New claims for state unemployment benefits sharply increased last week as the resurgent pandemic continued to batter the economy.
A total of 1.15 million workers filed initial claims for state unemployment benefits during the first full week of the new year, the Labor Department said. Another 284,000 claims were filed for Pandemic Unemployment Assistance, an emergency federal program for freelancers, part-time workers and others normally ineligible for state jobless benefits. Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 965,000.
It was the first week since July in which the unadjusted number of new state claims exceeded one million. Before the pandemic, weekly filings typically totaled around 200,000.
Economists had been bracing for a fresh wave of claims as the virus battered the service industry. The government reported last week that the economy shed 140,000 jobs in December, the first drop in employment since last spring, with restaurants, bars and hotels recording steep losses.
“Today’s report shows that we’re in a deep economic hole, and we’re digging in the wrong direction,” said Daniel Zhao, senior economist with the career site Glassdoor. “The report obviously shows that the rise in claims is worse than expected, and there is reason to think that things are going to get worse before they are going to get better.”
The holidays may have temporarily depressed unemployment claims in previous weeks, with people delaying filing for benefits until the new year. But several economists expressed skepticism that filing delays were a major driver of the uptick in claims last week.
“I don’t think there’s any question that on the margin, there could be some unusual things going on,” said Mark Hamrick, senior economic analyst at Bankrate. “But we have to think also about the fact that these are not our grandfather’s unemployment lines — meaning much of this is done digitally. I think if one just tries to understand human nature, it doesn’t make a lot of sense that someone would be delaying a request for financial assistance when they’re out of work.”
More likely, economists say, is that the availability of a $300 federal supplement to other unemployment payments — part of the $900 billion stimulus package that President Trump signed into law last month — prompted an increase in demand for benefits.
The labor market has rebounded somewhat since the initial coronavirus wave in the spring. But of the 22 million jobs that disappeared, nearly 10 million remain lost.
“Compared to then, we are doing better,” said AnnElizabeth Konkel, an economist at the career site Indeed, referring to the spring. “But compared to the pre-Covid era, we still have so far to go.”
Still, economists and analysts see better times ahead. As more people are vaccinated, cases will begin to fall, which will ease restrictions on businesses and could lead to a resurgence in consumer activity, helping to revive the service industry.
Perhaps more immediately, President-elect Joseph R. Biden Jr. has pledged to put forward a stimulus package that would provide relief to individuals, small businesses, students, schools and local governments.
The surge last week in unemployment claims is the latest indication that the coronavirus pandemic is still sending shock waves through the economy. And some economists say it could be spring before the labor market starts to meaningfully improve.
“People are still scared of the virus, as they should be, and that is going to have an economic impact,” said AnnElizabeth Konkel, an economist at the career site Indeed. “The virus is the root of all that is going on right now.”
How quickly the economy recovers will depend on several factors, including how soon more widespread administration of the vaccine can begin. Warmer weather could allow more people to gather outside, slowing the spread of the virus as it did last year. President-elect Joseph R. Biden Jr. has also vowed to push another big relief package through Congress, which could provide a lifeline to struggling individuals and businesses the coronavirus is under control.
Still, as the coronavirus continues to pummel the leisure and hospitality industries, employers are likely to continue cutting jobs in the weeks ahead. Some struggling businesses may not survive.
In addition, a major element of the relief package signed by President Trump last month — a $300 weekly federal supplement to other unemployment benefits — is set to expire in mid-March, which could again leave people in the lurch.
Economists say that economic improvement will not happen overnight even once the coronavirus does become contained.
“As we get into the second quarter, the economy should begin to heal,” said Mark Hamrick, senior economic analyst at Bankrate. “But clearly, all of this has taken much longer than anyone expected, and probably the healing will take some time as well.”
Jerome H. Powell, the chair of the Federal Reserve, made it clear on Thursday that the central bank would be cautious in easing off its support for the economy — and that action was anything but imminent. Speaking during a webcast question-and-answer session, Mr. Powell said it would take time for the economy to recover from the pain of the pandemic era.
“We’re a long way from maximum employment, there’s plenty of slack in the labor market,” he said, noting also that weakness in global economies would weigh on progress in the United States. And if inflation picks up substantially, he added, the Fed has policy tools to counteract that. “Too low inflation is the much more difficult problem to solve.”
