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Unemployment Claims Show Continuing Pressure on Job Market
Employers remain cautious about hiring, one economist says, “but the resurgence of the virus is really the main culprit.” More
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Why Markets Boomed in a Year of Human Misery
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyWhy Markets Boomed in a Year of Human MiseryIt wasn’t just the Fed or the stimulus. The rise in savings among white-collar workers created a tide lifting nearly all financial assets.Neil Irwin and Jan. 1, 2021, 5:00 a.m. ETThe central, befuddling economic reality of the United States at the close of 2020 is that everything is terrible in the world, while everything is wonderful in the financial markets.It’s a macabre spectacle. Asset prices keep reaching new, extraordinary highs, when around 3,000 people a day are dying of coronavirus and 800,000 people a week are filing new unemployment claims. Even an enthusiast of modern capitalism might wonder if something is deeply broken in how the economy works.To better understand this strange mix of buoyant markets and economic despair, it’s worth turning to the data. As it happens, the numbers offer a coherent narrative about how the United States arrived at this point — one with lessons about how policy, markets and the economy intersect — and reveal the sharp disparity between the pandemic year’s haves and have-nots.Income More
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Unemployment Claims Expected to Have Remained High Last Week
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyUnemployment Claims Expected to Have Remained High Last WeekThe weekly report, which will be published Thursday morning, might show a drop in claims because of the Christmas holiday.Victor Lopez-Lucas plays with his daughter Kenya, 1, as they wait in line to receive food donations in Bradenton, Fla., on Tuesday.Credit…Eve Edelheit for The New York TimesDec. 31, 2020, 7:00 a.m. ETNew clues to the economy’s trajectory heading into 2021 will come Thursday morning when the government reports the latest data on initial claims for jobless benefits.While the Christmas holiday might cause a dip in the numbers, with state unemployment offices that process claims closed for at least one day last week, new filings are expected to stay at a very high level, in the range of more than 800,000 per week, said Greg Daco, chief economist at Oxford Economics. “That’s very elevated and we are facing an economy that has slowed down significantly.”Applications for benefits declined during Thanksgiving week, only to move higher later, and a similar catch-up phenomenon could happen after Christmas and New Years, too.In California, widening restrictions on restaurants and other businesses and an uptick in coronavirus infections may cause filings to jump, said Scott Anderson, chief economist at Bank of the West in San Francisco.“California has locked down even more, and there is no end in sight in terms of cases and hospitalizations,” he said. “We’re seeing more layoffs and that hasn’t shown up in the numbers yet.”The $900 billion stimulus package that President Trump signed into law Sunday comes too late to affect the jobless claims data. It will take months for the impact of the aid to be felt, and most economists expect the rate of layoffs to remain high.When fresh monthly jobs data is released by the Labor Department next week, Mr. Anderson expects that it will show a rise in the unemployment rate to 6.9 percent in December, up from 6.7 percent last month. The unemployment rate has fallen sharply since peaking at 14.7 percent in April but hiring has slowed as the economy has faltered in recent months.What’s more, the pace of layoffs has been persistently high, as sectors like dining, travel and entertainment are struggling while the pandemic has kept many people at home.The introduction of vaccines is a bright spot, as are positive economic signs, like surging stock prices and a booming housing market. But it will be months before enough Americans can be inoculated to allow people to go to restaurants, events and movie theaters without fear of being infected.“The trend is not good with the additional closures implemented around the country,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago.AdvertisementContinue reading the main story More
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Most Americans Are Expected to Save, Not Spend, Their $600 Check
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyMost Americans Are Expected to Save, Not Spend, Their $600 CheckWhile lawmakers debate increasing the stimulus payments to $2,000, experts say it would make far more sense to give more money to the unemployed.Galen Gilbert, a 71-year old lawyer who lives in a Boston suburb, plans to deposit his stimulus check into savings. “I’m not really suffering financially,” he said.Credit…Katherine Taylor for The New York TimesNelson D. Schwartz and Dec. 30, 2020Updated 4:49 p.m. ETGalen Gilbert knows just what he will do with the check he gets from Washington as part of the pandemic relief package, whatever the amount: put it in the bank.