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Job growth slowed further in September, as fading government support and the failure to contain the coronavirus threatened to short-circuit the once-promising economic recovery.
Employers brought back 661,000 jobs in September, the Labor Department said Friday. That is down from 1.5 million in August, and far below the 4.8 million jobs added in June. The unemployment rate fell to 7.9 percent, in part because nearly 700,000 people left the labor force.
By Ella Koeze·Unemployment rates are seasonally adjusted.·Source: Bureau of Labor Statistics
The monthly report, the last before the presidential election, is the latest sign that the recovery is losing steam. Government data released on Thursday showed that personal income fell in August and that consumer spending grew more slowly as supplemental unemployment benefits expired. Companies including Disney, Allstate and two major airlines have recently announced large job cuts.
“It’s disturbing that we’re seeing such a dramatic slowdown in employment gains as we head into the fall,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “This is a red flag. We need aid now.”
Even with the recent slowdown, the economy has done better than many forecasters expected in the spring. It has regained just over half of the more than 22 million jobs lost in March and April, and the unemployment rate has fallen sharply since it reached a record high of nearly 15 percent in April.
But those early gains were largely a result of businesses’ reopening and bringing back workers. By now, most businesses that can reopen before a vaccine is widely available have done so. A growing number of businesses are deciding to make permanent job cuts, or to shut down. The number of people reporting they had lost their jobs permanently, as opposed to being on temporary furlough, rose in September.
“We got the easy ones first, and there are not a lot more of those to get,” said Dan North, chief economist for the credit insurance company Euler Hermes North America. “And in the meantime, we’re getting a lot of permanent job losses.”
Economists warn that permanent losses could worsen if Congress doesn’t provide more aid to households and businesses to replace the programs that expired over the summer. Prospects for a “Phase 4” spending package improved this week after appearing all but dead in September, but Democrats and Republicans in Washington have yet to reach a deal. If they don’t, the recovery could slow further in October, said Aneta Markowska, chief economist for the investment bank Jefferies.
“Everything depends on Phase 4 and whether we get that or not,” she said. “There’s no middle ground.”
Unemployment for women is worse than men’s across most demographics
Unemployment rates by race for men, women and over all
By Ella Koeze·Rates are seasonally adjusted except those for Asian men and women.·Source: Bureau of Labor Statistics
Women were hard hit early in the pandemic as service sector jobs evaporated and child-care responsibilities kept them at home.
And new data released Friday showed that in September, many dropped out of the work force entirely.
Women over the age of 16 lost 143,000 jobs last month, the Labor Department’s survey of households showed on Friday. The unemployment rate for this group still dropped — falling to 8 percent from 8.6 percent in August — but that was because many stopped looking for work altogether. To count as unemployed, workers must still be actively looking for new positions.
Labor force participation, the share of women working or looking for jobs, dropped to 55.6 percent from 56.1 percent. Apart from April and May 2020, that is lowest reading for women’s labor force participation since 1987.
The shift shows how the pandemic has become a serious threat to the meaningful progress made by women in the last economic expansion, when they accounted for a heavy share of job growth. The losses for women this time around stand in contrast to the last recession, more than a decade ago, when cuts in construction and other male-dominated roles caused men to disproportionately lose work.
The situation could become more complicated going forward: Women may have particular trouble getting back into jobs because they are more likely to be primary caregivers, and many schools have yet to fully reopen.
“As we head into the fall, the challenges of virtual schooling and prolonged child care closures may already be putting downward pressure on women’s participation,” Thomas Barkin, president of the Federal Reserve Bank of Richmond, said in a recent speech.
Census Bureau and Minneapolis Fed research suggests mothers have been far more likely than fathers to pull back on work amid the pandemic. About one in five working-age adults said this summer that they were not working was because the pandemic disrupted their child care — and of those not working, women ages 25 to 44 were almost three times as likely as men to be out of a job thanks child care.
For small businesses in the industries hit hardest by the pandemic, the lack of federal assistance is an existential threat — and time is running out.
Jon Forman bought the Cedar Lee Theatre, a movie theater in Cleveland that predated talking pictures, in 1977, and eventually operated five theaters in the area. He has weathered home movie rentals and streaming services, the rise of multiplexes and the costly switch to digital projection.
