Fed officials worried about the pandemic’s lasting economic damage, minutes show.
Federal Reserve officials worried that coronavirus-related lockdowns could spur bankruptcies and longer-term unemployment, potentially even inflicting lasting damage on the United States economy, minutes from their late-April meeting showed.
Central bank officials met on April 28-29, and notes from the gathering were released Wednesday. Jerome H. Powell, the Fed chair, struck a cautionary tone while speaking at a news conference following that meeting, warning that recovery could take time but pledging that monetary policymakers would do what they could to cushion the blow and help to get the labor market back on track.
The minutes showed that Mr. Powell’s colleagues shared his concern over the economy’s future. In their post-meeting statement, Fed officials said that the pandemic posed “considerable risks to the economic outlook” over the medium term.
“Participants expressed concern that the possibility of secondary outbreaks of the virus may cause businesses for some time to be reluctant to engage in new projects, rehire workers or make new capital expenditures,” according to the minutes.
Officials at the meeting also worried that foreign economies, particularly emerging markets, “could come under extreme pressure as a result of the pandemic and that this strain could spill over to and hamper U.S. economic activity.”
They voiced concern that the labor market might see longer-term damage if the crisis lingered and workers lost skills amid heightened unemployment.
Only one in five Americans expects overall business conditions to be “very” or “somewhat” good over the next year, according to a survey for The New York Times. Sixty percent foresee “periods of widespread unemployment or depression” over the next five years.
The poll was conducted this month by the online research platform SurveyMonkey. The results are little changed from a month earlier, and may even reflect a slight decline in outlook, signaling that the incipient reopening of businesses and federal and state political moves to deal with the coronavirus pandemic have had little impact on confidence.
That outlook could have serious implications for the economic recovery. If Americans fear that their jobs are in jeopardy or that business will remain slow, they may be less likely to spend even if their finances are stable.
Among those who have kept their jobs and their hours, more than 80 percent say their finances are at least as good as a year ago, and most are confident that their finances will remain steady over the next year, even as they worry about the broader economy.
But for those who have lost their jobs, it is a different picture. Many are skeptical that they will quickly find new work. Two-thirds say their finances have taken a hit, and most don’t expect their situation to improve over the next year.
Stocks jumped on Wednesday, rebounding from a late drop the day before, as investors were cheered by some strong results from retailers.
Markets have been volatile this week, with stocks rallying Monday and then falling on Tuesday, mostly as investors assessed a drugmaker’s claim of progress on a coronavirus vaccine. The drugmaker, Moderna, said that a very small early-stage trial of the vaccine had shown potential.
But reporting that questioned the specificity of that claim knocked stocks back in the final hour of trading on Tuesday.
On Wednesday, more retailers reported better than expected results that encouraged investors. Lowe’s, the home supplies chain, rose after reporting an 11.2 percent increase in comparable store sales in the first three months of the year. Target reported that digital sales in the first quarter had surged by 141 percent, though its shares fell slightly. Walmart, which had reported soaring sales the day before, added to its recent gains.
Delta Air Lines and United Airlines both jumped. Delta’s chief executive said in a television interview that the airline was likely to increase flight capacity during the summer as travel started to pick up, and United said it was working on a plan with Clorox and the Cleveland Clinic to reduce points of contact and promote social distancing for travelers.
The S&P 500 rose more than 1 percent, and stocks in Europe were also higher.
Oil prices continued their recent rally, with the U.S. crude benchmark climbing above $33 a barrel. A number of energy stocks also rallied.
After sinking to once unthinkable lows, oil prices have rebounded this month after oil producing nations cut output and consumption also picked up.
Internet providers like Charter and Comcast have introduced offers of free and low-cost internet with great fanfare in the last several weeks. The companies have said they want to help connect poor Americans during a pandemic that has shifted much of life online.
Schools and community organizations have aggressively promoted the offers. Scores of customers have tried to sign up.
But people signing up for the programs have encountered unexpected difficulties and roadblocks, according to interviews with people who have tried to sign up or who have helped them. Their stories highlight the way that the pandemic has stretched the gap between Americans who have easy access to the internet and those who do not, cutting the latter group off from venues for learning, work and play.
The benefits and rules of the offers vary widely, so a customer may not qualify for free service while someone in identical circumstances elsewhere in the country can sign up. Sometimes, people must endure hourslong waits on the phone to sign up, which can lead some to give up before they ever talk to a customer service agent. Others have been deterred by language barriers or are wary of requests for identification.
“We need a more stable solution that doesn’t have all the gaps in eligibility and delivery that these free and reduced offers provide us,” said Angela Siefer, the executive director of the National Digital Inclusion Alliance.
Cleaning with clouds of disinfectant. Keeping middle seats empty. Boarding back to front. For weeks, airlines have announced measure after measure aimed at putting travelers at ease. Now United Airlines hopes to lure customers back by partnering with two trusted brands: Clorox and the Cleveland Clinic.
On Wednesday, the airline said it was collaborating with both companies on a new initiative, United CleanPlus, that would help shape efforts to reduce points of contact and promote social distancing for travelers.
“Safety has always been our top priority, and right now in the midst of an unprecedented crisis, it’s our singular customer focus,” Scott Kirby, United’s chief executive, said in a recorded message to customers.
Clorox will consult with the airline on its disinfection practices and provide amenities to travelers at some locations. Experts from the Cleveland Clinic will offer advice on every part of the flying experience, keeping the airline up-to-date on the latest practices and technologies and helping to hold its policies to high standards.
Shares in the biopharma firm Moderna have been rising on hopes for its coronavirus vaccine candidate. The stock took off on Monday when it released promising early findings from a trial on humans. Then came the reality check.
