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    America Is on a Road to a Better Economy. But Better for Whom?

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    Listen to This ArticleAudio Recording by AudmTo hear more audio stories from publications like The New York Times, download Audm for iPhone or Android.The plunge the U.S. economy took last spring was so precipitous that the charts from the time look, literally, like cliffs. Industrial output fell 12.7 percent in April 2020, the worst drop since records began a century earlier, as entire industries shut down virtually overnight. Airline travel, as measured by the number of people passing through T.S.A. checkpoints, fell 94 percent in a month — from two million people on March 1 to just 124,000 on April 1. In two months, employers cut 22 million jobs, more than in every recession in the last 50 years, combined.“This thing is going to come for us all,” the economist Martha Gimbel, now an adviser to President Biden, said in April 2020, when the full extent of the damage was just beginning to hit home. She meant every industry, every income group, every class of worker — not just flight attendants and line cooks but also white-collar workers in supposedly recession-proof industries. Even sectors that were initially thriving in lockdown, like personal entertainment and home improvement, would feel the pinch once enough people saw their paychecks evaporate. No industry is recession-proof in a recession that shuts down the entire economy.That was the dominant view at the time. But it was wrong. “This thing” didn’t come for us all. It came for the restaurants, the hotels, the movie theaters and for thousands of other businesses and millions of workers. But the ripples didn’t spread as far as economists feared. The financial system didn’t melt down. White-collar workers didn’t lose their jobs en masse. The factories and construction sites that shut down in April had mostly reopened by June.A year later, the recovery is in full swing. Restaurants are open again. Airports are filling up. The United States has regained two-thirds of the jobs lost last spring, and is closing the remaining gap at the pace of hundreds of thousands of jobs a month. In his annual letter to shareholders a year ago, Jamie Dimon, the C.E.O. of JPMorgan Chase, warned of a “bad recession” that could rival the 2008 financial crisis; in this year’s edition, he predicted a multiyear boom. Amid the euphoria, the government’s closely watched monthly jobs report showed that hiring in April was a quarter of what economists had expected, and down sharply from March. It was a stark reminder: The pandemic isn’t over. A robust recovery isn’t guaranteed. The U.S. economy still faces a long climb back to health — and the most vulnerable workers will, inevitably, be the last to benefit. The number of jobs held by college graduates in April was back almost to its pre-pandemic level; among those with a high school diploma or less, there is still a gaping hole of more than 3.5 million jobs.Counting all the various Covid relief packages passed under two presidents, the United States has now pumped more than $5 trillion into the economy.Political leaders and policymakers from President Biden on down have talked about the need to create a post-pandemic economy that is better than the one we left behind last year. The question is: Better for whom? The pre-pandemic economy, too, was praised in some corners as the best in decades, but it was still one in which the unemployment rate for Black Americans was twice that of white Americans, where someone could work a full-time job 52 weeks a year and still stay mired in poverty and where people’s toehold in the middle class was so tenuous that, within weeks of losing their jobs last spring, many were left idling in their cars in a miles-long line at a local food bank. “We need a different economy than the one we had, because the one we had clearly was not resilient,” says William Spriggs, a Howard University economist.And yet in the next breath, Spriggs allows that he is optimistic that we actually will build a different economy this time, one in which jobs are plentiful, wages are rising and prosperity is widely shared. That optimism stems in part from the relatively strong recovery so far, and partly from the federal government’s ongoing efforts to keep it on track. But it also stems from the fact that after a crisis that laid bare the deep inequities in the U.S. economy, policymakers, journalists and voters are all less likely to accept without question a recovery that reaches only a small segment of the population. The first two decades of the 21st century were a parade of economic disappointments: The bursting of the dot-com bubble was followed by a recession; which was followed by a “jobless recovery”; which was followed by another burst bubble, this time in housing; and another, even worse, recession; and another, even weaker, recovery. Officially, the Great Recession ended in June 2009, but it took two years for U.S. gross domestic product to return to its pre-recession level, and six years for unemployment to do so. Long-term joblessness didn’t even stop rising until the recession had been over for nearly a year, and it didn’t get back to its pre-2008 normal until well into 2018. Year after year, forecasters predicted that this was the year that growth would finally pick up and wages would rise and prosperity would be widely shared. And year after year they were wrong. The pessimism became so ingrained that by 2019, when things were, finally, actually pretty good, the dominant economic narrative was about what would inevitably cause the next recession. (“Global pandemic” did not tend to make the list.)Judged against that grim benchmark, this recovery already looks like an improvement. The consensus is that G.D.P. will return to its pre-pandemic level sometime this quarter, and possibly already has. The unemployment rate is on pace to get there sometime next year. Turn on CNBC these days, and the debate is not over the risks of a weak recovery but over the possibility of runaway inflation, a problem usually associated with an economy that’s running too hot, not one that’s trying to get back on its feet after a crippling recession.This recovery is different, in part, because this recession was different. The last crisis, like most recessions, was caused by a fundamental imbalance — the housing bubble — that had to be resolved before the economy could start growing again. Construction workers and mortgage brokers had to find jobs in other industries. Households had to get out from under unsustainable debt loads. Banks and other financial institutions had to write off hundreds of billions in bad loans. This time, there was no