Some investors have worried that the Fed might speed up its plans to reduce its enormous bond purchases, or even to lift interest rates from their near-zero setting. The central bank has been buying about $120 billion in Treasury and mortgage-backed debt each month to keep markets operating smoothly and to help support the economy.
Top officials have been clear that economic conditions remain well short of their twin targets — maximum employment and slow but steady price increases. Mr. Powell reiterated that there was a long way to go to get the economy back to full health.
“When the time comes to raise interest rates, we will certainly do that,” he said. “And that time, by the way, is no time soon.”
His colleagues, including Lael Brainard, a Fed governor, and Richard Clarida, a vice chair, have also struck a cautious tone when talking about the outlook for monetary policy. Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said in a Bloomberg television interview earlier on Thursday that short-term inflation bumps would not prompt policy changes.
“It’s quite possible that we’ll see some spikes above 2 percent, in fact the math of inflation would suggest that we’ll get some spikes in the middle of the year, but that’s not a victory on price stability,” she said. The Fed has been trying to stabilize price increases, which have been slipping lower across advanced economies.
Mr. Powell also suggested that inflation could increase temporarily but said a temporary bounce would be “very unlikely” to lead to persistently faster gains.
The Fed chair reinforced that the central bank, which has historically lifted interest rates to prevent overheating in the labor market, will no longer do that — instead allowing the job market to continue to tighten so long as excesses do not appear in prices or elsewhere.
“We saw the social benefits that a strong labor market can and did bring,” Mr. Powell said, referring to the last business cycle, in which unemployment dropped to 3.5 percent but wage and price increases remained tame. “One of the big lessons of the last crisis was how much room there was in labor force participation.”
Google on Thursday announced it had finalized its $2.1 billion acquisition of Fitbit, after a deadline passed for the Justice Department to object to the deal.
Fitbit gives the search company a giant leap into the wearable health tech market, putting it more in direct competition with Apple.
In a blog post announcing the completion of the deal, Google said it was committed to protecting the privacy of users, the main sticking point for global regulators who reviewed the merger. The search company promised regulators it would not collect data to be used for targeted advertising.
“This deal has always been about devices, not data,” Rick Osterloh, Google’s senior vice president of devices and services, said. “We worked with global regulators on an approach which safeguards consumers’ privacy expectations.”
James Park, the chief executive of 13-year-old Fitbit, said under Google, with its vast resources, FitBit’s prospects were “truly limitless.” Fitbit has 29 million customers, a small share of the global market for fitness tracking devices. The giant in the field is Apple, which nearly 40 percent of the wearable tech market, according to IDC research.
Google’s privacy commitments were enough to persuade European regulators to approve the deal in December after a 13-month investigation. The regulators approved the deal on privacy commitments and with Google’s promise to continue providing its free Android software to competing makers of fitness and health devices.
The business deal was completed after the Justice Department did not object to the deal by Jan. 13, its deadline for making such a move. The Justice Department, which is suing Google for antitrust violations in its search business, said it was still investigating the deal. Regulators can scrutinize finalized mergers and acquisitions.
“The Antitrust Division’s investigation of Google’s acquisition of Fitbit remains ongoing,” said Alex Okuliar, a senior antitrust official for the agency. The Justice Department, Mr. Okuliar said, “continues to investigate whether Google’s acquisition of Fitbit may harm competition and consumers in the United States.”
Google said in a statement that it continues to be in touch with the agency. “We are confident this deal will increase competition in the highly crowded wearables market, and we’ve made commitments that we plan to implement globally,” the company said.
Over the past several years, big banks around the world have cut off lending to some of the fossil fuel industry’s most harmful practices, like coal mining and the use of coal-fired power plants.
Decisions like those would be prohibited by a new Trump administration rule finalized on Thursday — although the change may be swiftly undone by the incoming Biden administration, to the relief of the banks who opposed it.
On his last day as acting comptroller of the currency, Brian Brooks finalized a rule that the Office of the Comptroller of the Currency, which regulates the country’s biggest banks, is calling the Fair Access rule. It says that banks must offer the same products and services to everyone, unless they can prove to the regulator that a specific borrower is too much of a risk.
