The figures announced Thursday by the Labor Department bring the number of workers joining the official jobless ranks in the last six weeks to more than 30 million, and underscore just how dire economic conditions remain.
Many state agencies still find themselves overwhelmed by the flood of claims, leaving perhaps millions with dwindling resources to pay the rent or put food on the table.
If anything, according to many economists, the job losses may be far worse than government figures indicate. A study by the Economic Policy Institute found that roughly 50 percent more people than counted as filing claims in a recent four-week period may have qualified for benefits but were stymied in applying or didn’t even try because they found the process too formidable.
“The problem is even bigger than the data suggest,” said Elise Gould, a senior economist with the institute, a left-leaning research group. “We’re undercounting the economic pain.”
American Airlines reports a $2.2 billion loss.
American Airlines reported a loss of $2.2 billion in the first quarter of the year, a damaging but expected blow in an industry rocked by the pandemic. The company ended the quarter with $6.8 billion in cash on hand and plans to increase that to $11 billion by the end of June, a recognition that the downturn will be prolonged.
“Never before has our airline, or our industry, faced such a significant challenge,” the company’s chief executive, Doug Parker, said in a statement.
The airline said it expected to cut costs by $12 billion this year, in part by taking advantage of cheaper fuel. It has also slashed its schedule by 80 percent in April and May, and by 70 percent in June. Like its peers, American is accelerating aircraft retirements, freezing nonessential hiring and some pay raises, cutting executive pay, and offering unpaid leave and early retirement.
American has more than $10 billion in assets that it plans to use as collateral to raise additional capital, including an estimated $4.75 billion federal loan under the stimulus passed last year. The carrier also received $5.8 billion in a mix of mostly grants and some loans from the federal government to pay employees through September, more than any other airline.
As big companies report their latest quarterly earnings, C.E.O.s are revealing radically different attitudes toward the lockdowns and social-distancing measures imposed during the pandemic. It has made for lively conference calls with analysts, which are normally focused on far more prosaic matters.
After the market closed on Wednesday, Facebook reported better-than-expected earnings for the first quarter, and also “signs of stability” in the second. Mark Zuckerberg, Facebook’s chief executive, warned that the effects of the pandemic would be significant and long lasting, with “massive societal costs” stemming from stay-at-home orders. But he said that reopening too quickly “will almost guarantee future outbreaks and worse longer-term health and economic outcomes.”
Around the same time, Tesla announced that it eked out an unexpected first-quarter profit. What made headlines, though, was Elon Musk’s profanity-laced rant about stay-at-home orders. The electric carmaker’s chief, who has clashed with officials in California over the closure of Tesla’s factory there, likened lockdowns to “forcibly imprisoning people in their homes against all their constitutional rights.” Then, in response to a question about infrastructure spending, he really let rip.
“If somebody wants to stay in their house, that’s great. They should be allowed to stay in their house, and they should not be compelled to leave,” he said. “But to say that they cannot leave their house, and they will be arrested if they do, this is fascist. This is not democratic. This is not freedom.”
The eurozone economy shrank 3.8 percent during the first three months of the year while unemployment rose, as official data confirmed that the bloc is in the midst of its worst downturn since the common currency was introduced in 1999.
Economic output in France and Spain slumped more than 5 percent during the quarter — declines not seen since the end of World War II, according to official statistics from those countries. Lockdowns did not begin until March, near the end of the period covered by the report, suggesting that data for the quarter that began in April could be even worse.
Unemployment in the eurozone rose to 7.4 percent in March from 7.3 percent in February, interrupting a recovery that had been underway since the low point of the eurozone debt crisis in 2013.
In France, Germany and many other countries, employees are on government subsidized furloughs and do not count as unemployed. The jobless rate is almost certain to rise further as airlines, carmakers and other large corporations lay off workers in reaction to plunging sales.
Inflation in the eurozone fell to 0.4 percent in April from 0.7 percent in March as oil prices plunged. The rate is the lowest since 2016. But prices for food, alcohol and tobacco surged.
Twitter said on Thursday that it had an unprofitable quarter for the first time in more than two years, even as more users rushed to the platform. The company lost $8.3 million in the first quarter, breaking a profitability streak that started at the end of 2017.
Advertising revenue dropped substantially from March 11 to March 31, dipping 27 percent, as shelter-in-place orders were issued in the United States and advertisers cut their spending, the company said. Twitter’s revenue was $808 million in the quarter, a 3 percent increase from the prior year and above analyst estimates of $776 million.
Daily active users grew 24 percent from the previous year to 166 million, the highest growth rate Twitter has ever reported.
U.S. stock futures were mixed and European markets fell on Thursday as investors considered data revealing a sharp contraction in the eurozone economy and braced for figures expected to show another surge of jobless claims in the United States.