imbalance. Things were basically going fine, and then an outside force, what economists call an “exogenous shock,” turned the world upside-down. If we could somehow have pressed “pause” until the pandemic ended, there would have been no reason for a recession at all. Of course, there is no “pause” button. That’s why everyone was so worried about the ripple effects last year. Restaurants can’t pay waiters when they have no customers. Waiters can’t pay rent when they have no jobs. Landlords can’t pay their mortgages when their tenants don’t pay rent. Banks can’t make new loans when borrowers stop making payments. And so on and so on, until what began as an isolated crisis caused by a specific set of circumstances has turned into a general pullback in activity across the economy.Except that never really happened this time. Evictions, foreclosures and bankruptcies all fell last year. The financial system, as anyone who has checked their 401(k) balance lately can attest, did not collapse. Perhaps the most shocking statistic in a year of shocking economic statistics is this one: In what was, by many measures, the worst year since at least World War II, Americans’ income, in aggregate, actually rose.How is this possible? Because of the other reason this recovery is different: the federal government. Counting all the various Covid relief packages passed under two presidents, the United States has now pumped more than $5 trillion into the economy. That dwarfs not just what the U.S. has spent in any previous recession, but also the aid provided in almost any other large country. Here’s what that money meant in the real world: When the economy shut down last spring, the federal government stepped in to ban most evictions and made it easy for borrowers to delay payments on their mortgages and student loans. It expanded access to nutrition benefits, school-lunch programs and other emergency relief programs. The Federal Reserve bought hundreds of billions of dollars’ worth of bonds to keep credit flowing and avoid a repeat of the 2008 crisis.Most important, the government gave people money. Lots of money. By April of this year, the typical middle-class family of four had received more than $11,000 through successive rounds of direct payments. That doesn’t include the expanded child tax credit that was part of the latest aid bill, which is worth up to $3,600 per child.The CARES Act, which Congress passed in late March 2020, also provided $600 a week in extra unemployment benefits to laid-off workers, and created a whole new program — Pandemic Unemployment Assistance — to cover freelancers, gig workers and other people who ordinarily don’t qualify for benefits. And it created the Paycheck Protection Program, which gave out more than half a trillion dollars in low-interest — and in many cases, forgivable — loans to small businesses, most likely preventing thousands of employers from going under entirely.The government didn’t get everything right. Much of the economic response to Covid was deeply, frustratingly flawed. People spent weeks battling their way through busy signals and overloaded websites to claim their benefits, often only to see their payments suspended because of a lost piece of paperwork or a data-entry error. Small-business aid was snapped up by businesses that didn’t really need the help (and in some cases weren’t small), while restaurants, retailers and concert venues that were truly struggling became ensnared in a tangle of red tape and, in some cases, simply gave up. Congress, which reacted with such uncharacteristic speed in the spring, quickly fell back into its old partisan patterns, with Democrats pushing for more spending, Republicans for less — resulting in a monthslong delay in aid during a critical period last fall. “Their fiscal policy response was, in the beginning, on the money — it was exactly what we needed,” says Michelle Holder, an economist at John Jay College in New York. “But the long view was not necessarily taken into account with regard to how long it was really going to take our country to slog through this pandemic.”But as bad as it was, the scale of the hardship would have been far worse without the abundant government response. Researchers at Columbia University found that the federal aid kept 18 million Americans out of poverty last April and 13 million in January. The image of Americans lining up at food banks is, appropriately, seared on our collective memory, and measures of food insecurity did rise in the pandemic. But government aid almost certainly saved far more people from hunger, says Diane Whitmore Schanzenbach, a Northwestern University economist who has studied food insecurity during the pandemic. She notes that data from the Census Bureau shows rates of hunger dropping sharply after government aid checks arrived in January and March.And the aid didn’t just rescue millions of individual families. It also arguably rescued the economy itself. Last spring, for example, landlords across the country feared that tenants who had lost their jobs would start missing rent payments. But that never happened at a large scale. According to data from the National Multifamily Housing Council, which represents apartment owners and managers, 80 percent of tenants paid rent on time last May, and 95 percent paid by the end of the month — both comparable to the previous year, despite an eviction moratorium that lowered the stakes for nonpayment.Researchers at the JPMorgan Chase Institute, using data from thousands of checking accounts, found that practically as soon as the CARES Act aid began flowing, spending among low-income consumers rebounded fully to its pre-pandemic level. In other words, unlike in virtually every other recession on record, millions of people lost their jobs, but they didn’t have to stop spending. More than anything else, that is what put us on track to avert a downward spiral.