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American employers continue to cut jobs at rates that dwarf the pace of layoffs in past decades, even as the economy crawls forward from the coronavirus-induced recession that began last spring.
The Labor Department reported Thursday that 787,000 Americans filed for state unemployment benefits for the first time last week, a decline from the previous week’s total of 827,000. These figures, unadjusted for seasonal variations, are roughly four times the weekly tally of claims from before the pandemic.
But the totals did not reflect a fresh report from California, where officials have halted processing of initial claims for two weeks to clear a backlog and deal with fraud. Instead, the Labor Department used the most recent weekly figure available.
With seasonal adjustments, last week’s national figure was 837,000.
Applications for Pandemic Unemployment Assistance, an emergency federal program aimed at independent contractors, gig workers and part-time employees, totaled 650,000.
As bad as the numbers look compared with the start of the year, they are much improved from early spring, when fired and furloughed workers sought out benefits by the millions each week. Still, the totals offer little indication of a strengthening labor market.
“It’s unclear how many companies can sustain themselves and retain payrolls that support incomes,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “A solid rebound in job growth is now looking more muted.”
Large and small companies alike continue to let workers go. Disney, whose theme parks in Florida and California have been hard hit by a shortage of visitors, said Tuesday that it would lay off 28,000 workers.
Allstate announced plans on Wednesday to lay off approximately 3,800 employees, primarily in claims, sales, service and support functions, as part of a restructuring to reduce costs. The cuts constitute about 8 percent of the roughly 46,000 employees Allstate had at the end of 2019.
Furloughs of more than 30,000 workers by United Airlines and American Airlines began Thursday after Congress was unable to come up with a fresh aid package for the industry.
And with the end of a $600 federal weekly supplement to unemployment benefits in July, consumers have less to spend at businesses struggling to stay open, like restaurants, bars and retail stores.
The Commerce Department said Thursday that personal income declined 2.7 percent in August, reflecting the cessation of the $600 payments. On Friday, the Labor Department will report on hiring and unemployment for September.
Many economists said another round of federal stimulus could ease unemployment, but Democrats and Republicans in Congress haven’t agreed on a package.
“Clearly there has been a moderation in the rate of improvement from the early stages,” said Michelle Meyer, head of U.S. economics at Bank of America. “As we get further away from the initial shock, we have less of a natural catch-up, and we face more residual damage.”
Joann Taylor, a catering coordinator at a McAlister’s Deli franchise in Houston, used to work about 30 hours per week. But when the pandemic hit, her boss put her in an on-call position for deliveries only.
As a result, her hours were cut so severely — sometimes to two hours a week, or none at all — that she qualified for unemployment benefits, including $300 a week before taxes in Texas state benefits and a $600 federal supplement.
But when the $600 payments expired at the end of July, Ms. Taylor began struggling to pay her monthly bills, including $1,240 in rent, $180 for electricity, a $240 car payment and $155 for auto insurance.
Ms. Taylor, 45, is a single mother of two daughters, 6 and 14. In early September, she got a month’s worth of $300 weekly payments from Lost Wages Assistance, a short-term federal supplement to unemployment insurance, which she used to pay her September rent.
Determined to provide for her daughters, she used the time while underemployed to get a license to sell life and health insurance. Now she’s looking for an agency to take her on, hoping for steadier income.
But until then, without further aid from Congress, she’s worried about paying the rent and buying groceries for her family.
“I will have to go to every church around me and ask for help,” she said. “I will stand in food lines with the kids because I cannot leave them at home. I will apply anywhere that I can for help because there’s no way that I can allow us to be homeless.”
Tens of thousands of airline workers were furloughed starting Thursday after a widely supported effort to renew federal stimulus funding for the industry failed to overcome a congressional stalemate.
American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought.
“I am extremely sorry we have reached this outcome,” Doug Parker, American’s chief executive, said in a letter to staff. “It is not what you all deserve.”
Passenger airlines received $25 billion in payroll funding under the March stimulus law known as the CARES Act, on the condition that they refrained from broad job cuts until Oct. 1. Unions representing airline workers had garnered bipartisan support in Congress for another round of aid in recent weeks, but the effort was caught in the deadlock over a broader stimulus package, even after airline executives pleaded their case in Washington.
The pandemic’s toll on air travel and the industry has been so severe that tens of thousands of airline employees have already volunteered to take pay cuts, unpaid leave for an extended period, buyouts or early retirement.
Until June, MacKenzie Nicholson worked for the American Cancer Society, lobbying state and federal legislators to increase funding for cancer research. She lost her job after the pandemic forced the organization to cancel events across the country, eroding its revenue.
