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    Dip in Unemployment Claims Offers Hope as New Virus Cases Ease

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskNew Variants TrackerVaccine RolloutAdvertisementContinue reading the main storySupported byContinue reading the main storyDip in Unemployment Claims Offers Hope as New Virus Cases EaseWith restrictions lifting, workers in industries hard hit by the pandemic are getting a respite from layoffs, and job postings are increasing.A closed restaurant at Grand Central Market in Los Angeles. Workers in leisure and hospitality industries have been hit especially hard by job losses during the pandemic.Credit…Philip Cheung for The New York TimesFeb. 11, 2021Updated 5:59 p.m. ETAfter a pandemic-induced spike in layoffs amid new restrictions in many states, unemployment claims are falling, helped by a drop in new coronavirus cases.Initial claims for unemployment benefits declined last week, the Labor Department reported Thursday, and were significantly below the level in most of December and early January.New coronavirus cases have fallen by a third from the level of two weeks ago, prompting states like California and New York to relax curbs on indoor dining and other activities. That, in turn, has provided something of a respite for workers in the hardest-hit industries.Last week brought 813,000 new claims for state benefits, compared with 850,000 the previous week. Adjusted for seasonal variations, last week’s figure was 793,000, a decrease of 19,000.There were 335,000 new claims for Pandemic Unemployment Assistance, a federally funded program for part-time workers, the self-employed and others ordinarily ineligible for jobless benefits. That total, which was not seasonally adjusted, was down from 369,000 the week before.While claims remain extraordinarily high by historical standards, the improvement has raised hopes that layoffs will continue to slow as vaccinations spread and employers shift from shedding workers to adding them.“We’re stuck at this very high level of claims, but activity is picking up,” said Julia Pollak, a labor economist with ZipRecruiter, an online employment marketplace. Indeed, job postings at ZipRecruiter stand at 11.3 million, close to the 11.4 million level before the pandemic hit.The improving pandemic situation has eased the strain on restaurants and bars, Ms. Pollak added. But with a deficit of almost 10 million jobs since the pandemic struck, and employers still cautious about hiring, the economy faces broad challenges.Jerome H. Powell, the Federal Reserve chair, told the Economic Club of New York on Wednesday that policymakers should stay focused on restoring full employment, “given the number of people who have lost their jobs and the likelihood that some will struggle to find work in the postpandemic economy.”He noted that employment had dropped just 4 percent for workers earning high wages but “a staggering 17 percent” for the bottom quartile of earners.The Coronavirus Outbreak More

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    How Reddit Became America’s Unofficial Unemployment Hotline

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    In early December, Alex Branch’s car broke down. A 23-year-old former arcade employee in southern Virginia, Mr. Branch had been receiving unemployment benefits since he was laid off in March, and figured he would have no problem paying for the repairs. But when he checked his bank account, he was troubled to find that the […] More

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    Fed Chair Says Policymakers Should Focus on Full Employment

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskNew Variants TrackerVaccine RolloutAdvertisementContinue reading the main storySupported byContinue reading the main storyThe Fed Chair Is Worried About Getting People Back to WorkPlaying down inflation worries, Jerome H. Powell said policymakers needed to focus on restoring maximum employment.Jerome H. Powell, chair of the Federal Reserve, said reaching maximum employment after the pandemic would require “a societywide commitment” in a speech to the Economic Club of New York on Wednesday.CreditCredit…Al Drago for The New York TimesFeb. 10, 2021, 4:39 p.m. ETAs some prominent economists fret that the government might overdo its pandemic response and prompt prices to shoot higher, the nation’s top inflation fighter has a countermessage: Policymakers should stay focused on restoring full employment.“Given the number of people who have lost their jobs and the likelihood that some will struggle to find work in the postpandemic economy, achieving and sustaining maximum employment will require more than supportive monetary policy,” Jerome H. Powell, the chair of the Federal Reserve, said in speech to the Economic Club of New York on Wednesday. “It will require a societywide commitment.”Mr. Powell called policies that would bring the coronavirus pandemic to an end as soon as possible “paramount” and said both workers and businesses that had been disrupted by the crisis “are likely to need continued support.”Unemployment remains sharply elevated at 6.3 percent, up from 3.5 percent before the pandemic, and jumps to about 10 percent when adjusted for misclassified job statuses and recent dropouts from the work force.The pain has also been uneven. Employment has dropped just 4 percent for workers earning high wages but “a staggering 17 percent” for the bottom quartile of earners, Mr. Powell pointed out.Separately, he noted that “inflation has been much lower and more stable over the past three decades than in earlier times,” and later added that he did not expect it to accelerate in a sustained way coming out of the pandemic.Economists have often treated high employment and low inflation as conflicting goals. Policies that foster strong demand and pull workers back into the labor market can push up wages as businesses compete for talent, prompting them to raise prices both because they need to pass along their rising costs and because eager consumers will accept such increases — at least in theory. But the arithmetic has shifted in recent decades, as annual inflation remained stuck below the Fed’s 2 percent goal even during long periods of very low joblessness.President Biden and top Democrats are moving quickly to try to approve a $1.9 billion pandemic relief package. But some economists, including former Treasury Secretary Lawrence H. Summers, have warned that the large package could touch off long-dormant price increases. Many Republican lawmakers have also cited that risk as a reason to oppose the package.Mr. Powell did not weigh in on the package specifically, but he did seem to rebut many of those concerns. He and his colleagues have been unusually vocal in pushing for more fiscal support for the economy throughout the coronavirus era, with some saying the bigger risk is doing too little rather than doing too much.“I’m reluctant to get into what is clearly a very active debate,” Mr. Powell said when asked specifically about fiscal policy. But he added that “it is the essential tool for this situation.”The Coronavirus Outbreak More

