Jobless Claims Rise, Showing the Pandemic’s Economic Toll: Live Updates

Jobless Claims Rise, Showing the Pandemic’s Economic Toll: Live Updates

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The Avalon Cafe and Biscuit Bar in Detroit closed because of the pandemic. Conditions should improve in the coming months, economists say.
Credit…Elaine Cromie for The New York Times

The economy continues to slowly rebound from the worst of the pandemic, but claims for unemployment benefits remain high by historical standards, a sign of how long it will take for the job market to recover fully.

Initial jobless claims rose last week, the Labor Department reported Thursday, after a big drop in the previous week.

A total of 748,000 workers filed first-time claims for unemployment benefits in the week that ended Feb. 27, 32,000 higher than the week before. In addition, 437,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits, a rise of 9,000.

Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 745,000, an increase of 9,000.

Claims are lower than they were when coronavirus cases spiked early last year. With the virus easing since then in many places, some restrictions on business activity have been rolled back. That has helped the job market somewhat.

The increase in claims last week included a big jump in Ohio and Texas, as the latter recovered from severe winter storms last month.

“We knew there was some backlog in Texas and claims would likely go back up,” said Gregory Daco, chief U.S. economist at the forecasting firm Oxford Economics. “Despite expectations for record-breaking growth in 2021, the job market is still quite fragile.”

Gov. Greg Abbott of Texas said Tuesday that the state was lifting all restrictions on business and eliminating its mask requirement, moves that drew criticism from President Biden. Elsewhere, officials have been more cautious — in Chicago, parks and playgrounds reopened, while in Massachusetts, capacity restrictions on restaurants have been lifted.

“The labor market is continuing to gradually improve,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “Job growth will accelerate, perhaps as soon as the second quarter, with decent gains in leisure and hospitality and travel.”

Even so, the number of new filers remains extremely high by historical standards, a sign of just how entrenched the pandemic remains one year after it first struck.

“We are still dealing with millions of unemployed Americans,” said Gus Faucher, chief economist at PNC Financial Services Group. “It’s going to take a long time to get back to normal, but job growth will be stronger as we head into the spring.”

The United States will suspend retaliatory tariffs of up to 25 percent on Scotch whisky while British and U.S.officials seek to resolve a trade dispute.
Credit…Denis Balibouse/Reuters

The United States will suspend retaliatory tariffs against Britain for four months, including on Scotch whisky, arising from the longstanding trade dispute about subsidies for Boeing and Airbus. The two governments said they would use the time to try to come up with a long-term solution to the trade disagreement.

Since Britain left the European Union, it has sought to forge its own trade policy and secure a free-trade deal with the United States. On Jan. 1, the British government ended its retaliatory tariffs on Boeing and other goods, which were imposed by the European Union, in an effort to smooth over its relationship with the Biden administration. The decision essentially separated Britain from the dispute about aircraft subsidies between the European Union and United States. (That said, the U.S. trade representative argued Britain did not have the legal standing to keep imposing these tariffs outside the bloc.)

The tariff suspension is expected to help several types of British exporters, especially the Scotch whisky industry. In October 2019, a 25 percent tariff was placed on Scotch whisky and exports to the United States have since dropped 35 percent, costing companies more than £500 million (about $700 million), the industry’s trade group said. Cashmere and Stilton cheese producers will also benefit, the government said.

The decision “shows what the U.K. can do as an independent trading nation, striking deals that back our businesses and support free and fair trade,” Boris Johnson, Britain’s prime minister, said in a statement.

The suspension “will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from nonmarket economies, such as China,” the Office of the U.S. Trade Representative and British Department of International Trade said in a joint statement.

Stocks on Wall Street were unsteady on Thursday, with the S&P 500 dropping as much as a half a percent before recovering those losses, after two consecutive days of declines.

In Europe, the Stoxx Europe 600 was down 0.4 percent and London’s FTSE 100 fell 0.3 percent.

