Coronavirus job losses in the United States could hit 47 million, with unemployment at more than 30 per cent, according to stark new estim...
Coronavirus job losses in the United States could hit 47 million, with unemployment at more than 30 per cent, according to stark new estimates by a Federal Reserve.
The shocking prediction by the Fed's St. Louis district project came as Macy's announced it will furlough a majority of its 130,000 workers.
The retail giant on Monday said it is transitioning to an 'absolute minimum workforce' needed to maintain basic operations.
It says it will temporarily stop paying tens of thousands of employees who were thrown out of work when the chain closed its stores in response to collapsing sales during the pandemic.
St. Louis Fed economist Miguel Faria-e-Castro said of the unemployment estimates: 'These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.'
Online operations for the country's largest department store chain won't be hit as hard.
Employees who are enrolled in health benefits will continue to receive coverage with the company covering 100 per cent of the premium.
Unemployment in the United States hit a record high last week with 3.28million people - four times the previous record - making claims. Dow Jones say a further 2.65 million may join them this week.
The new estimates of 47 million unemployed do not account for the bailout bill signed by President Donald Trump last week, CNBC reports. It does also not account for those who leave the labor force.
People wait in line for help with unemployment benefits at the One-Stop Career Center in Las Vegas. A record-high number of people applied for unemployment benefits last week as layoffs engulfed the U.S in the face of a near-total economic shutdown caused by coronavirus
Macy's is furloughing most of its 130,000 workers beginning this week as its sales have collapsed because of the coronavirus pandemic. The New York flagship store is pictured
'We expect to bring colleagues back on a staggered basis as business resumes,' Macy's company said.
Macy's closed all of its stores this month, more than 500, as the coronavirus spread.
To survive, it has suspended its dividend, drawn down its line of credit, frozen hiring and spending, and cancelled orders. Macy's is now evaluating all financing options.
The retailer said in a statement Monday: '[The covid-19] outbreak continues to take a heavy toll on Macy's business.
'We have lost the majority of our sales due to the store closures.'
The company had already announced in February that it would close 125 stores, before the coronavirus outbreak.
Around 2,000 workers were let go at that point.
People gather at the entrance for the New York State Department of Labor offices in Brooklyn
Three million people filed unemployment claims between March 14 and March 21, according to a staggering report that was released by the Department of Labor on Thursday morning.
In the week ending March 14, the number of initial claims was 282,000 - meaning 3,001,000 new ones have been filed since then.
The previous high was 695,000 in October 1982. The report says service industries - specifically food and accommodation - are the hardest hit but that claims are also coming from the healthcare industry and from people who work in manufacturing, entertainment and arts.
Macy's is perhaps the most dramatic sign that even big name retailers are seeing their business evaporate and that the $2 trillion rescue package passed by Congress and signed by President Donald Trump last week may have come too late for some.
Media giant Gannett, which owns USA Today, the Arizona Republic and the Des Moines Register has also taken a hit, The Daily Beast reports. CEO Paul Bascobert asked workers to make a 'collective sacrifice'.
He added: 'Everyone will be touched by these changes in some form. For some it will be economic, for others it will mean covering the work of a colleague on furlough, for many it will be both.'
In Norfolk, Virginia 550 part-time city workers have been furloughed it was announced Monday.
America's oldest restaurant Delmonico's raises money for their laid-off employees
America's oldest restaurant Delmonico's is among eateries and bars across the country raising money on GoFundMe for their employees who have been laid off during the coronavirus lockdown.
New York City's 182-year-old restaurant, Delmonico's, shared news of their efforts to raise $200,000 for their employees over the weekend.
As of Monday morning, they have raised a little over $2,800 toward their goal.
New York City's 182-year-old restaurant, Delmonico's (pictured in April 2016), shared news of their efforts to raise $200,000 for their employees over the weekend
Delmonico's temporarily shut their doors and 'suspended all operations' as part of the lockdown on March 18. This image shows cooks preparing food at Delmonico's in 1902
'It is with much sadness that Delmonico's was forced to temporarily close our doors. As America's oldest restaurant, this is an extraordinary moment for us,' the Delmonico's team wrote on their GoFundMe page.
