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More Than 5.2 Million U.S. Workers Filed for Unemployment: Live Updates Small Business Shortfall Leaves Owners in the Lurch: Live Updates
(32 minutes later)
The Small Business Administration has run out of money for its Paycheck Protection Program, officials said on Thursday, leaving millions of businesses unable to apply for emergency loans while Congress struggles to reach a deal to replenish the funds.The Small Business Administration has run out of money for its Paycheck Protection Program, officials said on Thursday, leaving millions of businesses unable to apply for emergency loans while Congress struggles to reach a deal to replenish the funds.
Congress initially allocated $349 billion for the program, which was intended to provide loans to businesses with 500 or fewer employees. The money has gone quickly, with more than 1.4 million loans already approved as of Wednesday evening. Congress initially allocated $349 billion for the program, which was intended to provide loans to businesses with 500 or fewer employees. The money has gone quickly, with more than 1.4 million loans already approved as of Wednesday evening, as small businesses struggle with virus-induced quarantines and closings.
Treasury Secretary Steven Mnuchin and Jovita Carranza, the administrator of the Small Business Administration, warned on Wednesday night that “by law, the S.B.A. will not be able to issue new loan approvals once the programs experience a lapse in appropriations.” Treasury Secretary Steven Mnuchin is expected to resume negotiations with lawmakers about adding another $250 billion to the fund on Thursday.
Mr. Mnuchin is expected to resume negotiations with lawmakers about adding another $250 billion to the fund on Thursday. Nancy Kim, 42, who owns Spectrum Dermatology, a Scottsdale, Ariz. practice, tried to get a loan through the program, but her bank, Wells Fargo, never accepted their application and eight other lenders turned them away.
The loans have been sought after as small businesses struggle with virus-induced quarantines and closings, which have quickly depleted cash flows as businesses remain closed and customers stay home. “Within the next one or two months we might run out of money and have to shut down completely,” Ms. Kim said on Thursday. “Our patients are going to suffer.”
The program underwrites bank loans for small businesses that will never need to be repaid if owners use most of the money to keep paying employees for two and a half months. Economists and business lobbyists warned when the bill was being debated that the money was nowhere close to the $1 trillion or more that companies would need. A Wells Fargo spokeswoman said the bank continues to prepare applications for the funds, and will submit them when the funds are available again.
The coronavirus pandemic’s devastation became more evident Thursday with more than 5.2 million workers added to the tally of the unemployed. Doug Martin, 63, a sports marketer in Long Beach, Calif., says the events company he spent the month of February negotiating with went silent when conditions on the West Coast began to deteriorate in early March.
The latest figure from the Labor Department, reflecting last week’s initial unemployment claims, brings the four-week total to about 22 million, roughly the net number of jobs created in a nine-and-a-half-year stretch that began after the last recession and ended with the pandemic’s arrival. “There’s a whole domino effect to this thing, and I’m one of the dominoes,” he said in an interview. “This morning I read that the money’s gone and I’m like, ‘heck I didn’t even get a shot at this’.”
It underscores how the downdraft has spread to every corner of the economy: hotels and restaurants, mass retailers, manufacturers and white-collar strongholds like law firms.
“There’s nowhere to hide,” said Diane Swonk, chief economist at Grant Thornton in Chicago. “This is the deepest, fastest, most broad-based recession we’ve ever seen.”
Some of the new jobless claims represent freshly laid-off workers; others are from people who had been trying for a week or more to file. “We’re still playing catch-up on multiple fronts,” Ms. Swonk said.
Each day seems to bring unwelcome milestones. On Wednesday, the Commerce Department reported the steepest monthly drop in retail sales since record keeping began nearly 30 years ago, and the Federal Reserve said industrial production had recorded its biggest decline since 1946.
The mounting unemployment numbers seem certain to fuel the debate over how long to impose stay-at-home orders and restrictions on business activity. President Trump has said some measures should be relaxed soon because of the impact on workers. “There has to be a balance,” he said at a press briefing Wednesday evening. “We have to get back to work.”