Moderna’s claims that the vaccine generated an immune response in eight volunteers didn’t come with data, the health news publication Stat pointed out. It also noted that the National Institute for Allergy and Infectious Diseases, which teamed up with the company on the trial, had not said anything about it. Moderna, which has a pipeline of vaccines in trials but no products on the market, has received roughly half a billion dollars from the agency headed by Dr. Anthony Fauci.
After a 20 percent jump in its share price on Monday, Moderna announced plans to raise up to $1.3 billion by selling new shares. But after the Stat report was published, the company’s stock was down 10 percent at the market close on Tuesday, and has continued to fall in after-hours trading. Still, Moderna is up about 250 percent this year, valuing the company at about $27 billion.
European political leaders have been nervous that Chinese investors would take advantage of distressed share prices to buy up European assets. A deal disclosed Wednesday won’t make ease those jitters.
BOC Aviation, an aircraft leasing company controlled by the Chinese government, acquired a stake of almost 13 percent in Norwegian Air Shuttle, the budget airline said Wednesday in a regulatory filing.
BOC acquired the shares in the course of a debt restructuring, which was part of a bailout of Norwegian by the government of Norway. Norwegian leases aircraft from BOC, but it is struggling as passenger air traffic has almost entirely halted amid the coronavirus pandemic. To ease the pressure, BOC and other creditors agreed to convert the airline’s financial obligations into shares.
Norway is not part of the European Union, though it has a free-trade agreement with the bloc.
A city locks down to fight the coronavirus, but robots come and go.
The squat six-wheeled robots shuttled groceries and dinner orders to homes and offices. As the coronavirus spread, Starship shifted the fleet even further into grocery deliveries. Locals like Emma Maslin could buy from the corner store with no human contact.
“There’s no social interaction with a robot,” Ms. Maslin said.
The sudden usefulness of the robots to people staying in their homes is a tantalizing hint of what the machines could one day accomplish — at least under ideal conditions. Milton Keynes, with a population of 270,000 and a vast network of bicycle paths, is perfectly suited to rolling robots. Demand has been so high in recent weeks, some residents have spent days trying to schedule a delivery.
Rolls-Royce, the maker of jet engines, said on Wednesday that it would cut nearly 20 percent of its work force to deal with collapsing demand because of the coronavirus pandemic.
Rolls-Royce, one of Britain’s most important manufacturers, suggested that most of the job losses would come from its civil aerospace business, which produces engines for aircraft makers like Airbus and Boeing as well as airlines. The cuts — at least 9,000 jobs from a global work force of 52,000 — would come as part of a “detailed review” of its facilities, the company said.
The bulk of the world’s commercial airliners are grounded, and aircraft sales have slowed sharply and are not expected to fully recover for “several years,” according to the company. Rolls-Royce is losing revenue both from reduced engine sales and from lost sales of parts used to maintain its engines.
“We must respond to market conditions for the medium term until the world of aviation is flying again at scale,” Warren East, the company’s chief executive, said in a statement.
The carmaker Rolls-Royce is a separate company, owned by BMW.
Is a pandemic the right time to start a business? It just might be.
In March, as small businesses across the country were shutting down amid the spreading coronavirus pandemic, Shanel Fields was about to open one up.
For Ms. Fields, the timing couldn’t have been better. Her company, MD Ally, allows 911 dispatchers and other responders to route nonemergency calls and patients to virtual doctors, to help local governments improve their emergency response systems.
She’s not alone: New businesses are forming despite the pandemic, though at a significantly slower rate than before.
There have been more than 500,000 applications for an employer identification number since mid-March, according to the Census Bureau, although that is down nearly 20 percent from a year ago. Between mid-March and mid-April, the Small Business Administration issued nearly 300 start-up loans worth about $153 million, a 36 percent drop from year earlier. Stripe, the credit card processing firm, said it had handled more than $1 billion in sales for businesses that started on the platform during that time.
Past downturns produced some prominent American companies: Airbnb, Disney, General Motors, Hewlett-Packard, Microsoft, Slack, Uber and Venmo, to name a few.
“Downturns or challenging times are seen as good times to start a business for two reasons,” said Rashmi Menon, entrepreneur in residence at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies.
The Hudson Valley in upstate New York has for two decades beckoned filmmakers looking for bucolic settings. They used old towns, abandoned warehouses, office parks and rustic locales to produce some 500 movies, and in the process pump more than $250 million into the local economy.
This year, film production in the area was on the rise, and additional studio space was planned. But since the pandemic lockdown, work has ground to a halt.
“Things aren’t as they were, and they may never again be the same,” said Laurent Rejto, founder and director of the Hudson Valley Film Commission, a nonprofit organization based in the town of Woodstock that helps producers find locations, housing and crews.
Mary Stuart Masterson, the actress and founder of Upriver Studios, hoped to turn 104,000 square feet of a light-industrial complex in Saugerties, N.Y., into a state-of-the art film studio. But with the coronavirus pandemic, the rented space remains as it was, with the building conversion delayed and productions indefinitely paused.
“The timing is, who knows?” said Ms. Masterson, who remains optimistic that “there is a tomorrow.”
Catch up: Here’s what else is happening.
Urban Outfitters, which also owns Anthropologie and Free People, reported a 32 percent drop in net sales to $588 million in the first quarter and a net loss of $138 million, a decline that comes as apparel retailers continue to struggle with temporary store closures brought on by the pandemic. The retailer said on an earnings call that it was negotiating with landlords on lease terms and cost reductions.
Reporting was contributed by Ben Casselman, Jim Tankersley, Niraj Chokshi, Stanley Reed, Carlos Tejada, Cade Metz, David McCabe, Erin Griffith, Jack Ewing, Jason Karaian, Amy Haimerl, Eugene L. Meyer, Mohammed Hadi, Jeanna Smialek and Sapna Maheshwari.