“It doesn’t look like it’s going to happen,” says Louise Sheiner, a former Federal Reserve economist who is now at the Brookings Institution. “The fiscal support is what will prevent it from happening.”Illustration by ArdneksU.S. employers added 266,000 jobs in April. In any normal time, that would represent a good month for hiring; in the two years leading up to pandemic, job growth averaged a bit under 200,000 jobs per month. But in the context of an economy that is still down more than eight million jobs from February 2020, it represented an alarming deceleration (770,000 jobs were added in March). It also further inflamed an already-simmering debate over the best way to help the economy. Democrats looked at the unexpectedly weak job growth and saw evidence of an economy still in need of government aid. Republicans looked at it and saw evidence that government aid was contributing to the problem — that enhanced unemployment benefits were discouraging people from looking for jobs, leading to a shortage of available workers. Still, few economists expect the weakness to last. Goldman Sachs, in a note to clients after the disappointing jobs report, said it expected job gains to average 800,000 per month between May and September, which would still represent a faster recovery than after any crisis in recent memory. Speed matters because a principal lesson of the last recession is that the victims of a slow recovery are disproportionately the most disadvantaged workers. Wage growth for all but the highest-earning workers didn’t begin to pick up in earnest until nearly a decade into the recovery from the last recession. The Black unemployment rate didn’t fall below 10 percent until 2015, six years after the recession ended. (The unemployment rate never hit 10 percent for white people in the first place.)‘There is going to be a tendency to look at those numbers and say, “Mission accomplished,’ before it is time.”Jerome Powell, the Federal Reserve chairman, has repeatedly cited racial and other disparities as a reason for trying to revive the economy as quickly and completely as possible. People at the bottom of the income ladder enjoyed just a few years of decent gains before the pandemic cut the recovery prematurely short. The faster we can get back there, the sooner they can begin to enjoy those gains again. “Those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities,” Powell said in a speech at a National Community Reinvestment Coalition conference in early May. “Our recent history highlights both the benefits of a strong economy and the severe costs of a weak one.”Low-income families are starting in a much different place from where they were in the last recovery. Indeed, American households are, on average, in the best financial shape in decades. Debt levels, excluding home mortgages, are lower than before the pandemic. Delinquencies and defaults are down, too. And Americans in aggregate are sitting on a mountain of cash: $6 trillion in savings as of March, more than four times as much as before the pandemic.Averages, of course, don’t tell the full story. The wealthy, and even the merely affluent, have done exceedingly well during the pandemic. They have, by and large, kept their jobs. They have seen the value of their stock portfolios soar. And they have spent less on vacations, restaurant meals and other services. For those at the other end of the economic spectrum, the picture looks very different: Many of them lost their jobs, had no investments to start with and needed every penny of the aid they received to meet basic living expenses, if they managed to get that aid at all.Those diverging fortunes are what commentators have called the “K-shaped recovery” — rapid gains for some, collapse for others. But that narrative is incomplete. Millions of people have been financially devastated, but many more have not been. Most low-wage workers kept their jobs, or got them back relatively quickly. Many of them will emerge from the pandemic in better financial shape than they entered it, thanks in large part to successive rounds of government aid. Low- and middle-income families came out of the last recession mired in debt, and spent years trying to climb out of that hole. That reality colored their financial decisions long after the recession was over: whether to buy a house, whether to go to college, whether to take a chance on that new job or that new career or that new city. This time around, many people will have the opportunity to make their choices free of that burden.The lesson of both this crisis and the last one is that policy matters. In the last recession, an initially fairly robust response petered out too quickly, leading to a decade of stagnation. That hasn’t happened this time, but it still could. Unless the April jobs numbers are indicative of a broader slowdown — something hardly any forecaster thinks is especially likely — the aggregate economic statistics are going to start looking very strong in the coming months. “There is going to be a tendency to look at those numbers and say, ‘Mission accomplished,’ before it is time,” says Nela Richardson, chief economist for ADP, a payroll-processing firm. That is what happened a decade ago. But this time, far more people are paying attention. Inside the White House, economists have zeroed in on the labor-force participation rate among Black women as a key measure of economic health. Powell, at the Fed, now talks in virtually every public appearance about race and inequality — topics that previous Fed chairs typically tiptoed around or avoided altogether. Journalists who covered the aftermath of the last recession are more likely to question the notion that the economy is good just because the unemployment rate is low.Kristen Broady, a fellow in the Brookings Institution’s Metropolitan Policy Program, says that people are finally paying attention after years of being preached to that public-policy discussions should focus less on aggregate statistics. Recently, journalists and policymakers have been bringing up the subject with her, rather than the other way around. That, as much as anything, is cause for optimism.“This is the first time,” she says, “that I have hope.” More

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    Inflation Fears Rise as Prices Surge for Lumber, Cars and More

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    Federal Reserve officials believe low and stable price expectations give them room to heal the job market. But what if outlooks change?Turn on the news, scroll through Facebook, or listen to a White House briefing these days and there’s a good chance you’ll catch the Federal Reserve’s least-favorite word: Inflation. If that bubbling popular concern about prices gets too ingrained in America’s psyche, it could spell trouble for the nation’s central bank. More

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    Amid Economic Turmoil, Biden Stays Focused on Longer Term

