American employers continue to shed workers at a staggering rate as a resurgent coronavirus and the absence of new federal aid take a toll on economic growth.
The Labor Department reported Thursday that 886,000 Americans filed new claims for unemployment benefits last week, an increase of nearly 77,000 from the previous week. Adjusted for seasonal variations, the total was 898,000.
After dropping in late spring and early summer as pandemic-related lockdowns eased, new claims for state jobless benefits had been steadily totaling about 800,000 a week.
“It’s discouraging,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “We’re still stuck at a level of claims that’s far higher than it was during the worst of what followed the crash of 2008. The labor market appears to be stalled, which underscores the need for new stimulus as quickly as possible.”
New claims for Pandemic Unemployment Assistance, an emergency federal program that covers freelancers, self-employed workers, part-timers and others who don’t qualify for benefits under the regular unemployment system, were tallied at 373,000, down from 474,000. Most of the decline reflected an aberration in Arizona, which has been dealing with fraud issues in the program and reported no new claims.
The data do not include fresh figures for California, which has temporarily stopped accepting new unemployment applications to address a huge processing backlog and weed out fraud. Instead, the report incorporated the last weekly figures available.
The lack of fresh data from California makes it difficult to draw firm conclusions, but the latest numbers “point to a lot of churn in the labor market, and it appears the rate of firings has picked up,” said Michael Gapen, chief U.S. economist at Barclays.
Over the past month, large employers including United Airlines, Disney and Allstate announced tens of thousands of layoffs, and more are expected as sectors like leisure and hospitality struggle. In some states, restaurants have salvaged some business by serving diners outside, but many will lose that option as temperatures fall.
Despite the widespread economic pain, Republicans and Democrats in Washington have been unable to agree on a new relief package, a failure that may cause the economy to slow further in the coming months. Federal benefits created in March to supplement state payments to the unemployed are set to expire by the end of the year.
President Trump said on Thursday that he wanted a bigger stimulus package than the $1.8 trillion that White House negotiators have proposed and suggested, without explanation, that China would pay for it.
“I would go higher,” Mr. Trump said during an interview with the Fox Business Network. “Go big or go home.”
The comments came after Treasury Secretary Steven Mnuchin said that the White House was willing to make additional concessions to Speaker Nancy Pelosi of California in hopes of rekindling a stimulus deal before the election. The $1.8 trillion package that Mr. Mnuchin has proposed has already proven to be a non-starter with Senate Republicans who have panned it as too costly, making Mr. Trump’s call for a more expensive bill another complication in the already fraught negotiations.
Even as he called for a bigger deal with Democrats, Mr. Trump assailed Ms. Pelosi in personal terms and did not address Republican resistance to what the White House was seeking.
“She’s got a lot of mental problems,” Mr. Trump said. “It’s going to be very hard to do anything with her. She wants to wait until after the election.”
Mr. Trump said that a bigger package made sense because he would find a way to make China cover the costs and blamed Beijing for spreading the coronavirus. Mr. Trump has for years incorrectly asserted that China was also paying for the tariffs that he has imposed on Chinese imports.
The negotiations between the White House and Congress are expected to continue on Thursday, when Mr. Mnuchin and Ms. Pelosi are scheduled to speak.
Speaking on CNBC, the Treasury secretary said that he would agree to the language that Democrats had insisted on when it came to a coronavirus testing program and noted that the two sides had already agreed to spend an additional $75 billion on testing and contact tracing. The specifics of such a program have been an obstacle in the talks.
“We’ll fundamentally agree with their testing language, subject to some minor issues,” Mr. Mnuchin said. “We need to get money to the American public now.”
Mr. Mnuchin’s remarks came after the Labor Department reported that the number of new claims for unemployment benefits jumped to 886,000 last week.
But significant hurdles remain in reaching a deal, including Republican resistance to what the White House is willing to support. On Wednesday, Mr. Mnuchin acknowledged it would be difficult to pass and enact a deal in the next three weeks.
In the interview on CNBC, Mr. Mnuchin did not directly address the lack of support for a bill by Senator Mitch McConnell, the majority leader, suggesting that he has been briefed on negotiations between the White House and House Democrats while acknowledging that Senate Republicans prefer a more “targeted” relief bill.
At an event on Thursday, Mr. McConnell downplayed the prospects of a larger bill.
“I’m proposing what we think is appropriate,” Mr. McConnell said in Louisville, Ky., when asked about the targeted bill he was preparing.
