New claims for state unemployment insurance fell last week, but layoffs continue to come at an extraordinarily high level by historical standards.
Initial claims for state benefits totaled 790,000 before adjusting for seasonal factors, the Labor Department reported Thursday. The weekly tally, down from 866,000 the previous week, is roughly four times what it was before the coronavirus pandemic shut down many businesses in March.
On a seasonally adjusted basis, the total was 860,000, down from 893,000 the previous week.
“It’s not a pretty picture,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “We’ve got a long way to go, and there’s still a risk of a double-dip recession.”
The situation has been compounded by the failure of Congress to agree on new federal aid to the jobless.
A $600 weekly supplement established in March that had kept many families afloat expired at the end of July. The makeshift replacement mandated by President Trump last month has encountered processing delays in some states and has funds for only a few weeks.
“The labor market is stalling,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “We’re facing more headwinds, especially with the stimulus package delayed in Congress.”
New claims for Pandemic Unemployment Assistance, an emergency federal program for freelance workers, independent contractors and others not eligible for regular unemployment benefits, totaled 659,000, the Labor Department reported.
Federal data suggests that the program now has more beneficiaries than regular unemployment insurance. But there is evidence that both overcounting and fraud may have contributed to a jump in claims.
When the federal government’s $600 weekly supplemental benefit for recipients of unemployment insurance expired at the end of July, ZipRecruiter, an online employment marketplace, expected a huge wave of searches to follow.
But it never materialized. “Job seeker numbers are pretty flat,” said Julia Pollak, labor economist at ZipRecruiter. “People still expect to get their old jobs back.”
Ms. Pollak said she was surprised because 36 percent of those surveyed in July by ZipRecruiter said they would spend more time searching for work if the $600 payments ended. Just over 40 percent said they would be willing to take a less appealing position.
Instead, people aren’t budging. “We see a level of stasis in the economy,” Ms. Pollak said. “The uncertainty causes people to sit and wait. The whole economy is in a bit of a freeze.”
In some cases, workers have dropped out of the labor market. Labor Department data showed that among female workers 25 to 54 years old, 125,000 left the work force in August.
“This is a situation where many people are choosing to delay re-entering the labor force or to withdraw,” Ms. Pollak said. “In some cases, it makes more sense for workers to wait for conditions to improve in their industry. It’s costly for people to switch.”
As regular unemployment benefits run out, Ms. Pollak and ZipRecruiter still expect a fresh wave of searchers by the end of the year. “There is some return to normal,” she said. “People don’t want to maintain a Covid-style lockdown forever.”
Main Street businesses — especially music clubs, gyms, restaurants, bars and others that were forced to close by the coronavirus pandemic — are trying to figure out how, or if, they can dig out of debt.
Nearly 73,000 businesses have closed permanently since the pandemic took hold, according to an analysis by Yelp. And the fate of many that remain open increasingly hinges on their ability to renegotiate their leases.
“For 10 weeks, our revenue went to zero and stayed at zero,” said Rhonda Stark, the owner of three Orangetheory Fitness gyms in Ohio that were shut down from mid-March until late May. Ms. Stark’s collective rent bill, her largest fixed expense, tops $32,000 a month. She hasn’t paid it in full since March. Ms. Stark’s gyms have reopened at a reduced capacity, cutting her sales by about 30 percent. To stay open, she needs to strike new deals with her landlords.
Retail rent collections plunged in April to just 54 percent of the total owed, according to Datex Property Solutions, a software company that tracks data on thousands of its clients’ retail properties nationwide. By August, collections had rebounded to nearly 80 percent, but some tenants, like movie theaters, clothing retailers, hair salons and gyms, were much further behind.
“When tenants can’t pay the rent, it imperils landlords’ ability to pay their own overhead and their loans, and the whole thing cascades,” Mark Sigal, chief executive of Datex, said.
For both sides, it’s a complicated dance. Property owners have their own expenses to pay, including taxes, insurance, mortgage or debt payments, and maintenance bills. Buildings owned by real estate investment trusts or Wall Street bondholders have complex management structures and governing covenants that can limit the property manager’s ability to make a deal.
U.S. stock futures fell on Thursday, pointing to a downbeat open on Wall Street when trading starts. Global markets swooned, following Wall Street’s Wednesday slump after the Federal Reserve said it would need to keep rates near zero for years to help bring the U.S. economy back to full strength.
New claims for unemployment benefits in the United States declined last week, new government data showed. But at 860,000 on a seasonally adjusted basis, the reported number of claims was slightly higher than economists had expected.
European indexes were broadly lower, with the FTSE 100 down less than half a percent and the Stoxx Europe 600 losing 0.7 percent. Automakers like Volkswagen and Renault dropped after industry data showed European new car sales down more than 17 percent in August compared to a year ago.
In Asia, nearly every index closed lower. Hong Kong’s Hang Seng lost 1.6 percent, and South Korea’s Kospi fell 1.2 percent.
Oil futures were down about 0.6 percent. Risk-aversion in the markets pushed up the price of U.S. Treasury’s 10-year notes, and gold was lower.
