US job market’s modest improvement may be stalling

The number of laid-off workers seeking U.S. unemployment aid barely fell last week, and the reopening of small businesses has leveled off — evidence that the job market’s gains may have stalled just as a surge in coronavirus cases is endangering an economic recovery.
The government also reported Thursday that the economy contracted at a 5% annual rate in the first three months of the year, a further sign of the damage being inflicted by the viral pandemic. The economy is expected to shrink at a roughly 30% rate in the current quarter. That would be the worst quarterly contraction, by far, since record-keeping began in 1948. Economists do expect a snap-back in the second half of the year, though not enough to reverse all the damage.
Last week, the number of people applying for jobless benefits declined slightly to 1.48 million. It was the 12th straight weekly drop. An additional 700,000 people applied through a program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.
Combining those figures, overall applications for jobless aid have edged down just 3% in the past two weeks — a much slower pace than in late April and May.
“There has been no real decline in weekly claims the past two weeks,” said Julia Pollak, a labor economist at ZipRecruiter. “There has also been no real increase in job openings. What seemed like encouraging signs of recovery in May largely stalled in June.”
A separate government report Thursday said orders for durable goods unexpectedly jumped nearly 16% in May, reflecting a rebound in some business activity. Still, the pace of orders and shipments remains far below pre-pandemic levels. And excluding the volatile transportation category, so-called core orders rose only modestly, reflecting still-sluggish business investment.
The virus is once again squeezing companies across the economy.
Disney is postponing the scheduled mid-July reopening of its Southern California theme parks until it receives guidelines from the state. Macy’s is cutting nearly 4,000 corporate jobs — roughly 3% of its workforce — in response to financial strain caused by the virus.
Apple announced late Wednesday that it would re-close seven of its stores in the Houston area, which is suffering a spike in cases. Last week, it had said would re-close 11 other stores in four states. And the parent company of Chuck E. Cheese restaurants will seek Chapter 11 bankruptcy protection, in part because of the restaurants it has been forced to close as a result of the pandemic.
Larry Kudlow, President Donald Trump’s top economic adviser, asserted Thursday on Fox Business that the economy is rebounding quickly.
“I think the strong ‘V’ recovery is right still there,” Kudlow said, referring to the shape of a sharp rebound on a chart.
Most private economists, though, foresee a much more tepid recovery. And the latest economic figures coincide with a sudden resurgence of COVID-19 cases in the United States, especially in the South and West, that is threatening to derail the nascent economic rebound. On Wednesday, the nation set a record high of new coronavirus cases.
Many states are establishing their own records for daily infections, including Arizona, California, Mississippi, Nevada, Texas and Oklahoma. Cases of coronavirus have also jumped in Florida and Georgia. Should those trends continue, states may reimpose some limits on businesses that would likely trigger job cuts. And if not, consumers may choose to shop, eat out, and travel less.
Texas Gov. Greg Abbott said Thursday that that state will suspend its business reopenings amid a surge in coronavirus infections.
Real time data on small businesses suggests that the job market’s improvement slowed in June compared with May, when 2.5 million jobs were unexpectedly added. About 78% of small businesses have reopened as states have lifted shutdown orders, according to data from Homebase, a company that provides scheduling and time-tracking software to small businesses. Yet nationally, that figure has been flat for the past week.
In states that are suffering spikes in COVID-19 cases, small businesses are closing again and cutting some jobs.
Ray Sandza, an executive at Homebase, said the plateau in business reopenings is a worrisome sign that the remaining 20% of small companies could end up closing permanently.
“If you haven’t reopened yet, the likelihood of coming back is low,” Sandza said.
He noted that most small businesses had just one or two months’ of cash on hand when the pandemic intensified three months ago.
In Florida, Texas, and Arizona, the proportion of small businesses that have closed has risen in the past week as a result of the resurgent viral outbreaks. And in Arizona, as of Monday, the number of employees working at small companies was 31% below the pre-pandemic level. That’s worse than the previous week, when it was 26.5%.
