with Brent D. Griffiths
Unemployment officially stands at 10.2 percent, down significantly from its April peak but still at a level not seen since the Great Recession. And economists now worry a defining feature of the catastrophe a decade ago — long-term joblessness — is rearing its head again.
Layoffs that workers believed to be temporary back in March are turning permanent. “About 33 percent of the employees put on furlough in March were laid off for good by July, according to Gusto, a payroll and benefits firm whose clients include small businesses in all 50 states and D.C.,” Andrew Van Dam reports this morning. "Only 37 percent have been called back to their previous employer.”
The ranks of those permanently out of their previous job is expected to reach between 6.2 million and 8.7 million by the end of the year, Van Dam reports, citing a new analysis from a pair of economists, Harvard University’s Gabriel Chodorow-Reich and the Fed’s John Coglianese.
They found that after doubling from February to June, permanent layoffs plateaued in July, standing at 3.7 million as of last month.
But Goldman Sachs economists see signs a nascent rehiring trend started deteriorating again last month. Already, temporarily laid-off workers have been out of a job for “unprecedented lengths,” Goldman economist Joe Briggs wrote in a Friday note. In July, for example, 84 percent of them had been unemployed for at least five weeks, beating a previous high from the early 1980s recession — and 60 percent of them had been out of work since April.
The Labor Department counts those who have been out of a job for at least 26 weeks as the long-term unemployed, a threshold those laid off in March will start crossing next month. And “the longer workers are unemployed, the harder it is for them to claw their way back into the workforce,” Van Dam notes.
Displaced workers are turning more pessimistic about their prospects.
Those who believe they will be able to return to their jobs once the pandemic is over has dropped to 34 percent in mid-July from 78 percent in mid-April, according to a recent survey by the Associated Press and National Opinion Research Center at the University of Chicago. And those who think they will not return to their pre-pandemic positions has more than doubled, from 20 percent to 47 percent, that survey found.
The darkening outlook facing the unemployed is contributing to a decline in Americans’ psychological wellbeing.
“More than 10 percent of Americans say they have recently given serious consideration to suicide,” the American Enterprise Institute’s Michael Strain writes for Bloomberg Opinion, citing a recent survey by the Centers for Disease Control and Prevention. “Among younger adults, that figure rises to over one in four. Thirteen percent of people have reported starting or increasing drug or alcohol use to cope with pandemic-related stress.”
And Strain notes a rise in longer-term unemployment increases the suicide rate, as a 2012 study found: “Specifically, they document one additional suicide death for roughly every 20,000 workers who have been unemployed between 15 and 26 weeks.”
“The transition from saying you’ve been temporarily laid off to facing up to the fact that the job won’t come back is one fo the most psychologically difficult” challenges of losing a job, Gary Burtless, a labor expert at the Brookings Institution, tells me. “The longer we have high rates of infection compared with other rich industrialized countries — and the outcomes of getting the disease look so bad for workers, especially older workers — the more people get discouraged about whether employers will ever return to full strength.”
Yet Trump, his party and its voters remain bullish about jobless Americans returning to work swiftly.
Per Van Dam, “White House Council of Economic Advisers report out this month estimated 81 percent of layoffs from February to May were ‘likely to be temporary rather than permanent,’ citing Labor Department data.”
And polling shows elected Republicans remain insulated to an extent from the political fallout of the unemployment crisis.
"Eight in 10 Republican respondents who lost a job in the recession and have yet to return to work approve of Mr. Trump’s handling of the pandemic,” the New York Times’s Jim Tankersley writes of findings from SurveyMonkey polls over the summer. “Nearly three in 10 Republicans who lost jobs say they are better off economically than they were a year ago, a sentiment that is shared by barely one in 10 Democrats who have kept their jobs throughout the crisis.”
The S&P sets another record as the bull rages on.