The Treasury Department has begun electronically depositing funds meant to help with basic expenses into people’s bank accounts. But some banks are keeping some of that money to make up for negative balances.The Treasury Department has begun electronically depositing funds meant to help with basic expenses into people’s bank accounts. But some banks are keeping some of that money to make up for negative balances.
A 21-year-old Minneapolis woman, whose husband is a disabled military veteran with a bank account at USAA, said on Wednesday that the bank’s customer service agents said the payment would first be applied to a negative balance on the family’s bank account.A 21-year-old Minneapolis woman, whose husband is a disabled military veteran with a bank account at USAA, said on Wednesday that the bank’s customer service agents said the payment would first be applied to a negative balance on the family’s bank account.
The family would only receive what was left over, she said, asking not to be identified out of concern that her financial troubles could harm the careers of family members. The woman said her account had been overdrawn by thousands of dollars.The family would only receive what was left over, she said, asking not to be identified out of concern that her financial troubles could harm the careers of family members. The woman said her account had been overdrawn by thousands of dollars.
“Currently, a stimulus payment could be reduced when we execute legal garnishment or lien requirements,” said Matthew Hartwig, a USAA spokesman, in an email to the Times. “A reduction can also occur in circumstances when the stimulus payment is deposited into an account with a negative balance. To better support our members, we are continuing to examine ways to address such occurrences during this pandemic.” He would not comment on specific cases.“Currently, a stimulus payment could be reduced when we execute legal garnishment or lien requirements,” said Matthew Hartwig, a USAA spokesman, in an email to the Times. “A reduction can also occur in circumstances when the stimulus payment is deposited into an account with a negative balance. To better support our members, we are continuing to examine ways to address such occurrences during this pandemic.” He would not comment on specific cases.
When funds come into accounts with negative balances, banks are legally allowed to take what is needed to bring the balance to zero.When funds come into accounts with negative balances, banks are legally allowed to take what is needed to bring the balance to zero.
The government checks are meant to cushion the financial blow to Americans hit hardest by the fallout from the coronavirus pandemic.The government checks are meant to cushion the financial blow to Americans hit hardest by the fallout from the coronavirus pandemic.
Bank of America, JPMorgan Chase and Wells Fargo — the nation’s four biggest banks — are pausing their collections on negative account balances to give customers access to the government’s stimulus. Bank of America, JPMorgan Chase and Wells Fargo are pausing their collections on negative account balances to give customers access to the government’s stimulus.
“We are informing customers that a temporary credit will automatically post to the account within a few days of the stimulus payment deposit,” said Jim Seitz, a Wells Fargo spokesman.“We are informing customers that a temporary credit will automatically post to the account within a few days of the stimulus payment deposit,” said Jim Seitz, a Wells Fargo spokesman.
There is no more campaign trail. Instead of a traveling circus of raucous rallies, press bus gossip and drinks with sources at the hotel bar, there is Joseph R. Biden Jr. in his Delaware basement, videoconferencing into cable news. Journalists, barred from flying for safety reasons, still report by phone and text message, but voters go uninterviewed and swing states unexplored.
“It feels like it’s something that exists only in theory,” said Ruby Cramer, who spent months trailing Bernie Sanders as a reporter for BuzzFeed News. “There’s no tangible element. It doesn’t feel like the living, breathing, changing organism that it has always been.”
In interviews, nearly a dozen now-grounded campaign reporters described feeling unmoored without the usual rhythm of journeying from state to state, jousting with aides and badgering candidates — the raw ingredients that, through a subtle alchemy of social media, cable news hits and print deadlines, forge the day-to-day story line of a presidential race.
News outlets are also grappling with how to cover voters in crucial states like Florida, Michigan, and Nevada, where journalists often gauge the direction of the country’s politics.
Amid the pandemic, much of the country’s political press is now marooned in coastal cities, covering a national race from couches in Georgetown and Brooklyn.
The coronavirus pandemic’s devastation became more evident Thursday with more than 5.2 million workers added to the tally of the unemployed.
The latest figure from the Labor Department, reflecting last week’s initial unemployment claims, brings the four-week total to about 22 million, roughly the net number of jobs created in a nine-and-a-half-year stretch that began after the last recession and ended with the pandemic’s arrival.