Homebase’s data showed a solid rebound in jobs and hours worked in May that was consistent with the May jobs report, which also showed that the unemployment rate fell to 13.3% from 14.7%. Those are the two highest unemployment rates since the Great Depression.
Other real-time data is showing similar results. Kronos, which also produces small business scheduling software, said the number of shifts worked is now growing at only half the pace it was in late April and May. And shifts worked have actually fallen in 10 states in the past week, according to Dave Gilbertson, a Kronos official.
Thursday’s data on jobless claims included one bright spot: The total number of people receiving unemployment benefits aid fell to 19.5 million from 20.3 million, which suggests that employers are rehiring some workers.
For the unemployed, the federal government has been providing $600 in weekly benefits, on top of whatever state jobless aid recipients are receiving. This federal money has pumped nearly $20 billion a week into the economy and enabled many of the unemployed to stay afloat.
It has been a major help to Alexis O’Neill, who was laid off in March from an accounting job at an aviation fuel company. O’Neill, 49, who lives with her mother in Ann Arbor, Michigan, is looking for a job that would allow her to work from home so she could avoid putting her mother at risk of contracting the virus.
She has applied for at least a dozen jobs but has received no responses except an acknowledgement of her application. Many open jobs now seem to offer lower pay than before the pandemic struck. Compounding the dilemma for O’Neill, Michigan is stuck with the nation’s second-highest state unemployment rate, 21.2%.
“The job market is terrible,” she said. “Everything either pays so badly or doesn’t come with benefits.”
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Thursday related to the national and global response, the work place and the spread of the virus.
OUT & ABOUT: Restaurants, professional sports and movie theaters are trying to get back on their feet, but attempts to do so have been halting at best.
— MGM Resorts International is tightening its restrictions for customers and will now require masks for all guests and visitors inside casinos and other public spaces at all of its properties. The company had been requiring only its employees to use masks. Customers were asked only to abide by local regulations.
— Disneyland has pushed back the reopening of its parks in California because state approval will not arrive in time. It had planned to open the gates on July 17. The company said the state will not issue guidelines until after July 4, not enough time to open within two weeks. Disney still plans to reopen the restaurants and shops at Downtown Disney District on July 9 because the state has issued guidelines for those types of businesses.
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Disney still plans to open its theme parks in Florida next month. California and Florida are among a handful of states that have experienced a surge in infections.
— Darden Restaurants — the owner of Olive Garden, Longhorn Steakhouse and other chains — reports sales dropped 43% to $1.27 billion in its fiscal fourth quarter. The company says 91% of its dining rooms are now open, at least on a limited basis, and sales are improving. In the current quarter, it expects sales to be 70% of year-ago levels.
HOME SWEET HOME?: The real estate market has been upended because of social distancing and uncertainty about job security. Yet there are some signs of stabilization driven by record low mortgage rates.
— The number of days that homes were on market sank to the lowest levels since the COVID-19 outbreak this week, according to the latest data from Homes sold three days faster than last week on average as shelter-in-place orders are lifted. However, new listings are down 19% and total inventory is down 29%, potentially meaning more bidding wars for those who are entering the market.
“It’s unlikely we’ll see the national pace of sales return to normal this year, but we should see home closings accelerate in the coming weeks -- and peak later than usual this summer,” Javier Vivas, director of economic research for, said.
GOVERNMENTS & CENTRAL BANKS: The COVID-19 outbreak continues to force tough decisions by governments as economies are shut down and people lose jobs.
— The Eiffel Tower reopened to visitors Thursday after its longest-ever closure in peace time: 104 days. Other famous Parisian landmarks remain closed. The Louvre Museum reopens July 6. The tower lost 27 million euros ($30 million) from the lockdown that started in March, said its director general, Patrick Branco Ruivo.
— Greece will reopen 24 regional airports across the country on July 1 for the first time since a national lockdown began. Travelers have been allowed in Greece since June 15, but could only fly into Athens and the northern city of Thessaloniki. Visitors are subject to random coronavirus tests.
