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New US unemployment claims top 5 million

By SCOTT REEVES in New York | | Updated: 2020-04-16 23:45
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A driver wears a face mask and gloves as Uber and Lyft drivers with Rideshare Drivers United and the Transport Workers Union of America conduct a caravan protest outside the California Labor Commissioners office amidst the coronavirus pandemic on April 16, 2020 in Los Angeles, California. The drivers called for California to enforce the AB 5 law so that they may qualify for unemployment insurance as the spread of COVID-19 continues. Drivers also called for receiving back wages they say they are owed. [Photo/Agencies]

Efforts to curb the spread of the coronavirus with stay-at-home orders continue to rip through the US labor market as an additional 5.245 million Americans last week filed first-time jobless claims, the US Labor Department reported Thursday.

The latest unemployment filings boost the total to about 22 million, nearly erasing all the job gains made since the Great Recession sparked by the collapse of the subprime mortgage market in 2008.

"People have been asked to put their lives and livelihoods on hold, at significant economic and personal cost," Federal Reserve Chairman Jerome Powell said in a recent online discussion with the Brookings Institution. "We are moving with alarming speed from 50-year lows in unemployment to what will likely be very high, although temporary, levels.''

Prior to the coronavirus pandemic, the US unemployment rate was 3.5 percent. It's now about 15 percent.

However, jobless claims for the week ended April 11 dropped from the previous two weeks. The damage from the coronavirus is still severe and it will take several more weeks to determine if job losses have peaked.

US stock opened tepidly Thursday, but in positive territory.

However, in early trading, the Dow Jones Industrial Average lost 75.97 points, or 0.32 percent, to 23,428.86. The S&P 500 gained 0.33 percent. The Nasdaq Composite gained 0.90 percent.

Oil futures, a proxy for future economic activity, rose.

West Texas Intermediate crude, the gauge for US prices, rose 1.21 percent to $20.12 a barrel. Brent crude, the worldwide benchmark, rose 1.99 percent to $28.24.

Yield on the 10-year US Treasury bond dipped 0.025 percent.

The US Labor Department said 6.6 million people filed to receive unemployment benefits for the week ended April 4. That followed a revised 6.9 million the prior week – a record – and 3.3 million the week before, boosting the total to nearly 17 million.

Unemployed workers in 29 states receive benefits of $600 a week on top of state payment and some receive unemployment insurance under the federal stimulus package President Donald Trump signed into law last month. The enhanced benefits could keep claims at high levels for an extended period.

State-ordered stay-at-home orders hit the leisure, entertainment and retail industries hard as restaurants, stores and movie theaters were closed to curb the spread of the coronavirus.

The coronavirus outbreak may be peaking in some hotspots. Governors are considering how to re-start the economy in their states when it's safe.

"I do think we're going to see exemptions for shelter-in-place as we move to the end of the month, and then some openings in May," Mark Zandi, chief economist at Moody's Analytics, told CNBC. "I think we're going to get close to the apex. This week may be the apex."

But the economic damage is profound.

J.C. Penney, operator of about 865 department stores in 49 states, is holding talks with lenders to restructure debt or to secure financing for a possible bankruptcy filing, The Wall Street Journal reported.

The company's stock closed Wednesday at $0.23 a share and is in danger of being delisted by the New York Stock Exchange. The 52-week range is $0.20 to $1.37 a share. All stores are now closed as part of the effort to combat the coronavirus.

Other retail chains, including Nieman Marcus Group and J. Crew are negotiating with creditors, the Journal said, citing "people familiar with the matter".

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