“I’ve got more clients than I can handle right now and I’ve made more money than I usually do,” said Mr. Gilbert, a 71-year-old lawyer who lives in a Boston suburb. “So I’m not really suffering financially.”Cheryl K. Smith, an author and editor who lives in Low Pass, Ore., isn’t in a rush to spend the money, either. She plans to save a portion, too, while donating the rest to a local food bank. “I’m actually saving money right now,” Ms. Smith said.President Trump’s demand to increase the already-approved $600 individual payment to $2,000, with backing from congressional Democrats, has dominated events in Washington this week and redefined the debate for more stimulus during the pandemic. Mitch McConnell, the Senate majority leader, said on Wednesday he would not allow a vote on a standalone bill increasing the checks to $2,000, dooming the effort, at least for now.Whatever the amount, the reality is that most Americans right now are much more likely to save the money they receive.Of course, the money will be a lifesaver for the roughly 20 million people collecting unemployment benefits and others who are working reduced hours or earning less than they used to. Yet, for the majority of the estimated 160 million individuals and families who will receive it, spending the money is expected not to be a high priority.After an earlier round of $1,200 stimulus checks went out in the spring, the saving rate skyrocketed and remains at a nearly 40-year high. That largely reflects the lopsided nature of the pandemic recession that has put some Americans in dire straits while leaving many others untouched.Economists on the right and left of the political spectrum said that when otherwise financially secure people receive an unexpected windfall, they almost invariably save it. The free-market economist Milton Friedman highlighted this phenomenon decades ago.Many experts said a truly stimulative package would have earmarked the payments for those who need it most — the unemployed.“We know where the pockets of need are,” said Greg Daco, chief economist at Oxford Economics. “Putting it there would be a much more efficient use of the stimulus.”And because the money will immediately be put to work — the jobless don’t have the luxury of saving it — it would also have a much bigger impact on the overall economy, through what experts refer to as the multiplier effect. In essence, each dollar given to a person in need is likely to benefit the economy more because it would be used to pay for, say, groceries or rent.“Providing $2,400 to a family of four in the same financial situation as they were at the end of 2019 doesn’t do much to boost the overall economy right now,” Mr. Daco said. “It’s not whether it’s a positive or not. It’s their potency that’s in question.”Individuals with an adjusted gross income in 2019 of up to $75,000 will receive the $600 payment, and couples earning up to $150,000 a year will get twice that amount. There is also a $600 payment for each child in families that meet those income requirements. People making more than those limits will receive partial payments up to certain income thresholds.A more effective approach, experts say, would have raised unemployment insurance benefits to the jobless by $600 a week, matching the supplement under the stimulus package Congress passed last spring, rather than the $300 weekly subsidy the new legislation provides. Democrats had pushed for larger payments to the jobless and included it in legislation that passed the House, which they control. But the measure met stiff resistance from Republicans, who control the Senate, and was not included in the final compromise bill.The Coronavirus Outbreak More
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A Look at What’s in the Stimulus Package Trump Signed
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyA Look at What’s in the Stimulus Package Trump SignedThe $900 billion package provides more relief beyond the $600 checks that have become the focus in Washington.President Trump finally signed a $900 billion stimulus bill that includes much more than just direct payments to households.Credit…Al Drago for The New York TimesDec. 28, 2020Updated 6:31 p.m. ETWASHINGTON — The $900 billion stimulus bill that President Trump finally signed into law on Sunday evening goes well beyond providing the $600 checks that became a huge sticking point in getting the legislation across the finish line.The relief package casts a wide net with a variety of measures aimed at addressing the needs of millions of Americans, including those who have lost their jobs, as well as small businesses, nursing homes, colleges, universities and K-12 schools.The package extends some provisions of the original stimulus package that was passed in the spring, while adding new measures to help working families who have continued to suffer amid the pandemic.The full text of the bill ran almost 5,600 pages. Here’s a look at what’s included.Individual paymentsAmong the most anticipated components of the legislation is the direct payment, with $600 going to individual adults with an adjusted gross income of up to $75,000 a year based on 2019 earnings. Heads of households who earn up to $112,500 and a couple (or someone whose spouse died in 2020) who make up to $150,000 a year would get twice that amount.Eligible families with dependent children would receive an additional $600 per child.In a change from the last round, payments will not be denied to citizens married to someone without a social security number, allowing some spouses of undocumented immigrants to claim the benefit this time around.On Tuesday