Banks that cut off companies conducting legal businesses “need to show their work and the legitimate business reasons for doing so,” Mr. Brooks said in a statement.
The rule is set to take effect on April 1, but might not make it that far. The rule is one of a long list of changes that Democrats expect to undo after President-elect Joseph R. Biden Jr. takes office.
The rule was among a series of last-minute, industry-friendly changes that the Trump administration is making in its final days. Lobbying groups were given just 25 business days to comment on the proposal — over a period that stretched from Thanksgiving to Christmas to just after New Year’s Day — yet they made their dismay perfectly clear.
Greg Baer, the chief executive of the Bank Policy Institute, a trade group representing the biggest banks, wrote to the regulator in December to ask that the rule be withdrawn. In a statement posted on group’s website on Thursday, Mr. Baer said banks were disappointed in the decision to fast-track a rule that was “hastily conceived and poorly constructed.”
“The rule lacks both logic and legal basis, it ignores basic facts about how banking works, and it will undermine the safety and soundness of the banks to which it applies,” he said.
Delta Air Lines lost $755 million in the fourth quarter, bringing its losses to nearly $12.4 billion in 2020, a year in which the airline industry was battered by a pandemic that crippled air travel.
“Our December quarter results capped the toughest year in Delta’s history,” Ed Bastian, Delta’s chief executive, said in a statement Tuesday morning. “While our challenges continue in 2021, I am optimistic this will be a year of recovery and a turning point that results in an even stronger Delta.”
The airline brought in nearly $4 billion in operating revenue in the last three months of the year, a 65 percent decline from the same quarter a year earlier. But Delta also nearly halved its “daily cash burn,” an approximate measure of spending on core operations and investments, which analysts use to gauge how close a business is to taking in more cash than it is spending.
The distribution of coronavirus vaccines has given Delta and other airlines hope, but a meaningful recovery is not expected until the vaccines are widely administered, which is not expected until at least the second half of the year. During the first three months of 2021, Delta expects scheduled flight capacity to be down about a third and revenue to be 60 to 65 percent lower compared with the same quarter in 2019.
In the earnings announcement, Glen Hauenstein, Delta’s president, said the airline expected the year to unfold in three phases: choppy at first, followed by “an inflection point” and then a sustained recovery “as customer confidence gains momentum, vaccinations become widespread and offices reopen.”
Holiday travel provided some relief to the industry, but air travel is still down more than 60 percent compared with last year, according to the latest Transportation Security Administration airport security screening data.
The French carmaker Renault, saying it does not expect auto sales to bounce back quickly from the pandemic, announced a plan on Thursday to survive and make money while selling fewer cars and shifting emphasis to electric vehicles.
The plan presented by Luca de Meo, who took over as Renault’s chief executive in July, is a sharp departure from the strategy pursued by Carlos Ghosn, the former chief executive of Renault’s alliance with Japanese automakers Nissan and Mitsubishi.
Mr. de Meo implicitly criticized Mr. Ghosn during an online briefing for journalists and analysts on Thursday, saying that Renault had “too many layers, too many silos, too many shared responsibilities. All that mattered were size and volumes.”
Under the new plan, Renault will cut production capacity, reduce the number of models it offers and simplify manufacturing by increasing the number of parts shared among vehicles. For example, all gasoline vehicles will use the same basic engine.
Mr. de Meo said his aim was to avoid job cuts beyond those already planned. The French government is a big shareholder in the company, and has resisted job cuts in the past.
“We are also here to protect the work of people,” Mr. de Meo told reporters during a conference call. “We have so many opportunities to get rid of other costs.”
During a brutal period for the auto industry, Renault was among the hardest hit. The company said Tuesday that sales fell more than 20 percent in 2020, to less than three million vehicles.
“We are not betting on a strong recovery,” Clotilde Delbos, the Renault chief financial officer, said during the presentation. “Cost reduction will be the strongest lever for our improvement.”