Futures for the S&P 500 were negative, pointing to a slightly lower open on Wall Street on Thursday. European markets fell about 1 percent after a rally in Asian markets.
On Wednesday, the S&P 500 gained nearly 3 percent, lifted by news that the drugmaker Gilead Science had seen early results that its experimental drug remdesivir could speed recovery in patients infected with the coronavirus. A steady climb has lifted the S&P 500 by more than 31 percent since its March 23 low.
This news was also a boon to Chinese drugmakers that make some of the ingredients in Gilead’s drug.
Broader positive sentiment was on display in commodities markets, too, as the price of oil continued a rally after Norway, a major oil producer, said that it would limit production, something that will lift sagging prices. The price of the U.S. benchmark, West Texas Intermediate, jumped 16 percent to $17.53, while Brent crude, the international benchmark, rose more than 12 percent to $25.31 a barrel.
The price of gold also rallied.
Norway to cut oil production as demand craters.
Norway will cut oil production by 250,000 barrels a day, or about 13 percent, in June and by 134,000 barrels a day for the rest of 2020, the country’s Ministry of Petroleum and Energy said. The move “will contribute to a faster stabilization of the oil market” than leaving matters to market forces, the ministry said in a statement.
Demand for oil has collapsed as the coronavirus pandemic has led to the grounding of most of the world’s commercial aircraft, as well as the sharp curtailment of road traffic. The resulting oversupply of oil threatens to outstrip storage facilities and is forcing oil companies around the world to throttle back production.
Norway’s cuts will add to the 9.7 million barrels a day in cuts that the Organization of the Petroleum Exporting Countries, Russia and other nations agreed to on April 12. Tina Bru, the Norwegian energy minister, said that Norway was acting “on an independent basis and with Norwegian interests at heart.”
The move, though, is likely to spark optimism among traders that oil-producing countries are taking more coordinated actions to deal with the glut. The price of Brent crude, the international benchmark, rose by almost 10 percent Thursday to $24.75 a barrel, but it remains down more than 60 percent since the beginning of the year.
A little over two weeks ago, SoftBank warned investors to be prepared for its annual earnings results to be a blood bath, as the coronavirus cratered the value of its investments in risky tech start-ups. On Thursday, it said the damage could be even worse than expected, adding an additional $1.4 billion to its expected losses from the deterioration of its WeWork holdings.
The new warning brings the total of Softbank’s anticipated net loss in the fiscal year ending in March to 900 billion yen, or $8.4 billion, adding another asterisk to the reputation of the company’s chief executive, Masayoshi Son, and his goal of becoming an epoch-making tech investor.
Mr. Son has used his enormous influence to position SoftBank as the world’s largest tech investor, deploying his $100 billion Vision Fund to catapult promising and sometimes risky young tech companies, like Uber and the hotel operator Oyo, from obscurity to fame and fortune.
The newly reported figures have been driven down “primarily” by investments made outside of the Vision Fund, including in WeWork, the co-working start-up, SoftBank said in a statement. It said that losses at the company were projected to be in excess of 1 trillion yen.
Catch up: Here’s what else is happening.
The maker of Lysol, Reckitt Benckiser, reported a surge in sales for the first quarter of 2020 as the coronavirus pandemic led consumers to snap up its disinfectant products. Revenue was up 13 percent over the period a year earlier, the Britain-based business said. The company also said it saw strong demand for its Mucinex and Norofen cold and pain relief medicines.
Tapestry, the company that owns the brands Coach and Kate Spade, said it would open about 40 of its stores in North America on Friday for “contactless curbside or storefront pickup.”
Dunkin’ Brands, one of the world’s largest fast food restaurant companies, reported that sales plunged 19 percent at Dunkin’ Donuts and 23 percent at Baskin-Robbins in the last three weeks of March. The company has 21,000 franchised locations in 60 countries.
Royal Dutch Shell, Europe’s largest oil company, said on Thursday that it would cut its dividend for the first time since World War II as the company reported a loss of $24 million for the quarter compared to $6 billion in profits in the period a year earlier. The company said it was reducing its dividend, which pension funds and other investors rely on for income, by about two-thirds to 16 cents a share, citing the risk of a prolonged period of weak oil prices because of the effects of the coronavirus pandemic.
FedEx said on Wednesday that it would not take federal funds earmarked to pay employees under the CARES Act, one day after UPS announced the same. Lawmakers had set aside $25 billion in grants for passenger airlines and $4 billion for cargo carriers to pay workers, though the Treasury Department later classified a portion of the funds for airlines as a loan.
Reporting was contributed by Jack Ewing, Stanley Reed, Kate Conger, Ben Dooley, Nelson D. Schwartz, Alexandra Stevenson, Jason Karaian, Niraj Chokshi, Neal E. Boudette, Steve Lohr and Mike Isaac.