night, President Trump threatened to veto the bill because he said the payments were too low. He is advocating payments of $2,000. House Democrats planned to bring up an amendment to the bill on Thursday, an aide who was familiar with the proposal said. It is not clear how the House and Senate will act.Unemployment benefitsWith millions of Americans still unemployed, Congress acted to extend multiple programs to help those out of work, albeit at less generous levels than in the spring.The agreement would revive enhanced federal jobless benefits for 11 weeks, providing a lifeline for hard-hit workers until March 14. The new benefit, up to $300 per week, is half the amount provided by the original stimulus bill in the spring.The legislation also extends Pandemic Unemployment Assistance — a program aimed at a broad set of freelancers and independent contractors — for the same period, providing an additional $100 per week.Education resourcesSchool budgets have been severely crippled by the pandemic and left some of the most vulnerable students in dire academic and financial straits. The bill provides $82 billion for education, including about $54 billion for K-12 schools and $23 billion for colleges and universities.The Coronavirus Outbreak More
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New Signs of Economic Distress Emerge as Trump Imperils Aid Deal
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus DealThe Latest Vaccine InformationF.A.Q.AdvertisementContinue reading the main storySupported byContinue reading the main storyNew Signs of Economic Distress Emerge as Trump Imperils Aid DealA decline in consumer income and spending poses a further challenge to the recovery as jobless claims remain high and benefits approach a cutoff.Food donations were distributed on Saturday in Bloomington, Calif. Economic data released on Wednesday pointed to challenges ahead as the pandemic grinds on.Credit…Alex Welsh for The New York TimesDec. 23, 2020, 5:30 p.m. ETWith the fate of a federal aid package suddenly thrown into doubt by President Trump, economic data on Wednesday showed why the help is so desperately needed.Personal income fell in November for the second straight month, the Commerce Department said Wednesday, and consumer spending declined for the first time since April, as waning government aid and a worsening pandemic continued to take a toll on the U.S. economy.Separate data from the Labor Department showed that applications for unemployment benefits remained high last week and have risen since early November.Taken together, the reports are the latest evidence that the once-promising economic recovery is sputtering.“We know that things are going to get worse,” said Daniel Zhao, senior economist with the career site Glassdoor. “The question is how much worse.”The answer depends heavily on two factors: the path of the pandemic, and the willingness of the federal government to provide help.Congress, after months of delays, acted on Monday, passing a $900 billion economic relief package that would provide aid to the unemployed, small businesses and most households. Most urgently, it would prevent millions from losing jobless benefits at the end of this week.But on Tuesday evening, Mr. Trump demanded sweeping changes in the bill, throwing into doubt whether he would sign it.Mr. Trump’s criticism of the relief effort, which he called a “disgrace,” was that it was not generous enough: He called on Congress to provide $2,000 a person in direct payments to households, rather than the $600 included in the bill.Many economists view direct payments as among the least effective measures in the package, because much of the money would go to households that don’t need it. But beyond the merits of any specific measure, the real risk is that Mr. Trump’s comments could delay the aid, or derail it entirely.The data released Wednesday underscored the economy’s fragility. Personal income fell 1.1 percent in November and is down 3.6 percent since July, as the loss of federal assistance more than offset rising income from wages and salaries.Consumer spending, which proved resilient in the summer and fall, declined 0.4 percent, an ominous sign for small businesses trying to survive the winter. Some of the biggest drops came in categories most exposed to the pandemic’s impact: Spending on restaurants and hotels fell 3.8 percent in November, and spending on transportation, clothing and gasoline also declined.The pullback in spending is spilling over into the labor market. About 869,000 people filed new claims for state jobless benefits last week. That was down from a week earlier but is significantly above the level in early November, before a surge in coronavirus cases prompted a new round of layoffs in much of the country.A further 398,000 people filed for Pandemic Unemployment Assistance, one of two federal programs to expand jobless benefits that were set to expire this month without congressional action. Some forecasters expect the December employment report to show a net loss of jobs.“The data just underscores the importance of fiscal support,” said Aneta Markowska, chief financial economist for Jefferies, an investment bank. Without it, she said, “there would be permanent damage, and it would probably be pretty significant.”The relief bill was smaller than many economists said was needed to carry the economy through the pandemic and ensure a robust recovery. It won’t revive the hardest hit industries or undo the damage left by months of lost income for many households.A deserted hotel lobby in Beverly Hills, Calif. Consumer spending fell last month for the first time since April, with Americans cutting back in particular on restaurant meals and hotel stays.Credit…Philip Cheung for The New York TimesBut the package may be enough to forestall the wave of evictions and small-business failures that many economists warn is inevitable without it. And it should be enough to avoid a fall back into recession, which an increasing number of forecasters have said is likely without a quick injection of federal money.The Coronavirus Outbreak More