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    The Jobs Crisis Is Broader Than It Seemed

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyThe Jobs Crisis Is Broader Than It SeemedJanuary employment numbers suggest a stalling of progress toward a full recovery.Feb. 5, 2021Updated 1:09 p.m. ETCustomers at a taco restaurant in Manhattan this week. The past year has been brutal for the hospitality industry, but the most recent job figures suggest it’s far from the only sector suffering.Credit…Carlo Allegri/ReutersTo understand what is important about the new employment numbers released Friday, imagine two different varieties of economic downturn.In one, a handful of industries experience a near-shutdown for reasons beyond anyone’s control, driving millions of people out of their jobs. But most other industries carry on unfazed.In another, a broad contraction in spending causes job losses across the economy. The story is not so much about one or two industries being devastated, but lots of them experiencing moderate pain.Both would involve a lot of human suffering, and both would justify government help to the people affected. But they would have strikingly different implications for specific government action.In the first case, you would want very carefully targeted help to enable the people affected to stay on their feet until their industry can reopen. In the second, you would just want to pump money into the economy, to stimulate overall demand for goods and services.In the early phase of the coronavirus pandemic, we saw both types of downturns. Travel-related industries were most affected and experienced the worst job losses, and the pain was sufficiently widespread that there was a generalized crisis of inadequate demand.But as the year progressed, that changed. The federal government injected trillions of dollars into the economy, and the Federal Reserve’s actions to support the financial system generated a rally in markets. Industries that were less directly affected by the pandemic figured out how to get up and running safely. And there was a veritable boom in people who bought stuff — durable goods, to be precise, like furniture and exercise equipment — spending some of the money they couldn’t spend on services like restaurant meals.By the end of 2020, you could tell a story in which workers at hotels, airlines, restaurants and performance arenas desperately needed a hand, but most of the rest of the economy seemed comfortably on a path back to full health.The January employment numbers, however, undermine that story. They suggest a stalling, and in some areas a reversal, of progress toward a full recovery even in the segments of the economy not directly affected.There’s plenty of pain to be found in the leisure and hospitality sector, of course — it lost 61,000 additional jobs on top of a revised 536,000 lost in December. This is a brutal winter for the workers in restaurants, hotels and live entertainment venues. But if that were the extent of the pain, generous unemployment checks to the people affected might be enough to solve the problem. After all, we know what it will take to get those industries back to health: widespread vaccination and an easing of public health fears.The Coronavirus Outbreak More

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    January 2021 Jobs Report: Outlook for Economic Recovery Dims

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyAnemic Jobs Report Reaffirms Pandemic’s Grip on EconomyWith a gain of 49,000 jobs in January, and with few of those in the private sector, the labor market offers little relief to the nearly 10 million Americans who are unemployed. More

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    Toll Worker Job Losses Highlight Long-Term Fallout of Pandemic

