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An outdoor seating area at a Bronx restaurant. The hospitality industry has been hit especially hard by job losses during the pandemic.Credit…Michael Young for The New York Times
While vaccination efforts have gathered speed and restrictions on activities have receded in many states, the job market is showing signs of life.
Initial claims for state unemployment benefits fell last week to 657,000, a decrease of 100,000 from the previous week, the Labor Department reported Thursday. It was the lowest weekly level of initial state claims since the pandemic upended the economy a year ago.
On a seasonally adjusted basis, new state claims totaled 684,000.
In addition, there were 242,000 new claims for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits, a decrease of 43,000.
Unemployment claims have been at historically high levels for the past year, partly because some workers have been laid off more than once. Much of the drop last week was accounted for by a decline in new claims in Ohio and Illinois, but economists said the overall trend was encouraging.
“This is definitely a positive signal and a move in the right direction,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “We would expect to see further improvements as vaccines roll out and restrictions are lifted.”
Between the state and federal programs, the total number of new jobless claims was just under 900,000 after being stuck above one million a week.
Although the pace of vaccinations, as well as passage of a $1.9 trillion relief package this month, has lifted economists’ expectations for growth, the labor market has lagged behind other measures of recovery.
Still, the easing of restrictions on indoor dining areas, health clubs, movie theaters and other gathering places offers hope for the millions of workers who were let go in the last 12 months. And the $1,400 checks going to most Americans as part of the relief bill should help spending perk up in the weeks ahead.
Diane Swonk, chief economist at the accounting firm Grant Thornton, said she hoped for consistent employment gains but her optimism was tempered by concern about the longer-term displacement of workers by the pandemic.
“The numbers are encouraging, but no one is jumping the gun and hiring up for what looks to be a boom this spring and summer,” she said. “There is a reluctance to get ahead of activity.”
“We’ve passed the point where you can just flip a switch and the lights come back on,” she added. “We need to see a sustained increase in hiring, which I think we will see, but the concern is that it won’t be so robust. It takes longer to ramp up than it does to shut down.”
Most of United’s new flights will connect cities in the Midwest to tourist destinations.Credit…Sebastian Hidalgo for The New York Times
United Airlines plans to add more than two dozen new flights starting Memorial Day weekend, the latest sign that demand for leisure travel is picking up as the national vaccination rate moves higher.
Most of the new flights will connect cities in the Midwest to tourist destinations, such as Charleston, Hilton Head and Myrtle Beach in South Carolina; Portland, Maine; Savannah, Ga.; and Pensacola, Fla. United also said it planned to offer more flights to Mexico, the Caribbean, Central America and South America in May than it did during the same month in 2019.
The airline has seen ticket sales rise in recent weeks, according to Ankit Gupta, United’s vice president of domestic network planning and scheduling. Customers are booking tickets further out, too, he said, suggesting growing confidence in travel.
“Over the past 12 months, this is the first time we are really feeling more bullish,” Mr. Gupta said.
Airports have been consistently busier in recent weeks than at any point since the coronavirus pandemic brought travel to a standstill a year ago. Well over one million people were screened at airport security checkpoints each day over the past two weeks, according to the Transportation Security Administration, although the number of screenings is down more than 40 percent compared with the same period in 2019.
Most of the new United flights will be offered between Memorial Day weekend and Labor Day weekend aboard the airline’s regional jets, which have 50 seats. The airline said it would also add new flights between Houston and Kalispell, Mont.; Washington and Bozeman, Mont.; Chicago and Nantucket, Mass.; and Orange County, Calif., and Honolulu.
All told, United said it planned to operate about 58 percent as many domestic flights this May as it did in May 2019 and 46 percent as many international flights. Most of the demand for international travel has been focused on warm beach destinations that have less-stringent travel restrictions.
“That is one of the strongest demand regions in the world right now,” Mr. Gupta said. “A lot of the leisure traffic has sort of shifted to those places and it’s actually seen a boom in bookings.”
Delta Air Lines issued a similar update last week, announcing more than 20 nonstop summer flights to mountain, beach and vacation destinations. Both airlines have said in recent weeks that they have made substantial progress toward reducing how much money they are losing every day.
