A man wearing a mask walks by Century 21 department store, Wednesday, Sept. 30, 2020 in the Brooklyn borough of New York. The discount department store chain has filed for Chapter 11 bankruptcy protection and is closing its 13 stores. (AP Photo/Mark Lennihan)
By Christopher Rugaber
The number of Americans seeking unemployment benefits declined last week to a still-high 837,000, evidence that the economy is struggling to sustain a tentative recovery that began this summer.
The Labor Department's report, released Thursday, suggests that companies are still cutting a historically high number of jobs, though the weekly numbers have become less reliable as states have increased their efforts to root out fraudulent claims and process earlier applications that have piled up.
For example, California, which accounts for more than one-quarter of aid applications, simply provided the same figure it submitted the previous week. The state had said it would stop accepting jobless claims online so it could tackle a backlog of 600,000 claims.
Measures of the U.S. economy have been sending mixed signals. Consumer confidence jumped in September, fueled by optimism among higher-income households, though it remains below pre-pandemic levels. And a measure of pending home sales rose in August to a record high, lifted by ultra-low mortgage rates.
Yet some real-time measures indicate that growth has lost momentum with the viral pandemic still squeezing many employers, especially small retailers, hotels, restaurants and airlines, nearly seven months after it paralyzed the economy. An economic index compiled by the Federal Reserve Bank of New York grew in September at a weaker pace than during the summer months.
In its report on jobless claims Thursday, the Labor Department said the number of people who are continuing to receive benefits fell to 11.8 million, extending a steady decline since spring. That suggests that many of the unemployed are being recalled to their old jobs.
But it also reflects the fact that tens of thousands of jobless Americans have exhausted their regular state unemployment benefits. Some of them are likely transitioning to an extended jobless aid program that provides benefits for an additional three months.
Weekly applications for unemployment benefits are typically watched as a proxy for layoffs, although the data has become muddied in recent months. The flood of laid-off workers during the pandemic recession overwhelmed state agencies.
Congress also made millions of contractors and self-employed people eligible for jobless aid for the first time through a new program that is managed by state agencies. This program has further burdened the states.
The states’ efforts to clear backlogs and uncover fraud in the new program have made it harder to interpret the government’s report on unemployment benefits. Many economists no longer consider it a clear sign of the pace of layoffs.
Initial jobless claims are stuck above the highest levels reached in the 2008-2009 Great Recession. But last week, economists at Goldman Sachs noted that according to other government data, layoffs have fallen below the peaks of a decade ago.
Still, many large companies are announcing further layoffs.
The Walt Disney Co. said this week that it’s cutting 28,000 jobs in California and Florida, a consequence of the damage it’s suffered from the viral outbreak and the shutdowns and attendance limits that were imposed in response.
Allstate said it will shed 3,800 jobs — 7.5% of its workforce. And tens of thousands of airline workers will lose their jobs this month as federal aid to the airlines expires. The airlines were barred from cutting jobs as long as they were receiving the government assistance.
Late Wednesday, two of them — American and United — announced that they would begin to furlough 32,000 employees after lawmakers and the White House failed to agree on a pandemic relief package that would extend the aid to airlines.
On Friday, the government will issue the jobs report for September, the final such report before Election Day, Nov. 3. Analysts have forecast that it will show a gain of 850,000, which would mark the third straight monthly slowdown in job growth. It would mean that the economy has regained just over half the 22 million jobs that were lost to the pandemic.
The unemployment rate is expected to decline from 8.4% to 8.2%, according to data provider FactSet.
A Senate bill unveiled on Wednesday looks to tackleonline safety for children by regulating Big Tech and social media platforms to deter users from content that can harm their mental health. Irene Ly, a policy counsel for the age-based ratings and review organization Common Sense Media, joined Cheddar News to break down the potential of the Kids Online Safety Act. "We can't be imposing such a big burden on parents to be doing it all on theirselves," Ly said. "I think you also have to keep in mind that parents often didn't grow up with social media, so they don't understand what it's like to be addicted to social media or really understand how they work."
While many still remain skeptical about the metaverse, big tech firms and even one big bank are ready to expand their virtual worlds. Facebook parent company has pivoted so hard it will now call its employees 'Metamates,' and even JPMorgan Chase has created its own digital lounge on one virtual platform. While the sector remains young, there seems to be significant investment opportunity, especially with companies like Nvidia. Adam Johnson, a portfolio strategist at Adviser Investments, joins Closing Bell to discuss which companies could win in this space, consumer appetite, and more.
Marc Blinder, Co-Founder and CEO of Aikon, joins Cheddar News' Closing Bell, where he discusses how his company is helping businesses use blockchain applications without needing to learn the intricacies of the new technology.
The Federal Reserve minutes from its January meeting are indicating it's sticking to an interest rate hike in March, but what does the report coupled with ongoing inflation mean for investors going forward? Scott Brown, a market strategist at LPL Financial, joined Cheddar News to break down the minutes and talk about how investors might navigate the rest of the year. "it seems like the market is kind of inclined to trade off these headlines, really, through the first half of the year," he said. "And then, oh, don't forget, we've got midterm elections, which always tend to add a little bit of volatility in the second half of the year." Brown noted that the path forward for stock investors in 2022 would be "rockier" than last year.
Season 13 "Shark Tank" contestant Tania Speaks secured a $400,000 deal for her Speaks Organic Skincare brand with "Shark" Mark Cuban while also being named one of the best pitches in the history of the show — all at 19 years old. Now 20, Speaks joined Cheddar News to talk about the skincare line, the clean beauty industry, and the moment that host Cuban was moved by her pitch. "I couldn't believe that he got emotional. I'm surprised I held back my tears that long," the young entrepreneur revealed. "It's just amazing for someone else to be inspired by your story, especially Mark Cuban himself."
The media giant formerly known as ViacomCBS has officially rebranded itself as Paramount Global with a focus on its streaming service, Paramount Plus. Naveen Chopra, chief financial officer at Paramount, joined Cheddar to discuss the company’s name change and streaming wars. "There are components of content licensing that we continue to do, either historical arrangements or opportunities to license content that don't really impinge on what we're trying to do with our owned and operated services and that continues to be an important ingredient in our broader financial model," he said. "But our number one priority is putting our best assets on Paramount Plus." Chopra also discussed theatrical release windows before feature films hit its service and the platform's subscription goals.
The recent 7.5% year-over-year increase in consumer prices is the highest since 1982, and drew some strong reactions from investors, with speculations that the Federal Reserve will hike interest rates by 50 points instead of 25. But other analysts believe that the Fed will stick with its original plan of 25 points next month. Chris Vecchio, Senior Analyst, at DailyFX broke down how the Fed could potentially react to the historically high inflation data.