Negotiators have been locked in fruitless talks for months. On Thursday, Mr. Mnuchin assailed Democrats for letting politics get in the way of reaching agreement before the election, though Mr. Trump scuttled the talks himself when he said in a tweet last week that he had called off stimulus negotiations until after the election.
Mr. Mnuchin also called on Congress to give him the authority to repurpose approximately $300 billion in unused relief money from the legislation that was passed in March. He said he could begin getting that money into the economy this week.
More and more Americans are relying on a federal program designed to help the jobless as state unemployment benefits run out.
The program, Pandemic Emergency Unemployment Compensation, was created by Congress in March to provide 13 weeks of aid when regular state unemployment benefits expire — typically after 26 weeks.
It has now been more than 30 weeks since unemployment claims spiked in March, when the pandemic first forced the economy into lockdown mode, so millions of unemployed Americans are starting to qualify for the extended benefits.
But getting on the rolls isn’t easy, experts say. “The transition from regular state benefits to P.E.U.C. is not going smoothly,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, a left-leaning research group.
In some places, recipients of state unemployment benefits haven’t been notified of their eligibility for the federal extension, and aging computer systems have slowed the processing of applications.
Still, in the week that ended Sept. 26, the most recent period with available data, nearly 2.8 million people were getting Pandemic Emergency Unemployment Compensation benefits, a jump from fewer than two million the previous week. That increase was roughly equal to the decline in the number collecting state benefits.
The federal program is set to expire at the end of the year, and if it is not extended by Congress, “we’re going to see a disaster,” Ms. Shierholz said. “There will be a huge drop in living standards and an increase in poverty as well as downward pressure on economic growth.”
For those who qualify, the program has helped as they search for work.
Jared Gaxiola of Torrance, Calif., was laid off from his job as a freelance lighting technician in March, after live events were canceled across the country.
When Mr. Gaxiola’s state benefits ran out in mid-September, he was able to get a 13-week extension through Pandemic Emergency Unemployment Compensation.
Mr. Gaxiola, 35, hopes to find a job by the time the payments run out again in December. But with entertainment work still scarce, he worries about how he will pay his rent in the new year.
“I could probably borrow money from my sister if I needed to,” Mr. Gaxiola said. “But I really don’t want to have to do that.”
Before the pandemic struck, Chloe Ezi was a lifeguard at a public aquatic center in Powder Springs, Ga. It was part-time work, at $11 an hour, but she was able to bring in an extra $300 a week by teaching private swim lessons.
In March, Ms. Ezi was sent home for three months when the aquatic center closed during coronavirus lockdowns. Because she continued to be paid half her wages — about $75 a week — the pool told her that she was not eligible to file for unemployment benefits.
Ms. Ezi, 19, was called back to work in May, but because virus restrictions kept her from teaching private swim lessons, she was able to bring in only about $150 a week — barely enough to cover her $280 monthly car insurance bill, her $80 cellphone bill, and $100 monthly payments to Penn Foster College, where she is completing a dental assistant certificate program, plus groceries and other necessities.
“That’s not a lot to live off of,” Ms. Ezi said. “I was zeroing out my paycheck every month.”
To save money, Ms. Ezi lived with her boyfriend in his parents’ house.
“We’re all just a big family living in this house together,” she said. “It can get pretty stressful living with so many people like this.”
Tired of living in such close quarters, Ms. Ezi began looking for a job that would pay more. In August, she found a full-time position as a sales representative at a store that sells birding equipment, where she makes $13 an hour plus tips. She remains on the staff at the pool, where she still picks up an occasional shift.
Now she and her boyfriend can afford to rent a one-bedroom apartment in Smyrna, Ga. They moved in on Wednesday.
“My new job allowed us to finally get our own place,” she said. “I’m feeling pretty proud of myself right now.”
For three years, Lea Polizzi worked more than 50 hours a week as a nanny and a freelance photographer in New York City. But in March, when the pandemic hit, the family she worked for on the Upper East Side left the city, and all of her photography gigs dried up.
Ms. Polizzi, 24, filed for unemployment benefits and started receiving about $200 a week from the state, as well as a $600 federal supplement. Those payments enabled her to meet expenses — including the $1,100 rent for her apartment in the Bushwick neighborhood of Brooklyn — while she looked for a job.