The yield on the 10-year U.S. Treasury note was at 1.47 percent on Thursday. Rising government bond yields have rattled tech stocks especially hard because they have been some of the biggest gainers over the past year, partly supported by the Federal Reserve’s easy money policies.

The market volatility has actually been caused by good news: an economic rebound, which investors worry will cause inflation. Few economists see a significant risk of runaway inflation, but investors say that the mere possibility of painful price growth might drive the Fed to raise interest rates to tamp down a heated economy. And that would be bad for bonds.

Despite policymakers mostly brushing off the worries, more investors think the Fed might have to intervene. To address these worries, the Fed could buy the long-dated bonds where yields are rising or put in place a policy of yield curve control.

The Federal Reserve chair, Jerome H. Powell, has said the central bank would not cut support for the economy anytime soon. 
Credit…Pool photo by Susan Walsh

The market conniptions of recent days are a direct result of several developments that point to the brightening prospects of economic recovery. Vaccinations are rising, retail sales and industrial production have been surprisingly solid and, perhaps most important, the Biden administration is expected to push its $1.9 trillion stimulus plan through Congress in the coming days.

One clear consequence is expected to be strong growth. Wall Street economists now expect output to rise by nearly 5 percent in 2021. Such robust growth — it would be the best year for the economy since 1984 — would seem like a good thing for stocks.

But growth brings with it the possibility of rising inflation, which in turn could prompt the Federal Reserve to raise interest rates — and that’s what investors are reacting to, with different consequences for the stock and bond markets, Matt Phillips reports for The New York Times.

Few economists see a significant risk of runaway inflation, but investors say that the mere possibility of painful price growth might drive the Fed to raise interest rates to tamp down the economy.

That would be bad for bond owners. If the Fed raised rates, rates around the bond market would climb. Then the price of bonds that investors hold would have to fall until they produced yields that were comparable to the new, higher rates in the market.

In expectation of that, investors are demanding a higher return now in the form of a higher yield on their bonds. Higher rates can be a problem for the stock market’s performance. One reason is that high interest rates make owning bonds more attractive, coaxing at least some dollars out of the stock market. Higher rates can also make borrowing more expensive for companies, especially smaller ones that have potential but lack a track record of profitability.

Apollo Global Management, a private equity firm, is acquiring the Venetian resort in Las Vegas, citing increased bookings for trips to Las Vegas.
Credit…Ethan Miller/Getty Images

Almost a year ago, on March 11, the World Health Organization officially declared that the spread of the coronavirus was a pandemic. Lockdowns and social distancing soon became a fact of life, and companies that rely on people gathering and moving around were hit hard.

But in recent weeks, many of these businesses have said they see signs that people are preparing to go out again: to the office, on vacation and elsewhere. Taken together, the DealBook newsletter notes, these indicators suggest that a reopening might be around the corner, as vaccines roll out, the weather changes or people simply seek out something new after so long in isolation. (Scientists say that people should be careful even after being vaccinated.)

Apparel. Richard Hayne, the chief executive of Urban Outfitters, told investors this week that its brands had recently been selling more “going out-type apparel.” In the last week of February, seven of Anthropologie’s top 10 sellers online were dresses, which may suggest that shoppers are preparing for life beyond Zoom. “Over the past year, we were lucky if they included one or two dresses,” Mr. Hayne said.

Concert tickets. “We’re feeling more optimistic than we were a month ago,” Live Nation’s chief executive, Michael Rapino, said on an earnings call last week. When the company recently released nearly 200,000 tickets for summer music festivals in Britain, they sold out in days.

Trips to Vegas. Tom Reeg, the chief executive of the casino giant Caesars Entertainment, told analysts that bookings were up 20 percent month on month. “It’s almost like a switch was flipped sometime late January, early February,” he said last week. Apollo Global Management’s co-head of private equity, David Sambur, cited these numbers when explaining the firm’s big bet on a Las Vegas recovery: the $6.25 billion acquisition of the Venetian casino and expo center announced on Wednesday.