It underscores how the downdraft has spread to every corner of the economy: hotels and restaurants, mass retailers, manufacturers and white-collar strongholds like law firms.
“There’s nowhere to hide,” said Diane Swonk, chief economist at Grant Thornton in Chicago. “This is the deepest, fastest, most broad-based recession we’ve ever seen.”
Some of the new jobless claims represent freshly laid-off workers; others are from people who had been trying for a week or more to file. “We’re still playing catch-up on multiple fronts,” Ms. Swonk said.
Each day seems to bring unwelcome milestones. On Wednesday, the Commerce Department reported the steepest monthly drop in retail sales since record keeping began nearly 30 years ago, and the Federal Reserve said industrial production had recorded its biggest decline since 1946.
The mounting unemployment numbers seem certain to fuel the debate over how long to impose stay-at-home orders and restrictions on business activity. President Trump has said some measures should be relaxed soon because of the impact on workers. “There has to be a balance,” he said at a press briefing Wednesday evening. “We have to get back to work.”
Facebook said Thursday that it would start showing messages to people who have liked, reacted or commented on misinformation about Covid-19 that the social network had removed. The messages would also recommend credible information from the World Health Organization, the company said.Facebook said Thursday that it would start showing messages to people who have liked, reacted or commented on misinformation about Covid-19 that the social network had removed. The messages would also recommend credible information from the World Health Organization, the company said.
“As this pandemic evolves, we’ll continue focusing on the most effective ways to keep misinformation and dangerous hoaxes about Covid-19 off our apps and ensure people have credible information from health experts to stay safe and informed,” Guy Rosen, Facebook’s vice president of integrity, said in a blog post.“As this pandemic evolves, we’ll continue focusing on the most effective ways to keep misinformation and dangerous hoaxes about Covid-19 off our apps and ensure people have credible information from health experts to stay safe and informed,” Guy Rosen, Facebook’s vice president of integrity, said in a blog post.
As the coronavirus has spread around the world, killing hundreds of thousands of people, so too has online misinformation about it, despite aggressive efforts by social media companies to curb its dissemination. As part of its announcement on Thursday, Facebook said it had removed hundreds of thousands of posts from the social network that “could lead to imminent physical harm,” such as claims that drinking bleach cures the virus and that physical distancing measures are ineffective against its widespread transmission.As the coronavirus has spread around the world, killing hundreds of thousands of people, so too has online misinformation about it, despite aggressive efforts by social media companies to curb its dissemination. As part of its announcement on Thursday, Facebook said it had removed hundreds of thousands of posts from the social network that “could lead to imminent physical harm,” such as claims that drinking bleach cures the virus and that physical distancing measures are ineffective against its widespread transmission.
Still, conspiracy theories about the coronavirus have abounded on the social network. In March, the company said, it also reduced the reach of about 40 million false posts and applied warning labels showing more context based on thousands of articles by its independent fact-checking partners.Still, conspiracy theories about the coronavirus have abounded on the social network. In March, the company said, it also reduced the reach of about 40 million false posts and applied warning labels showing more context based on thousands of articles by its independent fact-checking partners.
Who would have thought that a crisis that began with mortgage defaults in American suburbs in 2007 would lead to a fiscal crisis in Greece in 2010? Or that a stock market crash in New York in 1929 would contribute to the rise of fascists in Europe in the 1930s?Who would have thought that a crisis that began with mortgage defaults in American suburbs in 2007 would lead to a fiscal crisis in Greece in 2010? Or that a stock market crash in New York in 1929 would contribute to the rise of fascists in Europe in the 1930s?
In the years ahead, we will learn what happens when the infinitely complicated web of interconnections that makes up the world economy is torn apart. And it opens the possibility of a global economy completely different from the one that has prevailed in recent decades.In the years ahead, we will learn what happens when the infinitely complicated web of interconnections that makes up the world economy is torn apart. And it opens the possibility of a global economy completely different from the one that has prevailed in recent decades.