But the pandemic is different. Many Americans remain wary of sitting indoors with strangers for two or three hours. And studios, hesitant to distribute big-budget movies when few people will pay to see them, have been delaying major releases until 2021.
“We need the public to go to movies — we need new movies,” Mr. Forman said. “That, we all know, is not going to happen anytime soon.”
Big chains may have the resources to wait for better days, but Mr. Forman isn’t sure he does. He has reopened only two of his theaters, and neither is attracting enough patrons to break even, even with fewer than 10 employees, down from 85 before the pandemic.
“To operate the way we’re operating, none of it is sustainable,” he said.
Mr. Forman has closed one theater permanently. Two others have been dark since March, and he is thinking about shutting the two reopened ones until demand picks up. But he worries about the damage already done to his business — he has burned through cash reserves meant to pay for new seating to help compete with the multiplexes.
Mr. Forman received a loan last spring under the federal Paycheck Protection Program, which helped sustain the business for a while. But that money is gone, and Mr. Forman said independent theaters like his need more help — preferably grants, not loans.
“We’re on a slope going down,” he said. “Without some sort of support, businesses are not going to survive.”
Deborah Dillard was laid off as a sales director at a golf course in Galveston, Texas, in March, after the pandemic hit and the resort shut down.
Ms. Dillard, 50, started receiving $400 a week in state unemployment benefits in April, along with a $600 federal supplement, which tided her over until the golf course called her back to work in May.
She was hesitant to return because she has lupus — a disease that suppresses her immune system — and because she was offered fewer hours than she worked before. But she knew that if she refused she would lose her unemployment benefits, so she agreed. Then, in mid-July, after two months of being unable to book golf tournaments at the resort because of social-distancing requirements, the company laid her off again.
In mid-August, she found a job as the marketing director on a fishing pier, which pays her 25 percent less than her previous role and does not give her health insurance. “At least I’m working,” she said.
Her husband was laid off as a truck-driving instructor in mid-April. With the loss of his income and her cut in pay, it has been challenging to cover their monthly bills, including $1,100 in rent, $700 in car payments, $300 for car insurance, and $500 for utilities. Ms. Dillard also has $2,000 in outstanding medical bills.
At the end of August, Ms. Dillard received $1,800 from Lost Wages Assistance, a short-term federal supplement. “It didn’t help much because it was so short,” she said. “I used it up right away.”
Hurricane Sally struck in September, then Tropical Storm Beta, and the storms’ combined force caused the fishing pier where she works to break off. The pier was closed because of the damage. “It was really alarming because my first thought was, ‘Oh, no, am I going to lose my job again?’” she said.
To her relief, Ms. Dillard’s employer has promised to keep her on the payroll while the pier is repaired.
To support her family as a single mother, Connie Sarmiento used to work three jobs. She would start her workday at 6:30 a.m. at the Grand Hyatt in San Francisco, where she was employed as a telephone operator. At 2:30 p.m. on game days, she would catch a bus to Oracle Park, the Giants’ baseball stadium, where she worked as a cashier until 10:30 p.m. She also served concessions at Chase Center, home to the N.B.A.’s Golden State Warriors.
While it was exhausting to work 16-hour days, she felt proud of being able to pay her bills and provide for her three children. But after the pandemic hit, she lost all her jobs. She was furloughed from the Hyatt in mid-March, and from the sports venues in April.
She started receiving $450 a week in state unemployment benefits, along with the $600 federal supplement. But once the federal payments ended in July, Ms. Sarmiento struggled to pay her monthly bills, including $3,000 in rent for a three-bedroom apartment that she shares with her children, a $500 car payment, $200 for car insurance and $500 for utilities.
Ms. Sarmiento’s October rent was due Thursday, but she has only half the money she needs to pay it. “I have to tell my landlord that I am unable to pay,” she said. “I’m afraid he’s going to tell me I have to move out. That’s really scary.”
In late July, Ms. Sarmiento was one of 2,100 concession workers to receive termination notices from Bon Appétit, the food-service contractor for Oracle Park and Chase Center. But she joined with her union and pushed back, successfully negotiating for the terminations to be rescinded at Oracle Park.
Ms. Sarmiento hopes to return to work at the Hyatt this fall and at Oracle Park next season. In the meantime, she spends her days filling out job applications, on the chance that something will come through.
