Initial weekly unemployment claims,
both regular and those under the Pandemic Unemployment Assistance program
Initial weekly unemployment claims, both regular and those under the Pandemic Unemployment Assistance program
The government reported on Thursday that more 1.4 million workers filed new claims for state unemployment benefits last week, the first time that the weekly tally has risen in more than three months.
The upturn, from about 1.3 million in the two preceding weeks, comes just days before an extra $600-a-week jobless benefit is set to expire.
An additional 975,000 claims were filed last week by freelancers, part-time workers and others who do not qualify for regular state jobless aid but are eligible for benefits under an emergency federal program, the Labor Department said. Unlike the state figures, that number is not seasonally adjusted.
“At this stage, you’re seeing all the wrong elements for recovery,” said Gregory Daco, the chief United States economist at Oxford Economics. “A deteriorating health situation, a weakening labor market and a softening path for demand.”
The report on Thursday has particular resonance: It reflects the week that will be used by the department to calculate the June jobs data and unemployment rate.
The stubbornly high rate of new weekly claims more than four months into the coronavirus pandemic “suggests that the nature of the downturn has changed from early on,” said Ernie Tedeschi, a policy economist at Evercore ISI. It may mean that businesses are shutting down again as cases surge in some places, or that funds from emergency federal loans through the Paycheck Protection Program are running out, he said — or worse, something more fundamental.
“It might be that businesses are running through their first line of credit,” he said, “and now they’re facing the music of an economy that has recovered a little bit but nearly enough.”
Daniella Knight called it “tag-team parenting.” She worked part time at a property-management company during the day while her husband took care of their three children — 3, 5 and 9 years old. She took over during his 4 p.m.-to-midnight shift as a litigation data analyst. After kissing the children good night, she worked her second job as a pediatric sleep consultant.
“We were already barely making it,” Ms. Knight said. But she thought she could temporarily put up with the exhaustion and stress so they could save enough to stop renting in Alexandria, Va., and buy a house with more than one bathroom.
The coronavirus pandemic added full-time home-schooling to their load. She stopped going to the small property-management office during the day to avoid contagion, instead driving there at night when it was less crowded or empty.
“Mom and Dad were at the end of our ropes, beyond exhausted,” she said. “I started to have panic attacks.”
Then, in June, her husband was laid off. He applied for unemployment insurance, Ms. Knight said, but “we have not gotten one dollar.”
Her husband found another job, working for the government, but has to wait six to eight weeks for his security clearance.
“We still have to pay our bills, our utilities, our rent, everything,” she said. The monthly cost of their health care alone is $1,600, which they had to tap their savings to pay, and they are counting on the unemployment benefits to kick in. “We can’t get by with another two months without that,” Ms. Knight said.
Having multiple jobs is business as usual for millions of Americans. But many cobbled-together employment arrangements that enabled people to get by when the jobless rate was skimming along at record lows collapsed once the pandemic curbed or closed large swaths of the economy.
And when hard times hit, they are excluded from regular state unemployment benefits.
“There’s a misfit between the enormous volatility and part-time jobs that make up the ways that people cobble together making money and the system that’s going to cut you a check,” said Susan J. Lambert, a professor at the University of Chicago who studies low-skilled hourly jobs.
The economic shock quickly exposed the mismatch between the reality of making a living in 2020 and the systems built to protect workers. People who rely on paychecks from different employers are already more likely to have shifting schedules and unpredictable weekly paychecks, low hourly wages and the absence of benefits like sick days and health insurance.
They are also more likely to be Black, young and without a college degree.
“The rules of the game have changed,” Ms. Lambert said, but protections for workers, like jobless benefits, have not caught up.
States have been whittling away at the backlog of unemployment claims, but persistent delays in some places have continued.
Behnaz Mansouri, an attorney at the Unemployment Law Project in Washington State, said her office was still averaging 200 phone calls a week from people who had received no benefits after waiting months, or who had inexplicably had them cut off.
Recently there has been some slow progress, she said. A number of people who had appealed a decision in March, April and May were beginning to be called in for a hearing. Those who have waited the longest, Ms. Mansouri said, are often those who have disabilities or don’t speak English well.
In Oklahoma, hundreds of frustrated workers camped out overnight hoping to sort out delays with their unemployment claims at one of the large-scale processing sessions that officials were holding around the state.
The pain of job losses can be found in every corner of the country, but Black men have had particular difficulties, said Peter Q. Blair, a co-director of the Project on Workforce at the Harvard Graduate School of Education.
The government’s June jobs report showed that although unemployment for every other group declined from May, the rate for African-American males over 20 rose to 15.8 percent from 15.3 percent.