Electric cars are among Renault’s few bright spots. Sales of the Zoe, a two-door battery powered hatchback, doubled in 2020 despite the pandemic. The Zoe displaced the Tesla Model 3 as the best-selling electric car in Europe. However, at around 20,000 euros after subsidies, or $24,000, the Zoe costs half as much as the Model 3 and is likely to be less profitable.
Mr. de Meo mentioned Renault’s troubled but essential alliance with Japanese carmakers Nissan and Mitsubishi only in passing. But at the end of the video presentation, Makoto Uchida, the chief executive of Nissan, made an appearance to say that he endorsed the Renault plan.
“I’m happy to see Renault back on the path to profitability,” Mr. Uchida said.
Hong Kong Broadband Network said in a statement on Thursday that it had taken steps to block access to a website that featured the personal information of police officers, the first full website censorship under Hong Kong’s expansive national security law.
The site, which featured personal information about the police and pro-establishment figures in the Chinese city, first faced partial blocks in Hong Kong on Jan. 6. A technical analysis by The New York Times showed the territory’s internet service providers appeared to be interfering with access to the site.
Hong Kong Broadband, one of the city’s largest internet service providers, said it cut access to the site on Jan. 13 “in compliance with the requirement issued under the national security law.”
In the past, Hong Kong’s government had a separate process, which included issuing court orders, to go after content deemed illegal online. But the purge of the website happened without any warning or official legal notification, according to Naomi Chan, the 18-year-old high-school student who created the site.
The disruption raises the prospect that Hong Kong, long a bastion of internet freedom on the border with China’s closely censored internet, could fall under the shadow of the mainland’s Great Firewall, which blocks foreign internet sites like Google and Facebook.
Since the national security law was put in place over the summer, the police have turned to harsh digital investigative tactics reminiscent of those used by security forces in China, including hanging cameras outside the doors of politicians and forcing arrestees to give them access to smartphones.
The law was prompted by sometimes violent antigovernment protests in 2019, which alarmed Communist Party leaders in Beijing. The Chinese government has since used the law to tighten its grip on the former British colony, which operates under its own laws and has long enjoyed some degree of autonomy, including freedom of speech.
Stocks on Wall Street posted small gains on Thursday and shares in Europe rose as investors anticipated President-elect Joseph R. Biden Jr.’s announcement of a multitrillion-dollar spending plan to counter the pandemic’s impact on the U.S. economy.
Mr. Biden’s plan is expected to initially focus on expanding the country’s vaccination program and virus testing capacity, The New York Times’s Jim Tankersley reports.
Mr. Biden is expected to provide details in a speech Thursday evening in Delaware, hours after the latest tally of weekly unemployment claims showed a sharp rise in newly unemployed workers in the United States. Hiring remains dreadful, with employers recording a net loss of 140,000 jobs in December. Last spring, as the pandemic arrived in the United States, 22 million jobs disappeared. Nearly 10 million remain lost.
In Europe, the benchmark Stoxx Europe 600 rose 0.7 percent and the FTSE 100 ended 0.8 percent higher.
The latest data from China shows a humming economy. Exports rose 18 percent in December from a year earlier, reflecting global demand for work-from-home devices. Imports also increased, 6.5 percent from a year earlier, a sign of a strengthening consumer economy inside the country.
Gov. Andrew M. Cuomo of New York has picked two European giants, Norway’s Equinor and BP, to supply the state with clean electricity from wind turbines planted on two large tracts in the Atlantic.
Offshore wind developers are attracted to the East Coast of the United States because of the availability of shallow water sites suitable for wind farms and the proximity of major electric power consuming centers like New York and Boston.
Until recently, offshore wind was largely a European industry but it has gained interest elsewhere as larger turbines and other innovations have brought down costs.
The deal will bring investment of nearly $9 billion, according to a news release from the state government. One of the sites is 20 miles off the south shore of Long Island, and the other is about the same distance south of Nantucket. The projects are expected to produce power late in this decade.
Equinor had already reached a $3 billion offshore power deal with New York in 2019. That wind farm plus the two just announced will have generating capacity sufficient to power 1.8 million homes.
For European oil companies like Equinor, the former Statoil, offshore wind projects provide opportunities to invest billions of dollars to advance their agenda of shifting away from oil and gas toward cleaner energy. Equinor moved early to acquire rights to ocean acreage off the United States and last year agreed to sell a 50 percent stake in its U.S. business to BP for $1.1 billion.