“I feel hopeless,” she said. “Some of the only jobs I can find are in warehouses. I’m 60 years old and I don’t know if I can lift big, heavy stuff anymore. My body is getting weak.”
Many people who lost their jobs in the first weeks of the coronavirus crisis now officially count as long-term unemployed.
The Labor Department said Friday that 2.4 million people had been out of work for 27 weeks or more, the formal — if somewhat arbitrary — threshold for long-term joblessness. An even bigger wave is on the way: Nearly five million people have been out of work for 15 to 26 weeks.
High levels of long-term unemployment were a hallmark of the recession a decade ago, when at one point nearly seven million people had been out of work for six months or longer. The current crisis does not yet rival that one in magnitude, but the numbers are rising much more quickly — last time, it took a full year after the recession began for long-term unemployment to reach its current level.
Research has found that people who are out of work for six months or more have a harder time getting jobs even when the economy improves, and many end up leaving the work force altogether. That can leave lasting scars on both workers and the broader economy.
“The risk is that you end up with people permanently detached from the labor market, and either you never get them back in or it takes you 10 years to get them back in, like it did the last time,” said Ian Shepherdson, chief economist of Pantheon Economics. “The economic consequences are that you depress future growth.”
A relatively comprehensive gauge of labor market weakness continues to fall rapidly as furloughed employees return to work and fewer Americans are forced to work part-time hours.
The underemployment rate — which counts unemployed people, those working fewer hours than they would like, and those who have given up on applying to jobs — fell to 12.8 percent in September from 14.2 percent in August, the Labor Department said Friday. It is down from an all-time high of 22.8 percent in April.
That decline came both as the overall unemployment rate dropped and as fewer people reported working part-time because weak economic conditions prevented them from getting more hours. It is worth noting that at the same time, more people reported working part-time for noneconomic reasons — which often include things like child and elder care.
The number of people who are not actively applying to work but who want a job, the group economists refer to as “marginally attached,” has also declined.
The continued healing is a good sign. The underemployment rate remained stubbornly elevated for years after the recession that spanned 2007 to 2009, returning to pre-crisis levels only in late 2018, nearly a decade after the downturn ended. It is falling more rapidly relative to the headline jobless rate this time around: The plain vanilla unemployment rate is at a level it hit in 2012, but underemployment is back to more recent 2014 levels.
Any slowdown in that trend would be a signal that the rapid rebound in the labor market may be ceding to a more grinding recovery, as workers struggle to find fitting opportunities and full-time work.
Six months into the pandemic-induced recession, evidence of permanent economic damage is growing.
When unemployment spiked in March and April, most of the job losses were temporary layoffs or furloughs. But in recent weeks, major companies have announced a wave of mass layoffs, many of them permanent.
Job losses are more likely to be permanent than earlier in the pandemic
Share of jobs lost each month that are temporary layoffs
By Ella Koeze·Data is seasonally adjusted.·Source: Bureau of Labor Statistics
The September jobs report from the Labor Department showed that the number of people on temporary layoff fell by more than a million, to 4.6 million. But the number permanently let go rose to 3.8 million. (Another 4.2 million people quit their jobs, began looking for work or were unemployed for other reasons.)
“The temporary layoffs in the beginning are turning more and more into permanent layoffs now as companies begin to see what their near future looks like,” said Erica Groshen, a Cornell University economist and the former head of the Bureau of Labor Statistics.
The rising number of permanent job losses is a troubling sign for the economy because it suggests that the low-hanging fruit of the recovery — furloughed workers who can be quickly recalled — is largely picked over and it will take much longer for the remaining unemployed workers to find jobs.
“Firing is faster than hiring,” said Julia Pollak, a labor economist at the career site ZipRecruiter. Even businesses in a position to hire, she said, will do so only slowly: “They are taking a wait-and-see approach because there is so much uncertainty about the long-term outlook.”
Investors were rattled Friday by the news that President Trump and the first lady had tested positive for the coronavirus. The development, throwing the nation’s leadership into uncertainty, comes 32 days before an election that already had investors on edge.
The S&P 500 fell 1.7 percent in early trading, following a drop in benchmarks across Europe and in Asia. The benchmark Stoxx Europe 600 was down about 0.8 percent. In Japan, where the news broke late on the trading day, stocks finished nearly 1 percent lower after spending most of the day in positive territory.
