring tumbled 1.6 million to a record low of 3.5 million in April. The hiring rate plunged to an all-time low of 2.7% from 3.4% in March.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

George Floyd protests recall earlier tensions, promises of economic change

By Howard Schneider

WASHINGTON (Reuters) – In November 2015, the shooting death of Jamar Clark by Minneapolis police touched off a debate on race and economic inequality that challenged the city’s progressive image and led local corporate leaders to back efforts at better sharing the spoils of a booming Midwestern state.

Five years later, the killing of George Floyd has reopened those wounds and highlighted a growing concern nationally: The last few years of economic growth saw gains for lower-income families, but any hope for a durable narrowing of economic gaps may have been short-circuited by the coronavirus pandemic and the subsequent economic crash falling heavily on minorities.

Floyd’s death in police custody in Minneapolis last week may have been a catalyst for an anger that has spawned protests nationwide, but it was in effect the third major shock to hit in as many months, said Tawanna Black, chief executive of Minnesota’s Center for Economic Inclusion (CEI), a group that grew out of those corporate promises of five years ago.

Before the recent surge in joblessness, “we saw the employment gap closing rapidly,” Black said. But “you were connecting people to low-wage jobs, and now you have displaced them. … What I am hopeful of is that we not just solve for criminal justice, but what’s required to get economic and social justice.”

It is complex, to be sure. Tension over police treatment of blacks has simmered through good economic times and bad. But for the economy, the course of the pandemic and the financial fallout highlights how little has changed over a decade of growth that seemed to hold out at least the possibility of progress on narrowing racial economic divides.

Median family income growth finally started rising in 2015, but median family income for blacks remains about 61% that of whites. In Minneapolis, it is even lower at about 44%.

A 2009-2020 bull market for stocks and rising home values have done little to improve overall wealth among African Americans, who comprise around 13% of the U.S. population but account for 4.2% of household net worth, according to Federal Reserve data. The figure in 1989 was 3.8%.

For Hispanics, it is even worse, with more than 18% of the U.S. population holding just 3.1% of household wealth.

(Graphic: Race gaps persist – )

‘NO PROGRESS’

Both groups have suffered an outsized blow from layoffs triggered by business closures meant to control the spread of the coronavirus and the crash in demand among consumers holed up

at home.

According to federal data from February to April, Hispanic employment fell by more than 25%. For blacks, the figure was 17.6%, more modest but still above the 15.5% for whites.

It is part of a “last-hired, first-fired” dynamic familiar to labor economists and considered one of the reasons behind the lack of progress in narrowing wealth and income gaps. In this case, it is also driven by the skewed nature of the coronavirus economic shock, which hit hardest among lower-paid service jobs in the restaurant and hospitality industry where minorities form a larger share of the workforce.

The shock has been no different in Minnesota from in parts of the Deep South, according to a Reuters comparison of federal employment data by race alongside demographic information on unemployment claimants submitted by the state in April.

African Americans made up about 5.7% of Minnesota’s employed workforce in 2019 but more than 8% of those who filed for unemployment in April.

Still predominantly white, with a self-effacing culture captured by writer Garrison Keillor’s “Prairie Home Companion” former radio show, the demographics around Minneapolis, the state’s largest city, have shifted quickly in recent decades. It

has for example opened itself to refugees from Somalia. The city is now about 20% black and 10% Hispanic.

Minnesota’s rural areas voted heavily in 2016 for Republican Donald Trump, while the state as a whole went for Democrat Hillary Clinton owing to strong support in the Minneapolis area.

That city is also home to a healthy list of large U.S. companies, many of them homegrown national brands like Target Corp, that are known for their civic boosterism and support for efforts like the one spearheaded by CEI’s Black.

The question now is whether the dislocation caused by the coronavirus, rising joblessness and the death of Floyd prompts lasting change.

Those firms will be central to deciding the pace of the economic recovery, and the nature of the jobs available in the economy that emerges.

After the last recovery did so little to change wealth and income dynamics, and the coronavirus showed the gulf between workers who were buffered from the crisis and those who were not, Black said it was time to think about the nature of the labor market that will emerge from here.

Many of the jobs “will not come back. Do we train people for tech jobs? Automation-resilient jobs?” she said. Over the last decade, “we made no progress.”

(Reporting by Howard Schneider; Editing by Dan Burns and Peter Cooney)