Cruise bookings. Royal Caribbean’s chief executive, Michael Bayley, recently told investors that the company recorded a 30 percent jump in new bookings this year, compared with the last two months of 2020. A large share are people over 65, who are counting on being vaccinated soon, Mr. Bayley suggested. The company, which suspended most cruises through April, began a $1.5 billion stock sale this week.

Gym memberships. January was the first month that Planet Fitness saw a net increase in memberships since the pandemic began, according to Chris Rondeau, the gym chain’s chief. The uptick “reinforces our belief that people want to return to bricks-and-mortar fitness,” he told analysts.

But not movie tickets (yet). Alamo Drafthouse filed for bankruptcy on Wednesday, making it one of the most prominent movie chains to seek Chapter 11 protection during the pandemic. Still, it expressed some optimism, “because of the increase in vaccination availability, a very exciting slate of new releases and pent-up audience demand,” said Tim League, the company’s founder.

What did Jay-Z and Jack Dorsey talk about when they went yachting around the Hamptons together last summer? Perhaps only Beyoncé knows.

Maybe now we do, too. Square, the mobile payments company led by Mr. Dorsey, announced on Thursday its plan to acquire a “significant majority” of Tidal, the streaming music service owned by Jay-Z and other artists — including Beyoncé, Jay-Z’s wife, and Rihanna, who is a client of Jay-Z’s entertainment management company, Roc Nation.

Square will pay $297 million in stock and cash for the stake in Tidal. Jay-Z will join Square’s board.

Credit…Sam Hodgson for The New York Times
Credit…Anushree Fadnavis/Reuters

The announcement comes less than two weeks after Jay-Z announced that he would sell 50 percent of his champagne company, Armand de Brignac — better known as Ace of Spades — to LVMH Moët Hennessy Louis Vuitton amid a downturn in the entertainment industry caused by the pandemic that has affected some of Jay-Z’s holdings.

“I think Roc Nation will be fine,” Jay-Z said in an interview last month about the sale of Armand de Brignac. “Like all entertainment companies, it will eventually recover. You just have to be smart and prudent at a time like this.”

Also last month, Mr. Dorsey, who is also the chief executive of Twitter, announced that he and Jay-Z had endowed a Bitcoin trust to support development in India and Africa.

Tidal, which Jay-Z bought in partnership with other artists in 2015 for $56 million, provides members access to music, music videos and exclusive content from artists, but the streaming music industry has been dominated by competitors like Spotify, Apple and Amazon.

In 2017, Jay-Z sold 33 percent of the company to Sprint for an undisclosed amount. (After a merger, Sprint is now a part of T-Mobile.) Earlier this week, Jay-Z bought back the shares from T-Mobile, and most will be sold to Square as part of the deal.

Mr. Dorsey and Jay-Z began to discuss the acquisition “a few months ago,” said Jesse Dorogusker, a Square executive who will lead Tidal on an interim basis.

“It started as a conversation between the two of them,” he said. “They found that sense of common purpose.”

Mr. Dorogusker said Square, which was founded in 2009, will offer financial tools to help Tidal’s artists collect revenue and manage their finances. “There are other tools they need to be successful and that we’re going to build for them,” he said.

Saudi Aramco’s Ras Tanura oil refinery and terminal in Saudi Arabia. Saudi officials volunteered to cut oil production by one million barrels a day at the last OPEC meeting.
Credit…Ahmed Jadallah/Reuters

The Organization of the Petroleum Exporting Countries and its allies, including Russia, are expected to meet by videoconference on Thursday to consider a potential but by no means certain production increase of as much as 1.5 million barrels a day.

Analysts say the combined group, called OPEC Plus, could increase the supply of oil without undermining its price on global markets. After collapsing last spring, oil prices have risen to pre-pandemic levels in recent weeks, with Brent crude, the global benchmark, reaching nearly $67 a barrel in late February.

Vaccination programs against the coronavirus are gathering pace, potentially leading to increased economic activity and greater demand for oil this year. In addition, production growth from shale producers in the United States is expected to be restrained this year.