Adding to the downbeat mood in markets, the U.S. Labor Department’s jobs report for September showed the improvement in the labor market was losing momentum. Employers added 661,000 jobs during the month, far fewer than in the previous months of the recovery.
Investors had already been on edge about the economy, as lawmakers in Washington failed to reach an agreement on a new economic relief plan. House Democrats on Thursday pushed through a $2.2 trillion stimulus plan that would provide aid to families, schools, restaurants, businesses and airline workers. But Republicans had already panned the relief bill as too large.
Shares of major airlines were down as a result. Demand for air travel has declined drastically because of the pandemic, and American Airlines and United Airlines on Thursday began furloughing more than 32,000 workers.
The news of Mr. Trump’s health pushed prices for United States Treasury bonds higher, sending yields lower. Gold prices also rose, as did the value of the Japanese yen against other currencies. These are all traditional haven assets that investors buy when they want to reduce risk.
Oil futures slid, with Brent crude and West Texas Intermediate, the two main benchmarks, down about 4 percent. Prices for other commodities fell, too.
Oil prices fell Friday as news that President Trump had tested positive for coronavirus weighed on both stock and commodity markets. Brent crude, the international benchmark, was down nearly 4 percent to $39.37 a barrel. West Texas Intermediate, the American standard, was also down about 4 percent to $37.18 a barrel.
The pressure on oil prices was only partly attributable to increased uncertainty about the upcoming election in the United States and Mr. Trump’s health, analysts said. Broader concerns about the global economy and oil demand are also reflected on the downward slide.
After prices recovered briskly from their lows in late April, when some futures plunged into negative territory, concerns about the future demand for oil have resurfaced. The high numbers of coronavirus cases in countries like the United States, Britain and Spain demonstrate, where some areas are facing a second wave of infections, show that the pandemic is far from under control and likely to continue to weigh on economic activity and oil consumption in the coming months.
For these reasons, the recovery of the demand for oil will face “a lot heavier going” over the rest of the year. said David Fyfe, chief economist at Argus Media, a commodities research firm,
Mr. Fyfe said that his firm did not expect oil demand to reach pre-pandemic levels until early 2023. Jet fuel use is being hit particularly hard, a result of restrictions to air travel and greater caution by passengers.
President Trump’s positive coronavirus test has added to the uncertainty around the U.S. elections, which investors and traders were already concerned about. Stock markets around the world fell on Friday and traders instead looked to government bonds, the Japanese yen and gold, all traditional haven assets, as they reduced risk.
Here’s what analysts said:
For investors, an unusual election just got thrown added risk.
“We don’t know the full extent of the outbreak,” said Joyce Chang, chair of global research at JPMorgan Chase. “It could be disruptive to both the Republicans and Democrats.” The market is focused on Mr. Trump, but full contact tracing still needs to be done in this case, given the cross-party discussions about fiscal stimulus, she added.
Ms. Chang has been recommending that investors be “long risk,” a position that would include buying stocks, but they should have substantial hedges because this was already expected to be an unusual election because of the amount of early or mail-in voting.
“You already had questions on how you can get a timely result announced when markets are used to hearing the result later that night,” she said.
A lasting impact only if it affects the election or public health.
“As with any other person, news that U.S. President Trump has contracted the coronavirus must be very worrying, on a personal level,” Paul Donovan, the chief economist at UBS Global Wealth Management, wrote in a note to clients. “Markets are, however, impersonal. After an initial reaction the news is only likely to have a lasting market impact if its seen as influencing the election outcome or public health.”
‘Uncertainty has obviously increased.’
This news “has brought the pandemic back to the forefront of market attention and raised a lot of questions, with few immediate answers, ahead of next month’s election,” Kit Juckes, a strategist at Société Générale, wrote in a note. “The path of the election campaign will inevitably change and uncertainty has obviously increased.”
Traders have been selling the U.S. dollar “partly because they think a Biden win is more likely. On that basis, increased pre-vote uncertainty is likely to help the dollar,” he added.
An extended recovery period could weigh on the U.S. dollar.
