Jobless Claims Show Economy Struggling to Regain Its Footing: Live Updates
Jobless Claims Show Economy Struggling to Regain Its Footing: Live Updates
New claims for unemployment insurance remained elevated last week amid a surge in coronavirus cases, the government reported Thursday.
More than 743,000 workers filed new claims for state benefits last week, before adjusting for seasonal factors, an increase of 18,000 from the week before. With seasonal swings factored in, the latest figure was 742,000, also an increase from the previous week, the Labor Department said.
Claims had drifted lower in recent weeksbut remain far above the levels reached in previous recessions. What’s more, the coronavirus resurgence in much of the country in recent weeks has caused new restrictions on business activity, leading to more job cuts.
“The economy has made significant progress in healing from the Covid shock, but there is still more work to be done, and layoffs are persisting,” said Michelle Meyer, head of U.S. economics at Bank of America.
New claims for Pandemic Unemployment Assistance, a federal program aimed at self-employed workers and independent contractors, totaled 320,000.
News that competing vaccines from two companies had shown strong evidence of efficacy against the virus has led the stock market higher and fueled hopes that the virus could be brought under control next year. That would clear the way for renewed growth, many experts say.
“We’re potentially entering a period of softness, but the medium term is more promising,” Ms. Meyer said.
On Monday, President-elect Joseph R. Biden Jr. called on the two parties to “come together” and enact a stimulus package along the lines of a $3 trillion proposal passed by the Democratic-controlled House.
For all the body blows of the last year, consumer demand remains relatively healthy, according to Ms. Meyer. “We are still seeing incredible strength in housing, and auto sales remain strong,” she said. “Consumers are still spending on bigger-ticket items.”
It is shaping up to be a grim holiday season for 12 million unemployed workers in the United States who will see their jobless benefits disappear by the end of the year, a development that also threatens the larger economy.
Two federal programs created by Congress in March under the CARES Act are set to expire unless Congress acts to extend them. But a new aid package will most likely have to wait until Joseph R. Biden Jr. becomes president on Jan. 20.
And there are no guarantees it will happen even then: If Republicans retain control of the Senate after two runoff elections in Georgia in early January, the odds of passing a major stimulus package will lengthen.
A new study by the progressive Century Foundation found that 7.3 million workers will lose their benefits with the end of Pandemic Unemployment Assistance, which provides coverage for gig workers, the self-employed and independent contractors. An additional 4.6 million will be cut off from Pandemic Emergency Unemployment Compensation, which kicks in when state employment benefits run out.
The programs represent “the last lifelines available to millions of Americans in desperate need,” said Andrew Stettner, a senior fellow with the Century Foundation and co-author of the study with Elizabeth Pancotti. “It will be a crippling end to one of our darkest years.”
A separate study by the California Policy Lab, a research group working with state and local governments, reported that nearly 45 percent of California workers had filed for unemployment benefits since March, with 83 percent of the Black labor force applying during that period. Many of those workers are back on the job, but the end of the two programs will affect 750,000 Californians.
The cutoff will also reduce spending by beneficiaries nationwide. Many economists predict that without renewed aid, economic growth could falter next year.
Macy’s reported a 23 percent drop in quarterly sales on Thursday, as the pandemic continued to keep many shoppers away from stores and reduced spending on categories like apparel, but the retailer struck an optimistic note after seeing net sales decline by 40 percent in the first half of the year.
Net sales for the third quarter declined to about $4 billion, from $5.2 billion in the same quarter a year ago, Macy’s said in a news release. The retailer swung to a net loss of $91 million, from a $2 million profit in the third quarter of 2019.
Department stores have been among the hardest-hit retailers this year, as many customers avoided shopping in person and sought less apparel amid remote work and postponed events.
Macy’s, which also owns Bloomingdale’s and Bluemercury, said digital sales grew in the quarter, which ended Oct. 31. But the company was still grappling with a “gradual steady recovery” at stores across all three of its brands, Jeff Gennette, chief executive of Macy’s, said on an earnings call.
“The stores that are performing the worst are the ones that are in our downtown locations,” he said. “So when you look at Herald Square, 59th Street at Bloomingdale’s, State Street, Union Square — they’re our most challenged.” That has been driven by a lack of office workers and tourists, he said.