'During this time of uncertainty many of our guests, friends, and neighbors have asked what they can do to financially assist the Delmonico's staff impacted by this profound event.
'We have set up a Delmonico's Employee Relief Fund to support our coworkers. Any contributions during this difficult time means more to us than you will ever know,' the team added.
Delmonico's temporarily shut its doors and 'suspended all operations' as part of the lockdown on March 18.
New York restaurateurs like Matter House and Grovehouse have also set up GoFundMe accounts after they suspended all operations at their restaurants across the city.
Across the United States, restaurateurs are transforming operations to try to stay afloat.
The National Restaurant Association warns the outbreak could cost 5 million to 7 million jobs and hundreds of billions in losses and is pushing for a special federal relief package for restaurants.
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed..
Before the virus hit, unemployment in the US was at its lowest in 60 years and the economy was stronger than it had ever been.
Congress has put together a $2.2 trillion stimulus package which will give Americans increased unemployment benefits and one-time checks of $1,200 if they earn less than $95,000 to try to ease some of the strain.
Jobs vanish and pay is cut as retail giants suffer the effect of coronavirus
Nordstrom said last week it was furloughing a portion of its corporate staff. And shoe company Designer Brands Inc., which operates DSW Designer Shoe Warehouse, furloughed 80% of its workers, effective this past weekend.
Analysts expect more furloughs to come as retailers scramble to pay their employees from fast-dwindling cash reserves. Labor is the single biggest monthly fixed cost for retailers, according to investment research firm Cowen & Co.
The furlough of workers will have negative consequences for an economy in which the retail industry supports one out of four workers.
'This could push us further into a damaging recession that will last longer than the duration of the crisis,' said Neil Saunders, managing director of GlobalData Retail.
More than 190,000 stores, including J.C. Penney and Neiman Marcus, have temporarily closed, accounting for nearly 50% of the U.S. retail square footage, according to Saunders.
Discounters, grocers and wholesale clubs that sell essential items like groceries remain open, although they have their own challenges of keeping up with shoppers who continue to stockpile canned goods, paper towels and other staples.
According to a recent report by Cowen & Co, department stores have enough cash to make it to about five to eight months with their stores temporarily closed. Macy's, however, has enough for five months, Cowen said.
When announcing the temporary closures, most retailers said they would keep paying their workers but they were looking at a two-week timetable.
That moment has now passed and the furloughs have become increasingly necessary as the coronavirus rapidly spreads.
The big question is how much of these furloughs will lead to permanent layoffs.
Rent the Runway, a pioneer in fashion rental, confirmed earlier Monday, that it was laying off its retail store staff and said it may not be able to reopen its stores that temporarily shuttered earlier this month. Its online subscription service still continues to operate.
Swedish retailer H&M said earlier this month that it may be forced to permanently layoff some its employees after temporarily shuttering 3,441 of its 5,062 stores globally.
Coresight Research's Deborah Weinswig now forecasts a new record high of 15,000 stores will close this year, up from her original prediction of 8,000 — all because of the viral outbreak.
Analysts believe that already ailing stores with heavy debt loads like J.C. Penney, and J. Jill may have to dramatically close more stores or be pushed closer to bankruptcy.
Even before the pandemic, traditional retailers, particularly department stores and mall-based clothing stores, had been struggling to reinvent themselves as shoppers shift more of their purchases online and embrace experiences like cooking classes and subscription services.
Now, the pandemic has forced people to stay home and clamp down on spending for non-essential items like clothing.
The closed Macys store on March 18, 2020 in Hicksville, New York
Macy's said that there won't be as many furloughs in its online operations, which continue to operate.
Employees who are enrolled in health benefits will continue to receive coverage with the company covering 100% of the premium.
'We expect to bring colleagues back on a staggered basis as business resumes,' Macy's said.
To survive in the meantime, Macy's, like a slew of other retailers, have taken steps to preserve their cash.
Macy's has suspended its dividend, drawn down its line of credit, frozen hiring and spending, and cancelled orders. It said Monday it is now evaluating all financing options.