Tag Archives: Economy

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)

Retailers already hit by coronavirus board up as U.S. protests rage

By Jessica Resnick-Ault

NEW YORK (Reuters) – Target Corp and Walmart said on Sunday they shuttered stores across the United States as retailers already reeling from closures because of the coronavirus pandemic shut outlets amid protests that included looting in many U.S. cities.

Protests turned violent in places including New York and Chicago following the death in Minneapolis of a black man, George Floyd, seen on video gasping for breath as a white police officer knelt on his neck.

In Los Angeles, protests led to the looting of the Alexander McQueen clothing store on Rodeo Drive, and a Gucci store on the vaunted strip was marked with the graffiti slogan: “Eat the rich,” according to local media reports.

In the nearby Grove Shopping Center, which houses 51 upscale stores, Nordstrom, Ray Ban and Apple were broken into. Nordstrom Inc temporarily closed all its stores on Sunday, it told Reuters in an emailed statement.

“We hope to reopen our doors as soon as possible,” the statement said. “We had impacts at some of them and are in the process of assessing any damage so we can resume serving customers.”

Apple Inc said in an email statement it also had decided to keep a number of its U.S. stores closed on Sunday. The company did not specify how many stores were closed, or if the closures would be extended.

The violence was widespread, and Minnesota-based Target said it was closing or limiting hours at more than 200 stores. It did not specify how long the closures would last.

The company told Reuters it was beginning to board up its Lake Street store in Minneapolis, near where Floyd was killed, for safety and to begin recovery efforts. The company said in a statement that it would plan to reopen the store late this year.

“There is certainly potential for the resulting social unrest to hurt certain businesses like retailers and restaurants, and for it to further dent consumer and business sentiment,” said Robert Phipps, director at Per Stirling. “It is even possible, particularly if the unrest continues and spreads, that it would, all other things being equal, have a significant impact on investor psychology and the markets.”

Walmart closed some stores in Minneapolis and Atlanta after protests Friday, and closed several hundred stores at 5 p.m. on Sunday, a spokesman said. “We’ll look at them each day, and at how each community is impacted and make decisions then,” the spokesman said.

Online retailer Amazon said it was monitoring the situation closely. “In a handful of cities we’ve adjusted routes or scaled back typical delivery operations to ensure the safety of our teams,” the company said in an emailed statement.

U.S. retail sales have posted record declines as the novel coronavirus pandemic kept Americans at home, putting the economy on track for its biggest contraction in the second quarter since the Great Depression in the 1930s.

(Reporting by Jessica Resnick-Ault; Additional reporting by Sinead Carew and Ismail Shakil; Editing by Chizu Nomiyama, Peter Cooney and Diane Craft)

NY Fed’s Williams says it’s hard to know what shape U.S. economic recovery will take

NEW YORK (Reuters) – The U.S. unemployment rate is likely to get worse before it gets better, and it is difficult to know what the economic recovery will look like, New York Federal Reserve Bank President John Williams said Thursday.

The most recent economic figures do not fully capture the pain American families are going through, since some people who stopped working for health reasons or to care for a family member may not be counted, Williams said in remarks prepared for a webinar organized by business groups based in upstate New York.

The unemployment rate, which surged to 14.7% in April, “is sure to get worse before it gets better,” Williams said.

As businesses begin to reopen, there will be more information on the economic toll of the virus on various industries and how long it could take the economy to rebound, he said.

“What we don’t know is what the shape or timescale of the recovery will be,” he said. “It’s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services.”

The Fed acted quickly to shore up the U.S. economy in March as the coronavirus spread. Policymakers cut rates to near zero and rolled out a slew of emergency lending facilities intended to keep credit flowing to businesses and households. The Fed also launched into open-ended asset purchases, including Treasury securities and mortgage-backed securities, to improve market functioning.

Williams said rates will stay low until policymakers are “confident” that the economy is stable and on track to reach the Fed’s maximum employment and price stability goals.

“Amid all the change we’re experiencing, you can be assured of one thing: our unwavering commitment to limit the economic damage from the pandemic and foster conditions for a strong and sustained recovery,” he said.

(Reporting by Jonnelle Marte; Editing by Chizu Nomiyama)

What you need to know about the coronavirus right now

(Reuters) – Here’s what you need to know about the coronavirus right now:

Back on the road

The U.S. auto industry is slowly returning to life with assembly plants scheduled to reopen on Monday and suppliers gearing up in support as the sector that employs nearly 1 million people seeks to recover from the coronavirus pandemic.

General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV (FCA) all have been preparing for weeks to reopen their North American factories in a push to restart work in an industry that accounts for about 6% of U.S. economic activity.

The reopening will be a closely watched test of whether workers across a range of industries can return to factories in large numbers without a resurgence of infections.

Hitting new lows

Japan’s economy became the world’s largest to slip into recession after the pandemic, first-quarter data showed on Monday, putting the nation on course for what could be its deepest post-war slump.

The GDP numbers underlined the broadening impact of the outbreak, with exports plunging the most since the devastating March 2011 earthquake as global lockdowns and supply chain disruptions hit shipments of Japanese goods.

But analysts warn of an even bleaker picture for the current quarter as consumption crumbled after the government in April requested citizens to stay home and businesses to close.

China on alert for new wave

While much of the rest of the world is experimenting with easing restrictions, one Chinese province is back in a partial lockdown after a spate of infections.

Jilin in the northeast reported two more confirmed cases over the weekend to take its total number of new infections to 33 since the first case of the current wave was reported on May 7. Separately, the financial hub of Shanghai reported one new locally transmitted case for May 17, its first since late March.

Pop-up carparks

Australia’s most populous state New South Wales encouraged its residents to avoid peak-hour public transport as it began its first full week of loosened lockdown measures, which saw people heading back to offices.

To help with maintaining social distancing, extra bicycle lanes and pop-up car parking lots will be made available, officials said.

“We normally encourage people to catch public transport but given the constraints in the peak…, we want people to consider different ways to get to work,” state premier Gladys Berejiklian told reporters in Sydney.

Furloughs no cure-all

Temporary unemployment schemes have spread far wider and faster than during the 2008-2009 global financial crisis, but are not likely to save jobs in sectors which face a tougher recovery post-pandemic, such as leisure and tourism.

These schemes, which typically provide at least 80% of pay for workers for whom there is no work now, mean companies do not face firing and potential re-hiring costs. Workers are more inclined to keep spending and so help prop up the economy.

“If it’s more than a year, you need other solutions and will need other policies like retraining,” said Gregory Claeys, senior fellow at economic think-tank Bruegel. “It’s good in a lockdown, but if there is more social change, you need alternatives.”

(Compiled by Karishma Singh and Mark John; Editing by Mark Heinrich)