Macy’s said it would “continue to watch the resurgence of Covid-19 carefully” and the possibility of temporary closures. Even if stores close, the company will be able to get merchandise to customers through regular online sales, along with curbside pickup and same-day delivery, Mr. Gennette said.
Turkey’s central bank on Thursday raised its key interest rate to 15 percent from 10.25 percent, a major shift in policy intended to quash inflation and prevent further devaluation of the lira.
The rate increase under a newly appointed central bank governor, which was at the high end of expectations, is a sign that the Turkish president, Recep Tayyip Erdogan, may be willing to at least tolerate measures that economists and members of Turkey’s business community have long said were necessary to stabilize the economy.
Even before the pandemic, economists worried that a combination of double-digit inflation, a sinking currency and a credit bubble made Turkey prone to a financial crisis that could spread well beyond its borders.
Fears about Turkey’s financial stability increased after the lira hit a new low of 8.5 to the dollar in early November. As recently as January it took only six lira to buy a dollar.
Mr. Erdogan has long insisted, against all evidence, that higher rates cause inflation — a view he expressed as recently as Wednesday. But he had also signaled this month that he recognized the threat to his power from a sinking lira, which has raised the price of imported food and fuel and eroded living standards of ordinary Turks.
Earlier this month Mr. Erdogan appointed a new central bank chief, Naci Agbal, a former finance minister who is seen as a capable technocrat. In addition, the Turkish finance minister, Berat Albayrak, who is also Mr. Erdogan’s son-in-law, resigned after being blamed for the country’s economic collapse.
The currency rallied after the personnel moves and gained further on Thursday, trading at 7.6 to the dollar.
Mr. Erdogan created uncertainty, however, after he told an audience of Turkish business people on Wednesday that he was still opposed to higher interest rates, the well-tested remedy for high inflation. The official annual inflation rate was almost 12 percent in October, but some economists think the true rate is much higher. “The cost of high interest rates is clear,’’ Mr. Erdogan told the business group.
The decision by the central bank on Thursday was a test of Mr. Agbal’s independence and his willingness to raise rates. The central bank declared its resolve to get prices under control, saying in a statement that “the tightness of monetary policy will be decisively sustained until a permanent fall in inflation is achieved.”
Free flowing credit has helped fuel Turkey’s rapid economic growth in the last two decades. But the steady decline of the lira scared away foreign investors and contributed to unemployment.
Higher interest rates will slow down the economy. But Hakan Bulgurlu, the chief executive of Arcelik, a maker of home appliances based in Istanbul, said Turks were ready to pay that price. “Turkey will always be a strong market,” Mr. Bulgurlu said in an interview ahead of the central bank decision. “All it needs is some stability and some predictability.”
The manager of the Tyson pork plant, in Waterloo, Iowa, that was the site of a deadly coronavirus outbreak this spring, allegedly organized a betting pool among supervisors to wager on how many of the employees would get sick, according to a lawsuit filed by the family of one of workers who died.
The lawsuit, filed by the son of Isidro Fernandez, a meatpacking worker who died in late April, said the betting pool was a “cash buy-in, winner take-all.”
Tyson declined to comment on the specific allegations in the lawsuit, but a spokesman said in an email that the company had introduced multiple steps to protect its workers in Waterloo. Those included taking employee temperatures, relaxing attendance policies and erecting barriers on the production floor to create social distance.
At the time of Mr. Fernandez’s death, the Tyson plant was a virus hot spot, though the plant’s leadership initially denied that there was an outbreak and rebuffed efforts by local officials to close the facility, according to the lawsuit filed in federal court in Iowa.
The workers were told to continue working despite showing symptoms of being sick. One worker was told to stay on the production line even after he vomited, the lawsuit said.
In all, about 1,000 workers — about a third of the work force — tested positive for the virus. Some of the issues at the Waterloo plant were detailed in a New York Times article in May. But the allegation about the betting pool among supervisors and managers was revealed this week after lawyers for Mr. Fernandez’s family amended their original lawsuit. The allegation of the betting pool was first reported by The Iowa Capital Dispatch.
