Newsletter: Fewer Jobs, Less Shopping, Slow Rebound

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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

The Tide Is High

An additional three million workers in the U.S. applied for unemployment benefits last week, continuing a two-month trend of historically high claims. About 36.5 million Americans have filed applications in the past eight weeks. Still, unemployment filings have declined since an initial surge in layoffs drove claims up to a weekly peak of nearly 7 million at the end of March. In 43 states, unemployment applications fell last week, including several that have begun reopening, Sarah Chaney and Gwynn Guilford report.

Will the number of initial claims keep trending lower? Possibly. RBC Capital Markets economist Tom Porcelli tracks several high-frequency metrics on job losses, including Google searches, U.S. Treasury cash flows and private small-business data. “What they all suggest is that the worst of the job losses are very likely behind us,” he said.

The coronavirus employment shock is hitting women harder than men.


U.S. retail sales for April are expected to fall 12.3% from the prior month. (8:30 a.m. ET)

The New York Fed’s Empire State survey for May is expected to rise to minus-60.0 from minus-78.2 a month earlier. (8:30 a.m. ET)

U.S. industrial production for April is expected to fall 11.1% from the prior month. (9:15 a.m. ET)

The University of Michigan consumer sentiment survey for the first part of May is expected to fall to 65.0 from 71.8 at the end of April.

The U.S. job openings and labor turnover survey for March is out at 10 a.m. ET.

Newsmakers Live: Q&A With White House Economic Adviser Kevin Hassett. Starts at 11 a.m. ET

The Baker Hughes rig count is out at 1 p.m. ET.


Bleak Friday

U.S. consumers have pulled back on shopping and eating out. April’s retail sales figures are expected to show another record drop. Economists surveyed by The Wall Street Journal forecast that retail sales fell 12.3% in April from a month earlier. That would mark the steepest month-over-month decline since records began in 1992. Consumer spending is the main driver of the U.S. economy and retail sales account for about a quarter of all consumer spending. Social distancing, lockdowns, and travel restrictions have taken an unprecedented toll on that segment of the economy, Harriet Torry reports. hurt many retailers. Coronavirus will finish some of them off. Roughly 100,000 stores are expected to close over the next five years—more than triple the number that shut during the previous recession—as e-commerce jumps to a quarter of U.S. retail sales from 15% last year, Suzanne Kapner and Sarah Nassauer report.


Three out of four U.S. small businesses have sought federal aid to cope with fallout from the new coronavirus. A Census Bureau survey released Thursday found a much smaller share of firms reported actually receiving funds. Thirty-eight percent of respondents nationally, on average, said they had gotten loan money through the Small Business Administration’s Paycheck Protection Program, Amara Omeokwe reports.

The economic shock from the coronavirus pandemic hit lower-income households first and immediately left them much worse off, according to a new survey from the Federal Reserve. Almost 40% of households earning less than $40,000 a year experienced at least one job loss in March, versus 19% of households earning between $40,000 and $100,000 and 13% of those earning more than $100,000, David Harrison reports.

Do As I Say…

The debate over the next federal stimulus package is taking on the trappings of a morality play, pitting Democrats who want $1 trillion in aid for cash-strapped states against Republicans, including President Trump, who say that’s a bailout for fiscal mismanagement. This is not a good time to mix macroeconomic policy and moralizing. For one thing, the federal government is hardly one to preach fiscal rectitude to states, who have done a better job of managing their debts. For another, without federal help, prudent and profligate states alike will have to tighten their belts, deepening the recession and slowing the recovery, Greg Ip writes.

Around the U.S.

The CDC released guidelines for reopening workplaces, restaurants and other venues.

Some businesses reopened in Wisconsin a day after court struck down state restrictions.

In Orlando, Fla., the tourists are gone, and the prospect of their return uncertain.

Supply chain shift. Taiwan Semiconductor Manufacturing, the world’s largest contract manufacturer of silicon chips, said it would spend $12 billion to build a chip factory in Arizona.

Around the World

China’s recovery from the coronavirus is off to a slow start. Industrial output rebounded in April, but unemployment worsened and retail sales fell further than expected. The figures suggest that the first country hit by the coronavirus isn’t quickly returning to normal levels of economic activity, Jonathan Cheng reports.

The German economy posted its largest decline in output since the financial crisis. First-quarter gross domestic product contracted 2.2% from the previous quarter, German statistics office Destatis said Friday. Economists expect to see an even sharper drop during the April-to-June period, Maria Martinez reports. (Note: U.S. figures are typically annualized, Germany’s aren’t. To compare the two, U.S. 1Q GDP contracted at a 4.8% annualized pace, and Germany’s at an 8.8% annualized pace.)

Prime Minister Shinzo Abe lifted a state of emergency in much of Japan and credited voluntary restrictions for bringing down new coronavirus infections sharply. The nationwide state of emergency that started in April was lifted in 39 of the nation’s 47 prefectures, not including Tokyo and Osaka. A full end to the decree may come as soon as May 21, Mr. Abe said.

Quote of the Day

“I think a V-shaped recovery is off the table.” —Federal Reserve Bank of Minneapolis President Neel Kashkari


China’s coronavirus shutdown hit U.S. supply chains. Hard. “It is likely to lead firms to consider bringing some critical activities back to the United States or to set up backup suppliers to reduce the firms’ exposure to any single supplier or country. While introducing such additional safeguards is going to reduce the efficiency of supply chains in normal times, it may well improve performance in the longer run by mitigating the high costs of supply chain disruptions,” New York Fed economist Sebastian Heise writes.


Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.

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