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    The president’s advisers are pushing their most detailed argument yet for the long-term benefits of a $4 trillion agenda to remake the American economy.WASHINGTON — President Biden and his economic team on Thursday made their most detailed case yet for trillions of dollars in new federal spending to rebuild public investment in workers, research and physical infrastructure, focusing on long-term ingredients of economic growth and equality as the current recovery from recession showed signs of distress.The president’s aides published what amounted to a deeper economic backbone for the argument that Mr. Biden is making publicly and privately to sell his plans to lawmakers, including the message he conveyed to a group of Republican senators he invited to the White House on Thursday to discuss an infrastructure package centered on roads, bridges, transit and broadband.That meeting ended with encouraging words from both sides. Republicans said Mr. Biden invited the senators, who had previously offered a nearly $570 billion, narrowly focused package, to return with an updated offer, including how to pay for new spending.Senator Shelley Moore Capito of West Virginia, who is leading the Republicans’ negotiations, said lawmakers would prepare an updated offer for the president to review by early next week, including a more detailed list of the kinds of projects they would be willing to fund and a set of proposals to cover the costs. The senators said they expected Mr. Biden would then respond with a counteroffer.“I made it clear that this was not a stagnant offer from us,” Ms. Capito said. “He made it clear that he is serious in wanting to pursue this.”She said Republican senators were open to raising the overall top-line price tag of their offer, which is a fraction of the new spending the president proposed. She also suggested that Republicans would be willing to cut a deal with Mr. Biden even if he decided to pursue a more progressive package, including priorities beyond traditional infrastructure, with only Democratic votes. Other senators predicted the sides would know by Memorial Day whether they could reach a deal.“It’s in nobody’s interest to draw this out beyond the time when you think it’s workable,” said Senator Roy Blunt, Republican of Missouri. “But I certainly left there thinking there’s a workable agreement to be had if we want to stretch a little both ways.”Shortly before the meeting, the White House Council of Economic Advisers posted a document to its website that cast Mr. Biden’s $4 trillion economic agenda as a way to correct decades of tax-cutting policies that had failed to bolster the middle class. In its place, the administration is pushing a rebuilding of public investment, like infrastructure, research and education, as the best way to fuel economic growth and improve families’ lives.The so-called issue brief reflects the administration’s longer-term thinking on economic policy when conservatives have ramped up criticism of the president over slowing job growth and accelerating inflation.Administration officials express confidence that recent price surges in used cars, airfare and other sectors of the economy will prove temporary, and that job growth will speed up again as more working-aged Americans are vaccinated against Covid-19 and regain access to child care during work hours. They say Mr. Biden’s $1.9 trillion economic aid package, which he signed in March, will lift job growth in the coming months, noting that new claims for unemployment fell to a pandemic-era low on Thursday.The officials also said it was appropriate for the president to look past the current crisis and push efforts to strengthen the economy long term.The two halves of Mr. Biden’s $4 trillion agenda, the American Jobs Plan and the American Families Plan, are premised on the economy returning to a low unemployment rate where essentially every American who wants to work is able to find a job, Cecilia Rouse, the chair of the Council of Economic Advisers, said in an interview.“The American Rescue Plan was rescue,” Dr. Rouse said. “It was meant as stimulus as we work through this hopefully once-in-a-century, if not longer, pandemic. The American Jobs Plan, American Families Plan are saying, look, that’s behind us, but we knew going into the pandemic that there were structural problems in our country and in our economy.”Mr. Biden’s plans would raise taxes on high earners and corporations to fund new federal spending on physical infrastructure, care for children and older Americans, expanded access to education, an accelerated transition to low-carbon energy and more.Those efforts “reflect the empirical evidence that a strong economy depends on a solid foundation of public investment, and that investments in workers, families and communities can pay off for decades to come,” Mr. Biden’s advisers wrote. “These plans are not emergency legislation; they address longstanding challenges.”The five-page brief focuses on arguments about what drives productivity, wage growth, innovation and equity in the economy. The issues predate the coronavirus recession and recovery, and Democrats in particular have pledged for years to address them.The brief begins by attacking the “old orthodoxy” of tax-cutting policies by presidents and Congress, including the 2017 tax cut passed by Republicans under President Donald J. Trump. A driving rationale behind that law was an effort to encourage more investment by private companies, bolstering what economists call the nation’s capital stock. The brief faults those policies for not producing the rapid gains in economic growth that champions of those policies promised, and it says that raising taxes on high earners “will help ensure that the gains from economic growth are more broadly shared.”Republicans continue to insist that tax cuts, particularly for businesses, are the key to economic competitiveness and middle-class prosperity. They have refused to negotiate any changes to their party’s signature 2017 tax law as part of an infrastructure agreement, even as they concede some need for a limited version of the new public investments Mr. Biden is calling for.Republicans used the meeting on Thursday to reiterate that they would be unwilling to raise corporate or personal taxes lowered by their 2017 law. Instead, they pitched the president on the use of zero-interest loans and public-private partnerships, in addition to existing gasoline taxes and other government savings.Mr. Biden would raise taxes to reverse what his economic team calls the federal government’s underinvestment in policies that help educate children and adults, facilitate the development of new technologies and industries and support parents so they are able to work and earn more. His team cites the wave of quickly developed coronavirus vaccines from Pfizer and Moderna, which grew out of publicly funded research, as an example of public investments yielding private-sector innovation.“Those started with ideas that were funded by the public sector decades ago,” Dr. Rouse said. “And then the private sector built on top of that, so it’s really, the private sector needs to work with the public sector. We are all very grateful that the public sector was willing to take that risk, and it didn’t pay off right away.”“In many ways, the federal government should be patient,” she said. “We are a kind of entity, we should be patient. So I’m not saying we have to wait a million years for something to pay off, but we don’t need to have the kind of immediate payoff that a private company might need to see.”That argument is in many ways a departure from how administrations typically pitch economic policies during a crisis. There is no focus in the brief on immediate job creation or a quick bump in economic growth.Weeks after Mr. Biden detailed both halves of his plan, the administration has offered no projections about the effects of his policies on jobs or growth. Instead, Dr. Rouse and other administration officials cited forecasts by the Moody’s Analytics economist Mark Zandi, which are among the more favorable outside analyses of the president’s agenda.Administration officials say there is no need for their economic team to produce such forecasts. Congressional Republicans have repeatedly called for the White House to produce an estimate of how many jobs would be created by Mr. Biden’s plans. More

