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U.S. Jobless Claims Show Further Economic Strain: Live Updates

Jobless claims show continuing strain on the economy.

More than two million new unemployment claims came in last week, showing the persistent strain on the economy caused by the coronavirus pandemic.

The Labor Department reported that 1.9 million Americans filed new claims for state unemployment insurance last week, along with 623,000 new claims for federal aid available to the self-employed and others not normally eligible for state jobless benefits.

The overall number collecting state benefits increased by almost 650,000 to a seasonally adjusted total of 21.5 million, showing that even as some businesses reopen and workers come off the rolls, others are being newly laid off or belatedly starting to receive benefits.

The job market is “crawling out of the hole now,” said Torsten Slok, chief economist at Deutsche Bank Securities. “We do have the worst behind us,” he said.

At the same time, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the weekly claims “are not falling as fast as I’d like them to fall or thought they would be falling.”

“Let’s not kid ourselves,” he added. “This is still an astonishing rate of layoffs.”

The European Central Bank administered another dose of economic stimulus to the eurozone economy Thursday, saying it would nearly double the size of its purchases of government and corporate bonds.

The central bank will step up its bond purchases by another 600 billion euros, or $675 billion, a way of driving down market interest rates and making credit cheaper. The decision will push the total bond purchases promised by the central bank since the pandemic began to 1.35 trillion euros.

Christine Lagarde, the central bank’s president, raised expectations that the bank would do more when she said last week that the economic effects of the pandemic could fulfill worst case scenarios. Members of the bank’s Governing Council have also expressed concern about deflation, a ruinous downward spiral of prices.

The latest data on joblessness in the eurozone, released Wednesday, showed the unemployment rate in April was 7.3 percent, a number that reflects the government-backed furlough programs designed to curb mass unemployment. But many national financial support programs are set to begin scaling back soon, making it likely that joblessness will grow higher over the coming months, economists said.

Wall Street dips as global markets waver.

Stocks on Wall Street dropped, following European markets lower on Thursday, in a small retreat after days of back-to-back gains.

The drop came after the U.S. government said the overall number of workers on state jobless rolls increased last week, signaling continued strain on the economy even as some businesses reopen.

In Europe, the decline came despite new efforts by the European Central Bank to bolster the region’s economy. The E.C.B. said that it expanded its stimulus measures by more than expected, stepping up bond purchases by another 600 billion euros, or $675 billion, to address economic distress caused by the virus outbreak.

The S&P 500 fell about half a percent. The index had climbed for four consecutive days before Thursday’s dip.

Stocks have been buoyed by recovery hopes in recent weeks, with the S&P 500 rising to within 10 percent of its pre-pandemic highs, while stocks in Europe are back to where they stood in early March. Investors have been inspired by signs of a quick return of normal activity — even if not to levels seen before government-imposed shutdowns and social-distancing orders. Companies, from automakers to restaurants, have reported that sales are beginning to pick up.

Still, the bad news has been relentless, from unrest in the United States to continuing tensions between Washington and Beijing.

LVMH may be reconsidering its takeover of Tiffany.

When the French luxury giant LVMH agreed to buy Tiffany for $16.2 billion last November, many thought it was a high price at the time. It looks even more expensive amid the coronavirus pandemic, and LVMH is weighing whether to press for the deal to be re-priced.

LVMH’s chief executive, Bernard Arnault, is talking with advisers about his options, and the matter was discussed at a board meeting on Tuesday, according to today’s DealBook newsletter. Among the points the company could raise are whether Tiffany has suffered a “material adverse change” to its business, or whether the jewelry icon will miss financial projections agreed to in the deal.

Tiffany’s shares plunged after Women’s Wear Daily first reported LVMH’s on deliberations. LVMH said this morning that it would not buy Tiffany shares in the open market, ruling out a potential tactic to lower the overall price of the deal.

LVMH hasn’t approached Tiffany to discuss re-pricing the deal. For its part, Tiffany believes that its deal agreement is ironclad. And buying Tiffany would give LVMH another major luxury brand and landmark real estate on Fifth Avenue in Manhattan. Neither side expects LVMH to try to walk away from the deal — at least, not at this moment.

A number of deals agreed before the pandemic have been rescinded or revamped, including L Brands breaking off a sale of Victoria’s Secret to Sycamore Partners, Carlyle fighting to get out of buying a stake in American Express Global Business Travel, and BorgWarner and Delphi agreeing to cut the price of their deal after threatening lawsuits.

Germans will receive 300 euros, or about $336, per child, and pay a reduced value added tax on daily items and less for electricity, under a €130 billion stimulus plan announced by Chancellor Angela Merkel’s government.

Ms. Merkel called the package, which was agreed to late Wednesday, a “bold response” to the pandemic downturn.

The plan also includes €5.3 billion for the social security system, €10 billion to help municipalities cover housing and other costs and €1.9 billion for cultural institutions and nonprofits. It includes incentives to purchase electric vehicles, but none for gas- or diesel-fired engines, which Germany’s powerful automakers had sought.

