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 than 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 not nearly enough.”
AMC Theatres, the nation’s largest cinema chain, delayed the opening of its more than 1,000 theaters in the United States until mid-to-late August. The move was not a surprise, given that it arrived on the heels of the Warner Bros. announcement earlier this week that “Tenet,” its big-budgeted thriller from Christopher Nolan, would not be released on its rescheduled date of Aug. 12. No new date has yet been set.
With the coronavirus showing no signs of abatement, the studios and their movie theater partners have been playing a game of chicken, postponing the return to moviegoing until the virus numbers show a decline. Disney, which had rescheduled its live-action adaptation of “Mulan” for Aug. 21, has yet to announce a date shift but is likely to do so.
Theater chains large and small are struggling with the ramifications of the pandemic. Though they received initial assistance from the federal government in the form of the Paycheck Protection Program, they are still grappling with soaring fixed costs and zero revenue.
Overseas, AMC says that approximately one-third of its cinemas in Europe and the Middle East are already open and operating normally.
AT&T reported second-quarter results Thursday, and the numbers revealed customer defections across it businesses, including wireless, broadband and satellite TV. The only bright spot appeared to be HBO Max, but even there the numbers looked fuzzy. Here are the highlights:
The wireless division saw a loss of 154,000 customers in its traditional service where people pay a monthly bill. The company added 165,000 new customers to its prepaid plans. Factoring in resellers and other connected devices like tablets, AT&T claims 171.4 million total wireless accounts, an 8 percent uptick from last year. The phone giant still has plenty of cash coming in the door, allowing it to pay down its enormous debt and shell out dividends.
The company’s TV service, including satellite (formerly known as DirecTV) and its online cable platform, saw a net loss of 954,000 customers, a downturn the company blamed on lower household spending because of the pandemic.
So what about HBO Max? The company’s new streaming service was introduced in late May, and in its first month it attracted 4.1 million customers. For some context, rival Disney+ signed up 10 million after the first 24 hours. AT&T said it hoped to have 50 million HBO Max customers by 2025.
To get there, AT&T will need to convert more of its regular HBO customers to HBO Max customers. More than 23.5 million people who pay for regular HBO could switch to HBO Max.
What’s making those numbers a bit hard to understand is that AT&T sells two versions of HBO. Both cost the same, but HBO Max has much more content. AT&T wants people to buy HBO Max or convert their existing HBO account to HBO Max. Because most people get HBO through their cable or satellite provider, AT&T has already cut deals with most of them to allow their customers to make the switch.
But that doesn’t mean everyone has. Or can. Amazon, for example, sells HBO through its Amazon Channels service, but it hasn’t been able to strike a deal with AT&T to convert those people to HBO Max customers. AT&T’s chief executive, John Stankey, had some harsh words for Amazon on the earnings call following the report. “We’ve tried repeatedly to make HBO Max available on Amazon,” he said, “Unfortunately, Amazon has taken an approach of treating HBO Max and its customers differently” than other services.
Customers may also be confused about HBO versus HBO Max, or may not be aware they can even make the switch — a marketing challenge for AT&T.
Revenue at the HBO division was down 5.2 percent to $1.6 billion, a result of more people cutting their cable and satellite accounts. But AT&T is spending more — costs were up about a third to $1.5 billion — to invest in HBO Max. Content is expensive.
The company’s cable network division that includes CNN, TNT and TBS (where it airs sports programming) took a big hit to its advertising business with a 37 percent drop to $796 million, the biggest shortfall across the media group.
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.
The pandemic has taken a heavy toll on retailers, especially apparel sellers and other mall-based chains that might have otherwise stayed afloat, perhaps even for a short period, without turning to bankruptcy court.
The latest company to file for bankruptcy was Ascena Retail Group, which on Thursday became at least the ninth prominent retailer to file for bankruptcy since early May, following Brooks Brothers, Neiman Marcus Group and J.C. Penney, among others.
Ascena, just a few years ago was one of the country’s largest clothing retailers for women and girls, will close “a select number” of its Ann Taylor, Lane Bryant, LOFT and Lou & Grey stores, as well as all of its Catherines locations.
Ascena was known for decades as Dress Barn, the clothing chain founded in 1962 by Roslyn S. Jaffe, who noticed that there were few options for stylish and affordable women’s work attire even as more women were entering the work force. Dress Barn went public in 1983, around the time that the “power suit” came into vogue, exemplifying women’s desire to take on the predominantly male corporate world.
— Gillian Friedman and
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.”
The four-month pause that has protected millions of Americans from eviction cases is set to expire at the end of this week. But that hasn’t stopped landlords across the country from trying to get a head start forcing renters out, reports Matthew Goldstein.
Landlords in Tucson, Ariz., filed dozens of eviction cases last month despite the federal moratorium, which was put in place because of the coronavirus crisis. Legal aid lawyers had to go to court to stop the eviction of a San Antonio renter who had lost her job during a citywide stay-at-home order. And in Omaha, a court found that a struggling renter’s attempted eviction had violated the emergency law.
As the number of Covid-19 cases has surged across the country, a disturbing trend has emerged: landlords commencing eviction proceedings even though the CARES Act relief law currently protects about 12 million tenants living in qualifying properties.
State and local governments have also issued eviction moratoriums, but the CARES Act is the furthest reaching, covering as many as 12.3 million renters living in an apartment complex or single-family home financed with a federally backed mortgage. But like other moratoriums, it’s about to expire: After Friday, landlords can begin filing eviction notices for failure to pay rent. It will be at least 30 days after that before any tenants are kicked out.
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.
🏦Senator Mitt Romney, Republican of Utah, confirmed that he would oppose Judy Shelton’s nomination to the Federal Reserve Board. It remains unclear whether Ms. Shelton, an unorthodox economist with close ties to the Trump administration, has enough votes to clear the full Senate. The Senate Banking Committee voted to advance Ms. Shelton’s nomination this week, as several Republicans who had once expressed doubts about her suitability decided to vote in her favor. Now, she and fellow Fed nominee Christopher Waller must win a simple majority vote in the full Senate to gain confirmation.
✈️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.
🧪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.