Jobless Claims to Show the Pandemic’s Toll on the Economy: Live Updates

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The Avalon Cafe and Biscuit Bar in Detroit closed because of the pandemic. Conditions should improve in the coming months, economists say.
Credit…Elaine Cromie for The New York Times

The economy’s ability to heal from the damage inflicted by the pandemic will be tested Thursday morning when the Labor Department reports the latest data on initial jobless claims.

With caseloads dropping and restrictions on business activity being eased in many places, filings for unemployment benefits have come down, too. In late February, the government reported that initial claims had sunk to their lowest level since November on a seasonally adjusted basis.

But the pace of reopenings has been uneven.

Gov. Greg Abbott of Texas said Tuesday that the state was lifting all restrictions on business and eliminating its mask requirement, moves that drew criticism from President Biden. Elsewhere, officials have been more cautious — in Chicago, parks and playgrounds reopened, while in Massachusetts, capacity restrictions on restaurants have been lifted.

“The labor market is continuing to gradually improve,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “Job growth will accelerate, perhaps as soon as the second quarter, with decent gains in leisure and hospitality and travel.”

Even so, the number of new filers, at more than 700,000 per week last month, remains extremely high by historical standards, a sign of the continuing devastation a year after the pandemic struck.

Another reading will come Friday, when the Labor Department reports on hiring and unemployment in February. Economists expect the survey to show a gain of 200,000 jobs, with the unemployment rate unchanged at 6.3 percent.

In January, the job market hit a soft spot, with employers adding just 49,000 positions. That offered little hope to the nearly 10 million Americans out of work. But conditions should improve in the coming months, economists say, with vaccination efforts gaining speed and another relief package nearing passage on Capitol Hill.

Mr. Anderson expects annualized growth of 7.2 percent in the second quarter (1.75 percent on a quarterly basis), paced by consumer spending and the aid infusion from Washington.

“The amount of sheer spending by the government is moving the needle,” Mr. Anderson said. By summer, spending should return to pre-pandemic levels, he said, but it could take another two years for the labor market to recover fully.

Jerome Powell, the Federal Reserve chair. The central bank has played down inflation concerns.
Credit…Al Drago for The New York Times

Global stocks dropped on Thursday, extending losses from the previous day when U.S. bond yields jumped higher again.

The S&P 500 index is set to open more than half a percentage point lower when trading begins. It fell 1.3 percent on Wednesday, led by tech stocks. The Stoxx Europe 600 dropped 1.1 percent on Thursday, with some of the biggest loses in semiconductor companies. The Nikkei 225 in Japan and Hang Seng in Hong Kong closed more than 2 percent lower.

The 10-year U.S. yield was 1.47 percent on Thursday. On Wednesday, the yield jumped 9 basis points, or 0.09 percentage point, to 1.48 percent. Rising yields have rattled tech stocks especially hard because they have been some of the biggest gainers over the past year and partly supported by central bank’s easy money policies.

The market volatility has actually been caused by good economic news: an economic rebound, which investors worry will cause inflation. Few economists see a significant risk of runaway inflation, but investors say that the mere possibility of painful 1970s-style price growth might drive the Federal Reserve to raise interest rates to tamp down a heated economy. And that would be bad for bonds, The New York Times’s Matt Phillips wrote.

Despite policymakers mostly brushing off the worries, more investors think the Fed might have to intervene. To address these worries, the Fed could buy the long-dated bonds where yields are rising or put in place a policy of yield curve control, The Times’s Jeanna Smialek wrote.

Jerome H. Powell, the Fed chair, is set to speak Thursday at a Wall Street Journal event, where he may be asked to address the recent bond activity.

Elsewhere in markets:

  • The latest report on state unemployment claims will be released by the Labor Department on Thursday. As businesses have reopened, the numbers have fallen in recent weeks, but at more than 700,000 per week, they remain extremely high by historical standards.

  • Most commodity prices fell. Futures on West Texas Intermediate, the U.S. crude benchmark, dropped 0.5 percent to about $61 a barrel.