Equinor, other companies and the state will invest $644 million in a port in South Brooklyn and other facilities for constructing and servicing the wind farms, according to the news release.
The Trump administration on Thursday added the Chinese National Overseas Oil Corporation, one of China’s largest oil and gas producers, to an “entity list” that will restrict its ability to purchase American exports, citing the company’s “reckless and belligerent actions” in the South China Sea.
The Department of Commerce, which made the announcement, also said it would add a Chinese company named Skyrizon to a separate list of companies that have ties to the Chinese military, which will result in new restrictions on investing in and selling products to the company.
The Trump administration has steadily ramped up restrictions on the sale of American technology to Chinese entities, saying that such sales pose a national security risk. The Chinese government fuels its military development in part through policies that allow it to access and replicate sensitive technologies for its militarization efforts, the Commerce Department said.
In a separate announcement Thursday morning, the department said that it was expanding its restrictions on exports of technology to prohibit companies from selling goods to foreign intelligence services in Cuba, China, Iran, North Korea, Russia, Syria and Venezuela. The department said it would also expand the categories of goods that fall under those restrictions.
Airlines, workplaces and sports stadiums may soon require people to show their coronavirus vaccination status on their smartphones before they can enter.
A coalition of leading technology companies, health organizations and nonprofit groups — including Microsoft, Oracle, Salesforce, Cerner, Epic Systems, the Mitre Corporation and the Mayo Clinic — announced on Thursday morning that they were developing technology standards to enable consumers to obtain and share their immunization records through health passport apps.
“For some period of time, most all of us are going to have to demonstrate either negative Covid-19 testing or an up-to-date vaccination status to go about the normal routines of our lives,” said Dr. Brad Perkins, the chief medical officer at the Commons Project Foundation, a nonprofit organization in Geneva that is a member of the vaccine credential initiative.
That will happen, Dr. Perkins added, “whether it’s getting on an airplane and going to a different country, whether it’s going to work, to school, to the grocery store, to live concerts or sporting events.”
Vaccine passport apps could fill a significant need for airlines, employers and other businesses.
In the United States, the federal government has developed paper cards that remind people who receive coronavirus vaccinations of their vaccine manufacturer, batch number and date of inoculation. But there is no federal system that consumers can use to get easy access to their immunization records online and establish their vaccination status for work or travel.
A few airlines, including United Airlines and JetBlue, are already trying out CommonPass, a health passport app from the Commons Project. The app enables passengers to retrieve their coronavirus test results from their health providers and then gives them a confirmation code allowing them to board certain international flights. The vaccination credentialing system would work similarly.
President-elect Joseph R. Biden Jr. on Thursday is expected to outline a $1.9 trillion spending package to combat the coronavirus pandemic and its effects on the economy, with an initial focus on large-scale expansions of the nation’s vaccination program and virus testing capacity, according to two people familiar with the plans.
Mr. Biden will detail his proposal, which he and his economic team have been honing for weeks, in an evening speech in Delaware. The efforts will cover the pandemic, the economy, health care, education, climate change and other domestic priorities, Brian Deese, the incoming director of the National Economic Council, said at the Reuters Next conference on Wednesday.
Top Democrats in Congress have said in recent days that they are preparing for the efforts to span two bills.
The first package, which will be the focus of Thursday’s speech, will include money to complete $2,000 direct payments to individuals, and aid to small businesses and local and state governments, components that Mr. Biden has emphasized in recent weeks, will be part of the initial package. That will come in the form of additional $1,400 stimulus checks, topping up the $600 checks that Congress approved in December.
Others briefed on Mr. Biden’s thinking said he would also call for the first piece of legislation to include an extension of supplemental federal unemployment benefits, which are set to expire in March for many workers, and more help for renters.
Plans for the first package also include a significant increase in spending on vaccine deployment, testing and contact tracing, Mr. Deese said, and Mr. Biden will seek enough money to allow most schools to open, in an effort to increase labor force participation.
“We need to get the schools open,” Mr. Deese said, “so that parents, and particularly women, who are being disproportionately hurt in this economy, can get back to work.”