Here’s what you need to know:
More than three million file unemployment claims, the most ever in a week.
Credit…Taylor Glascock for The New York Times
Nearly 3.3 million people filed for unemployment benefits last week, sending a collective shudder throughout the economy that is unlike anything Americans have experienced.
The numbers, released by the Labor Department on Thursday, are some of the first hard data on the economic toll of the coronavirus pandemic, which has shut down whole swaths of American life faster than government statistics can keep track.
Just three weeks ago, barely 200,000 people applied for jobless benefits, a historically low number. In the half-century that the government has tracked applications, the most applications filed in a single week had been fewer than 700,000.
“In the whole history of initial claims, there’s never been anything remotely close to that,” said Ben Herzon, executive director of IHS Markit, a business data and analytics firm.
As staggering as the figures are, they almost certainly understate the problem. Some part-time and low-wage workers don’t qualify for unemployment benefits. Nor do gig workers, independent contractors and the self-employed, although the emergency aid package being considered by Congress would broaden eligibility. Others who do qualify may not know it. And the sudden rush of layoffs led to jammed phone lines and overwhelmed computer servers at unemployment offices across the country, leaving many people unable to file claims.
The worst could be yet to come. Mr. Herzon said he expected a similarly large number next Thursday, when the Labor Department releases its report on new claims filed this week.
Mnuchin says Thursday’s jobless claims are ‘not relevant.’
Treasury Secretary Steven Mnuchin said on Thursday that the surge in weekly unemployment claims was “not relevant” and that hopefully many of those workers will be rehired now that Congress is on the cusp of passing a $2 trillion economic relief package.
“To be honest with you, I just think these numbers right now are not relevant,” Mr. Mnuchin said on CNBC. “The good thing about this bill is the president is protecting people.”
The Treasury secretary said that he was optimistic that the House would quickly pass the bill that cleared the Senate late Wednesday night. He said that he is coordinating closely with the Federal Reserve, speaking with Chairman Jerome H. Powell as many as 30 times per day to roll out new emergency lending programs.
Mr. Mnuchin also vowed to be fully transparent about how the government is lending to distressed industries and noted that those that receive loans will face restrictions on executive pay and stock buybacks. However, he said that the Trump administration could not force companies across the country not to lay off workers.
“We don’t believe in mandating and regulating certain big businesses,” Mr. Mnuchin said.
THE AID PLAN
Chief executives could still receive millions in compensation.
Lawmakers put some restrictions on the compensation of executives whose companies receive government assistance under the bill, in an effort to address one of the criticisms about bailouts of banks and other companies during the 2008 financial crisis. But the limits will not do away with multimillion dollar paydays for corporate bosses.
THE DETAILS Executives who made more than $3 million in 2019 could be awarded $3 million, plus half of any sum in excess of $3 million. As a result, a chief executive who earned $20 million in 2019 would be allowed compensation of $11.5 million, or $3 million plus half of $17 million per year. The restrictions would apply from the time the federal support begins to one year after it ends.
In addition, companies receiving assistance will not be allowed to increase the compensation of executives who earned between $425,000 and $3 million in 2019 until a year after government support ends.
THE CONTEXT Of course, senior executives and their boards of directors could decide on their own to pay themselves far less to show investors, employees and lawmakers that they, too, are making a sacrifice. But those who don’t would effectively have their compensation subsidized by taxpayers, said Sarah Anderson, a project director at the Institute for Policy Studies, a progressive research organization based in Washington.
Wall Street climbs in early trading.
U.S. stocks rose on Thursday as lawmakers in Washington advanced a highly anticipated $2 trillion rescue package to bolster the American economy.
The climb came despite Labor Department figures released early Thursday that revealed a record number of unemployment claims, more evidence of the staggering economic toll of the coronavirus pandemic stacking up.
The number of people who sought jobless benefits last week was colossal — nearly 3.3 million — but had been widely anticipated by investors.
The S&P 500 was up more than 3 percent in early trading.
The gains added to a rally that began on Tuesday as the lawmakers negotiated a spending and support plan to help households and companies cope with the coronavirus outbreak. The Senate passed the plan late on Wednesday, and it was expected to get approval by the House and President Trump shortly after.
But questions remain about the timing of the support plan and whether lawmakers should do even more, and that left investors nervous. Prices for longer-term U.S. Treasury bonds were up, sending yields lower and suggesting investors were looking for safe places to park their money. Oil prices, a proxy for the outlook for the world economy because they indicate demand for fuel, fell on futures markets.
Fed chair: The virus’s spread will determine when economy returns to normal.
Jerome H. Powell, the Federal Reserve chair, said during a rare television interview on Thursday that the United States “may well” be in a recession already, but that it should get the coronavirus under control before getting back to work.
“The first order of business will be to get the spread of the virus under control, and then to resume economic activity,” Mr. Powell said, speaking on NBC’s “Today” show. “The virus is going to dictate the timetable here.”
Mr. Powell’s comments contrast those of President Trump, who has suggested that he wants many Americans to get back to work as soon as Easter, less than three weeks away, and that efforts to slow the spread of the virus by shuttering large parts of the economy should not be worse than the disease itself.
The Aid Plan
Banks aren’t the focus, but they still get help.