Saudi Aramco’s Ras Tanura oil refinery and terminal in Saudi Arabia. Saudi officials volunteered to cut oil production by one million barrels a day at the last OPEC meeting.
Credit…Ahmed Jadallah/Reuters

The Organization of the Petroleum Exporting Countries and its allies, including Russia, are expected to meet by videoconference on Thursday to consider a potential but by no means certain production increase of as much as 1.5 million barrels a day.

Analysts say the combined group, called OPEC Plus, could increase the supply of oil without undermining its price on global markets. After collapsing last spring, oil prices have risen to pre-pandemic levels in recent weeks, with Brent crude, the global benchmark, reaching nearly $67 a barrel in late February.

Vaccination programs against the coronavirus are gathering pace, potentially leading to increased economic activity and greater demand for oil this year. In addition, production growth from shale producers in the United States is expected to be restrained this year.

Petroleum heavyweights that are curtailing production, like Russia and the United Arab Emirates, would like to put some of that oil back on the market. On the other hand, Saudi Arabia, OPEC’s de facto leader, continues to urge caution while apparently seeking even higher prices.

After January’s OPEC meeting, Saudi Arabia voluntarily agreed to cut its own production by one million barrels a day, to about 8.1 million barrels a day. That cut is scheduled to expire in April, and it remains uncertain what the Saudis will do. Prince Abdulaziz bin Salman, the Saudi oil minister, clearly enjoys surprising the market and upending what he thinks are traders’ expectations.

On Wednesday, a preparatory technical committee meeting did not produce a formal recommendation, analysts say.

“Once again, it seems that Russia and U.A.E. are pressing for a collective OPEC Plus increase, while Saudi Arabia and Algeria are seeking to keep output unchanged for the time being,” Helima Croft, an analyst at RBC Capital Markets, an investment bank, wrote in a note to clients.

In January, OPEC Plus reached an unusual compromise that allowed modest increases to Russia and Kazakhstan that were offset by the substantial cuts that Saudi Arabia volunteered after the meeting.

The outcome of the meeting on Thursday may depend once again on how much production the Saudis are willing to sacrifice to gain higher prices.

Disney will close 30 percent of its stores in North America this year.
Credit…Joshua Lott for The New York Times

After 33 years as a shopping mall mainstay, Mickey Mouse is mostly calling it a day.

The Walt Disney Company said on Wednesday that it would dramatically downsize its chain of Disney Stores, which have struggled amid the pandemic and a broader consumer shift to online shopping. At least 60 locations in North America — 30 percent of the Disney Store footprint in the region — will close this year.

The company described the closures as the “beginning” of its downsizing effort. A significant number of overseas stores are also expected to close. According to its 2020 annual report, Disney has about 60 stores in Europe.

The Disney Store chain was founded in 1987 and once numbered more than 1,000 locations worldwide. For a time in the early 1990s, during a boom for shopping malls, Disney even experimented with an adjacent spinoff chain of Mickey’s Kitchen restaurants, where items included Dumbo burgers, Pinocchio pizzas and fries shaped like Donald Duck.

Disney redesigned many Disney Store locations in 2017 in an attempt to boost business, incorporating live video feeds from its theme parks and shifting the merchandise mix away from toys and toward fashion-conscious young adults. Results were mixed. In 2019, as shopping malls continued to struggle, Disney expanded its merchandising presence at Target stores, a move that analysts viewed as the beginning of the end for the stand-alone Disney Store business.

ShopDisney, the company’s online store, will expand over the next year and become more integrated with Disney’s theme park apps and social media platforms, according to Stephanie Young, president of Disney Consumer Products, Games and Publishing.

The Federal Reserve chair, Jerome H. Powell, has said the central bank would not cut support for the economy anytime soon. 
Credit…Pool photo by Susan Walsh

The market conniptions of recent days are a direct result of several developments that point to the brightening prospects of economic recovery. Vaccinations are rising, retail sales and industrial production have been surprisingly solid and, perhaps most important, the Biden administration is expected to push its $1.9 trillion stimulus plan through Congress in the coming days.

One clear consequence is expected to be strong growth. Wall Street economists now expect output to rise by nearly 5 percent in 2021. Such robust growth — it would be the best year for the economy since 1984 — would seem like a good thing for stocks.