“This is a period of radical uncertainty, an order of magnitude greater than anything we’re used to,” said Adam Tooze, a historian at Columbia and author of “Crashed,” a study of the extensive global ripple effects of the 2008 financial crisis.“This is a period of radical uncertainty, an order of magnitude greater than anything we’re used to,” said Adam Tooze, a historian at Columbia and author of “Crashed,” a study of the extensive global ripple effects of the 2008 financial crisis.
Crises have a way of bringing to the fore issues that are easy to ignore in good times.Crises have a way of bringing to the fore issues that are easy to ignore in good times.
One obvious candidate is globalization, in which companies can move production wherever it’s most efficient, people can hop on a plane and go nearly anywhere, and money can flow to wherever it will be put to its highest use. The idea of a world economy with the United States at its center was already falling apart, given China’s rise and the United States’s own turn toward nationalism.One obvious candidate is globalization, in which companies can move production wherever it’s most efficient, people can hop on a plane and go nearly anywhere, and money can flow to wherever it will be put to its highest use. The idea of a world economy with the United States at its center was already falling apart, given China’s rise and the United States’s own turn toward nationalism.
There are signs that the coronavirus crisis is exaggerating, and possibly cementing, those changes.There are signs that the coronavirus crisis is exaggerating, and possibly cementing, those changes.
U.S. stocks were mixed as investors wrestled with the latest figures showing the economic damage from the coronavirus outbreak.U.S. stocks were mixed as investors wrestled with the latest figures showing the economic damage from the coronavirus outbreak.
Shares of banks continued to slide, as Morgan Stanley added to a string of earnings reports from the sector that show profits tumbling and lenders preparing for damage to come.Shares of banks continued to slide, as Morgan Stanley added to a string of earnings reports from the sector that show profits tumbling and lenders preparing for damage to come.
Energy stocks were also sharply lower, as were shares of major airlines after leaders of United Airlines issued a dire note to the carrier’s 100,000 employees on Wednesday, warning that staffing cuts may be coming and demand for air travel is likely to remain subdued into next year.Energy stocks were also sharply lower, as were shares of major airlines after leaders of United Airlines issued a dire note to the carrier’s 100,000 employees on Wednesday, warning that staffing cuts may be coming and demand for air travel is likely to remain subdued into next year.
Investors also faced another spate of bad economic news on Thursday, with weekly unemployment claims data showing another mass shedding of jobs.Investors also faced another spate of bad economic news on Thursday, with weekly unemployment claims data showing another mass shedding of jobs.
The S&P 500 drifted between gains and losses, after having dropped more than 2 percent on Wednesday. Stocks in Europe were slightly higher, after also having given up their early gains, while shares in Asia fell on Thursday.The S&P 500 drifted between gains and losses, after having dropped more than 2 percent on Wednesday. Stocks in Europe were slightly higher, after also having given up their early gains, while shares in Asia fell on Thursday.
Though still far from the record reached on Feb. 19, stocks in the United States had been steadily climbing in recent weeks as investors began to focus on the prospect of an eventual rebound from the economic collapse set off by the pandemic.Though still far from the record reached on Feb. 19, stocks in the United States had been steadily climbing in recent weeks as investors began to focus on the prospect of an eventual rebound from the economic collapse set off by the pandemic.
Treasury Secretary Steven Mnuchin voiced his opposition on Thursday to proposals that the International Monetary Fund create new reserve assets to bolster its arsenal of tools for helping economies stricken by the coronavirus pandemic.Treasury Secretary Steven Mnuchin voiced his opposition on Thursday to proposals that the International Monetary Fund create new reserve assets to bolster its arsenal of tools for helping economies stricken by the coronavirus pandemic.
The United States has been blocking proposals by leaders in Europe and Africa that call for issuance of new Special Drawing Rights, which would allow the fund to inject liquidity into the global economy, which it expects to shrink by 3 percent this year. Special Drawing Rights, or S.D.R.s, are essentially the fund’s way of printing money by boosting the foreign exchange reserves of its 189 member countries.The United States has been blocking proposals by leaders in Europe and Africa that call for issuance of new Special Drawing Rights, which would allow the fund to inject liquidity into the global economy, which it expects to shrink by 3 percent this year. Special Drawing Rights, or S.D.R.s, are essentially the fund’s way of printing money by boosting the foreign exchange reserves of its 189 member countries.