Petroleum heavyweights that are curtailing production, like Russia and the United Arab Emirates, would like to put some of that oil back on the market. On the other hand, Saudi Arabia, OPEC’s de facto leader, continues to urge caution while apparently seeking even higher prices.

After January’s OPEC meeting, Saudi Arabia voluntarily agreed to cut its own production by one million barrels a day, to about 8.1 million barrels a day. That cut is scheduled to expire in April, and it remains uncertain what the Saudis will do. Prince Abdulaziz bin Salman, the Saudi oil minister, clearly enjoys surprising the market and upending what he thinks are traders’ expectations.

On Wednesday, a preparatory technical committee meeting did not produce a formal recommendation, analysts say.

“Once again, it seems that Russia and U.A.E. are pressing for a collective OPEC Plus increase, while Saudi Arabia and Algeria are seeking to keep output unchanged for the time being,” Helima Croft, an analyst at RBC Capital Markets, an investment bank, wrote in a note to clients.

In January, OPEC Plus reached an unusual compromise that allowed modest increases to Russia and Kazakhstan that were offset by the substantial cuts that Saudi Arabia volunteered after the meeting.

The outcome of the meeting on Thursday may depend once again on how much production the Saudis are willing to sacrifice to gain higher prices.

Disney will close 30 percent of its stores in North America this year.
Credit…Joshua Lott for The New York Times

After 33 years as a shopping mall mainstay, Mickey Mouse is mostly calling it a day.

The Walt Disney Company said on Wednesday that it would dramatically downsize its chain of Disney Stores, which have struggled amid the pandemic and a broader consumer shift to online shopping. At least 60 locations in North America — 30 percent of the Disney Store footprint in the region — will close this year.

The company described the closures as the “beginning” of its downsizing effort. A significant number of overseas stores are also expected to close. According to its 2020 annual report, Disney has about 60 stores in Europe.

The Disney Store chain was founded in 1987 and once numbered more than 1,000 locations worldwide. For a time in the early 1990s, during a boom for shopping malls, Disney even experimented with an adjacent spinoff chain of Mickey’s Kitchen restaurants, where items included Dumbo burgers, Pinocchio pizzas and fries shaped like Donald Duck.

Disney redesigned many Disney Store locations in 2017 in an attempt to boost business, incorporating live video feeds from its theme parks and shifting the merchandise mix away from toys and toward fashion-conscious young adults. Results were mixed. In 2019, as shopping malls continued to struggle, Disney expanded its merchandising presence at Target stores, a move that analysts viewed as the beginning of the end for the stand-alone Disney Store business.

ShopDisney, the company’s online store, will expand over the next year and become more integrated with Disney’s theme park apps and social media platforms, according to Stephanie Young, president of Disney Consumer Products, Games and Publishing.

Mark Zuckerberg, the Facebook chief executive, testifying in October. Before the ban on political ads, he had said he wanted to maintain a hands-off approach toward speech on Facebook.
Credit…Pool photo by Michael Reynolds
  • Facebook said on Wednesday that it planned to lift its ban on political advertising across its network, resuming a form of digital promotion that has been criticized for spreading misinformation and falsehoods and inflaming voters. The social network said it would allow advertisers to buy new ads about “social issues, elections or politics” beginning on Thursday, according to a copy of an email sent to political advertisers and viewed by The New York Times.

  • Darren W. Woods, the chief executive of Exxon Mobil, said in an interview before an annual presentation to investors that Exxon would try to set a goal for not emitting more greenhouse gases than it removed from the atmosphere, though he said it was still difficult to say when that might happen. Under pressure from activist investors, Exxon said this week that it was adding two new directors with no previous ties to fossil fuels to its board. The company recently said it would create a new business that captured carbon dioxide from industrial plants and buried it deep in the ground. It also recently invested in Global Thermostat, a company that aims to suck carbon dioxide out of the air.





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