Ms. Nicholson, 30, received roughly $5,000 in severance pay, so she did not qualify for unemployment benefits until that money ran out in August. By then, a $600 weekly federal supplement to unemployment insurance had expired, so she received only New Hampshire benefits: $384 a week after taxes.
Her husband was furloughed as a Jeep service manager in late March, but was called back in April. Even with paychecks of $1,000 a week, his income is not enough to cover their monthly expenses, including a $2,118 mortgage payment, car payments totaling $666, and student loan payments adding up to $500.
On Sept. 10, she received $1,620 from Lost Wages Assistance, a short-term federal supplement, which allowed her to pay the September bills.
To make ends meet in October, she plans to pick up shifts for DoorDash, Uber and Lyft. But with her husband back at work and their children, 3 and 7, needing supervision and help with Zoom school all day, she will have to work those shifts in the evenings.
It’s hard for her to square the anxiety over meeting basic needs with the life she had a year ago, when she and her husband had just bought their first home, and their family seemed settled and secure.
“The winter’s coming and we have oil heat, and I don’t know if we’ll be able to pay for that,” she said. “At least we have a fireplace.”
Home construction workers, whose livelihoods were on the line as the economy collapsed in the spring, are benefiting from a newly resurgent housing market, while builders of commercial and retail properties struggle.
About 40 percent of construction workers are in the residential sector, while 60 percent are in the nonresidential field, according to Ken Simonson, chief economist of the Associated General Contractors of America, a trade group.
Mr. Simonson’s group represents the nonresidential part of the business, which has been hard hit by empty office buildings and stores.
“The outlook is fairly bleak for nonresidential construction,” he said. “New residential construction is terrific, specifically single family homes.”
After plunging in the spring, employment in residential construction rose 2.1 percent from June to August, while nonresidential jobs declined 0.4 percent, the contractors’ group said. One exception to the trend is construction of distribution centers, which is being driven by the boom in e-commerce that has accompanied the pandemic.
Construction employment was 7.2 million in August, the latest month for which figures from the Bureau of Labor Statistics are available. That was a decline of 425,000 from February.
The National Association of Realtors reported Wednesday that its index of pending home sales rose 8.8 percent in August, reaching a record high, as rock-bottom mortgage rates and a desire to escape crowded cities for suburban and exurban areas fed demand.
“Even before the pandemic, we had a housing shortage and one of the factors was a shortage of skilled construction workers,” said Lawrence Yun, the trade group’s chief economist. “The residential sector is booming.”
Democrats and Republicans have been unable to reach an agreement on the appropriate level of financial support for small businesses, workers, state governments and the broader economy, though Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have held talks this week. House Democrats abruptly postponed a planned vote Wednesday evening on a $2.2 trillion plan, putting off action until Thursday to leave time for last-ditch negotiations with the Trump administration.
But analysts said that it was unlikely there would be additional fiscal stimulus before the November election, and major airlines began to furlough workers on Thursday after financial support from Washington ended the day before.
“We’re hearing a lot of hope out of Speaker Pelosi and Secretary Mnuchin that a deal will get done, but we wonder if this chatter is merely something to drown out all of the layoff announcements we’ve heard this week out of companies,” Matt Maley, chief market strategist at Miller Tabak, wrote in an email to clients on Thursday.
American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought. Earlier in the week, Disney said it would lay off about 28,000 park workers, and Allstate announced plans to lay off approximately 3,800 employees.
The S&P 500 was only slightly higher after early gains faded. Shares in Europe also gave up their early gains.
The Tokyo Stock Exchange was shut down for the day because of a technical glitch, which halted trading in one of the world’s largest economies. There have been outages on the exchange outages in the past, but trading had not stopped for a whole day before.
It’s a new month, and a new quarter. Today’s DealBook newsletter ran the numbers …
The stock market had its worst month since March. The S&P 500 was down about 4 percent in September, and at times it flirted with “correction” territory. Investors are getting jittery about the election, and several business leaders despaired at the spectacle of the first presidential debate on Tuesday.
Mergers and acquisitions picked up, particularly for big deals. The value of $5 billion-plus deals was the most on record for a third quarter, following a pandemic-induced freeze on transactions. Over all, global deal value in the first nine months of the year is down about 20 percent from the same period last year.
I.P.O.s are poised to set records. The amount raised in U.S. listings so far this year is ahead of even the heady dot-com days, with the busiest deal count for a third quarter since 2000, according to Renaissance Capital. It’s no surprise what’s fueling the boom: More than 100 SPACs have gone public so far this year, raising more than $44 billion.