But the $600 payments expired at the end of July. Since then, Ms. Polizzi has used about 75 percent of her savings — roughly $4,000 — to pay bills.
“That was the money I had saved to use for vacations or emergency funds,” Ms. Polizzi said. “I was going to buy a new camera. And then as soon as everything started going down, I had to put everything on hold, because I knew that I was going to end up having to pay rent with it eventually.”
Ms. Polizzi recently received $900 from Lost Wages Assistance, a short-term supplement from the federal government, and she expects one more payment from the program in the next few weeks.
In the meantime, she has taken matters into her own hands. She is making masks, lingerie, hats and jewelry and selling the items online at $25 to $200 apiece.
She has made about 60 sales. “Hopefully, I’ll be able to make it work and just pay all my bills through my art ventures,” she said.
Stocks fell on Thursday, as earnings reports and new economic data reminded investors of the challenges that companies and workers face amid a second wave of coronavirus cases. New restrictions were imposed in London after a curfew in Paris and other French cities.
Share prices for airlines and hospitality companies, already battered this year, fell as the tightening European rules cast a shadow over travel and spending in the coming holiday season.
On Wall Street, the S&P 500 dropped more than 1 percent at the start of trading, on track for its third consecutive daily decline, before recovering some ground. The drop in European markets was steeper, with the Stoxx 600 Europe and Britain’s FTSE 100 down more than 2 percent.
It didn’t seem to help that Treasury Secretary Steven Mnuchin said on Thursday that the White House was willing to make additional concessions to Speaker Nancy Pelosi of California in hopes of rekindling a stimulus deal before the election. Mr. Mnuchin had dampened sentiment in the markets Wednesday by cautioning that he didn’t expect a relief package before the Nov. 3 election.
Mr. Mnuchin’s comments came as data from the Labor Department showed that new state unemployment claims jumped last week to nearly 900,000, a figure that highlights the fact that employers continue to shed workers at a staggering rate.
The slide in markets on Thursday is “linked to spikes in coronavirus cases and fears that regional lockdowns will subdue the economic recovery,” said Susannah Streeter, an analyst at Hargreaves Lansdown. “We are seeing fresh losses for airlines and travel stocks.”
Shares of European airlines, Lufthansa and easyJet, fell sharply. Ryanair tumbled after saying it would fly only 40 percent of its usual capacity this winter, down from previous plans for 60 percent.
On Wall Street, United Airlines dropped after the company said it lost $1.8 billion in the three months through September. Marriott International, MGM Resorts and other travel and tourism stocks were also lower.
On the afternoon of Feb. 24, President Trump declared on Twitter that the coronavirus was “very much under control” in the United States, but hours earlier, senior members of the president’s economic team, privately addressing board members of the conservative Hoover Institution, were less confident.
Tomas J. Philipson, a senior economic adviser to the president, told the group he could not yet estimate the effects of the virus on the American economy. To some in the group, the implication was that an outbreak could prove worse than Mr. Philipson and other Trump administration advisers were signaling in public at the time.
The next day, board members — many of them Republican donors — got another taste of government uncertainty from Larry Kudlow, the director of the National Economic Council. Hours after he had boasted on CNBC that the virus was contained in the United States and “it’s pretty close to airtight,” Mr. Kudlow delivered a more ambiguous private message. He asserted that the virus was “contained in the U.S., to date, but now we just don’t know,” according to a document describing the sessions obtained by The New York Times.
The document, written by a hedge fund consultant who attended the three-day gathering of Hoover’s board, was stark. “What struck me,” the consultant wrote, was that nearly every official he heard from raised the virus “as a point of concern, totally unprovoked.”
The consultant’s assessment quickly spread through parts of the investment world. U.S. stocks were already spiraling because of a warning from a federal public health official that the virus was likely to spread, but traders spotted the immediate significance: The president’s aides appeared to be giving wealthy party donors an early warning of a potentially impactful contagion at a time when Mr. Trump was publicly insisting that the threat was nonexistent.
Interviews with eight people who either received copies of the memo or were briefed on aspects of it as it spread among investors in New York and elsewhere provide a glimpse of how elite traders had access to information from the administration that helped them gain financial advantage during a chaotic three days when global markets were teetering.
To many of the investors who received or heard about the memo, it was the first significant sign of skepticism among Trump administration officials about their ability to contain the virus. It also provided a hint of the fallout that was to come, said one major investor who was briefed on it: the upending of daily life for the entire country.