“Institutions that focus on diversity and do it well are the successful institutions in our society,” said Jerome Powell, the Federal Reserve chair.Credit…Mandel Ngan/Agence France-Presse — Getty Images
Jerome H. Powell, the Federal Reserve chair, said on Thursday that the central bank was trying to make its economic employee base more racially diverse and he was not satisfied with its progress toward that goal so far.
“It’s very frustrating, because we have had for many years a strong focus on recruiting a more diverse cadre of economists,” Mr. Powell said while speaking on NPR’s “Morning Edition,” after being asked about a New York Times story on the Fed’s lack of Black economists. “We’re not at all satisfied with the results.”
Only two of the 417 economists, or 0.5 percent, at the Fed’s board in Washington were Black, according to data the Fed provided to The Times earlier this year. By comparison, Black people make up 13 percent of the country’s population and 3 to 4 percent of the U.S. citizens and permanent residents who graduate as Ph.D. economists each year.
Across the entire Fed system — including the Board of Governors and the 12 regional banks — 1.3 percent of economists identified as Black. The Fed has been making efforts to hire more broadly, Mr. Powell said, including by working with historically Black colleges.
“It’s a very high priority,” Mr. Powell said of hiring more diversely. “Institutions that focus on diversity and do it well are the successful institutions in our society.”
The Fed chair was also asked about how he would rate the central bank’s sweeping efforts to rescue the economy as markets melted down at the start of the coronavirus outbreak last year. In addition to cutting its policy interest rate to near zero and rolling out an enormous bond-buying program, the Fed set up a series of emergency lending programs to funnel credit to the economy.
Rolled out over a frantic few weeks, the programs included ones that the Fed had never tried before to backstop corporate bond and private company loan markets.
“I liken it to Dunkirk,” Mr. Powell said, referring to the rapid evacuation of British and Allied forces from France in World War II. “Just get in the boats and go.”
Despite the speed of the decision-making, Mr. Powell said that he looked back on the results as positive.
“Overall, it was a very successful program,” he said. “It served its purpose in staving off what could have been far worse outcomes.”
Esther George, the president of the Federal Reserve Bank of Kansas City, said she expected inflation to “firm,” given time.Credit…Ann Saphir/Reuters
Esther George, the president of the Federal Reserve Bank of Kansas City, says that although the outlook for growth has improved as vaccinations increase and the government rolls out relief packages, the path of the pandemic remains a major question hanging over the U.S. and global economies.
“We’re not out of this yet,” Ms. George said in an interview on Wednesday. “It’s hard to know what the dynamics will be on the other side.”
Ms. George said she was focused on labor force participation as a sign of the job market’s strength more than the headline unemployment rate, which has fallen to 6.2 percent from a 14.8 percent peak but misses many people who aren’t looking for new jobs after losing theirs during the pandemic. Participation, the share of people working or looking, remains a hefty two percentage points below its prepandemic levels.
“That might be the thing I really watch in the coming months,” she said.
Ms. George expects inflation to “firm,” but that the process is likely to take a while, she said, and it is “too soon to say” whether it will end with a more meaningful rise. Some prominent economists have begun to warn that prices, which have been low for decades, could rise rapidly as the government spends big and the Fed keeps rates at rock bottom to support the economic recovery.
“Wages are a very telling factor in a story about inflation,” Ms. George said.
Many economists look for faster growth in compensation as a signal that inflation is sustainable, not just driven by short-lived supply constraints or temporary quirks in the data.
Ms. George’s colleagues, including Jerome H. Powell, the Fed chair, have been clear that they expect prices to move higher this year but will not necessarily see that as an achievement of their inflation goal. The Fed redefined its target last year and now aims for 2 percent annual price gains, on average, over time.
Ms. George did not venture a guess of when the Fed will hit its three criteria for raising interest rates: full employment, 2 percent realized price gains and the expectation of higher inflation for some time. Some Fed officials expect to raise rates next year or in 2023, but most of them expect the initial increase to come even later.
Dan Gilbert, the chief executive of Quicken Loans, which has been based in Detroit since 2010.Credit…Tony Dejak/Associated Press
Dan Gilbert, the Quicken Loans founder, has spent more than a decade putting billions into downtown Detroit. Now he’s broadening his scope.
