The government reported on Thursday that nearly 1.2 million workers filed new claims for state unemployment benefits last week. It was the lowest weekly total since March, but signaled the continuing damage that the pandemic is inflicting on the labor market.
An additional 656,000 claims were filed by freelancers, part-time workers and others who do not qualify for regular state jobless aid but are eligible for benefits under a separate federal unemployment insurance program, the Labor Department announced on Thursday. Unlike the state figures, that number is not seasonally adjusted.
“Over all, the data was modestly better than we expected, a surprising improvement,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. There were declines across nearly all the states, even those where there is a resurgence of the virus.
But jobless claims “remain at alarmingly high levels,” she said, and the stubbornly high number of people collecting unemployment — estimated by economists at 30 million — suggests that “temporary layoffs are becoming permanent.”
Although the number of new claims is down from the stratospheric levels reached in the early days of the pandemic, the million-plus tallies that have continued for 20 weeks in a row are still extraordinarily high by historical standards.
And now that emergency federal supplemental benefits have expired, the newest entrants to join the ranks of unemployed will not be receiving the extra $600 a week that has helped jobless workers pay bills through the spring and early summer.
Rashida Tlaib, Alexandria Ocasio-Cortez and other House Democrats signed on to a letter urging the Federal Reserve to do more to support state and local governments, adding to criticism that the central bank is being too cautious in some of the programs it set up to help the economy during the pandemic.
“Our states and cities are already anticipating unprecedented and catastrophic budget shortfalls,” according to the letter, shared with The New York Times ahead of its release on Thursday. It urges the Fed chair, Jerome H. Powell, to lower the rate charged on the loans the central bank makes to municipal bond holders to near-zero, while extending the debt payback period to at least five years.
The central bank is buying municipal bonds, something that Mr. Powell had long been wary of doing because he worried that it ran the risk of picking winners and losers. The Fed has restrained the pool of eligible borrowers and made the terms unattractive. Only Illinois has chosen to use the program to date, given its pricing.
The Fed generally charges relatively high rates in its emergency lending programs, because it tries not to compete with private capital. But the central bank’s role has blurred during the coronavirus crisis. For example, it now buys corporate bonds and offers loans to midsize businesses, backed by Congressional funding provided to the Treasury Department to protect the Fed against losses. Those programs have been difficult to run as a backup option, and in some cases provide credit alongside the private market rather than as a last resort.
The Democrat’s letter — led by Ms. Tlaib, Pramila Jayapal, Joe Neguse and Mark Pocan — argues that the central bank is offering friendlier loan terms to businesses than to state and local governments.
But it is difficult or impossible to make an apples-to-apples comparison between the terms of the corporate programs and the municipal facility, because the programs and the markets they aim to help are drastically different.
“The terms of borrowing are not particularly generous,” Charles Evans, the president of the Federal Reserve Bank of Chicago told reporters this week, referring to the municipal program. “It would make sense for a lot of state and local governments to be waiting until they see what the parameters of fiscal support actually are.”
Mr. Evans said that lowering the interest rate could be a “sensible thing to do,” but he noted that the programs were settled on in conjunction with the Treasury Department.
“Sometimes there are differences of perspective there,” he said. The Treasury has generally been more risk-averse than the Fed in creating emergency facilities.
While the elevated levels of jobless claims show that businesses are still struggling to keep employees on the payroll, there has been some pickup in hiring. After drooping, job postings at the online jobs site ZipRecruiter rose by 7.4 percent in July and are still climbing, said Julia Pollak, the company’s labor economist.
But the latest economic data is mixed, she cautioned. Surveys from the Institute for Supply Management, for instance, showed that business activity in service industries expanded last month, but that the employment index declined, an indication that many companies are still not bringing back workers.
There were steep increases in joblessness related to the performing arts and other live events in July, Ms. Pollak said.
And announcements of impending layoffs continue to pile in. Ms. Pollak has been tracking plant closings and layoffs that the government requires to be announced in advance. “They are showing that new layoffs are still taking place at an alarming rate,” she said. “Plenty of layoffs are scheduled for August, September and October, as well.”
“Many companies are realizing now that the effects will be much longer than expected,” she said.
For Curtis Hoover, the freelance designing gig came just in time. His regular state unemployment benefits had run out, as had the weekly $600 supplement that Congress approved to help jobless workers make it through the pandemic. He was still eligible for payments under an emergency extension of benefits for 13 weeks, but the clock was ticking on that assistance as well.
“It couldn’t have come at a better time,” said Mr. Hoover, who got his first assignment this week. “I’m very grateful that I can work in my safe environment, although it’s odd jumping in as a team member when you have never met the team face to face.”
Mr. Hoover, who is 57 and lives in Reading, Pa., lost his job as a graphic designer last year. His search for new work got off to a slow start. He had an interview the week before the shutdowns — and remembers debating whether he should shake hands at the meeting — but it went nowhere. Two other interviews were canceled in the following weeks.
Last month, as the expiration of the $600 supplement loomed, he prepared for the steep cut in income. He pared his spending, canceling Netflix, ending his gym membership, and shopping more carefully at the supermarket.
“I’m in a fortunate position because I paid off my house several years ago,” Mr. Hoover said. “If I had a mortgage, I’d be in deep trouble by now.”
With rising concerns that temporary layoffs are turning into permanent job losses, economists worry what this will mean for workers at the bottom rungs of the labor market — those with the fewest skills and the lowest pay.
Workers in low-skill industries like restaurants and bars will need retraining to be hired in sectors like manufacturing, construction or technology, said Rebeela Farooqi, chief U.S. economist at High Frequency Economics.
“It’s not easy to switch,” she said. “We are at risk of structural damage to the labor market.”
