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Applications for jobless benefits remained high last week, even as the collapse of stimulus talks in Washington raised fears of a new wave of layoffs.
More than 804,000 Americans filed new claims for state unemployment benefits last week, the Labor Department said Thursday. That is up from 799,000 the week before, before accounting for seasonal patterns. Another 464,000 people applied for benefits under the federal Pandemic Unemployment Assistance program, which covers freelancers, self-employed workers and others left out of the regular unemployment system.
For the second week in a row, the reported number will carry a golden-state-sized asterisk: California last month announced that it would temporarily stop accepting new unemployment applications while it addresses a huge processing backlog and puts in place procedures to weed out fraud.
In the absence of up-to-date data, the Labor Department is assuming California’s claim number was unchanged from its pre-shutdown figure of more than 225,000 applications, or more than a quarter of the national total. The state began accepting new filings this week, and is expected to resume reporting data in time for next week’s report, though it isn’t yet clear how the backlog of claims filed this week will be reflected.
While the lack of data from California makes week-to-week comparisons difficult, the larger trend is clear: After falling swiftly from a peak of more than 6 million last spring, weekly jobless claims have stalled at a level far higher than the worst weeks of past recessions.
“The level of claims is still staggeringly high,” said Daniel Zhao, senior economist at the career site Glassdoor. “We’re seeing evidence that the recovery is slowing down, whether it’s in slowing payroll gains or in the sluggish improvement in jobless claims.”
That slowdown comes as trillions of dollars in government aid to households and businesses has dried up. Prospects for a new stimulus package, already dubious in a divided Washington, collapsed outright this week when President Trump said he was pulling out of negotiations.
Economists warn that without more aid, layoffs will rise again. Several major corporations like Disney and Allstate have announced thousands of new job cuts. And with winter weather looming, restaurants and other businesses that were able to shift operations outdoors during warmer weather could be forced to pull back anew.
Millions of people who lost jobs earlier in the crisis remain out of work, and many are starting to exhaust their financial resources. The threat is particularly acute for people receiving benefits under Pandemic Unemployment Assistance and another program created in response to the pandemic, both of which expire at the end of the year.
“It seems increasingly unlikely that we’ll have a deal before the election, and bills are due now,” Mr. Zhao said. “Every week that passes puts extra pressure on workers households and small businesses, so any delay in the stimulus is going to have a meaningful impact on Americans.”
Wall Street followed global markets higher on Thursday, adding to a rally that had been fueled by hope that lawmakers in Washington might still reach an agreement to aid ailing industries in the United States.
Before the start of trading Thursday, President Trump said on television that negotiations on a broad stimulus package had resumed, two days after he abruptly pulled the plug by instructing his top lieutenants to cut off talks. “We’re talking about airlines and we’re talking about a bigger deal than airlines,” Mr. Trump said.
The S&P 500 rose about half a percent, after a gain of 1.7 percent on Wednesday. Though trading has been turbulent, with stock prices swinging higher or lower along with the prospects for an aid deal, the index is on track for a weekly gain of nearly 3 percent.
Most major stock indexes in Europe and Asia also rose on Thursday, as did oil prices. Crude oil futures climbed about 2 percent, as Hurricane Delta caused oil producers to shut down most of their output in the Gulf of Mexico.
Aviation stocks, including IAG, which owns British Airways, and the engine maker Rolls-Royce, rose following gains in American Airlines, Delta Air Lines and United Airlines on Wednesday, amid expectations the Congress and Treasury Department would reach a deal on stimulus for the U.S. airline industry.
Talks on a stand-alone airline bill come as prospects remain deeply uncertain for a broader stimulus package, even as data from the U.S. Labor Department on Thursday showed first-time filings for state unemployment benefits continue to be elevated.
“Hopes for a U.S. pre-election fiscal stimulus are quietly fading to nothing,” Paul Donovan, an economist at UBS Global Wealth Management, wrote in a note to clients. “There might be something for the airlines, but no big package looks likely given the language (and amount of time available).”
Shares in Regeneron Pharmaceuticals rose nearly 3 percent after the company said it had submitted an application to the Food and Drug Administration for emergency approval of the experimental antibody cocktail that President Trump suggested in a video was a “cure” for the coronavirus.
Forget about Halloween: Best Buy is the latest retailer to announce that it will offer the holiday deals typically found after Thanksgiving on Oct. 13 and 14, following similar announcements from Amazon, Target and Walmart, as the pandemic pulls seasonal shopping earlier than ever.