The Gilbert Family Foundation and the Rocket Community Fund, the philanthropic arm of Quicken Loans’ Rocket Mortgage company, announced on Thursday a $500 million investment in Metro Detroit, to be spent over the next 10 years. The first $15 million will be put toward paying off property tax debt of low-income homeowners who qualified for Detroit’s Pay As You Stay initiative.
Quicken Loans has been based in Detroit since 2010, and Mr. Gilbert and his real estate firm, Bedrock, have spent billions buying and redeveloping properties there. Those efforts have been praised for revitalizing a downtown area of roughly seven square miles, but also criticized by some who contend they did not do enough to help those who live in the rest of the city.
“We feel like we’ve made Detroit into a tech boomtown,” said Mr. Gilbert. But he acknowledged that some may have felt left behind. “This can bridge that,” he said.
Mr. Gilbert added that his focus outside of Detroit’s city center stems from his work on President Barack Obama’s Blight Removal Task Force in 2014 as the city was emerging from bankruptcy. “Property taxes was the No. 1 issue that was causing the blight foreclosures,” he said.
Detroit’s housing crisis dates to “racial covenants” in the 1920s. In the mid-2000s, the city became a center of risky lending that defined the financial crisis, with subprime lending accounting for three-fourths of the mortgages in the city. (Quicken Loans settled a lawsuit with the Justice Department for its own lending practices during that time, but admitted no wrongdoing.)
The economic crisis that followed toppled a city already grappling with a dwindling population and shrinking revenue. Those who paid for the recovery were largely low-income housing owners — in many cases Black — whom the city was also accused of overtaxing. Poverty rates ascended and city services deteriorated as a result.
The investment announced on Thursday is an effort to address the lingering effects of the crisis. Twenty thousand families qualify for the tax-relief program, said Mr. Gilbert’s wife, Jennifer, who founded the Gilbert Family Foundation with her husband.
“By preserving that wealth, we also preserve opportunities for intergenerational wealth transfer,” she said. “The stability of the home allows for people to then focus on other economic opportunities that allow them to thrive.”
After the first $15 million of the initiative is spent paying back taxes of low-income homeowners, the remaining funds will be focused on, among other things, home repair and narrowing the digital divide.
The community will be vital for input, including those who qualify for the initial tax relief. “We can learn a lot about where we want to invest next and how best we can positively impact them and their lives,” Ms. Gilbert said.
A Nike store in Beijing on Thursday. Nike shares fell in premarket trading after it was criticized on Chinese social media over a statement it made about reports of forced labor in Xinjiang.Credit…Greg Baker/Agence France-Presse — Getty Images
Stocks on Wall Street dropped on Thursday even as the latest weekly data showed that state unemployment claims fell to the lowest level since the start of the pandemic.
The S&P 500 index and Nasdaq composite both fell less than half a percent in early trading.
Stock trading has grown choppy lately as investors weigh news of rising Covid-19 cases and new lockdowns, or the rollback of efforts to reopen economies, against mounting signs of economic recovery as more people are vaccinated and the effects of the $1.9 trillion stimulus package emerge.
On Thursday, the Labor Department reported that initial claims for unemployment benefits fell last week to 657,000, a decrease of 100,000 from the previous week. On a seasonally adjusted basis, new state claims totaled 684,000.
German lockdown U-turn
As Europe grapples with an emerging third wave of the pandemic, Germany has canceled a strict five-day lockdown that was set to start at the beginning of April. Chancellor Angela Merkel said she took “ultimate responsibility” for the reversal, which came after a large backlash to the plan, even from within her own party, and anger from retailers and restaurants.
“In the near term, this avoids the negative economic consequences of a lockdown,” Paul Donovan, an economist at UBS Global Wealth Management, wrote in a note. But over a longer a period of time, markets will question whether this will just delay Germany’s ability to restrain the virus and slow down the recovery, he added.
European stocks were lower Thursday. The Stoxx Europe 600 index was down 0.8 percent and the FTSE 100 in Britain fell 1 percent.
Suez Canal
Oil prices dropped. Futures of Brent crude, the European benchmark, fell 1.5 percent to $63.45 a barrel and futures of West Texas Intermediate, the U.S. benchmark, fell 1.8 percent to about $60 a barrel.