But growth brings with it the possibility of rising inflation, which in turn could prompt the Federal Reserve to raise interest rates — and that’s what investors are reacting to, with different consequences for the stock and bond markets, Matt Phillips reports for The New York Times.

Few economists see a significant risk of runaway inflation, but investors say that the mere possibility of painful price growth might drive the Fed to raise interest rates to tamp down the economy.

That would be bad for bond owners. If the Fed raised rates, rates around the bond market would climb. Then the price of bonds that investors hold would have to fall until they produced yields that were comparable to the new, higher rates in the market.

In expectation of that, investors are demanding a higher return now in the form of a higher yield on their bonds. Higher rates can be a problem for the stock market’s performance. One reason is that high interest rates make owning bonds more attractive, coaxing at least some dollars out of the stock market. Higher rates can also make borrowing more expensive for companies, especially smaller ones that have potential but lack a track record of profitability.

Mark Zuckerberg, the Facebook chief executive, testifying in October. Before the ban on political ads, he had said he wanted to maintain a hands-off approach toward speech on Facebook.
Credit…Pool photo by Michael Reynolds
  • Facebook said on Wednesday that it planned to lift its ban on political advertising across its network, resuming a form of digital promotion that has been criticized for spreading misinformation and falsehoods and inflaming voters. The social network said it would allow advertisers to buy new ads about “social issues, elections or politics” beginning on Thursday, according to a copy of an email sent to political advertisers and viewed by The New York Times.

  • Darren W. Woods, the chief executive of Exxon Mobil, in an interview before an annual presentation to investors promised that Exxon would try to set a goal for not emitting more greenhouse gases than it removed from the atmosphere, though he said it was still difficult to say when that might happen. Under pressure from activist investors, Exxon said this week that it was adding two new directors with no previous ties to fossil fuels to its board. The company recently said it would create a new business that captured carbon dioxide from industrial plants and buried it deep in the ground. It also recently invested in Global Thermostat, a company that aims to suck carbon dioxide out of the air.

What did Jay-Z and Jack Dorsey talk about when they went yachting around the Hamptons together last summer? Perhaps only Beyoncé knows.

Maybe now we do, too. Square, the mobile payments company led byMr. Dorsey, announced on Thursday its plan to acquire a “significant majority” of Tidal, the streaming music service owned by Jay-Z and other artists — including Beyoncé, Jay-Z’s wife, and Rihanna, who is a client of Jay-Z’s entertainment management company, Roc Nation.

Square will pay $297 million in stock and cash for the stake in Tidal. Jay-Z will join Square’s board.

Credit…Sam Hodgson for The New York Times
Credit…Anushree Fadnavis/Reuters

The announcement comes less than two weeks after Jay-Z announced that he would sell 50 percent of his champagne company, Armand de Brignac — better known as Ace of Spades — to LVMH Moët Hennessy Louis Vuitton amid a downturn in the entertainment industry caused by the pandemic that has affected some of Jay-Z’s holdings.

“I think Roc Nation will be fine,” Jay-Z said in an interview last month about the sale of Armand de Brignac. “Like all entertainment companies, it will eventually recover. You just have to be smart and prudent at a time like this.”

Also last month, Mr. Dorsey, who is also the chief executive of Twitter, announced that he and Jay-Z had endowed a Bitcoin trust to support development in India and Africa.

Tidal, which Jay-Z bought in partnership with other artists in 2015 for $56 million, provides members access to music, music videos and exclusive content from artists, but the streaming music industry has been dominated by competitors like Spotify, Apple and Amazon.

In 2017, Jay-Z sold 33 percent of the company to Sprint for an undisclosed amount. (After a merger, Sprint is now a part of T-Mobile.) Earlier this week, Jay-Z bought back the shares from T-Mobile, and most will be sold to Square as part of the deal.

Mr. Dorsey and Jay-Z began to discuss the acquisition “a few months ago,” said Jesse Dorogusker, a Square executive who will lead Tidal on an interim basis.

“It started as a conversation between the two of them,” he said. “They found that sense of common purpose.”

Mr. Dorogusker said Square, which was founded in 2009, will offer financial tools to help Tidal’s artists collect revenue and manage their finances. “There are other tools they need to be successful and that we’re going to build for them,” he said.

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