“It’s important that we look at the way in which this crisis is having a disparate effect on the African-American community, particularly Black men,” he said.
The Trump administration is dropping its insistence on a payroll tax cut as the centerpiece of the upcoming economic relief bill in favor of more direct payments to Americans, Treasury Secretary Steven Mnuchin said on Thursday.
The payroll tax cut, which was a priority for President Trump, emerged as an obstacle as Senate Republicans have tried to coalesce around a stimulus plan this week. Mr. Mnuchin said that the idea, which he thinks would help stimulate the economy over the longer term, will not be in the “base bill” but that it could still emerge in future legislation.
“We think the payroll tax cut is a very good pro-growth policy,” Mr. Mnuchin said on CNBC. “The president’s focus is, he wants to get money into people’s pockets now.”
Mr. Mnuchin said that Republicans had agreed to a plan to continue expanded unemployment insurance, which will expire at the end of the month. He said that the proposal would replace approximately 70 percent of a worker’s lost wages so that the policy did not create incentives for people not to return to their jobs.
“We want to make sure that the people who are out there that can’t find jobs do get a reasonable wage replacement,” Mr. Mnuchin said.
He added that there would be tax credits to encourage businesses to rehire workers. The plan would also replenish the Paycheck Protection Program so that small businesses with revenue down by 50 percent or more can apply for second loans.
His comments come as Senate Republicans on Thursday are expected to unveil a roughly $1 trillion coronavirus relief measure that will allocate more than $100 billion to schools, new aid for states to conduct testing across the country and liability protections for schools, hospitals and businesses.
The Treasury secretary also said that the Republican plan would include liability protections for businesses that are seeking to reopen to shield them from “frivolous lawsuits.”
Southwest Airlines and American Airlines on Thursday reported deep losses in the second quarter of the year, as a meek rebound in travel slowed in recent weeks with the spread of coronavirus infections and travel restrictions nationwide.
For Southwest, revenue declined 83 percent from the same quarter last year, resulting in an overall loss of $915 million. American saw revenue fall 86 percent, giving way to a $2 billion loss. The losses represent a reversal of fortune for both airlines, which earned hundreds of millions of dollars in profit during the same three months in 2019.
“The current environment is more unpredictable and more volatile than anything we ever could have imagined,” American’s chief executive, Doug Parker, said in an email to staff on Thursday.
Demand for flying will probably “remain depressed” until a vaccine or treatment for the virus is developed, said Southwest’s chief executive, Gary Kelly, echoing his counterpart at United Airlines.
The quarterly results are in line with their industry peers: Revenue fell 88 percent for United and 87 percent for Delta Air Lines. United suffered a $1.6 billion loss, down from a $1 billion profit last year. Delta lost $5.7 billion, down from a $1.4 billion profit in 2019.
The second quarter is likely to be the worst of the pandemic for the industry, which was blindsided by a more than 90 percent decline in passenger traffic in March. Air travel remained below that level through April. Airlines started to claw their way back in May and June, but the recovery has since stagnated as coronavirus infections spread across the country. The number of people screened at federal airport checkpoints remains about 75 percent below last year’s levels.
A federal stimulus in March delivered emergency funding, which protected jobs through September, but every major airline has warned of deep cuts to come. American has warned that it could furlough as many as 20,000 employees this fall, while United has warned that it could furlough up to 36,000. Delta has said similar cuts may follow, though it is working to avoid them, while Southwest said on Thursday that it did not plan to furlough or lay off employees — or cut pay or benefits — through the end of the year.
Airlines are shoring up emergency reserves for what is expected to be a long, choppy recovery. American said it ended the quarter with more than $10 billion in cash on hand, not including a $4.75 billion Treasury Department loan it expects to take and another $1.2 billion it raised on Thursday. Southwest said it had about $14.5 billion, while United and Delta each have more than $15 billion on hand.
American averaged daily losses of $55 million in the second quarter, compared with $43 million for Delta, $40 million for United and $23 million for Southwest.
Twitter’s daily users surged to 186 million in the second quarter, up 34 percent from a year ago.
But revenue fell 19 percent to $683 million, missing Wall Street estimates of $700 million. The company also had a net loss of $124 million, it said on Thursday (not Wednesday, as this item originally stated.)
Twitter executives blamed the advertising slump caused by the pandemic, and said some marketers also became skittish about promoting their products during the Black Lives Matter protests. Twitter said it saw advertising return once the protests began subsiding.