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For Millions of Jobless, Christmas Is a Season to Endure, Not Celebrate
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus DealThe Latest Vaccine InformationF.A.Q.AdvertisementContinue reading the main storySupported byContinue reading the main storyFor Millions of Jobless, Christmas Is a Season to Endure, Not CelebrateEven with new federal aid on the way, many Americans face a holiday of tough choices, trying to celebrate while dealing with pressing needs.Tresa Watson, right, with her grandson Khalil and his mother, Rachel Rucinski, at their home in Milwaukee. Ms. Watson was laid off in March.Credit…Sebastian Hidalgo for The New York TimesNelson D. Schwartz and Dec. 23, 2020, 5:00 a.m. ETNicole Craig, an unemployed mother of two from Pittsburgh, will have no Christmas gifts for her two children, and the ham she bought with food stamps will be far less than their usual holiday dinner. Months behind on her rent and utility bills, she has been struggling to afford formula and diapers. But there is one thing she couldn’t give up: a small Christmas tree and the trimmings to go with it.Ms. Craig spent the last $7 in her bank account on tinsel, a symbol of light in the darkness of 2020. “It’s my baby’s first Christmas,” she said. “I wanted him to be able to see a Christmas tree.”Although Ms. Craig, 42, lost her job as a counselor for at-risk youth through no fault of her own, she can’t help blaming herself when she sees Christmas decorations and other reminders of a holiday she can barely celebrate. “I don’t even want to think about it because I feel so bad for my kids,” she said. “It makes me feel like such a failure.”For Ms. Craig, and millions of other Americans who lost their jobs because of the coronavirus pandemic, this is a holiday season more to weather than to relish. With unemployment benefits running out and an unforgiving job market offering few berths, this Christmas will be remembered by many for painful sacrifices, not the joy of exchanging gifts and partaking of festive meals with family.The arrival of vaccines and the approval of a new federal relief package offer hope, but they come too late to salvage this year’s celebration — particularly with the prospect that this winter could bring the pandemic’s darkest days.“I’m really afraid of what’s going to happen,” Ms. Craig said.The long delay in achieving a congressional accord on an aid bill has meant fewer gifts under the tree even as the pandemic has separated families and moved what holiday cheer there is this year to video-chat gatherings.And for many families, the $600-a-person stimulus payments approved by Congress are already earmarked for rent and other necessities.In the meantime, unemployed Americans like Monica Scott of Lakeland, Fla., are looking to the past for comfort.“This year the only thing I can do is talk about memories,” said Ms. Scott, who is five months pregnant and had to leave her job at an Amazon warehouse because of the risk of miscarriage from loading and unloading heavy packages. “Last year was awesome — so many toys, clothes and shoes.”Ms. Scott, 34, wants to make a Christmas dinner with her three boys — 14, 10 and 8 years old — but food will be limited because she will be relying on food stamps and lacks a kitchen. Ms. Scott is living in a motel after being evicted last spring from her apartment, but hopes to find a permanent home soon.“It’s just a room with a bathroom,” she said. “The rent is due, and I don’t know where it will come from. I could move in with my sister, but she has her kids, and it’s just not comfortable.”Jessica Hudson, with her children, Emerson and Marleigh, spent the last few weeks scouting beautifully decorated houses for a family drive on Christmas Day.Credit…Sarahbeth Maney for The New York TimesMs. Scott and others will also be turning to food banks to pull together Christmas dinner.“We usually do rib roast, Martinelli’s apple cider, a couple of desserts,” said Jessica Hudson, a full-time student and mother of two from Millbrae, Calif. “We won’t be able to do any of that this year.”Ms. Hudson and her partner, who is unemployed, are doing their best to make Christmas as cheery as they can: They bought stockings and candy from the dollar store, and they have spent the last few weeks scouting local streets for the most beautifully decorated houses, so that they can take their children on a drive to see them on Christmas Day.The Coronavirus Outbreak More
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Stimulus Deal Provides Economic Relief, for Now
The aid package will keep millions from losing jobless benefits. But it comes too late to prevent lasting damage to many families and businesses. More