“In our view, an S.D.R. allocation is not an effective tool to respond to urgent needs,” Mr. Mnuchin said in a statement.“In our view, an S.D.R. allocation is not an effective tool to respond to urgent needs,” Mr. Mnuchin said in a statement.
He said he opposed the idea because much of the allocation would go to the richest countries, which likely would not utilize them, while poor countries would receive far less. S.D.R.s are distributed proportionally according to the shares countries have in the I.M.F.He said he opposed the idea because much of the allocation would go to the richest countries, which likely would not utilize them, while poor countries would receive far less. S.D.R.s are distributed proportionally according to the shares countries have in the I.M.F.
The Treasury secretary said he preferred a more “targeted approach” and that the United States was considering contributions to the fund’s trusts that provide grants and loans to the poorest countries.The Treasury secretary said he preferred a more “targeted approach” and that the United States was considering contributions to the fund’s trusts that provide grants and loans to the poorest countries.
The debate over S.D.R.s has been one of the points of contention at the “virtual” spring meetings hosted by the I.M.F. and World Bank this year. France had been spearheading the proposal.The debate over S.D.R.s has been one of the points of contention at the “virtual” spring meetings hosted by the I.M.F. and World Bank this year. France had been spearheading the proposal.
European carmakers are beginning to gradually reopen factories in what will be an important test of whether it is possible to get the economy going again without endangering the health of employees.
Volkswagen, which has already restarted limited production at some parts factories, said Wednesday that it would reopen car assembly plants in Zwickau, Germany, and Bratislava, Slovakia, on Monday. Other VW factories around the world will follow later in April and in May.
Daimler, the maker of Mercedes-Benz cars and trucks, said that next week it would reopen three German factories that manufacture vital parts, such as a system made in Berlin that controls the valves of internal combustion engines. The plants will initially operate for one shift a day as Daimler gradually restarts operations in Germany, the company said.
Volvo Cars said it would reopen its factories and offices in Sweden on Monday. Sweden has taken a more relaxed approach to the virus, allowing grade schools and restaurants to remain open.
More than one million Europeans are either working reduced hours or unemployed because of car and parts factory shutdowns, so restarting the plants is crucial. But the factories will also be laboratories of whether the risk of infection can be controlled by the use of face masks, plastic barriers and other measures.
For more than four decades, China has never acknowledged that its economy actually shrank, even during major economic crises. But that may change on Friday, when the country announces gross domestic product for the January-to-March quarter.For more than four decades, China has never acknowledged that its economy actually shrank, even during major economic crises. But that may change on Friday, when the country announces gross domestic product for the January-to-March quarter.
China’s National Bureau of Statistics already confirmed last month that domestic industrial production, retail sales and investment all suffered record, double-digit drops in the first two months of this year compared with the same period of 2019. That has prompted most, though not all, economists to guess that overall economic performance for the first quarter of this year will show a decrease from a year earlier.China’s National Bureau of Statistics already confirmed last month that domestic industrial production, retail sales and investment all suffered record, double-digit drops in the first two months of this year compared with the same period of 2019. That has prompted most, though not all, economists to guess that overall economic performance for the first quarter of this year will show a decrease from a year earlier.
The question is how big a drop it will be.The question is how big a drop it will be.
One survey of 18 Chinese and foreign institutions by Caixin, a Chinese news organization, found that they were forecasting that the economy was anywhere from flat to down 11.5 percent in the first quarter. The average forecast was for a drop of 6.6 percent.One survey of 18 Chinese and foreign institutions by Caixin, a Chinese news organization, found that they were forecasting that the economy was anywhere from flat to down 11.5 percent in the first quarter. The average forecast was for a drop of 6.6 percent.
A broader survey by Reuters of 57 analysts found an even wider range of predictions — anywhere from a nose-dive of 28.9 percent to a gain of 4 percent. But the average in the Reuters survey, a loss of 6.5 percent, was practically identical to Caixin’s.A broader survey by Reuters of 57 analysts found an even wider range of predictions — anywhere from a nose-dive of 28.9 percent to a gain of 4 percent. But the average in the Reuters survey, a loss of 6.5 percent, was practically identical to Caixin’s.