The Federal Reserve said Wednesday that the U.S. economy continued to show weakness, and that policymakers would keep interest rates very low through at least 2023.
“Overall activity remains well below its level before the pandemic, and the path ahead remains highly uncertain,” said the Fed chair, Jerome H. Powell. The remarks caused the S&P 500 to tumble; it closed 0.5 percent lower.
Fastly is up more than 310 percent this year. Zscaler is up over 180 percent. Chegg and Veeva are up 75 percent and 90 percent. In a tech universe dominated by Apple, Amazon, Microsoft and Google, the share prices of little companies you’ve probably never heard of are soaring.
The coronavirus pandemic has accelerated trends that were building for years by forcing large swaths of the population to work from home and shop online. And many obscure companies are taking off, driven by investors who expect them to flourish in an economy whose future arrived ahead of schedule.
“When it comes to remote work in particular, the past 10 weeks have seen more changes than we’ve seen in the previous 20 years,” said Erik Brynjolfsson, an economist and the director of the Digital Economy Lab at Stanford University.
Surveys conducted by Mr. Brynjolfsson and economists at the Massachusetts Institute of Technology found that the share of Americans working from home jumped to about 50 percent this year, from around 15 percent before the pandemic.
The tech-heavy Nasdaq composite index is up roughly 60 percent since it bottomed out in late March, and much of those gains can be attributed to the shares of the tech behemoths. Investors have bet heavily that those companies’ dominant market positions will only improve in the pandemic and its aftermath.
But the trajectory of smaller technology stocks has been even more remarkable. Zoom — the suddenly ubiquitous video conferencing service — has been an investor darling, up close to 500 percent this year as workplaces shut down. Peloton, the home video cycling company, is up almost 200 percent amid widespread gym closures — and just added to its product line.
Registrations of new cars fell 19 percent in the European Union in August, a much steeper decline than in July when registrations fell 6 percent compared to a year earlier, the European Automobile Manufacturers Association said Thursday. The decline in car sales added to evidence that the economic rebound is losing steam. “Further recovery in the coming quarters will likely be rather sluggish,” the Kiel Institute, an economic research organization in Germany, said Thursday as it revised its forecasts for growth in the European economy downward.
Top Glove, the world’s largest medical glove manufacturer, on Thursday reported its best financial performance ever because of demand stemming from the pandemic. The Malaysia-based company said its net profit last quarter was 1.33 billion ringgit, or about $321 million, 18 times higher than the same quarter a year earlier. Rights activists have raised concerns about forced labor in Malaysia’s glove industry, which provides two-thirds of the global supply, leading U.S. Customs and Border Protection to impose an import ban on two of Top Glove’s subsidiaries in July. The company, which says it has begun reimbursing foreign workers for the fees they paid recruitment agencies, said on Thursday that it was “making good progress” in working with the U.S. authorities to lift the ban.
The pilots union at United Airlines has reached an agreement to avoid furloughs until next summer, sparing the jobs of thousands of pilots weeks before broad job cuts are slated to begin across the industry. The union, the United Master Executive Council, said the agreement, which has yet to be approved by its 13,000 members, would protect pilots from furloughs until June. It would also open a second round of early retirement offers and includes temporary work reductions that would be reversed automatically as the airline recovers.
Federal Reserve officials expect to leave interest rates near zero for years — through at least 2023 — and will tolerate periods of higher inflation as they try to revive the labor market and economy, based on their September policy statement and economic projections released Wednesday. “Effectively, we’re saying rates will remain highly accommodative until the economy is far along in its recovery,” the Fed chair, Jerome H. Powell, said at a news conference following the meeting.
Marcos Quintana, 29, was laid off in December from his job as a seasonal custodian at a school in Bakersfield, Calif. He expected to find new work quickly, but the pandemic hit, and many custodial jobs dried up.
He started receiving $200 a week in state unemployment benefits, as well as a $600 boost from the federal government. When the $600 program expired in late July and his state unemployment benefits ran out, he was left with $230 a week from Pandemic Emergency Unemployment Compensation, a federal program for those whose state benefits have expired.
Mr. Quintana lived with his girlfriend, who lost her job as a hairstylist in March when salons closed. She filed for unemployment benefits but never received them, so Mr. Quintana supported them, paying the $935 in rent and as much as $300 in utilities for their apartment. To avoid falling behind on his $357 car payment and $185 car insurance bill, he cut off cable television and borrowed from his father.
Then Mr. Quintana found that he was eligible for Lost Wages Assistance, a short-term supplement that provides $300 a week from federal disaster funds. He was certified to receive the payments on Sept. 15, but he’s not sure when they will arrive.
Regardless, the money will be too late to avoid upheaval in Mr. Quintana’s life. His relationship with his girlfriend soured as the financial stress mounted. And Mr. Quintana couldn’t afford their bills.
So last week the couple split, and he moved in with his parents.
“It feel like a kid again,” he said. “Like I’ve taken two steps backward in life.”