This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.
Better but Still Really, Really Bad
Economies in Japan, the eurozone and U.K. remain mired in severe economic downturns. Surveys of purchasing managers this month found activity across the manufacturing and service sectors contracted for the third straight month, reflecting fallout from the coronavirus pandemic. Gross domestic product is expected to decline at a record-breaking pace in parts of Asia, Europe and the U.S. during the second quarter, though the purchasing manager indexes offered hope the worst is past. “The survey data at least brought reassuring signs that the downturn likely bottomed out in April,” IHS Markit economist Chris Williamson said of the eurozone survey. “The rise in the PMI adds to expectations that the downturn should continue to moderate as lockdown restrictions are further lifted heading into the summer.”
U.S. survey data is out at 9:45 a.m. ET today.
WHAT TO WATCH TODAY
U.S. jobless claims for the week ended May 16 are expected to fall to 2.4 million from 2.981 million a week earlier. (8:30 a.m. ET)
The Philadelphia Fed’s manufacturing survey for May is expected to rise to minus-40 from minus-56.6 a month earlier. (8:30 a.m. ET)
IHS Markit’s preliminary U.S. manufacturing index for May is expected to rise to 39 from 36.1 at the end of April. The services index is expected to inch up to 30 from 26.7. (9:45 a.m. ET)
U.S. existing-home sales for April are expected to fall to an annual pace of 4.24 million from 5.27 million a month earlier. (10 a.m. ET)
The Conference Board’s leading economic index for April is expected to rise to minus-5.0% from minus-6.7% a month earlier. (10 a.m. ET)
Federal Reserve: New York’s John Williams speaks at 10 a.m. ET, Vice Chairman Richard Clarida speaks on the U.S. economic outlook and monetary policy at 1 p.m. ET, and Chairman Jerome Powell gives opening remarks and governor Lael Brainard moderates a panel on Covid-19 during an online Fed Listens event at 2:30 p.m. ET.
Japan’s consumer-price index for April is out at 7:30 p.m. ET and the Bank of Japan releases a policy statement at 11 p.m. ET.
All 50 U.S. states have now taken steps to reopen. On Wednesday, Connecticut became one of the last to loosen restrictions. But large parts of states, including major metropolitan areas, are still largely shut. In most places, the reopenings are happening in phases. Absent mandated federal guidelines, local leaders looking to reopen have weighed the potential costs to the economy and public health, relying on sources including virus data, task forces, public-health leaders and their own constituencies, Talal Ansari, Betsy McKay and Jennifer Calfas report.
The global tally of coronavirus infections passed five million on Thursday.
The weekly unemployment claims report, due out today, is expected to show that millions of workers filed applications for unemployment insurance again last week. Those national numbers omit a substantial slice of the workforce. Hundreds of thousands of self-employed and gig-economy workers don’t appear in the overall weekly claims number, Sarah Chaney and Kate King report.
Red Light, Green Light
Ford Motor stopped assembly lines in Chicago and Michigan on Wednesday after workers tested positive for Covid-19, the latest sign of the risks to companies and their employees as they attempt to resume work. The closures come after Detroit’s auto makers on Monday began restarting their U.S. factories, which were idled around March 20 as the coronavirus pandemic took hold. The companies have spent several weeks preparing measures to ensure a safe work environment, including temperature checks, plastic barriers between work stations and even electronic bracelets that beep if an employee violates social-distancing rules, Ben Foldy and Mike Colias report.
Millions of people are behind on their credit-card and auto-loan payments. Lenders in April had nearly 15 million credit cards in “financial hardship” programs, such as deferral programs that let borrowers temporarily stop making payments, according to estimates by credit-reporting firm TransUnion. That accounts for about 3% of the credit-card accounts the company tracks. Nearly three million auto loans were in these hardship programs, accounting for about 3.5% of those tracked. The numbers have surged from a year ago, when 0.03% of credit cards and about 0.5% of auto loans were in financial-hardship programs, AnnaMaria Andriotis reports.
Nearly half of adults live in households that have lost income in the two months since the coronavirus pandemic led to a nationwide economic shutdown and more than a third expect to lose income over the next four weeks, the Census Bureau said in a new report.
Staging a Comeback
Chinese leader Xi Jinping is racing to revive a battered economy as he tries to project a united Communist Party and quash dissent against his authority. An annual legislative conclave will bring thousands of lawmakers and political advisers to Beijing this week and give Mr. Xi an opportunity to lay out his economic goals and pivot back to sidelined priorities through the staging of China’s first major political assembly since the Covid-19 pandemic started. China’s economy has been scarred by mass quarantines and other restrictions that have largely contained the domestic contagion while crippling consumption and stalling supply chains, Chun Han Wong reports.
There’s a new coronavirus outbreak in China. Dozens of new cases around a northeastern city have prompted authorities to lock down the area and replace some officials.
World Bank Names Chief Economist
The World Bank has a new chief economist. Carmen Reinhart, a Harvard professor whose work has focused on financial crises and globalization, steps into the role as the international lender tries to cushion developing countries from the latest meltdown. Ms. Reinhart has advocated a temporary debt standstill for developing nations.
In her own words: “Not since the 1930s have advanced and emerging economies experienced the combination of a breakdown in global trade, depressed global commodity prices, and a synchronous economic downturn. … Clearly, this is a ‘whatever-it-takes’ moment for large-scale, outside-the-box fiscal and monetary policies,” Ms. Reinhart wrote in March at Project Syndicate.
WHAT ELSE WE’RE READING
The World Bank’s top economic post hasn’t been without controversy. Paul Romer resigned in 2018 after criticizing the bank’s economic research. Now at New York University, Mr. Romer still has strong feelings about the matter. “It should just outsource its research. It shouldn’t try and be a research organization, and it should just be transparent about what it can be good at and is good at,” he said in a recent interview.
SIGN UP FOR OUR CALENDAR
Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.