The government reported on Thursday that 723,000 workers filed new claims for state unemployment benefits last week as the coronavirus pandemic continued to inflict economic damage.
Another 298,000 new claims were filed under a federal emergency program, Pandemic Unemployment Assistance, designed for freelancers, part-time workers and others who are not normally eligible for state benefits. Neither figure is seasonally adjusted.
On a seasonally adjusted basis, the figure for new state claims was 709,000.
New claims declined to a new low from the stratospheric multimillion levels reached in the spring — but they continue to outrun records set in previous recessions.
“The gradual healing of the labor market continued, but the magnitude is still high,” said Diane Swonk, chief economist at the accounting firm Grant Thornton.
“Technically it looks like we’re in a recovery,” she said, “but we’re still so much in the hole.”
Prospects for digging out of that hole are shadowed by the alarming rise in coronavirus caseloads around the country.
And many people already collecting unemployment insurance have been hitting the 26-week limit on benefits that exists in most states.
Those workers are eligible to receive an additional 13 weeks of benefits under a federal program called Pandemic Emergency Unemployment Compensation, though the transfer from one program to the other is not automatic in some states. That caseload has been rising.
Most economists agree that controlling the pandemic is a prerequisite for an economic recovery regardless of any government-ordered shutdowns.
News of the development of a vaccine that is 90 percent effective lifted hopes — and markets — this week. But Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said on Tuesday, “The economy right now is being dictated by coronavirus’s existence, and I think less by the potential for a vaccine.”
Several Fed officials, including the chair, Jerome H. Powell, have said Congress’s failure to agree on another relief package for individuals and business will hamper any recovery. Both federal pandemic-related jobless programs will expire at the end of the year without further action.
With the coronavirus pandemic entering its ninth month, economists warn that the prolonged downturn could inflict long-lasting wounds to the U.S. employment outlook.
“There’s a risk that we’re going to see permanent damage to the labor market,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics, referring to laid-off workers who end up dropping out of the work force and to industries like restaurants, entertainment, travel and hospitality that are unable to return to full capacity.
Roughly one-third of unemployed workers have been without a job for 27 weeks or more, compared with 4.1 percent in April. The longer someone is unemployed, the harder it is to get back into the work force.
There have been more job gains than losses recently, and the unemployment rate fell last month to 6.9 percent from 7.9 percent in September. But much of the progress was in dining and retail businesses, which are the most vulnerable to losses from rising coronavirus caseloads.
State unemployment rolls have declined in recent weeks, but some of that drop is a result of program limits: In most states, benefits expire after 26 weeks.
Some of the workers who have hit the limits of their state benefits have signed up for Pandemic Emergency Unemployment Compensation, a program that Congress created in March to provide an additional 13 weeks of benefits for people who exhausted their state aid. The number of filings in this program increased to 4.14 million for the week ending Oct. 24, from 3.98 million the previous week.
“That’s where you see the wounds festering and worry about how deep they are and how much they’ll scar us,” said Diane Swonk, chief economist at the accounting firm Grant Thornton.
The particulars of Pfizer’s vaccine, not to mention the challenges of the pandemic, will make add complexity to the effort to distribution efforts, report The New York Times’s Rebecca Robbins and David Gelles.
The vaccine, created with the German company BioNTech, has to be stored at around minus 70 degrees Celsius (minus 94 Fahrenheit) until shortly before it is injected. That is about the temperature of the South Pole on a winter day and colder than any of the other leading vaccines in development.
Vaccine manufactured in the United States will go into vials (five doses per vial). Vials will go into trays (195 vials per tray). Trays will go into specially designed cooler-type boxes (up to five trays per box).
The reusable boxes, each toting 1,000 to 5,000 doses and stuffed with dry ice, are equipped with GPS-enabled sensors. Pfizer employees will be able to monitor the boxes’ locations and temperatures as FedEx and UPS transport them to hospitals and clinics nationwide.
Once the Pfizer coolers reach their destinations, hospitals or pharmacies will have a few choices of how to store the vaccine. The easiest option is using ultracold freezers, but not many sites have them. Otherwise, the facilities can stash the trays in conventional freezers for up to five days. Or they can keep the vials in the cooler for up to 15 days, as long as they replenish the dry ice and do not open it more than twice a day.
Then there is the thorny question of who will receive vaccines first. That will be up to state governments.
Britain’s economy grew 15.5 percent in the third quarter compared with the previous three months, the biggest quarterly expansion since officials starting keeping records in 1955, according to the national statistics agency.
The economy surged back into action, following a deep recession in the first half of the year, after lockdown measures were eased, schools and offices were allowed to reopen, and the government funded a popular meal discount program to get people back into restaurants.
But the record expansion from July to September still left the British economy 9.7 percent smaller than it was at the end of 2019, and has been already overshadowed by the fact that economists believe Britain is in the midst of another contraction, with England under a second national lockdown. Britain passed a grim record on Wednesday, surpassing more than 50,000 coronavirus deaths, the highest in Europe.