Again, Apple led the way: “The Dow Jones Industrial Average jumped 378.13 points, or 1.4 percent, to close at 28,308.46. The S&P 500 climbed 1 percent to 3,431.28 and hit an all-time high. Monday also marked the S&P 500′s first-ever close above 3,400. The Nasdaq Composite advanced 0.6 percent to 11,379.72 and also reached a record,” CNBC's Fred Imbert and Yun Li report.
“Apple shares rose 1.2 percent to lead other tech-related names higher … Shares of airlines and cruise operators gained amid positive coronavirus treatment developments. United Airlines rose by more than 9 percent along with American. Delta gained 9.3 percent. Carnival advanced 10.2 percent. Norwegian Cruise Line and Royal Caribbean closed higher by 7.6 percent and 4.7 percent, respectively.”
Oil markets remain muted ahead of dual storm threat: “Two storms are barreling toward the Gulf Coast forcing a shutdown in oil operations, but the muted reaction in oil prices demonstrates just how closely the market is tied to a global recovery from covid-19,” CNBC's Pippa Stevens reports.
“Marco, which is expected to make landfall first, has weakened as it approaches the coast and was downgraded to a tropical storm on Sunday night. The other storm Laura, however, is strengthening and ‘could be more menacing,’ according to Again Capital’s Kilduff.”
From the U.S.:
- At least 5,707,000 cases have been reported; at least 173,000 have died.
- Eliminating payroll tax could deplete Social Security by 2023. The program's actuary issued that warning after four Democratic senators requested an estimate of how Trump's proposal to zero out its funding mechanism would impact its finances, CNN's Katie Lobosco reports.
- Florida judge blocks order requiring in-person learning: “But late Monday, state officials filed an appeal, which put a stay on the preliminary injunction. Lawyers for the FEA said they would file a motion to reinstate the judge’s ruling,” Valerie Strauss reports.
- CDC drops 14-day self-quarantine for international and travelers from states with outbreaks: “Instead, they share ‘after-travel’ recommendations based on individual countries. A map of country-specific health information can be found on the CDC website, and includes a map of reported cases in the United States,” Shannon McMahon reports.
- EPA approves coronavirus cleaner for emergency use: “The Environmental Protection Agency gave emergency approval for the application of a cleanser intended to kill the coronavirus on surfaces for up to seven days, and the state of Texas said it would allow American Airlines and two branches of Total Orthopedics Sports & Spine to start using the new product,” Steven Mufson reports.
Big-box stores were ready for the pandemic.
The pivot to curbside delivery and more online shopping has been a boon: “The big sellers’ strength wasn’t always a sure thing. Early in the pandemic, while they had rising sales, they also had rising costs and complications as they tried to keep workers and customers safe and product moving,” the WSJ's Sarah Nassauer and Jennifer Maloney report.
“But now, Walmart Inc., Home Depot Inc. and a handful of other big retailers are delivering not only strong sales but also strong profits. Last week, Target Corp. posted an 80 percent jump in earnings from a year ago, while profit leapt 75 percent at Lowe’s. Amazon’s profit doubled to a record $5.2 billion in its June quarter.” (Amazon CEO Jeff Bezos owns The Washington Post.)
More from the corporate front:
- Delta plans to follow United with debt backed by loyalty program: “The airline is set to market new loans and bonds secured by its SkyMiles loyalty program after the U.S. Labor Day holiday on Sept. 7,” Bloomberg News's Gillian Tan and Claire Boston report. "The size of the deal and terms, including yield, are still being finalized and could change." The airline also plans to furlough 2,000 pilots in October.
- The pandemic is changing back-to-school shopping: “National chains are rushing to salvage sales by revamping displays, stocking up on high-demand items like face masks, hand sanitizer and thermometers, and adjusting their marketing to appeal to homebound students and cash-strapped parents … The National Retail Federation, an industry lobbying group, expects back-to-school sales to reach record heights as parents shift spending on big-ticket items like computers and desks,” Abha Bhattarai reports.