Unlike the federal stimulus packages enacted in 2008 and 2009, the legislation passed by the Senate is not focused on the country’s biggest banks. Emergency relief measures enacted by the Federal Reserve have already given those companies access to short-term funding and added liquidity, or ease of trading, to the markets. So the role of banks in the rescue bill is to provide much-needed capital to businesses and taxpayers.
THE DETAILS Banks are widely expected to provide loans and other types of financing to distressed individuals and companies. To ensure that their own access to cash is not hampered by a raft of new client demands or market developments, the Fed has encouraged them to use the so-called “discount window,” its lending operation for big banks, and at least eight major financial institutions already have. As part of the stimulus package, banks can opt out of observing new federal accounting standards for estimating future credit losses during the period covered by the law.
THE CONTEXT Thanks to the Dodd-Frank Act of 2010 and new regulatory requirements that have been placed on major market participants, the U.S. financial system is in a far better position than it was in 2008, when big banks relied too heavily on borrowed money to fund themselves and their future obligations. But the backstops the government is providing to troubled borrowers could benefit the banks too.
THE AID PLAN
An F.A.Q. on the stimulus bill and your pocketbook.
How much money will individuals get — and how will it be distributed? How are unemployment benefits changing? Are gig workers included?
The Senate unanimously passed a $2 trillion economic stimulus plan on Wednesday that will offer assistance to tens of millions of American households affected by the coronavirus. Its components include payments to individuals, expanded unemployment coverage that includes the self-employed, loans for small businesses and nonprofits, temporary changes to withdrawal rules from retirement accounts, and more.
The House of Representatives was expected to quickly take up the bill and pass it, sending it to President Trump for his signature.
We collected answers to common questions about what’s in the bill.
Trump weighs postponing tariff payments to help businesses.
The Trump administration is considering postponing tariff payments on some imported goods for 90 days, according to people familiar with the matter, as it looks to ease the burden on businesses hurt by the coronavirus pandemic.
Some businesses and trade groups have argued that the levies President Trump imposed on foreign metals and products from China before the outbreak continue to raise their costs and weigh on their profits as the economy is slowing sharply. But even after the global pandemic hit the United States, Mr. Trump and his advisers have denied that cutting tariffs would be one of the measures they would undertake to buoy the economy.
The White House now appears to be considering a proposal that would defer tariff duties for three months for importers, though it would not cancel them outright. The administration’s consideration of a deferral was reported earlier by Bloomberg News.
It is not clear which tariffs the deferral might apply to, or if the idea will ultimately be approved. But the proposal appears to be separate from a plan announced on Friday by the U.S. Customs and Border Protection that it would approve delayed payment of duties, taxes and fees on a case-by-case basis.
The oil keeps flowing. Where can it go?
The world is awash in crude oil it doesn’t need, and is slowly running out of places to put it.
The coronavirus pandemic has strangled the world’s economies, silenced factories and grounded airlines, cutting the need for fuel. But Saudi Arabia, the world’s largest producer, is locked in a price war with its rival Russia and is determined to keep raising production.
So storage facilities around the globe are filling up. Huge tankers filled with crude are anchored off coastlines, with no place to go.
As storage space becomes harder to find, the prices, which have already fallen more than half this year, could drop even further. And companies could be forced to shut off their wells.
India, on nationwide lockdown, unveils $23 billion relief package.
On the second day of India’s nationwide lockdown to reduce the spread of the coronavirus, the government announced a relief package of 1.7 trillion rupees, or $22.6 billion, to ease the economic pain that it will cause India’s 1.3 billion residents.
The centerpiece of the plan unveiled on Thursday is an increased ration of free food for the 800 million poorest Indians. The government will give each family an additional 5 kilograms of rice or wheat and 1 kilogram of pulses per person per month for the next three months. The food would supplement existing food allocations poor families already receive.
The most vulnerable people — poor women, farmers, widows, and senior citizens — will also receive small direct cash transfers to their bank accounts.
The extended lockdown is expected to be particularly hard on poor workers, most of whom feed themselves from their day’s earnings. With everyone ordered to stay inside and virtually all businesses closed, these workers no longer have a way to make a living.
Catch up: Here’s what else is happening today.
The Transportation Security Administration screened just 240,000 travelers on Wednesday, about 11 percent of its typical volume. Alaska Airlines plans to cut its schedule for April and May by 70 percent, and Hawaiian Airlines said it would eliminate most long-haul flights next month, focusing instead on all-cargo flights.
Ford Motor said it was aiming to restart production at some North American plants in early to mid-April. It said it planned to resume one assembly shift in Hermosillo, Mexico, on April 6, and aimed to resume some production by April 14 at several plants in Michigan, Ohio, Kentucky and Missouri “while the company introduces additional safety measures to protect returning workers.”
Reporting was contributed by Niraj Chokshi, Vindu Goel, Kate Kelly, Peter Eavis, Neil Irwin, Tara Siegel Bernard, Ron Lieber, Peter S. Goodman, Patricia Cohen, Tiffany Hsu, Kevin McKenna, Ben Casselman, Geneva Abdul, Amie Tsang, Carlos Tejada, Alexandra Stevenson, Su-Hyun Lee and Heather Murphy.