The daily business briefing: April 30, 2020

1. Economy contracts at 4.8 percent annual rate in 1st quarter

The U.S. economy contracted at an annualized rate of 4.8 percent in the first quarter of 2020 as businesses lost customers or shut down entirely because of the coronavirus pandemic. It was the first quarterly drop in six years, and the steepest since the Great Recession. The first quarter included two months with no coronavirus shutdowns, but the second quarter won't, so it is expected to be even worse. Some experts warn the economy could contract at a rate of more than 30 percent in the second three-month period of 2020. Data from the Labor Department recently showed that more than 26 million Americans have filed initial unemployment claims over five weeks, wiping out all of the job gains since the Great Recession.

The Associated Press The Washington Post

2. Fed says it will keep interest rates near zero

The Federal Reserve said at the close of a two-day policy meeting on Wednesday that it would hold its benchmark short-term interest rate near zero to help support the economy through the coronavirus crisis. The historically low federal funds rate has helped bring down credit card and mortgage rates, although consumers who don't have good credit can find it hard to borrow from jittery banks. The U.S. central bank also plans to expand the number of cities and counties eligible for its bond-buying program to help keep local and state governments afloat. "The most significant responsibility of the Fed now is to make sure that credit markets continue to function,” said Greg McBride, chief financial analyst at Bankrate.com. "Without functioning credit markets, there will be no economic recovery."

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CNBC

3. Mass workplace, rent strikes planned for May 1

Employees from major U.S. corporations are staging a mass strike on Friday, and asking customers to join in by boycotting their employers for failing to adequately protect frontline workers during the coronavirus crisis despite record profits. The protesters have chosen May 1, International Workers' Day, to walk out of their jobs at Amazon, Whole Foods, Instacart, Walmart, Target, FedEx, and Shipt to demand they be provided with paid leave, protective gear, and hazard pay. Other strikes planned for May 1 include student protests and rent strikes. "May Day is the day you don't go to work or buy things or pay rent," Vanessa Bain, a lead organizer of the Instacart walkout, told Vice. "To consumers, we're saying: 'Don't buy from these companies on May 1. Don't empower them with your dollars.'"

Vice News

4. Facebook, Microsoft soar after reporting strong revenue

Facebook and Microsoft shares surged in after-hours trading on Wednesday after the tech giants reported encouraging revenue despite the economic fallout from the coronavirus pandemic. Facebook's stock gained 10 percent after the social network reported that its advertising sales stabilized in April after a "significant" pullback in March due to the coronavirus crisis. Microsoft shares rose by 3.1 percent overnight after the software maker reported 15 percent quarterly sales growth thanks to the strength of its cloud computing business. Microsoft said the pandemic "had minimal net impact on the total company revenue" in the quarter that ended March 31, but warned deeper impact could be felt in future quarters. The tech gains helped lift U.S. stock index futures slightly higher several hours before Thursday's opening bell.

CNBC

5. Lyft to lay off 17 percent of staff

Lyft said in a regulatory filing Wednesday that it would lay off 982 people, about 17 percent of its staff, as the coronavirus crisis cuts sharply into on-demand customer rides. Another 288 employees will be furloughed. The company also will cut the pay of most employees by 10 percent, with executives facing up to 30 percent pay cuts. Lyft's thousands of drivers are not included in the moves, as the ride-hailing service considers them to be independent contractors. Rival Uber has benefited from its established and growing Uber Eats service during the crisis, and Lyft announced last week that it is launching a rival service, Essential Deliveries.

Ars Technica