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    The Jobs Report: The Boom That Wasn’t

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    April’s anemic job creation was so out of line with what other indicators have suggested that it will take some time to unravel the mystery.A restaurant in Greenwich Village in Manhattan. Hiring in the hospitality and leisure sector was robust in April, but job growth over all was surprisingly weak.Mary Altaffer/Associated PressIt’s a little secret of the news business that for some anticipated events, like a Supreme Court decision or the death of a prominent figure, we pre-write much of an article or different versions of them so that we can publish quickly once news occurs.Which is why there is now a trashed draft of this article explaining how the April jobs numbers show what a hyper-speed economic recovery looks like. It was completely wrong.Employers added only 266,000 jobs last month, the government reported Friday morning, not the million or so that forecasters expected. The unemployment rate actually edged up, to 6.1 percent.The details of the new numbers are messy. Temporary employment fell sharply (down 111,000 jobs), while hiring in the leisure and hospitality sector was robust (up 331,000 jobs). It will take time to figure out why so many mainstream forecasts were so wrong — the modest job creation is out of whack with what other indicators have suggested — and whether some part of the weak results is more statistical aberration than reality.But if robust job growth doesn’t return quickly, it will be very concerning. The economy is still short 8.2 million jobs from its February 2020 level. The great hope has been that employers would fill that gap rapidly, bringing the United States back to its full potential in short order.Even if you view April as an outlier, job growth has averaged only 524,000 a month for the last three months, a pace that if continued would imply a long slog back to full health. It certainly does not signal the kind of rapid boom that many forecasters have started to expect, and that the Biden administration and the Federal Reserve are hoping for.These numbers are consistent with the story many business leaders are telling, of severe labor shortages — that demand has surged back but employers cannot find enough workers to fulfill it, at least not at the wages they are accustomed to paying. Many employers and conservatives argue that the expanded federal unemployment benefits have been too generous (they were extended as part of the recent pandemic rescue aid package and are scheduled to expire in September).Citing the jobs report, the Chamber of Commerce on Friday urged an immediate end to the $300 weekly unemployment benefit supplement.April’s slow job growth was accompanied by significant pay increases. Average hourly earnings rose by 0.7 percent, not too shabby on its own. And in certain sectors the pay raises were blockbusters, including a 4.8 percent rise in leisure and hospitality average hourly earnings — in a single month.It’s worth noting that the labor force is growing — an additional 430,000 Americans were either working or looking for work in April — so it’s pretty much the opposite of the situation after the 2008 recession, when wages were growing slowly and millions were leaving the labor force.Still, it remains possible that many people remain reluctant to jump back into work for a variety of other reasons: having to care for children whose classes are remote; fearing the coronavirus; reconsidering their careers.Back in 2010, the Obama administration introduced one of the more unfortunate economic messaging concepts of recent decades, announcing that a “Recovery Summer” was underway. It became a punchline, because while the economy was expanding, Americans were still far worse off than they’d been before the 2008 recession, and improvement was coming very slowly.That’s one outcome the Biden administration desperately wants to avoid. More

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    ‘A Perfect Positive Storm’: Bonkers Dollars for Big Tech

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    The dictionary doesn’t have enough superlatives to describe what’s happening to the five biggest technology companies, raising uncomfortable questions for their C.E.O.s.In the Great Recession more than a decade ago, big tech companies hit a rough patch just like everyone else. Now they have become unquestioned winners of the pandemic economy.The combined yearly revenue of Amazon, Apple, Alphabet, Microsoft and Facebook is about $1.2 trillion, according to earnings reported this week, more than 25 percent higher than the figure just as the pandemic started to bite in 2020. In less than a week, those five giants make more in sales than McDonald’s does in a year.The U.S. economy is cranking back from 2020, when it contracted for the first time since the financial crisis. But for the tech giants, the pandemic hit was barely a blip. It’s a fantastic time to be a titan of U.S. technology — as long as you ignore the screaming politicians, the daily headlines about killing free speech or dodging taxes, the gripes from competitors and workers, and the too-many-to-count legal investigations and lawsuits.America’s technology superpowers aren’t making bonkers dollars in spite of the deadly coronavirus and its ripple effects through the global economy. They have grown even stronger because of the pandemic. It’s both logical and slightly nuts.The wildly successful last year also raises uncomfortable questions for tech company bosses, the public and elected officials already peeved about the industry: Is what’s good for Big Tech good for America? Or are the tech superstars winning while the rest of us are losing?Americans have more money in their pockets thanks to