— The Dutch government is giving a 1,000 euro ($1,120) bonus to health care workers who helped the country tackle the coronavirus outbreak.
WORKPLACE: Companies with national and, or global operations are trying to revive businesses even as infections surge at home and abroad.
— Ford CEO Jim Hackett said the company’s safety procedures have kept most workers safe as factories have reopened, but he doesn’t know how to make sure employees stay safe outside of work in states where infections are surging.
Testing requirements have made Ford’s factories safer than the world outside, Hackett said, “It’s what people are doing when they are not at work, and they take their masks off and they’re acting more freely.”
Hackett said he has struggled with what role Ford should take in talking to workers about their off-hours. The United Auto Workers union, which represents about 55,000 Ford factory workers and about 150,000 auto plant workers nationwide, wants companies to test workers for the virus every day once the technology is available.
— Chico’s FAS will restore full pay to workers on July 5 after the retailer cut pay by 50% as stores closed nationwide. It furloughed others. Chico’s is also reinstating the base salaries of its current executive officers to their previous levels.
TRAVEL PLANS: AAA says summer travel will drop this year for the first time since 2009. The auto club predicts Americans will take 700 million trips from July through September, a 15% decline from last summer. AAA says car trips will drop 3%, while airline travel will plunge 74% and cruise and rail excursions will fall 86%.
MARKETS: Stock indexes were down on Wall Street Thursday as investors weigh a mixed batch of economic reports highlighting the damage that the coronavirus lockdowns have inflicted on the economy.
BOXING MATCH: Professional sports are attempting a comeback even without crowds that have been prohibited because of social distancing rules. Corrugated packaging company DS Smith is offering to fill those seats — with fans fashioned from recyclable cardboard. After providing such service in stadiums in the U.K., the company wants to speak with Major League Baseball, which plans to start its season in late July, the NBA, and Major League Soccer.
 Nearly 1.1 million coronavirus relief payments totaling some $1.4 billion went to dead people, a government watchdog reported Thursday.
More than 130 million so-called economic impact payments were sent to taxpayers as part of the $2.4 trillion coronavirus relief package enacted in March. The Government Accountability Office, Congress’ auditing arm, cited the number of erroneous payments to deceased taxpayers in its report on the government programs.
While the government has asked survivors to return the money, it’s not clear they have to.
The errors occurred mainly because of a lag in reporting data on who is deceased — a lapse that tax experts say is almost inevitable.
The revelation of more than $1 billion in taxpayer funds erroneously paid out shines a light on the part of the government’s massive relief program with which most ordinary Americans are most familiar. It follows disclosures that several major restaurant chains and other publicly traded companies had received emergency loans under the $670 billion program for the nation’s struggling small businesses.
“GAO found that more than $1 trillion in taxpayer funds have already been obligated — including more than $1 billion to deceased individuals — with little transparency into how that money is being spent,” Rep. Carolyn Maloney, D-N.Y., chair of the House Committee on Oversight and Reform, said in a statement.
The IRS didn’t use death records to prevent payments to deceased individuals for the first three batches of payments because of the legal interpretation the agency was operating under, the GAO report says.
The IRS asked in May for the money back from the deceased taxpayers’ survivors. Some legal experts have said the government may not have the legal authority to require that it be returned.
Former Taxpayer Advocate Nina Olson has said there is nothing in the law prohibiting payments from going to the deceased. Nor is there anything in the law requiring people to return the payments. And she notes that the language used on the IRS website does not say that returning the payments is required by law.
“We are starting from these two soundbites and working backward,” Olson, who now runs the nonprofit Center for Taxpayer Rights, said.
The relief payments were made to taxpayers based on the information filed on their 2019 or 2018 taxes. But it is considered a rebate on 2020 taxes. The government used the previous tax forms to help speed along payments to the public to offset some of the economic devastation from the coronavirus pandemic.
However some people who filed those taxes may no longer be alive. Those payments are sent to an heir or executor of their estate. If the payment is based off a final tax return completed after their death, an economic impact payment check may even denote that the person is deceased next to their name.
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