The plan requires new borrowing. Ms. Merkel’s government abandoned its adherence to a balanced budget in March, when it passed a €750 billion rescue package that included taking on more than €150 billion of fresh debt. The latest package will also be financed by new borrowing, reflecting government concerns that millions of employees still need incentives to encourage spending.

“We need to get out of this crisis with an oomph,” the finance minister, Olaf Scholz said.

China steps back in airline dispute one day after U.S. vowed retaliation.

The Chinese authorities on Thursday appeared to retreat partially from an escalating dispute with the United States over air travel between the two countries, announcing that foreign airlines would be allowed to operate one flight per week in Chinese cities.

The announcement, from China’s civil aviation regulator, followed the Trump administration’s announcement on Wednesday that it would block Chinese passenger airlines from flying into or out of the United States starting on June 16. That move was a response to a similar ban by the Chinese government on American carriers, which had further stoked tensions between the world’s two biggest economies.

Foreign airlines that were barred from operating in China during the pandemic — which includes all American airlines except those carrying cargo — will be allowed to choose one Chinese city from an approved list to operate one flight each week, beginning June 8, the announcement said. The pandemic and Chinese restrictions had effectively halted passenger trips to China by United Airlines, Delta Air Lines and American Airlines.

Senate sends changes to the Paycheck Protection Program to the president.

The Senate gave final approval on Wednesday to a measure that would relax the terms of the Paycheck Protection Program, a federal loan program for small businesses struggling during the pandemic.

The bill, approved overwhelmingly by the House last week, would extend to 24 weeks from eight weeks the time that small businesses would have to spend the loan money. The eight-week period to spend the loan money was set to lapse within days for some businesses, leaving the Senate limited time to consider alternatives. The measure now heads to President Trump’s desk.

The bill also would give companies greater flexibility to use the loan money on other business expenses, like utilities and rent, by lowering the amount required to be spent on payroll to 60 percent, from 75 percent.

Republicans said that they generally favored revamping the program, which was created by the $2.2 trillion stimulus bill enacted in March. But an attempt to pass the bill by unanimous consent was delayed by Senator Ron Johnson, Republican of Wisconsin, who wanted a letter clarifying that the extension applied to the time frame to spend the loan money, not to the application period. Senator Mitch McConnell of Kentucky, the majority leader, submitted the letter just after 7 p.m.

The Paycheck Protection Program aims to help small businesses continue paying their workers by giving them access to government-backed loans that will be forgiven entirely if most of the money is spent on payroll costs.

As the pandemic upends work and home life, women have carried an outsize share of the burden, more likely to lose a job and more likely to shoulder the load of closed schools and day care. For many working mothers, the gradual reopening of the economy won’t solve their problems, but compound them, writes The New York Times’s Patricia Cohen and Tiffany Hsu.

If parents are called back to the workplace before day care and other support for family needs is available, they may need to limit their hours or leave the labor force altogether. And such choices are far more likely to face women than men.

Parents in the United States have nearly doubled the time they were spending on education and household tasks before the coronavirus outbreak, to 59 hours per week from 30, with mothers spending 15 hours more on average than fathers, according to a report from Boston Consulting Group.

The inequities that existed before are now “on steroids,” said Claudia Goldin, an economics professor at Harvard University. Since workplaces tend to reward hours logged, she said, women are at a further disadvantage. “As work opens up, husbands have an edge,” Ms. Goldin said, and if the husband works more, his wife is going to have to work less.

Catch up: Here’s what else is happening.

  • Senior executives at Quibi will take a 10 percent pay cut, with the company’s leaders calling it “the right thing to do.” Jeffrey Katzenberg and Meg Whitman raised $1.75 billion to start the short-form video service, but it has gotten off to a rocky start, which Mr. Katzenberg has blamed on the coronavirus.

  • The Federal Reserve announced on Wednesday that it will expand its municipal bond-buying program, allowing two cities or counties in each state to sell their debt to the central bank, regardless of their population. The change will affect sparsely populated states like Wyoming, and will also extend to bond issuers like New York’s subway system.

  • Sales of e-bikes jumped 85 percent in March from a year earlier, according to the NPD Group, a research firm. Amazon, Walmart and Specialized are sold out of most models. If you are contemplating an e-bike purchase, there are trade-offs to consider, writes Brian Chen.

  • Canada Goose, the seller of $1,000 down-filled jackets, reported on Wednesday a fourth quarter sales decline of 10 percent, after cutting about 20 percent of its corporate work force last month amid the pandemic. While the company said publicly that it cut just 2.5 percent of its global work force when it laid off 125 people last month, it said in internal communications obtained by The New York Times that the figure represented roughly 20 percent of corporate employees.

Reporting was contributed by Tiffany Hsu, Nelson D. Schwartz, Niraj Chokshi, Vivan Wang, Melissa Eddy, Jack Ewing, Matt Phillips, Michael J. de la Merced, Jeanna Smialek, Patricia Cohen, Mohammed Hadi and William Davis.

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