government stimulus checks and pandemic savings, and the tech giants are getting a significant share. Their combined revenue is equivalent to roughly 5 percent of the gross domestic product of the United States.Big Tech’s pandemic big bucks have an understandable root cause: We needed its services.People gravitated to Facebook’s apps to stay in touch and entertained, and businesses wanted to pay Facebook and Google, which Alphabet owns, to help them find customers who were stuck at home. People preferred to buy diapers and deck chairs from Amazon rather than risk their health shopping in stores. Companies loaded up on software from Microsoft as their businesses and work forces went virtual. Apple’s laptops and iPads become lifelines for office workers and schoolchildren.Before the pandemic, America’s technology superpowers were already influential in how we communicated, worked, stayed entertained and shopped. Now they are practically unavoidable. Investors have scooped up Big Tech shares in a bet that these companies are nearly invincible.“They were already on the way up and had been for the best part of a decade, and the pandemic was unique,” said Thomas Philippon, a professor of finance at New York University. “For them it was a perfect positive storm.”Times weren’t so good for these companies in the last economic rough patch. In the downturn from 2007 to 2009, Microsoft’s sales dropped slightly, and its stock price fell 60 percent from the fall of 2008 to March 2009, a low point for U.S. stocks. Google and Amazon each lost as much as two-thirds of their market value.One sign of how this time is different: Amazon’s revenue is growing much faster in 2021 than it did in 2009, when the company was one-fifteenth its current size. Sales in the first quarter rose 44 percent from a year earlier, and Amazon’s profits before taxes — which have never been exactly robust — more than doubled to $8.9 billion. Businesses are addicted to Amazon’s cloud computer services, where sales rose 32 percent, and shoppers can’t live without Amazon’s delivery. Investors love Amazon, too. The company’s stock market value has nearly doubled since the beginning of 2020 to $1.8 trillion.For the other tech giants, it’s as if their brief pandemic nosedive never happened. Advertising sales typically rise and fall with the economy. But as other types of ad spending shrank when the U.S. economy contracted last year, ad sales rose for Google and Facebook. The growth was even better for them in the first three months of this year.A year ago, analysts worried that Apple would be crippled as the pandemic gripped China, which is the hub of the company’s manufacturing operations and its most important consumer market. The fears didn’t last long. In the first three months of 2021, Apple’s revenue from selling iPhones increased at the fastest rate since 2012. Sales in mainland China, Taiwan and Hong Kong nearly doubled from a year earlier.Apple’s revenue from iPhone sales in the first three months of the year rose at the fastest pace since 2012.Agence France-Presse — Getty ImagesThe tech giants are not the only companies rallying in dark times. America’s big banks have also been on a tear. So have some younger technology companies, such as Snap and Zoom, the maker of the pandemic-favorite videoconferencing app. The crisis forced all sorts of businesses to go digital fast in ways that could help them thrive. Restaurants invested in online sales and delivery, and doctors went full bore into telemedicine.But the dictionary doesn’t have enough superlatives to describe what’s happening to the five biggest technology companies. It’s all a bit awkward, really. It’s rocket fuel for critics, including some regulators and lawmakers in Europe and the United States, who say the tech giants crowd out newcomers and leave everyone worse off.Big Tech companies say they face stiff competition that leads to better products and lower prices, but their bank statements might suggest otherwise. Facebook’s profit margins are higher now than they were before the pandemic.Some of their success is explained by the peculiarities of the pandemic economy. Some people and sectors are doing awesome, while other families are lining up at food banks and while companies like airlines are begging for cash. Unlike the stock market clobbering in the Great Recession, stock indexes in the United States have reached new highs.The tech superstars have also capitalized on this moment. Alphabet and Facebook have used the pandemic to cut back in places that matter less, such as promotional costs and travel and entertainment budgets. And the tech giants have generally increased spending in areas that extend their advantages.Alphabet is now spending more on big-ticket projects, like building computer complexes, than Exxon Mobil spends to dig oil and gas out of the ground. Amazon’s work force has expanded by more than 470,000 people since the end of 2019. That deepens the moat separating the tech superstars from everyone else.Big Tech is emerging from the pandemic lean, mean and ready for a U.S. economy expected to roar back to life in 2021. Meanwhile, there are still long lines at food banks. Some American workers who lost their jobs last year may never get them back. Housing advocates are worried that millions of people will be evicted from their homes. And being Big Tech is an invitation for everyone to hate you — but you do have towering piles of money. More

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    As Economy Rebounds, Manufacturers Face New Hurdles

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    U.S. factories are humming again. But the recovery’s speed has left many employers scrambling for workers or for parts.Matt Guse would hire a dozen machinists — if only he could find them.The owner of MRS Machining, a maker of precision metal parts in rural Augusta, Wis., Mr. Guse finds business is rebounding so quickly as the pandemic’s effect eases that his 47-worker shop is short-handed.“I’ve turned down a million dollars’ worth of work in the last two weeks,” he said. “Doing that, it’s hard to go to bed at night when you put your head to the pillow. I have open capacity, but I need more people.”After a sharp downturn when the pandemic hit last year, factories are humming again. But the recovery’s speed has left employers scrambling. Despite huge layoffs — manufacturing employment initially dropped by 1.4 million — some companies find themselves desperate for workers.In other cases, shortages of parts like semiconductors and supply chain disruptions have made orders hard to fill and created fresh uncertainty.