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Lenders prepare for a rocky start to the small-business loan program.
A $349 billion relief program to help small businesses cover their payroll costs for up to eight weeks will be “up and running tomorrow,” Treasury Secretary Steven Mnuchin said at the White House briefing on Thursday.
But banks and other lenders that are expected to make the loans warned that the relief effort, known as the paycheck protection program, was going to have a rocky start. Late on Thursday, they were still waiting for critical technical guidance about how to make the loans, and pushing back on terms they warned were onerous.
Brock Blake, the chief executive of Lendio, a marketplace that connects borrowers and lenders, tweeted: “Wow. What a mess!”
The lenders appear to have won one concession. Mr. Mnuchin said the interest rates paid by borrowers on the loans would be increased to 1 percent from 0.5 percent after banks protested that they would lose money servicing the loans unless the rate was raised.
The banks were still waiting, however, for guidance about how to underwrite the loans and how the government would handle a provision promising forgiveness for businesses that used the money to retain or rehire workers.
Mr. Mnuchin said borrowers would be able to apply for the loans and receive them quickly: “You get the money, you get it the same day.”
But industry executives said there was virtually no chance of that happening on Friday. Even as Mr. Mnuchin was speaking, lenders still had “nothing” in the way of guidance on critical loan issues, said Tony Wilkinson, the chief executive of the National Association of Government Guaranteed Lenders, an industry trade group.
Chase updated its website on Thursday night to say it was still awaiting information on the program and “as a result, Chase will most likely not be able to start accepting applications on Friday, April 3rd, as we had hoped.”
Mr. Mnuchin also said that his agency and the Small Business Administration had “brought in a lot of external resources” for the program. Jovita Carranza, the small-business administrator, said they were working with partners from the government and the private sector to “make our systems as robust as possible to meet the needs.”
Neither official named any companies involved in the effort. But they may draw on the assistance of major firms in cloud computing and financial services in distributing the loans, which are meant to help shuttered businesses make payroll.
Oil prices surge after Trump tweets about production cuts.
Oil prices surged, setting off a rally in shares of energy companies, after President Trump said on Thursday that he expected that Saudi Arabia and Russia would substantially cut their oil production to halt the collapse of prices.
Mr. Trump said in a tweet that he had spoken with Crown Prince Mohammed bin Salman, who had spoken with President Vladimir V. Putin. “I expect & hope that they will be cutting back approximately 10 million barrels,” he said. That figure represents about 10 percent of normal global consumption. The president later said the cut could be as much as 15 million barrels.
Saudi Arabia called on Thursday for an urgent meeting of the Organization of the Petroleum Exporting Countries and other oil-producing countries with the “aim of reaching a fair agreement to restore” balance in the oil markets. The Saudis said in a statement that they were acting to support the global economy and in “appreciation” of Mr. Trump’s request.
The Kremlin denied that Mr. Putin had spoken to the Saudi crown prince, as Mr. Trump had said in his Twitter message. “No, there was no conversation,” Dmitri S. Peskov, spokesman for Mr. Putin, told the Interfax news agency.
Still, crude oil futures, which had already been climbing on Thursday, surged and shares of oil and gas companies rallied. West Texas Intermediate, the U.S. crude benchmark, rose about 25 percent, and Occidental Petroleum was the best performing stock in the S&P 500, with a gain of about 19 percent. Apache rose nearly 17 percent, and Halliburton gained more than 13 percent.
The rally bolstered the stock market, with the S&P 500 ending the day up more than 2 percent.
Oil prices had been hammered as the coronavirus pandemic all but eliminated travel and damped demand for energy. A price war that broke out between Saudi Arabia and Russia last month intensified the decline. After the countries failed to reach a deal on production cuts, both instead increased output in an effort to gain market share.
The combination of slumping demand and the contest between two of the world’s largest oil producers had pushed crude oil prices down by 55 percent in March alone, wreaking havoc on the energy industry, with oil companies slashing budgets, and refineries cutting production of gasoline, diesel and jet fuel.
The possibility of some relief to the industry was also welcomed by stock investors looking for some good news. Earlier on Thursday, a report on jobless claims showed that 6.6 million Americans filed for unemployment benefits last week in the latest sign of the economic damage wrought by the coronavirus pandemic.
Businesses dependent on consumer spending were battered as a result. Retailers ranging from Gap to Walgreens Boots Alliance fell. Live Nation Entertainment, which produces concerts and sells tickets to events, was one of the worst-performing stocks in the S&P 500, after falling about 13 percent. Kohl’s fell about 10 percent.
6.6 million more people joined the U.S. unemployment rolls last week.
More than 6.6 million people filed new claims for unemployment benefits last week, the Labor Department said Thursday, setting a grim record for the second straight week.
The latest claims brought the two-week total to nearly 10 million.
The speed and scale of the job losses is without precedent. Until last month, the worst week for unemployment filings was 695,000 in 1982.
“What usually takes months or quarters to happen in a recession is happening in a matter of weeks,” said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch.
A month ago, most forecasters still thought the United States could avoid a recession. Today, with the pandemic shuttering businesses and forcing vast layoffs, many economists are expecting a decline in gross domestic product that rivals the worst periods of the Great Depression.
The Treasury Department hires investment banks to help with bailout programs.
Treasury Secretary Steven Mnuchin said he has tapped three Wall Street investment banking firms to advise the government on its bailout of the airline industry and other companies that are critical to national security.
As part of the economic relief package passed by Congress last week, Mr. Mnuchin has allocated more than $40 billion in money to rescue the airlines and other companies that are important for national security. The government will take equity stakes or other forms of compensation in exchange for propping up the businesses.