The company also said it was working on building more “direct-response” ad features, which would allow people to purchase or download things directly from their Twitter timelines. Twitter has traditionally largely focused on brand-awareness campaigns. On Facebook, direct-response advertising makes up the bulk of the social network’s ad revenue.
The company continues to deal with the fallout of last week’s breach in which hackers took over dozens of accounts of prominent Twitter users in a haphazard Bitcoin fraud. On Thursday, the company said the hackers had gained access the direct messages of up to 36 of the 130 of the hacked accounts.
Twitter recently started labeling some of President Trump’s messages to indicate that he was spreading falsehoods or glorifying violence. On Tuesday, Twitter said it would take down accounts associated with QAnon, the pro-Trump conspiracy theory, citing concerns about how such content could incite violence. It was the first time a large social media service took sweeping action against QAnon. Facebook is planning a similar takedown in coming weeks, people with knowledge of the plans have said.
Wall Street was set for a day of unsteady trading on Thursday, with some better than expected earnings reports competing for investors’ attention with a rise in unemployment claims by workers in the United States.
The S&P 500 drifted lower in early trading, while shares in Europe were slightly higher.
The mood was set in part by word that 1.4 million workers filed new claims for state unemployment benefits last week, the first time that the weekly tally has risen in more than three months. The rise in claims comes as a surge in coronavirus cases around the United States prompts some states to reinstate restrictions on public gatherings and close bars and restaurants again.
Investors have shaken off concerns about the impact the lockdowns might have on the economy, in part because lawmakers in Washington are in the middle of negotiations over a spending plan that will help offset some of the damage. On Wednesday, Senate Republican leaders and White House officials said that they had reached an agreement in principle on a proposal to give more than $100 billion to schools, send additional checks directly to Americans and provide $16 billion for states to conduct testing and contact tracing.
Stocks in the United States are on track for a fourth consecutive weekly gain this week. The S&P 500 has climbed more than 5 percent so far in July.
It has also helped sentiment that several companies reporting results for the three months through June, have largely met or exceeded Wall Street’s expectations. On Thursday, the consumer products giant Unilever reported that underlying sales fell 0.3 percent in the previous quarter, which was a much better result than had been expected amid pandemic lockdowns. It was enough to push its shares up more than 7 percent.
Daimler, the automaker, said it lost 1.9 billion euros, or about $2.2 billion, in the second quarter as sales fell about a third, but the company told investors that it expected a profit for the full year; its shares rose more than 5 percent.
Another automaker, Tesla, reported an unexpected profit on Wednesday, a result that defied the depressed earnings throughout the industry. Its shares have been on a roll, and were trading nearly 5 percent higher in premarket trading.
🧪Dow, the American chemicals company, announced plans to cut 6 percent of its global work force, nearly 2,200 jobs, as it published its second quarter earnings on Thursday. The Michigan-based company said it aimed to save $500 million this year, increasing the previous target from $350 million. Its sales declined 24 percent in the second quarter, compared with last year.
Tesla on Wednesday reported a profit of $104 million, a result that surprised analysts, who were expecting the electric carmaker to lose money as the coronavirus pandemic squeezed the company on two fronts. Sales for the second quarter, which ended in June, slowed while much of the economy shut down and as millions of people lost their jobs and cut back on spending. And for nearly two months, the company was forced to halt production at its main plant in Fremont, Calif.
🤖 Microsoft on Wednesday said its revenue rose 13 percent in the last quarter despite the slump in the economy. The company’s growth was led by big gains in its cloud software offerings as more people work from home. For the three months ended in June, its fiscal fourth quarter, Microsoft generated revenue of $38 billion. Its operating profit increased 8 percent to $13.4 billion, or $1.46 a share. LinkedIn, the hiring and professional networking site owned by Microsoft, said on Tuesday that it was cutting 962 jobs, or 6 percent of its work force, partly because hiring has fallen sharply.
💉 With profit bolstered by hundreds of millions of dollars in federal stimulus money, HCA Healthcare, the giant for-profit hospital chain, reported much higher second-quarter earnings on Wednesday, even as its revenue fell when its huge network of hospitals treated fewer patients during the pandemic. The company reported $1.1 billion in net income for the three months that ended June 30, a 38 percent jump from the same period in 2019, on lower revenue of $11.1 billion. HCA, already a major beneficiary of hospital bailout money, said it had received a total of $1.7 billion from the federal government so far.
🛬 United Airlines said its revenue will max out at about 50 percent of last year’s haul if a vaccine does not become available. The airline expects passenger revenue in July, August and September to be down about 83 percent from the same period last year, a slight improvement over the nearly 94 percent decline the airline reported for the second quarter on Tuesday.