Foreign banks, which come under only slightly less political pressure than Chinese institutions to issue sunny forecasts, have tended to be at the bearish end of the range.Foreign banks, which come under only slightly less political pressure than Chinese institutions to issue sunny forecasts, have tended to be at the bearish end of the range.
Amazon’s founder, Jeff Bezos, said the company was developing its own coronavirus testing capabilities, including building a lab, and is preparing to start testing a small number of workers soon. In an annual letter to shareholders, Mr. Bezos also advocated for “regular testing on a global scale, across all industries,” as a way to reopen the economy. The Transportation Department largely denied requests from JetBlue and Spirit Airlines to stop flying to several destinations, service that is required under the terms of the federal stimulus. The decision suggests that the department may be unlikely to grant the majority of such exemption requests, many of which have been issued by smaller carriers.
Amazon’s founder, Jeff Bezos, said the company was developing its own coronavirus testing capabilities, including building a lab, and is preparing to start testing a small number of workers soon. In an annual letter to shareholders, Mr. Bezos also advocated “regular testing on a global scale, across all industries,” as a way to reopen the economy.
Morgan Stanley, the smallest of the major Wall Street banks, reported a 30 percent downswing in earnings for the first quarter. Driven by declines in its money management and investment businesses as well as higher costs related to both increased loss cushions and the quarter’s strong trading volumes, Morgan Stanley’s profits fell to $1.7 billion for the quarter, with overall revenues falling 8 percent, to $9.5 billion.Morgan Stanley, the smallest of the major Wall Street banks, reported a 30 percent downswing in earnings for the first quarter. Driven by declines in its money management and investment businesses as well as higher costs related to both increased loss cushions and the quarter’s strong trading volumes, Morgan Stanley’s profits fell to $1.7 billion for the quarter, with overall revenues falling 8 percent, to $9.5 billion.
Some fast-food chains in Britain have begun to slowly reopen after shutting doors in a nationwide lockdown in March. Pret a Manger said it had opened 10 locations near London hospitals in response to requests from hospital staff. KFC reopened 11 restaurants across the country for delivery only and with a limited menu. Burger King plans to reopen four restaurants for delivery only.
Gov. Gavin Newsom of California signed an executive order Wednesday directing the state’s unemployment agency to pay benefits to workers like drivers for Uber and Lyft through a federal assistance program for the self-employed. He said the state would also extend aid to undocumented workers, many of whom have been unable to get federal relief during the pandemic despite paying local and state taxes.Gov. Gavin Newsom of California signed an executive order Wednesday directing the state’s unemployment agency to pay benefits to workers like drivers for Uber and Lyft through a federal assistance program for the self-employed. He said the state would also extend aid to undocumented workers, many of whom have been unable to get federal relief during the pandemic despite paying local and state taxes.
Reporting was contributed by Alexandra Stevenson, Davey Alba, Neil Irwin, Nelson D. Schwartz, Liz Alderman, Alan Rappeport, Kate Kelly, Keith Bradsher, Niraj Chokshi, Caitlin Dickerson, Miriam Jordan, Jim Tankersley, Emily Cochrane, Emily Flitter, Reed Abelson, Sapna Maheshwari, Ben Casselman, Noam Scheiber, Geneva Abdul, Mohammed Hadi, Carlos Tejada and Mike Ives. Reporting was contributed by Michael M. Grynbaum, Alexandra Stevenson, Davey Alba, Neil Irwin, Nelson D. Schwartz, Liz Alderman, Alan Rappeport, Kate Kelly, Keith Bradsher, Niraj Chokshi, Caitlin Dickerson, Miriam Jordan, Jim Tankersley, Stacey Cowley, Emily Cochrane, Emily Flitter, Reed Abelson, Sapna Maheshwari, Ben Casselman, Noam Scheiber, Geneva Abdul, Mohammed Hadi, Carlos Tejada and Mike Ives.