More than 38 million jobs have been lost in the U.S. over a course of nine weeks since the coronavirus outbreak hit the country hard in mid-March.
That’s 38.6 million lost jobs, to be exact, with an undetermined amount not likely to return. In the most recent jobs report for the week ended May 16, 2.4 million people filed initial jobless claims for unemployment benefits. Although 2.4 million represents the lowest in new weekly filings since mid-March, it’s hardly a stat to cheer about, and more first-time filings are expected in the weeks to come.
“At any other time in the past 50 years, news that 2.4 million Americans filed for unemployment insurance in a single week would be a horrifying development. But in March and April, we saw weekly figures that at times crested above six million, so [the] news that jobless claims fell to 2.438 million after 2.687 million [on an adjusted basis] last week is good news,” Tim Quinlan, Wells Fargo Securities’ senior economist, said. And when 2.4 million is considered good, “you know things are bad,” the economist said.
The jobless claims report is a closely-tracked measure of the health of the U.S. economy because the claims data is considered a hard number, but Quinlan said the circumstances for this particular cycle of reports might make the report less reliable. Media reports about website outages, long wait-times and phone calls going unanswered as local offices have been unprepared to handle the number of claims have opened the possibility that the numbers may be higher than actually reported. But there’s also no clarity yet on how many of those filing are joining the ranks of the unemployed just on a temporary basis.
Nonessential retailers, including those in the fashion sector, temporarily shut down stores in mid-March as state and local governments mandated shelter-in-place rules to curtail the spread of the coronavirus, or COVID-19, outbreak. Most stores remained shut for more than two months, resulting in layoffs of retail store associates. Since the end of April, many retailers–from off-mall specialty chains like Chico’s FAS to big box plays like Five Below, and even Simon Property Group, the large mall operator–have started moving toward reopening locations where they can, in line with the requirements of local authorities.
And with more malls and shopping centers reopening as restrictions ease, other specialty retail chains like American Eagle Outfitters and Clark’s will start their reopening process. Tapestry Inc., which owns the Coach, Kate Spade and Stuart Weitzman brands, has already opened 300 stores, with many offering curbside or store pickup service. Macy’s Inc. CEO Jeff Gennette said Thursday the department store retailer will have 270 doors open in their full formats in time for the Memorial Day weekend, with additional stores open for curbside delivery only. Capri Holdings Ltd. earlier this month sent an e-mail to its Michael Kors customers noting that it will reopen its doors on a store-by-store basis based on guidance from the Centers for Disease Control and Prevention and local governmental authorities.
For stores that are reopening, customers can expect to see new procedures including limited store capacity to reduce density, increased cleaning and sanitizing procedures, inclusion of hand sanitizers throughout the stores for customers and staff, and closed fitting rooms during the early stages.
As stores reopen, the big question for retail remains how will the consumer respond, and this Memorial Day weekend could provide some hints on the consumer mindset. On Friday, Gennette said stores that have reopened have seen a positive trend as consumers are heading out and shopping. Still, even as the trend has been better than what Macy’s executives were expecting, chief financial officer Paula Price pointed out that sales likely won’t reach normalized trajectories until deep into 2021 or even 2022.
Retailers currently reporting first quarter earnings results, and even fashion brands like Burberry, are not providing guidance for upcoming quarters because of the uncertainty connected to the pandemic.
There are still public health concerns over whether reopenings across the country might result in the need to roll back restrictions if infections start to rise. And even if things stabilize over the summer to a new normal, there’s talk by epidemiologists–although still speculative–about a possible second wave this fall and winter.
All those unknowns don’t necessarily mean the U.S. economy will be in the dumps for years to come.
If consumers become comfortable with the new normal and start to see businesses reopen, that should create some much needed consumer confidence to keep the economy on a stable restart, particularly as furloughed employees start to move off the unemployment line.