“It remains to be seen whether the illness of President Donald Trump could fuel foreign-exchange currency volatility and boost the U.S. dollar and the Japanese yen on a sustained basis,” said Valentin Marinov, a currency strategist at Crédit Agricole. “The latest developments may significantly reduce visibility ahead of the U.S. election and force investors to remain in a holding pattern.”
Mr. Marinov added that an improvement in the chances of Joseph R. Biden Jr. winning would lead to more traders selling the dollar. But a Trump victory would strengthen the dollar against the nation’s main trading partners because of expected protectionist policies. If Mr. Trump needs an extended time to recover, that “could be seen as reducing his chances of winning and thus could actually boost risk and weigh on the U.S. dollar,” he added.
Efforts to reach a deal on pandemic relief could improve.
The news could wind up having a positive effect on the markets if it helps lawmakers and the Trump administration to reach a deal on pandemic relief, said Jamie Cox, managing partner for the Harris Financial Group.
“Initial market reactions to the news that President Trump tested positive for Covid-19 are as expected — negative,” he said. “However, markets could have some unexpected reactions as this could break the log jam in current stimulus negotiations.”
This increases the chance of a contested and drawn out election.
“Market participants are divided on the impact of the election,” said Trevor Greetham, a fund manager at Royal London Asset Management. “Where everyone agrees is that a close and contested outcome with a drawn out period of rancor and instability would be bad news for markets. If anything the President’s illness makes that more likely.”
Inflation in the eurozone was negative for the second month in a row, the European statistics agency reported Friday. The news will put pressure on the European Central Bank to do more to stimulate the economy and avoid deflation, a sustained decline in prices that can be devastating for growth. The annual rate of inflation was minus 0.3 percent in September after minus 0.2 percent in August, according to official figures.
Almost 20,000 Amazon employees in the United States — nearly 1.5 percent of the company’s frontline work force — have had confirmed or presumed cases of the coronavirus, the company said Thursday. The e-commerce giant said it has employed 1,372,000 frontline workers at Amazon and its Whole Foods grocery stores since the start of March, and by its calculations, the infection rate among employees was on average 42 percent lower than in the surrounding communities, when it adjusted for the age of its work force.
Boeing said on Thursday that it planned to consolidate production of its 787 Dreamliner jet at its factory in South Carolina, dealing a blow to workers in the Seattle area where the plane is also manufactured. The move will not take place until mid-2021 at the earliest and comes as Boeing contends with a steep decline in air travel that has devastated the aviation business. Over the past year, the company has repeatedly slashed production of the Dreamliner, a twin-aisle jet designed for long flights, and it warned this summer that it was exploring producing the plane in just one place.
Transport for London, the local government agency that oversees the city’s transportation system will need another 5.7 billion pounds, or $7.3 billion, to get through the next 18 months, the city’s mayor, Sadiq Khan, said on Thursday. The agency already received a £1.6 billion bailout in May but the additional money is needed because of a drop in passenger numbers and the increased cost of completing a delayed rail line.
Walmart has agreed to sell its majority ownership stake in the British supermarket Asda for 6.8 billion pounds, or $8.8 billion.
The new owners will be Zuber and Mohsin Issa, two brothers who are also the founders of EG Group, a large chain of gas stations and fast food outlets across Europe and the United States, backed by the British private equity firm TDR Capital.
Walmart will keep a stake in the business and a seat on the board, the company said on Friday. The U.S. retailer bought Asda in 1999, its first move into Britain, for just over $10 billion.
The deal is Walmart’s second attempt to sell Asda in recent years: It struck an agreement to sell the business to J Sainsbury, a major British rival, for £7.3 billion in 2018, only for Britain’s competition regulator to block the transaction last year because of potential price increases for consumers. The two supermarkets have jostled between being Britain’s second and third largest stores, behind Tesco.
The companies said they expected the sale to be completed in the first half of 2021, subject to regulatory approval.
Tesla said Friday that it delivered 139,300 electric cars in the third quarter, an increase of more than 50 percent from the second quarter, when its operations were hampered the coronavirus pandemic.
The company said it produced 145,036 vehicles in the third quarter, an increase of about 76 percent from the second quarter. The automaker was forced to close its factory in Fremont, Calif., for about two months in March because of the pandemic. It was able to rely on a new factory in China that reopened after the country brought the outbreak there under control.
Compared to a year earlier, Tesla’s deliveries increased by more than 40 percent in the third quarter.