“It was a lot easier to turn the lights out than to ramp up,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. “Manufacturers weren’t prepared for a surge of demand in goods. They’ve been caught a bit flat-footed.”The manufacturing recovery signals a turning point, with the Biden administration putting a fresh focus on increasing factory jobs, especially in areas like semiconductors and electric vehicles. That growth will be crucial if the overall economy is to expand rapidly in the months ahead.The Commerce Department reported Monday that orders for durable goods — like cars and appliances — rose half a percentage point in March, prompting Barclays to lift its tracking estimate of economic growth for the first quarter to 1.4 percent, or 5.6 percent at an annualized rate.On Thursday, the government will release its initial reading on economic growth in the first three months of the year, and manufacturing is expected to be among the bright spots. The consensus of analysts polled by Bloomberg is that the report will show gross domestic product expanded by 1.7 percent, up from 1.3 percent.At one point, factory production was down substantially because of the pandemic, but it should return to pre-Covid-19 levels by the third quarter of this year, according to Chad Moutray, chief economist for the National Association of Manufacturers.“We’re seeing gangbuster levels of orders,” he said. “But the sector has a lot of challenges, like a rise in raw material costs, supply chain disruptions, logistics bottlenecks and worker shortages.”At MRS Machining, Mr. Guse said, spot shortages of items like steel and metal plate are a constant issue. “Quotes for material goods from suppliers are usually good for three to six months,” he said. “Now it’s a matter of hours.”As at many factories, the work pays well, starting at $18 to $20 an hour and rising to around $30. But the most skilled workers, like machinists, remain hard to find, according to Mr. Guse.“We’re getting applicants because people are moving out of Minneapolis and Chicago and looking to live in a more rural environment,” he said.Despite the good news at MRS, rebuilding overall factory employment is a challenge, said Scott Paul, president of the Alliance for American Manufacturing, a policy group representing manufacturers and the United Steelworkers.President Biden is fighting a long-term trend. Nearly 12.3 million Americans work in factories. Two decades ago, that figure stood at just over 17 million.“We feed the companies whose products go into infrastructure,” said Kathie Leonard, the chief executive of Auburn Manufacturing, which makes heat- and fire-resistant fabrics.Yoon Byun for The New York TimesFiberglass fabric before it is processed in a vertical oven, where it will be heated at 1,300 degrees Fahrenheit to caramelize so it won’t smoke when reaching high temperatures.Yoon Byun for The New York TimesAfter the last few economic downturns — the falloff in growth following the Asian financial crisis of the late 1990s; the slump after the attacks of Sept. 11, 2001; and the Great Recession — manufacturing failed to recover the lost jobs.To be sure, the sector has made up a good amount of ground after losing nearly 1.4 million positions in the first months of the pandemic, but employment remains about 515,000 jobs short of where it was in February 2020.Some experts question why policymakers focus so much on production when most Americans work in service industries that have been gaining jobs over the years and offer better growth prospects. But manufacturing is one of the few paths to a middle-class life for the two-thirds of American adults who lack a college degree.The average hourly wage of manufacturing workers is $29.15, while workers in leisure and hospitality, another field that draws people with less education, earn $17.67 an hour.Mr. Paul hopes that Mr. Biden’s plan to revitalize American manufacturing as part of his larger infrastructure effort will bear fruit.“He’s pretty serious about some form of industrial policy,” Mr. Paul said, citing the administration’s call for action in making products like semiconductors and electric vehicles. “It may be possible for Biden to do what no president has since manufacturing began its job decline and reverse the losses.”The administration’s blueprint includes $50 billion in funding for investments in chip manufacturing and research as well as $174 billion in spending to advance electric vehicles.The $2 trillion plan, with its focus on rebuilding roads and bridges as well as the electric grid, could help companies like Auburn Manufacturing of Maine, said its chief executive, Kathie Leonard.“Customers are struggling to meet launch timelines and production targets,” said Christie Wong Barrett, chief executive of MacArthur Corporation, a maker of labels and decals outside Flint, Mich. Brittany Greeson for The New York TimesMacArthur makes labels and decals like those showing tire pressure or indicating vehicle identification numbers. Its business was hard hit a year ago when the pandemic forced auto plants to shut down.Brittany Greeson for The New York Times“We feed the companies whose products go into infrastructure,” said Ms. Leonard, describing the heat- and fire-resistant fabrics Auburn makes at two factories in central Maine, about a half-hour from Portland. “The infrastructure plan holds promise for companies like us.”“You have to work at being an optimist,” she said. “We’re not going to hire 25 people, but maybe five. We need to hire a technical director, fabricators, and we need staff to help with e-commerce.”The semiconductor shortages are a headache for Christie Wong Barrett, chief executive of MacArthur Corporation, a maker of labels and decals outside Flint, Mich. She said orders had been delayed by car companies — her major customers — that couldn’t find enough of the chips they needed to keep cars coming off the assembly lines.“Customers are struggling to meet launch timelines and production targets,” she said. “Orders are either reduced in volume or delayed. It trickles down to different suppliers, and we’re just getting a haircut across the board.”MacArthur’s business had already been damaged when auto plants closed a year ago amid the pandemic lockdowns, cutting off demand for labels and decals like those showing tire pressure or indicating vehicle identification numbers.Ms. Barrett was able to pivot and supply products for medical customers, averting all but a handful of layoffs for her work force of 50. She remains optimistic, despite the current logistical backups.“It’s a horrible disruption right now, but I’m anticipating a strong recovery,” she said. “We never made major cuts, and as automotive production starts to recover more, I expect to hire several more people in the coming months.” More

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    Automatic Aid for the People? How Jobless Benefits Can Fit the Economy.