Best Buy said on Wednesday that it would offer the Black Friday deals next week, both online and in stores, after Target said that it would hold an event called “Deal Days” on the same dates. Walmart is planning its own deals bonanza called the “Big Save Event” Oct. 11 to Oct. 15.
The chains’ announcements came after Amazon said that its annual Prime Day sale, which was postponed in July, would be held on Oct. 13 and 14.
Even before Amazon’s announcement, big retailers were already planning to kick off holiday deals in October to help limit in-store crowds and to reduce concerns around the reliability and timeliness of shipping in a season ruled by digital sales.
Guidelines from the Centers for Disease Control and Prevention encourage people to avoid “higher risk” activities like “going shopping in crowded stores just before, on, or after Thanksgiving” to help prevent the spread of the coronavirus.
Unemployment benefits have kept millions of families afloat during the pandemic-induced recession. But the benefits won’t last forever.
Last week was the 29th week since mass layoffs began in March. In most states, regular unemployment benefits last just 26 weeks, meaning that many people who lost their jobs in the first wave have already exhausted their benefits.
Congress in March created a program funded by the federal government for people whose state benefits have expired. The number of recipients under that program, Pandemic Emergency Unemployment Compensation, swelled to nearly 2 million in mid-September, up from 1.4 million a month earlier.
The program adds only 13 weeks of additional benefits, however, so people who lost their jobs in March will receive those benefits only until mid-December. And the entire program will expire at the end of the year if Congress doesn’t extend it.
A separate program, which pre-existed the pandemic, offers another 13 to 20 weeks of benefits, depending on the state. But the benefits are based on state economic conditions, and the rapid decline in the unemployment rate means that workers in several states would no longer qualify for it.
The net result is that potentially millions of workers could see their benefits expire this winter. Epidemiologists warn that cases of the coronavirus are likely to rise as temperatures drop, and winter weather could reduce job opportunities.
“People are going to have their backs against the wall, and it’s pretty much the worst time of the year for the program to end,” said AnnElizabeth Konkel, an economist at the employment site Indeed.
Among the nearly 6,000 people whose deaths have been linked to the coronavirus in Sweden, 2,694, or 46 percent, had been among those living in nursing homes.
That tragedy is in part the story of how Sweden has, over decades, gradually yet relentlessly downgraded its famously generous social safety net, report Peter S. Goodman and Erik Augustin Palm.
When the pandemic hit, the nursing staff at the Sabbatsbergsbyn nursing home in the center of Stockholm found itself grappling with an impossible situation.
It was the middle of March, and several of the 106 residents, most of them suffering dementia, were already displaying symptoms of Covid-19. The staff had to be dedicated to individual wards while rigorously avoiding entering others to prevent transmission. But when the team presented this plan to the supervisors, they dismissed it, citing meager staffing, said one nurse, who spoke on the condition on anonymity, citing concerns about potential legal action.
The facility was owned and operated by Sweden’s largest for-profit operator of nursing homes, Attendo, whose stock trades on the Nasdaq Stockholm exchange. Last year, the company tallied revenue in excess of $1.3 billion.
On weekends and during night shifts, the nurse was frequently the only one on duty. The rest of the staff lacked proper protective gear, said the nurse and a care aide, who spoke on condition of anonymity for fear of being fired. Management had given them basic cardboard masks — “the kind house painters wear,” the nurse said — while instructing them to use the same ones for days in a row. Some used plastic file folders and string to make their own visors.
By the time the nurse quit in May, at least 20 residents were dead, she said.
“The way we had to work went against everything we learned in school regarding disease control,” the nurse said. “I felt ashamed, because I knew that we were spreaders.”
Federal Reserve officials were counting on Congress and the White House to pass additional aid for households and businesses hit by the pandemic when they released their latest economic forecasts, minutes from their Sept. 15-16 meeting showed. Many officials “noted that their economic outlook assumed additional fiscal support and that if future fiscal support was significantly smaller or arrived significantly later than they expected, the pace of the recovery could be slower than anticipated,” according to notes from the meeting, which were released on Wednesday.
“Jurassic World: Dominion,” the $200 million movie that has been a guinea pig as Hollywood resumes filming, will stop production for two weeks after a handful of people working on the film tested positive for the coronavirus. “All tested negative shortly after, but due to our safety protocols we’re going to pause for two weeks,” the film’s director, Colin Trevorrow, posted on Twitter.