The economic recovery started to slow in the late summer, and by September, the monthly increase in gross domestic product was just 1.1 percent. For the fourth quarter, the Bank of England has forecast that the economy will shrink by 2 percent, sending the recovery off course. That prospect prompted the government to extend its wage-subsidy program and grants to self-employed workers.
Britain’s economy is following a similar path as the rest of Europe, where a second wave of the pandemic has interrupted a recovery that began in the summer. But the data shows Britain suffering a deeper recession than other countries.
One reason for that, the Office for National Statistics noted, are differences in how Britain and the rest of Europe calculate changes to their health care and education sectors. Britain recorded a particularly steep decline in these sectors over the spring when nonurgent hospital treatments were delayed and schools were closed.
Shares in Chinese internet titans like Alibaba, Tencent and Meituan recovered on Thursday after Beijing unveiled sweeping new proposals earlier this week to rein in their power. But their market values remain well below where they were before the announcement, suggesting the longer-term effects of the rules will be harder to shake, the DealBook newsletter notes.
China’s potential new rules take aim at online platforms, proposing limits on exclusivity requirements, selling products below cost and different treatment of partners based on algorithms. They follow new regulations on financial technology companies like Ant Group, the Alibaba affiliate whose blockbuster I.P.O. was abruptly derailed last week by Chinese regulators.
Chinese regulators may continue tightening control. “We should learn from international experience, strengthen our antimonopoly examinations and ensure that a fair market order is maintained,” Liang Tao, the vice chairman of the China Banking and Insurance Regulatory Commission, said at a conference on Wednesday. (Officials also rejected a software developer’s I.P.O. filing that day.)
Silicon Valley is assessing the potential repercussions. In years past, some executives warned against Washington taking a tougher line on homegrown technology giants, for fear that they would lose out to Chinese rivals that grew unchecked.
For now, Beijing’s moves are unlikely to have much impact on U.S. efforts to rein in tech giants, according to antitrust experts and company executives. But in the longer term, they believe it is another sign that regulators worldwide are preparing to limit their powers.
Stocks lost ground on Thursday as the exuberance over potential success in the development of a coronavirus vaccine faded in the face of steadily rising infections. A downbeat assessment of oil demand also cast a shadow on the markets.
The S&P 500 fell slightly after ending trading on Wednesday just short of its Sept. 2 record high. The Stoxx Europe 600, a benchmark index for European shares, slipped 0.3 percent, and other major indexes on the continent were about 0.5 percent lower.
The recent rally in oil prices also slowed after the International Energy Agency issued a report that said that the combination of a “poor outlook for demand and rising production” in countries like Libya meant that “fundamentals are too weak to offer firm support for prices.” Despite brightening prospects for a coronavirus vaccine, the agency said it did not anticipate a “significant impact” from such a breakthrough in the first half of 2021.
Shares in oil giants dragged indexes lower, with Royal Dutch Shell down 2.6 percent, and Exxon Mobil and Chevron down more than 1 percent.
Still, U.S. stocks are up about 9 percent in November, in Wall Street’s best two-week stretch since April when markets were rebounding from their plunge over fears of the economic impact of the pandemic.
Most of those November’s gains came last week, as clarity over the outcome of the U.S. election raised investor sentiment, but stocks have also been jolted higher by promising news from Pfizer and BioNTech about a vaccine under development.
Moderna, the pharmaceutical firm developing a coronavirus vaccine, said Wednesday evening that it had accumulated enough data to begin the first preliminary analysis of its drug. The results are expected within days, and Moderna’s shares rose nearly 5 percent.
Still, the virus is spreading in many parts of the world seemingly unchecked. The total number of people hospitalized with the virus in the United States reached 65,368, the most at any point in the pandemic. Worldwide, the number of new infections is growing faster than ever, with many European countries hit particularly hard.
Shares in Siemens, the giant engineering company in Germany, slumped as much as 5 percent after the company predicted only a moderate increase in profit next year.
Investors will hear from the Federal Reserve chair, Jerome H. Powell, on Thursday. Mr. Powell, who is scheduled to speak at a European Central Bank conference, has been urging leaders in Washington to reach an agreement on a long-stalled plan for additional spending to support workers and businesses in the United States.
The government reported on Thursday that 723,000 workers filed new claims for state unemployment benefits last week as the pandemic continued to inflict economic damage. New claims declined from the week before, but they continue to outrun previous records.
President-elect Joseph R. Biden Jr. tapped Ron Klain to be his White House chief of staff. Mr. Klain is a veteran Democratic operative who first worked with Mr. Biden in 1989, when Mr. Biden was a senator from Delaware. He later served as Mr. Biden’s chief of staff when he was vice president, helping oversee the 2009 economic rescue package, and later acting as President Barack Obama’s “Ebola czar.”