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    The pandemic showed the flaws in the American approach to help the unemployed. Alternatives exist.The line outside an unemployment office in Fayetteville, Ark., last April.September Dawn Bottoms for The New York TimesFor years, people who study unemployment benefits have warned that the American system of jobless insurance was too antiquated and clunky to meet the needs of workers in a time of economic crisis.To understand what they were worried about, consider this bizarre timeline since the start of the pandemic:Last spring, when the economic shutdown caused millions to lose their jobs, many state systems were so clogged that people were unable to receive jobless benefits for weeks, sometimes longer.Congress concluded that it would be technologically impossible to calibrate extra benefits to replace every jobless person’s full income, so it took a blunter approach: Lawmakers tacked an extra $600 per week onto unemployment checks. The result, by one estimate, was that 76 percent of recipients made more than they earned when they were working.At the end of July, that $600 supplement expired, falling to zero. But the economy remained in dire condition with jobs nowhere to be found — leaving millions of jobless people in the lurch.Then, early this year, $300 per week was tacked on. It is set to stay there until September, even as Americans are vaccinated on a mass scale and as the economy starts to roar ahead.So while unemployment insurance has fulfilled a vital role of keeping families afloat financially — and preventing overall demand for goods and services from collapsing — the stop-and-start cash sequence has been reflective of neither individual recipients’ lost income nor the state of the labor market.This has been partly the result of U.S. policymakers’ rejection of ideas that many labor market experts support, and that some advanced nations have adopted to varying degrees. These economists have called for investing more in the technological and customer service infrastructure of state unemployment systems, and presetting benefits based on economic conditions. Benefits would adjust automatically to the level of need, thus helping people who are struggling and stabilizing the overall economy without Congress having to do much of anything.“There are a lot of flaws and gaps in the unemployment insurance system that were revealed in Covid but have always been there,” said Chloe East, an economist at the University of Colorado Denver who has studied the system.Such proposals have typically come from left-of-center policy experts. But now, as the economy starts to recover, there’s a twist. In the potential boom-time summer to come, these automatic triggers would probably fulfill conservative policy goals — ensuring that benefits are reduced as the economy recovers, thus increasing incentives to return to work.In some areas, employers are struggling to attract workers.  A roadside banner beckons potential employees outside Channel Control Merchants in Hattiesburg, Miss.Rogelio V. Solis/Associated PressBusinesses around the country are complaining of difficulty finding people to hire. Many employers blame generous unemployment insurance payments that may give some would-be workers incentive to stay home.Some recipients still earn more on unemployment than they do when they’re working, thanks to the $300 supplement. And under current law, those benefits will remain in place until Sept. 6 no matter how much the economy might boom or how abundant jobs turn out to be.In a proposed sweeping overhaul of the system published this month by Arindrajit Dube of the University of Massachusetts Amherst, the duration of jobless benefits would vary based on the unemployment rate. States with a jobless rate under 5 percent would extend benefits for 26 weeks, and those with 10 percent unemployment for 98 weeks. He would also raise benefits by $100 a week when the jobless rate was above 6 percent, and by $200 when it was above 8 percent.Some lawmakers are thinking similarly. Two Democrats, Senators Ron Wyden of Oregon and Michael Bennet of Colorado, proposed legislation this month that would, among many other things, extend benefits when the unemployment rate is at or above 5.5 percent.Similar proposals have failed to advance for a range of reasons. For one, the plans appear expensive in the conventions of budget math. The current practice is to extend benefits in a bill, or a series of them, if the need arises. That appears less expensive than building in money in advance for jobless benefits and automatic triggers based on the economy.Now consider the partisanship that can come into play in limiting the size of recession aid packages. If lawmakers agree to spend only $900 billion on economic help, for example, it’s a disadvantage if some of that is devoted to a theoretical estimate of what jobless benefits might be years in the future.Moreover, lawmakers may like the appearance that they are leaping to citizens’ aid in a crisis or recession — which would be less visible if the aid were increased automatically.In times of economic crisis, like last year, Democrats and Republicans have been able to agree on these policies. But if they were to try to devise a system from scratch, they might turn out to be quite far apart on how generous jobless benefits should be.“I think everyone can agree the optimal system would be calibrated to the economy, but the devil is so much in the details,” said Marc Goldwein, policy director of the Committee for a Responsible Federal Budget. “I suspect the parties are much farther apart on what a permanent trigger should look like than what we should do in the next six months.”Still, the current moment shows there could be harmony between at least some fiscal conservatives and pro-business interests and those on the left who would like to see more expansive benefits.“Even people who would like to see pandemic unemployment insurance gone by now would have wanted people last May and June to be getting checks when millions of people weren’t getting them because the systems couldn’t function,” said Jay Shambaugh, an economist at George Washington University. “One way or another, the system we have now didn’t provide money along the optimal path.”The flip side of a system that can get money out quickly is that it can also be fine-tuned to make sure benefits go away when circumstances justify it. 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