“We’re saddened by the loss of any Tyson team member and sympathize with their families,” the company said in a statement. “Our top priority is the health and safety of our workers.”
Wall Street was facing its third consecutive daily decline on Thursday, following global markets lower as the surge in coronavirus cases in the United States led to more restrictions, including the closure of New York’s public schools.
The S&P 500 fell slightly in early trading, after a 1.2 percent drop on Wednesday. The Stoxx Europe 600 index dropped 0.6 percent, led lower by shares in energy companies; the Nikkei 225 index in Japan slipped 0.4 percent, and the Hang Seng in Hong Kong fell 0.7 percent.
Local curbs on businesses and other economic activity, including curfews in Maryland and Los Angeles County, are being instituted in response to the growing number of virus cases. Though effective vaccines are in development, their rollout will come after what looks to be a bleak winter, with the prospects of more fiscal stimulus in doubt. There have been 250,000 coronavirus-related deaths in the United States.
The additional restrictions are expected to hamper the economic recovery that took place over the summer. The 37 large countries that make up the Organization for Economic Cooperation and Development, which represent most of the world’s economic activity, saw 9 percent growth in the three months that ended in September, the group said, but that was still 4.3 percent below its precrisis level.
In the United States, the Labor Department said new claims for unemployment insurance remained elevated last week amid a surge in coronavirus cases. More than 743,000 workers filed new claims for state benefits last week, before adjusting for seasonal factors, an increase of 18,000 from the week before.
The low-cost airline Norwegian Air filed for bankruptcy protection, one of the largest carriers to seek to reorganize since the pandemic crushed air travel. Flights will continue as it attempts to reduce its debts, the company said. Its shares dropped 13 percent.
After two days of conversations with top newsmakers at the DealBook Online Summit this week, these are the moments that will stick with me.
1. Dr. Anthony Fauci said that at least 75 percent of society would need to take the Covid-19 vaccine, even if it had 95 percent efficacy, before it was safe to stop wearing masks and social distancing. That’s a very high threshold considering how polarized things are in the United States over basic steps like masking, let alone getting a shot.
2. Bill Gates predicted that, even after the pandemic, habits will have changed. He said business travel could halve in the long term, which would have huge economic implications.
3. Jamie Dimon’s no-nonsense approach to negotiations may be easier said than done, but I saw many people nodding on Zoom when the JPMorgan Chase chief executive broke down the state of government stimulus talks. “I know now we have this big debate,” he said. “Is it $2.2 trillion, $1.5 trillion? You’ve got to be kidding me. I mean, just split the baby and move on. This is childish behavior on the part of our politicians.”
3 ½. He also said Bitcoin is “not my cup of tea,” which is making waves in cryptocurrency circles.
4. The debate about size and scale was also striking in the juxtaposition between Ruth Porat, Alphabet’s chief financial officer, who argued that Google had helped create many small businesses and Tim Sweeney, the founder of the “Fortnite” maker Epic Games, who said that tech giants were squeezing those businesses too hard.
5. In the panel discussion about race and corporate America with the former Xerox executive Ursula Burns, Robert Smith of Vista Equity Partners and Michael Render (the rapper and activist known as Killer Mike), I brought up the potential controversy over hiring quotas. Ms. Burns pushed back, describing quotas as “the result of failure by business to do what they should be doing naturally.”
6. The N.B.A. star LeBron James’s More Than a Vote group clearly had a profound impact on this election, mobilizing some 300,000 voters. And he broke the news in our discussion, with Sherrilyn Ifill of the NAACP Legal Defense and Education Fund, that the voting-access group would remain active in Georgia for its Senate runoff elections.
7. Throughout the summit, there was a sense, from Mr. James to Killer Mike and the executives we spoke with, that all are now using their platforms to be “more than” their titles — more than an executive, more than an athlete, more than an entertainer. After the election, I wondered whether the past four years of activism among business leaders were an aberration. The past two days convinced me that they were not.
“Wonder Woman 1984,” the last potential blockbuster remaining on the 2020 movie calendar, will open both in theaters and on WarnerMedia’s new streaming service, HBO Max, on Dec. 25, the company announced Wednesday. The news was expected, as many cities around the country have shut down theaters in an attempt to stem a rise in coronavirus cases. Internationally, the film will open in theaters on Dec. 16.
