The daily business briefing: May 29, 2020
Another 2.1 million Americans file unemployment claims, Trump signs an executive order targeting social media, and more
2.1 million more Americans filed unemployment claims last week
The Labor Department reported Thursday that 2.1 million Americans made initial applications for unemployment benefits last week despite the gradual lifting of coronavirus lockdowns around the country. The new claims brought the total number of people who have lost work since the coronavirus crisis began in mid-March to 41 million. In a positive sign, the running total of those currently receiving benefits fell to 21 million last week from 25 million the week before. It was the first weekly drop since the crisis began, suggesting some businesses were starting to rehire. Still, the new jobless claims showed that the economy is struggling as the U.S. coronavirus death toll surpasses 100,000, more than the number of Americans killed in the Vietnam and Korean wars combined.
Trump signs executive order seeking regulations on social media
President Trump on Thursday signed an executive order seeking to chip away at regulations protecting social media companies from lawsuits over content posted on their platforms. Trump's announcement came two days after Twitter for the first time labeled two of his tweets "potentially misleading." Trump said the "unchecked power" of social media giants presents a dire threat to free speech, and he told federal agencies to review protections for companies such as Twitter and Facebook under a 1996 law shielding websites from lawsuits. Critics said Trump was overstepping his authority and threatening the First Amendment rights of private companies. "(Trump) is trying to steal for himself the power of the courts and Congress to rewrite decades of settled law," said Sen. Ron Wyden (D-Ore.).
Stocks fall as U.S.-China tensions escalate over Hong Kong
The Dow Jones Industrial Average gave back a gain of 210 points and closed down by 148 points or 0.6 percent on Tuesday after President Trump said he would hold a news conference about China on Friday. The S&P 500 and the Nasdaq fell by 0.2 percent and 0.6 percent, ending a two-day winning streak. Trump's announcement came after China's National People's Congress approved a proposal to impose a national security law the Trump administrations said would deprive Hong Kong of its autonomy, threatening the special trade status that has helped the former British colony remain a global financial hub since it was returned to Chinese rule in 1997. U.S. stock index futures fell early Friday ahead of the opening bell in a sign of caution due to the rising U.S.-China tensions.
Economy shrinks and the White House cancels updated forecast
The economy shrank at an annual rate of 5 percent in the first quarter, which ended with broad business shutdowns due to the coronavirus pandemic, the Commerce Department reported Thursday. The contraction was faster than expected. The White House has decided not to release an updated economic forecast for the year, an unusual step reflecting administration concerns about how deeply the pandemic has damaged the economy ahead of the November election. "It's a sign that the White House does not anticipate a major recovery in employment and growth prior to the election," said Joe Brusuelas, chief economist for the consultant RSM. President Trump has said the economy will rebound in late 2020 or in 2021.
30-year fixed-rate mortgage falls to record low
Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage fell to 3.15 percent, the lowest since the federally chartered mortgage investor started tracking rates in 1971. The rate came with an average 0.8 point (a point is an additional fee equal to 1 percent of the loan amount). The previous record low of 3.23 percent was set in April. Rates have fallen during the coronavirus crisis as the Federal Reserve dropped its target short-term interest rate to near zero and stepped up its purchases of financial assets to boost the economy. Investors also have played a part as they sought the safety of bonds during stock-market turmoil, increasing demand for bonds and driving down yields.