At a news conference on Thursday, Mr. Mnuchin said he picked PJT Partners, Moelis and Perella Weinberg Partners to serve as outside advisers to the effort.
PJT will be focused on the airlines, Moelis will focus on cargo carriers and Perella Weinberg will concentrate on other companies, such as Boeing. Mr. Mnuchin said that the firms would be charging the rate they use for work for charities, and the contracts would be made public.
“No big fees to bankers,” Mr. Mnuchin said. The Treasury has also selected three law firms to be part of the process. Mr. Mnuchin did not disclose their names.
Retailers make contingency plans as shutdowns continue.
As the coronavirus pandemic worsens and more Americans are told to stay home to avoid spreading the virus, retailers are responding by extending store closings and providing protection to workers in stores that remain open.
Lululemon said on Thursday that its stores in North America and other countries would remain closed until it was safe to reopen and that it would keep employees on the payroll through June 1, even if the stores remain shuttered.
The company’s senior leaders will take a 20 percent salary cut for three months, and its board will forgo a cash retainer, resources that will go toward a fund for Lululemon employees “facing Covid-19 related hardships.”
The athleisure retailer, which recently hit $4 billion in annual sales, will continue to sell its goods online.
Bed Bath & Beyond said that it would extend its temporary store closures in the United States and Canada until “at least” May 2. Its Buy Buy Baby and Harmon stores continue to operate based on state and local regulations.
The chain said it would furlough most store associates and “a portion” of corporate associates until at least May 2. Bed Bath & Beyond said staff affected by its announcement would receive pay and benefits through April 18.
And Target said on Thursday that it would supply face masks and gloves to its more than 350,000 workers in stores and distribution centers, following a similar announcement by Walmart this week. The chain said that starting on Saturday, it would also monitor and potentially limit customer traffic in stores to promote social distancing. Target said that it had already put up signs to promote social distancing, and added plexiglass partitions at registers.
Unemployment could remain as high as 9 percent through 2021, the C.B.O. says.
The Congressional Budget Office said on Thursday that it expected unemployment to top 10 percent for the second quarter of 2020 and the economy to contract by 7 percent as the coronavirus takes a toll on economic activity in the United States.
In a blog post on Thursday, the director of the budget office, Phillip Swagel, wrote the decline “could be much larger” and that the virus had made any economic forecasts highly uncertain.
Mr. Swagel said the unemployment rate could have reached 12 percent if not for the expected effects of the $2.2 trillion economic rescue package that President Trump signed last week.
More ominously, the office does not expect a quick return to rapid economic growth later this year. Instead, Mr. Swagel wrote that its analysts “expected the effects of job losses and business closures to be felt for some time” with the unemployment rate remaining at 9 percent by the end of 2021.
Disney will furlough its nonessential employees.
Disney, the world’s largest entertainment company, with 227,000 employees worldwide, said on Thursday that it would furlough nonessential workers across its businesses starting April 19, making them eligible for compensation through the government stimulus. A Disney spokeswoman declined to say how many employees could be affected.
Furloughed employees will continue to receive full health care benefits. Disney will cover premiums.
Disney has become the entertainment industry’s biggest coronavirus casualty. With its biggest division (theme parks and consumer products) essentially closed, its movie and TV studios idled, its ESPN operation with no live sports to broadcast, and a new chief executive (Bob Chapek) running things on a day-to-day basis, Disney’s market capitalization has fallen by more than $50 billion over the last month.
Most of Disney’s workers are employed at theme parks. Walt Disney World in Florida ranks as the largest single-site employer in the United States with roughly 75,000 employees. Disneyland in California employs about 24,000 people. Disney closed its domestic parks the weekend of March 13. Disney said last week that it would continue to pay its parks employees until April 18.
Catch up: Here’s what else is going on.
Delta Air Lines told employees that it would allow flight attendants, baggage handlers, gate agents and other so-called front-line employees who were concerned about the coronavirus to stay home and still get paid. Any employee concerned for their safety would be allowed to take voluntary leave and continue to be paid “in some form,” according to an internal memo to managers that was viewed by The New York Times.
A partnership between Ben Silbermann, chief executive of technology company Pinterest, and research groups at institutions and universities including Stanford University and University of Pennsylvania, introduced a new app called How We Feel. The app allows people to report their symptoms to scientists, doctors and public health professionals to aid in research and tracking of the coronavirus.
Governors and mayors across the country are answering questions about the virus on Twitter, using the hashtags #AsktheGov and #AsktheMayor. Governors from Rhode Island, California, Washington, Illinois and 10 other states took questions on Thursday, while mayors from at least nine cities said they would answer questions on Friday.
Amazon said on Thursday that it was restricting the sale of N95 masks and large bottles of hand sanitizer to hospitals and government agencies to ease the supply shortages of medical supplies from the coronavirus. It said small-volume bottles of hand sanitizer and disinfectant wipes for personal use would remain available on the site.
Reporting was contributed by Brooks Barnes, Stacy Cowley, David McCabe, Kenneth Vogel, Alan Rappeport, Sapna Maheshwari, Nicole Sperling, Niraj Chokshi, Jim Tankersley, Peter Eavis, Stanley Reed, Ben Casselman, Patricia Cohen, Clifford Krauss, Andrew E. Kramer, Mary Williams Walsh, Keith Bradsher, Neal E. Boudette, Kate Conger, Daisuke Wakabayashi, Stefanos Chen, Keith Collins, David Yaffe-Bellany, Mohammed Hadi, Carlos Tejada and Daniel Victor.