Between those stints at the White House, Mr. Klain has worked at Steve Case’s investment fund, Revolution, which has taken stakes in companies like DraftKings and Sweetgreen. “Ron joined Revolution in 2005 when it was just an idea, and helped build it into a significant venture capital firm,” Mr. Case said in an email to the DealBook newsletter. Mr. Case, the former chief executive of AOL, described Mr. Klain, most recently Revolution’s general counsel, as “a great thinker, a great manager and a great communicator.”
He recalled a party held by Mr. Biden in 2010, when Mr. Klain left the White House to return to Revolution:
Vice President Biden and his family and close advisers were there — and frankly they were a little unhappy to lose him, and made sure I knew it. I had to remind them that they had “stolen” him from us in the first place! Obviously, they now have him back!
Twitter plans to announce on Thursday that is investing $100 million in Community Development Financial Institutions in a new initiative aimed at combating “racial injustice and persistent poverty,” the DealBook newsletter reports.
The commitment is worth around 1 percent of Twitter’s cash pile, and will be used for loans provided by the Opportunity Finance Network’s band of C.D.F.I.s across the United States. These institutions take government money, donations and other funds to seed businesses that banks won’t deal with in underserved communities. More than 80 percent of customers in the network have low incomes, and around 60 percent are people of color.
Twitter’s move follows similar corporate initiatives, including from Netflix (deposits in Black-owned banks), PayPal (investments in Black- and Latino-led venture funds) and Square (C.D.F.I.s), with the latter company also run by Twitter’s chief executive, Jack Dorsey. Twitter’s finance chief, Ned Segal, said it was inspired by those companies, and held conversations with nonprofit groups and financial institutions about how “to bring our balance sheet to benefit these communities,” he said. Twitter wants to establish a model that can be replicated by other companies, so that the Opportunity Finance Network can scale up if other corporate investors come on board.
Twitter will reinvest the interest it earns from loans, which it says will be offered at below-market rates, into Operation Hope, a nonprofit organization aimed at improving financial literacy and economic inclusion.
The social media company has been criticized for the spread of disinformation on its platform, which it has been trying to contain. Mr. Segal said the announcement on Thursday fit with the company’s broader mission of “serving the public conversation,” alongside its policies on what appears on its platform. “We hope that each thing stands on its own,” he said.
As it prepares to start selling its fifth major game console in 25 years on Thursday, Sony has largely become the PlayStation company, reports Seth Schiesel.
Mark Cerny, Sony’s architect for the PlayStation 5 and an adviser to the company for decades, said in an interview last week that the involvement of Sony Music executives in the birth of PlayStation was important. It instilled a respect within the game division’s culture for the creative process and was a precursor of the company’s shift toward entertainment.
The second PlayStation, released in 2000, was a hit (and remains the world’s best-selling game console) propelled by Rockstar Games’ Grand Theft Auto III and Sony’s expansion into new geographic markets.
The PlayStation 4, released in 2013, dominated the competition, selling more than twice as many units as Microsoft’s Xbox One. That victory gave Sony the financial breathing room it needed to mount a revival and perhaps become a beacon for the broader Japanese electronics industry.
Sony’s shares are up more than elevenfold since 2012, profits have risen, and the company is still one of Japan’s largest, with about 110,000 employees and a market value around $108 billion.
“Entertainment, led by gaming, is Sony’s new face, the company’s new growth driver,” said Kota Ezawa, a Citigroup analyst in Tokyo. “There has been a clear statement and direct change in direction by Ken Yoshida to move Sony from a traditional electronics business of selling boxes to a business selling entertainment.”
Job losses that aren’t reflected in the unemployment figures also exact a toll.
Cindy Fraser used to work three jobs: as a church custodian in Redford, Mich., as a house cleaner, and as a florist specializing in weddings and special events.
When the pandemic hit, her housecleaning and florist gigs dried up. She held on to her custodial job, working about 25 hours a week at $10 an hour. But without the income from her side jobs, she has struggled to keep up with her monthly bills, including a $650 mortgage payment, a $350 car payment, $150 for car insurance and $300 for utilities. She applied for Pandemic Unemployment Assistance, a federal program for part-time workers and others ordinarily ineligible for state jobless benefits, but was told she did not qualify.
Ms. Fraser, 54, is a single mother of four children and lives with her two younger daughters, 15 and 16, one of whom has a genetic condition and several autoimmune disorders that make her vulnerable to the coronavirus.
Ms. Fraser has to be selective about taking additional work because she worries about exposure to the virus in a store or a restaurant.
“I can’t get sick, because if either one of my daughters gets sick, I am the only parent to take care of them,” she said. “So I have to be extremely choosy as to what kind of jobs I can take so I don’t bring the virus into my home. I can’t just go get a job at Walmart.”
To make ends meet, Ms. Fraser has been relying on the $2,000 a month in survivor benefits she has received since her husband died and has spent nearly all of her savings, about $5,000.
“I had wanted to save that money for my daughters’ college tuition and driver’s training,” she said. “But now, it’s just going toward keeping a roof over their head.”
The New York Times
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