“Short everything,” was the reaction of the investor, using the Wall Street term for betting on the idea that the stock prices of companies would soon fall.
Americans used one-time stimulus checks they received from the federal government early in the pandemic to pad their savings accounts and pay off debt, new research from the Federal Reserve shows.
Households spent just 29 percent of the money they received earlier this year, the Federal Reserve Bank of New York said in a post on its website, citing its Survey of Consumer Expectations, conducted in June and August. Another 36 percent of the cash was saved, while 35 percent was used to pay down debt.
Americans adults who qualified for the stimulus received up to $1,200 each, with an extra $500 added per child in the household. Out of the Fed’s sample, 89 percent of households received money.
Poorer families and those who lost jobs or income amid the pandemic were more likely to use their money to pay down debts, while richer families saved the money.
“The economic impact payments, by increasing both household income and the debt pay down, contributed importantly to the sharp increase in the overall saving rate during the early months of the pandemic,” the central bank’s researchers wrote in the post.
Several factors might have been behind the relatively low spending and high saving. People were unsure when the economic crisis would clear up, the researchers wrote, and might have been acting cautiously. They were on lockdown, which might have limited opportunities to spend, and some rent payments — which count as consumption — were delayed.
The trends seem unlikely to change if new aid becomes available: In the August survey, the New York Fed asked what households might do if they received another $1,500 check. Respondents expect to spend even less of that money, about 24 percent.
The newfound savings buffer cushioned the blow as expanded unemployment insurance expired. Consumer spending has held up even though millions remain unemployed but are no longer receiving an extra $600 per week from the federal government.
“We’re still benefiting from the stimulus,” Randal K. Quarles, vice chair for supervision at the Fed, said during an event on Wednesday, noting that it makes it harder to guess what will happen to the economy once that tailwind fades.
Morgan Stanley was the latest Wall Street bank to report a jump in earnings for the three months through September, helped in large part by an upswing in trading revenue.
Profit rose 25 percent to $2.72 billion over the same period last year, the bank said on Thursday. Revenue rose 16 percent to $11.66 billion.
As U.S. markets rallied during the quarter, revenue from the bank’s trading business rose 19 percent from the same period last year. Gains from loans held for sale as part of Morgan Stanley’s corporate lending activity also rose substantially.
Still, in what could be interpreted as a sign of optimism over the health of the corporate economy, Morgan Stanley’s provision for credit losses on loans and lending commitments was less than half of what it was in the previous quarter.
Morgan Stanley’s chief executive, James P. Gorman, said in a statement that the quarter was characterized by “consistent, high returns.” He predicted that the completion of his bank’s acquisition of the trading company E*TRADE and its recently announced purchase of Eaton Vance would position Morgan Stanley well for future growth.
Poverty has returned to levels higher than before the coronavirus crisis, two new studies have found. The number of poor people has grown by eight million since May, according to researchers at Columbia University, after falling by four million at the beginning of the pandemic as a result of the $2 trillion emergency package known as the Cares Act. Using a different definition of poverty, researchers from the University of Chicago and Notre Dame found that poverty has grown by six million people in the past three months, with circumstances worsening most for Black people and children.
Shares in Big Hit, the management company behind the Korean boy band BTS, skyrocketed on their first day of trading in South Korea on Thursday, as investors rushed to get a piece of one of the world’s biggest musical acts. The stock opened at 270,000 won, or about $235, double the company’s offering price of 135,000 won, and was up 30 percent, the daily limit, in early trading. By day’s end, the stock was down over 4 percent from its opening price, with the company’s value settling at around 8.7 trillion won, or about $7.6 billion, by the market’s close.
Wells Fargo has found evidence that some employees filed fraudulent applications to get money from a Small Business Administration relief program supporting companies dealing with coronavirus lockdowns, according to an internal memo. The memo said the employees had created fake profiles to file for money from the Economic Injury Disaster Loan program. “We have terminated the employment of those individuals and will cooperate fully with law enforcement,” the bank’s head of human resources, David Galloreese, wrote in the memo, which was posted on an internal website on Wednesday.
United Airlines lost $1.8 billion in the three months through September, with operating revenue down 78 percent compared with the same period in 2019. The airline said it ended September with more than $19 billion in cash and other available liquidity, boosted by a large debt offering backed by its mileage program and the ability to borrow $5.2 billion from the Treasury Department.