On Wednesday, oil prices jumped more than 5 percent after a container ship got stuck in the Suez Canal, blocking one of the world’s key shipping routes, which is also an important artery for the flow of oil. On Thursday, efforts to dislodge the ship were ongoing as some 150 other ships were waiting on either side.
The company trying to move the ship warned it could take weeks. Shipping has already been heavily disrupted by the pandemic, sending freight prices soaring.
Elsewhere in markets
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Nike shares dropped more than 3 percent in early trading, and H&M shares fell close to 4 percent in Stockholm after Chinese social media users called for a boycott of the companies. The two fashion retailers published statements expressing concern over reports of forced labor in Xinjiang. Nike’s statement said the company didn’t source cotton from the region, but the online attacks have called it a boycott of the region’s cotton farmers.
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Yields on 10-year Treasury notes fell to about 1.6 percent.
“We are here to help our small businesses, and that is why I’m proud to more than triple the amount of funding they can access,” said Isabella Casillas Guzman, the Small Business Administration’s administrator.Credit…Anna Moneymaker for The New York Times
Companies harmed by the coronavirus pandemic can soon borrow up to $500,000 through the Small Business Administration’s emergency lending program, raising a cap that has frustrated many applicants.
“The pandemic has lasted longer than expected,” Isabella Casillas Guzman, the agency’s administrator, said on Wednesday. “We are here to help our small businesses, and that is why I’m proud to more than triple the amount of funding they can access.”
The change to the Economic Injury Disaster Loan program — known as EIDL and pronounced as idle — will take effect the week of April 6. Those who have already received loans but might now qualify for more money will be contacted and offered the opportunity to apply for an increase, the agency said.
The Small Business Administration has approved $200 billion in disaster loans to 3.8 million borrowers since the program began last year. Unlike the forgivable loans made through the larger and more prominent Paycheck Protection Program, the disaster loans must be paid back. But they carry a low interest rate and a long repayment term.
Normally, the decades-old disaster program makes loans of up to $2 million, and in the early days of the pandemic, the agency gave some applicants as much as $900,000. But it soon capped loans at $150,000 because it feared exhausting the available funding. That limit — which the agency did not tell borrowers about for months — angered applicants who needed more capital to keep their struggling ventures alive.
The agency has $270 billion left to lend through the pandemic relief program, James Rivera, the head of the agency’s Office of Disaster Assistance, told senators at a hearing on Wednesday.
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Tribune Publishing’s board recommended that shareholders approve a purchase offer from the hedge fund Alden Global Capital over a higher bid from a Maryland hotel executive, according to a securities filing Tuesday. Alden, Tribune’s largest shareholder, agreed last month to buy the rest of the company at $17.25 per share and take it private in a deal that would value the company at $630 million. Last week, Stewart W. Bainum Jr., a hotel magnate, made an $18.50 per share offer for the whole company.
Jane Fraser in 2019. “The blurring of lines between home and work and the relentlessness of the pandemic workday have taken a toll on our well-being,” she told Citigroup employees.Credit…Erin Scott/Reuters
Complaints of “Zoom fatigue” have emerged across industries and classrooms in the past year, as people confined to working from home faced schedules packed with virtual meetings and often followed up by long video catch-ups with friends, reports Anna Schaverien of The New York Times.
But Citigroup, one of the world’s largest banks, is trying to start a new end-of-week tradition meant to combat that fatigue: Zoom-free Fridays.
The bank’s new chief executive, Jane Fraser, announced the plan in a memo sent to employees on Monday. Recognizing that workers have spent inordinate amounts of the past 12 months staring at video calls, Citi is encouraging its employees to take a step back from Zoom and other videoconferencing platforms for one day a week, she said.
“The blurring of lines between home and work and the relentlessness of the pandemic workday have taken a toll on our well-being,” Ms. Fraser wrote in the memo, which was seen by The New York Times.
No one at the company would have to turn their video on for any internal meetings on Fridays, she said. External meetings would not be affected.
The bank outlined other steps to restore some semblance of work-life balance. It recommended employees stop scheduling calls outside of traditional working hours and pledged that when employees can return to offices, a majority of its workers would be given the option to work from home up to two days a week.