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyToll Worker Job Losses Highlight Long-Term Fallout of PandemicThe Pennsylvania Turnpike laid off workers to switch to labor-saving technology, in what might be a broader trend.John Mahalis lost his job when the Pennsylvania Turnpike shifted to machine toll collection during the pandemic. Policymakers worry that many workers may face a similar technology-driven fate.Credit…Kriston Jae Bethel for The New York TimesFeb. 4, 2021, 5:00 a.m. ETJohn Mahalis of Philadelphia was two and a half months from his pension’s vesting when he learned that he would be permanently laid off from his job as a toll collector on the Pennsylvania Turnpike. The news was a gut punch; Mr. Mahalis said it would leave him less able to financially weather retirement.“It came out of the blue,” said Mr. Mahalis, 65. He had worked for the turnpike for five years after 20 years of unemployment due to an injury he sustained as a dockworker. He had loved the work, especially interacting with customers, and earned good money: By taking as much overtime as he could get, he made about $53,000 a year, along with benefits.“It was the best thing I ever did,” he said. “I felt like a man again.”The job evaporated overnight when the Pennsylvania Turnpike Commission, struggling during the coronavirus pandemic, decided in June to move up its plan to lay off nearly 500 toll workers and replace them with electronic tolling. Dismissals planned for early 2022 instead went into effect immediately, a move that the commission said would help the system financially accommodate weaker traffic during the economic downturn.The United States may be witnessing the bleeding edge of a labor force shuffle that often occurs during recessions: Employers who have been forced to cut workers turn to existing or new technology to carry on with less labor. But this time the shift could be magnified by a wave of forced layoffs at the start of the pandemic and by the fact that demand in some cases came back before employees safely could.That has created a big incentive for employers to figure out how to produce more with fewer workers, powered by new technologies that allow for more automation.Layoffs have shifted from temporary to permanent as the pandemic has dragged on, and many workers have moved to the sidelines of the labor market as service jobs in particular — everything from conference centers and hotels to tollbooths — are downsized or streamlined. It is unclear how quickly workers facing firings will find new jobs that are good substitutes in terms of skills and salaries.“We’re learning that technology can replace people even more than we thought, and some of that is happening,” Jerome H. Powell, the Federal Reserve chair, said at a news conference last week. “We’re still going to need to keep people in mind whose lives have been disrupted because they’ve lost the work that they did.”Technology adoption can lead to faster productivity growth — or at least a one-time bounce — that might improve the economy’s potential. But it can be difficult for laid-off workers to move into new jobs that pay as well and fit their qualifications.“This story isn’t new,” said Nela Richardson, the chief economist at ADP, the payroll-processing company. “There was always a question about what to do about those left behind by technology and globalization that was never answered.”The Pennsylvania Turnpike offers a stark example. Its workers knew that machines would eventually make them obsolete, but they thought they would have time to prepare.Faye Townsend, 50, was on a trial period at the turnpike’s administrative building, working a job that she hoped would lead to an even more secure one before the switch to cashless tolls. When the coronavirus crisis began, she was sent back to the road system but not allowed into the tollbooth. Instead, she and her colleagues spent worried days clocking in, sanitizing the building and waiting to learn whether and when they could return to collecting.The Coronavirus Outbreak More

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    C.B.O. Report Says U.S. Economy Is Healing But Workers Have A Ways to Go