- The colonel of truth: “Kentucky Fried Chicken has decided to pause using its 'finger lickin' good' slogan because ... well, that's probably not the best idea right now,” CNN Business's Jordan Valinsky reports.
Around the world:
- German researchers held a large indoor concert: “The 1,400 or so people who attended the concert, one of the largest indoor gatherings in Germany in months, were not breaking any rules. In fact, they were the subjects of a study by researchers at Martin Luther University Halle-Wittenberg, a public institution, to gather data on crowded indoor events during the pandemic,” Rick Noack reports from Leipzig. “The aim of the study, researchers said, was to identify approaches that could allow concerts and other events to resume safely, before the emergence of an effective vaccine. Participants, all of whom had tested negative for the virus, were hooked up to tracking devices.”
New York AG steps up probe of the Trump Organization.
The suit reveals an investigation into the company's financial dealings: “The New York attorney general is investigating whether [Trump’s] company misled lenders and taxing authorities by improperly inflating the value of his assets, according to a court filing,” David A. Fahrenthold, Jonathan O'Connell and Joshua Partlow report.
“The filing from Attorney General Letitia James (D) said that the Trump Organization has declined to hand over some documents that had been subpoenaed, and that the president’s son Eric has refused to be interviewed. James’s inquiry began 18 months ago, but James had not disclosed its focus or scope before Monday.
"Eric Trump — now the day-to-day leader of his father’s company — agreed to an interview, and then canceled two days before, according to the filing. He has declined to set another date, citing ‘rights afforded to every individual under the Constitution’ to justify refusing the subpoena for an interview, the attorney general said.”
When superpowers collide
U.S., China reaffirm commitment to trade deal.
Envoys for the countries discussed strengthening coordination: “The U.S. and China reaffirmed their commitment to the phase-one trade deal in a biannual review, demonstrating a willingness to cooperate even as tensions rise over issues ranging from data security to democracy in Hong Kong,” Bloomberg reports.
“The two countries discussed steps China has taken, including ensuring greater protection for intellectual property rights and removing impediments to American companies in financial services and agriculture, the U.S. Trade Representative said. Both sides agreed to create conditions to push the deal forward, according to China’s Ministry of Commerce.”
TikTok sues Trump administration to fight impending ban.
It's just the latest development in what lies ahead for the short-form video app: “TikTok alleges that [Trump’s] executive order is ‘not rooted in bona fide national security concerns,’ according to excerpts of the complaint the company detailed in a blog post. It also alleges the U.S. government did not conduct a fair process in deciding that the app needed to be banned in the country and that its Chinese owner ByteDance must divest its assets in the United States,” Rachel Lerman reports.
“TikTok’s legal challenge could also serve as a way for the company to gain the higher ground and drive up its price tag in ongoing negotiations for a buyer, a process that has become a tug-of-war between Trump’s orders — which give American companies negotiating leverage — and TikTok’s pushback.”
- Facebook CEO Mark Zuckerberg stoked Washington's fears about TikTok: “In a private dinner at the White House in late October, Zuckerberg made the case to [Trump] that the rise of Chinese internet companies threatens American business, and should be a bigger concern than reining in Facebook. Zuckerberg discussed TikTok specifically in meetings with several senators,” the WSJ's Georgia Wells, Jeff Horwitz and Aruna Viswanatha report. “Few tech companies have as much to gain as Facebook from TikTok’s travails.”
From Holger Zschäepitz, an editor for German outlet Welt:
- The Census Bureau releases new home sales for July
- Nordstrom, Best Buy, Hormel Foods, J.M. Smucker and Intuit are among the notable companies reporting their earnings, per Kiplinger.
- Dick's Sporting Goods and Williams-Sonoma are among the notable companies reporting their earnings
- Fed Chair Jerome Powell headlines the Kansas City Fed’s annual Jackson Hole Economic Policy Symposium
- The Labor Department releases the latest weekly jobless claims
- Dollar General, HP, Abercrombie & Fitch, Ulta Beauty and Dollar Tree are among the notable companies reporting their earnings