The home-improvement retailer Lowe’s will pay an additional $100 million in discretionary bonuses to frontline hourly workers in its U.S. stores, distribution centers and store support centers, the company said on Wednesday. Employees will receive the bonus on Oct. 16, with full-time workers receiving $300 and part-time and seasonal hires getting $150.
The World Bank warned on Wednesday that the coronavirus pandemic could push more than 100 million people into extreme poverty this year, elevating the global poverty rate for the first time in more than two decades. In a new report, the bank said that 88 million to 115 million people will be living on less than $1.90 a day, lifting the poverty rate — which had been projected to decline this year before the pandemic hit — as high as 9.4 percent. The health and economic crisis has taken a severe toll on middle-income countries, creating a class of “new poor” that includes educated people in cities.
The hedge fund billionaire Daniel S. Loeb is urging the Walt Disney Company to cut its dividend payments and redirect the money to buying content for its Disney+ streaming service. It’s an unusual break from the traditional activist investor playbook, reports today’s DealBook newsletter.
Activists traditionally buy stakes in companies and press them to increase shareholder payouts, cut costs or shed assets. But in a letter to Disney’s chief executive, Robert Chapek, Mr. Loeb urged the entertainment giant to commit more resources to Disney+. By permanently cutting its dividend — worth about $3 billion a year — the company could more than double its Disney+ content budget of about $1 billion a year, Mr. Loeb said.
Mr. Loeb, whose Third Point hedge fund owned about a 0.3 percent stake in Disney as of June 30, said that the company could raise the “lifetime value” of Disney+ subscribers to $500 apiece, from $100 today, by charging more for the service and reducing customer defections. He also recommends consolidating Disney’s other streaming services, including Hulu and ESPN+, into Disney+.
By taking these steps, Disney could build a streaming business that eventually generates more revenue than cable TV and box-office releases, “but only if the company leans into this opportunity and invests more aggressively,” Mr. Loeb wrote.
Disney would still face a formidable competitor in Netflix. Analysts at BMO Capital expect that company to spend over $17 billion on new content this year, and more than $26 billion by 2028. Mr. Loeb wrote that the market values Netflix customers at about $1,200 each.
He isn’t the only activist investor seeking to shake up a major media company: Nelson Peltz’s Trian has taken a stake in Comcast, which owns NBCUniversal. But Trian has yet to publicly disclose what it wants Comcast to do.
JPMorgan Chase announced a $30 billion initiative on Thursday to “advance racial equity” via loans and other investments in Black and Latino communities over the next five years.
“We can do more and do better to break down systems that have propagated racism and widespread economic inequality,” said Jamie Dimon, the bank’s chief executive.
To promote more affordable housing, the bank is committing $8 billion to support the origination of an additional 40,000 mortgages for Black and Latino households. It its also putting up $14 billion in loans, equity and other capital to help finance 100,000 affordable rental units.
To help to Black and Latino-owned businesses, the bank will commit $2 billion it says will support additional 15,000 loans. It also plans to spend $750 million more with Black and Latino-owned suppliers to the bank.
JPMorgan said it was expanding access to its services by opening up new branches in underserved communities and hiring 150 new community managers. It is investing up to $50 million in capital and deposits in Black and Latino-led community banks and financial firms.
Internally, JP Morgan says it will it will consider progress in achieving a more diverse work force as part of yearly performance reviews. That will also play a role in pay for members of the firm’s operating committee, as well as their direct reports.
The banking system has been under pressure to help address the growing racial economic divide in the United States. JPMorgan found itself the center of a political firestorm last year, after a report alleged discriminatory practices. Mr. Dimon later said that although the bank had “done some great work on diversity and inclusion,” it must be “absolutely relentless on doing more.”
Ruby Tuesday filed for bankruptcy protection on Wednesday, citing the “unprecedented impact” of the coronavirus pandemic.
The casual dining chain said it would use the Chapter 11 process to cut debt and buttress its financial position. Ruby Tuesday expects to keep its restaurants open during the bankruptcy process, which it intends to emerge from “as quickly as possible.”
“This announcement does not mean ‘Goodbye, Ruby Tuesday,’” the company’s chief executive, Shawn Lederman, said in a statement. “With this critical step in our transformation for long-term financial health — this is ‘Hello’, to a stronger Ruby Tuesday.”
The pandemic has had a particularly devastating impact on the hospitality industry, including restaurants, hotels and entertainment companies. Virus restrictions forced businesses to shut down for long periods and reopen with reduced capacity, prompting a number of chains to file for bankruptcy protection, including Chuck. E Cheese, California Pizza Kitchen and NPC International, the largest franchisee of Pizza Hut in the United States.