The Federal Aviation Administration lifted its ban on Boeing’s 737 Max on Wednesday, allowing the plane to return to the skies after being grounded for more than 20 months following crashes in Indonesia and Ethiopia that killed 346 people.
Until it was grounded, the single-aisle Max, with up to 230 seats, was a workhorse on routes covering short and intermediate distances. But the lifting of the ban raises several questions about what comes next, The New York Times’s Niraj Chokshi explains. Here’s what we know:
Most travelers are unlikely to encounter the Max anytime soon. The F.A.A. must still approve pilot training procedures for the U.S. airlines flying the Max. The planes need to be updated with new software and wiring. And airlines hammered by a steep decline in travel have little incentive to act with urgency.
American Airlines is expected to be the first carrier to fly the Max, with plans to use the plane from Dec. 29 through Jan. 4 for flights connecting Miami International Airport and La Guardia Airport in New York. The airline aims to increase service during January, using the Max for as many as 36 flights out of Miami in a single day, according to a letter from American executives to employees.
The Air Line Pilots Association expressed confidence in the changes ordered by the F.A.A. The union, which represents nearly 60,000 pilots in North America, including those at Delta and United, said it “believes that the engineering fixes to the flight-critical aircraft systems are sound and will be an effective component that leads to the safe return to service of the 737 Max.”
Many experts contend that it won’t take long to restore passenger’s confidence in the jet. Airlines are eager to demonstrate the plane’s safety, assuring customers that they are reviewing its readiness themselves. United said it would conduct “additional pilot training, multiple test flights and meticulous technical analysis to ensure the planes are ready to fly.”
The pandemic has relieved some of the pressure to get the plane flying quickly. Because so few people are traveling, airlines can afford to reintroduce the jet gradually without passing up much business, giving them time to show hesitant travelers that the plane can fly without incident. And analysts believe that a few months without any major problems will go a long way in overcoming any doubts.
Other aviation authorities will have to issue similar rulings before the Max can operate outside the United States. For example, Canada’s minister of transport, Marc Garneau, said his agency was still conducting its own review and that “there will be differences between what the F.A.A. has approved today, and what Canada will require for its operators.”
There is a slender silver lining to the out-of-control pandemic: It is hastening the testing of vaccines that could eventually end it.
The surging number of virus cases has already allowed Pfizer and Moderna to accelerate the testing of their vaccines, which appear to be very effective at preventing Covid-19, and it is likely to speed the evaluations of promising vaccine candidates from other pharmaceutical companies, The New York Times’s Rebecca Robbins reports.
Here’s how the trials work:
Late-stage vaccine trials are designed so that the faster participants get sick, the faster drug developers gain enough data to know whether their vaccines are effective.
The trial ends after a certain number of cases — around 150 to 170 — have accrued. That number is chosen to make sure the results have sufficient statistical power to tell how well the vaccine works.
For example, Moderna, which announced on Monday that an early analysis found its vaccine to be 94.5 percent effective, had planned for an outside panel to take a first look at its data after only 53 cases of Covid-19 turned up in its trial. But the nationwide surge in infections helped Moderna blow past that number: The results were based on 95 sick participants.
Hoping to fast-track their testing, drug makers have been setting up trials in virus hot spots all over the world — not just in the United States. For example, Chinese vaccine makers are running late-stage trials of their candidates in countries like the United Arab Emirates, Morocco, Argentina and Peru.
Apple’s practice of throttling phones was a black eye for the company when it was revealed in 2017, seeming to confirm some customers’ suspicions that their devices got slower when Apple released new phones. Apple said at the time that its software had slowed down phones with older batteries to prevent them from shutting off unexpectedly. Apple offered some customers free battery replacements in response to the controversy.
As part of its settlement with the states, Apple must be more transparent about how it manages battery life on its devices. Apple previously agreed to pay up to $500 million to affected customers to settle a separate class-action suit.
An Apple spokeswoman declined to comment but pointed to language in the settlement that said the agreement did not mean Apple has admitted any wrongdoing.