The massive cuts have prompted some economists to predict the unemployed could top an eye-popping 40 million by mid-April, with deep economic consequences for workers struggling to make rent and mortgages amid public health isolation orders.
The rest of the economy isn’t doing much better. Oil prices sank to an 18-year low Monday from collapsing demand; Texas manufacturing activity and outlook plummeted to a record low; and a new forecast from IHS Markit estimates that “it will likely take two to three years for most economies to return to their pre-pandemic levels of output.”
“There isn’t much question that this is going to get even worse before it gets better,” said Julia Coronado, president of MacroPolicy Perspectives in New York. “The big question now is how quickly relief money can get to Americans and small businesses.”
Indeed, the tanking economy has ratcheted up the pressure on the Trump administration to turn the largest stimulus package in American history into immediate relief for businesses and workers. The Treasury Department, in particular, faces a staggering list of tasks as it tries to rapidly create massive new federal programs aimed at shielding Americans from the economic impact.
The congressional package signed into law by President Trump on Friday includes a massive increase in unemployment benefits and direct checks of $1,200 to more than 100 million American taxpayers. It also includes close to $400 billion in loans to small businesses, as well as more than $500 billion in a fund that can go to corporations, cities and states.
In the next few days, the Trump administration will need to quickly figure out the rules for delivering that stimulus money to thousands of companies and more than 150 million households.
“They have to make a triage decision about what’s going to get their attention first," said Ryan Ellis, a conservative tax lobbyist. "Because if you try to do everything at once, you’re going to do nothing at once.”
The layoffs and furloughs are tied to the massive drop-offs in sales that major corporations are weathering, as coronavirus-related shutdowns sweep the nation. Thousands of stores have temporarily closed as states and local governments issue stay-at-home orders for millions of Americans. On Monday, Virginia, Maryland and the District joined others barring Americans from leaving their homes for even longer periods of time, extending the economic crunch for even more companies. Retailers and regional media companies are getting hit particularly hard, as the coronavirus pandemic threatens companies that could never have prepared for such a deep, long downturn.
Gannett is furloughing employees at more than 100 newspapers across the country, including USA Today, the Des Moines Register and the Arizona Republic, because of a precipitous fall in advertising revenue. Workers who make more than $38,000 a year will be required take one week of unpaid leave in April, May and June, according to a memo obtained by The Washington Post from USA Today Network President Maribel Wadsworth. Other newspapers also have suffered, including the Tampa Bay Times, which on Monday announced furloughs and a reduction of its print newspaper to just twice a week.
At Macy’s, executives say they have taken significant steps to stem the financial fallout in recent weeks. The retail giant has canceled orders, frozen hiring and spending, and suspended dividend payouts to investors. It also has delayed bonuses and 401(k) matches for workers. Macy’s executives will take temporary pay cuts beginning in April, while Jeff Gennette, Macy’s chairman and chief executive, is forgoing pay until the crisis subsides.
The nation’s largest department store chain closed all 775 Macy’s, Bloomingdale’s and Blue Mercury stores on March 18, which basically leaves the company online sales. "We have lost the majority of our sales due to the store closures,” it said in a statement Monday.
“The floodgates are wide open,” said Mark Cohen, director of retail studies at Columbia Business School and the former chief executive of Sears Canada. “Now that the pipe dream of an Easter opening is over, companies are trying to figure out how to protect their ability to come out of this when it’s all over, whenever that might be.”
Macy’s said it will keep “the absolute minimum workforce” for streamlined operations, with a focus on its digital business, distribution centers and call centers. Furloughed employees will continue to receive health insurance at least through May. Macy’s said it expects to bring back employees “on a staggered basis as business resumes," though analysts say the pandemic is likely to result in permanent shifts in the way these company operate long term.
Gap and Kohl’s also announced Monday that they will furlough the majority of their U.S. employees this week as store closures stretch into April. The two retailers, which employ a combined 251,000 workers, said the measures are part of a broader reckoning. Kohl’s is cutting expenses by roughly $500 million, while Gap plans to lay off corporate employees and cut executive pay. Gap also owns Banana Republic and Old Navy brands.
Abigail Portis, who has been working at Banana Republic for almost two years, was furloughed by email Monday. The message from Gap’s corporate office said store workers will no longer be paid, and encouraged them to apply for unemployment benefits.
It was just the latest round of bad news for the 20-year-old, who two weeks ago was laid off from her other part-time job at a local clothing boutique in Tucson.
“This is like a double whammy for me,” said Portis who is looking forward to the $1,200 in federal help expected to come in April. “I don’t know what I’m going to do next. There’s a total job freeze here. Everything is shut down.”
Smaller companies are being affected, too: Shoe retailer Steve Madden on Monday said it will furlough a “significant” number of its employees and cut executive pay as part of a wide-ranging plan to cut costs.
Jacob Bogage contributed to this report.