The unemployment rate in the eurozone edged up to 8.1 percent in August from 8 percent in July, the European Union said Thursday, as government support cushioned much of the economic impact of the pandemic.
But economists fear that the jobless rate could surge when the programs expire, or employers go bankrupt or are forced to lay off workers permanently.
Germany, France and many other countries compensate workers for some of the income they lose when their employers put them on furlough or reduced hours. That has a led to relatively modest increases in the jobless rate, which was 7.2 percent in March when the pandemic hit Europe.
In the United States, which does not have a comparable program, unemployment shot from 3.5 percent in February to 14.7 percent in April, though the rate has since declined to 8.4 percent.
In theory, people on Europe’s short-work programs will get their jobs back when the economy improves. But as the pandemic lingers and surges in some places, restaurants and other small businesses may go under, while companies such as airlines may lay off workers permanently because they don’t expect revenue to rebound for several years.
“Short-time work schemes have managed to flatten the curve substantially,” Bert Colijn, a senior economist at ING Bank, said in a note. But he added that surges in the number of new infections creates “a lot of uncertainty about the growth environment.”
Carnival Cruise Line has canceled cruises from all of its U.S. home ports except Miami and Port Canaveral for November and December, following a decision from the Centers for Disease Control and Prevention to extend its no-sail order for cruise operations. “As we have said throughout this pause, our return to operations will be gradual and phased in,” Christine Duffy, president of Carnival Cruise Line, said in a statement. “And while we are not making any presumptions, once cruising is allowed, we will center our initial start-up from the homeports of Miami and Port Canaveral.”
The Federal Reserve on Wednesday said it would extend its ban on share buybacks by big banks as well as its cap on dividend payouts through the end of the year, a move the central bank said was an effort “to ensure that large banks maintain a high level of capital resilience” as pandemic-spurred economic uncertainty persists. The limitations apply to only the largest banks — those with more than $100 billion in total assets, which include firms like Bank of America, Citigroup and Wells Fargo.
The National Association of Theater Owners, a trade organization for cinemas in the United States and beyond, pleaded with Congress for financial help. “Absent a solution designed for their circumstances, theaters may not survive the impact of the pandemic,” it said in a letter. The letter said that “69 percent of small and midsize theater companies will be forced to file for bankruptcy or close permanently” without government help.
Shares in the Swedish retailer H&M rose more than 7 percent after the company said online sales were growing strongly and the company had already returned to profit in the third quarter.
H&M also announced that it would close 250 stores globally next year as part of its plans to consolidate stores and ramp up digital offerings to meet the needs of customers who are increasingly choosing to shop online.
”More and more customers started shopping online during the pandemic, and they are making it clear that they value a convenient and inspiring experience in which stores and online interact and strengthen each other,” the company’s chief executive, Helena Helmersson, said in a statement.
The company also said that it was working to improve its supply chain to increase the availability of inventory and the speed of deliveries.
The coronavirus pandemic has hit retailers particularly hard. Many clothing stores shut their doors during the lockdowns, leading to unpaid rents and staff furloughs. H&M reported that in the beginning of the third quarter, roughly 900 of its 5,000 stores were temporarily closed. At the end of the quarter, which ended on Aug. 31, just over 200 stores were still temporarily shut.
“Although the challenges are far from over, we believe that the worst is behind us and we are well placed to come out of the crisis stronger,” Ms. Helmersson said.
Google said on Thursday that it would spend more than $1 billion to license content from international news organizations, after years of criticism that it was not providing fair compensation for articles and other content linked to by its internet search products.
The program is part of a new Google product called News Showcase that will present news from around the world in short snippets that readers can quickly browse on a phone or other device. The company will pay publishers to curate the material that will be presented.
The program was starting on Thursday in Germany and Brazil, and would be rolled out to additional countries in the months ahead, Sundar Pichai, Google’s chief executive, wrote in a blog post. Partnerships have been signed with nearly 200 publications, including in Argentina, Australia, Britain and Canada, Google said. The papers include Der Spiegel and Handelsblatt in Germany and Folha de S.Paulo in Brazil.
Google has faced years of criticism around the world for not doing enough to support news organizations whose content it links to. In the Europe Union, new copyright rules give publishers stronger rights to negotiate with aggregators like Google. In Australia, Google and Facebook are facing new regulations that could require them to pay local publishers for news they carry.
The European Publishers Association, a trade group, criticized Google’s program as an attempt to undermine government actions. “By launching a product, they can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production,” Angela Mills Wade, the group’s executive director, said in a statement.