Ms. Farooqi also warned that the mounting number of school closings would make it difficult for parents — particularly mothers — to re-enter the work force, causing more lasting damage to the labor market.
Wall Street’s rally was set to end Thursday as stock futures followed European markets lower ahead of the release of U.S. weekly jobless claims.
Futures for the S&P 500 signaled a small drop when trading begins. On Wednesday, the S&P had climbed to within 2 percent of its record after a four-day rally.
European shares were lower Thursday, weighed down by warnings from Britain’s central bank of a slow recovery ahead. Asian stocks ended the day mostly in negative territory.
The yield on the 10-year U.S. Treasury note fell, and oil futures also dropped, with Brent crude down about 0.4 percent, to $45 a barrel, and West Texas Intermediate slipping more than 1 percent, to about $41.70 a barrel.
The U.S. Labor Department released data on Thursday showing that workers filed more than one million new state jobless claims for the 20th straight week, as the coronavirus pandemic continued to layoffs and business closures. But the tally for last week, of 1.2 million claims, was the lowest since March, and that helped limit the losses on Wall Street.
Also on Thursday, The Bank of England policymakers said that they expected the British economy to contract by 9 percent this year, a less severe downturn than they indicated a few months ago, but they also predicted that the economy would not return to its pre-pandemic levels until the end of 2021. Even in three years, they said, the economy will still be smaller than it would have been had the growth rate followed the path it was on at the end of 2019.
Glencore, the giant Swiss-based mining and commodities trader, said it would not pay shareholders a proposed $2.6 billion dividend because of continuing uncertainty caused by the coronavirus, and would instead focus on reducing its debt after reporting a loss for the first half of the year. Shares fell more than 4 percent before recovering, a main reason for the drop in the FTSE 100.
In Washington, prospects for a deal on a new rescue package to address the coronavirus’s toll on the economy appeared to dim. Top Democrats and White House officials on Wednesday remained nowhere close to an agreement and were growing increasingly pessimistic that they could meet a self-imposed Friday deadline as President Trump again threatened to act on his own to provide relief.
The Bank of England presented both a better and worse outlook for the British economy on Thursday. As the central bank left its monetary policy stance unchanged, policymakers said that they expected the British economy to contract by 9.5 percent this year, a less severe downturn than they indicated a few months ago, and the unemployment rate would peak at 7.5 percent at the end of the year.
But then the economy won’t return to its pre-pandemic level until the end of 2021, they said. Even in three years, the economy will still be smaller than it would have been had the growth rate followed the path it was on at the end of 2019.
The central bank said economic indicators suggested consumer spending was rising but the bank’s governor, Andrew Bailey, added that it was not possible to make confident forecasts based on the current state of the recovery. The latest projections have an “unusually large downside skew,” he said, meaning they included a wide range of possible negative outcomes.
While the central bank assumes the economic impact of the coronavirus will dissipate gradually over the next few years, its forecast is challenged by fears of a second pandemic wave. Even as the British government is encouraging people to eat out and return to their offices, it is putting parts of the country under another round of lockdown restrictions and delaying the reopening of some businesses because of flare-ups in the virus.
Amid speculation in financial markets about whether the Bank of England would adopt negative interest rates, the central bank published some analysis on the policy idea, saying that it would be less effective “at this time” but that negative rates were still an option.
The economic collapse caused by the coronavirus has put millions of economic futures in doubt. More than nine million people have been furloughed in Britain, or 29 percent of the country’s work force, and 2.8 million have filed unemployment claims.
Some fields, such as hospitality or live entertainment, seem especially uncertain, leaving some people in a quandary: Wait for business and employment to pick up, or leave behind a job and career and try something new?
For Hanna Scaife, 24, the choice became simple as the lockdown wore on. She has enrolled in an art school beginning in September, with plans to transfer to the University of Sunderland to study ceramics and glass.
“I think it’s time for a change,” she said.
Angela Saunders, 39, built a hospitality and catering recruitment business with her husband in Scarborough, northeast England, but the pandemic brought that to an end. Now, they plan to pivot and begin buying and selling vintage clothing.
“Although recruitment can earn us a lot of money,” she said, “taking a step back has made me realize, really, I’d rather just have enough money and more happiness.”
For many workers, the transition to more secure positions will be difficult, because they will require retraining and further education, and be competing against a flood of other unemployed people, said Michael Koch, an assistant professor for human resource management and organizational behavior at the University of Kent.
“The gig economy is going to grow as a result of Covid,” he said, as businesses will aim to employ workers on short-term contracts or use more casual labor to maintain flexibility should a lockdown happen again.
More than half of Americans who flew in the past year are not ready to do so again, according to a new survey, underscoring the difficulty airlines face in convincing people it is safe for them to get back on planes.
In the survey of nearly 6,500 travelers conducted by Gallup and the financial firm Franklin Templeton, 52 percent said they were uncomfortable flying.
Younger adults are more willing to travel; only a third of those between the ages of 18 and 34 expressed discomfort with the idea. But older adults, who tend to have more time and money to travel, are far more reluctant. Among those 55 or older, 69 percent said they would not be comfortable taking a flight.
Unsurprisingly, views on flying vary significantly by political identification. Nearly 60 percent of Democrats said they were uncomfortable flying, compared with 54 percent of independents and just 42 percent of Republicans.
Even those willing to fly have limits. Although 44 percent said they were comfortable getting on a flight that lasted less than two hours, only 21 percent said they were open to the idea of flying more than six hours, confirming the industry consensus that international travel will take much longer to recover than shorter, domestic trips.
Travelers are also divided in their willingness to pay to have an empty seat next to them. Just under half said they would not shell out any money for greater distance from others, while 47 percent said they would pay up to $100. That share shrinks as the price of an empty seat rises, though 18 percent said they would spend $250 or more.
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