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyU.S. Economy Is Healing, but Budget Office Says Workers Have a Long Way to GoNew projections from the independent Congressional Budget Office fuel Republicans’ calls for “targeted” economic aid — and Democrats’ push to go big.Workers constructed an outdoor seating area for a restaurant in San Diego last week. While the new budget office report shows that the economy is recovering at a faster pace than expected, officials do not see unemployment falling to its pre-pandemic level by the end of the decade.Credit…Ariana Drehsler for The New York TimesFeb. 1, 2021Updated 6:33 p.m. ETWASHINGTON — The United States economy will return to its pre-pandemic size by the middle of this year, even if Congress does not approve any more federal money to aid the recovery, the Congressional Budget Office said on Monday. But it will be years before everyone thrown off the job by the coronavirus is able to return to work.Those projections could further complicate President Biden’s ability to quickly pass a $1.9 trillion stimulus package, as moderate Republicans and even some left-leaning economists express concerns that too much new federal borrowing could overheat the economy.Still, Democrats worried about families putting food on the table and avoiding eviction or foreclosure as the pandemic continues to suppress economic activity are forging ahead with Mr. Biden’s more aggressive plans, introducing budget resolutions in the House and Senate on Monday that would allow legislation based on the president’s proposals to pass without Republican votes.Mr. Biden met late Monday with a group of 10 Republican senators who have drafted a $600 billion economic aid proposal of their own. It would scale back many of the president’s spending ambitions, like additional unemployment benefits and $1,400 direct payments to individuals, while scrapping other elements entirely, like his proposed aid to state and local governments to patch budget shortfalls.Mr. Biden, who spent three decades in the Senate, has welcomed discussions with Republicans but shown little willingness to significantly cut the cost of his plan. The budget office report on Monday offered some evidence to support his position, with figures suggesting that the economy could absorb substantial new federal assistance without stoking higher inflation or forcing the Federal Reserve to raise interest rates.Congressional Democrats and many liberal economists on Monday repeated their calls for lawmakers to act swiftly and aggressively to help the large swaths of Americans still struggling to recover, a message echoed by Mr. Biden’s aides.Jen Psaki, the White House press secretary, told reporters that the budget office report was “not a measure of how each American family is doing and whether the American people are getting the assistance they need.” Mr. Biden, she said, “believes that the risk is not going too small, but not big enough.”The new projections from the office, which is nonpartisan and issues regular budgetary and economic forecasts, show the economy healing faster than the office’s forecasts over the summer suggested it would.Officials told reporters on Monday that the brightening outlook stemmed from large sectors of the economy adapting better and more rapidly to the pandemic than originally expected. It also reflected increased growth driven by a $900 billion economic aid package that Congress passed in December, which included $600 direct checks to individuals and more generous and longer-lasting benefits for the millions of people who are still unemployed.The budget office now expects the unemployment rate to fall to 5.3 percent at the end of the year, down from an 8.4 percent projection in July. The unemployment rate stood at 6.7 percent in December. The economy is expected to grow 3.7 percent for the year, after recording a much smaller contraction in 2020 than the budget office had expected.The Coronavirus Outbreak More

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    America’s Next Great Economic Experiment: What if We Run It Hot?

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    AdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyAmerica’s Next Great Economic Experiment: What if We Run It Hot?Supporters of aggressive stimulus see an opportunity to finally correct the mistakes of the last recession and achieve boom times quickly.Credit…Thomas White/ReutersJan. 29, 2021, 5:00 a.m. ETPresident Biden’s proposed $1.9 trillion pandemic rescue package includes money for many goals: expediting the rollout of coronavirus vaccines; reopening schools; expanding unemployment benefits; sending more cash payments to most Americans.But when you skip the line-by-line details and look at the overall numbers, something striking becomes evident. The administration’s proposal, when combined with the $900 billion in pandemic aid agreed to in December, would amount to a bigger surge of spending, both in absolute terms and relative to the depth of the nation’s economic hole, than has been attempted in modern American history.Mr. Biden’s proposal — or even more limited versions of it that appear to have a better shot of winning congressional approval — would pump enough money into the economy to, in effect, intentionally overheat it. Or at minimum it would push the limits of how fast the American economy can rev.Supporters of aggressive stimulus aid view that as a positive thing, a means to finally correct the mistakes of the last recession and achieve a boom-time economy quickly, rather than muddle along with millions out of work for years.Mark Zandi of Moody’s Analytics, whose work on the impact of fiscal stimulus President Biden has frequently cited, estimates that the United States currently has an “output gap” — a gap between actual activity and economic potential — of 4 percent to 5 percent of G.D.P., and that the Biden proposal would amount to 8 percent to 9 percent of this year’s G.D.P.Even if scaled back somewhat to gain moderates’ support, the Biden plan implies enough fuel to get the economy burning hot.“It’s better to err on the side of too much rather than too little,” Mr. Zandi said. “Interest rates are at zero, inflation is low, unemployment is high. You don’t need a textbook to know this is when you push on the fiscal accelerator. Let’s go.”To skeptics, it would be a risky use of the power of the Treasury, with far-reaching implications for inflation, financial bubbles and the sustainability of the national debt.“We’re already in uncharted territory,” said Douglas Holtz-Eakin, president of the American Action Forum and a former director of the Congressional Budget Office who has advised Republicans. He noted that fourth-quarter G.D.P. was only about $119 billion below its level of a year earlier: “Do we need another $1.9 trillion to deal with that problem? I have an arithmetic problem with where we are.”Traditional fiscal policy to address a recession goes something like this. First make your best projection of how the economy will perform in the months ahead. Then make your best guess at how much smaller that is compared with the economy’s potential if healthy — for example, the value of G.D.P. if everyone who wanted a job was working and factories were running at full capacity.At that point, try to analyze the “fiscal multipliers” of policies under consideration: how much economic activity each dollar of spending is likely to trigger. Then size your fiscal stimulus package accordingly, essentially using federal dollars to replace the economic activity that has evaporated because of the recession.In practice, of course, it’s never that simple. It includes a lot of estimates and projections, and congressional politics will ultimately determine the size and content of stimulus legislation. Constrained by Congress, President Barack Obama’s signature fiscal stimulus program, enacted in early 2009, was a poor match for the economic crisis at hand. It pumped an average of $240 billion into the economy each of its first three years, at a time the “output gap” approached $1 trillion per year.The approach of both parties in fighting the pandemic-induced downturn has focused less on the big picture. It has been more about assembling provisions to help individuals and businesses weather the crisis, whatever the price tag. Under that approach, large bipartisan majorities enacted the $2 trillion CARES Act in the spring and several smaller provisions, including the $900 billion package a month ago.These efforts are less fiscal stimulus in the traditional sense — using government money to replace missing demand in the economy — and more an effort to directly alleviate the problems the pandemic has caused.“This package is sized not simply to fill the hole,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution. “It’s trying to do somewhat different things. A lot of people and businesses are desperately hurting right now, so this money is relief aimed at those people, and in order to be really confident you’re reaching them all, you need to send a lot of money.”But that doesn’t change the fact that the aggregate money the government is pumping out adds up to more than the missing economic activity, which could have meaningful consequences for the years ahead. And that is before accounting for other expected proposals from the Biden administration, such as large-scale funding of new infrastructure.“There are pros and cons,” she said. “Running the economy hot might be a good thing, but there also might be a painful adjustment with a period of slow growth on the other side of the mountain.”In an economy running hot, employers face shortages of workers and must bid up their wages to attract staff. This, along with potential shortages of various commodities, can, in theory, fuel a vicious cycle of rising prices.For the last 13 years, arguably longer, the United States has had the opposite problem. Large numbers of Americans of prime working age — 25 to 54 — have been either unemployed or outside the labor force altogether. Wage growth has been weak most of that time, and inflation persistently below the levels the Federal Reserve aims for.Some argue that estimates of potential output by the C.B.O. and private economists are too pessimistic — that Americans should dare to dream bigger. “We don’t really know what the G.D.P. output gap truly is,” said Mark Paul, an economist at New College of Florida. “Economists for decades have erred and been too cautious, thinking that full production is significantly lower than it actually is. We’ve been consistently running a cold economy, creating massive problems for social cohesion.”In a paper published in December, he said a pandemic aid package of more than $3 trillion would be justified based on the scale of job losses that have been endured. The output gap looks worse based on employment than it does when you look at G.D.P., in part because job losses have disproportionately occurred in sectors that generate relatively low economic output per worker, such as restaurants.Still, the scale of the pandemic aid already in train helps explain why Mr. Biden faces a tricky road toward finding a Senate majority for the next bill, even among Republicans who are not dead set against stimulus spending conceptually.“It’s hard for me to see, when we just passed $900 billion of assistance, why we would have a package that big,” Senator Susan Collins, the Maine Republican, said recently. “Maybe a couple of months from now, the needs will be evident and we will need to do something significant, but I’m not seeing it now.”A key case for going large revolves around risk management. With the economy mired in a cycle of weak labor markets and low inflation, a little overheating might be welcome. If, for example, the Federal Reserve needed to raise interest rates down the road to keep inflation from taking off, it could be a positive thing for creating a more balanced economy less reliant on monetary policy and booming asset prices.Jerome Powell, the Federal Reserve chair, has said that ensuring the long-term productive capacity of the economy is a more urgent priority than tamping down inflation.“I’m much more worried about falling short of a complete recovery, and losing people’s careers and lives that they built, because they don’t get back to work in time,” Mr. Powell said in a news conference Wednesday. “I’m more concerned about that than about the possibility which exists of higher inflation. Frankly, we welcome slightly higher inflation.”Put differently: It’s hard to worry too much about getting burned after a decade-long winter out in the cold.AdvertisementContinue reading the main story More